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<SEC-DOCUMENT>/in/edgar/work/0000889812-00-003896/0000889812-00-003896.txt : 20000927
<SEC-HEADER>0000889812-00-003896.hdr.sgml : 20000927
ACCESSION NUMBER:		0000889812-00-003896
CONFORMED SUBMISSION TYPE:	S-4/A
PUBLIC DOCUMENT COUNT:		40
FILED AS OF DATE:		20000922

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PHILIPP BROTHERS CHEMICALS INC
		CENTRAL INDEX KEY:			0001069899
		STANDARD INDUSTRIAL CLASSIFICATION:	 [2810
]		IRS NUMBER:				131840497
		FISCAL YEAR END:			1231
</COMPANY-DATA>

		FILING VALUES:
			FORM TYPE:		S-4/A
			SEC ACT:		
			SEC FILE NUMBER:	333-64641
			FILM NUMBER:		727361
</FILING-VALUES>

			BUSINESS ADDRESS:	
				STREET 1:		ONE PARKER PLZ
				CITY:			FORT LEE
				STATE:			NJ
				ZIP:			07024
				BUSINESS PHONE:		2019446020
</BUSINESS-ADDRESS>

				MAIL ADDRESS:	
					STREET 1:		ONE PARKET PLZ
					CITY:			FORT LEE
					STATE:			NJ
					ZIP:			07024
</MAIL-ADDRESS>
</FILER>
</SEC-HEADER>
<DOCUMENT>
<TYPE>S-4/A
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>POST-EFFECTIVE AMENDMENT NO. 1 TO S-4
<TEXT>


<PAGE>

   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 22, 2000

                                                      REGISTRATION NO. 333-64641
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                 POST EFFECTIVE
                                 AMENDMENT NO. 1
                                       TO
                                    FORM S-4
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933

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

                        PHILIPP BROTHERS CHEMICALS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>                                             <C>                                  <C>
                NEW YORK                                    2819                               13-1840497
     (STATE OR OTHER JURISDICTION OF            (PRIMARY STANDARD INDUSTRIAL         (I.R.S. EMPLOYER IDENTIFICATION
     INCORPORATION OR ORGANIZATION)             CLASSIFICATION CODE NUMBER)                      NUMBER)
</TABLE>

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

                                ONE PARKER PLAZA
                           FORT LEE, NEW JERSEY 07024
                                 (201) 944-6020
               (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
         INCLUDING AREA CODE OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)

                       SEE TABLE OF ADDITIONAL REGISTRANTS

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

                                JACK C. BENDHEIM,
                      PRESIDENT AND CHIEF EXECUTIVE OFFICER
                        PHILIPP BROTHERS CHEMICALS, INC.
                                ONE PARKER PLAZA
                           FORT LEE, NEW JERSEY 07024
                                 (201) 944-6020
            (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
                   INCLUDING AREA CODE, OF AGENT FOR SERVICE)

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

                                 With a copy to:
                             LAWRENCE M. BELL, ESQ.
                        GOLENBOCK, EISEMAN, ASSOR & BELL
                               437 MADISON AVENUE
                          NEW YORK, NEW YORK 10022-7302
                                 (212) 907-7300

        APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT

If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. / /

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. //

If this form is a post effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. /X/ Registration No. 333-64641

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>


                         TABLE OF ADDITIONAL REGISTRANTS

<TABLE>
<CAPTION>

                                           STATE OR OTHER        PRIMARY STANDARD
                                           JURISDICTION OF          INDUSTRIAL
       EXACT NAME OF REGISTRANT           INCORPORATION OR        CLASSIFICATION          IRS EMPLOYER
     AS SPECIFIED IN ITS CHARTER            ORGANIZATION            CODE NUMBER        IDENTIFICATION NO.
<S>                                       <C>                    <C>                   <C>
C.P. Chemicals, Inc.                         New Jersey                2819                22-1548721
One Parker Plaza
Fort Lee, New Jersey 07024
(201) 944-6020

Koffolk, Inc.                                 Delaware                 2819                22-3429128
One Parker Plaza
Fort Lee, New Jersey 07024
(201) 944-6020

Phibro-Tech, Inc.                             Delaware                 2819                22-3060339
One Parker Plaza
Fort Lee, New Jersey 07024
(201) 944-6020

MRT Management Corp.                          Delaware                 2819                22-3407010
One Parker Plaza
Fort Lee, New Jersey 07024
(201) 944-6020

Mineral Resource Technologies, L.L.C.         Delaware                 2819                58-2204234
120 Interstate North Parkway East,
Suite 440
Atlanta, Georgia 30339
(770) 989-0089

Prince Agriproducts, Inc.                     Delaware                 2819                23-1653576
One Prince Plaza
Quincy, Illinois 62301
(217) 222-8854

The Prince Manufacturing Company            Pennsylvania               2819                13-2793019
700 Lehigh Street
Bowmanstown, Pennsylvania 18030
(610) 852-2345

The Prince Manufacturing Company              Illinois                 2819                13-2793024
One Prince Plaza
Quincy, Illinois 62301

Phibrochem, Inc.                             New Jersey                2819                22-2758614
One Parker Plaza
Fort Lee, New Jersey 07024
(201) 944-6020

Phibro Chemicals, Inc.                        New York                 2819                22-2871784
One Parker Plaza
Fort Lee, New Jersey 07024
(201) 944-6020

Western Magnesium Corp.                      California                2819                13-2849569
One Parker Plaza
Fort Lee, New Jersey 07024
(201) 944-6020

</TABLE>


<PAGE>

                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS


INTRODUCTORY NOTE.

This Post Effective Amendment No. 1 is filed pursuant to Rule 462(d) of the
Securities Act solely for the purpose of retransmitting in EDGAR format certain
exhibits (the "Retransmitted Exhibits") to the Registrant's registration
statement on Form S-4, Registration No. 333-64641 (the "Registration
Statement"). The Retransmitted Exhibits were not received by the Securities and
Exchange Commission (the "Commission") as part of the EDGAR transmission of the
Registration Statement as originally filed on September 29, 1998 (the "Original
Filing"), due to a transmission error by the Registrant's EDGAR service
provider. As indicated by the footnotes to the Exhibit Index below, certain of
the Retransmitted Exhibits were amended by amendments to the Registration
Statement filed subsequent to the date of the Original Filing. The Registration
Statement, as amended, was declared effective by the Commission on December 17,
1998.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

     (a) Exhibits

EXHIBIT NO.   DESCRIPTION OF EXHIBIT
- -----------   ----------------------

       3.1    Restated Certificate of Incorporation of Philipp Brothers
              Chemicals, Inc.*

       3.2    By-laws of Philipp Brothers Chemicals, Inc.*

       3.3    Certificate of Incorporation of Phibro-Tech, Inc.*

       3.4    By-Laws of Phibro-Tech, Inc.*

       3.5    Certificate of Incorporation of C.P. Chemicals, Inc.*

       3.6    By-Laws of C.P. Chemicals, Inc.*

       3.7    Certificate of Incorporation of Prince Agriproducts, Inc.*

       3.8    By-Laws of Prince Agriproducts, Inc.*

       3.9    Certificate of Incorporation of The Prince Manufacturing Company,
              an Illinois corporation*

       3.10   By-Laws of The Prince Manufacturing Company, an Illinois
              corporation*

       3.11   Certificate of Incorporation of The Prince Manufacturing Company,
              a Pennsylvania corporation*

       3.12   By-Laws of The Prince Manufacturing Company, a Pennsylvania
              corporation*

       3.13   Certificate of Formation of Mineral Resource Technologies, L.L.C.*

       3.14   Limited Liability Company Agreement of Mineral Resource
              Technologies, L.L.C., dated as of November 21, 1995, as amended as
              of June 1, 1998*

       3.15   Certificate of Incorporation of MRT Management Corp.*

       3.16   By-Laws of MRT Management Corp.*

       3.17   Certificate of Incorporation of Koffolk, Inc.*

       3.18   By-Laws of Koffolk, Inc.*

       3.19   Certificate of Incorporation of Phibrochem, Inc.*

       3.20   By-Laws of Phibrochem, Inc.*

       3.21   Certificate of Incorporation of Phibro Chemicals, Inc.*

       3.22   By-Laws of Phibro Chemicals, Inc.*

       3.23   Certificate of Incorporation of Western Magnesium Corp.**

       3.24   By-Laws of Western Magnesium Corp.**

       4.1    Indenture, dated as of June 11, 1998, among the Company, the
              Guarantors named therein and The Chase Manhattan Bank, as trustee,
              relating to the 9 7/8% Senior Subordinated Notes due 2008 of the
              Company, and exhibits thereto, including Form of 9 7/8% Senior
              Subordinated Note due 2008 of the Company**

              Certain instruments which define the rights of holders of
              long-term debt of the Company and its consolidated subsidiaries
              have not been filed as Exhibits to this Registration Statement
              since the total amount of securities authorized under any such
              instrument does not exceed 10% of the total assets of the Company
              and its subsidiaries on a consolidated basis, as of June 30, 1998.
              For a description of such indebtedness, see Note 6 of Notes to
              Consolidated Financial Statements. The Company hereby agrees to
              furnish copies of such instruments to the Securities and Exchange
              Commission upon its request.

       5.1    Opinion of Golenbock, Eiseman, Assor & Bell regarding the legality
              of securities being registered*

       5.2    Opinion of Blanc Williams, Johnston & Kronstadt L.L.C. regarding
              the legality of securities being registered*


<PAGE>


       5.3    Opinion of Schmiedeskamp, Robertson, New & Mitchell regarding the
              legality of securities being registered*

       5.4    Opinion of Martin H. Philip, Esq. regarding the legality of
              securities being registered.*

       10.1   Registration Rights Agreement, dated June 11, 1998, among Philipp
              Brothers Chemicals, Inc., the Guarantors named therein and
              Schroder & Co. Inc.**

       10.2   Revolving Credit, Acquisition Term Loan and Security Agreement,
              dated August 19, 1998, among Philipp Brothers Chemicals, Inc., as
              Borrower, the Guarantors named therein, PNC Bank, N.A. as Agent
              and Lender, and the other institutions from time to time party
              thereto as Lenders**

       10.3   Manufacturing Agreement, dated May 15, 1994, by and between Merck
              & Co., Inc., Koffolk, Ltd., and Philipp Brothers Chemicals,
              Inc.+ ** ++ @

       10.4   Distribution Agreement, dated March 1, 1996, between Elanco
              Quimica Ltda. and Planalquimica Industrial Ltda.+ ** ++

       10.5   Asset Purchase and Trademark Assignment Agreement, dated August 5,
              1996, between Koffolk, Inc. and Merck & Co., Inc.; assigned by
              Merck & Co., Inc. to Merial Limited.** ++

       10.6   Distributorship Agreement, dated August 5, 1996, by and between
              Merck & Co., Inc. and Koffolk, Inc.; assigned by Merck & Co., Inc.
              to Merial Limited.+ ** ++

       10.7   License Agreement, dated May 30, 1996, by and between Michigan
              Technological University and Mineral Resource Technologies,
              L.L.C.+ ** ++

       10.8   Lease, dated July 25, 1986, between Philipp Brothers Chemicals,
              Inc. and 400 Kelby Associates, as amended December 1, 1986 and
              December 30, 1994**

       10.9   Lease, dated June 30, 1995, between First Dice Road Co. and
              Phibro-Tech, Inc., as amended May 1998**

       10.10  Lease, dated December 24, 1981, between Koffolk (1949) Ltd. and
              Israel Land Administration*

       10.11  Master Lease Agreement, dated February 27, 1998, between General
              Electric Capital Corp., Philipp Brothers Chemicals, Inc. and
              Phibro-Tech, Inc.**

       10.12  Stockholders Agreement, dated December 29, 1987, by and between
              Philipp Brothers Chemicals, Inc., Charles H. Bendheim, Jack C.
              Bendheim and Marvin S. Sussman**

       10.13  Employment Agreement, dated December 29, 1987, by and between
              Philipp Brothers Chemicals, Inc. and Marvin S. Sussman**

       10.14  Stockholders Agreement, dated February 21, 1995, between I. David
              Paley, Nathan Z. Bistricer, James O. Herlands and Phibro-Tech,
              Inc., as amended as of June 11, 1998**

       10.15  Severance Agreement, dated as of February 21, 1995, between I.
              David Paley and Phibro-Tech, Inc.**

       10.16  Form of Severance Agreement, each dated as of February 21, 1995,
              between Philipp Brothers Chemicals, Inc. and each of Nathan Z.
              Bistricer and James O. Herlands**

       10.17  Agreement of Limited Partnership of First Dice Road Company, dated
              June 1, 1985, by and among Western Magnesium Corp., Jack Bendheim,
              Marvin S. Sussman and James O. Herlands, as amended November
              1985**

       10.18  Philipp Brothers Chemicals, Inc. Retirement Income and Deferred
              Compensation Plan Trust, dated January 1, 1994, by and between
              Philipp Brothers Chemicals, Inc. on its own behalf and on behalf
              of C.P. Chemicals, Inc., Phibro-Tech, Inc. and the Trustee
              thereunder; Philipp Brothers Chemicals, Inc. Retirement Income and
              Deferred Compensation Plan Trust, dated March 18, 1994**

       10.19  Form of Executive Income Deferred Compensation Agreement, each
              dated March ]1, 1990, by and between Philipp Brothers Chemicals,
              Inc. and each of Jack Bendheim, James Herlands and Marvin
              Sussman**

       10.20  Form of Executive Income Split Dollar Agreement, each dated March
              1, 1990, by and between Philipp Brothers Chemicals, Inc. and each
              of Jack Bendheim, James Herlands and Marvin Sussman**

       10.21  Agreement for the Sale and Purchase of the Shares of ODDA
              Smelteverk A/S and of the Business and Certain Assets of BOC
              Carbide Industries, a division of BOC Ltd., dated June 26, 1998,
              between The BOC Group plc and Philipp Brothers Chemicals, Inc.+ *

       10.22  Supply Agreement, dated as of September 28, 1998, between BOC
              Limited and Phillip Brothers Chemicals, Inc.+ *

       10.23  Administrative Consent Order, dated March 11, 1991, issued by the
              State of New Jersey Department of Environmental Protection,
              Division of Hazardous Waste Management, to C.P. Chemicals, Inc.**

       10.24  Purchase Agreement, dated as of June 1, 1998, between Jack C.
              Bendheim and the Company*

       10.25  Agreement, dated as of June 1, 1998, by and among Jack C.
              Bendheim, Phibro-Tech, Inc., MRT Management Corp. and Mineral
              Resource Technologies, L.L.C.*

       10.26  Licensing Agreement, dated January 28, 1980, between Gunness Wharf
              Limited and BOC Limited+ *


<PAGE>


       10.27  Agreement, dated January 28, 1980, between BOC Limited and Gunness
              Wharf Limited+ *

       12.1   Statement regarding computation of ratios.**

       21.1   Subsidiaries of Philipp Brothers Chemicals, Inc.**

       21.2   Subsidiaries of C.P. Chemicals, Inc.**

       21.3   Subsidiaries of Phibro-Tech, Inc.**

       23.1   Consent of PricewaterhouseCoopers LLP, certified public
              accountants** @

       23.2   Consent of Edward Isaacs & Co. LLP, certified public
              accountants** @

       23.3   Consent of Dov Kahana & Co., certified public accountants** @

       23.4   Consent of Cabinet Associes, certified public accountants** @

       23.5   Consent of Wilson Wright & Co., chartered accountants and
              registered auditors** @

       23.6   Consent of Wilson Wright & Co., chartered accountants and
              registered auditors** @

       23.7   Consent of PricewaterhouseCoopers DA, certified public
              accountants*

       23.8   Consent of Golenbock, Eiseman, Assor & Bell (included as part of
              Exhibit 5.1 to this Registration Statement)*

       23.9   Consent of Blanc, Williams, Johnston & Kronstadt L.L.C. (included
              as part of Exhibit 5.2 to this Registration Statement)*

       23.10  Consent of Martin H. Philip, Esq. (included as part of Exhibit 5.3
              to this Registration Statement)*

       23.11  Consent of Schmiedeskamp, Robertson, New & Mitchell (included as
              part of Exhibit 5.4 to this Registration Statement)*

       24.1   Power of Attorney (set forth on signature pages of this
              Registration Statement as filed on September 29, 1998)*

       25.1   Statement of Eligibility under the Trust Indenture Act of 1939 of
              The Chase Manhattan Bank on Form T-1**

       27.1   Financial Data Schedule**

       99.1   Form of Letter of Transmittal** @

       99.2   Form of Notice of Guaranteed Delivery** @

       99.3   Form of Letter to Clients** @

       99.4   Form of Letter to Brokers, Dealers, Trust Companies and Other
              Nominees** @


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

 * Previously filed.

 ** Filed herewith solely for the purpose of retransmitting such exhibit, which
was not received by the Commission as part of the original filing of this
Registration Statement on September 29, 1998 as a result of a transmission error
on the part of the Registrant's EDGAR service provider.

+ A request for confidential treatment has been granted for portions of such
document. Confidential portions have been omitted and filed separately with the
SEC as required by Rule 406(b).


++ Amended in Pre-Effective Amendment No. 2 to the Registration Statement filed
December 14, 1998.

@ Amended in Pre-Effective Amendment No. 3 to the Registration Statement filed
December 17, 1998.



<PAGE>


                                  SIGNATURES


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS POST EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF FORT LEE, NEW JERSEY, ON SEPTEMBER 21, 2000.


                                          PHILIPP BROTHERS CHEMICALS, INC.

                                          By:     /s/ JACK C. BENDHEIM
                                              ----------------------------------
                                                      Jack C. Bendheim,
                                               President and Chief Executive
                                                         Officer


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS POST
EFFECIVVE AMENDMENT TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.


<TABLE>
<CAPTION>

SIGNATURE                                   TITLE                      DATE
- -------------------------  ---------------------------------------     -------------------
<S>                        <C>                                         <C>

/s/ JACK C. BENDHEIM       Director, President and                     September 21, 2000
- -------------------------  Chief Executive Officer
Jack C. Bendheim           Principal Executive Officer)


/s/ MARVIN S. SUSSMAN*     Director                                    September 21, 2000
- -------------------------
Marvin S. Sussman


/s/ JAMES O. HERLANDS*     Director                                    September 21, 2000
- -------------------------
James O. Herlands


/s/ NATHAN Z. BISTRICER*   Vice President and Chief Financial          September 21, 2000
- -------------------------  Officer (Principal Financial Officer and
Nathan Z. Bistricer        Principal Accounting Officer)

</TABLE>


- ------------------
*Executed pursuant to a power of attorney
 contained in the Registration Statement


<PAGE>

                                   SIGNATURES


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS POST EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF FORT LEE, NEW JERSEY, ON SEPTEMBER 21, 2000.


                                          C.P. CHEMICALS, INC.

                                          By:     /s/ JACK C. BENDHEIM
                                              ----------------------------------
                                                      Jack C. Bendheim,
                                                  Chief Executive Officer


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS POST
EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.


<TABLE>
<CAPTION>
        SIGNATURE                   TITLE                          DATE
- -------------------------  ----------------------------------     ---------------
<S>                        <C>                                    <C>

/s/ JACK C. BENDHEIM       Director and Chief Executive Officer   September 21, 2000
- -------------------------  (Principal Executive Officer)
Jack C. Bendheim


/s/ JAMES O. HERLANDS*     Director                               September 21, 2000
- --------------------------
James O. Herlands


/s/ NATHAN Z. BISTRICER*   Vice President and Chief Financial     September 21, 2000
- -------------------------  Officer (Principal Financial Officer
Nathan Z. Bistricer        and Principal Accounting Officer)
</TABLE>


- ---------------
*Executed pursuant to a power of attorney
 contained in the Registration Statement


<PAGE>


                                   SIGNATURES


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE COMPANY HAS
DULY CAUSED THIS POST EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF FORT
LEE, NEW JERSEY, ON SEPTEMBER 21, 2000.


                                          KOFFOLK, INC.

                                          By:     /s/ JACK C. BENDHEIM
                                              ----------------------------------
                                                      Jack C. Bendheim,
                                                         President


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS POST
EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.


<TABLE>
<CAPTION>
        SIGNATURE                   TITLE                              DATE
- -------------------------  ----------------------------------          ---------------
<S>                        <C>                                         <C>

/s/ JACK C. BENDHEIM       Director, President and                     September 21, 2000
- -------------------------  Treasurer (Principal Executive Officer,
Jack C. Bendheim           Principal Financial Officer and
                           Principal Accounting Officer)

</TABLE>


<PAGE>

                                   SIGNATURES


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS POST EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF FORT LEE, NEW JERSEY, ON SEPTEMBER 21, 2000.


                                          MINERAL RESOURCE TECHNOLOGIES, L.L.C.

                                          By: MRT Management Corp., Managing
                                                Member

                                          By:     /s/ JACK C. BENDHEIM
                                              ----------------------------------
                                                      Jack C. Bendheim,
                                                   President and Chief Executive
                                                           Officer


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS POST
EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.



<TABLE>
<CAPTION>
        SIGNATURE                   TITLE                              DATE
- -------------------------  ----------------------------------          ---------------
<S>                        <C>                                         <C>

/s/ JACK C. BENDHEIM       Director, President and Chief Executive     September 21, 2000
- ------------------------   Officer, Managing Member (Principal
Jack C. Bendheim           Executive Officer, Managing Member)


/s/ NATHAN Z. BISTRICER*   Director, Vice President and Chief          September 21, 2000
- -------------------------  Financial Officer, Managing Member
Nathan Z. Bistricer        (Principal Financial Officer and
                           Principal Accounting Officer)


/s/ HUGH P. SHANNONHOUSE*  Director, Managing Member                   September 21, 2000
- -------------------------
Hugh P. Shannonhouse

</TABLE>


- ------------------
  *Executed pursuant to a power of
   attorney contained in the Registration
   Statement


<PAGE>

                                  SIGNATURES


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS POST EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF FORT LEE, NEW JERSEY, ON SEPTEMBER 21, 2000.


                                          MRT MANAGEMENT CORP.

                                          By:     /s/ JACK C. BENDHEIM
                                              ----------------------------------
                                                      Jack C. Bendheim,
                                               President and Chief Executive
                                                         Officer


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS POST
EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.



<TABLE>
<CAPTION>
        SIGNATURE                           TITLE                          DATE
- -------------------------           ----------------------------------     ---------------
<S>                                 <C>                                    <C>

/s/ JACK C. BENDHEIM                Director, President and                September 21, 2000
- ----------------------------        Chief Executive Officer
Jack C. Bendheim                    Principal Executive Officer)


/s/ HUGH P. SHANNONHOUSE*           Director                               September 21, 2000
- ----------------------------
Hugh P. Shannonhouse


/s/ NATHAN Z. BISTRICER*            Director, Vice President and           September 21, 2000
- ---------------------------         Chief Financial Officer
Nathan Z. Bistricer                 (Principal Financial Officer and
                                    Principal Accounting Officer)

</TABLE>


- ------------------
*Executed pursuant to a power of attorney
 contained in the Registration Statement


<PAGE>

                                   SIGNATURES


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS POST EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF FORT LEE, NEW JERSEY, ON SEPTEMBER 21, 2000.


                                          PHIBROCHEM, INC.

                                          By:     /s/ JACK C. BENDHEIM
                                              ----------------------------------
                                                      Jack C. Bendheim,
                                               President and Chief Executive
                                                         Officer


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS POST
EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.



<TABLE>
<CAPTION>

     SIGNATURE                              TITLE                           DATE
- --------------------------       ---------------------------------------   ------------------
<S>                              <C>                                       <C>

/s/ JACK C. BENDHEIM             Director, President and                   September 21, 2000
- ---------------------------      Chief Executive Officer
Jack C. Bendheim                 (Principal Executive Officer)


/s/ JAMES O. HERLANDS*           Director                                  September 21, 2000
- ---------------------------
James O. Herlands


/s/ NATHAN Z. BISTRICER*         Director, Vice President and              September 21, 2000
- ---------------------------      Chief Financial Officer
Nathan Z. Bistricer              (Principal Financial Officer and
                                 Principal Accounting Officer)
</TABLE>


- ------------------
*Executed pursuant to a power of attorney
 contained in the Registration Statement


<PAGE>


                                   SIGNATURES


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS POST EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF FORT LEE, NEW JERSEY, ON SEPTEMBER 21, 2000.


                                          PHIBRO CHEMICALS, INC.

                                          By:     /s/ JACK C. BENDHEIM
                                              ----------------------------------
                                                      Jack C. Bendheim,
                                               President and Chief Executive
                                                         Officer


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS POST
EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.


<TABLE>
<CAPTION>

     SIGNATURE                              TITLE                      DATE
- --------------------------      ----------------------------------     ------------------
<S>                             <C>                                    <C>

/s/ JACK C. BENDHEIM            Director, President and                September 21, 2000
- ------------------------        Chief Executive Officer
Jack C. Bendheim                (Principal Executive Officer)


/s/ JAMES O. HERLANDS*          Director                               September 21, 2000
- -------------------------
James O. Herlands


/s/ NATHAN Z. BISTRICER*        Director, Vice President and           September 21, 2000
- ---------------------------     Chief Financial Officer
Nathan Z. Bistricer             (Principal Financial Officer and
                                Principal Accounting Officer)
</TABLE>


- ------------------
*Executed pursuant to a power of attorney
 contained in the Registration Statement


<PAGE>

                                   SIGNATURES


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS POST EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF FORT LEE, NEW JERSEY, ON SEPTEMBER 21, 2000.


                                          PHIBRO-TECH, INC.

                                          By:     /s/ JACK C. BENDHEIM
                                              ----------------------------------
                                                      Jack C. Bendheim,
                                                  Chief Executive Officer


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS POST
EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.




<TABLE>
<CAPTION>

     SIGNATURE                            TITLE                        DATE
- --------------------------       ----------------------------------    ------------------
<S>                              <C>                                   <C>

/s/ JACK C. BENDHEIM             Director and                          September 21, 2000
- ---------------------------      Chief Executive Officer
Jack C. Bendheim                 (Principal Executive Officer)


/s/ NATHAN Z. BISTRICER*         Director, Senior Vice President       September 21, 2000
- ------------------------------   and Chief Financial Officer
Nathan Z. Bistricer              (Principal Financial Officer and
                                 Principal Accounting Officer)
</TABLE>


- ------------------
*Executed pursuant to a power of attorney
contained in the Registration Statement


<PAGE>


                                   SIGNATURES


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS POST EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF FORT LEE, NEW JERSEY, ON SEPTEMBER 21, 2000.


                                                PRINCE AGRIPRODUCTS, INC.

                                          By:     /s/ JACK C. BENDHEIM
                                              ----------------------------------
                                                      Jack C. Bendheim,
                                                  Chief Executive Officer


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS POST
EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.




<TABLE>
<CAPTION>

     SIGNATURE                              TITLE                               DATE
- --------------------------          ---------------------------------------     ------------------
<S>                                 <C>                                         <C>

/s/ JACK C. BENDHEIM                Director and Chief Executive                September 21, 2000
- ------------------------            Officer (Principal Executive Officer)
Jack C. Bendheim

/s/ MARVIN S. SUSSMAN*              Director and President                      September 21, 2000
- -------------------------
Marvin S. Sussman

/s/ NATHAN Z. BISTRICER*            Director, Vice President and                September 21, 2000
- -------------------------           Chief Financial Officer
Nathan Z. Bistricer                 (Principal Financial Officer and
                                    Principal Accounting Officer)
</TABLE>


- ------------------
*Executed pursuant to a power of attorney
 contained in the Registration Statement


<PAGE>

                                   SIGNATURES


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS POST EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF FORT LEE, NEW JERSEY, ON SEPTEMBER 21, 2000.


                                          THE PRINCE MANUFACTURING COMPANY

                                          By:     /s/ JACK C. BENDHEIM
                                              ----------------------------------
                                                      Jack C. Bendheim,
                                                  Chief Executive Officer


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS POST
EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THECAPACITIES AND ON THE DATES INDICATED.



<TABLE>
<CAPTION>

     SIGNATURE                              TITLE                           DATE
- --------------------------       ---------------------------------------   ------------------
<S>                              <C>                                       <C>

/s/ JACK C. BENDHEIM             Director and Chief Executive Officer      September 21, 2000
- -------------------------        (Principal Executive Officer)
Jack C. Bendheim

/s/ MARVIN S. SUSSMAN*           Director and President                    September 21, 2000
- -------------------------
Marvin S. Sussman

/s/ NATHAN Z. BISTRICER*         Director, Vice President and              September 21, 2000
- --------------------------       Chief Financial Officer
Nathan Z. Bistricer              (Principal Financial Officer and
                                 Principal Accounting Officer)

</TABLE>


- ------------------
*Executed pursuant to a power of attorney
 contained in the Registration Statement


<PAGE>

                                   SIGNATURES


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS POST EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF FORT LEE, NEW JERSEY, ON SEPTEMBER 21, 2000.


                                          THE PRINCE MANUFACTURING COMPANY

                                          By:     /s/ JACK C. BENDHEIM
                                              ----------------------------------
                                                      Jack C. Bendheim,
                                                  Chief Executive Officer


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS POST
EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.



<TABLE>
<CAPTION>

     SIGNATURE                              TITLE                             DATE
- --------------------------          ------------------------------------      ------------------
<S>                                 <C>                                       <C>

/s/ JACK C. BENDHEIM                Director and Chief Executive Officer      September 21, 2000
- ---------------------------         (Principal Executive Officer)
Jack C. Bendheim

/s/ MARVIN S. SUSSMAN*              Director and President                    September 21, 2000
- ----------------------------
Marvin S. Sussman

/s/ NATHAN Z. BISTRICER*            Director, Vice President and              September 21, 2000
- ---------------------------         Chief Financial Officer
Nathan Z. Bistricer                 (Principal Financial Officer and
                                    Principal Accounting Officer)
</TABLE>


- ------------------
*Executed pursuant to a power of attorney
 contained in the Registration Statement


<PAGE>

                                   SIGNATURES


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS POST EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF FORT LEE, NEW JERSEY, ON SEPTEMBER 21, 2000.


                                          WESTERN MAGNESIUM CORP.

                                          By:     /s/ JACK C. BENDHEIM
                                              ----------------------------------
                                                      Jack C. Bendheim,
                                                   President and Chief Executive
                                                            Officer

     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS POST
EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.



<TABLE>
<CAPTION>

     SIGNATURE                              TITLE                            DATE
- --------------------------         ----------------------------------   ------------------
<S>                                <C>                                  <C>

/s/ JACK C. BENDHEIM               Director, President and              September 21, 2000
- --------------------               Chief Executive Officer
Jack C. Bendheim                   (Principal Executive Officer)


/s/ JAMES O. HERLANDS*              Director                            September 21, 2000
- ----------------------
James O. Herlands


/s/ NATHAN Z. BISTRICER*           Director, Vice President and         September 21, 2000
- ---------------------------        Chief Financial Officer
Nathan Z. Bistricer                (Principal Financial Officer and
                                   Principal Accounting Officer)
</TABLE>


- ------------------
  *Executed pursuant to a power of
   attorney contained in the Registration
   Statement


<PAGE>


                                  EXHIBIT INDEX



 EXHIBIT NO.  DESCRIPTION OF EXHIBIT
 -----------  ----------------------

       3.1    Restated Certificate of Incorporation of Philipp Brothers
              Chemicals, Inc.*

       3.2    By-laws of Philipp Brothers Chemicals, Inc.*

       3.3    Certificate of Incorporation of Phibro-Tech, Inc.*

       3.4    By-Laws of Phibro-Tech, Inc.*

       3.5    Certificate of Incorporation of C.P. Chemicals, Inc.*

       3.6    By-Laws of C.P. Chemicals, Inc.*

       3.7    Certificate of Incorporation of Prince Agriproducts, Inc.*

       3.8    By-Laws of Prince Agriproducts, Inc.*

       3.9    Certificate of Incorporation of The Prince Manufacturing Company,
              an Illinois corporation*

       3.10   By-Laws of The Prince Manufacturing Company, an Illinois
              corporation*

       3.11   Certificate of Incorporation of The Prince Manufacturing Company,
              a Pennsylvania corporation*

       3.12   By-Laws of The Prince Manufacturing Company, a Pennsylvania
              corporation*

       3.13   Certificate of Formation of Mineral Resource Technologies, L.L.C.*

       3.14   Limited Liability Company Agreement of Mineral Resource
              Technologies, L.L.C., dated as of November 21, 1995, as amended as
              of June 1, 1998*

       3.15   Certificate of Incorporation of MRT Management Corp.*

       3.16   By-Laws of MRT Management Corp.*

       3.17   Certificate of Incorporation of Koffolk, Inc.*

       3.18   By-Laws of Koffolk, Inc.*

       3.19   Certificate of Incorporation of Phibrochem, Inc.*

       3.20   By-Laws of Phibrochem, Inc.*

       3.21   Certificate of Incorporation of Phibro Chemicals, Inc.*

       3.22   By-Laws of Phibro Chemicals, Inc.*

       3.23   Certificate of Incorporation of Western Magnesium Corp.**

       3.24   By-Laws of Western Magnesium Corp.**

       4.1    Indenture, dated as of June 11, 1998, among the Company, the
              Guarantors named therein and The Chase Manhattan Bank, as trustee,
              relating to the 9 7/8% Senior Subordinated Notes due 2008 of the
              Company, and exhibits thereto, including Form of 9 7/8% Senior
              Subordinated Note due 2008 of the Company**

              Certain instruments which define the rights of holders of
              long-term debt of the Company and its consolidated subsidiaries
              have not been filed as Exhibits to this Registration Statement
              since the total amount of securities authorized under any such
              instrument does not exceed 10% of the total assets of the Company
              and its subsidiaries on a consolidated basis, as of June 30, 1998.
              For a description of such indebtedness, see Note 6 of Notes to
              Consolidated Financial Statements. The Company hereby agrees to
              furnish copies of such instruments to the Securities and Exchange
              Commission upon its request.

       5.1    Opinion of Golenbock, Eiseman, Assor & Bell regarding the legality
              of securities being registered*

       5.2    Opinion of Blanc Williams, Johnston & Kronstadt L.L.C. regarding
              the legality of securities being registered*

       5.3    Opinion of Schmiedeskamp, Robertson, New & Mitchell regarding the
              legality of securities being registered*

       5.4    Opinion of Martin H. Philip, Esq. regarding the legality of
              securities being registered.*

       10.1   Registration Rights Agreement, dated June 11, 1998, among Philipp
              Brothers Chemicals, Inc., the Guarantors named therein and
              Schroder & Co. Inc.**

       10.2   Revolving Credit, Acquisition Term Loan and Security Agreement,
              dated August 19, 1998, among Philipp Brothers Chemicals, Inc., as
              Borrower, the Guarantors named therein, PNC Bank, N.A. as Agent
              and Lender, and the other institutions from time to time party
              thereto as Lenders**


      10.3    Manufacturing Agreement, dated May 15, 1994, by and between Merck
              & Co., Inc., Koffolk, Ltd., and Philipp Brothers Chemicals,
              Inc.+ ** ++ @

      10.4    Distribution Agreement, dated March 1, 1996, between Elanco
              Quimica Ltda. and Planalquimica Industrial Ltda.+ ** ++

      10.5    Asset Purchase and Trademark Assignment Agreement, dated August 5,
              1996, between Koffolk, Inc. and Merck & Co., Inc.; assigned by
              Merck & Co., Inc. to Merial Limited.** ++

      10.6    Distributorship Agreement, dated August 5, 1996, by and between
              Merck & Co., Inc. and Koffolk, Inc.; assigned by Merck & Co., Inc.
              to Merial Limited.+ ** ++

      10.7    License Agreement, dated May 30, 1996, by and between Michigan
              Technological University and Mineral Resource Technologies,
              L.L.C.+ ** ++

<PAGE>


       10.8   Lease, dated July 25, 1986, between Philipp Brothers Chemicals,
              Inc. and 400 Kelby Associates, as amended December 1, 1986 and
              December 30, 1994**

       10.9   Lease, dated June 30, 1995, between First Dice Road Co. and
              Phibro-Tech, Inc., as amended May 1998**

       10.10  Lease, dated December 24, 1981, between Koffolk (1949) Ltd. and
              Israel Land Administration*

       10.11  Master Lease Agreement, dated February 27, 1998, between General
              Electric Capital Corp., Philipp Brothers Chemicals, Inc. and
              Phibro-Tech, Inc.**

       10.12  Stockholders Agreement, dated December 29, 1987, by and between
              Philipp Brothers Chemicals, Inc., Charles H. Bendheim, Jack C.
              Bendheim and Marvin S. Sussman**

       10.13  Employment Agreement, dated December 29, 1987, by and between
              Philipp Brothers Chemicals, Inc. and Marvin S. Sussman**

       10.14  Stockholders Agreement, dated February 21, 1995, between I. David
              Paley, Nathan Z. Bistricer, James O. Herlands and Phibro-Tech,
              Inc., as amended as of June 11, 1998**

       10.15  Severance Agreement, dated as of February 21, 1995, between I.
              David Paley and Phibro-Tech, Inc.**

       10.16  Form of Severance Agreement, each dated as of February 21, 1995,
              between Philipp Brothers Chemicals, Inc. and each of Nathan Z.
              Bistricer and James O. Herlands**

       10.17  Agreement of Limited Partnership of First Dice Road Company, dated
              June 1, 1985, by and among Western Magnesium Corp., Jack Bendheim,
              Marvin S. Sussman and James O. Herlands, as amended November
              1985**

       10.18  Philipp Brothers Chemicals, Inc. Retirement Income and Deferred
              Compensation Plan Trust, dated January 1, 1994, by and between
              Philipp Brothers Chemicals, Inc. on its own behalf and on behalf
              of C.P. Chemicals, Inc., Phibro-Tech, Inc. and the Trustee
              thereunder; Philipp Brothers Chemicals, Inc. Retirement Income and
              Deferred Compensation Plan Trust, dated March 18, 1994**

       10.19  Form of Executive Income Deferred Compensation Agreement, each
              dated March ]1, 1990, by and between Philipp Brothers Chemicals,
              Inc. and each of Jack Bendheim, James Herlands and Marvin
              Sussman**

       10.20  Form of Executive Income Split Dollar Agreement, each dated March
              1, 1990, by and between Philipp Brothers Chemicals, Inc. and each
              of Jack Bendheim, James Herlands and Marvin Sussman**

       10.21  Agreement for the Sale and Purchase of the Shares of ODDA
              Smelteverk A/S and of the Business and Certain Assets of BOC
              Carbide Industries, a division of BOC Ltd., dated June 26, 1998,
              between The BOC Group plc and Philipp Brothers Chemicals, Inc.*

       10.22  Supply Agreement, dated as of September 28, 1998, between BOC
              Limited and Phillip Brothers Chemicals, Inc.+ *

       10.23  Administrative Consent Order, dated March 11, 1991, issued by the
              State of New Jersey Department of Environmental Protection,
              Division of Hazardous Waste Management, to C.P. Chemicals, Inc.**

       10.24  Purchase Agreement, dated as of June 1, 1998, between Jack C.
              Bendheim and the Company*

       10.25  Agreement, dated as of June 1, 1998, by and among Jack C.
              Bendheim, Phibro-Tech, Inc., MRT Management Corp. and Mineral
              Resource Technologies, L.L.C.*

       10.26  Licensing Agreement, dated January 28, 1980, between Gunness Wharf
              Limited and BOC Limited+* 10.27 Agreement, dated January 28, 1980,
              between BOC Limited and Gunness Wharf Limited+ *

       12.1   Statement regarding computation of ratios.**

       21.1   Subsidiaries of Philipp Brothers Chemicals, Inc.**

       21.2   Subsidiaries of C.P. Chemicals, Inc.**

       21.3   Subsidiaries of Phibro-Tech, Inc.**


       23.1   Consent of PricewaterhouseCoopers LLP, certified public
              accountants** @

       23.2   Consent of Edward Isaacs & Co. LLP, certified public
              accountants** @

       23.3   Consent of Dov Kahana & Co., certified public accountants** @

       23.4   Consent of Cabinet Associes, certified public accountants** @

       23.5   Consent of Wilson Wright & Co., chartered accountants and
              registered auditors** @

       23.6   Consent of Wilson Wright & Co., chartered accountants and
              registered auditors** @


       23.7   Consent of PricewaterhouseCoopers DA, certified public
              accountants*

       23.8   Consent of Golenbock, Eiseman, Assor & Bell (included as part of
              Exhibit 5.1 to this Registration Statement)*

       23.9   Consent of Blanc, Williams, Johnston & Kronstadt L.L.C. (included
              as part of Exhibit 5.2 to this Registration Statement)*

       23.10  Consent of Martin H. Philip, Esq. (included as part of Exhibit 5.3
              to this Registration Statement)*

<PAGE>

       23.11  Consent of Schmiedeskamp, Robertson, New & Mitchell (included as
              part of Exhibit 5.4 to this Registration Statement)*

       24.1   Power of Attorney (set forth on signature pages of this
              Registration Statement as filed on September 29, 1998)*

       25.1   Statement of Eligibility under the Trust Indenture Act of 1939 of
              The Chase Manhattan Bank on Form T-1**

       27.1   Financial Data Schedule**


       99.1   Form of Letter of Transmittal** @

       99.2   Form of Notice of Guaranteed Delivery** @

       99.3   Form of Letter to Clients** @

       99.4   Form of Letter to Brokers, Dealers, Trust Companies and Other
              Nominees** @


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

 * Previously filed.

** Filed herewith solely for the purpose of retransmitting such exhibit, which
was not received by the Commission as part of the original filing of this
Registration Statement on September 29, 1998 as a result of a transmission error
on the part of Registrant's EDGAR service provider.

+ A request for confidential treatment has been granted for portions of such
document. Confidential portions have been omitted and filed separately with the
SEC as required by Rule 406(b).


++ Amended in Pre-Effective Amendment No. 2 to the Registration Statement filed
December 14, 1998.

@ Amended in Pre-Effective Amendment No. 3 to the Registration Statement filed
December 17, 1998.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.23
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>CERTIFICATE OF INCORPORATION OF
                WESTERN MAGNESIUM CORP.
<TEXT>


<PAGE>


                                                                    EXHIBIT 3.23


State of California
SECRETARY OF STATE
CORPORATION DIVISION


     I, BILL JONES, Secretary of State of the State of California, hereby
certify:

     That the annexed transcript was prepared by and in this office from the
record on file, of which it purports to be a copy, and that it is full, true and
correct.

     IN WITNESS WHEREOF I execute this certificate and affix the Great Seal of
the State of California this May 19, 1998.


/s/ Bill Jones
- --------------
Bill Jones
Secretary of State

<PAGE>


ARTICLES OF INCORPORATION
OF
WESTERN MAGNESIUM CORP.


                                     *******


     FIRST: That the name of the corporation is WESTERN MAGNESIUM CORP.

     SECOND: That the specific business in which the said corporation will
primarily engage is:

     To engage in the business of purchasing, developing, manufacturing,
compounding, refining, distributing, selling, exploiting and using, and in every
way deal in, manufacture, distill, treat, prepare, analyze, synthesize and
produce chemicals of every kind, chemical materials, substances and products
including acids, alkalis, and salts and their compounds.

     The general purposes and powers of the corporation are:

     To establish, build, lease as lessee, purchase or otherwise acquire,
operate, maintain, improve, sell or otherwise dispose of, convey, mortgage,
pledge, and lease as lessor, refineries, factories, mills, shops, offices,
laboratories, structures, and works of all kinds.

     To manufacture, purchase or otherwise acquire, own, mortgage, pledge, sell,
assign and transfer, or otherwise dispose of, to invest, trade, deal in and deal
with, goods, wares and merchandise and real and personal property of every class
and description.

     To acquire and pay for in cash, stock or bonds of this corporation or
otherwise, the good will, rights, assets and property and to undertake or assume
the whole or any part of the obligations or liabilities of any person, firm,
association or corporation.

     To acquire, hold, use, sell, assign, lease, grant licenses in respect of,
mortgage or otherwise dispose of letters patent of the United States or any
foreign country, patent rights, licenses and privileges, inventions,
improvements and processes, copyrights, trade-marks and trade names, relating to
or useful in connection with any business of this corporation.

     To acquire, subscribe for, hold, own, pledge and otherwise dispose of and
vote shares of stock, bonds and securities of any other corporation, domestic or
foreign.

     To become a promoter, a partner (either general or limited or both), a
member, an associate, a joint venture or a manager of other business enterprises
or partnerships or ventures, and to enter into agreements of partnership with
individuals or other corporations, for the purpose of carrying on any business,
which would be proper or convenient in connection with the purposes of the
corporation.

     To enter into, make and perform contracts of every kind and description
with any person firm, association, corporation, municipality, county, state,
body politic or government or colony or dependency thereof, conducive to the
attainment of any of the objects or purposes of the corporation.



<PAGE>


     To borrow money and issue bonds, debentures, notes and evidences of
indebtedness and to secure the payment or performance of its obligations by
mortgage, deed of trust, pledge or otherwise.

     To purchase, hold, sell and transfer the shares of its own capital stock so
far as may be permitted by the laws of the State of California.

     To have one or more offices within or without the State of California, to
carry on all or any of its operations and business and, without restriction or
limit as to amount, to purchase or otherwise acquire, hold, own, mortgage, sell,
convey or otherwise dispose of real and personal property of every class arid
description in any of the states, districts, territories or colonies of the
United States, and in any and a11 foreign countries, subject to the laws of such
state, district, territory, colony or country.

     The foregoing clauses shall be construed both as objects and powers and it
is hereby expressly provided that the foregoing enumeration of specific powers
shall not be held to limit or restrict in any manner the powers of the
corporation.

     In general, to carry on any other business in connection with the
foregoing, and to have and exercise all the powers conferred by the State of
California upon corporations formed under the laws of the State of California.

     THIRD: That the county in which the principal office for the transaction of
the business of said corporation is located is San Diego County, State of
California.

     FOURTH: The number of its directors is three (3). The name and address of
each person appointed to act as a first director is as follows:

NAME                             ADDRESS

MARIS KRUZE                      277 Park Avenue,
                                 New York, New York 10017

JOHN L. VAUGHAN                  277 Park Avenue,
                                 New York, New York 10017

FRANK SIMMONS                    277 Park Avenue,
                                 New York, New York 10017

     The number of directors may be changed from time to time by a by-law fixing
or changing the number duly adopted by the shareholders.

     FIFTH: The total number of shares which the corporation is authorized to
issue is one thousand (1,000); all of such shares shall be without par value.

     Such shares may be issued for such consideration as from time to time may
be determined by the board of directors.

     SIXTH: Subject to the right of shareholders to adopt, amend or repeal
by-laws, by-laws may be adopted, amended, or repealed by the board of directors,
except a by-law or amendment thereof changing the authorized number of
directors.

     SEVENTH: This corporation reserves the right to amend, alter, change or
repeal any provision contained in these articles of incorporation in the manner
now or

<PAGE>


hereafter prescribed by statute, and all rights conferred upon shareholders
herein are granted subject to this reservation.

     IN WITNESS WHEREOF, for the purpose of forming this corporation under the
laws of the State of California each of the undersigned, including each person
appointed to act as a first director of this corporation, has executed these
articles of incorporation this 22nd day of December, 1975.


/s/ Maris Kruze
- ---------------
Maris Kruze, Incorporator-Director


/s/ John L Vaughan
- ------------------
John L. Vaughan. Incorporator-Director


/s/ Frank Simmons
- -----------------
Frank Simmons, Incorporator-Director



STATE OF NEW YORK        ss
COUNTY OF NEW YORK


     On this 22nd day of December, 1975, before me, a notary public in and for
the county and state aforesaid, personally appeared MARIS KRUZE, JOHN L. VAUGHAN
and FRANK SIMMONS, known to me to be the persons whose names are subscribed to
and who executed the within instrument, and acknowledged to me that they
executed the same.

     IN WITNESS WHEREOF, I have hereto set my hand and affixed my official seal
the day and year above written.

/s/
- ------------------------
Notary Public

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.24
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>BY-LAWS  OF WESTERN MAGNESIUM CORP.
<TEXT>


<PAGE>


WESTERN MAGNESIUM CORP.
BY-LAWS

ARTICLE I
OFFICES

     Section 1. The principal office shall be located in Chula Vista,
California.

     Section 2. The corporation may also have offices at such other places both
within and without the State of California as the board of directors may from
time to time determine or the business of the corporation may require.

ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS

     Section 1. All meetings of shareholders for the election of directors shall
be held in Chula Vista, State of California, at such place as may be fixed from
time to time by the board of directors.

     Section 2. Annual meetings of shareholders, commencing with the year 1977,
shall be held on the 15th day of January if not a legal holiday, and if a legal
holiday, then on the next secular day following, at 10:00 A. M., at which they
shall elect by a plurality vote a board of directors, and transact such other
business as may properly be brought before the meeting.

     Section 3. Written or printed notice of the annual meeting stating the
place, day and hour of the meeting shall be given to each shareholder entitled
to vote thereat not less than ten days before the date of the meeting.

ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS

     Section 1. Special meetings of shareholders for any purpose other than the
election of directors may be held at such time and place within or without the
State of California as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.

     Section 2. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the president, the board of directors, or the
holders of not less than one-fifth of all the shares entitled to vote at the
meeting.

     Section 3. Written or printed notice of a special meting of shareholders,
stating the time, place and purpose or purposes thereof, shall be given to each
shareholder entitled to vote thereat, at least five days before the date fixed
for the meeting.

     Section 4. The business transacted at any special meeting of shareholders
shall be limited to the purposes stated in the notice.

ARTICLE IV
QUORUM AND VOTING OF STOCK

     Section 1. The holders of a majority of the shares of stock issued and
outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might have been
transacted at the meeting as


<PAGE>



originally notified.

     Section 2. If a quorum is present, the affirmative vote of a majority of
the shares of stock represented at the meeting shall be the act of the
shareholders unless the vote of a greater number of shares of stock is required
by law or the articles of incorporation.

     Section 3. Each outstanding share of stock, having voting power, shall be
entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.

     In all elections for directors every shareholder, entitled to vote, shall
have the right to vote, in person or by proxy, the number of shares of stock
owned by him, for as many persons as there are directors to be elected, or to
cumu late the vote of said shares, and give one candidate as many votes as the
number of directors multiplied by the number of his shares of stock shall equal,
or to distribute the votes on the same principle among as many candidates as he
may see fit.

     Section 4. Any action required to be taken at a meeting of the shareholders
may be taken without a meeting if a consent in writing, setting forth the action
so taken, shall be signed by all of the shareholders entitled to vote with
respect to the subject matter thereof.

ARTICLE V
DIRECTORS

     Section 1. The number of directors shall be three. Directors need not be
residents of the State of California nor shareholders of the corporation. The
directors, other than the first board of directors, shall be elected at the
annual meeting of the shareholders, and each director elected shall serve until
the next succeeding annual meeting and until his successor shall have been
elected and qualified. The first board of directors shall hold office until the
first annual meeting of shareholders.

     Section 2. Vacancies and newly created directorships resulting from any
increase in the number of directors may be filled by a majority of the directors
then in office, though less than a quorum, and the directors so chosen shall
hold office until the next annual election and until their successors are duly
elected and shall qualify.

     Section 3. The business affairs of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the articles of
incorporation or by these by-laws directed or required to be exercised or done
by the shareholders.

     Section 4. The directors may keep the books of the corporation, except such
as are required by law to be kept within the State, outside of the State of
California, at such place or places as they may from time to time determine.

     Section 5. The board of directors, by the affirmative vote of a majority of
the directors then in office, and irrespective of any personal interest of any
of its members shall have authority to establish reasonable compensation of all
directors for services to the corporation as directors, officers or otherwise.

ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS

     Section 1. Meetings of the board or directors, regular or special, my be
held either within or without the State of California.

     Section 2. The first meeting of each newly elected board of directors shall
be held at such time and place as shall be fixed by the vote of the shareholders
at the annual meeting and no notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting, provided a
quorum shall be present, or it may convene at such place and time as shall be
fixed by the consent in writing of all the directors.

     Section 3. Regular meetings of the board of directors may be held upon such


<PAGE>



notice, or without notice, and at such time and at such place as shall from time
to tine be determined by the board.

     Section 4. Special meetings of the board of directors my be called by the
president on five days notice to each director, either personally or by mail or
by telegram; special meetings shall be called by the president or secretary in
like manner and on like notice on the written request of two directors.

     Section 5. Attendance of a director at any meeting shall constitute a
waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of such
meeting.

     Section 6. A majority of the directors shall constitute a quorum for the
transaction of business unless a greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.

     Section 7. Any action required or permitted to be taken at a meeting of the
directors may be taken without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by all of the directors entitled to vote
with respect to the subject matter thereof.

ARTICLE VII
EXECUTIVE COMMITTEE

     Section 1. The board of directors, by resolution adopted by a majority of
the number of directors fixed by the by-laws or otherwise, may designate two or
more directors to constitute an executive committee, which committee, to the
extent provided in such resolution, shall have and exercise all of the authority
of the board of directors in the management of the corporation, except as
otherwise required by law. Vacancies in the membership of the committee shall be
filled by the board of directors at a regular or special meeting of the board of
directors. The executive committee shall keep regular minutes of its proceedings
and report the same to the board when required.

ARTICLE VIII
NOTICES

     Section 1. Whenever, under the provisions of the statutes or of the
articles of incorporation or of these by-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.

     Section 2. Whenever any notice whatever is required to be given under the
provisions of the statutes or under the provisions of the articles of
incorporation or these bylaws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.

ARTICLE IX
OFFICERS


<PAGE>



     Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of directors may also choose additional vice- presidents,
and one or more assistant secretaries and assistant treasurers. Any two or more
offices, except those of President and Secretary, may be held by the same
person.

     Section 2. The board of directors at its first meeting after each annual
meeting of shareholders shall choose a president, one or more vice-presidents, a
secretary and a treasurer, none of whom need be a member of the board.

     Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board of directors.

     Section 4. The salaries of all officers and agents of the corporation shall
be fixed by the board of directors.

     Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.

THE PRESIDENT

     Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.

     Section 7. He shall execute bonds, mortgages and other contracts requiring
a seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.

THE VICE-PRESIDENTS

     Section 8. The vice-president, or if there shall be more than one, the
vice-presidents in the order determined by the board of directors, shall, in the
absence or disability of the president, perform the duties and exercise the
powers of the president and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.

THE SECRETARY AND ASSISTANT SECRETARIES

     Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as my be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it my be attested by his signature or by the Signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.

     Section 10. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors, shall,
in the absence or disability of the secretary, perform the duties and exercise
the powers of the secretary


<PAGE>



and shall perform such other duties and have such other powers as the board of
directors my from time to time prescribe.

THE TREASURER AND ASSISTANT TREASURERS

     Section 11. The treasurer shall have the custody of the corporate funds and
securities and shall keep full end accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.

     Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.

     Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.

     Section 14. The assistant treasurer, or, if there shall be more than one,
the assistant treasurers in the order determined by the board of directors,
shall, in the absence or disability of the treasurer, perform the duties and
exer cise the powers of the treasurer and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.

ARTICLE X
CERTIFICATES FOR SHARES

     Section 1. The shares of the corporation shall be represented by
certificates signed by the president or a vice-president and the secretary or an
assistant secretary of the corporation, and may be sealed with the seal of the
corporation or a facsimile thereof.

     When the corporation is authorized to issue shares of more than one class
there shall be set forth upon the face or back of the certificate, or the
certificate shall have a statement that the corporation will furnish to any
shareholder upon request and without charge, a full or summary statement of the
designations, preferences, limitations, and relative rights of the shares of
each class authorized to be issued and, if the corporation is authorized to
issue any preferred or special class in series, the variations in the relative
rights and preferences between the shares of each such series so far as the same
have been fixed and determined and the authority of the board of directors to
fix and determine the relative rights and preferences of subsequent series.

     Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.

LOST CERTIFICATES

     Section 3. The board of directors may direct a new certificate to be issued
in place of any certificate theretofore issued by the corporation alleged to
have been lost or destroyed. When authorizing such issue of a new certificate,
the board of directors, in its discretion and as a condition precedent to the
issuance thereof, may prescribe such terms and conditions as it deems expedient,
and may require such indemnities as it


<PAGE>



deems adequate, to protect the corporation from any claim that may be made
against it with respect to any such certificate alleged to have been lost or
destroyed.

TRANSFERS OF SHARES

     Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate repre senting shares duly endorsed or accompanied
by proper evidence of succession, assignment or authority to transfer, a new
certificate shall be issued to the person entitled thereto, and the old
certificate cancelled and the transaction recorded upon the books of the
corporation.

CLOSING OF TRANSFER BOOKS

     Section 5. For the purpose of determining shareholders entitled to notice
of or to vote at any meeting of shareholders, or any adjournment thereof or
entitled to receive payment of any dividend, or in order to make a deter
mination of shareholders for any other proper purpose, the board of directors
may provide that the stock transfer books shall be closed for a stated period
but not to exceed, in any case, fifty days. If the stock transfer books shall be
closed for the purpose of determining shareholders entitled to notice of or to
vote at a meeting of shareholders, such books shall be closed for at least ten
days immediately preceding such meeting. In lieu of closing the stock transfer
books, the board of directors may fix in advance a date as the record date for
any such determination of shareholders, such date in any case to be not more
than fifty days and, in case of a meeting of shareholders, not less than ten
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the board of directors
declaring such dividend is adopted, as the case may be, shall be the record date
for such determination of shareholders. When a determination of shareholders
entitled to vote at any meeting of shareholders has been made as provided in
this section, such determination shall apply to any adjournment thereof.

REGISTERED SHAREHOLDERS

     Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
California.

ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS

     Section 1. Subject to the provisions of the articles of incorporation
relating thereto, if any, dividends may be declared by the board of directors at
any regular or special meeting, pursuant to law. Dividends may be paid in cash,
in property or in shares of the capital stock, subject to any provisions of the
articles of incorporation.

     Section 2. Before payment of any dividend, there may be Bet aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the director shall think conducive to the


<PAGE>



interest of the corporation, and the directors may modify or abolish any such
reserve in the manner in which it was created.

CHECKS

     Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.

FISCAL YEAR

     Section 4. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.

SEAL

     Section 5. The corporate seal shall have inscribed thereon the name of the
corporation, the date of its incorporation and the words "Corporate Seal,
California".

ARTICLE XII
AMENDMENTS

     Section 1. These by-laws may be altered, amended or repealed or new by-laws
may be adopted (a) at any regular or special meeting of shareholders at which a
quorum is present or represented, by the affirmative vote of a majority of the
stock entitled to vote, provided notice of the proposed alteration, amendments
or repeal be contained in the notice of such meeting, or (b) by the affirmative
vote of a majority of the board of directors at any regular or special meeting
of the board.

     The board of directors shall not make or alter any by-law fixing their
number.

ARTICLE XIII
DIRECTORS' ANNUAL REPORT

     Section 1. The directors shall cause to be sent to the shareholders not
later than one hundred twenty days after the close of the fiscal year, a report
which shall include a balance sheet as of the closing date of the last fiscal
year, and a statement of income or profit and loss, for the year ended on that
date, certified by the president, secretary, treasurer or a public accountant.
The balance sheet shall set forth the bases employed in stating the valuation of
the assets and any changes in such bases during the preceding year; the amount
of the surplus, the sources thereof and any changes therein during the past
year; the number of shares of each class authorized and outstanding and the
number of shares, if any, carried as treasury shares, the cost thereof and the
source from which such cost was paid; and the amounts, if any, of loans or
advances to or from officers, shareholders and employees. The statement of
income or profit and loss shall disclose the amount of income or loss, setting
forth in particular the amounts of depreciation, depletion, amortization,
interest and extraordinary income or charges, and the amount of income from
subsidiary corporations, if any. In case no adequate written or printed
statement of its affairs has been given to the shareholders for six months and
shareholders holding at least ten percent of the number of outstanding shares
make a written request to the secretary, assistant secretary or treasurer of the
corporation therefor, a state ment, including a balance sheet as of the end of
the preceding calendar month and a statement of income or profit and loss for
the period from the end of the preceding fiscal year to the end of the preceding
calendar month, shall be delivered to the person or persons making the request
within thirty days thereafter and a copy thereof shall be kept on file in the
principal office of the corporation for a period of twelve months for inspection
by any shareholder demanding an examination thereof or a copy thereof shall be
mailed to such shareholder.

     I, THE UNDERSIGNED, being the secretary of WESTERN MAGNESIUM


<PAGE>



CORP., DO HEREBY CERTIFY the foregoing to be the by-laws of said corporation, as
adopted at a meeting of the directors held on the 13th day of January, 1976.


Secretary

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.1
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>INDENTURE
<TEXT>


<PAGE>

                        PHILIPP BROTHERS CHEMICALS, INC.

                                    as Issuer

                                       and

                           The GUARANTORS named herein

                                       and

                            THE CHASE MANHATTAN BANK

                                   as Trustee

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

                                    INDENTURE

                            Dated as of June 11, 1998

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


                               up to $140,000,000

               9 7/8% Senior Subordinated Notes due 2008, Series A

               9 7/8% Senior Subordinated Notes due 2008, Series B




<PAGE>




                              CROSS-REFERENCE TABLE

  TIA                                                       Indenture
Section                                                      Section
- -------                                                      -------

  310(a)(1) ...............................................    7.10
     (a)(2) ...............................................    7.10
     (a)(3) ...............................................    N.A.
     (a)(4) ...............................................    N.A.
     (a)(5) ...............................................    7.10; 7.11
     (b) ..................................................    7.08; 7.10; 11.02
     (c) ..................................................    N.A.
  311(a) ..................................................    7.11
     (b) ..................................................    7.11
     (c) ..................................................    N.A.
  312(a) ..................................................    2.05
     (b) ..................................................    11.03
     (c) ..................................................    11.03
  313(a) ..................................................    7.06
     (b)(1) ...............................................    7.06
     (b)(2) ...............................................    7.06
     (c) ..................................................    7.06; 11.02
     (d) ..................................................    7.06
  314(a) ..................................................    4.06; 4.08; 11.02
     (b) ..................................................    N.A.
     (c)(1) ...............................................    7.02; 11.04
     (c)(2) ...............................................    7.02; 11.04
     (c)(3) ...............................................    N.A.
     (d) ..................................................    N.A.
     (e) ..................................................    11.05
     (f) ..................................................    N.A.
  315(a) ..................................................    7.01(b)
     (b) ..................................................    7.05; 11.02
     (c) ..................................................    7.01(a)
     (d) ..................................................    6.05; 7.01(c)
     (e) ..................................................    6.11
  316(a)(last sentence) ...................................    2.09
     (a)(1)(A) ............................................    6.05
     (a)(1)(B) ............................................    6.04
     (a)(2) ...............................................    N.A.
     (b) ..................................................    6.07
     (c) ..................................................    9.04
  317(a)(1) ...............................................    6.08
     (a)(2) ...............................................    6.09
     (b) ..................................................    2.04
  318(a) ..................................................    11.01
     (c) ..................................................    11.01
- ----------------------
N.A. means Not Applicable

                                       -i-

<PAGE>




NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.


                                      -ii-

<PAGE>

                                TABLE OF CONTENTS


                                                                            Page
                                                                            ----
ARTICLE ONE

                   DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01.    Definitions ............................................     ii
SECTION 1.02.    Incorporation by Reference of TIA ......................     ii
SECTION 1.03.    Rules of Construction ..................................     ii

ARTICLE TWO

                                   THE NOTES

SECTION 2.01.    Form and Dating. .......................................     ii
SECTION 2.02.    Execution and Authentication; Aggregate Principal Amount     ii
SECTION 2.03.    Registrar and Paying Agent .............................     ii
SECTION 2.04.    Paying Agent To Hold Assets in Trust ...................     ii
SECTION 2.05.    Holder Lists ...........................................     ii
SECTION 2.06.    Transfer and Exchange ..................................     ii
SECTION 2.07.    Replacement Notes ......................................     ii
SECTION 2.08.    Outstanding Notes ......................................     ii
SECTION 2.09.    Treasury Notes .........................................     ii
SECTION 2.10.    Temporary Notes ........................................     ii
SECTION 2.11.    Cancellation ...........................................     ii
SECTION 2.12.    Defaulted Interest .....................................     ii
SECTION 2.13.    CUSIP Number ...........................................     ii
SECTION 2.14.    Deposit of Monies ......................................     ii
SECTION 2.15.    Restrictive Legends ....................................     ii
SECTION 2.16.    Book-Entry Provisions for Global Note ..................     ii
SECTION 2.17.    Registration of Transfers and Exchanges ................     ii
SECTION 2.18.    Additional Interest Under Registration Rights Agreement      ii

ARTICLE THREE

                                   REDEMPTION

SECTION 3.01.    Notices to Trustee .....................................     ii
SECTION 3.02.    Selection of Notes To Be Redeemed ......................     ii
SECTION 3.03.    Optional Redemption ....................................     ii
SECTION 3.04.    Notice of Redemption ...................................     ii
SECTION 3.05.    Effect of Notice of Redemption .........................     ii
SECTION 3.06.    Deposit of Redemption Price ............................     ii
SECTION 3.07.    Notes Redeemed in Part .................................     ii


<PAGE>


                                                                            Page
                                                                            ----


ARTICLE FOUR

                                    COVENANTS

SECTION 4.01.    Payment of Notes. ......................................    iii
SECTION 4.02.    Maintenance of Office or Agency ........................    iii
SECTION 4.03.    Corporate Existence ....................................    iii
SECTION 4.04.    Payment of Taxes and Other Claims ......................    iii
SECTION 4.05.    Maintenance of Properties and Insurance ................    iii
SECTION 4.06.    Compliance Certificate; Notice of Default ..............    iii
SECTION 4.07.    Compliance with Laws ...................................    iii
SECTION 4.08.    Provision of Financial Statements and Information ......    iii
SECTION 4.09.    Waiver of Stay, Extension or Usury Laws ................    iii
SECTION 4.10.    Limitation on Restricted Payments ......................    iii
SECTION 4.11.    Limitation on Transactions with Affiliates. ............    iii
SECTION 4.12.    Limitation on Incurrence of Indebtedness. ..............    iii
SECTION 4.13.    Limitation on Dividends and Other Payment Restrictions
                     Affecting Restricted Subsidiaries...................    iii
SECTION 4.14.    Limitation on Designation of Unrestricted Subsidiaries .    iii
SECTION 4.15.    Change of Control ......................................    iii
SECTION 4.16.    Limitation on Asset Sales ..............................    iii
SECTION 4.17.    Reserved ...............................................    iii
SECTION 4.18.    Limitation on Liens ....................................    iii
SECTION 4.19.    Business Activities ....................................    iii
SECTION 4.20.    Limitation on Guarantees of Indebtedness by Subsidiaries    iii
SECTION 4.21.    Limitation on Incurrence of Senior Subordinated
                     Indebtedness........................................    iii
SECTION 4.22.    Future Guarantors ......................................    iii
SECTION 4.23.    Sale and Leaseback Transactions ........................    iii

ARTICLE FIVE

                             SUCCESSOR CORPORATION

SECTION 5.01.    Merger, Consolidation and Sale of Assets ...............    iii
SECTION 5.02.    Successor Corporation Substituted ......................    iii

ARTICLE SIX

                                    REMEDIES

SECTION 6.01.    Events of Default ......................................    iii
SECTION 6.02.    Acceleration. ..........................................    iii
SECTION 6.03.    Other Remedies .........................................    iii
SECTION 6.04.    Waiver of Past Defaults ................................    iii
SECTION 6.05.    Control by Majority. ...................................    iii
SECTION 6.06.    Limitation on Suits. ...................................    iii
SECTION 6.07.    Right of Holders To Receive Payment. ...................     iv




<PAGE>


                                                                            Page
                                                                            ----

SECTION 6.08.    Collection Suit by Trustee .............................     iv
SECTION 6.09.    Trustee May File Proofs of Claim .......................     iv
SECTION 6.10.    Priorities. ............................................     iv
SECTION 6.11.    Undertaking for Costs. .................................     iv
SECTION 6.12.    Restoration of Rights and Remedies. ....................     iv

ARTICLE SEVEN

                                    TRUSTEE

SECTION 7.01.    Duties of Trustee ......................................     iv
SECTION 7.02.    Rights of Trustee ......................................     iv
SECTION 7.03.    Individual Rights of Trustee ...........................     iv
SECTION 7.04.    Trustee's Disclaimer ...................................     iv
SECTION 7.05.    Notice of Default ......................................     iv
SECTION 7.06.    Reports by Trustee to Holders ..........................     iv
SECTION 7.07.    Compensation and Indemnity. ............................     iv
SECTION 7.08.    Replacement of Trustee .................................     iv
SECTION 7.09.    Successor Trustee by Merger, Etc .......................     iv
SECTION 7.10.    Eligibility; Disqualification. .........................     iv
SECTION 7.11.    Preferential Collection of Claims Against the Company ..     iv

ARTICLE EIGHT

                     SATISFACTION AND DISCHARGE; DEFEASANCE

SECTION 8.01.    Satisfaction and Discharge of Indenture ................     iv
SECTION 8.02.    Defeasance or Covenant Defeasance ......................     iv
SECTION 8.03.    Application of Trust Money. ............................     iv
SECTION 8.04.    Repayment to the Company. ..............................     iv
SECTION 8.05.    Reinstatement ..........................................     iv
SECTION 8.06.    Acknowledgment of Discharge by Trustee .................     iv

ARTICLE NINE

                      AMENDMENTS, SUPPLEMENTS AND WAIVERS

SECTION 9.01.    Without Consent of Holders .............................     iv
SECTION 9.02.    With Consent of Holders ................................     iv
SECTION 9.03.    Compliance with TIA ....................................     iv
SECTION 9.04.    Revocation and Effect of Consents ......................     iv
SECTION 9.05.    Notation on or Exchange of Notes .......................     iv
SECTION 9.06.    Trustee To Sign Amendments, Etc. .......................     iv

ARTICLE TEN

                                 SUBORDINATION

SECTION 10.01.   Notes Subordinated to Senior Debt ......................     iv
SECTION 10.02.   Suspension of Payment When Senior Debt Is in Default ...     iv
SECTION 10.03.   Notes Subordinated to Prior Payment of All Senior Debt
                    on Dissolution, Liquidation or Reorganization of
                    Company .............................................      v

<PAGE>


                                                                            Page
                                                                            ----

SECTION 10.04.   Holders To Be Subrogated to Rights of Holders of Senior
                    Debt.................................................      v
SECTION 10.05.   Obligations of the Company Unconditional ...............      v
SECTION 10.06.   Trustee Entitled to Assume Payments Not Prohibited in
                    Absence of Notice....................................      v
SECTION 10.07.   Application by Trustee of Assets Deposited with It .....      v
SECTION 10.08.   No Waiver of Subordination Provisions ..................      v
SECTION 10.09.   Holders Authorize Trustee To Effectuate Subordination of
                    Notes................................................      v
SECTION 10.10.   Right of Trustee to Hold Senior Debt ...................      v
SECTION 10.11.   This Article Ten Not To Prevent Events of Default ......      v
SECTION 10.12.   No Fiduciary Duty of Trustee to Holders of Senior Debt .      v

ARTICLE ELEVEN

                                 MISCELLANEOUS

SECTION 11.01.   TIA Controls ...........................................      v
SECTION 11.02.   Notices ................................................      v
SECTION 11.03.   Communications by Holders with Other Holders ...........      v
SECTION 11.04.   Certificate and Opinion as to Conditions Precedent .....      v
SECTION 11.05.   Statements Required in Certificate or Opinion ..........      v
SECTION 11.06.   Rules by Trustee, Paying Agent, Registrar ..............      v
SECTION 11.07.   Legal Holidays .........................................      v
SECTION 11.08.   Governing Law ..........................................      v
SECTION 11.09.   No Adverse Interpretation of Other Agreements ..........      v
SECTION 11.10.   No Personal Liability ..................................      v
SECTION 11.11.   Successors .............................................      v
SECTION 11.12.   Duplicate Originals ....................................      v
SECTION 11.13.   Severability ...........................................      v

ARTICLE TWELVE

                               GUARANTEE OF NOTES

SECTION 12.01.   Unconditional Guarantee ................................      v
SECTION 12.02.   Limitations on Guarantees ..............................      v
SECTION 12.03.   Execution and Delivery of Guarantee ....................      v
SECTION 12.04.   Release of a Guarantor .................................      v
SECTION 12.05.   Waiver of Subrogation ..................................      v
SECTION 12.06.   No Set-Off .............................................      v
SECTION 12.07.   Obligations Absolute ...................................      v
SECTION 12.08.   Obligations Continuing .................................      v
SECTION 12.09.   Obligations Not Reduced ................................      v
SECTION 12.10.   Obligations Reinstated .................................      v
SECTION 12.11.   Obligations Not Affected ...............................      v
SECTION 12.12.   Waiver .................................................     vi
SECTION 12.13.   No Obligation To Take Action Against the Company .......     vi



<PAGE>


                                                                            Page
                                                                            ----

SECTION 12.14.   Dealing with the Company and Others ....................     vi
SECTION 12.15.   Default and Enforcement ................................     vi
SECTION 12.16.   Amendment, Etc .........................................     vi
SECTION 12.17.   Acknowledgment .........................................     vi
SECTION 12.18.   Costs and Expenses .....................................     vi
SECTION 12.19.   No Merger or Waiver; Cumulative Remedies ...............     vi
SECTION 12.20.   Survival of Obligations ................................     vi
SECTION 12.21.   Guarantee in Addition to Other Obligations .............     vi
SECTION 12.22.   Severability ...........................................     vi
SECTION 12.23.   Successors and Assigns                                       vi

ARTICLE THIRTEEN

                           SUBORDINATION OF GUARANTEE

SECTION 13.01.   Obligations of Guarantors Subordinated to Guarantor
                    Senior Debt..........................................     vi
SECTION 13.02.   Suspension of Guarantee Obligations When Guarantor Senior
                    Debt Is in Default...................................     vi
SECTION 13.03.   Guarantee Obligations Subordinated to Prior Payment of
                    All Guarantor Senior Debt on Dissolution, Liquidation
                    or Reorganization of Such Guarantor..................     vi
SECTION 13.04.   Holders of Guarantee Obligations  To Be Subrogated to
                    Rights of Holders of Guarantor Senior Debt ..........     vi
SECTION 13.05.   Obligations of the Guarantors Unconditional ............     vi
SECTION 13.06.   Trustee Entitled To Assume Payments Not Prohibited in
                    Absence of Notice....................................     vi
SECTION 13.07.   Application by Trustee of Assets Deposited with It .....     vi
SECTION 13.08.   No Waiver of Subordination Provisions ..................     vi
SECTION 13.09.   Holders Authorize Trustee To Effectuate Subordination of
                    Guarantee Obligations................................     vi
SECTION 13.10.   Right of Trustee To Hold Guarantor Senior Debt. ........     vi
SECTION 13.11.   No Suspension of Remedies ..............................     vi
SECTION 13.12.   No Fiduciary Duty of Trustee to Holders of Guarantor
                    Senior Debt..........................................     vi

SIGNATURES...............................................................    S-1

Exhibit A - Form of Series A Note .......................................    A-1
Exhibit B - Form of Series B Note .......................................    B-1
Exhibit C - Form of Legend for Global Notes .............................    C-1
Exhibit D - Form of Certificate To Be Delivered in Connection with
              Transfers to Non-QIB Accredited Investors..................    D-1
Exhibit E - Form of Certificate To Be Delivered in Connection with
              Transfers Pursuant to Regulation S.........................    E-1
Exhibit F - Form of Guarantee ...........................................    F-1
Exhibit G - Certificate to be Delivered upon Exchange or
              Registration of Transfer of Security.......................    G-1



<PAGE>


                                       -1-

     INDENTURE, dated as of June 11, 1998, among Philipp Brothers Chemicals,
Inc., a New York corporation (the "Company"), each of the Guarantors named
herein, as guarantors, and The Chase Manhattan Bank, as Trustee (the "Trustee").

     The Company has duly authorized the creation of an issue of 9 7/8% Senior
Subordinated Notes due 2008, Series A, and 9 7/8% Senior Subordinated Notes due
2008, Series B, to be issued in exchange for the 9 7/8% Senior Subordinated
Notes due 2008, Series A, pursuant to the Registration Rights Agreement (as
defined herein) and, to provide therefor, the Company has duly authorized the
execution and delivery of this Indenture. All things necessary to make the Notes
(as defined), when duly issued and executed by the Company, and authenticated
and delivered hereunder, the valid obligations of the Company, and to make this
Indenture a valid and binding agreement of the Company and each of the
Guarantors, have been done.

     Each party hereto agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders (as defined) of the
Company's 9 7/8% Senior Subordinated Notes due 2008, Series A and Series B.


ARTICLE ONE

                   DEFINITIONS AND INCORPORATION BY REFERENCE


     SECTION 1.01. Definitions.

     "Acquired Debt" means, with respect to any specified Person, Indebtedness
of any other Person (the "Acquired Person") existing at the time the Acquired
Person merges with or into, or becomes a Restricted Subsidiary of, such
specified Person, including Indebtedness incurred in connection with, or in
contemplation of, the Acquired Person merging with or into, or becoming a
Restricted Subsidiary of, such specified Person; provided, however, that
Indebtedness of such Acquired Person which is redeemed, defeased, retired or
otherwise repaid at the time of or immediately upon consummation of the
transactions by which such Acquired Person merges with or into or becomes a
Restricted Subsidiary of such specified Person shall not be Acquired Debt.

     "Additional Interest" shall have the meaning set forth in the Registration
Rights Agreement.

     "Affiliate" means, with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with") of any Person means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.

     "Agent" means any Registrar, Paying Agent or co-Registrar.

     "Agent Members" has the meaning provided in Section 2.16.



<PAGE>


                                       -2-

     "Asset Sale" means (i) any sale, lease, conveyance or other disposition by
the Company or any Restricted Subsidiary of any assets (including by way of a
sale and leaseback) other than in the ordinary course of business or (ii) the
issuance or sale of Capital Stock of any Restricted Subsidiary, in the case of
each of (i) and (ii), whether in a single transaction or a series of related
transactions, to any Person (other than to the Company or a Restricted
Subsidiary and other than directors' qualifying shares) for Net Proceeds in
excess of $250,000. The (i) disposition of property of the Company or any of its
Restricted Subsidiaries that, in the reasonable judgment of the Company, is no
longer useful in the conduct of the business of the Company and its Restricted
Subsidiaries or (ii) a Permitted Investment in a Permitted Joint Venture of the
Company shall not constitute an Asset Sale.

     "Asset Sale Offer" has the meaning provided in Section 4.16.

     "Asset Sale Offer Purchase Date" has the meaning provided in Section 4.16.

     "Asset Sale Offer Trigger Date" has the meaning provided in Section 4.16.

     "Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).

     "Authenticating Agent" has the meaning provided in Section 2.02.

     "Bankruptcy Law" means Title 11, U.S. Code or any similar federal, state or
foreign law for the relief of debtors.

     "Board of Directors" means, as to any Person, the board of directors of
such Person or any duly authorized committee thereof.

     "Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.

     "Business Day" means any day other than a Saturday, Sunday or any other day
on which banking institutions in the city of New York are required or authorized
by law or other governmental action to be closed.

     "Capital Lease Obligation" of any Person means, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease for property leased by such Person that would at such time be
required to be capitalized on the balance sheet of such Person in accordance
with GAAP.

     "Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, of
such Person, including any Preferred Stock.



<PAGE>


                                       -3-

     "Cash Equivalents" means (i) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency or instrumentality thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition thereof; (ii) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any such state or
any public instrumentality thereof, maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Rating Services or
Moody's Investors Service, Inc.; (iii) commercial paper maturing no more than
one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from Standard & Poor's Rating Services or at
least P-1 from Moody's Investors Service, Inc.; (iv) certificates of deposit,
time deposits or bankers' acceptances (or, with respect to foreign banks,
similar instruments) maturing within one year from the date of acquisition
thereof issued by any bank organized under the laws of the United States of
America or any state thereof or the District of Columbia or any member of the
European Union or any U.S. branch of a foreign bank or (with respect to any
Restricted Subsidiary) any foreign country in which such Restricted Subsidiary
is located and having at the date of acquisition thereof combined capital and
surplus of not less than $250 million and a Thompson or Keefe Bank Watch Rating
of "B" or better (including bank accounts in such banks); (v) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (iv) above; (vi) in the case of any Foreign
Subsidiary, Investments: (a) in direct obligations of the sovereign nation (or
any agency or instrumentality thereof) in which such Foreign Subsidiary is
organized or is conducting business or in obligations fully and unconditionally
guaranteed by such sovereign nation (or any agency or instrumentality thereof),
(b) of the type and maturity described in clauses (i) through (v) above of
foreign obligors, which Investments or obligors (or the parents of such
obligors) have ratings described in such clauses or equivalent ratings from
comparable foreign rating agencies or (c) of the type and maturity described in
clauses (i) through (v) above of foreign obligors, (or the parents of such
obligors), which Investments or obligors (or the parents of such obligors) are
not rated as provided in such clauses or in clause (vi)(b) but which are, in the
reasonable judgment of the Company, comparable in investment quality to such
Investments and obligors (or the parents of such obligors); and (vii)
investments in money market funds which invest substantially all their assets in
securities of the types described in clauses (i) through (vi) above.

     "Cash Flow" means, with respect to any period, Consolidated Net Income for
such period, plus, to the extent deducted in computing such Consolidated Net
Income: (i) extraordinary net losses, plus (ii) provision for taxes based on
income or profits and any provision for taxes utilized in computing the
extraordinary net losses under clause (i) hereof, plus (iii) Consolidated
Interest Expense, plus (iv) depreciation, amortization and all other non-cash
charges (including amortization of goodwill and other intangibles but excluding
any items that will require cash payments in the future for which an accrual or
reserve is made).

     "Change of Control" means the occurrence of any of the following events
after the Issue Date: (i) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) (other than one or more Permitted
Holders) is or becomes (including by merger, consolidation or otherwise) the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a Person shall be deemed to have beneficial ownership of all shares
that such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of 50%
or


<PAGE>


                                       -4-

more of the voting power of the total outstanding Voting Stock of the Company;
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election to such Board of Directors, or
whose nomination for election by the stockholders of the Company, was approved
by a vote of 66-2/3% of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of such Board of Directors of the Company then in office; (iii) the
approval by the holders of Capital Stock of the Company of any plan or proposal
for the liquidation or dissolution of the Company as a whole and not any
Restricted Subsidiary or Guarantor (whether or not otherwise in compliance with
the terms of this Indenture); or (iv) the sale or other disposition (other than
by way of merger or consolidation) of all or substantially all of the Capital
Stock or assets of the Company and its Restricted Subsidiaries taken as a whole
to any person or group (as defined in Rule 13d-5 of the Exchange Act) (other
than to one or more of the Permitted Holders) as an entirety or substantially as
an entirety in one transaction or a series of related transactions, unless the
"beneficial owners" of the Voting Stock of such Person immediately prior to such
transaction own, directly or indirectly, more than 50% of the total voting power
of such Person immediately after such transaction.

     "Change of Control Offer" has the meaning provided in Section 4.15.

     "Change of Control Purchase Date" has the meaning provided in Section 4.15.

     "Commission" means the Securities and Exchange Commission.

     "Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person's common stock, whether outstanding on the Issue
Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.

     "Company" means the party named as such in this Indenture until a successor
replaces it pursuant to this Indenture and thereafter means such successor and
also includes for the purposes of any provision contained herein and required by
the TIA any other obligor on the Notes.

     "Consolidated Cash Flow Coverage Ratio" means, for any period, the ratio of
(i) the aggregate amount of Cash Flow for such period to (ii) Consolidated
Interest Expense for such period, determined on a pro forma basis after giving
pro forma effect to (a) the incurrence of the Indebtedness giving rise to the
calculation of the Consolidated Cash Flow Coverage Ratio and (if applicable) the
application of the net proceeds therefrom, including to refinance other
Indebtedness, as if such Indebtedness was incurred, and the application of such
proceeds occurred, at the beginning of such period; (b) the incurrence,
repayment or retirement of any other Indebtedness by the Company and its
Restricted Subsidiaries since the first day of such period as if such
Indebtedness was incurred, repaid or retired at the beginning of such period
(except that, in making such computation, the amount of Indebtedness under any
revolving credit facility shall be computed based upon the average balance of
such Indebtedness at the end of each month during such period); (c) in the case
of Acquired Debt, the related acquisition as if such acquisition had occurred at
the beginning of such period; and (d) any acquisition or disposition by the
Company and its Restricted Subsidiaries of any

<PAGE>
                                      -5-


company or any business or any assets out of the ordinary course of business, or
any related repayment of Indebtedness, in each case since the first day of such
period, assuming such acquisition or disposition had been consummated on the
first day of such period.

     "Consolidated Interest Expense" means, with respect to any period, the sum
of (i) the interest expense of the Company and its Restricted Subsidiaries for
such period, including, without limitation, (a) amortization of debt discount,
(b) the net payments, if any, under interest rate contracts (including
amortization of discounts), (c) the interest portion of any deferred payment
obligation and (d) accrued interest, plus (ii) the interest component of the
Capital Lease Obligations paid, accrued and/or scheduled to be paid or accrued
by the Company and its Restricted Subsidiaries during such period, and all
capitalized interest of the Company and its Restricted Subsidiaries, plus (iii)
all dividends paid during such period by the Company and its Restricted
Subsidiaries with respect to any Disqualified Stock (other than by any
Restricted Subsidiary to the Company or any other Restricted Subsidiary and
other than any dividend paid in Capital Stock (other than Disqualified Stock)),
in each case, as determined on a consolidated basis in accordance with GAAP
consistently applied.

     "Consolidated Net Income" means, with respect to any period, the net income
(or loss) of the Company and its Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP consistently applied,
adjusted to the extent included in calculating such net income (or loss), by
excluding, without duplication, (i) all extraordinary gains (less all fees and
expenses relating thereto), (ii) the portion of net income (or loss) of the
Company and its Restricted Subsidiaries allocable to interests in unconsolidated
Persons or Unrestricted Subsidiaries, except to the extent of the amount of
dividends or distributions actually paid to the Company or its Restricted
Subsidiaries by such other Person during such period, (iii) for purposes of
Section 4.10, net income (or loss) of any Person combined with the Company or
any of its Restricted Subsidiaries on a "pooling-of-interests" basis
attributable to any period prior to the date of combination, (iv) net gains and
losses (less all fees and expenses relating thereto) in respect of disposition
of assets (including, without limitation, pursuant to sale and leaseback
transactions) other than in the ordinary course of business, (v) the net income
of any Restricted Subsidiary to the extent that the declaration of dividends or
similar distributions by that Restricted Subsidiary of that income to the
Company is not at the time permitted, directly or indirectly, by operation of
the terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its stockholders, or (vi) the cumulative non-cash effect of any
change in accounting principles; provided that any net gain referred to in
clause (iv) above that relates to a Restricted Investment and which is received
in or converted into cash by the Company or a Restricted Subsidiary during such
period shall be included in the consolidated net income of the Company.

     "Consolidated Net Worth" means, with respect to any Person at any date, the
sum of (i) the consolidated stockholders' equity of such Person less the amount
of such stockholders' equity attributable to Disqualified Stock of such Person
and its Subsidiaries (Restricted Subsidiaries, in the case of the Company), as
determined on a consolidated basis in accordance with GAAP consistently applied,
and (ii) the amount of any Preferred Stock of such Person not included in the
stockholders' equity of such Person in accordance with GAAP, which Preferred
Stock does not constitute Disqualified Stock.

     "Consolidated Tangible Assets" means, with respect to any Person, as of any
date of determination, the total assets, less goodwill, deferred financing costs
and other

<PAGE>
                                      -6-


intangibles and less accumulated amortization, shown on the most recent balance
sheet of such Person, determined on a consolidated basis in accordance with
GAAP.

     "Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of execution of this Indenture is located at 450 West
33rd Street, New York, New York 10001.

     "covenant defeasance" has the meaning set forth in Section 8.02.

     "Credit Facility" means the Loan and Security Agreement dated as of August
31, 1994 and as amended between the Company, certain of its Subsidiaries and the
lenders named therein as the same may be further amended, modified, renewed,
refunded, replaced or refinanced from time to time (including extending the
maturity of, increasing the amount of available borrowings under, extending the
purpose to include acquisition, working capital and other facilities of,
changing the conditions and basis of borrowing of, combining the seniority of,
changing the covenants and other provisions of, and adding Subsidiaries of the
Company as additional borrowers or guarantors under, or otherwise restructuring,
all or any portion of the Indebtedness under such agreement or any successor or
replacement and whether with the same or any other agent, lender or group of
lenders), including (i) any related notes, letters of credit, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified, renewed, refunded, replaced or
refinanced from time to time, and (ii) any notes, guarantees, collateral
documents, instruments and agreements executed in connection with any such
amendment, modification, renewal, refunding, replacement or refinancing.

     "Currency Agreement Obligations" means the obligations of any Person under
a foreign exchange contract, currency swap agreement or other similar agreement
or arrangement to protect such Person against fluctuations in currency values.

     "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator
or similar official under any Bankruptcy Law.

     "Default" means any event that is, or after the giving of notice or passage
of time or both would be, an Event of Default.

     "defeasance" has the meaning set forth in Section 8.02.

     "Depository" means The Depository Trust Company, its nominees and
successors.

     "Designated Senior Debt" means (i) the Indebtedness under the Credit
Facility, and (ii) any other Senior Debt permitted to be incurred under this
Indenture the principal amount of which is $15.0 million or more (including to a
syndicate of lenders or an agent thereof) at the time of the designation of such
Senior Debt as "Designated Senior Debt" by the Company in a written instrument
delivered to the Trustee.

     "Designation" has the meaning set forth in Section 4.14.

     "Designation Amount" has the meaning provided in Section 4.14.


<PAGE>
                                      -7-


     "Disposition" means, with respect to any Person, any merger, consolidation
or other business combination involving such Person (whether or not such Person
is the Surviving Person) or the sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of such Person's assets.

     "Disqualified Stock" means (i) any Preferred Stock of any Restricted
Subsidiary (other than Preferred Stock owned by the Company or any Wholly Owned
Restricted Subsidiary) and (ii) that portion of any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof (other than upon a Change of
Control of the Company in circumstances where the holders of the Notes would
have similar rights), in whole or in part on or prior to the stated maturity of
the Notes.

     "Dollars" or "$" means lawful money of the United States of America.

     "Event of Default" has the meaning provided in Section 6.01.

     "Excess Proceeds" has the meaning provided in Section 4.16.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.

     "Exchange Notes" means the 9 7/8% Senior Subordinated Notes due 2008,
Series B to be issued in exchange for the Initial Notes pursuant to the
Registration Rights Agreement or, with respect to Initial Notes issued under
this Indenture subsequent to the Issue Date pursuant to Section 2.02, a
registration rights agreement substantially identical to the Registration Rights
Agreement.

     "Exchange Offer" has the meaning provided in the Registration Rights
Agreement.

     "Existing Indebtedness" has the meaning provided in Section 4.12.

     "Fair Market Value" means, with respect to any asset or property, the sale
value that would be obtained in an arm's-length transaction between an informed
and willing seller under no compulsion to sell and an informed and willing buyer
under no compulsion to buy.

     "Foreign Subsidiary" means a Restricted Subsidiary not organized under the
laws of the United States or any political subdivision thereof and the
operations of which are located entirely outside the United States.

     "GAAP" means generally accepted accounting principles in the United States
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession in the United States of America, which are applicable
as of the Issue Date and consistently applied.

     "Global Note" has the meaning provided in Section 2.01.


<PAGE>
                                      -8-


     "Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection or deposit in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.

     "Guarantor" means (i) the domestic Subsidiaries of the Company on the Issue
Date, (ii) each of the Company's Restricted Subsidiaries which become Restricted
Subsidiaries after the Issue Date and which are organized in the United States,
and (iii) each of the Company's Restricted Subsidiaries that in the future
executes a supplemental indenture in which such Restricted Subsidiary agrees to
be bound by the terms of this Indenture as a Guarantor.

     "Holder" means any holder of Notes.

     "IAI Global Note" has the meaning provided in Section 2.01.

     "incur" has the meaning set forth in Section 4.12.

     "Indebtedness" means, with respect to any Person, without duplication, and
whether or not contingent, (i) all indebtedness of such Person for borrowed
money or which is evidenced by a note, bond, debenture or similar instrument,
(ii) all obligations of such Person to pay the deferred or unpaid purchase price
of property, which purchase price is due more than six months after the date of
placing such property in service or taking delivery and title thereto, (iii) all
Capital Lease Obligations of such Person, (iv) all obligations of such Person in
respect of letters of credit or bankers' acceptances issued or created for the
account of such Person, (v) to the extent not otherwise included in this
definition, all net obligations of such Person under Interest Rate Agreement
Obligations or Currency Agreement Obligations of such Person, (vi) all
liabilities of others of the kind described in the preceding clause (i), (ii) or
(iii) secured by any Lien on any property owned by such Person; provided,
however, if the obligations secured by a Lien (other than a Permitted Lien not
securing any liability that would itself constitute Indebtedness) on any assets
or property have not been assumed by such Person in full or are not such
Person's legal liability in full, the amount of such Indebtedness for purposes
of this definition shall be limited to the lesser of the amount of Indebtedness
secured by such Lien and the Fair Market Value of the property subject to such
Lien, (vii) all Disqualified Stock issued by such Person and all Preferred Stock
issued by a Subsidiary of such Person (other than Preferred Stock of a
Restricted Subsidiary owned by the Company or a Wholly Owned Restricted
Subsidiary), and (viii) to the extent not otherwise included, any Guarantee by
such Person of any other Person's indebtedness or other obligations described in
clauses (i) through (vii) above. "Indebtedness" of the Company and the
Restricted Subsidiaries shall not include current trade payables incurred in the
ordinary course of business, and non-interest bearing installment obligations
and accrued liabilities incurred in the ordinary course of business. The
principal amount outstanding of any Indebtedness issued with original issue
discount is the accreted value of such Indebtedness. Notwithstanding the
foregoing, "Indebtedness" shall not include Indebtedness arising from the
honoring by a bank or other financial institution of a check, draft or similar
instrument inadvertently drawn against insufficient funds in the ordinary course
of business; provided that such "Indebtedness" is extinguished within 3 Business
Days of the incurrence thereof. In addition, Indebtedness shall not include a
government grant and any Guarantee of the Company or a Restricted Subsidiary
required by such grant which obligates the Company or a Restricted Subsidiary to
repay such grant at the discretion of such government or upon the failure of the
conditions of such grant

<PAGE>
                                      -9-


specified therein to be fulfilled, but which is forgiven solely by reason of the
passage of time or the fulfillment of such grant conditions (other than
repayment); provided that if the conditions for forgiveness of such government
grant lapse for whatever reason and the Company or a Restricted Subsidiary
becomes obligated to repay such grant, the grant shall be deemed Indebtedness
which is incurred at the time such obligation to repay is triggered.

     "Indenture" means this Indenture, as amended or supplemented from time to
time in accordance with the terms hereof.

     "Initial Notes" means, collectively, (i) the 9 7/8% Senior Subordinated
Notes due 2008, Series A, of the Company issued on the Issue Date and (ii) one
or more series of 9 7/8% Senior Subordinated Notes due 2008 that are issued
under this Indenture subsequent to the Issue Date pursuant to Section 2.02, in
each case for so long as such securities constitute Restricted Securities.

     "Initial Purchaser" means Schroder & Co. Inc.

     "Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.

     "interest" means, when used with respect to any Note, the amount of all
interest accruing on such Note, including any applicable defaulted interest
pursuant to Section 2.12 and any Additional Interest pursuant to the
Registration Rights Agreement.

     "Interest Payment Date" means the stated maturity of an installment of
interest on the Notes.

     "Interest Rate Agreement Obligations" means, with respect to any Person,
the obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements, and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.

     "Investment" means, with respect to any Person, any direct or indirect loan
or other extension of credit (including, without limitation, a Guarantee) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued
by, any other Person. "Investment" shall exclude extensions of trade credit by
the Company and its Restricted Subsidiaries on commercially reasonable terms in
accordance with normal trade practices of the Company or such Restricted
Subsidiary, as the case may be. For the purposes of Section 4.10, (i)
"Investment" shall include and be valued at the Fair Market Value of the net
assets of any Restricted Subsidiary (to the extent of the Company's equity
interest in such Restricted Subsidiary) at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary and shall exclude the Fair
Market Value of the net assets of any Unrestricted Subsidiary at the time that
such Unrestricted Subsidiary is designated a Restricted Subsidiary and (ii) the
amount of any Investment shall be the original cost of such Investment plus the
cost of all additional Investments by the Company or any of its Restricted
Subsidiaries, without any adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment, reduced by
the payment of dividends or distributions in connection with such Investment or
any other amounts received in respect of such Investment; provided, however,
that no such payment of dividends or distributions or

<PAGE>
                                      -10-


receipt of any such other amounts shall reduce the amount of any Investment if
such payment of dividends or distributions or receipt of any such amounts would
be included in Consolidated Net Income. If the Company or any Restricted
Subsidiary of the Company sells or otherwise disposes of any Common Stock of any
direct or indirect Restricted Subsidiary of the Company such that, after giving
effect to any such sale or disposition, the Company no longer owns, directly or
indirectly, greater than 50% of the outstanding Common Stock of such Restricted
Subsidiary, the Company and/or such Restricted Subsidiary shall be deemed to
have made an Investment on the date of any such sale or disposition equal to the
Fair Market Value of the Common Stock of such Restricted Subsidiary not sold or
disposed of.

     "Issue Date" means the date on which the Notes are first issued under this
Indenture.

     "Koffolk" means Koffolk (1949) Ltd., an Israeli corporation and wholly
owned Subsidiary of the Company.

     "Koffolk Credit Facility" means such credit agreement as may be entered
into, from time to time, by Koffolk and one or more lenders as the same may be
amended, modified, renewed, refunded, replaced or refinanced from time to time,
including (i) any related notes, letters of credit, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and in
each case as amended, modified, renewed, refunded, replaced or refinanced from
time to time, and (ii) any notes, guarantees, collateral documents, instruments
and agreements executed in connection with any such amendment, modification,
renewal, refunding, replacement or refinancing.

     "Legal Holiday" has the meaning provided in Section 11.07.

     "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or similar encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to give a security
interest in any asset).

     "Maturity Date" means June 1, 2008.

     "MRT" means Mineral Resource Technologies, L.L.C., a Delaware limited
liability company, and any corporation into which such limited liability company
may be converted.

     "Net Proceeds" means, with respect to any Asset Sale by any Person, the
aggregate cash or Cash Equivalent proceeds received by such Person and/or its
Affiliates in respect of such Asset Sale, which amount is equal to the excess,
if any, of (i) the cash or Cash Equivalents received by such Person and/or its
Affiliates (including any cash payments received by way of deferred payment
pursuant to, or monetization of, a note or installment receivable or otherwise,
but only as and when received) in connection with such Asset Sale, over (ii) the
sum of (a) the amount of any Indebtedness that is secured by such asset and
which is repaid by such Person in connection with such Asset Sale, plus (b) all
fees, commissions and other expenses incurred by such Person in connection with
such Asset Sale, plus (c) provision for taxes, including income taxes, directly
attributable to the Asset Sale or to prepayments or repayments of Indebtedness
with the proceeds of such Asset Sale, plus (d) if such Person is a Restricted
Subsidiary, any dividends or distributions payable to holders of

<PAGE>
                                      -11-


minority interests in such Restricted Subsidiary from the proceeds of such Asset
Sale, plus (e) appropriate amounts to be provided or established by the Company
or any Restricted Subsidiary as a reserve against any liabilities associated
with such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale; provided that upon the release of any such reserves, such
amounts shall constitute "Net Proceeds" hereunder.

     "Notes" means, collectively, the Initial Notes, the Private Exchange Notes,
if any, and the Unrestricted Notes, treated as a single class of securities, as
amended or supplemented from time to time in accordance with the terms of this
Indenture, that are issued pursuant to this Indenture.

     "obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursement obligations, damages and other liabilities
payable under the documentation governing any Indebtedness.

     "Offering Memorandum" means the Final Offering Memorandum dated June 5,
1998 relating to the issuance of the Notes.

     "Officer" means, with respect to any Person, the Chairman of the Board of
Directors, the Chief Executive Officer, the President, any Vice President, the
Chief Financial Officer, the Treasurer, the Controller or the Secretary of such
Person, or any other officer designated by the Board of Directors serving in a
similar capacity and, with respect to the Trustee or any agent of the Trustee, a
Trust Officer.

     "Officers' Certificate" means a certificate signed on behalf of a Person by
two Officers of such Person, one of whom must be the principal executive
officer, the principal financial officer or the principal accounting officer of
such Person, that meets the requirements set forth in this Indenture.

     "Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee complying with the requirements of Sections
11.04 and 11.05, as they relate to the giving of an Opinion of Counsel.

     "Other Debt" has the meaning provided in Section 4.20.

     "Paying Agent" has the meaning provided in Section 2.03.

     "Payment Blockage Notice" has the meaning provided in Section 10.02.

     "Payment Blockage Period" has the meaning provided in Section 10.02.

     "Permitted Holders" means (i) Jack Bendheim; (ii) each of his spouse,
siblings, ancestors, descendants (whether by blood, marriage or adoption, and
including stepchildren) and the spouses, siblings, ancestors and descendants
(whether by blood, marriage or adoption, and including stepchildren) of such
natural persons, the beneficiaries, estates and legal representatives of any of
the foregoing, the trustee of any bona fide trust of which any of the foregoing,
individually or in the aggregate, are the majority in interest beneficiaries or
grantors, and any corporation, partnership, limited liability company or other
Person in which

<PAGE>
                                      -12-


any of the foregoing, individually or in the aggregate, own or control a
majority in interest; and (iii) all Affiliates controlled by the individual
named in clause (i) above.

     "Permitted Indebtedness" has the meaning provided in Section 4.12.

     "Permitted Investments" means (i) any Investment in or in securities of the
Company or any Wholly Owned Restricted Subsidiary; (ii) any investment in cash
or Cash Equivalents; (iii) any Investment in or in securities of a Person
engaged in a Related Business (an "Acquired Person") if, as a result of such
Investment, (a) the Acquired Person becomes a Wholly Owned Restricted
Subsidiary, or (b) the Acquired Person either (1) is merged, consolidated or
amalgamated with or into the Company or one of its Wholly Owned Restricted
Subsidiaries and the Company or such Wholly Owned Restricted Subsidiary is the
Surviving Person, or (2) transfers or conveys substantially all of its assets
to, or is liquidated into, the Company or one of its Wholly Owned Restricted
Subsidiaries; (iv) Investments in accounts and notes receivable acquired in the
ordinary course of business; (v) any notes, obligations or other securities
received in connection with an Asset Sale that complies with Section 4.16 or any
other disposition not constituting an Asset Sale; (vi) Interest Rate Agreement
Obligations and Currency Agreement Obligations permitted pursuant to Section
4.12(b); (vii) investments in or acquisitions of Capital Stock or similar
interests in Persons (other than Affiliates of the Company) received in the
bankruptcy or reorganization of or by such Person or any exchange of such
investment with the issuer thereof or taken in settlement of or other resolution
of claims or disputes; (viii) any Investment in or in securities of a Restricted
Subsidiary of the Company in which at least 80% of the outstanding voting
securities (other than directors' qualifying shares) are owned, directly or
indirectly, by the Company or one or more Restricted Subsidiaries or a Surviving
Person of any Disposition involving the Company, as the case may be; provided
that for the purposes of the term "Permitted Investments" an Investment in a
Foreign Subsidiary of the Company pursuant to clauses (i) and (viii) above shall
mean only any direct or indirect loan or other extension of credit at then
prevailing market rates payable in cash (including, without limitation, a
Guarantee) or any purchase or acquisition of any bonds, notes, debentures or
other securities or evidences of Indebtedness issued by such Foreign Subsidiary
at commercially reasonable rates payable in cash; provided, further, however,
that the previous proviso does not apply in the case of clause (iii) above or to
any Investment in a Foreign Subsidiary existing on the Issue Date; and (ix) any
Investment comprised of property (which shall not include Capital Stock, cash or
Cash Equivalents or Indebtedness) contributed to or in a Permitted Joint Venture
of the Company or a Restricted Subsidiary in the aggregate amount not to exceed
5% of Consolidated Tangible Assets of the Company for which the Person making
such Investment receives equity interests in such Permitted Joint Venture.

     "Permitted Joint Venture" means, with respect to any Person, any
corporation, association, partnership, joint venture, limited liability
partnership, limited liability company or other business entity in which the
Company or any of its Restricted Subsidiaries shall contribute capital in the
form of cash or Cash Equivalents or intangible assets, including without
limitation technology and contracts related thereto; provided, however, that (i)
such Person or any Subsidiary of such Person is engaged in a Related Business,
(ii) any cash, Cash Equivalents or assets contributed by such Person to the
capital of such entity shall be treated no less favorably to the Company or the
Restricted Subsidiary than like amounts or values of cash, Cash Equivalents or
assets contributed by other shareholders, partners, members or other investors,
and (iii) if, in the case of a corporation, association or other business
entity, the Company and its Restricted Subsidiary shall own or control, directly
or indirectly, less than

<PAGE>
                                      -13-


50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof or, in the case of a partnership, joint
venture, limited liability partnership, limited liability company or similar
entity, the Company and its Restricted Subsidiaries shall own or control,
directly or indirectly, less than 50% of the total equity and voting interests,
then in each such case the Company or its Restricted Subsidiary shall obtain the
agreement of the other shareholders, partners or members of such entity that no
technology or other non-cash assets contributed to the capital of such entity by
the Company or a Restricted Subsidiary may be voluntarily disposed of or
distributed to any Person other than the Company or a Restricted Subsidiary
without the prior written consent of the Company or a Restricted Subsidiary.

     "Permitted Liens" means (i) Liens on assets or property of the Company that
secure Senior Debt and Liens on assets or property of a Guarantor that secure
Senior Debt; (ii) Liens securing Indebtedness of a Person existing at the time
that such Person is merged into or consolidated with the Company or a Restricted
Subsidiary; provided, however, that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any assets
other than those of such Person; (iii) Liens on property acquired by the Company
or a Restricted Subsidiary; provided, however, that such Liens were in existence
prior to the contemplation of such acquisition and do not extend to any property
other than that of the Person merged into or consolidated with the Company or
such Restricted Subsidiary; (iv) Liens in respect of Interest Rate Agreement
Obligations and Currency Agreement Obligations permitted under this Indenture;
(v) Liens in favor of the Company or any Restricted Subsidiary; (vi) Liens
existing or created on the Issue Date; (vii) Liens securing the Notes or the
Guarantees; (viii) Liens to secure Attributable Debt that is permitted to be
incurred pursuant to Section 4.23; (ix) leases or subleases granted to others
that do not materially interfere with the ordinary course of business of the
Company and its Restricted Subsidiaries; (x) Liens arising from filing Uniform
Commercial Code financing statements regarding leases; (xi) Liens in favor of
customs and revenue authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods; (xii) Liens to
secure obligations arising from statutory, regulatory, contractual or warranty
requirements of the Company or any of its Restricted Subsidiaries, including the
performance of statutory obligations, surety or appeal bonds or performance
bonds, or landlords', carriers', warehousemen's, mechanics', suppliers',
materialmen's or other like Liens, in any case incurred in the ordinary course
of business and rights to offset and set off; (xiii) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded; provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (xiv) Liens securing Indebtedness incurred to amend, modify,
renew, refund, replace or refinance Indebtedness that has been secured by a Lien
permitted under this Indenture, provided that (a) any such Lien not extend to or
cover any assets or property not securing the Indebtedness so refinanced and (b)
the Refinancing Indebtedness secured by such Lien shall have been permitted to
be incurred under this Indenture; and (xv) Liens on assets of Foreign
Subsidiaries securing Indebtedness permitted by this Indenture.

     "Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.

     "Physical Notes" has the meaning provided in Section 2.01.


<PAGE>
                                      -14-


     "Preferred Stock" as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends or distributions, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over Capital Stock of any other class of such Person.

     "Private Exchange Notes" shall have the meaning provided in the
Registration Rights Agreement.

     "Private Placement Legend" means the legend initially set forth on the
Initial Notes in the form set forth in Exhibit A as the same may be revised from
time to time to comply with applicable laws and regulations.

     "pro forma" means, with respect to any calculation made or required to be
made pursuant to the terms of this Indenture, a calculation in accordance with
Article 11 of Regulation S-X under the Securities Act.

     "Public Equity Offering" has the meaning provided in Section 3.03.

     "Purchase Money Obligation" means any Indebtedness (as amended, modified,
renewed, refunded, replaced or refinanced) secured by a Lien on assets related
to the business of the Company or the Restricted Subsidiaries, and any additions
and accessions thereto, which are purchased, constructed or improved by the
Company or any Restricted Subsidiary at any time after the Issue Date; provided,
however, that (i) any security agreement or conditional sales or other title
retention contract pursuant to which the Lien on such assets is created
(collectively, a "Security Agreement") shall be entered into within 90 days
after the purchase or substantial completion of the construction or improvement
of such assets and shall at all times be confined solely to the assets so
purchased, constructed or improved, any additions and accessions thereto and any
proceeds therefrom, (ii) at no time shall the aggregate principal amount of the
outstanding Indebtedness secured thereby be increased, except in connection with
the purchase of additions and accessions thereto and except in respect of fees
and other obligations in respect of such Indebtedness, and (iii) (A) the
aggregate outstanding principal amount of Indebtedness secured thereby
(determined on a per asset basis in the case of any additions and accessions)
shall not at the time such Security Agreement is entered into exceed 100% of the
purchase price or cost of construction or improvement to the Company or any
Restricted Subsidiary of the assets subject thereto or (B) the Indebtedness
secured thereby shall be with recourse solely to the assets so purchased,
constructed or improved, any additions and accessions thereto and any proceeds
therefrom.

     "QIB Global Note" has the meaning provided in Section 2.01.

     "Qualified Institutional Buyer" or "QIB" shall have the meaning specified
in Rule 144A.

     "Record Date" means the Record Dates specified in the Notes.

     "Redemption Date" means, when used with respect to any Note to be redeemed,
the date fixed for such redemption pursuant to this Indenture and the Notes.

     "Redemption Price" means, when used with respect to any Note to be
redeemed, the price fixed for such redemption, including principal and premium,
if any, pursuant to this Indenture and the Notes.


<PAGE>
                                      -15-


     "Redesignation" has the meaning provided in Section 4.14.

     "refinancing" has the meaning provided in Section 4.12.

     "Refinancing Indebtedness" has the meaning provided in Section 4.12.

     "Registrar" has the meaning provided in Section 2.03.

     "Registration Rights Agreement" means the Registration Rights Agreement
dated as of the Issue Date among the Company, the Guarantors and the Initial
Purchaser.

     "Regulation S Global Note" has the meaning provided in Section 2.01.

     "Regulation S" means Regulation S under the Securities Act.

     "Related Business" means any business that is reasonably related to or
complementary to the businesses conducted by the Company or the Restricted
Subsidiaries on the Issue Date.

     "Representative" means this Indenture trustee or other trustee, agent or
representative in respect of any Designated Senior Debt; provided that (a) if,
and for so long as, any Designated Senior Debt lacks such a representative, then
the Representative for such Designated Senior Debt shall at all times constitute
the holders of a majority of such Designated Senior Debt and (b) the
administrative agent (or any successor thereto) shall be a Representative of the
lenders under the Credit Facility.

     "Required Filing Dates" has the meaning provided in Section 4.08.

     "Restricted Investment" means an Investment other than a Permitted
Investment.

     "Restricted Payment" means (i) any dividend or other distribution declared
or paid on any Capital Stock of the Company (other than (A) dividends or
distributions payable solely in Capital Stock (other than Disqualified Stock) of
the Company or (B) dividends or distributions payable to the Company or any
Restricted Subsidiary or (C) dividends or distributions by MRT to its members to
permit such members to make payments upon tax obligations); (ii) any payment to
purchase, redeem or otherwise acquire or retire for value any Capital Stock of
the Company; (iii) any payment to purchase, redeem, defease or otherwise acquire
or retire for value, prior to any scheduled maturity, repayment or sinking fund
payment, any Subordinated Indebtedness other than a purchase, redemption,
defeasance or other acquisition or retirement for value that is paid for with
the proceeds of Refinancing Indebtedness that is permitted under Section 4.12;
or (iv) any Restricted Investment. A Permitted Investment is not a Restricted
Payment.

     "Restricted Security" has the meaning assigned to such term in Rule
144(a)(3) under the Securities Act; provided, however, that the Trustee shall be
entitled to request and conclusively rely on an Opinion of Counsel with respect
to whether any Note constitutes a Restricted Security.

     "Restricted Subsidiary" means each direct or indirect Subsidiary of the
Company other than an Unrestricted Subsidiary.


<PAGE>
                                      -16-


     "Rule 144A" means Rule 144A under the Securities Act.

     "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.

     "Senior Debt" means (A) with respect to the Company, the principal of and
interest (including post-petition interest) on, and all other amounts owing in
respect of, (x) the Credit Facility and (y) any other Indebtedness incurred by
the Company (including, but not limited to, reasonable fees and expenses of
counsel and all other charges, fees and expenses incurred in connection with
such Indebtedness), unless the instrument creating or evidencing such
Indebtedness or pursuant to which such Indebtedness is outstanding expressly
provides that such Indebtedness is on a parity with or subordinated in right of
payment to the Notes, and (B) with respect to any Guarantor, the principal of
and interest (including post-petition interest) on, and all other amounts owing
in respect of, (i) such Guarantor's obligations in respect of the Credit
Facility, including its obligations as a guarantor thereof, and (ii) any other
Indebtedness incurred by such Guarantor (including, but not limited to,
reasonable fees and expenses of counsel and all other charges, fees and expenses
incurred in connection with such Indebtedness), unless the instrument creating
or evidencing such Indebtedness or pursuant to which such Indebtedness is
outstanding expressly provides that such Indebtedness is on a parity with or
subordinated in right of payment to the Guarantee of such Guarantor.
Notwithstanding the foregoing, "Senior Debt" shall not include (i) any
Indebtedness for federal, state, local or other taxes, (ii) any Indebtedness
among or between the Company, any Restricted Subsidiary and/or any of their
Affiliates, (iii) any Indebtedness that is incurred in violation of this
Indenture, (iv) Indebtedness evidenced by the Notes or the Guarantees, or (v)
Indebtedness of a Person that is expressly subordinate or junior in right of
payment (other than as a result of the Indebtedness being unsecured) to any
other Indebtedness of such Person.

     "Shareholders Agreements" means (i) the Shareholders Agreement dated
December 29, 1987 by and between Marvin S. Sussman and the Company; (ii) the
Shareholders Agreement dated February 21, 1995 among Phibro-Tech, Inc., I. David
Paley, Nathan Z. Bistricer and James O. Herlands; (iii) the Limited Liability
Company Agreement of MRT dated as of November 21, 1995; and (iv) each of the
Severance Agreements between Phibro-Tech, Inc. and I. David Paley, Nathan Z.
Bistricer and James O. Herlands, respectively, each dated February 21, 1995;
each as amended and in effect on the Issue Date, and as thereafter amended,
except for any amendment subsequent to the Issue Date which causes the terms of
such agreement to be less favorable to the Company, Phibro-Tech or MRT, as the
case may be.

     "Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X promulgated
pursuant to the Securities Act, as such Regulation S-X is in effect on the Issue
Date.

     "Subordinated Indebtedness" means Indebtedness of the Company or a
Guarantor which (A) if incurred by the Company, is subordinated in right of
payment to the Notes, or (B) if incurred by a Guarantor, is subordinated in
right of payment to the Guarantee of such Guarantor.

     "Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding voting power of the Voting Stock of which is owned or controlled,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person, or by such

<PAGE>
                                      -17-


Person and one or more other Subsidiaries thereof, or (ii) any limited
partnership of which such Person or any Subsidiary of such Person is a general
partner, or (iii) any other Person (other than a corporation or limited
partnership) in which such Person or one or more other Subsidiaries of such
Person, or such Person and one or more other Subsidiaries thereof, directly or
indirectly, have more than 50% of the outstanding partnership or similar
interests or have the power, by contract or otherwise, to direct or cause the
direction of the policies, management and affairs thereof.

     "Surviving Person" means, with respect to any Person involved in or that
makes any Disposition, the Person formed by or surviving such Disposition or the
Person to which such Disposition is made.

     "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb), as amended, as in effect on the date of this Indenture, except as
otherwise provided in Section 9.03.

     "Trustee" means the party named as such in this Indenture until a successor
replaces it in accordance with the provisions of this Indenture and thereafter
means such successor.

     "Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer this Indenture, or in the case of a
successor trustee, an officer assigned to the department, division or group
performing the corporation trust work of such successor and assigned to
administer this Indenture.

     "U.S. Government Obligations" means direct obligations of, and obligations
guaranteed by, the United States of America for the payment of which the full
faith and credit of the United States of America is pledged.

     "U.S. Legal Tender" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.

     "Unrestricted Notes" means one or more Notes (other than Private Exchange
Notes) that do not and are not required to bear the Private Placement Legend,
including, without limitation, the Exchange Notes.

     "Unrestricted Subsidiary" means any Subsidiary of the Company designated as
such pursuant to and in compliance with Section 4.14 and not redesignated a
Restricted Subsidiary in compliance with such Section.

     "Voting Stock" of a Person means Capital Stock of such Person of the class
or classes pursuant to which the holders thereof have the general voting power
under ordinary circumstances to elect at least a majority of the board of
directors, managers or trustees of such Person (irrespective of whether or not
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).

     "Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required scheduled payment
of principal, including payment at final maturity, in respect

<PAGE>
                                      -18-


thereof, with (b) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment, by (ii) the
then outstanding aggregate principal amount of such Indebtedness.

     "Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary with
respect to which all of the outstanding voting securities (other than directors'
qualifying shares or nominal shares held by a third party to comply with local
law) thereof are owned, directly or indirectly, by the Company or a Surviving
Person of any Disposition involving the Company, as the case may be.

     SECTION 1.02. Incorporation by Reference of TIA.

     Whenever this Indenture refers to a provision of the TIA, such provision is
incorporated by reference in, and made a part of, this Indenture. The following
TIA terms used in this Indenture have the following meanings:

          "indenture securities" means the Notes.

          "indenture security holder" means a Holder.

          "indenture to be qualified" means this Indenture.

          "indenture trustee" or "institutional trustee" means the Trustee.

          "obligor" on this Indenture securities means the Company or any other
     obligor on the Notes.

     All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule and
not otherwise defined herein have the meanings assigned to them therein.

     SECTION 1.03. Rules of Construction.

     Unless the context otherwise requires:

          (1) a term has the meaning assigned to it;

          (2) an accounting term not otherwise defined has the meaning assigned
     to it in accordance with GAAP of any date of determination;

          (3) "or" is not exclusive;

          (4) words in the singular include the plural, and words in the plural
     include the singular;

          (5) "herein," "hereof" and other words of similar import refer to this
     Indenture as a whole and not to any particular Article, Section or other
     subdivision; and

          (6) any reference to a statute, law or regulation means that statute,
     law or regulation as amended and in effect from time to time and includes
     any

<PAGE>
                                      -19-


     successor statute, law or regulation; provided, however, that any reference
     to the Bankruptcy Law shall mean the Bankruptcy Law as applicable to the
     relevant case.


ARTICLE TWO

                                    THE NOTES


     SECTION 2.01. Form and Dating.

     The Initial Notes, the notation thereon relating to the Guarantees, if any,
and the Trustee's certificate of authentication relating thereto shall be
substantially in the form of Exhibit A hereto, provided, that any Initial Notes
issued in a public offering shall be substantially in the form of Exhibit B
hereto. The Exchange Notes, the notation thereon relating to the Guarantees, if
any, and the Trustee's certificate of authentication relating thereto shall be
substantially in the form of Exhibit B hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or depository rule
or usage. The Company and the Trustee shall approve the form of the Notes and
any notation, legend or endorsement on them. Each Note shall be dated the date
of its issuance and shall show the date of its authentication. Each Note shall
have an executed Guarantee endorsed thereon substantially in the form of Exhibit
F hereto.

     The terms and provisions contained in the Notes and the Guarantees, if any,
annexed hereto as Exhibits A, B and F, shall constitute, and are hereby
expressly made, a part of this Indenture and, to the extent applicable, the
Company, the Guarantors, if any, and the Trustee, by their execution and
delivery of this Indenture, expressly agree to such terms and provisions and to
be bound thereby.

     Notes offered and sold (i) in reliance on Rule 144A, (ii) to Institutional
Accredited Investors or (iii) in reliance on Regulation S, unless the applicable
Holder requests Notes in the form of Certificated Notes in registered form
("Physical Notes"), which shall be in substantially the form set forth in
Exhibit A, shall be issued initially in the form of one or more permanent global
Notes in registered form, substantially in the form set forth in Exhibit A (the
"Global Note"), deposited with the Trustee, as custodian for the Depository,
duly executed by the Company (and having an executed Guarantee endorsed thereon)
and authenticated by the Trustee as hereinafter provided, and shall bear the
legend set forth in Exhibit C. One or more separate Global Notes shall be issued
to represent Notes held by (i) Qualified Institutional Buyers (a "QIB Global
Note"), (ii) Institutional Accredited Investors (an "IAI Global Note") and (iii)
Persons acquiring Notes in reliance on Regulation S (a "Regulation S Global
Note"). The aggregate principal amount of any Global Note may from time to time
be increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depository, as hereinafter provided.

     All Notes offered and sold in reliance on Regulation S shall remain in the
form of a Global Note until the consummation of the Exchange Offer pursuant to
the Registration Rights Agreement; provided, however, that all of the time
periods specified in the Registration Rights Agreement to be complied with by
the Company and the Guarantors have been so complied with.

     SECTION 2.02. Execution and Authentication; Aggregate Principal Amount.


<PAGE>
                                      -20-


     Two Officers, or an Officer and an Assistant Secretary of the Company and
each Guarantor, shall sign, or one Officer shall sign and one Officer or an
Assistant Secretary (each of whom shall, in each case, have been duly authorized
by all requisite corporate actions) shall attest to, the Notes for the Company
and the Guarantees for the Guarantors by manual or facsimile signature.

     If an Officer or Assistant Secretary whose signature is on a Note or a
Guarantee was an Officer or Assistant Secretary at the time of such execution
but no longer holds that office or position at the time the Trustee
authenticates the Note, the Note shall nevertheless be valid.

     A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.

     The Trustee shall authenticate (i) Initial Notes for original issue in the
aggregate principal amount not to exceed $140,000,000 in one or more series (of
which no more than $40,000,000 may be issued after the Issue Date, provided that
such subsequent issuance complies with Section 4.12(a) and no Default or Event
of Default exists under this Indenture at the time of such subsequent issuance
or will result therefrom), (ii) Private Exchange Notes from time to time for
issue only in exchange for a like principal amount of Initial Notes, and (iii)
Unrestricted Notes from time to time only (A) in exchange for a like principal
amount of Initial Notes or (B) in an aggregate principal amount of not more than
the excess of $140,000,000 over the sum of the aggregate principal amount of (x)
Initial Notes then outstanding, (y) Private Exchange Notes then outstanding and
(z) Unrestricted Notes issued in accordance with (iii)(A) above, in each case
upon a written order of the Company in the form of an Officers' Certificate of
the Company. Each such written order shall specify the amount of Notes to be
authenticated and the date on which the Notes are to be authenticated, whether
the Notes are to be Initial Notes, Private Exchange Notes or Unrestricted Notes
and whether the Notes are to be issued as Physical Notes or Global Notes or such
other information as the Trustee may reasonably request. The aggregate principal
amount of Notes outstanding at any time may not exceed $140,000,000, except as
provided in Section 2.07.

     In the event that the Company shall issue and the Trustee shall
authenticate any Notes issued under this Indenture subsequent to the Issue Date
pursuant to clauses (i) and (iii) of the first sentence of the immediately
preceding paragraph, the Company shall use its reasonable efforts to obtain the
same "CUSIP" number for such Notes as is printed on the Notes outstanding at
such time; provided, however, that if any series of Notes issued under this
Indenture subsequent to the Issue Date is determined, pursuant to an Opinion of
Counsel of the Company in a form reasonably satisfactory to the Trustee to be a
different class of security than the Notes outstanding at such time for federal
income tax purposes, the Company may obtain a "CUSIP" number for such Notes that
is different than the "CUSIP" number printed on the Notes then outstanding.
Notwithstanding the foregoing, all Notes issued under this Indenture shall vote
and consent together on all matters as one class and no series of Notes will
have the right to vote or consent as a separate class on any matter.

     The Trustee may appoint an authenticating agent (the "Authenticating
Agent") reasonably acceptable to the Company to authenticate Notes. Unless
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such

<PAGE>
                                      -21-


Authenticating Agent. An Authenticating Agent has the same rights as an Agent to
deal with the Company or with any Affiliate of the Company.

     The Notes shall be issuable in fully registered form only, without coupons,
in denominations of $1,000 and any integral multiple thereof.

     The Trustee is authorized to enter into a letter of representation with the
Depository in the form provided to the Trustee by the Company and to act in
accordance with such letter.

     SECTION 2.03. Registrar and Paying Agent.

     The Company shall maintain an office or agency (which shall be located in
the Borough of Manhattan in the City of New York, State of New York) where (a)
Notes may be presented or surrendered for registration of transfer or for
exchange ("Registrar"), (b) Notes may be presented or surrendered for payment
("Paying Agent") and (c) notices and demands to or upon the Company in respect
of the Notes and this Indenture may be served. The Registrar shall keep a
register of the Notes and of their transfer and exchange. The Company may have
one or more Co-Registrars and one or more additional Paying Agents reasonably
acceptable to the Trustee. The term "Paying Agent" or "Registrar" includes any
additional Paying Agent or Registrar, as the case may be. The Company may act as
its own Paying Agent, except that for the purposes of payments on the Notes
pursuant to Sections 4.15 and 4.16, neither the Company nor any Affiliate of the
Company may act as Paying Agent.

     The Company shall enter into an appropriate agency agreement with any Agent
not a party to this Indenture, which agreement shall incorporate the provisions
of the TIA and implement the provisions of this Indenture that relate to such
Agent. The Company shall notify the Trustee of the name and address of any such
Agent. If the Company shall fail to maintain a Registrar or Paying Agent the
Trustee shall act as such.

     The Company initially appoints the Trustee as Registrar, Paying Agent and
agent for service of demands and notices in connection with the Notes, until
such time as the Trustee has resigned or a successor has been appointed. Any of
the Registrar, the Paying Agent or any other agent may resign upon 30 days'
notice to the Company. The Company may change any Paying Agent and Registrar
without notice to the Holders.

     SECTION 2.04. Paying Agent To Hold Assets in Trust.

     The Company shall require each Paying Agent other than the Trustee to agree
in writing that such Paying Agent shall hold in trust for the benefit of the
Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, premium, if any, or interest on, the Notes (whether such assets
have been distributed to it by the Company or any other obligor on the Notes),
and the Company and the Paying Agent shall notify the Trustee of any Default by
the Company (or any other obligor on the Notes) in making any such payment. The
Company at any time may require a Paying Agent to distribute all assets held by
it to the Trustee and account for any assets disbursed and the Trustee may at
any time during the continuance of any payment Default, upon written request to
a Paying Agent, require such Paying Agent to distribute all assets held by it to
the Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Company to the
Paying Agent, the Paying Agent shall have no further liability for such assets.


<PAGE>
                                      -22-


     SECTION 2.05. Holder Lists.

     The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish or cause the Registrar to furnish
to the Trustee three (3) Business Days (or such shorter period as the Trustee
may expressly agree to) before each Record Date and at such other times as the
Trustee may request in writing a list as of such date and in such form as the
Trustee may reasonably require of the names and addresses of the Holders, which
list may be conclusively relied upon by the Trustee, and the Company shall
otherwise comply with TIA ss. 312(a).

     SECTION 2.06. Transfer and Exchange.

     Subject to Sections 2.16 and 2.17, when Notes are presented to the
Registrar or a Co-Registrar with a request to register the transfer of such
Notes or to exchange such Notes for an equal principal amount of Notes or other
authorized denominations, the Registrar or Co-Registrar shall register the
transfer or make the exchange as requested if its requirements for such
transaction are met; provided, however, that the Notes presented or surrendered
for registration of transfer or exchange shall be duly endorsed or accompanied
by a written instrument of transfer in form satisfactory to the Company, the
Trustee and the Registrar or Co-Registrar, duly executed by the Holder thereof
or his attorney duly authorized in writing. To permit registration of transfers
and exchanges, the Company shall execute and the Trustee shall authenticate
Notes and the Guarantors shall execute Guarantees thereon at the Registrar's or
Co-Registrar's request. No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax, fee or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar governmental charge
payable upon exchanges or transfers pursuant to Section 2.10, 3.07, 4.15, 4.16
or 9.05, in which event the Company shall be responsible for the payment of such
taxes).

     The Registrar or Co-Registrar shall not be required to register the
transfer of or exchange of any Note (i) during a period beginning at the opening
of business on the day which is 15 days before the mailing of a notice of
redemption of Notes and ending at the close of business on the day of such
mailing and (ii) selected for redemption in whole or in part pursuant to Article
Three, except the unredeemed portion of any Note being redeemed in part.

     Any Holder of a beneficial interest in a Global Note shall, by acceptance
of such Global Note, agree that transfers of beneficial interests in such Global
Notes may be effected only through a book entry system maintained by the Holder
of such Global Note (or its agent), and that ownership of a beneficial interest
in the Note shall be required to be reflected in a book entry system.

     SECTION 2.07. Replacement Notes.

     If a mutilated Note is surrendered to the Trustee or if the Holder of a
Note claims that the Note has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Note and
the Guarantors shall execute a Guarantee thereon if the Trustee's requirements
are met. If required by the Trustee or the Company, such Holder must provide an
indemnity bond or other indemnity of reasonable tenor, sufficient in the
reasonable judgment of the Company, the Guarantors and the Trustee, to protect
the Company, the Guarantors, the Trustee or any Agent from any loss which any of
them may suffer if a Note is

<PAGE>
                                      -23-


replaced. Every replacement Note shall constitute an obligation of the Company
and the Guarantors.

     SECTION 2.08. Outstanding Notes.

     Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those canceled by it, those delivered to it
for cancellation and those described in this Section as not outstanding. Subject
to the provisions of Section 2.09, a Note does not cease to be outstanding
because the Company or any of its Affiliates holds the Note.

     If a Note is replaced pursuant to Section 2.07 (other than a mutilated Note
surrendered for replacement), it ceases to be outstanding unless the Trustee
receives proof satisfactory to it that the replaced Note is held by a bona fide
purchaser. A mutilated Note ceases to be outstanding upon surrender of such Note
and replacement thereof pursuant to Section 2.07.

     If on a Redemption Date or the Maturity Date the Paying Agent holds U.S.
Legal Tender sufficient to pay all of the principal, premium, if any, and
interest due on the Notes payable on that date and is not prohibited from paying
such money to the Holders thereof pursuant to the terms of this Indenture, then
on and after that date such Notes shall be deemed not to be outstanding and
interest on them shall cease to accrue.

     SECTION 2.09. Treasury Notes.

     In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver, consent or notice, Notes owned by
the Company or an Affiliate of the Company shall be considered as though they
are not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes which a Trust Officer of the Trustee actually knows are so owned
shall be so considered. The Company shall notify the Trustee, in writing, when
either it or, to its knowledge, any of its Affiliates repurchases or otherwise
acquires Notes, of the aggregate principal amount of such Notes so repurchased
or otherwise acquired and such other information as the Trustee may reasonably
request and the Trustee shall be entitled to rely thereon.

     SECTION 2.10. Temporary Notes.

     Until definitive Notes are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Notes upon receipt of a written order
of the Company in the form of an Officers' Certificate. The Officers'
Certificate shall specify the amount of temporary Notes to be authenticated and
the date on which the temporary Notes are to be authenticated. Temporary Notes
shall be substantially in the form of definitive Notes but may have variations
that the Company considers appropriate for temporary Notes and so indicate in
the Officers' Certificate. Without unreasonable delay, the Company shall
prepare, the Trustee shall authenticate and the Guarantors shall execute
Guarantees on, upon receipt of a written order of the Company pursuant to
Section 2.02, definitive Notes in exchange for temporary Notes.

     SECTION 2.11. Cancellation.

     The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and the Paying Agent shall forward to the Trustee any Notes
surrendered to them for transfer, exchange or payment. The Trustee, or at the
direction of the Trustee, the Registrar or the Paying Agent, and no one else,
shall cancel and, at the written direction of the Company, shall

<PAGE>
                                      -24-


dispose, in its customary manner, of all Notes surrendered for transfer,
exchange, payment or cancellation. Subject to Section 2.07, the Company may not
issue new Notes to replace Notes that it has paid for or delivered to the
Trustee for cancellation. If the Company shall acquire any of the Notes, such
acquisition shall not operate as a redemption or satisfaction of the
Indebtedness represented by such Notes unless and until the same are surrendered
to the Trustee for cancellation pursuant to this Section 2.11.

     SECTION 2.12. Defaulted Interest.

     The Company will pay interest on overdue principal from time to time on
demand at the rate of interest then borne by the Notes. The Company shall, to
the extent lawful, pay interest on overdue installments of interest (without
regard to any applicable grace periods) from time to time on demand at the rate
of interest then borne by the Notes. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months, and, in the case of a partial
month, the actual number of days elapsed.

     If the Company defaults in a payment of interest on the Notes, it shall pay
the defaulted interest, plus (to the extent lawful) any interest payable on the
defaulted interest, to the Persons who are (i) Holders on a subsequent special
record date, if it so elects, which special record date shall be the fifteenth
day next preceding the date fixed by the Company for the payment of defaulted
interest or the next succeeding Business Day if such date is not a Business Day,
or (ii) if the Company does not elect a special record date, Holders on the next
Record Date, which payment shall be made on the next regular Interest Payment
Date. The Company shall notify the Trustee in writing of the amount of defaulted
interest proposed to be paid on each Note and the date of the proposed payment
(a "Default Interest Payment Date"), and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such defaulted interest or shall make
arrangements satisfactory to the Trustee for such deposit on or prior to the
date of the proposed payment, such money when deposited to be held in trust for
the benefit of the Persons entitled to such defaulted interest as provided in
this Section; provided, however, that in no event shall the Company deposit
monies proposed to be paid in respect of defaulted interest later than 10:30
a.m. New York City time on the proposed Default Interest Payment Date. At least
15 days before the subsequent special record date, the Company shall mail (or
cause to be mailed) to each Holder, as of a recent date selected by the Company,
with a copy to the Trustee, a notice that states the subsequent special record
date, the payment date and the amount of defaulted interest, and interest
payable on such defaulted interest, if any, to be paid. Notwithstanding the
foregoing, any interest which is paid prior to the expiration of the 30-day
period set forth in Section 6.01(i) shall be paid to Holders as of the regular
record date for the Interest Payment Date for which interest has not been paid.
Notwithstanding the foregoing, the Company may make payment of any defaulted
interest in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange.

     SECTION 2.13. CUSIP Number.

     The Company in issuing the Notes may use a "CUSIP" number, and, if so, the
Trustee shall use the CUSIP number in notices of redemption or exchange as a
convenience to Holders; provided, however, that no representation is hereby
deemed to be made by the Trustee as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Notes, and that reliance may be placed
only on the other identification numbers printed on the Notes. The Company shall
promptly notify the Trustee of any change in the CUSIP number.


<PAGE>
                                      -25-


     SECTION 2.14. Deposit of Monies.

     Prior to 10:30 a.m. New York City time on each Interest Payment Date,
Maturity Date, Redemption Date, Change of Control Purchase Date and Asset Sale
Purchase Date, the Company shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Interest Payment Date, Maturity Date, Redemption Date, Change of Control
Purchase Date and Asset Sale Purchase Date, as the case may be, in a timely
manner which permits the Paying Agent to remit payment to the Holders on such
Interest Payment Date, Maturity Date, Redemption Date, Change of Control
Purchase Date and Asset Sale Purchase Date, as the case may be.

     SECTION 2.15. Restrictive Legends.

     Each Global Note and Physical Note that constitutes a Restricted Security
shall bear the legend (the "Private Placement Legend") as set forth in Exhibit A
(as the same may be revised from time to time to comply with applicable laws and
regulations) on the face thereof until after the second anniversary of the later
of the Issue Date and the last date on which the Company or any Affiliate of the
Company was the owner of such Note (or any predecessor security) (or such
shorter period of time as permitted by Rule 144 under the Securities Act or any
successor provision thereunder, unless otherwise agreed by the Company and the
Holder thereof) (or such longer period of time as may be required under the
Securities Act or applicable state securities laws in the opinion of counsel for
the Company).

     Each Global Note shall also bear the legend as set forth in Exhibit C.

     SECTION 2.16. Book-Entry Provisions for Global Note.

     (a) The Global Notes initially shall (i) be registered in the name of the
Depository or the nominee of such Depository, (ii) be delivered to the Trustee
as custodian for such Depository, and (iii) bear the legend as set forth in
Exhibit C.

     Members of, or participants in, the Depository ("Agent Members") shall have
no rights under this Indenture with respect to any Global Note held on their
behalf by the Depository, or the Trustee as its custodian, or under the Global
Notes, and the Depository may be treated by the Company, the Trustee and any
Agent of the Company or the Trustee as the absolute owner of such Global Note
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any Agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depository or impair, as between the Depository and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a Holder of any Note.

     (b) Transfers of a Global Note shall be limited to transfers in whole, but
not in part, to the Depository, its successors or their respective nominees.
Interests of beneficial owners in a Global Note may be transferred or exchanged
for Physical Notes in accordance with the rules and procedures of the Depository
and the provisions of Section 2.17. In addition, Physical Notes shall be
transferred to all beneficial owners in exchange for their beneficial interests
in a Global Note if (i) the Depository notifies the Company that it is unwilling
or unable to continue as Depository for the Global Notes and a successor
depository is not appointed by the Company within 90 days of such notice or (ii)
an Event of Default has occurred and is continuing and the Registrar has
received a written request from the Depository to issue Physical Notes.


<PAGE>
                                      -26-


     (c) In connection with any transfer or exchange of a portion of the
beneficial interest in a Global Note to beneficial owners pursuant to paragraph
(b), the Registrar shall (if one or more Physical Notes are to be issued)
reflect on its books and records the date and a decrease in the principal amount
of such Global Note in an amount equal to the principal amount of the beneficial
interest in the Global Note to be transferred, and the Company shall execute,
the Guarantors shall execute Guarantees on, and the Trustee shall authenticate
and deliver, one or more Physical Notes of like tenor and amount.

     (d) In connection with the transfer of an entire Global Note to beneficial
owners pursuant to paragraph (b) of this Section 2.16, such Global Note shall be
deemed to be surrendered to the Trustee for cancellation, and the Company shall
execute, the Guarantors shall execute Guarantees on and the Trustee shall
authenticate and deliver, to each beneficial owner identified by the Depository
in exchange for its beneficial interest in the Global Note, an equal aggregate
principal amount of Physical Notes of authorized denominations.

     (e) Any Physical Note constituting a Restricted Security delivered in
exchange for an interest in a Global Note pursuant to paragraph (b) or (c) of
this Section 2.16 shall, except as otherwise provided by paragraphs (d) and (f)
of Section 2.17, bear the Private Placement Legend.

     (f) The Holder of a Global Note may grant proxies and otherwise authorize
any Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Notes.

     SECTION 2.17. Registration of Transfers and Exchanges.

     (a) Transfer and Exchange of Physical Notes. When Physical Notes are
presented to the Registrar or Co-Registrar with a request:

          (i) to register the transfer of the Physical Notes; or

          (ii) to exchange such Physical Notes for an equal number of Physical
     Notes of other authorized denominations,

the Registrar or Co-Registrar shall register the transfer or make the exchange
as requested if the requirements under this Indenture as set forth in this
Section 2.17 for such transactions are met; provided, however, that the Physical
Notes presented or surrendered for registration of transfer or exchange:

          (I) shall be duly endorsed or accompanied by a written instrument of
     transfer in form satisfactory to the Registrar or Co-Registrar, duly
     executed by the Holder thereof or his attorney-in-fact duly authorized in
     writing; and

          (II) in the case of Physical Notes the offer and sale of which have
     not been registered under the Securities Act, such Physical Notes shall be
     accompanied, in the sole discretion of the Company, by the following
     additional information and documents, as applicable:

     a.   if such Physical Note is being delivered to the Registrar or
          Co-Registrar by a Holder for registration in the name of such Holder,
          without transfer, a certification from such Holder to that effect
          (substantially in the form of Exhibit G hereto); or


<PAGE>
                                      -27-


     b.   if such Physical Note is being transferred to a Qualified
          Institutional Buyer in accordance with Rule 144A, a certification to
          that effect (substantially in the form of Exhibit G hereto); or

     c.   if such Physical Note is being transferred to an Institutional
          Accredited Investor, delivery of a certification to that effect
          (substantially in the form of Exhibit G hereto) and a Transferee
          Certificate for Institutional Accredited Investors substantially in
          the form of Exhibit D hereto and an Opinion of Counsel reasonably
          satisfactory to the Company to the effect that such transfer is in
          compliance with the Securities Act; or

     d.   if such Physical Note is being transferred in reliance on Regulation
          S, delivery of a certification to that effect (substantially in the
          form of Exhibit G hereto) and a Transferee Certificate for Regulation
          S Transfers substantially in the form of Exhibit E hereto and an
          Opinion of Counsel reasonably satisfactory to the Company to the
          effect that such transfer is in compliance with the Securities Act; or

     e.   if such Physical Note is being transferred in reliance on Rule 144
          under the Securities Act, delivery of a certification to that effect
          (substantially in the form of Exhibit G hereto) and an Opinion of
          Counsel reasonably satisfactory to the Company to the effect that such
          transfer is in compliance with the Securities Act; or

     f.   if such Physical Note is being transferred in reliance on another
          exemption from the registration requirements of the Securities Act, a
          certification to that effect (substantially in the form of Exhibit G
          hereto) and an Opinion of Counsel reasonably acceptable to the Company
          to the effect that such transfer is in compliance with the Securities
          Act.

     (b) Restrictions on Transfer of a Physical Note for a Beneficial Interest
in a Global Note. Unless otherwise agreed to by the Company, a Physical Note may
not be exchanged for a beneficial interest in a Global Note except upon
satisfaction of the requirements set forth below. Upon receipt by the Registrar
or Co-Registrar of a Physical Note, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Registrar or Co-Registrar,
together with:

     a.   certification, substantially in the form of Exhibit G hereto, that
          such Physical Note is being transferred (I) to a Qualified
          Institutional Buyer, (II) to an Institutional Accredited Investor or
          (III) in reliance on Regulation S and, in the case of (II), a
          Transferee Certificate for Institutional Accredited Investors
          substantially in the form of Exhibit D hereto and, in the case of
          (III), a Transferee Certificate for Regulation S Transfers
          substantially in the form of Exhibit E hereto and in each case an
          Opinion of Counsel reasonably satisfactory to the Company to the
          effect that such transfer is in compliance with the Securities Act;
          and

     b.   written instructions from the Company directing the Registrar or
          Co-Registrar to make, or to direct the Depository to make, an
          endorsement on the applicable Global Note to reflect an increase in
          the aggregate amount of the Notes represented by the Global Note,


<PAGE>
                                      -28-


then the Registrar or Co-Registrar shall cancel such Physical Note and cause, or
direct the Depository to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Registrar or Co-Registrar,
the principal amount of Notes represented by the applicable Global Note to be
increased accordingly. If no Global Note representing Notes held by Qualified
Institutional Buyers, Institutional Accredited Investors or Persons acquiring
Notes in reliance on Regulation S, as the case may be, is then outstanding, the
Company shall issue and the Trustee shall, upon written instructions from the
Company in accordance with Section 2.02, authenticate such a Global Note in the
appropriate principal amount.

     (c) Transfer and Exchange of Global Notes. The transfer and exchange of
Global Notes or beneficial interests therein shall be effected through the
Depository in accordance with this Indenture (including the restrictions on
transfer set forth herein) and the procedures of the Depository therefor. Upon
receipt by the Registrar or Co-Registrar of written instructions, or such other
instruction as is customary for the Depository, from the Depository or its
nominee, requesting the registration of transfer of an interest in a QIB Global
Note, an IAI Global Note or a Regulation S Global Note, as the case may be, to
another type of Global Note, together with the applicable Global Notes (or, if
the applicable type of Global Note required to represent the interest as
requested to be transferred is not then outstanding, only the Global Note
representing the interest being transferred), the Registrar or Co-Registrar
shall cause, or direct the Depository to cause, in accordance with the standing
instructions and procedures existing between the Depository and the Registrar or
Co-Registrar, the principal amount of Notes represented by the applicable Global
Notes involved in such transfer or exchange to be adjusted accordingly to
reflect the applicable increase and decrease of the principal amount of Notes
represented by such types of Global Notes, giving effect to such transfer. If
the applicable type of Global Note required to represent the interest as
requested to be transferred is not outstanding at the time of such request, the
Company shall issue and the Trustee shall, upon written instructions from the
Company in accordance with Section 2.02, authenticate a new Global Note of such
type in principal amount equal to the principal amount of the interest requested
to be transferred. Any such transfer or exchange of Global Notes or beneficial
interests therein shall be effected through the Depository in accordance with
this Indenture (including the restrictions on transfer as contemplated herein)
and the procedure of the Depository therefor. Unless otherwise agreed to by the
Company, any request for the registration of the transfer of an interest in a
QIB Global Note, an IAI Global Note or a Regulation S Global Note to another
type of Global Note must be accompanied by a certificate from the transferor,
substantially in the form of Exhibit G hereto, that the transferee is either (i)
a Qualified Institutional Buyer in accordance with Rule 144A, (ii) an
Institutional Accredited Investor, or (iii) relying on Regulation S, and in the
case of (ii), a Transferee Certificate for Institutional Accredited Investors
substantially in the form of Exhibit D hereto and, in the case of (iii), a
Transferee Certificate for Regulation S Transfers substantially in the form of
Exhibit E hereto and in each case an Opinion of Counsel reasonably satisfactory
to the Company to the effect that such transfer is in compliance with the
Securities Act.

     (d) Transfer of a Beneficial Interest in a Global Note for a Physical Note.

     (i)  Any Person having a beneficial interest in a Global Note may upon
          request exchange such beneficial interest for a Physical Note. Upon
          receipt by the Registrar or Co-Registrar of written instructions, or
          such other form of instructions as is customary for the Depository,
          from the Depository or its nominee on behalf of any Person having a
          beneficial interest in a Global Note and upon receipt by the Trustee
          of a written order or such other form of instructions as is customary
          for the Depository or the Person designated

<PAGE>
                                      -29-


          by the Depository as having such a beneficial interest containing
          registration instructions and, in the case of any such transfer or
          exchange of a beneficial interest in Notes the offer and sale of which
          have not been registered under the Securities Act, the following
          additional information and documents:

          a.   if such beneficial interest is being transferred to the Person
               designated by the Depository as being the beneficial owner, a
               certification from such Person to that effect (substantially in
               the form of Exhibit G hereto); or

          b.   if such beneficial interest is being transferred to a Qualified
               Institutional Buyer in accordance with Rule l44A, a certification
               to that effect (substantially in the form of Exhibit G hereto);
               or

          c.   if such beneficial interest is being transferred to an
               Institutional Accredited Investor, delivery of a certification to
               that effect (substantially in the form of Exhibit G hereto) and a
               Certificate for Institutional Accredited Investors substantially
               in the form of Exhibit D hereto and an Opinion of Counsel
               reasonably satisfactory to the Company to the effect that such
               transfer is in compliance with the Securities Act; or

          d.   if such beneficial interest is being transferred in reliance on
               Regulation S, delivery of a certification to that effect
               (substantially in the form of Exhibit G hereto) and a Transferee
               Certificate for Regulation S Transfers substantially in the form
               of Exhibit E hereto and an Opinion of Counsel reasonably
               satisfactory to the Company to the effect that such transfer is
               in compliance with the Securities Act; or

          e.   if such beneficial interest is being transferred in reliance on
               Rule 144 under the Securities Act, delivery of a certification to
               that effect (substantially in the form of Exhibit G hereto) and
               an Opinion of Counsel reasonably satisfactory to the Company to
               the effect that such transfer is in compliance with the
               Securities Act; or

          f.   if such beneficial interest is being transferred in reliance on
               another exemption from the registration requirements of the
               Securities Act, a certification to that effect (substantially in
               the form of Exhibit G hereto) and an Opinion of Counsel
               reasonably satisfactory to the Company to the effect that such
               transfer is in compliance with the Securities Act,

          then the Registrar or Co-Registrar will cause, in accordance with the
          standing instructions and procedures existing between the Depository
          and the Registrar or Co-Registrar, the aggregate principal amount of
          the applicable Global Note to be reduced and, following such
          reduction, the Company will execute and, upon receipt of an
          authentication order in the

<PAGE>
                                      -30-


          form of an Officers' Certificate in accordance with Section 2.02, the
          Trustee will authenticate and deliver to the transferee a Physical
          Note.

     (ii) Notes issued in exchange for a beneficial interest in a Global Note
          pursuant to this Section 2.17(d) shall be registered in such names and
          in such authorized denominations as the Depository, pursuant to
          instructions from its direct or indirect participants or otherwise,
          shall instruct the Registrar or Co-Registrar in writing. The Registrar
          or Co-Registrar shall deliver such Physical Notes to the Persons in
          whose names such Physical Notes are so registered.

     (e) Restrictions on Transfer and Exchange of Global Notes. Notwithstanding
any other provisions of this Indenture, a Global Note may not be transferred as
a whole except by the Depository to a nominee of the Depository or by a nominee
of the Depository to the Depository or by any such nominee to a successor
Depository or a nominee of such successor Depository.

     (f) Private Placement Legend. Upon the transfer, exchange or replacement of
Notes not bearing the Private Placement Legend, the Registrar or Co-Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Notes bearing the Private Placement Legend,
the Registrar or Co-Registrar shall deliver only Notes that bear the Private
Placement Legend unless (i) the requested transfer is after the second
anniversary of the Issue Date (provided, however, that neither the Company nor
any Affiliate of the Company has held any beneficial interest in such Note, or
portion thereof, at any time prior to or on the second anniversary of the Issue
Date unless otherwise agreed by the Company) and (ii) there is delivered to the
Registrar or Co-Registrar a certificate and/or, if requested, an Opinion of
Counsel, each reasonably satisfactory to the Company and the Trustee to the
effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act.

     (g) General. By its acceptance of any Note bearing the Private Placement
Legend, each Holder of such a Note acknowledges the restrictions on transfer of
such Note set forth in this Indenture and in the Private Placement Legend and
agrees that it will transfer such Note only as provided in this Indenture.

     The Registrar shall retain copies of all letters, notices and other written
communications received pursuant to Section 2.16 or this Section 2.17. The
Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time during the
Registrar's normal business hours upon the giving of reasonable written notice
to the Registrar.

     (h) Transfers of Notes Held by Affiliates. Any certificate (i) evidencing a
Note that has been transferred to an Affiliate of the Company within two years
after the Issue Date, as evidenced by a notation on the Assignment Form for such
transfer or in the representation letter delivered in respect thereof or (ii)
evidencing a Note that has been acquired from an Affiliate (other than by an
Affiliate) in a transaction or a chain of transactions not involving any public
offering, shall, until two years after the last date on which the Company or any
Affiliate of the Company was an owner of such Note, in each case, bear the
Private Placement Legend, unless otherwise agreed by the Company (with written
notice thereof to the Trustee).


<PAGE>
                                      -31-


     SECTION 2.18. Additional Interest Under Registration Rights Agreement.

     Under certain circumstances, the Company shall be obligated to pay certain
Additional Interest to the Holders, all as set forth in Section 4 of the
Registration Rights Agreement. The terms thereof are hereby incorporated herein
by reference.


ARTICLE THREE

                                   REDEMPTION


     SECTION 3.01. Notices to Trustee.

     If the Company elects to redeem Notes pursuant to Paragraph 5 of the Notes,
it shall notify the Trustee and the Paying Agent in writing of the Redemption
Date and the principal amount of the Notes to be redeemed.

     The Company shall give each notice to the Trustee provided for in this
Section 3.01 45 days before the Redemption Date (unless a shorter notice period
shall be satisfactory to the Trustee), together with an Officers' Certificate
stating that such redemption shall comply with the conditions contained herein
and in the Notes. Any such notice may be canceled at any time prior to notice of
such redemption being mailed to any Holder and shall thereby be void and of no
effect.

     SECTION 3.02. Selection of Notes To Be Redeemed.

     If less than all of the Notes are to be redeemed at any time, selection of
the Notes to be redeemed will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not listed on a securities exchange, on a
pro rata basis or by lot or any other method as the Trustee shall deem fair and
appropriate; provided, however, that Notes redeemed in part shall only be
redeemed in integral multiples of $1,000; provided, further, that any such
redemption pursuant to the provisions relating to a Public Equity Offering shall
be made on a pro rata basis or on as nearly a pro rata basis as practicable
(subject to the procedures of The Depository Trust Company or any other
depository), unless such method is otherwise prohibited. Notices of any optional
or mandatory redemption shall be mailed by first class mail at least 30 but not
more than 60 days before the Redemption Date to each holder of Notes to be
redeemed at such holder's registered address. If any Note is to be redeemed in
part only, the notice of redemption that relates to such Note shall state the
portion of the principal amount thereof to be redeemed, and the Trustee shall
authenticate and mail to the holder of the original Note a new Note in principal
amount equal to the unredeemed portion of the original Note promptly after the
original Note has been canceled. On and after the Redemption Date, interest will
cease to accrue on Notes or portions thereof called for redemption.

     SECTION 3.03. Optional Redemption.

     The Notes are redeemable at the option of the Company, in whole or in part,
at any time on or after June 1, 2003 at the redemption prices (expressed as
percentages of the principal amount of the Notes) set forth below plus in each
case accrued and unpaid interest, if any, to the

<PAGE>
                                      -32-


date of redemption, if redeemed during the twelve-month period beginning on of
the years indicated below:


Year                                                                Percentage
- ----                                                                ----------
2003........................................................         104.938%
2004........................................................         103.292%
2005........................................................         101.646%
2006 and thereafter.........................................         100.000%

     In addition, at any time prior to June 1, 2001, the Company may, at its
option, redeem up to 30% of the sum of (i) the initial aggregate principal
amount of the Notes issued in the Offering and (ii) the respective initial
aggregate principal amount of the Notes issued under the Indenture after the
Issue Date, on one or more occasions, with the net proceeds of one or more
Public Equity Offerings at 109 7/8% of the principal amount thereof, plus
accrued interest to the Redemption Date; provided, however, that immediately
after giving effect to such redemption, at least 70% of the sum of (i) the
initial aggregate principal amount of the Notes issued in the Offering and (ii)
the respective initial aggregate principal amount of the Notes issued under the
Indenture after the Issue Date remain outstanding (other than any Notes owned by
the Company or any of its Affiliates). In order to effect the foregoing
redemption with the proceeds of any Public Equity Offering, the Company shall
make such redemption not more than 90 days after the consummation of any such
Public Equity Offering.

     "Public Equity Offering" means an underwritten public offering of Capital
Stock (other than Disqualified Stock) of the Company pursuant to an effective
registration statement filed under the Securities Act.

     SECTION 3.04. Notice of Redemption.

     At least 30 days but not more than 60 days before a Redemption Date, the
Company shall mail or cause to be mailed a notice of redemption by first class
mail to each Holder of Notes to be redeemed at its registered address, with a
copy to the Trustee and any Paying Agent. At the Company's request, the Trustee
shall give the notice of redemption in the Company's name and at the Company's
expense. The Company shall provide such notices of redemption to the Trustee at
least five days before the intended mailing date (unless a shorter period shall
be satisfactory to the Trustee).

     Each notice of redemption shall identify (including the CUSIP number) the
Notes to be redeemed and shall state:

          (1) the Redemption Date;

          (2) the Redemption Price and the amount of accrued interest, if any,
     to be paid;

          (3) the name and address of the Paying Agent;

          (4) the subparagraph of the Notes pursuant to which such redemption is
     being made;


<PAGE>
                                      -33-


          (5) that Notes called for redemption must be surrendered to the Paying
     Agent to collect the Redemption Price plus accrued interest, if any;

          (6) that, unless the Company defaults in making the redemption
     payment, interest on Notes or applicable portions thereof called for
     redemption ceases to accrue on and after the Redemption Date, and the only
     remaining right of the Holders of such Notes is to receive payment of the
     Redemption Price plus accrued interest as of the Redemption Date, if any,
     upon surrender to the Paying Agent of the Notes redeemed;

          (7) if any Note is being redeemed in part, the portion of the
     principal amount of such Note to be redeemed and that, after the Redemption
     Date, and upon surrender of such Note, a new Note or Notes in the aggregate
     principal amount equal to the unredeemed portion thereof will be issued;
     and

          (8) if fewer than all the Notes are to be redeemed, the identification
     of the particular Notes of such Holder (or portion thereof) to be redeemed,
     as well as the aggregate principal amount of Notes to be redeemed and the
     aggregate principal amount of Notes to be outstanding after such partial
     redemption.

     The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the purchase
of Notes.

     SECTION 3.05. Effect of Notice of Redemption.

     Once notice of redemption is mailed in accordance with Section 3.04, such
notice of redemption shall be irrevocable and Notes called for redemption become
due and payable on the Redemption Date and at the Redemption Price plus accrued
interest as of such date, if any. Upon surrender to the Trustee or Paying Agent,
such Notes called for redemption shall be paid at the Redemption Price plus
accrued interest thereon to the Redemption Date, but installments of interest,
the maturity of which is on or prior to the Redemption Date, shall be payable to
Holders of record at the close of business on the relevant record dates referred
to in the Notes. Interest shall accrue on or after the Redemption Date and shall
be payable only if the Company defaults in payment of the Redemption Price.

     SECTION 3.06. Deposit of Redemption Price.

     On or before the Redemption Date and in accordance with Section 2.14, the
Company shall deposit with the Paying Agent U.S. Legal Tender sufficient to pay
the Redemption Price plus accrued interest, if any, of all Notes to be redeemed
on that date. The Paying Agent shall promptly return to the Company any U.S.
Legal Tender so deposited which is not required for that purpose, except with
respect to monies owed as obligations to the Trustee pursuant to Article Seven.

     Unless the Company fails to comply with the preceding paragraph and
defaults in the payment of such Redemption Price plus accrued interest, if any,
interest on the Notes to be redeemed will cease to accrue on and after the
applicable Redemption Date, whether or not such Notes are presented for payment.

     SECTION 3.07. Notes Redeemed in Part.


<PAGE>
                                      -34-


     Upon surrender of a Note that is to be redeemed in part, the Trustee shall
authenticate for the Holder a new Note or Notes equal in principal amount to the
unredeemed portion of the Note surrendered.


ARTICLE FOUR

                                    COVENANTS


     SECTION 4.01. Payment of Notes.

     (a) The Company shall pay the principal of, premium, if any, and interest
on the Notes on the dates and in the manner provided in the Notes and in this
Indenture.

     (b) An installment of principal of or interest on the Notes shall be
considered paid on the date it is due if the Trustee or Paying Agent (other than
the Company or any of its Affiliates) holds, prior to 10:30 a.m. New York City
time on that date, U.S. Legal Tender designated for and sufficient to pay the
installment in full and is not prohibited from paying such money to the Holders
pursuant to the terms of this Indenture or the Notes.

     (c) The Company shall pay, to the extent such payments are lawful, interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue principal and on overdue installments of interest (without regard to any
applicable grace periods) from time to time on demand at the rate borne by the
Notes. Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months.

     (d) Notwithstanding anything to the contrary contained in this Indenture,
the Company may, to the extent it is required to do so by law, or shall cause
the Trustee to, deduct or withhold income or other similar taxes imposed by the
United States of America from principal or interest payments hereunder.

     SECTION 4.02. Maintenance of Office or Agency.

     The Company shall maintain the office or agency required under Section
2.03. The Company shall give prior written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 11.02.

     SECTION 4.03. Corporate Existence.

     Except as otherwise permitted by Article Five, the Company shall do or
cause to be done, at its own cost and expense, all things necessary to preserve
and keep in full force and effect its corporate existence and the corporate
existence of each of its Restricted Subsidiaries in accordance with the
respective organizational documents of each such Restricted Subsidiary and the
material rights (charter and statutory) and franchises of the Company and each
such Restricted Subsidiary; provided, however, that the Company shall not be
required to preserve, with respect to itself, any material right or franchise
and, with respect to any of its Restricted Subsidiaries, any such existence,
material right or franchise, if the Board of Directors of the Company (or if
such

<PAGE>
                                      -35-


existence is with respect to any Restricted Subsidiary which is not a
Significant Subsidiary, by the appropriate Officers of the Company) shall
determine in good faith that the preservation thereof is no longer desirable in
the conduct of the business of the Company and its Subsidiaries, taken as a
whole.

     SECTION 4.04. Payment of Taxes and Other Claims.

     The Company shall pay or discharge or cause to be paid or discharged,
before penalties attach, (i) all material taxes, assessments and governmental
charges (including withholding taxes and any penalties, interest and additions
to taxes) levied or imposed upon it or any of its Restricted Subsidiaries or
properties of it or any of its Restricted Subsidiaries and (ii) all material
lawful claims for labor, materials and supplies that, if unpaid, might by law
become a Lien upon the property of the Company or any of its Restricted
Subsidiaries; provided, however, that the Company shall not be required to pay
or discharge or cause to be paid or discharged any such tax, assessment, charge
or claim whose amount, applicability or validity is being contested in good
faith by appropriate negotiations or proceedings properly instituted and
conducted for which adequate reserves, to the extent required under GAAP, have
been taken.

     SECTION 4.05. Maintenance of Properties and Insurance.

     (a) The Company shall, and shall cause each of the Restricted Subsidiaries
to, maintain all material properties used in the conduct of its business in
working order and condition (subject to ordinary wear and tear) and make all
necessary repairs, renewals, replacements, additions, betterments and
improvements thereto and actively conduct and carry on its business; provided,
however, that nothing in this Section 4.05 shall prevent the Company or any of
the Restricted Subsidiaries of the Company from discontinuing the operation and
maintenance of any of its properties, if such discontinuance is (i) in the
ordinary course of business pursuant to customary business terms or (ii) in the
good faith judgment of the respective Boards of Directors or other governing
body of the Company or Restricted Subsidiary, as the case may be, desirable in
the conduct of their respective businesses and would not be reasonably likely to
cause a material adverse effect upon the business, operations, assets, condition
(financial or otherwise) or prospects of the Company and its Subsidiaries, taken
as a whole.

     (b) The Company shall provide or cause to be provided, for itself and each
of the Restricted Subsidiaries of the Company, insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the good faith
judgment of the Company, are customary for companies in the conduct of the
business of the Company and its Restricted Subsidiaries, with reputable insurers
or with the Government of the United States of America or any agency or
instrumentality thereof (if not through self-insurance).

     SECTION 4.06. Compliance Certificate; Notice of Default.

     (a) The Company shall deliver to the Trustee, within 120 days after the end
of each of the Company's fiscal years, an Officers' Certificate (provided,
however, that one of the signatories to each such Officers' Certificate shall be
the Company's principal executive officer, principal financial officer or
principal accounting officer), as to such Officers' knowledge, without
independent investigation, of the Company's compliance with all conditions and
covenants under this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and in the event any Default of the
Company's exists, such Officers' Certificate shall specify the

<PAGE>
                                      -36-


nature of such Default. Each such Officers' Certificate shall also notify the
Trustee should the Company elect to change the manner in which it fixes its
fiscal year-end.

     (b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the annual financial
statements delivered pursuant to Section 4.08 shall be accompanied by a written
report of the Company's independent certified public accountants (who shall be a
firm of established national reputation) stating (A) that their audit
examination has included a review of the terms of this Indenture and the form of
the Notes as they relate to accounting matters, and (B) whether, in connection
with their audit examination, any Default or Event of Default has come to their
attention and if such a Default or Event of Default has come to their attention,
specifying the nature and period of existence thereof; provided, however, that,
without any restriction as to the scope of the audit examination, such
independent certified public accountants shall not be liable by reason of any
failure to obtain knowledge of any such Default or Event of Default that would
not be disclosed in the course of an audit examination conducted in accordance
with generally accepted auditing standards.

     (c) (i) If any Default or Event of Default has occurred and is continuing
or (ii) if any Holder seeks to exercise any remedy hereunder with respect to a
claimed Default under this Indenture or the Notes, the Company shall deliver to
the Trustee, at its address set forth in Section 11.02, by registered or
certified mail or by facsimile transmission followed by hard copy by registered
or certified mail an Officers' Certificate specifying such event, notice or
other action promptly upon its becoming aware of such occurrence.

     SECTION 4.07. Compliance with Laws.

     The Company shall comply, and shall cause each of its Subsidiaries to
comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, all states and municipalities
thereof, and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of their respective businesses and the ownership of their respective
properties, except for such noncompliances as would not singly or in the
aggregate reasonably be expected to have a material adverse effect on the
financial condition or results of operations of the Company and its Subsidiaries
taken as a whole.

     SECTION 4.08. Provision of Financial Statements and Information.

     Whether or not the Company is then subject to Section 13(a) or 15(d) of the
Exchange Act, the Company shall file with the Commission following the
effectiveness of the Exchange Offer Registration Statement, so long as any Notes
are outstanding, the annual reports, quarterly reports and other periodic
reports which the Company would have been required to file with the Commission
pursuant to such Section 13(a) or 15(d) if the Company were so subject, and such
documents shall be filed with the Commission on or prior to the respective dates
(the "Required Filing Dates") by which the Company would have been required so
to file such documents if the Company were so subject; provided the Commission
will accept such filings. The Company shall also in any event (i) within 15 days
of each Required Filing Date following the effectiveness of the Exchange Offer
Registration Statement, file with the Trustee, and supply the Trustee with
copies for delivery to the holders of the Notes and prospective purchasers at
the expense of the Company, the annual reports, quarterly reports and other
periodic reports which the Company would have been required to file with the
Commission pursuant to Section 13(a) or 15(d) of the Exchange Act if the Company
were subject to such Sections and (ii) if the

<PAGE>
                                      -37-


Commission will not accept the filing of such documents promptly upon written
request and payment of the reasonable cost of duplication and delivery, supply
copies of such documents to any prospective holder of the Notes. Prior to the
effectiveness of the Exchange Offer Registration Statement, the Company will
provide upon request from holders of the Notes or prospective holders the
information required by Rule 144A(d)(4) under the Securities Act.

     SECTION 4.09. Waiver of Stay, Extension or Usury Laws.

     The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all or any
portion of the principal of or interest on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.

     SECTION 4.10. Limitation on Restricted Payments.

     (a) The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, make any Restricted Payment, unless at the time of
and immediately after giving effect to the proposed Restricted Payment (with the
value of any such Restricted Payment, if other than cash, to be determined
reasonably and in good faith by the Board of Directors of the Company):

          (i) no Default or Event of Default shall have occurred and be
     continuing or would occur as a consequence thereof;

          (ii) the Company could incur at least $1.00 of additional Indebtedness
     (other than Permitted Indebtedness) pursuant to Section 4.12; and

          (iii) the aggregate amount of all Restricted Payments made after the
     Issue Date shall not exceed the sum of:

               (a) an amount equal to 50% of the Company's aggregate cumulative
          Consolidated Net Income accrued on a cumulative basis during the
          period (treated as one accounting period) beginning on the first day
          of the first calendar month after the Issue Date and ending on the
          date of such proposed Restricted Payment (or, if such aggregate
          cumulative Consolidated Net Income for such period shall be a deficit,
          minus 100% of such deficit); plus

               (b) the aggregate amount of all net cash proceeds received since
          the Issue Date by the Company from the issuance and sale (other than
          to a Restricted Subsidiary) of, or equity contribution with respect
          to, Capital Stock (other than Disqualified Stock) and the principal
          amount of Indebtedness of the Company or any Restricted Subsidiary
          issued or incurred on or after the Issue Date that has been converted
          into or exchanged for Capital Stock (other than Disqualified Stock),
          in any such case and solely for purposes of avoiding duplication, to
          the extent that such proceeds are not theretofore used (x) to redeem,
          repurchase, retire or otherwise acquire Capital Stock or any
          Indebtedness of the Company or any

<PAGE>
                                      -38-


          Restricted Subsidiary pursuant to clause (ii) of the next paragraph or
          (y) to make any Restricted Investment pursuant to clause (iv) of the
          next paragraph; plus

               (c) the amount of the net reduction in Investments in
          Unrestricted Subsidiaries resulting from (x) the payment of dividends
          or the repayment in cash of the principal of loans or the cash return
          on any Investment, in each case to the extent received by the Company
          or any Restricted Subsidiary from Unrestricted Subsidiaries, (y) the
          release or extinguishment of any Guarantee of Indebtedness of any
          Unrestricted Subsidiary, and (z) the redesignation of Unrestricted
          Subsidiaries as Restricted Subsidiaries (valued as provided in the
          definition of "Investment"), such aggregate amount of the net
          reduction in Investments not to exceed in the case of any Unrestricted
          Subsidiary the amount of Restricted Investments previously made by the
          Company or any Restricted Subsidiary in such Unrestricted Subsidiary,
          which amount was included in the calculation of the amount of
          Restricted Payments; plus

               (d) to the extent that any Restricted Investment that was made
          after the Issue Date is sold for cash or the proceeds of such sale are
          converted into cash or otherwise liquidated or repaid for cash, the
          amount of cash proceeds received with respect to such Restricted
          Investment, net of taxes and the cost of disposition, not to exceed
          the amount of Restricted Investments made after the Issue Date.

     (b) Section 4.10(a) shall not prohibit, so long as no Default or Event of
Default is continuing, the following actions (collectively, "Permitted
Payments"):

          (i) the payment of any dividend within 60 days after the date of
     declaration thereof, if at such declaration date such payment would have
     been permitted under this Indenture (which payment shall be deemed to have
     been paid on such date of declaration for purposes of clause (iii) of the
     preceding paragraph);

          (ii) the redemption, repurchase, retirement or other acquisition of
     any Capital Stock or any Indebtedness of the Company or any Restricted
     Subsidiary in exchange for, or out of the proceeds of, the substantially
     concurrent sale (other than to a Restricted Subsidiary) of, or equity
     contribution with respect to, Capital Stock of the Company (other than any
     Disqualified Stock);

          (iii) any purchase or defeasance of Subordinated Indebtedness to the
     extent required upon a Change of Control or Asset Sale (as defined therein)
     by this Indenture or other agreement or instrument pursuant to which such
     Subordinated Indebtedness was issued or any refinancing of Subordinated
     Indebtedness permitted by this Indenture or other agreement or instrument
     pursuant to which such Subordinated Indebtedness was issued, but only if
     the Company (x) in the case of a Change of Control, has complied with its
     obligations under Section 4.15 or (y) in the case of an Asset Sale, has
     applied the Net Proceeds from such Asset Sale in accordance with Section
     4.16;

          (iv) any Restricted Investment to the extent the sole consideration
     for which consists of, or is made with the proceeds of the substantially
     concurrent sale (other than to a Restricted Subsidiary) of, or equity
     contribution with respect to, Capital Stock of the Company (other than any
     Disqualified Stock);


<PAGE>
                                      -39-


          (v) the repurchase of Capital Stock of the Company (including options,
     warrants or other rights to acquire such Capital Stock) from departing or
     deceased directors, officers and employees of the Company and its
     Subsidiaries pursuant to the terms of an employee benefit plan or employee
     agreement in an amount that shall not exceed $250,000 in any fiscal year
     plus any amount available for such payments hereunder since the Issue Date
     which have not been used for such purpose and in no event shall such
     payments exceed $1.0 million in any fiscal year, in each case, plus the
     aggregate cash proceeds from any payments on insurance policies in which
     the Company or any of its Subsidiaries is the beneficiary with respect to
     any directors, officers or employees of the Company and its Subsidiaries
     which proceeds are used to purchase the Capital Stock of the Company or any
     Restricted Subsidiary of the Company held by any of such directors,
     officers or employees; and the repurchase of Capital Stock of the Company
     or a Restricted Subsidiary by the Company or such Restricted Subsidiary
     pursuant to the terms of any of the Shareholders Agreements;

          (vi) loans or advances to employees of the Company or any of its
     Subsidiaries which loans or advances exist on the Issue Date, and other
     loans or advances to employees of the Company or any Subsidiary to pay
     reasonable relocation expenses or otherwise entered into in the ordinary
     course of business not to exceed $500,000 in the aggregate principal amount
     at any one time;

          (vii) Restricted Investments in an amount such that the sum of the
     aggregate amount of Restricted Investments made pursuant to this clause
     (vii) after the Issue Date does not exceed $5.0 million at any one time
     outstanding; and

          (viii) payments made in accordance with the table appearing under the
     caption "Use of Proceeds" in the Offering Memorandum (other than the
     Potential Acquisition (as defined in the Offering Memorandum), other
     acquisitions and general corporate purposes) in the Offering Memorandum
     pursuant to which the Notes are offered and sold.

     (c) For purposes of Section 4.10(a)(iii), the Permitted Payments referred
to in clauses (i), (v) and (vii) above shall be included in the aggregate amount
of Restricted Payments made since the Issue Date, and any other Permitted
Payments described above shall be excluded.

     (d) Not later than thirty (30) days after the end of any fiscal quarter of
the Company during which any Restricted Payment or Restricted Investment has
been made, the Company shall deliver to the Trustee an Officers' Certificate
stating that such Restricted Payment or Restricted Investment complies with this
Indenture and setting forth in reasonable detail the basis upon which the
required calculations were computed, which calculations may be based upon the
Company's latest available internal quarterly financial statements.

     SECTION 4.11. Limitation on Transactions with Affiliates.

     (a) The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, enter into or suffer to exist any transaction or
series of related transactions (including, without limitation, the sale,
purchase, exchange or lease of assets, property or services) with any Affiliate
of the Company unless (1) such transaction or series of transactions is on terms
that are no less favorable to the Company or such Restricted Subsidiary, as the
case may be, than those that could reasonably be obtainable at such time in a
comparable transaction in arm's-length dealings with an unrelated third party,
and (2) the Company delivers to the Trustee (a) with respect

<PAGE>
                                      -40-


to any transaction or series of transactions involving aggregate payments in
excess of $500,000, an Officers' Certificate certifying that such transaction or
series of related transactions complies with clause (1) above and (b) with
respect to any transaction or series of transactions involving aggregate
payments in excess of $2.0 million, an Officer's Certificate certifying that
such transaction or series of related transactions has been approved by a
majority of the members of the Board of Directors of the Company, and (c) with
respect to any transaction or series of transactions involving aggregate
payments in excess of $5.0 million, an opinion as to the fairness of the
transaction to the Company from a financial point of view issued by an
accounting, appraisal or investment banking firm of national standing.

     (b) Section 4.11(a) shall not apply to (i) employment agreements or
compensation or employee benefit arrangements with any officer, director or
employee of the Company or any of its Restricted Subsidiaries entered into in
the ordinary course of business (including customary benefits thereunder and
including reimbursement or advancement of out-of-pocket expenses, and director's
and officer's liability insurance), (ii) any transaction entered into by or
among the Company or one of its Restricted Subsidiaries with one or more
Restricted Subsidiaries of the Company, (iii) any transaction permitted by
Section 4.10(b), (iv) transactions permitted by, and complying with, the
provisions described under Section 5.01, and (v) any transaction described under
the caption "Use of Proceeds" in the Offering Memorandum.

     SECTION 4.12. Limitation on Incurrence of Indebtedness.

     (a) The Company shall not, and shall not permit any Restricted Subsidiary
to, create, incur, assume or directly or indirectly guarantee or in any other
manner become directly or indirectly liable for ("incur") any Indebtedness
(including Acquired Debt), except that the Company and any Restricted Subsidiary
may incur Indebtedness (including Acquired Debt) if, at the time of, and
immediately after giving pro forma effect to, such incurrence of Indebtedness,
the Consolidated Cash Flow Coverage Ratio of the Company for the most recently
ended four fiscal quarters would be at least 2.0 to 1.0 if incurred during the
period from the Issue Date through June 1, 2000, and 2.25 to 1.0 if incurred
thereafter.

     (b) The foregoing limitations shall not apply to the incurrence of any of
the following (collectively, "Permitted Indebtedness"), each of which shall be
given independent effect:

          (i) Indebtedness of the Company arising under the Credit Facility, in
     an aggregate principal amount not to exceed at any time outstanding the
     greater of (x) $35.0 million and (y) the sum, at such time, of (I) 80% of
     the consolidated book value of eligible receivables of the Company and the
     Restricted Subsidiaries and (II) 60% of the consolidated book value of
     inventory of the Company and the Restricted Subsidiaries;

          (ii) Indebtedness of the Company and the Guarantors represented by the
     Notes, the Guarantees and the Exchange Notes;

          (iii) Indebtedness of the Company or any Restricted Subsidiary not
     covered by any other clause of this paragraph which is outstanding on the
     Issue Date ("Existing Indebtedness");

          (iv) Indebtedness owed or issued by any Restricted Subsidiary to the
     Company or to another Restricted Subsidiary, or owed or issued by the
     Company to any Restricted Subsidiary; provided, however, that any such
     Indebtedness shall at all times be held by a

<PAGE>
                                      -41-


     Person which is either the Company or a Restricted Subsidiary; provided,
     further, however, that upon either (a) the transfer or other disposition of
     any such Indebtedness to a Person other than the Company or another
     Restricted Subsidiary or (b) the sale, lease, transfer or other disposition
     of shares of Capital Stock (including by consolidation or merger) of any
     such Restricted Subsidiary to a Person other than the Company or another
     Restricted Subsidiary, the incurrence of such Indebtedness shall be deemed
     to be an incurrence that is not permitted by this clause (iv);

          (v) Indebtedness of the Company or any Restricted Subsidiary arising
     with respect to Interest Rate Agreement Obligations and Currency Agreement
     Obligations incurred for the purpose of fixing or hedging interest rate
     risk or currency risk with respect to any fixed or floating rate
     Indebtedness that is permitted by the terms of this Indenture to be
     outstanding or with respect to any receivable or liability the payment of
     which is determined by reference to a foreign currency;

          (vi) Indebtedness represented by performance, completion, guarantee,
     surety and similar bonds and assurances provided by or for the Company or
     any Restricted Subsidiary in the ordinary course of business;

          (vii) any Indebtedness incurred in connection with or given in
     exchange for the renewal, extension, substitution, refunding, defeasance,
     refinancing or replacement, in whole or in part (a "refinancing"), of any
     Indebtedness incurred as permitted under the first paragraph of this
     Section 4.12 or any Indebtedness described in any of clauses (ii) or (iii)
     above, this clause (vii) and clauses (x), (xi) or (xii) below ("Refinancing
     Indebtedness"); provided, however, that (a) the principal amount of such
     Refinancing Indebtedness shall not exceed the principal amount (or accreted
     amount, if less, or in the case of a revolving credit facility the maximum
     amount of the facility, if more) of the Indebtedness so refinanced (plus
     the premiums and reasonable expenses to be paid in connection therewith,
     which, with respect to such premiums, shall not exceed the stated amount of
     any premium or other payment required to be paid in connection with such a
     refinancing pursuant to the terms of the Indebtedness being refinanced);
     (b) if the Weighted Average Life to Maturity of the Indebtedness being
     refinanced is equal to or greater than the Weighted Average Life to
     Maturity of the Notes, the Refinancing Indebtedness shall have a Weighted
     Average Life to Maturity equal to or greater than the Weighted Average Life
     to Maturity of the Indebtedness being refinanced; (c) with respect to
     Refinancing Indebtedness other than Senior Debt incurred by the Company or
     a Guarantor, such Refinancing Indebtedness shall rank no more senior than,
     and, if applicable, shall be at least as subordinated in right of payment
     to the Notes as, the Indebtedness being refinanced; and (d) the obligor on
     such Refinancing Indebtedness shall be the obligor on the Indebtedness
     being refinanced or the Company;

          (viii) Indebtedness of the Company or any Restricted Subsidiary (a)
     representing Capital Lease Obligations and any amendments, modifications,
     renewals, refundings, replacements or refinancings thereof and/or (b) in
     respect of Purchase Money Obligations for property acquired, constructed or
     improved in the ordinary course of business and any refinancings thereof,
     which taken together in the aggregate principal amount do not exceed the
     greater of (i) $5.0 million and (ii) 5% of Consolidated Tangible Assets of
     the Company at any one time outstanding;


<PAGE>
                                      -42-


          (ix) commodity agreements entered into in the ordinary course of
     business to protect against fluctuations in the prices of raw materials and
     not for speculative purposes;

          (x) Indebtedness incurred by the Company or any Restricted Subsidiary
     constituting reimbursement obligations with respect to letters of credit
     issued in the ordinary course of business, including, without limitation,
     letters of credit in respect of workers' compensation claims or
     self-insurance, or other Indebtedness with respect to reimbursement type
     obligations regarding workers' compensation claims or self-insurance;

          (xi) Indebtedness of Koffolk arising under the Koffolk Credit
     Facility, in an aggregate principal amount not to exceed at any time
     outstanding the greater of (x) $10.0 million and (y) the sum, at such time,
     of (I) 80% of the book value of eligible receivables of Koffolk and its
     Israeli subsidiaries and (II) 50% of the book value of inventory of Koffolk
     and its Israeli subsidiaries; provided that the aggregate principal amount
     at any time outstanding shall not, in any case, exceed $15.0 million and
     such Indebtedness is issued for working capital purposes;

          (xii) Indebtedness of Foreign Subsidiaries of the Company incurred to
     finance working capital of such Foreign Subsidiaries in an aggregate
     principal amount at any time outstanding not to exceed the sum of (x) 80%
     of the book value of net accounts receivable of such Foreign Subsidiaries
     and (y) 50% of the book value of the inventory of such Foreign
     Subsidiaries;

          (xiii) Guarantees by the Company and its Restricted Subsidiaries of
     each other's Indebtedness; provided that such Indebtedness is permitted to
     be incurred under this Indenture; and

          (xiv) Indebtedness of the Company or any Restricted Subsidiary in
     addition to that described in clauses (i) through (xiii) above, and any
     amendments, modifications, renewals, refundings, replacements or
     refinancings of such Indebtedness, so long as the aggregate principal
     amount of all such Indebtedness incurred pursuant to this clause (xiv) does
     not exceed $5.0 million at any one time outstanding.

     (c) For purposes of determining any particular amount of Indebtedness under
this covenant, Guarantees, Liens or obligations with respect to letters of
credit supporting Indebtedness otherwise included in the determination of such
particular amount shall not be included.

     (d) Indebtedness of any Person which is outstanding at the time such Person
becomes a Restricted Subsidiary or is merged with or into or consolidated with
the Company or a Restricted Subsidiary shall be deemed to have been incurred at
the time such Person becomes a Restricted Subsidiary or is merged with or into
or consolidated with the Company or a Restricted Subsidiary, and Indebtedness
which is assumed at the time of the acquisition of any asset shall be deemed to
have been incurred at the time of such acquisition.

     SECTION 4.13. Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries.

     The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, create or otherwise cause to become effective any
consensual encumbrance or consensual restriction on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions to
the Company or any other Restricted Subsidiary on its Capital Stock or with

<PAGE>
                                      -43-


respect to any other interest or participation in, or measured by, its profits,
or pay any Indebtedness owed to the Company or any other Restricted Subsidiary,
(ii) make loans or advances to, or issue Guarantees for the benefit of, the
Company or any other Restricted Subsidiary or (iii) transfer any of its
properties or assets to the Company or any other Restricted Subsidiary, except
for such encumbrances or restrictions existing under or by reason of (a) the
Credit Facility as in effect on the Issue Date, and any amendments,
modifications, renewals, refundings, replacements or refinancings thereof;
provided that such amendments, modifications, renewals, refundings, replacements
or refinancings are no more restrictive in the aggregate with respect to such
dividend and other payment restrictions than those contained in the Credit
Facility (or, if more restrictive, than those contained in this Indenture)
immediately prior to any such amendment, restatement, renewal, replacement or
refinancing, (b) applicable law, (c) any instrument governing Indebtedness or
Capital Stock of an Acquired Person acquired by the Company or any of its
Restricted Subsidiaries as in effect at the time of such acquisition (except to
the extent such Indebtedness was incurred in connection with or in contemplation
of such acquisition); provided, however, that no such encumbrance or restriction
is applicable to any Person, or the properties or assets of any Person, other
than the Acquired Person, (d) by reason of customary non-assignment, subletting
or net worth provisions in leases or other agreements entered into the ordinary
course of business, (e) Purchase Money Obligations for property acquired in the
ordinary course of business that impose restrictions only on the property so
acquired, (f) an agreement for the sale or disposition of assets or the Capital
Stock of a Restricted Subsidiary; provided, however, that such restriction or
encumbrance is only applicable to such Restricted Subsidiary or assets, as
applicable, and such sale or disposition otherwise is permitted by Section 4.16;
provided, further, however, that such restriction or encumbrance shall be
effective only for a period from the execution and delivery of such agreement
through a termination date not later than 270 days after such execution and
delivery, (g) Refinancing Indebtedness permitted under this Indenture; provided,
however, that the restrictions contained in the agreements governing such
Refinancing Indebtedness are no more restrictive in the aggregate than those
contained in the agreements governing the Indebtedness being refinanced
immediately prior to such refinancing, (h) this Indenture, the Notes and the
Guarantees and (i) encumbrances and restrictions imposed by amendments,
restatements, renewals, replacements or refinancings of the contracts,
instruments or obligations referred to in clauses (a) through (h) above;
provided that such encumbrances and restrictions are, in the good faith judgment
of the Company's Board of Directors, no more restrictive, in any material
respect, than those contained in such contracts, instruments or obligations
immediately prior to such amendment, restatement, renewal, replacement or
refinancing.

     SECTION 4.14. Limitation on Designation of Unrestricted Subsidiaries.

     (a) The Company shall not designate any Subsidiary of the Company (other
than a newly created Subsidiary in which no Investment has previously been made)
as an "Unrestricted Subsidiary" under this Indenture (a "Designation") unless:

          (i) no Default shall have occurred and be continuing at the time of or
     after giving effect to such Designation;

          (ii) immediately after giving effect to such Designation, the Company
     would be able to incur $1.00 of additional Indebtedness (other than
     Permitted Indebtedness) under the covenant described under Section 4.12;
     and

          (iii) the Company would not be prohibited under this Indenture from
     making an Investment at the time of Designation in an amount (the
     "Designation Amount") equal to

<PAGE>
                                      -44-


     the greater of (x) the book value of such Restricted Subsidiary on such
     date and (y) the Fair Market Value of such Restricted Subsidiary on such
     date.

In the event of any such Designation, the Company shall be deemed to have made
an Investment constituting a Restricted Payment pursuant to Section 4.10 for all
purposes of this Indenture in an amount equal to the Designation Amount.

     (b) The Company shall not designate an Unrestricted Subsidiary as a
Restricted Subsidiary (a "Redesignation"), unless:

          (i) no Default shall have occurred and be continuing at the time of
     and after giving effect to such Redesignation; and

          (ii) all Liens and Indebtedness of such Unrestricted Subsidiary
     outstanding immediately following such Redesignation shall be deemed to
     have been incurred at such time and shall have been permitted to be
     incurred for all purposes of this Indenture.

     An Unrestricted Subsidiary shall be deemed to be redesignated as a
Restricted Subsidiary at any time if (a) the Company or any other Restricted
Subsidiary (i) provides credit support for, or a guarantee of, any Indebtedness
of such Unrestricted Subsidiary (including any undertaking, agreement or
instrument evidencing such Indebtedness) or (ii) is directly or indirectly
liable for any Indebtedness of such Unrestricted Subsidiary or (b) a default
with respect to any Indebtedness of such Unrestricted Subsidiary (including any
right which the holders thereof may have to take enforcement action against it)
would permit (upon notice, lapse of time or both) any holder of any other
Indebtedness of the Company or any Restricted Subsidiary to declare a default on
such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its final scheduled maturity, except in the case of clause (a)
to the extent permitted under Section 4.10.

     (c) All Designations and Redesignations must be evidenced by Board
Resolutions delivered to the Trustee certifying compliance with the foregoing
provisions. Subsidiaries that are not designated by the Board of Directors as
Restricted or Unrestricted Subsidiaries will be deemed to be Restricted
Subsidiaries. The Designation of a Restricted Subsidiary as an Unrestricted
Subsidiary shall be deemed a Designation of all of the Subsidiaries of such
Unrestricted Subsidiary as Unrestricted Subsidiaries.

     SECTION 4.15. Change of Control.

     (a) In the event of a Change of Control, each holder of Notes will have the
right, unless the Company has given a notice of redemption, subject to the terms
and conditions of this Indenture, to require the Company to offer to purchase
all or any portion (equal to $1,000 or an integral multiple thereof) of such
holder's Notes at a purchase price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest, if any, to the date
of purchase, in accordance with the terms set forth below (a "Change of Control
Offer").

     (b) On or before the 30th day following the occurrence of any Change of
Control, the Company shall mail to each holder of Notes, with a copy to the
Trustee, at such holder's registered address a notice stating: (i) that a Change
of Control has occurred and that such holder has the right to require the
Company to purchase all or a portion (equal to $1,000 or an integral multiple
thereof) of such holder's Notes at a purchase price in cash equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest, if any, to
the date of purchase (the

<PAGE>
                                      -45-


"Change of Control Purchase Date"), which shall be a business day, specified in
such notice, that is not earlier than 30 days or later than 60 days from the
date such notice is mailed, (ii) the amount of accrued and unpaid interest, if
any, as of the Change of Control Purchase Date, (iii) that any Note not tendered
will continue to accrue interest, (iv) that, unless the Company defaults in the
payment of the purchase price for the Notes payable pursuant to the Change of
Control Offer, any Notes accepted for payment pursuant to the Change of Control
Offer shall cease to accrue interest on the Change of Control Purchase Date, (v)
that Holders electing to have a Note purchased pursuant to a Change of Control
Offer will be required to surrender the Note, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Note completed, to the Paying
Agent at the address specified in the notice prior to the close of business on
the second Business Day prior to the Change of Control Purchase Date, (vi) that
Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the second Business Day prior to the Change of Control
Purchase Date, a facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Notes the Holder delivered for purchase and
a statement that such Holder is withdrawing his election to have such Notes
purchased, (vii) that Holders whose Notes are purchased only in part will be
issued new Notes in a principal amount equal to the unpurchased portion of the
Notes surrendered; provided, however, that each Note purchased and each new Note
issued shall be in an original principal amount of $1,000 or integral multiples
thereof, (viii) the circumstances and relevant facts regarding such Change of
Control, and (ix) such other information as may be required by applicable laws
and regulations.

     (c) On or prior to 10:00 a.m. (Eastern Standard Time) on the Change of
Control Purchase Date, the Company shall (i) accept for payment all Notes or
portions thereof tendered pursuant to the Change of Control Offer, (ii) deposit
with the Paying Agent U.S. Legal Tender sufficient to pay the aggregate purchase
price of all Notes or portions thereof accepted for payment, and (iii) deliver
or cause to be delivered to the Trustee all Notes tendered pursuant to the
Change of Control Offer. The Paying Agent shall promptly mail to each holder of
Notes or portions thereof accepted for payment an amount equal to the purchase
price for such Notes plus accrued and unpaid interest, if any, thereon, and the
Trustee shall promptly authenticate and mail to each holder of Notes accepted
for payment in part a new Note equal in principal amount to any unpurchased
portion of the Notes, and any Note not accepted for payment in whole or in part
shall be promptly returned to the holder of such Note. On and after a Change of
Control Purchase Date, interest will cease to accrue on the Notes or portions
thereof accepted for payment, unless the Company defaults in the payment of the
purchase price therefor. The Company shall publicly announce the results of the
Change of Control Offer on or as soon as practicable after the Change of Control
Purchase Date.

     (d) The Company shall comply with the applicable tender offer rules,
including the requirements of Section 14(e) and Rule 14e-1 under the Exchange
Act, and all other applicable securities laws and regulations in connection with
any Change of Control Offer and will be deemed not to be in violation of any of
the covenants under this Indenture to the extent such compliance is in conflict
with such covenants.

     SECTION 4.16. Limitation on Asset Sales.

     (a) The Company shall not, and shall not permit any Restricted Subsidiary
to, make any Asset Sale unless (i) the Company or such Restricted Subsidiary, as
the case may be, receives consideration at the time of such Asset Sale at least
equal to the Fair Market Value (as evidenced by a resolution of the Board of
Directors set forth in an Officers' Certificate delivered to the Trustee) of the
assets or other property sold or disposed of in the Asset Sale and (ii) at least
<PAGE>
                                      -46-


75% of such consideration consists of either cash or Cash Equivalents; provided,
however, that for purposes of this Section 4.16, "cash" shall include (x) the
amount of any Indebtedness (other than any Indebtedness that is by its terms
subordinated to the Notes and/or the Guarantees) of the Company or such
Restricted Subsidiary as shown on the Company's or such Restricted Subsidiary's
most recent balance sheet or in the notes thereto that is assumed by the
transferee of any such assets or other property in such Asset Sale (and
excluding any liabilities that are incurred in connection with or in
anticipation of such Asset Sale), but only to the extent that such assumption is
effected on a basis such that there is no further recourse to the Company or any
of the Restricted Subsidiaries with respect to such liabilities and (y) any
notes, obligations or securities received by the Company or such Restricted
Subsidiary from such transferee that are converted within 60 days by the Company
or such Restricted Subsidiary into cash (to the extent of the cash received).

     (b) Within 270 days after receipt of Net Proceeds from any Asset Sale, the
Company may elect to apply the Net Proceeds from such Asset Sale to (a)
permanently reduce any Senior Debt and/or (b) make an investment in, or acquire
assets and properties that will be used in, the business of the Company, or a
Restricted Subsidiary, existing on the Issue Date or in a Related Business.
Pending the final application of any such Net Proceeds, the Company or any
Restricted Subsidiary may temporarily reduce Indebtedness of the Company under
the Credit Facility or temporarily invest such Net Proceeds in cash or Cash
Equivalents. Any Net Proceeds from an Asset Sale not applied or invested as
provided in the first sentence of this paragraph within 270 days of such Asset
Sale will be deemed to constitute "Excess Proceeds."

     (c) Each date that the aggregate amount of Excess Proceeds in respect of
which an Asset Sale Offer (as defined below) has not been made exceeds $5.0
million shall be deemed an "Asset Sale Offer Trigger Date." As soon as
practicable, but in no event later than 20 Business Days after each Asset Sale
Offer Trigger Date, the Company shall commence an offer (an "Asset Sale Offer")
to purchase the maximum principal amount of Notes that may be purchased out of
the Excess Proceeds. Any Notes to be purchased pursuant to an Asset Sale Offer
shall be purchased pro rata based on the aggregate principal amount of Notes
outstanding, and all Notes shall be purchased at an offer price in cash in an
amount equal to 100% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase. To the extent that any Excess
Proceeds remain after completion of an Asset Sale Offer, the Company may use the
remaining amount for general corporate purposes otherwise permitted by this
Indenture. In the event that the Company is prohibited under the terms of any
agreement governing outstanding Senior Debt of the Company from repurchasing
Notes with Excess Proceeds pursuant to an Asset Sale Offer as set forth in the
first sentence of this paragraph, the Company shall promptly use all Excess
Proceeds to reduce permanently such outstanding Senior Debt of the Company. Upon
the consummation of any Asset Sale Offer, the amount of Excess Proceeds shall be
deemed to be reset to zero.

     (d) Notice of an Asset Sale Offer shall be mailed via first-class mail
postage prepaid by the Company not later than the 20th Business Day after the
related Asset Sale Offer Trigger Date to each holder of Notes at such holder's
registered address, stating: (i) that an Asset Sale Offer Trigger Date has
occurred and that the Company is offering to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds (to the extent
provided in the immediately preceding paragraph), at an offer price in cash in
an amount equal to 100% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of the purchase (the "Asset Sale Offer Purchase
Date"), which shall be a business day, specified in such notice, that is not
earlier than 30 days or later than 60 days from the date such notice is mailed,
(ii)

<PAGE>
                                      -47-


the amount of accrued and unpaid interest, if any, as of the Asset Sale Offer
Purchase Date, (iii) that any Note not tendered will continue to accrue
interest, (iv) that, unless the Company defaults in the payment of the purchase
price for the Notes payable pursuant to the Asset Sale Offer, any Notes accepted
for payment pursuant to the Asset Sale Offer shall cease to accrue interest
after the Asset Sale Offer Purchase Date, (v) that Holders electing to have a
Note purchased pursuant to a Asset Sale Offer will be required to surrender the
Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Note completed, to the Paying Agent at the address specified in the
notice prior to the close of business on the third Business Day prior to the
Asset Sale Offer Purchase Date, (vi) that Holders will be entitled to withdraw
their election if the Paying Agent receives, not later than the second Business
Day prior to the Asset Sale Offer Purchase Date, a facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the Notes
the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased, (vii) that Holders whose
Notes are purchased only in part will be issued new Notes in a principal amount
equal to the unpurchased portion of the Notes surrendered; provided, however,
that each Note purchased and each new Note issued shall be in an original
principal amount of $1,000 or integral multiples thereof, and (viii) such other
information as may be required by applicable laws and regulations.

     (e) On the Asset Sale Offer Purchase Date, the Company shall (i) accept for
payment the maximum principal amount of Notes or portions thereof tendered
pursuant to the Asset Sale Offer that can be purchased out of Excess Proceeds
from such Asset Sale that are to be applied to an Asset Sale Offer, (ii) deposit
with the Paying Agent the aggregate purchase price of all Notes or portions
thereof accepted for payment, and (iii) deliver or cause to be delivered to the
Trustee all Notes tendered pursuant to the Asset Sale Offer. If less than all
Notes tendered pursuant to the Asset Sale Offer are accepted for payment by the
Company for any reason consistent with this Indenture, selection of the Notes to
be purchased by the Company shall be in compliance with the requirements of the
principal national securities exchange, if any, on which the Notes are listed
or, if the Notes are not so listed, on a pro rata basis or by lot; provided,
however, that Notes accepted for payment in part shall only be purchased in
integral multiples of $1,000. The Paying Agent shall promptly mail to each
holder of Notes or portions thereof accepted for payment an amount equal to the
purchase price for such Notes plus accrued and unpaid interest, if any, thereon,
and the Trustee shall promptly authenticate and mail to such holder of Notes
accepted for payment in part a new Note equal in principal amount to any
unpurchased portion of the Notes, and any Note not accepted for payment in whole
or in part shall be promptly returned to the holder of such Note. On and after
an Asset Sale Offer Purchase Date, interest will cease to accrue on the Notes or
portions thereof accepted for payment, unless the Company defaults in the
payment of the purchase price therefor. The Company will publicly announce the
results of the Asset Sale Offer on or as soon as practicable after the Asset
Sale Offer Purchase Date.

     (f) This Section 4.16 shall not apply to a transaction consummated in
compliance with Article Five.

     (g) The Company shall comply with the applicable tender offer rules,
including the requirements of Section 14(e) and Rule 14e-1 under the Exchange
Act, and all other applicable securities laws and regulations in connection with
any Asset Sale Offer and will be deemed not to be in violation of any of the
covenants under this Indenture to the extent such compliance is in conflict with
such covenants.

     SECTION 4.17. Reserved.


<PAGE>
                                      -48-


     SECTION 4.18. Limitation on Liens.

     The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, create, incur, assume or suffer to exist any Lien
securing Indebtedness that is pari passu with or subordinated in right of
payment to the Notes (other than Permitted Liens) on any asset now owned or
hereafter acquired, or any income or profits therefrom, or assign or convey any
right to receive income therefrom to secure any such Indebtedness, unless (i) if
such Lien secures Indebtedness which is pari passu with the Notes, then the
Notes are secured on an equal and ratable basis with the obligations so secured
until such time as such obligation is no longer secured by a Lien or (ii) if
such Lien secures Indebtedness which is subordinated to the Notes, any such Lien
shall be subordinated to a Lien granted to the holders of the Notes in the same
collateral as that securing such Lien to the same extent as such Subordinated
Indebtedness is subordinated to the Notes.

     SECTION 4.19. Business Activities.

     The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in any business other than a Related Business.

     SECTION 4.20. Limitation on Guarantees of Indebtedness by Subsidiaries.

     In the event that any Restricted Subsidiary guarantees any Indebtedness of
the Company other than the Notes (the "Other Debt"), the Company shall cause
such Restricted Subsidiary to concurrently guarantee the Company's obligations
under this Indenture and the Notes to the same extent that such Restricted
Subsidiary guaranteed the Company's obligations under the Other Debt (including
waiver of subrogation, if any); provided, however, that if such Other Debt is
(i) Senior Debt, such Guarantee will be subordinated in right of payment to all
Senior Debt of such Guarantor (which will include such Guarantee of such Other
Debt) pursuant to the subordination provisions of this Indenture (which
subordination will be substantially identical to the subordination provisions of
this Indenture applicable to the Notes), (ii) Indebtedness which is not Senior
Debt or Subordinated Indebtedness, such Guarantee will be pari passu in right of
payment with the Guarantee of the Other Debt, or (iii) Subordinated
Indebtedness, such Guarantee will be senior in right of payment to the Guarantee
of the Other Debt (which Guarantee of such Subordinated Indebtedness will
provide that such Guarantee is subordinated to the Guarantee to the same extent
and in the same manner as the Notes are subordinated to Senior Debt); provided,
further, however, that each Restricted Subsidiary issuing a Guarantee pursuant
to the provisions of this Section 4.20 will be automatically and unconditionally
released and discharged from its obligations under such Guarantee upon the
release or discharge of the Guarantee of the Other Debt that resulted in the
Company's obligations under the Notes and this Indenture being so guaranteed.
The Company will cause each Restricted Subsidiary required to issue a Guarantee
after the date of issuance of the Notes to execute and deliver an indenture
supplemental to this Indenture, as described under Section 4.22.

     SECTION 4.21. Limitation on Incurrence of Senior Subordinated Indebtedness.

     The Company (i) shall not, directly or indirectly, incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness that is
subordinated or junior in right of payment to any Senior Debt of the Company and
senior in any respect in right of payment to the Notes and (ii) shall not,
directly or indirectly, permit any Guarantor to incur, create, issue, assume,

<PAGE>
                                      -49-


guarantee or otherwise become liable for any Indebtedness that is subordinated
or junior in right of payment to its Senior Debt and senior in any respect in
right of payment to its Guarantee. For purposes of this provision, no
Indebtedness shall be deemed to be subordinated in right of payment to any other
Indebtedness by reason of the fact that such other Indebtedness is secured by
any Lien or is subject to a Guarantee.

     SECTION 4.22. Future Guarantors.

     The Company and each Guarantor shall cause each Restricted Subsidiary of
the Company (other than any Foreign Subsidiary) which, after the date of this
Indenture (if not then a Guarantor), becomes a Restricted Subsidiary to execute
and deliver an indenture supplemental to this Indenture and thereby become a
Guarantor which shall be bound by the Guarantee of the Notes in the form set
forth in this Indenture (without such future Guarantor being required to execute
and deliver the Guarantee endorsed on the Notes).

     SECTION 4.23. Sale and Leaseback Transactions.

     The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company or any Restricted Subsidiary may enter into a sale and leaseback
transaction if (a) the Company could have (i) incurred Indebtedness in an amount
equal to the Attributable Debt relating to such sale and leaseback transaction
pursuant to either (1) the Consolidated Cash Flow Coverage Ratio test set forth
in Section 4.12(a) or (2) clause (xiv) of the definition of the term "Permitted
Indebtedness" and (ii) incurred a Lien to secure such Indebtedness pursuant to
Section 4.18 and (b) the sale portion of such sale and leaseback transaction
complies with Section 4.16, and the net proceeds from such sale are applied in
accordance with such Section 4.16 and (c) the cash proceeds of such sale and
leaseback transaction are at least equal to the Fair Market Value (as determined
in good faith by the Board of Directors and set forth in an Officers'
Certificate delivered to the Trustee) of the property that is the subject of
such sale and leaseback transaction.

ARTICLE FIVE

                              SUCCESSOR CORPORATION


     SECTION 5.01. Merger, Consolidation and Sale of Assets.

     (a) The Company shall not, in any single transaction or series of related
transactions, consolidate or merge with or into (whether or not the Company is
the Surviving Person), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets (determined on a
consolidated basis for the Company and its Restricted Subsidiaries) in one or
more related transactions to, another Person, and the Company will not permit
any Restricted Subsidiary to enter into any such transaction or series of
related transactions if such transaction or series of related transactions, in
the aggregate, would result in a sale, assignment, transfer, lease, conveyance
or other disposition of all or substantially all of the properties and assets of
the Company and the Restricted Subsidiaries, taken as a whole, to another
Person, unless (i) the Surviving Person is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the Surviving Person (if other than the Company) assumes all the
obligations of the Company under the Notes (and the Guarantees of the Company's
Restricted Subsidiaries shall be confirmed as applying to such Surviving
Person's

<PAGE>
                                      -50-


obligations), this Indenture and, if then in effect, the Registration Rights
Agreement pursuant to a supplemental indenture or other written agreement, as
the case may be, in a form reasonably satisfactory to the Trustee; (iii)
immediately after such transaction, no Default or Event of Default shall have
occurred and be continuing; and (iv) after giving pro forma effect to such
transaction, the Surviving Person (x) would have a Consolidated Net Worth equal
to or greater than the Consolidated Net Worth of the Company immediately
preceding such transaction and (y) would be permitted to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to Section
4.12(a). Notwithstanding clauses (iii) and (iv) above, any Restricted Subsidiary
may consolidate with, merge into or transfer all or part of its properties and
assets to the Company or another Restricted Subsidiary.

     In the event of any transaction (other than a lease) described in and
complying with the conditions listed in the immediately preceding paragraph in
which the Company is not the Surviving Person, such Surviving Person shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company, and the Company shall be discharged from its obligations under,
this Indenture, the Notes and the Registration Rights Agreement.

     (b) In connection with any such consolidation, merger, amalgamation,
transfer, lease or disposition, the Company or such Person shall have delivered
to the Trustee (i) an Officers' Certificate and an Opinion of Counsel
(pertaining only to 5.01(i) and 5.01(ii)), each in form and substance reasonably
satisfactory to the Trustee, stating that such consolidation, amalgamation,
merger, sale, assignment, conveyance, transfer, lease or disposition and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture, comply with this Indenture and that all conditions
precedent therein provided for relating to such transaction have been complied
with, and (ii) if a supplemental indenture is required in connection with such
transaction, an Opinion of Counsel, in form and substance reasonably
satisfactory to the Trustee, that such supplemental indenture constitutes the
legal, valid, binding and enforceable obligation of the Surviving Person.

     (c) For purposes of the foregoing, the transfer (by lease, assignment, sale
or otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Subsidiaries, the
Capital Stock of which constitutes all or substantially all of the properties
and assets of the Company, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.

     SECTION 5.02. Successor Corporation Substituted.

     Upon any consolidation, amalgamation or merger, or any sale, assignment,
conveyance, transfer, lease or disposition of all or substantially all of the
properties and assets of the Company in accordance with Section 5.01, the
Surviving Person shall succeed to, and be substituted for, and may exercise
every right and power of the Company under this Indenture, with the same effect
as if such successor had been named as the Company in this Indenture; and
thereafter, the Company shall be discharged from all obligations and covenants
under this Indenture and the Notes.


ARTICLE SIX

                                    REMEDIES



<PAGE>
                                      -51-


     SECTION 6.01. Events of Default.

     "Events of Default", wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

          (i) a default for 30 days in the payment when due of interest on, or
     Additional Interest (if any) with respect to, any Note (whether or not
     prohibited by the subordination provisions of this Indenture);

          (ii) a default in the payment when due of principal on any Note
     (whether or not prohibited by the subordination provisions of this
     Indenture), whether upon maturity, acceleration, optional or mandatory
     redemption, required repurchase or otherwise;

          (iii) failure to perform or comply with any covenant, agreement or
     warranty in this Indenture (other than the defaults specified in clauses
     (i) and (ii) above) which failure continues for 30 days after written
     notice thereof has been given to the Company by the Trustee or to the
     Company and the Trustee by the holders of at least 25% in aggregate
     principal amount of the then outstanding Notes;

          (iv) the occurrence of one or more defaults under any agreements,
     indentures or instruments under which the Company or any Restricted
     Subsidiary then has outstanding Indebtedness in excess of $5.0 million in
     the aggregate and, if not already matured at its final maturity in
     accordance with its terms, such Indebtedness shall have been accelerated
     and such acceleration is not rescinded, annulled or cured within 10 days
     thereafter;

          (v) one or more judgments, orders or decrees for the payment of money
     in excess of $5.0 million, either individually or in the aggregate, shall
     be entered against the Company or any Restricted Subsidiary or any of their
     respective properties and which judgments, orders or decrees are not paid,
     discharged, bonded or stayed or stayed pending appeal for a period of 60
     days after their entry;

          (vi) the Company or any Significant Subsidiary shall (A) commence a
     voluntary case or proceeding under any Bankruptcy Law with respect to
     itself, (B) consent to the entry of a judgment, decree or order for relief
     against it in an involuntary case or proceeding under any Bankruptcy Law,
     (C) consent to the appointment of a Custodian of it or for substantially
     all of its property, (D) consent to or acquiesce in the institution of a
     bankruptcy or an insolvency proceeding against it, (E) make a general
     assignment for the benefit of its creditors, (F) admit in writing its
     inability to pay its debts as they become due, or (G) take any corporate
     action to authorize or effect any of the foregoing;

          (vii) a court of competent jurisdiction shall enter a judgment, decree
     or order for relief in respect of the Company or any Significant Subsidiary
     in an involuntary case or proceeding under any Bankruptcy Law which shall
     (A) approve as properly filed a petition seeking reorganization,
     arrangement, adjustment or composition in respect of the Company or any
     Significant Subsidiary, (B) appoint a Custodian of the Company or any
     Significant Subsidiary or for substantially all of its property or (C)
     order the winding-up or liquidation of its affairs; and such judgment,
     decree or order shall remain unstayed and in effect for a period of 60
     consecutive days; or


<PAGE>
                                      -52-


          (viii) any Guarantee of a Significant Subsidiary ceases to be in full
     force and effect (other than as expressly provided for under this
     Indenture) or is declared null and void, or any Guarantor which is a
     Significant Subsidiary denies that it has any further liability under any
     Guarantee, or gives notice to such effect (other than by reason of the
     termination of this Indenture or the release of any such Guarantee in
     accordance with this Indenture).

     The Company shall provide an Officers' Certificate to the Trustee within
five days of the occurrence of any Default or Event of Default (provided,
however, that pursuant to Section 4.06 hereof the Company shall provide such
certification at least annually whether or not they know of any Default or Event
of Default) that has occurred and, if applicable, describe such Default or Event
of Default and the status thereof.

     SECTION 6.02. Acceleration.

     (a) If any Event of Default (other than as specified in clause (vi) or
(vii) of Section 6.01 with respect to the Company) occurs and is continuing, the
Trustee or the Holders of at least 25% in aggregate principal amount of the then
outstanding Notes may, and the Trustee at the written request of such Holders
shall, declare all the Notes to be due and payable immediately by notice in
writing to the Company, and to the Company and the Trustee if by the Holders,
specifying the respective Event of Default and that such notice is a "notice of
acceleration," and the Notes shall become immediately due and payable.
Notwithstanding the foregoing, in the case of an Event of Default arising from
the events specified in clause (vi) or (vii) of Section 6.01 with respect to the
Company, the principal of, premium, if any, and any accrued interest on all
outstanding Notes shall ipso facto become immediately due and payable without
further action or notice.

     (b) At any time after a declaration of acceleration, but before a judgment
or decree for payment of the money due has been obtained by the Trustee, the
Holders of a majority in principal amount of the Notes outstanding, by written
notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if (i) the Company has paid or deposited with the Trustee a
sum sufficient to pay (A) all sums paid or advanced by the Trustee and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, (B) all overdue interest (including any interest accrued
subsequent to an Event of Default specified in clause (vi) or (vii) of Section
6.01 hereof) on all Notes, (C) the principal of and premium, if any, on any
Notes which have become due otherwise than by such declaration or occurrence of
acceleration and interest thereon at the rate borne by the Notes, and (D) to the
extent that payment of such interest is lawful, interest upon overdue interest
at the rate borne by the Notes; and (ii) all Events of Default, other than the
non-payment of principal of Notes which have become due solely by such
declaration or occurrence of acceleration, have been cured or waived; and (iii)
the rescission would not conflict with any judgment, order or decree of any
court of competent jurisdiction.

     (c) The Holders of a majority in aggregate principal amount of the Notes
then outstanding by written notice to the Trustee may, on behalf of the Holders
of all of the Notes, waive any existing Default or Event of Default and its
consequences under this Indenture except (i) a continuing Default or Event of
Default in the payment of the principal of, or premium, if any, or interest on,
the Notes (which may be waived only with the consent of each Holder of Notes
affected), or (ii) in respect of a covenant or provision which under this
Indenture cannot be modified or amended without the consent of the Holder of
each Note outstanding.


<PAGE>
                                      -53-


     SECTION 6.03. Other Remedies.

     If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy by proceeding at law or in equity to collect the payment of the
principal of, premium, if any, or interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.

     All rights of action and claims under this Indenture or the Notes may be
enforced by the Trustee even if it does not possess any of the Notes or does not
produce any of them in the proceeding. A delay or omission by the Trustee or any
Holder in exercising any right or remedy accruing upon an Event of Default shall
not impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative to the extent permitted by law.

     SECTION 6.04. Waiver of Past Defaults.

     Prior to the declaration of acceleration of the Notes, the Holders of not
less than a majority in aggregate principal amount of the Notes then outstanding
by written notice to the Trustee may, on behalf of the Holders of all the Notes,
waive any existing Default or Event of Default and its consequences under this
Indenture, except a Default or Event of Default specified in Section 6.01(i) or
(ii) or in respect of any provision hereof which cannot be modified or amended
without the consent of the Holder so affected pursuant to Section 9.02. When a
Default or Event of Default is so waived, it shall be deemed cured and shall
cease to exist. This Section 6.04 shall be in lieu of ss. 316(a)(1)(B) of the
TIA and such ss. 316(a)(1)(B) of the TIA is hereby expressly excluded from this
Indenture and the Notes, as permitted by the TIA.

     SECTION 6.05. Control by Majority.

     Subject to Section 2.09, the Holders of the Notes may not enforce this
Indenture or the Notes except as provided in this Article Six and under the TIA.
The Holders of not less than a majority in aggregate principal amount of the
outstanding Notes shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, provided, however, that the Trustee
may refuse to follow any direction (a) that conflicts with any rule of law or
this Indenture, (b) that the Trustee determines, in its sole discretion, may be
unduly prejudicial to the rights of another Holder, or (c) that may expose the
Trustee to personal liability for which reasonable indemnity provided to the
Trustee against such liability shall be inadequate; provided, further, however,
that the Trustee may take any other action deemed proper by the Trustee that is
not inconsistent with such direction or this Indenture. This Section 6.05 shall
be in lieu of ss. 316(a)(1)(A) of the TIA, and such ss. 316(a)(1)(A) of the TIA
is hereby expressly excluded from this Indenture and the Notes, as permitted by
the TIA.

     SECTION 6.06. Limitation on Suits.

     No Holder of any Notes shall have any right to institute any proceeding
with respect to this Indenture or the Notes or any remedy hereunder, unless the
Holders of at least 25% in aggregate principal amount of the outstanding Notes
have made written request, and offered reasonable indemnity satisfactory to the
Trustee, to the Trustee to institute such proceeding as Trustee under the Notes
and this Indenture, the Trustee has failed to institute such proceeding within
45 days after receipt of such notice, request and offer of indemnity and the
Trustee, within

<PAGE>
                                      -54-


such 45-day period, has not received directions inconsistent with such written
request by Holders of not less than a majority in aggregate principal amount of
the outstanding Notes.

     The foregoing limitations shall not apply to a suit instituted by a Holder
of a Note for the enforcement of the payment of the principal of, premium, if
any, or interest on, such Note on or after the respective due dates expressed or
provided for in such Note.

     A Holder may not use this Indenture to prejudice the rights of any other
Holders or to obtain priority or preference over such other Holders.

     SECTION 6.07. Right of Holders To Receive Payment.

     Notwithstanding any other provision in this Indenture, the right of any
Holder of a Note to receive payment of the principal of, premium, if any, and
interest on such Note, on or after the respective due dates expressed or
provided for in such Note, or to bring suit for the enforcement of any such
payment on or after the respective due dates, is absolute and unconditional and
shall not be impaired or affected without the consent of the Holder.

     SECTION 6.08. Collection Suit by Trustee.

     If an Event of Default specified in clause (i) or (ii) of Section 6.01
occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Company, or any other obligor on the
Notes for the whole amount of the principal of, premium, if any, and accrued
interest remaining unpaid, together with interest on overdue principal and, to
the extent that payment of such interest is lawful, interest on overdue
installments of interest, in each case at the rate per annum provided for by the
Notes and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.

     SECTION 6.09. Trustee May File Proofs of Claim.

     The Trustee may 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
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents, counsel, accountants and experts) and
the Holders allowed in any judicial proceedings relative to the Company or
Restricted Subsidiaries (or any other obligor upon the Notes), their creditors
or their property and shall be entitled and empowered to participate as a
member, voting or otherwise, of any official committee of creditors appointed in
such matter and to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same, and any Custodian in
any such judicial proceedings is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agent and counsel, and any other amounts due the
Trustee under Section 7.07. The Company's payment obligations under this Section
6.09 shall be secured in accordance with the provisions of Section 7.07. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.

     SECTION 6.10. Priorities.


<PAGE>
                                      -55-


     If the Trustee collects any money pursuant to this Article Six it shall pay
out such money in the following order:

     First: to the Trustee for amounts due under Section 7.07;

     Second: to Holders for interest accrued on the Notes, ratably, without
     preference or priority of any kind, according to the amounts due and
     payable on the Notes for interest;

     Third: to Holders for the principal amounts (including any premium) owing
     under the Notes, ratably, without preference or priority of any kind,
     according to the amounts due and payable on the Notes for the principal
     (including any premium); and

     Fourth: the balance, if any, to the Company or any other obligor on the
     Notes, as their interests may appear, or as a court of competent
     jurisdiction may direct.

     The Trustee, upon prior written notice to the Company, may fix a record
date and payment date for any payment to Holders pursuant to this Section 6.10.

     SECTION 6.11. Undertaking for Costs.

     In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court may in its discretion require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.11
does not apply to any suit by the Trustee, any suit by a Holder pursuant to
Section 6.07, or a suit by a Holder or Holders of more than 10% in aggregate
principal amount of the outstanding Notes.

     SECTION 6.12. Restoration of Rights and Remedies.

     If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture or any Note and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the Company, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.


ARTICLE SEVEN

                                     TRUSTEE


     SECTION 7.01. Duties of Trustee.

     (a) If an Event of Default has occurred and is continuing, the Trustee may
exercise such of the rights and powers vested in it by this Indenture and shall
use the same degree of care and skill in its exercise thereof as a prudent
person would exercise or use under the circumstances in the conduct of his own
affairs.


<PAGE>
                                      -56-


     (b) Except during the continuance of an Event of Default:

          (1) The Trustee need perform only those duties as are specifically set
     forth in this Indenture and no duties, covenants or obligations of the
     Trustee shall be implied in this Indenture.

          (2) In the absence of bad faith on its part, the Trustee may
     conclusively rely, as to the truth of the statements and the correctness of
     the opinions expressed therein, upon certificates or opinions furnished to
     the Trustee and conforming to the requirements of this Indenture. However,
     in the case of any such certificates or opinions that by any provision
     hereof are specifically required to be furnished to the Trustee, the
     Trustee shall examine the certificates and opinions to determine whether or
     not they conform to the requirements of this Indenture (but need not
     confirm or investigate the accuracy or mathematical calculations or other
     facts stated therein or otherwise verify the contents thereof).

     (c) Notwithstanding anything to the contrary herein contained, the Trustee
may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:

          (1) This paragraph does not limit the effect of paragraph (b) of this
     Section 7.01.

          (2) The Trustee shall not be liable for any error of judgment made in
     good faith by a Trust Officer, unless it is proved that the Trustee was
     negligent in ascertaining the pertinent facts.

          (3) The Trustee shall not be liable with respect to any action it
     takes or omits to take in good faith in accordance with a direction
     received by it pursuant to Section 6.02, 6.04 or 6.05.

     (d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or powers
if it shall have reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk or liability is not reasonably assured
to it.

     (e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01 and
Section 7.02.

     (f) The Trustee shall not be liable for interest on any money or assets
received by it except as the Trustee may agree in writing with the Company.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.

     (g) The Trustee may refuse to perform any duty or exercise any right or
power hereunder unless (i) it is provided adequate funds to enable it to do so
and (ii) it receives indemnity satisfactory to it, in its sole discretion,
against any loss, liability, fee or expense.

     SECTION 7.02. Rights of Trustee.

     Subject to Section 7.01:


<PAGE>
                                      -57-


          (a) The Trustee may conclusively rely and shall be fully protected in
     acting or refraining from acting upon any document believed by it to be
     genuine and to have been signed or presented by the proper Person. The
     Trustee need not and shall not be required to investigate any fact or
     matter stated in the document.

          (b) Before the Trustee acts or refrains from acting, it may consult
     with counsel of its selection and may require an Officers' Certificate or
     an Opinion of Counsel, or both, which shall conform to Sections 11.04 and
     11.05. The Trustee shall not be liable for any action it takes or omits to
     take in good faith in reliance on such Officers' Certificate or Opinion of
     Counsel.

          (c) The Trustee may act through its attorneys and agents and shall not
     be responsible for the misconduct or negligence of any agent appointed with
     due care.

          (d) The Trustee shall not be liable for any action that it takes or
     omits to take in good faith which it reasonably believes to be authorized
     or within its rights or powers.

          (e) The Trustee shall not be bound to make any investigation into the
     facts or matters stated in any resolution, certificate, statement,
     instrument, opinion, notice, request, direction, consent, order, bond,
     debenture, or other paper or document, but the Trustee, in its discretion,
     may make such further inquiry or investigation into such facts or matters
     as it may see fit, and, if the Trustee shall determine to make such further
     inquiry or investigation, it shall be entitled, upon reasonable notice to
     the Company, to examine the books, records, and premises of the Company,
     personally or by agent or attorney and to consult with the officers and
     representatives of the Company, including the Company's accountants and
     attorneys.

          (f) The Trustee shall be under no obligation to exercise any of the
     rights or powers vested in it by this Indenture at the request, order or
     direction of any of the Holders pursuant to the provisions of this
     Indenture, unless such Holders shall have offered to the Trustee security
     or indemnity satisfactory to the Trustee against the costs, expenses and
     liabilities which may be incurred by it in compliance with such request,
     order or direction.

          (g) The Trustee shall not be required to give any bond or surety in
     respect of the performance of its powers and duties hereunder.

          (h) Delivery of reports, information and documents to the Trustee
     under Section 4.08 is for informational purposes only and the Trustee's
     receipt of the foregoing shall not constitute constructive notice of any
     information contained therein or determinable from information contained
     therein, including the Company's compliance with any of their covenants
     hereunder (as to which the Trustee is entitled to rely exclusively on
     Officers' Certificates).

          (i) The permissive right of the Trustee to act hereunder shall not be
     construed as a duty.

     SECTION 7.03. Individual Rights of Trustee.

     The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Company, any of their
Subsidiaries, or their

<PAGE>
                                      -58-


respective Affiliates with the same rights it would have if it were not Trustee.
Any Agent may do the same with like rights. However, the Trustee must comply
with Sections 7.10 and 7.11.

     SECTION 7.04. Trustee's Disclaimer.

     The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Notes, and it shall not be
accountable for the Company's use of the proceeds from the Notes, and it shall
not be responsible for any statement of the Company in this Indenture or any
document entered into or issued in connection with the issuance and sale of the
Notes or any statement in the Notes other than the Trustee's certificate of
authentication.

     SECTION 7.05. Notice of Default.

     If a Default or an Event of Default occurs and is continuing and if it is
known to a Trust Officer, the Trustee shall mail to each Holder notice of the
uncured Default or Event of Default within 90 days after obtaining knowledge
thereof. Except in the case of a Default or an Event of Default in payment of
principal of, or interest on, any Note, including an accelerated payment, a
Default in payment on the Change of Control Purchase Date pursuant to a Change
of Control Offer or on the Asset Sale Purchase Date pursuant to a Asset Sale
Offer and a Default in compliance with Article Five hereof, the Trustee may
withhold the notice if and so long as its Board of Directors, the executive
committee of its Board of Directors or a committee of its directors and/or Trust
Officers in good faith determines that withholding the notice is in the interest
of the Holders. The foregoing sentence of this Section 7.05 shall be in lieu of
the proviso to ss. 315(b) of the TIA and such proviso to ss. 315(b) of the TIA
is hereby expressly excluded from this Indenture and the Notes, as permitted by
the TIA.

     SECTION 7.06. Reports by Trustee to Holders.

     Within 60 days after April 15 of each year beginning with 1999, the Trustee
shall, to the extent that any of the events described in TIA ss. 313(a) occurred
within the previous twelve months, but not otherwise, mail to each Holder a
brief report dated as of such date that complies with TIA ss. 313(a). The
Trustee also shall comply with TIA ss.ss. 313(b), (c) and (d).

     A copy of each report at the time of its mailing to Holders shall be mailed
to the Company and filed with the Commission and each stock exchange, if any, on
which the Notes are listed.

     The Company shall promptly notify the Trustee if the Notes become listed on
any stock exchange and the Trustee shall comply with TIA ss. 313(d).

     SECTION 7.07. Compensation and Indemnity.

     The Company and the Guarantors, jointly, shall pay to the Trustee from time
to time such compensation for its services as has been agreed to in writing
signed by the Company and the Trustee. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
and the Guarantors, jointly and severally, shall reimburse the Trustee upon
request for all reasonable out-of-pocket disbursements, advances or expenses
incurred or made by it in connection with the performance of its duties under
this Indenture. Such expenses shall include the reasonable fees and expenses of
the Trustee's agents, counsel, accountants and experts.


<PAGE>
                                      -59-


     The Company and the Guarantors, jointly and severally, shall indemnify each
of the Trustee (or any predecessor Trustee) and its agents, employees,
stockholders, Affiliates and directors and officers for, and hold them each
harmless against, any and all loss, liability, damage, claim or expense
(including reasonable fees and expenses of counsel), including taxes (other than
taxes based on the income of the Trustee) incurred by any of them except for
such actions to the extent caused by any negligence, bad faith or willful
misconduct on their part, arising out of or in connection with the acceptance or
administration of this trust including the reasonable costs and expenses of
defending themselves against any claim or liability in connection with the
exercise or performance of any of their rights, powers or duties hereunder. The
Trustee shall notify the Company and the Guarantors promptly of any claim
asserted against the Trustee for which it may seek indemnity, provided, however,
that failure to so notify the Company and the Guarantors shall not release the
Company and the Guarantors of their obligations hereunder unless and to the
extent such failure results in the forfeiture by the Company and the Guarantors
of any substantial rights or defenses. At the Trustee's sole discretion, the
Company and the Guarantors shall defend the claim and the Trustee shall
cooperate and may participate in the defense; provided, however, that any
settlement of a claim shall be approved in writing by the Trustee (such approval
not to be unreasonably withheld) if such settlement would result in an admission
of liability by the Trustee or if such settlement would not be accompanied by a
full release of the Trustee for all liability arising out of the events giving
rise to such claim. Alternatively, the Trustee may at its option have separate
counsel of its own choosing and the Company shall pay the reasonable fees and
expenses of such counsel; provided that the Company will not be required to pay
such fees and expenses if it assumes the Trustee's defense and there is no
conflict of interest between the Company and the Trustee in connection with such
defense as reasonably determined by the Trustee. The Company need not pay for
any settlement made without its written consent, which consent will not be
unreasonably withheld. The Company need not reimburse any expense or indemnify
against any loss or liability to the extent incurred by the Trustee through its
negligence, bad faith or willful misconduct.

     To secure the Company and the Guarantors' payment obligations in this
Section 7.07, the Trustee shall have a lien prior to the Notes on all assets or
money held or collected by the Trustee (subject to the subordination provisions
of Article Ten hereof), in its capacity as Trustee, except assets or money held
in trust to pay principal of or premium, if any, or interest on particular
Notes.

     When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(vi) or (vii) occurs, such expenses and the
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law.

     The provisions of this Section 7.07 shall survive the resignation or
removal of the Trustee and the discharge or termination of this Indenture.

     SECTION 7.08. Replacement of Trustee.

     The Trustee may resign at any time by so notifying the Company in writing
at least 30 days in advance of such resignation; provided, however, that no such
resignation shall be effective until a successor Trustee has accepted its
appointment pursuant to this Section 7.08. The Holders of a majority in
principal amount of the outstanding Notes may remove the Trustee and

<PAGE>
                                      -60-


appoint a successor Trustee with the Company's consent, by so notifying the
Company and the Trustee. The Company may remove the Trustee if:

          (1) the Trustee fails to comply with Section 7.10;

          (2) the Trustee is adjudged bankrupt or insolvent or an order for
     relief is entered with respect to the Trustee under any Bankruptcy Law;

          (3) a receiver or other public officer takes charge of the Trustee or
     its property; or

          (4) the Trustee becomes incapable of acting.

     If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall notify each Holder of such event
and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in aggregate principal
amount of the outstanding Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.

     A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Immediately after that, the retiring
Trustee shall transfer all property held by it as Trustee to the successor
Trustee, subject to the lien provided in Section 7.07, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail notice of such successor Trustee's
appointment to each Holder.

     If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in aggregate principal amount of the outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.

     If the Trustee fails to comply with Section 7.10, any Holder may petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.

     Notwithstanding any resignation or replacement of the Trustee pursuant to
this Section 7.08, the Company's obligations under Section 7.07 shall continue
for the benefit of the retiring Trustee.

     SECTION 7.09. Successor Trustee by Merger, Etc.

     If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the resulting, surviving or transferee corporation without any further act
shall, if such resulting, surviving or transferee corporation is otherwise
eligible hereunder, be the successor Trustee; provided, however, that such
corporation shall be otherwise qualified and eligible under this Article Seven.

     SECTION 7.10. Eligibility; Disqualification.

     This Indenture shall always have a Trustee who satisfies the requirement of
TIA ss.ss. 310(a)(1), (2) and (5). The Trustee (or, in the case of a Trustee
that is a corporation included in

<PAGE>
                                      -61-


a bank holding company system, the related bank holding company) shall have a
combined capital and surplus of at least $100 million as set forth in its most
recent published annual report of condition, and have a Corporate Trust Office
in the City of New York. In addition, if the Trustee is a corporation included
in a bank holding company system, the Trustee, independently of such bank
holding company, shall meet the capital requirements of TIA ss. 310(a)(2). The
Trustee shall comply with TIA ss. 310(b); provided, however, that there shall be
excluded from the operation of TIA ss. 310(b)(1) any indenture or indentures
under which other securities, or certificates of interest or participation in
other securities, of the Company are outstanding, if the requirements for such
exclusion set forth in TIA ss. 310(b)(1) are met. The provisions of TIA ss. 310
shall apply to the Company, as obligor of the Notes.

     SECTION 7.11. Preferential Collection of Claims Against the Company.

     The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein. The
provisions of TIA ss. 311 shall apply to the Company, as obligor of the Notes.

ARTICLE EIGHT

                     SATISFACTION AND DISCHARGE; DEFEASANCE


     SECTION 8.01. Satisfaction and Discharge of Indenture.

     (a) This Indenture shall be discharged and shall cease to be of further
effect (except as to surviving rights of registration of transfer or exchange of
Notes herein expressly provided for) as to all outstanding Notes and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture, when:

          (i) either

               (1) Notes theretofore authenticated and delivered (other than (x)
          Notes which have been lost, stolen or destroyed and which have been
          replaced or paid as provided in Section 2.07 hereof and (y) Notes with
          respect to which payment therefor has theretofore been deposited in
          trust by the Company and thereafter repaid to the Company or
          discharged from such trust) have been delivered to the Trustee for
          cancellation; or

               (2) all Notes not theretofore delivered to the Trustee for
          cancellation (other than (x) Notes which have been lost, stolen or
          destroyed and which have been replaced or paid as provided in Section
          2.07 hereof and (y) Notes with respect to which payment therefor has
          theretofore been deposited in trust or segregated and held in trust by
          the Company and thereafter repaid to the Company or discharged from
          such trust) have been called for redemption pursuant to the terms of
          this Indenture or have otherwise become due and payable, and the
          Company, in each case, has irrevocably deposited or caused to be
          deposited with the Trustee in trust for the purpose U.S. Legal Tender
          sufficient to pay and discharge the entire

<PAGE>
                                      -62-


          indebtedness on such Notes not theretofore delivered to the Trustee
          for cancellation, for the principal of, premium, if any, and interest
          to the date of such deposit;

          (ii) the Company has paid or caused to be paid all other sums payable
     hereunder by the Company; and

          (iii) the Company has delivered to the Trustee an Officers'
     Certificate and an Opinion of Counsel each stating that all conditions
     precedent herein provided for relating to the satisfaction and discharge of
     this Indenture have been complied with.

     (b) Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 7.07 hereof shall
survive and, if money shall have been deposited with the Trustee pursuant to
clause (a)(i)(2) of this Section 8.01, the obligations of the Trustee under
Sections 8.03 and 8.04 shall survive.

     SECTION 8.02. Defeasance or Covenant Defeasance.

     (a) Subject to the satisfaction of the conditions in Section 8.02(c)
hereof, the Company may, at its option by Board Resolution, at any time, with
respect to the Notes, elect to have the obligations of the Company discharged
with respect to the outstanding Notes ("defeasance"). Upon such defeasance, the
Company shall be deemed to have paid and discharged the entire indebtedness
represented by the outstanding Notes, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.04 hereof and the other
Sections of and matters under this Indenture referred to in (i) and (ii) below,
and to have satisfied all its other obligations under such Notes and this
Indenture, except for the following, which shall survive until otherwise
terminated or discharged hereunder: (i) the rights of Holders of Notes to
receive solely from the trust fund described in Section 8.02(c) and as more
fully set forth in such Section, payments in respect of the principal of,
premium, if any, and interest on such Notes when such payments are due, (ii) the
Company's obligations under Sections 2.03, 2.05, 2.06, 2.07, 2.10 and 4.02,
(iii) the rights, powers, trusts, duties and immunities of the Trustee
hereunder, including, without limitation, the Trustee's rights under Section
7.07, and (iv) this Article Eight. Subject to compliance with this Article
Eight, the Company may exercise its option under this Section 8.02(a)
notwithstanding the prior exercise of its option under Section 8.02(b) with
respect to the Notes.

     (b) Subject to the satisfaction of the conditions in Section 8.02(c)
hereof, the Company may, at its option by Board Resolution, at any time, elect
to effect covenant defeasance ("covenant defeasance"). On and after the date
such conditions are satisfied, (i) the Company shall be released from its
obligations under any covenant or provision contained in Sections 4.03 (but only
as to Restricted Subsidiaries), 4.04, 4.05, 4.06, 4.07, 4.08 and 4.10 through
4.23, (ii) clauses (iii) through (vi) of Section 6.01 hereof shall not apply,
and (iii) the provisions of Articles Five and Ten shall not apply, and the Notes
shall thereafter be deemed to be not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants and the
provisions of Articles Five and Ten, but shall continue to be deemed
"outstanding" for all other purposes hereunder and subject to any mandatory
requirements of the TIA. For this purpose, such covenant defeasance means that,
with respect to the Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
Section or Article, whether directly or indirectly, by reason of any reference
elsewhere herein to any such Section or Article or by reason

<PAGE>
                                      -63-


of any reference in any such Section or Article to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or an Event of Default under clauses (iii) through (vi) of Section 6.01 hereof,
but, except as specified above, the remainder of this Indenture shall be
unaffected thereby.

     (c) In order to effect defeasance or covenant defeasance, the following
conditions must be satisfied:

          (i) the Company shall have irrevocably deposited with the Trustee (or
     another trustee satisfying the requirements of Section 7.10 hereof who
     agrees to comply with the provisions of this Article Eight applicable to
     it), as trust funds in trust, for the benefit of the Holders of such Notes,
     U.S. Legal Tender, U.S. Government Obligations or a combination thereof, in
     such amounts as will be sufficient, in the opinion of a nationally
     recognized firm of independent public accountants or a nationally
     recognized investment banking firm, as evidenced by a written report,
     without consideration of reinvestment of interest of such U.S. Government
     Obligations, to pay the principal of, premium, if any, and interest on the
     outstanding Notes (except lost, stolen or destroyed Notes which have been
     replaced or paid) to maturity or redemption, as the case may be, and the
     Company shall have irrevocably instructed the Trustee (or such other
     trustee) to apply such U.S. Legal Tender or U.S. Government Obligations to
     said payments in respect of the Notes;

          (ii) the Company shall have delivered to the Trustee one or more
     Opinions of Counsel in the United States (which counsel or counsels shall
     be independent of the Company) to the effect that:

               (A) the Holders of the outstanding Notes will not recognize
          income, gain or loss for Federal income tax purposes as a result of
          such defeasance or covenant defeasance, as the case may be, and will
          be subject to Federal income tax on the same amounts, in the same
          manner and at the same times as would have been the case if such
          defeasance or covenant defeasance, as the case may be, had not
          occurred (which opinion, in the case of defeasance, shall be based
          upon a ruling of the Internal Revenue Service or a change in
          applicable Federal income tax law occurring after the Issue Date);

               (B) the trust funds will not be subject to any rights of holders
          of Indebtedness of the Company (other than Holders of the Notes); and

               (C) after the 91st day following the deposit the trust funds will
          not be subject to the effect of any applicable bankruptcy, insolvency,
          reorganization or similar laws affecting creditors' rights generally;

          (iii) no Default or Event of Default shall have occurred and be
     continuing on the date of such deposit or, in the case of Section 6.01(vi)
     or (vii), at any time during the period ending on the 91st day after the
     date of such deposit;

          (iv) such defeasance or covenant defeasance shall not result in a
     breach or violation of, or constitute a default under, the Indenture or any
     other material agreement or instrument to which the Company is a party or
     by which it is bound; and

          (v) the Company shall have delivered to the Trustee an Officers'
     Certificate and an Opinion of Counsel, each stating that all conditions
     precedent (other than

<PAGE>
                                      -64-


     conditions requiring the passage of time) to either defeasance or covenant
     defeasance, as the case may be, have been complied with and that no
     violations under agreements governing any other outstanding Indebtedness of
     the Company would result therefrom.

     Opinions required to be delivered under this Section may have
qualifications customary for opinions of the type required.

     SECTION 8.03. Application of Trust Money.

     The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or U.S.
Government Obligations deposited with it pursuant to Section 8.01 or 8.02, and
shall apply the deposited U.S. Legal Tender and the money from U.S. Government
Obligations in accordance with this Indenture to the payment of the principal of
and interest on the Notes. The Trustee shall be under no obligation to invest
said U.S. Legal Tender or U.S. Government Obligations except as it may agree in
writing with the Company.

     The Company shall pay, and indemnify the Trustee against, any tax, fee or
other charge imposed on or assessed against the U.S. Legal Tender or U.S.
Government Obligations deposited pursuant to Section 8.01 or 8.02 or the
principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of outstanding
Notes.

     SECTION 8.04. Repayment to the Company.

     Subject to Sections 8.01 and 8.02, the Trustee and the Paying Agent shall
promptly pay to the Company upon written request any excess U.S. Legal Tender or
U.S. Government Obligations held by them at any time and thereupon shall be
relieved from all liability with respect to such money. The Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal or interest that remains unclaimed for one year;
provided, however, that the Trustee or such Paying Agent, before being required
to make any payment, may at the expense of the Company cause to be published
once in a newspaper of general circulation in the City of New York or mail to
each Holder entitled to such money notice that such money remains unclaimed and
that after a date specified therein which shall be at least 30 days from the
date of such publication or mailing any unclaimed balance of such money then
remaining will be repaid to the Company. After payment to the Company, Holders
entitled to such money must look to the Company for payment as general creditors
unless an applicable law designates another Person.

     SECTION 8.05. Reinstatement.

     If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender or
U.S. Government Obligations in accordance with Section 8.01 or 8.02 by reason of
any legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Notes shall
be revived and reinstated as though no deposit had occurred pursuant to Section
8.01 or 8.02, as the case may be, until such time as the Trustee or Paying Agent
is permitted to apply all such U.S. Legal Tender or U.S. Government Obligations
in accordance with Section 8.01 or 8.02, as the case may be; provided, however,
that if the Company has made any payment of interest on or principal of any
Notes because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive

<PAGE>
                                      -65-


such payment from the U.S. Legal Tender or U.S. Government Obligations held by
the Trustee or Paying Agent.

     SECTION 8.06. Acknowledgment of Discharge by Trustee.

     After (i) the conditions of Section 8.01 or 8.02(a) have been satisfied,
(ii) the Company has paid or caused to be paid all other sums payable hereunder
by the Company and (iii) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent referred to in clause (i), above, relating to the satisfaction and
discharge or defeasance of this Indenture have been complied with, the Trustee
upon request shall acknowledge in writing the discharge of the Company's
obligations under this Indenture except for those surviving obligations
specified in Section 8.01 or 8.02, as the case may be.

ARTICLE NINE

                       AMENDMENTS, SUPPLEMENTS AND WAIVERS


     SECTION 9.01. Without Consent of Holders.

     The Company, when authorized by a Board Resolution, and the Trustee,
together, may amend or supplement this Indenture or the Notes without notice to
or consent of any Holder:

          (i) to cure any ambiguity, defect or inconsistency; provided, however,
     that such amendment or supplement does not adversely affect the rights of
     any Holder;

          (ii) to effect the assumption by a successor Person of all obligations
     of the Company under the Notes, this Indenture and, if still in effect, the
     Registration Rights Agreement in the event of any Disposition involving the
     Company in which the Company is not the Surviving Person;

          (iii) to provide for uncertificated Notes in addition to or in place
     of certificated Notes;

          (iv) to comply with any requirements of the Commission in order to
     effect or maintain the qualification of this Indenture under the TIA;

          (v) to make any change that would provide any additional benefit or
     rights to the Holders;

          (vi) to provide for issuance of the Exchange Notes (which will have
     terms substantially identical in all material respects to the Initial Notes
     except that the transfer restrictions contained in the Initial Notes will
     be modified or eliminated, as appropriate), and which will be treated
     together with any outstanding Initial Notes, as a single issue of
     securities; or

          (vii) to make any other change that does not adversely affect the
     rights of any Holder under this Indenture;


<PAGE>
                                      -66-


provided, however, that the Company has delivered to the Trustee an Opinion of
Counsel stating that such amendment or supplement complies with the provisions
of this Section 9.01.

     SECTION 9.02. With Consent of Holders.

     (a) Subject to Section 6.07, the Company, when authorized by a Board
Resolution, and the Trustee, together, with the written consent of the Holder or
Holders of not less than a majority in aggregate principal amount of the then
outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for the Notes), may amend or supplement this Indenture or the
Notes without notice to any other Holder. Subject to Section 6.02 and 6.07, the
Holder or Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes may waive compliance by the Company with any
provision of this Indenture or the Notes without notice to any other Holder.

     (b) Notwithstanding Section 9.02(a) hereof, no amendment, supplement or
waiver, including a waiver pursuant to Section 6.04, shall, without the prior
written consent of each Holder of each Note affected thereby:

          (i) reduce the principal amount of the Notes whose Holders must
     consent to an amendment, supplement or waiver;

          (ii) reduce the principal of or change the fixed maturity of any Note,
     or alter or waive the provisions with respect to the redemption of the
     Notes in a manner adverse to the Holders of the Notes other than with
     respect to a Change of Control Offer or an Asset Sale Offer;

          (iii) reduce the rate of or change the time for payment of interest on
     any Notes;

          (iv) waive a Default or Event of Default in the payment of principal
     of, premium, if any, or interest on the Notes (except that Holders of at
     least a majority in aggregate principal amount of the then outstanding
     Notes may (a) rescind an acceleration of the Notes that resulted from a
     non-payment default and (b) waive the payment default that resulted from
     such acceleration);

          (v) make any Note payable in money other than that stated in the
     Notes;

          (vi) make any change in the provisions of this Indenture relating to
     the rights of Holders to waive past Defaults or Events of Default or the
     rights of Holders to receive payments of principal of, or premium, if any,
     or interest on, the Notes; or

          (vii) following the occurrence of a Change of Control, amend, change
     or modify the Company's obligation to make and consummate a Change of
     Control Offer by reason of such Change of Control or modify any of the
     provisions or definitions with respect thereto in a manner adverse to the
     Holders with respect to such Change of Control, or following the occurrence
     of an Asset Sale, amend, change or modify the Company's obligation to make
     and consummate an Asset Sale Offer with respect to such Asset Sale or
     modify any of the provisions or definitions with respect thereto in a
     manner adverse to the Holders with respect to such Asset Sale.


<PAGE>
                                      -67-


     (c) It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.

     (d) After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.

     SECTION 9.03. Compliance with TIA.

     Every amendment, waiver or supplement of this Indenture or the Notes shall
comply with the TIA as then in effect; provided, however, that this Section 9.03
shall not of itself require that this Indenture or the Trustee be qualified
under the TIA or constitute any admission or acknowledgment by any party hereto
that any such qualification is required prior to the time this Indenture and the
Trustee are required by the TIA to be so qualified.

     SECTION 9.04. Revocation and Effect of Consents.

     Until an amendment, waiver or supplement becomes effective, a consent to it
by a Holder is a continuing consent by the Holder and every subsequent Holder of
a Note or portion of a Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is not made on any Note. Subject
to the following paragraph, any such Holder or subsequent Holder may revoke the
consent as to such Holder's Note or portion of such Note by notice to the
Trustee or the Company received before the date on which the Trustee receives an
Officers' Certificate certifying that the Holders of the requisite principal
amount of Notes have consented (and not theretofore revoked such consent) to the
amendment, supplement or waiver. An amendment, supplement or waiver becomes
effective upon receipt by the Trustee of such Officers' Certificate and evidence
of consent by the Holders of the requisite percentage in principal amount of
outstanding Notes.

     The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be at least 30 days prior to the
first solicitation of such consent. If a record date is fixed, then
notwithstanding the second sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date (or their duly designated
proxies), and only those Persons, shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.

     After an amendment, supplement or waiver becomes effective, it shall bind
every Holder, unless it makes any change described in Section 9.02(b), in which
case, the amendment, supplement or waiver shall bind only each Holder of a Note
who has consented to it and every subsequent Holder of a Note or portion of a
Note that evidences the same debt as the consenting Holder's Note; provided,
however, that any such waiver shall not impair or affect the right of any Holder
to receive payment of principal of and interest on a Note, on or after the
respective due dates expressed in such Note, or to bring suit for the
enforcement of any such payment on or after such respective dates without the
consent of such Holder.

     SECTION 9.05. Notation on or Exchange of Notes.


<PAGE>
                                      -68-


     If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder of such Note to deliver it to the Trustee. The
Trustee may place an appropriate notation on the Note about the changed terms
and return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms.

     SECTION 9.06. Trustee To Sign Amendments, Etc.

     The Trustee shall execute any amendment, supplement or waiver authorized
pursuant to this Article Nine; provided, however, that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel and an Officers' Certificate
each stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article Nine is authorized or permitted by this
Indenture. Such Opinion of Counsel shall not be an expense of the Trustee or the
Holders.


ARTICLE TEN

                                  SUBORDINATION


     SECTION 10.01. Notes Subordinated to Senior Debt.

     The Company covenants and agrees, and each Holder of the Notes, by its
acceptance thereof, likewise covenants and agrees, that all Notes shall be
issued subject to the provisions of this Article Ten; and each Person holding
any Note, whether upon original issue or upon transfer, assignment or exchange
thereof, accepts and agrees that the payment of all obligations on the Notes by
the Company shall, to the extent and in the manner herein set forth, be
subordinated and junior in right of payment to the prior payment in full, in
cash in the case of the Credit Facility, or in cash or in Cash Equivalents
(other than clause (vi) in the definition of Cash Equivalents or investments in
money market funds thereto) in the case of any other Senior Debt, of all
obligations on Senior Debt, including, without limitation, the Company's
obligations under the Credit Facility; that the subordination is for the benefit
of, and shall be enforceable directly by, the holders of Senior Debt, and that
each holder of Senior Debt whether now outstanding or hereafter created,
incurred, assumed or guaranteed shall be deemed to have acquired Senior Debt in
reliance upon the covenants and provisions contained in this Indenture and the
Notes.

     SECTION 10.02. Suspension of Payment When Senior Debt Is in Default.

     (a) The Company shall not make any payment upon or in respect of the Notes
(except from the trust created pursuant to Section 8.02) if (i) a default in the
payment of the principal of, premium, if any, or interest on any Designated
Senior Debt occurs and is continuing, whether at maturity or on a date fixed for
payment or prepayment or by declaration of acceleration or otherwise, or (ii)
the Trustee has received written notice ("Payment Blockage Notice") from the
Representative of any holders of Designated Senior Debt that a nonpayment
default has occurred and is continuing with respect to such Designated Senior
Debt that permits such holders to accelerate the maturity of such Designated
Senior Debt. Payments on the Notes shall resume (and all past due amounts on the
Notes, with interest thereon as specified in this Indenture, shall be

<PAGE>
                                      -69-


paid) (i) in the case of a payment default in respect of any Designated Senior
Debt, on the date on which such default is cured or waived or otherwise ceases
to exist; and (ii) in the case of a nonpayment default in respect of any
Designated Senior Debt, on the earlier of (a) the date on which such nonpayment
default is cured or waived, or (b) 179 days after the date on which the Payment
Blockage Notice with respect to such default was received by the Trustee, in
each case, unless the maturity of any Designated Senior Debt has been
accelerated and the Company has defaulted with respect to the payment of such
Designated Senior Debt, or (c) the date on which such Payment Blockage Period
(as defined below) shall have been terminated by written notice to the Company
or the Trustee from the Representative of the holders of Designated Senior Debt
initiating such Payment Blockage Period. During any consecutive 365-day period,
the aggregate number of days in which payments due on the Notes may not be made
as a result of nonpayment defaults on Designated Senior Debt (a "Payment
Blockage Period") shall not exceed 179 days, and there shall be a period of at
least 186 consecutive days in each consecutive 365-day period during which no
Payment Blockage Period is in effect. No event or circumstance that creates a
nonpayment default under any Designated Senior Debt that (i) gives rise to the
commencement of a Payment Blockage Period or (ii) exists at the commencement of
or during any Payment Blockage Period shall be made the basis for the
commencement of any subsequent Payment Blockage Period unless such default has
been cured or waived for a period of not less than 90 consecutive days. In no
event shall a Payment Blockage Period extend beyond 179 days from the date of
the receipt of the Payment Blockage Notice. Any number of notices of a
nonpayment default may be given during a Payment Blockage Period; provided,
however, that no such notice shall extend such Payment Blockage Period beyond
179-day limit.

     (b) In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee or any Holder when, and after the Trustee has been
notified that, such payment is prohibited by Section 10.02(a), such payment
shall be held for the benefit of, and shall be paid over or delivered to, the
holders of Senior Debt (pro rata to such holders on the basis of the respective
amount of Senior Debt held by such holders) or their respective Representatives,
as their respective interests may appear. The Trustee shall be entitled to rely
on information regarding amounts then due and owing on the Senior Debt, if any,
received from the holders of such Senior Debt (or their Representatives) or, if
such information is not received from such holders or their Representatives
after written request therefor, from the Company and only amounts included in
the information provided to the Trustee shall be paid to the holders of Senior
Debt.

     Nothing contained in this Article Ten shall limit the right of the Trustee
or the Holders of Notes to take any action to accelerate the maturity of the
Notes pursuant to Section 6.02 or to pursue any rights or remedies hereunder;
provided that all Senior Debt thereafter due or declared to be due shall first
be paid in full, in cash in the case of the Credit Facility, or in cash or in
Cash Equivalents (other than clause (vi) in the definition of Cash Equivalents
or investments in money market funds thereto) in the case of any other Senior
Debt, before the Holders are entitled to receive any payment of any kind or
character with respect to obligations on the Notes.

     SECTION 10.03. Notes Subordinated to Prior Payment of All Senior Debt on
Dissolution, Liquidation or Reorganization of Company.

     (a) Upon any direct or indirect payment or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any liquidation, dissolution, winding-up, reorganization,
assignment for the benefit of creditors

<PAGE>
                                      -70-


or marshaling of assets of the Company or in a bankruptcy, reorganization,
insolvency, receivership or other similar proceeding relating to the Company or
its property, whether voluntary or involuntary, all obligations due or to become
due upon all Senior Debt shall first be paid in full, in cash in the case of the
Credit Facility, or in cash or in Cash Equivalents (other than clause (vi) in
the definition of Cash Equivalents or investments in money market funds thereto)
in the case of any other Senior Debt, or such payment duly provided for to the
satisfaction of the holders of Senior Debt, before any payment or distribution
of any kind or character is made on account of any obligations on the Notes, or
for the acquisition, repurchase, redemption or defeasance of any of the Notes
for cash or property or otherwise. Upon any such dissolution, winding-up,
liquidation, reorganization, receivership or similar proceeding, any direct or
indirect payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to which the Holders of the
Notes or the Trustee under this Indenture would be entitled, except for the
provisions hereof, shall be paid by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Holders or by the Trustee under this Indenture if
received by them, directly to the holders of Senior Debt (pro rata to such
holders on the basis of the respective amounts of Senior Debt held by such
holders) or their respective Representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Senior Debt may have been
issued, as their respective interests may appear, for application to the payment
of Senior Debt remaining unpaid until all such Senior Debt has been paid in
full, in cash in the case of the Credit Facility, or in cash or in Cash
Equivalents (other than clause (vi) in the definition of Cash Equivalents or
investments in money market funds thereto) in the case of any other Senior Debt,
after giving effect to any concurrent payment, distribution or provision
therefor to or for the holders of Senior Debt.

     (b) To the extent any payment of Senior Debt (whether by or on behalf of
the Company, as proceeds of security or enforcement of any right of setoff or
otherwise) is declared to be fraudulent or preferential, set aside or required
to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or
other similar Person under any bankruptcy, insolvency, receivership, fraudulent
conveyance or similar law, then, if such payment is recovered by, or paid over
to, such receiver, trustee in bankruptcy, liquidating trustee, agent or other
similar Person, the Senior Debt or part thereof originally intended to be
satisfied shall be deemed to be reinstated and outstanding as if such payment
has not occurred.

     (c) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, shall be received by any Holder when such payment or
distribution is prohibited by this Section 10.03(c), such payment or
distribution shall be held in trust for the benefit of, and shall be paid over
or delivered to, the holders of Senior Debt (pro rata to such holders on the
basis of the respective amount of Senior Debt held by such holders) or their
respective Representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Senior Debt may have been issued, as their
respective interests may appear, for application to the payment of Senior Debt
remaining unpaid until all such Senior Debt has been paid in full, in cash in
the case of the Credit Facility, or in cash or in Cash Equivalents (other than
clause (vi) in the definition of Cash Equivalents or investments in money market
funds thereto) in the case of any other Senior Debt, after giving effect to any
concurrent payment, distribution or provision therefor to or for the holders of
such Senior Debt.

     (d) The consolidation of the Company with, or the merger of the Company
with or into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of all or substantially all of its
assets, to another corporation upon the terms

<PAGE>
                                      -71-


and conditions provided in Article Five hereof and as long as permitted under
the terms of the Senior Debt shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section if such other
corporation shall, as a part of such consolidation, merger, conveyance or
transfer, assume the Company's obligations hereunder in accordance with Article
Five hereof.

     SECTION 10.04. Holders To Be Subrogated to Rights of
                    Holders of Senior Debt.

     Subject to the payment in full, in cash in the case of the Credit Facility,
or in cash or in Cash Equivalents (other than clause (vi) in the definition of
Cash Equivalents or investments in money market funds thereto) in the case of
any other Senior Debt, of all Senior Debt, the Holders of the Notes shall be
subrogated to the rights of the holders of Senior Debt to receive payments or
distributions of cash, property or securities of the Company applicable to the
Senior Debt until the Notes shall be paid in full; and, for the purposes of such
subrogation, no such payments or distributions to the holders of the Senior Debt
by or on behalf of the Company or by or on behalf of the Holders by virtue of
this Article Ten which otherwise would have been made to the Holders shall, as
between the Company and the Holders of the Notes, be deemed to be a payment by
the Company to or on account of the Senior Debt, it being understood that the
provisions of this Article Ten are and are intended solely for the purpose of
defining the relative rights of the Holders of the Notes, on the one hand, and
the holders of the Senior Debt, on the other hand.

     Each Holder by purchasing or accepting a Note waives any and all notice of
the creation, modification, renewal, extension or accrual of any Senior Debt of
the Company and notice of or proof of reliance by any holder or owner of Senior
Debt of the Company upon this Article Ten and the Senior Debt of the Company
shall conclusively be deemed to have been created, contracted or incurred in
reliance upon this Article Ten, and all dealings between the Company and the
holders and owners of the Senior Debt of the Company shall be deemed to have
been consummated in reliance upon this Article Ten.

     SECTION 10.05. Obligations of the Company Unconditional.

     Nothing contained in this Article Ten or elsewhere in this Indenture or in
the Notes is intended to or shall impair, as between the Company and the
Holders, the obligation of the Company, which is absolute and unconditional, to
pay to the Holders the principal of and interest on the Notes as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the Holders and creditors of the
Company other than the holders of the Senior Debt, nor shall anything herein or
therein prevent the Trustee or any Holder from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article Ten of the holders of Senior Debt in respect
of cash, property or Notes of the Company received upon the exercise of any such
remedy. Upon any payment or distribution of assets or securities of the Company
referred to in this Article Ten, the Trustee, subject to the provisions of
Sections 7.01 and 7.02, and the Holders shall be entitled to rely upon any order
or decree made by any court of competent jurisdiction in which any liquidation,
dissolution, winding-up or reorganization proceedings are pending, or a
certificate of the receiver, trustee in bankruptcy, liquidating trustee or agent
or other Person making any payment or distribution to the Trustee or to the
Holders for the purpose of ascertaining the Persons entitled to participate in
such payment or distribution, the holders of Senior Debt and other Indebtedness
of the Company, the amount thereof or payable thereon, the amount or

<PAGE>
                                      -72-


amounts paid or distributed thereon and all other facts pertinent thereto or to
this Article Ten. Nothing in this Article Ten shall apply to the claims of, or
payments to, the Trustee under or pursuant to Section 7.07. The Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself or itself to be a holder of any Senior Debt (or a trustee
on behalf of, or other representative of, such holder) to establish that such
notice has been given by a holder of such Senior Debt or a trustee or
representative on behalf of any such holder.

     In the event that the Trustee determines in good faith that any evidence is
required with respect to the right of any Person as a holder of Senior Debt to
participate in any payment or distribution pursuant to this Article Ten, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Debt held by such Person,
the extent to which such person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such Person under
this Article Ten, and if such evidence is not furnished, the Trustee may defer
any payment to such Person pending judicial determination as to the right of
such Person to receive such payment.

     SECTION 10.06. Trustee Entitled to Assume Payments
                    Not Prohibited in Absence of Notice.

     The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Notes pursuant to the provisions of this Article Ten.
Regardless of anything to the contrary contained in this Article Ten or
elsewhere in this Indenture, the Trustee shall not be charged with knowledge of
the existence of any default or event of default with respect to any Senior Debt
or of any other facts which would prohibit the making of any payment to or by
the Trustee unless and until the Trustee shall have received notice in writing
from the Company, or from a holder of Senior Debt or a Representative therefor,
together with proof satisfactory to the Trustee of such holding of Senior Debt
or of the authority of such Representative, and, prior to the receipt of any
such written notice, the Trustee shall be entitled to assume (in the absence of
actual knowledge to the contrary) that no such facts exist. Nothing contained in
this Section 10.06 shall limit the right of the holders of Senior Debt to
recover payments as contemplated by this Article Ten.

     SECTION 10.07. Application by Trustee of Assets Deposited with It.

     U.S. Legal Tender or U.S. Government Obligations deposited in trust with
the Trustee pursuant to and in accordance with Sections 8.01 and 8.02 shall be
for the sole benefit of the Holders of the Notes and, to the extent allocated
for the payment of Notes, shall not from and after the time of such deposit be
subject to the subordination provisions of this Article Ten. Otherwise, any
deposit of assets or securities by or on behalf of the Company with the Trustee
or any Paying Agent (whether or not in trust) for the payment of principal of or
interest on any Notes shall be subject to the provisions of this Article Ten;
provided, however, that if prior to the second Business Day preceding the date
on which by the terms of this Indenture any such assets may become distributable
for any purpose (including, without limitation, the payment of either principal
of or interest on any Note) the Trustee or such Paying Agent shall not have
received with respect to such assets any notice provided for in Section 10.06,
then the Trustee or such Paying Agent shall have full power and authority to
receive such assets and to apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary received by it
on or after such date. The foregoing shall not apply to the Paying Agent if the
Company or any Subsidiary or Affiliate of the Company is acting as Paying Agent.
Nothing

<PAGE>
                                      -73-


contained in this Section 10.07 shall limit the right of the holders of Senior
Debt to recover payments as contemplated by this Article Ten.

     SECTION 10.08. No Waiver of Subordination Provisions.

     (a) No right of any present or future holder of any Senior Debt to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act by any such holder, or by any non-compliance by the Company
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof any such holder may have or be otherwise charged with.

     (b) Without limiting the generality of subsection (a) of this Section
10.08, the holders of Senior Debt may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the Notes,
without incurring responsibility to the Holders of the Notes and without
impairing or releasing the subordination provided in this Article Ten or the
obligations hereunder of the Holders of the Notes to the holders of Senior Debt,
do any one or more of the following: (1) change the manner, place, terms or time
of payment of, or renew, refinance, replace or alter, Senior Debt or any
instrument evidencing the same or any agreement under which Senior Debt is
outstanding; (2) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Debt; (3) release any Person
liable in any manner for the collection or payment of Senior Debt; and (4)
exercise or refrain from exercising any rights against the Company and any other
Person.

     SECTION 10.09. Holders Authorize Trustee To
                    Effectuate Subordination of Notes.

     Each Holder of the Notes by such Holder's acceptance thereof authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effect the subordination provisions contained in
this Article Ten, and appoints the Trustee such Holder's attorney-in-fact for
such purpose, including, in the event of any liquidation, dissolution,
winding-up, reorganization, assignment for the benefit of creditors or
marshaling of assets of the Company tending towards liquidation or
reorganization of the business and assets of the Company, the immediate filing
of a claim for the unpaid balance of such Holder's Notes in the form required in
said proceedings and cause said claim to be approved. If the Trustee does not
file a proper claim or proof of debt in the form required in such proceeding
prior to 30 days before the expiration of the time to file such claim or claims,
then any of the holders of the Senior Debt or any Representative thereof is
hereby authorized to file an appropriate claim for and on behalf of the Holders
of said Notes. Nothing herein contained shall be deemed to authorize the Trustee
or the holders of Senior Debt or their Representative to authorize or consent to
or accept or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights of any
Holder thereof, or to authorize the Trustee or the holders of Senior Debt or
their Representative to vote in respect of the claim of any Holder in any such
proceeding.

     SECTION 10.10. Right of Trustee to Hold Senior Debt.

     The Trustee and any agent of the Company or the Trustee shall be entitled
to all the rights set forth in this Article Ten with respect to any Senior Debt
which may at any time be held by it in its individual or any other capacity to
the same extent as any other holder of Senior Debt and nothing in this Indenture
shall deprive the Trustee or any such agent of any of its rights as such holder.


<PAGE>
                                      -74-


     Whenever a distribution is to be made or a notice given to holders or
owners of Senior Debt, the distribution may be made and the notice may be given
to their Representative, if any.

     SECTION 10.11. This Article Ten Not To Prevent Events of Default.

     The failure to make a payment on account of principal of or interest on the
Notes by reason of any provision of this Article Ten will not be construed as
preventing the occurrence of an Event of Default.

     Nothing contained in this Article Ten shall limit the right of the Trustee
or the Holders of Notes to take any action to accelerate the maturity of the
Notes pursuant to Article Six or to pursue any rights or remedies hereunder or
under applicable law, subject to the rights, if any, under this Article Ten of
the holders, from time to time, of Senior Debt.

     SECTION 10.12. No Fiduciary Duty of Trustee to Holders of Senior Debt.

     The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Debt, and it undertakes to perform or observe such of its covenants and
obligations as are specifically set forth in this Article Ten, and no implied
covenants or obligations with respect to the Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be liable to any such
holders (other than for its willful misconduct or gross negligence) if it shall
pay over or deliver to the Holders of Notes or the Company or any other Person
money or assets in compliance with the terms of this Indenture. Nothing in this
Section 10.12 shall affect the obligation of any Person other than the Trustee
to hold such payment for the benefit of, and to pay such payment over to, the
holders of Senior Debt or their Representative.


ARTICLE ELEVEN

                                  MISCELLANEOUS


     SECTION 11.01. TIA Controls.

     If any provision of this Indenture limits, qualifies, or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control; provided, however, that this Section 11.01
shall not of itself require that this Indenture or the Trustee be qualified
under the TIA or constitute any admission or acknowledgment by any party hereto
that any such qualification is required prior to the time this Indenture and the
Trustee are required by the TIA to be so qualified.

     SECTION 11.02. Notices.

     Any notices or other communications required or permitted hereunder shall
be in writing, and shall be sufficiently given if made by hand delivery, by
telex, by telecopier or overnight courier guaranteeing next-day delivery or
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:

<PAGE>
                                      -75-


     if to the Company or any Guarantor:

              PHILIPP BROTHERS CHEMICALS, INC.
              One Parker Plaza
              Fort Lee, NJ  07024
              Facsimile:  (201) 944-6245
              Attn:  Chief Executive Officer

     with a copy to:

              Golenbock, Eiseman, Assor & Bell
              437 Madison Avenue
              35th Floor
              New York, NY  10022
              Facsimile:  (212) 754-0330
              Attn:  Nathan E. Assor, Esq.

<PAGE>
                                      -76-


     if to the Trustee:

             THE CHASE MANHATTAN BANK
             450 West 33rd Street
             New York, New York  10001
             Attention:  Global Trust Services

     Each of the Company and the Trustee by written notice to the other may
designate additional or different addresses for notices to such Person. Any
notice or communication to the Company or the Trustee shall be deemed to have
been given or made as of the date so delivered if hand delivered; when answered
back, if telexed; when receipt is acknowledged, if faxed; and five (5) calendar
days after mailing if sent by registered or certified mail, postage prepaid
(except that (i) the Trustee shall not be deemed to have knowledge of such
notice nor shall any time period within which the Trustee is required to act as
a result of such notice commence until the Trustee actually receives the notice
in question and (ii) a notice of change of address shall not be deemed to have
been given until actually received by the addressee).

     Any notice or communication mailed to a Holder shall be mailed by first
class mail, certified or registered return receipt requested, or by overnight
courier guaranteeing next-day delivery to its address as it appears on the
registration books of the Registrar. Any notice or communication shall be mailed
to any Person as described in TIA ss. 313(c), to the extent required by the TIA.

     Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders. If a notice or
communication is mailed in the manner provided above, it is duly given, whether
or not the addressee receives it.

     SECTION 11.03. Communications by Holders with Other Holders.

     Holders may communicate pursuant to TIA ss. 312(b) with other Holders with
respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and any other Person shall have the protection of TIA ss.
312(c).

     SECTION 11.04. Certificate and Opinion as to Conditions Precedent.

     Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall if the Trustee shall so request
furnish to the Trustee:

          (1) an Officers' Certificate, in form and substance satisfactory to
     the Trustee, stating that, in the opinion of the signers, all conditions
     precedent to be performed by the Company, if any, provided for in this
     Indenture relating to the proposed action have been complied with; and/or

          (2) an Opinion of Counsel stating that, in the opinion of such
     counsel, all such conditions precedent to be performed by the Company, if
     any, provided for in this Indenture relating to the proposed action have
     been complied with (which counsel, as to factual matters, may rely on an
     Officers' Certificate).


<PAGE>
                                      -77-


     SECTION 11.05. Statements Required in Certificate or Opinion.

     Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture, other than the Officers' Certificate
required by Section 4.06, shall include:

          (1) a statement that the Person making such certificate or opinion has
     read such covenant or condition;

          (2) a brief statement as to the nature and scope of the examination or
     investigation upon which the statements or opinions contained in such
     certificate or opinion are based;

          (3) a statement that, in the opinion of such Person, he has made such
     examination or investigation as is reasonably necessary to enable him to
     express an informed opinion as to whether or not such covenant or condition
     has been complied with; and

          (4) a statement as to whether or not, in the opinion of each such
     Person, such condition or covenant has been complied with; provided,
     however, that with respect to such matters of fact an Opinion of Counsel
     may rely on an Officers' Certificate or certificate of public officials,
     and provided, further, that an Opinion of Counsel may have qualifications
     for opinions of the type required.

     SECTION 11.06. Rules by Trustee, Paying Agent, Registrar.

     The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a meeting of Holders. The Paying Agent
or Registrar may make reasonable rules for its functions.

     SECTION 11.07. Legal Holidays.

     A "Legal Holiday" used with respect to a particular place of payment is a
Saturday, a Sunday or a day on which banking institutions in New York, New York
or at such place of payment are not required to be open. If a payment date is a
Legal Holiday at such place, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.

     SECTION 11.08. Governing Law.

     THIS INDENTURE, THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT GIVING EFFECT
TO APPLICABLE PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT THE APPLICATION
OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. Each of the
parties hereto agrees to submit to the jurisdiction of the courts of the State
of New York in any action or proceeding arising out of or relating to this
Indenture.

     SECTION 11.09. No Adverse Interpretation of Other Agreements.


<PAGE>
                                      -78-


     This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or any of its Subsidiaries. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.

     SECTION 11.10. No Personal Liability.

     No director, officer, employee, incorporator, direct or indirect
controlling person, stockholder, member, partner or affiliate, as such, of the
Company or any Guarantor, or any successor entity, as such, shall have any
liability for any obligations of the Company or any Guarantor under the Notes,
this Indenture, the Guarantees or the Registration Rights Agreement or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Notes by accepting a Note, and the Trustee, waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.

     SECTION 11.11. Successors.

     All agreements of the Company in this Indenture and the Notes shall bind
their successors. All agreements of the Trustee in this Indenture shall bind its
successors.

     SECTION 11.12. Duplicate Originals.

     All parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together shall represent the same
agreement.

     SECTION 11.13. Severability.

     In case any one or more of the provisions in this Indenture or in the Notes
shall be held invalid, illegal or unenforceable, in any respect for any reason,
the validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions shall not in any way be affected or
impaired thereby, it being intended that all of the provisions hereof shall be
enforceable to the full extent permitted by law.


ARTICLE TWELVE

                               GUARANTEE OF NOTES


     SECTION 12.01. Unconditional Guarantee.

     Subject to the provisions of this Article Twelve, each Guarantor, if any,
hereby, jointly and severally, unconditionally and irrevocably guarantees (such
guarantee to be referred to herein as a "Guarantee") to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns, the Notes or the obligations of the Company hereunder or
thereunder, that: (a) the principal of, premium, if any, and interest on the
Notes (and any Additional Interest payable thereon) shall be duly and punctually
paid in full when due, whether at maturity, upon redemption at the option of
Holders pursuant to the provisions of the Notes relating thereto, by
acceleration or otherwise, and interest on the overdue principal and (to the
extent permitted by law) interest, if any, on the Notes and all other
obligations of the Company or the Guarantors to the Holders or the Trustee
hereunder or thereunder (including amounts due the Trustee under Section 7.07)
shall be promptly paid in full or performed, all in accordance with

<PAGE>
                                      -79-


the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, the same shall
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed, or failing performance of
any other obligation of the Company to the Holders under this Indenture or under
the Notes, for whatever reason, each Guarantor shall be obligated to pay, or to
perform or cause the performance of, the same immediately. An Event of Default
under this Indenture or the Notes shall constitute an event of default under
this Guarantee, and shall entitle the Holders of Notes to accelerate the
obligations of the Guarantors hereunder in the same manner and to the same
extent as the obligations of the Company.

     Each of the Guarantors hereby agrees that its obligations hereunder shall
be unconditional, irrespective of the validity, regularity or enforceability of
the Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, any release of any other Guarantor, the recovery of any
judgment against the Company, any action to enforce the same, whether or not a
Guarantee is affixed to any particular Note, or any other circumstance which
might otherwise constitute a legal or equitable discharge or defense of a
guarantor. Each of the Guarantors hereby waives the benefit of diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding first
against the Company, protest, notice and all demands whatsoever and covenants
that its Guarantee shall not be discharged except by complete performance of the
obligations contained in the Notes, this Indenture and this Guarantee. This
Guarantee is a guarantee of payment and not of collection. If any Holder or the
Trustee is required by any court or otherwise to return to the Company or to any
Guarantor, or any custodian, trustee, liquidator or other similar official
acting in relation to the Company or such Guarantor, any amount paid by the
Company or such Guarantor to the Trustee or such Holder, this Guarantee, to the
extent theretofore discharged, shall be reinstated in full force and effect.
Each Guarantor further agrees that, as between it, on the one hand, and the
Holders of Notes and the Trustee, on the other hand, (a) subject to this Article
Twelve, the maturity of the obligations guaranteed hereby may be accelerated as
provided in Article Six hereof for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (b) in the
event of any acceleration of such obligations as provided in Article Six hereof,
such obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Guarantee.

     No director, officer, employee, incorporator, direct or indirect
controlling person, stockholder, member, partner or affiliate, as such, of any
Guarantor, or any successor entity, as such, shall have any liability for any
obligations of the Company or any Guarantor under the Notes, this Indenture, the
Guarantees or the Registration Rights Agreement or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder of
Notes by accepting a Note, and the Trustee, waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.

     Each Guarantor that makes a payment or distribution under its Guarantee
shall be entitled to a contribution from each other Guarantor in an amount pro
rata, based on the net assets of each Guarantor, determined in accordance with
GAAP.

     SECTION 12.02. Limitations on Guarantees.


<PAGE>
                                      -80-


     The obligations of each Guarantor under its Guarantee will be limited to
the maximum amount which, after giving effect to all other contingent and fixed
liabilities of such Guarantor and after giving effect to any collections from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guarantee or pursuant to its
contribution obligations under this Indenture, will result in the obligations of
such Guarantor under its Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law.

     SECTION 12.03. Execution and Delivery of Guarantee.

     To further evidence the Guarantee set forth in Section 12.01, each
Guarantor hereby agrees that a notation of such Guarantee, substantially in the
form of Exhibit F hereto, shall be endorsed on each Note authenticated and
delivered by the Trustee. Such Guarantee shall be executed on behalf of each
Guarantor by either manual or facsimile signature of two Officers, or an Officer
and an Assistant Secretary, of each Guarantor, each of whom, in each case, shall
have been duly authorized to so execute by all requisite corporate action. The
validity and enforceability of any Guarantee shall not be affected by the fact
that it is not affixed to any particular Note.

     Each of the Guarantors hereby agrees that its Guarantee set forth in
Section 12.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Guarantee.

     If an Officer of a Guarantor whose signature is on this Indenture or a
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which such Guarantee is endorsed or at any time thereafter, such
Guarantor's Guarantee of such Note shall be valid nevertheless.

     The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of any Guarantee set forth in this
Indenture on behalf of each Guarantor.

     SECTION 12.04. Release of a Guarantor.

     (a) So long as no Event of Default shall have occurred and be continuing
upon the sale or disposition (whether by merger, stock purchase, asset sale or
otherwise) of a Guarantor (or all or substantially all of the assets of any such
Guarantor or 50% or more of the Capital Stock of any such Guarantor) to an
entity which is not a Subsidiary of the Company, which transaction is otherwise
in compliance with this Indenture, such Guarantor shall be deemed released from
all its obligations under its Guarantee of the Notes and under this Indenture;
provided, however, that any such termination shall occur only to the extent that
all obligations of such Guarantor under all its Guarantees of, and under all of
its pledges of assets or other security interests which secure, any Indebtedness
of the Company shall also terminate upon such release, sale or transfer. Upon
the release of any Guarantor from its Guarantee pursuant to the provisions of
the Indenture, each other Guarantor not so released shall remain liable for the
full amount of principal of, and interest on, the Notes as and to the extent
provided in this Indenture.

     (b) The Trustee shall deliver an appropriate instrument evidencing the
release of a Guarantor upon receipt of a request by the Company or such
Guarantor accompanied by an Officers' Certificate and an Opinion of Counsel
certifying as to the compliance with this Section 12.04.


<PAGE>
                                      -81-


     The Trustee shall execute any documents reasonably requested by the Company
or a Guarantor in order to evidence the release of such Guarantor from its
obligations under its Guarantee endorsed on the Notes and under this Article
Twelve.

     Except as set forth in Articles Four and Five and this Section 12.04,
nothing contained in this Indenture or in any of the Notes shall prevent any
consolidation or merger of a Guarantor with or into the Company or another
Guarantor or shall prevent any sale or conveyance of the property of a Guarantor
as an entirety or substantially as an entirety to the Company or another
Guarantor.

     SECTION 12.05. Waiver of Subrogation.

     Until this Indenture is discharged and all of the Notes are discharged and
paid in full, each Guarantor hereby irrevocably waives and agrees not to
exercise any claim or other rights which it may now or hereafter acquire against
the Company that arise from the existence, payment, performance or enforcement
of the Company's obligations under the Notes or this Indenture and such
Guarantor's obligations under this Guarantee and this Indenture, in any such
instance including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution, indemnification, and any right to participate in any
claim or remedy of the Holders against the Company, whether or not such claim,
remedy or right arises in equity, or under contract, statute or common law,
including, without limitation, the right to take or receive from the Company,
directly or indirectly, in cash or other property or by set-off or in any other
manner, payment or security on account of such claim or other rights. If any
amount shall be paid to any Guarantor in violation of the preceding sentence and
any amounts owing to the Trustee or the Holders of Notes under the Notes, this
Indenture, or any other document or instrument delivered under or in connection
with such agreements or instruments, shall not have been paid in full, such
amount shall have been deemed to have been paid to such Guarantor for the
benefit of, and held in trust for the benefit of, the Trustee or the Holders and
shall forthwith be paid to the Trustee for the benefit of itself or such Holders
to be credited and applied to the obligations in favor of the Trustee or the
Holders, as the case may be, whether matured or unmatured, in accordance with
the terms of this Indenture. Each Guarantor acknowledges that it will receive
direct and indirect benefits from the financing arrangements contemplated by
this Indenture and that the waiver set forth in this Section 12.05 is knowingly
made in contemplation of such benefits.

     SECTION 12.06. No Set-Off.

     Each payment to be made by a Guarantor hereunder in respect of its
obligations hereunder shall be payable in the currency or currencies in which
such obligations are denominated, and shall be made without set-off,
counterclaim, reduction or diminution of any kind or nature.

     SECTION 12.07. Obligations Absolute.

     Except as otherwise provided in this Indenture, the obligations of each
Guarantor hereunder are and shall be absolute and unconditional and any monies
or amounts expressed to be owing or payable by each Guarantor hereunder which
may not be recoverable from such Guarantor on the basis of a Guarantee shall be
recoverable from such Guarantor as a primary obligor and principal debtor in
respect thereof.

     SECTION 12.08. Obligations Continuing.


<PAGE>
                                      -82-


     Except as otherwise provided in this Indenture, the obligations of each
Guarantor hereunder shall be continuing and shall remain in full force and
effect until all the obligations have been paid and satisfied in full. Each
Guarantor agrees with the Trustee that, if requested, it will from time to time
deliver to the Trustee suitable acknowledgments of this continued liability
hereunder and under any other instrument or instruments in such form as counsel
to the Trustee may advise and as will prevent any action brought against it in
respect of any default hereunder being barred by any statute of limitations now
or hereafter in force and, in the event of the failure of a Guarantor so to do,
it hereby irrevocably appoints the Trustee the attorney and agent of such
Guarantor to make, execute and deliver such written acknowledgment or
acknowledgments or other instruments as may from time to time become necessary
or advisable, in the judgment of the Trustee on the advice of counsel, to fully
maintain and keep in force the liability of such Guarantor hereunder.

     SECTION 12.09. Obligations Not Reduced.

     The obligations of each Guarantor hereunder shall not be satisfied, reduced
or discharged solely by the payment of such principal, premium, if any,
interest, fees and other monies or amounts as may at any time prior to discharge
of this Indenture pursuant to Article Eight be or become owing or payable under
or by virtue of or otherwise in connection with the Notes or this Indenture.

     SECTION 12.10. Obligations Reinstated.

     The obligations of each Guarantor hereunder shall continue to be effective
or shall be reinstated, as the case may be, if at any time any payment which
would otherwise have reduced the obligations of any Guarantor hereunder (whether
such payment shall have been made by or on behalf of the Company or by or on
behalf of a Guarantor) is rescinded or reclaimed from any of the Holders upon
the insolvency, bankruptcy, liquidation or reorganization of the Company or any
Guarantor or otherwise, all as though such payment had not been made. If demand
for, or acceleration of the time for, payment by the Company is stayed upon the
insolvency, bankruptcy, liquidation or reorganization of the Company, all such
Indebtedness otherwise subject to demand for payment or acceleration shall
nonetheless be payable by each Guarantor as provided herein.

     SECTION 12.11. Obligations Not Affected.

     Except as otherwise provided in this Indenture, the obligations of each
Guarantor hereunder shall not be affected, impaired or diminished in any way by
any act, omission, matter or thing whatsoever, occurring before, upon or after
any demand for payment hereunder (and whether or not known or consented to by
any Guarantor or any of the Holders) which, but for this provision, might
constitute a whole or partial defense to a claim against any Guarantor hereunder
or might operate to release or otherwise exonerate any Guarantor from any of its
obligations hereunder or otherwise affect such obligations, whether occasioned
by default of any of the Holders or otherwise, including, without limitation:

          (a) any limitation of status or power, disability, incapacity or other
     circumstance relating to the Company or any other person, including any
     insolvency, bankruptcy, liquidation, reorganization, readjustment,
     composition, dissolution, winding up or other proceeding involving or
     affecting the Company or any other person;


<PAGE>
                                      -83-


          (b) any irregularity, defect, unenforceability or invalidity in
     respect of any Indebtedness or other obligation of the Company or any other
     person under this Indenture, the Notes or any other document or instrument;

          (c) any failure of the Company, whether or not without fault on its
     part, to perform or comply with any of the provisions of this Indenture or
     the Notes, or to give notice thereof to a Guarantor;

          (d) the taking or enforcing or exercising or the refusal or neglect to
     take or enforce or exercise any right or remedy from or against the Company
     or any other Person or their respective assets or the release or discharge
     of any such right or remedy;

          (e) the granting of time, renewals, extensions, compromises,
     concessions, waivers, releases, discharges and other indulgences to the
     Company or any other Person;

          (f) any change in the time, manner or place of payment of, or in any
     other term of, any of the Notes, or any other amendment, variation,
     supplement, replacement or waiver of, or any consent to departure from, any
     of the Notes or this Indenture, including, without limitation, any increase
     or decrease in the principal amount of or premium, if any, or interest on
     any of the Notes;

          (g) any change in the ownership, control, name, objects, businesses,
     assets, capital structure or constitution of the Company or a Guarantor;

          (h) any merger, consolidation or amalgamation of the Company or a
     Guarantor with any Person or Persons;

          (i) the occurrence of any change in the laws, rules, regulations or
     ordinances of any jurisdiction by any present or future action of any
     governmental authority or court amending, varying, reducing or otherwise
     affecting, or purporting to amend, vary, reduce or otherwise affect, any of
     the obligations under the Notes and this Indenture or the obligations of a
     Guarantor under its Guarantee; and

          (j) any other circumstance (other than by complete, irrevocable
     payment or a release made pursuant to Section 12.04) that might otherwise
     constitute a legal or equitable discharge or defense of the Company under
     this Indenture or the Notes or of a Guarantor in respect of its Guarantee
     hereunder.

     SECTION 12.12. Waiver.

     Without in any way limiting the provisions of Section 12.01 hereof, each
Guarantor hereby waives notice of acceptance hereof, notice of any liability of
any Guarantor hereunder, notice or proof of reliance by the Holders upon the
obligations of any Guarantor hereunder, and diligence, presentment, demand for
payment on the Company, protest, notice of dishonor or non-payment of any of the
obligations under the Notes or this Indenture, or other notice or formalities to
the Company or any Guarantor of any kind whatsoever.

     SECTION 12.13. No Obligation To Take Action Against the Company.


<PAGE>
                                      -84-


     Neither the Trustee nor any other Person shall have any obligation to
enforce or exhaust any rights or remedies or to take any other steps under any
security for the obligations under the Notes or this Indenture or against the
Company or any other Person or any property of the Company or any other Person
before the Trustee is entitled to demand payment and performance by any or all
Guarantors of their liabilities and obligations under their Guarantees or under
this Indenture.

     SECTION 12.14. Dealing with the Company and Others.

     The Holders, without releasing, discharging, limiting or otherwise
affecting in whole or in part the obligations and liabilities of any Guarantor
hereunder and without the consent of or notice to any Guarantor, may

          (a) grant time, renewals, extensions, compromises, concessions,
     waivers, releases, discharges and other indulgences to the Company or any
     other Person;

          (b) take or abstain from taking security or collateral from the
     Company or from perfecting security or collateral of the Company;

          (c) release, discharge, compromise, realize, enforce or otherwise deal
     with or do any act or thing in respect of (with or without consideration)
     any and all collateral, mortgages or other security given by the Company or
     any third party with respect to the obligations or matters contemplated by
     this Indenture or the Notes;

          (d) accept compromises or arrangements from the Company;

          (e) apply all monies at any time received from the Company or from any
     security upon such part of the obligations under the Notes or this
     Indenture as the Holders may see fit or change any such application in
     whole or in part from time to time as the Holders may see fit; and

          (f) otherwise deal with, or waive or modify their right to deal with,
     the Company and all other Persons and any security as the Holders or the
     Trustee may see fit.

     SECTION 12.15. Default and Enforcement.

     If any Guarantor fails to pay in accordance with Section 12.01 hereof, the
Trustee may proceed in its name as trustee hereunder in the enforcement of the
Guarantee of any such Guarantor and such Guarantor's obligations thereunder and
hereunder by any remedy provided by law, whether by legal proceedings or
otherwise, and to recover from such Guarantor the obligations.

     SECTION 12.16. Amendment, Etc.

     No amendment, modification or waiver of any provision of this Indenture
relating to any Guarantor or consent to any departure by any Guarantor or any
other Person from any such provision will in any event be effective unless it is
signed by such Guarantor and the Trustee.

     SECTION 12.17. Acknowledgment.


<PAGE>
                                      -85-


     Each Guarantor hereby acknowledges communication of the terms of this
Indenture and the Notes and consents to and approves of the same.

     SECTION 12.18. Costs and Expenses.

     Each Guarantor shall pay on demand by the Trustee any and all costs, fees
and expenses (including, without limitation, legal fees) incurred by the
Trustee, its agents, advisors and counsel or any of the Holders in enforcing any
of their rights under any Guarantee in the same manner as the Company shall be
requested to pay the Trustee's fees.

     SECTION 12.19. No Merger or Waiver; Cumulative Remedies.

     No Guarantee shall operate by way of merger of any of the obligations of a
Guarantor under any other agreement, including, without limitation, this
Indenture. No failure to exercise and no delay in exercising, on the part of the
Trustee or the Holders, any right, remedy, power or privilege hereunder or under
this Indenture or the Notes, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder or
under this Indenture or the Notes preclude any other or further exercise thereof
or the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges in the Guarantee and under this Indenture, the
Notes and any other document or instrument between a Guarantor and/or the
Company and the Trustee are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.

     SECTION 12.20. Survival of Obligations.

     Without prejudice to the survival of any of the other obligations of each
Guarantor hereunder, the obligations of each Guarantor under Section 12.01 shall
survive the payment in full of the obligations under this Indenture and the
Notes and shall be enforceable against such Guarantor without regard to and
without giving effect to any defense, right of offset or counterclaim available
to or which may be asserted by the Company or any Guarantor.

     SECTION 12.21. Guarantee in Addition to Other Obligations.

     The obligations of each Guarantor under its Guarantee and this Indenture
are in addition to and not in substitution for any other obligations to the
Trustee or to any of the Holders in relation to this Indenture or the Notes and
any guarantees or security at any time held by or for the benefit of any of
them.

     SECTION 12.22. Severability.

     Any provision of this Article Twelve which is prohibited or unenforceable
in any jurisdiction shall not invalidate the remaining provisions and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction unless its removal
would substantially defeat the basic intent, spirit and purpose of this
Indenture and this Article Twelve.

     SECTION 12.23. Successors and Assigns.

     Each Guarantee shall be binding upon and inure to the benefit of each
Guarantor and the Trustee and the other Holders and their respective successors
and permitted assigns, except

<PAGE>
                                      -86-


that no Guarantor may assign any of its obligations hereunder or thereunder
other than as otherwise provided herein.


ARTICLE THIRTEEN

                           SUBORDINATION OF GUARANTEE


     SECTION 13.01. Obligations of Guarantors Subordinated
                    to Guarantor Senior Debt.

     Anything in Article Twelve or elsewhere herein to the contrary
notwithstanding, each of the Guarantors, for itself and its successors, and the
Trustee and each Holder, by his or her acceptance of Guarantees, agrees that the
payment of all obligations under the Notes or this Indenture owing to the
Holders in respect of its Guarantee (collectively, as to any Guarantor, its
"Guarantee Obligations") is subordinated, to the extent and in the manner
provided in this Article Thirteen, to the prior payment in full, in cash in the
case of the Credit Facility, or in cash or in Cash Equivalents (other than
clause (vi) of the definition of Cash Equivalents or investments in money market
funds thereto) in the case of any other Senior Debt incurred by such Guarantor,
or such payment duly provided for to the satisfaction of the holders of Senior
Debt incurred by such Guarantor, of all obligations on Senior Debt incurred by
such Guarantor, including without limitation, the Guarantors' obligations under
or in connection with or as guarantors in respect of the Credit Facility; that
such subordination is for the benefit of, and shall be enforceable directly by,
any holder of Senior Debt incurred by such Guarantor, and that each holder of
Senior Debt incurred by such Guarantor whether now outstanding or hereafter
created, incurred, assumed or guaranteed shall be deemed to have acquired Senior
Debt incurred by such Guarantor in reliance upon the covenants and provisions
contained in this Indenture and the Notes.

     This Article Thirteen shall constitute a continuing offer to all Persons
who become holders of, or continue to hold, Senior Debt incurred by a Guarantor,
and such provisions are made for the benefit of the holders of Senior Debt
incurred by a Guarantor and such holders are made obligees hereunder and any one
or more of them may enforce such provisions.

     SECTION 13.02. Suspension of Guarantee Obligations
                    When Guarantor Senior Debt Is in Default.

     (a) A Guarantor shall not make any payment upon or in respect of the Notes
(except from the trust created pursuant to Section 8.02) if (i) a default in the
payment of the principal of, premium, if any, or interest on any Designated
Senior Debt occurs and is continuing, whether at maturity or on a date fixed for
payment or prepayment or by declaration of acceleration or otherwise, or (ii)
the Trustee has received a Payment Blockage Notice from the Representative of
any holder(s) of Designated Senior Debt that a nonpayment default has occurred
and is continuing with respect to such Designated Senior Debt that permits any
of such holder(s) to accelerate the maturity of such Designated Senior Debt.
Payments on the Notes shall resume (and all past due amounts on the Notes, with
interest thereon as specified in this Indenture, shall be paid) (i) in the case
of a payment default in respect of any Designated Senior Debt, on the date on
which such default is cured or waived or otherwise ceases to exist; and (ii) in
th case of a nonpayment default in respect of any Designated Senior Debt, on the
earlier of (a) the date on which such nonpayment default is cured or waived, or
(b) 179 days after the date on which the Payment Blockage Notice with respect to
such default was received by the Trustee, in each case,

<PAGE>
                                      -87-


unless the maturity of any Designated Senior Debt has been accelerated and the
Company or any Guarantor has defaulted with respect to the payment of such
Designated Senior Debt, or (c) the date on which such Payment Blockage Period
shall have been terminated by written notice to the Company, the Guarantor or
the Trustee from the Representative of the holders of Designated Senior Debt
initiating such Payment Blockage Period. During any consecutive 365-day period,
the Payment Blockage Period shall not exceed 179 days, and there shall be a
period of at least 186 consecutive days in each consecutive 365-day period
during which no Payment Blockage Period is in effect. No event or circumstance
that creates a nonpayment default under any Designated Senior Debt that (i)
gives rise to the commencement of a Payment Blockage Period or (ii) exists at
the commencement of or during any Payment Blockage Period shall be made the
basis for the commencement of any subsequent Payment Blockage Period unless such
default has been cured or waived for a period of not less than 90 consecutive
days. In no event shall a Payment Blockage Period extend beyond 179 days from
the date of the receipt of the Payment Blockage Notice. Any number of notices of
a nonpayment default may be given during a Payment Blockage Period; provided,
however, that no such notice shall extend such Payment Blockage Period beyond
the 179-day limit.

     (b) In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee or any Holder from such Guarantor when such payment is
prohibited by Section 13.02(a), such payment shall be held for the benefit of,
and shall be paid over or delivered to, the holders of Senior Debt incurred by
such Guarantor with respect to such Guarantor (pro rata to such holders on the
basis of the respective amount of such Senior Debt held by such holders) or
their respective Representatives, as their respective interests may appear. The
Trustee shall be entitled to rely on information regarding amounts then due and
owing on such Senior Debt, if any, received from the holders of such Senior Debt
(or their Representatives) or, if such information is not received from such
holders or their Representatives after written request therefor, from the
Company and only amounts included in the information provided to the Trustee
shall be paid to the holders of such Senior Debt.

     Nothing contained in this Article Thirteen shall limit the right of the
Trustee or the Holders of Notes to take any action to accelerate the maturity of
the Notes pursuant to Section 6.02 or to pursue any rights or remedies
hereunder; provided that all Senior Debt incurred by a Guarantor thereafter due
or declared to be due shall first be paid in full, in cash in the case of the
Credit Facility, or in cash or Cash Equivalents (other than clause (vi) in the
definition of Cash Equivalents or investments in money market funds thereto) in
the case of any other Senior Debt, before the Holders are entitled to receive
any payment of any kind or character with respect to obligations on the Notes or
any of the Guarantees.

     SECTION 13.03. Guarantee Obligations Subordinated
                    to Prior Payment of All Guarantor Senior
                    Debt on Dissolution, Liquidation or
                    Reorganization of Such Guarantor.

     (a) Upon any direct or indirect payment or distribution of assets of any
Guarantor of any kind or character, whether in cash, property or securities, to
creditors upon any liquidation, dissolution, winding-up, reorganization,
assignment for the benefit of creditors or marshaling of assets of such
Guarantor or in a bankruptcy, reorganization, insolvency, receivership or other
similar proceeding relating to such Guarantor or its property, whether voluntary
or involuntary, all obligations due or to become due upon all Senior Debt
incurred by such Guarantor shall first be paid in full, in cash in the case of
the Credit Facility, or in cash or in

<PAGE>
                                      -88-


Cash Equivalents (other than clause (vi) in the definition of Cash Equivalents
or investments in money market funds thereto) in the case of any other Senior
Debt, or such payment duly provided for to the satisfaction of the holders of
such Senior Debt, before any payment or distribution of any kind or character is
made on account of any obligations on the Guarantee of such Guarantor, or for
the acquisition, repurchase, redemption or defeasance of the Guarantee of such
Guarantor for cash or property or otherwise. Upon any such dissolution,
winding-up, liquidation, reorganization, receivership or similar proceeding, any
direct or indirect payment or distribution of assets of such Guarantor of any
kind or character, whether in cash, property or securities, to which the Holders
of the Guarantee of such Guarantor or the Trustee under this Indenture would be
entitled, except for the provisions hereof, shall be paid by the Guarantor or by
any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution, or by the Holders or by the Trustee under
this Indenture if received by them, directly to the holders of such Senior Debt
(pro rata to such holders on the basis of the respective amounts of such Senior
Debt held by such holders) or their respective Representatives, or to the
trustee or trustees under any indenture pursuant to which any of such Senior
Debt may have been issued, as their respective interests may appear, for
application to the payment of such Senior Debt remaining unpaid until all such
Senior Debt has been paid in full, in cash in the case of the Credit Facility,
or in cash or in Cash Equivalents (other than clause (vi) in the definition of
Cash Equivalents or investments in money market funds thereto) in the case of
any other Senior Debt, after giving effect to any concurrent payment,
distribution or provision therefor to or for the holders of Senior Debt.

     (b) To the extent any payment of Senior Debt incurred by a Guarantor
(whether by or on behalf of any Guarantor, as proceeds of security or
enforcement of any right of setoff or otherwise) is declared to be fraudulent or
preferential, set aside or required to be paid to any receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar Person under any
bankruptcy, insolvency, receivership, fraudulent conveyance or similar law,
then, if such payment is recovered by, or paid over to, such receiver, trustee
in bankruptcy, liquidating trustee, agent or other similar Person, such Senior
Debt or part thereof originally intended to be satisfied shall be deemed to be
reinstated and outstanding as if such payment has not occurred.

     (c) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of any Guarantor of any kind or character, whether in
cash, property or securities, shall be received by any Holder when such payment
or distribution is prohibited by this Section 13.03(c), such payment or
distribution shall be held in trust for the benefit of, and shall be paid over
or delivered to, the holders of such Senior Debt incurred by such Guarantor (pro
rata to such holders on the basis of the respective amount of Senior Debt held
by such holders) or their respective Representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior Debt may have
been issued, as their respective interests may appear, for application to the
payment of such Senior Debt remaining unpaid until all such Senior Debt has been
paid in full, in cash in the case of the Credit Facility, or in cash or in Cash
Equivalents (other than clause (vi) in the definition of Cash Equivalents or
investments in money market funds thereto) in the case of any other Senior Debt,
after giving effect to any concurrent payment, distribution or provision
therefor to or for the holders of such Senior Debt.

     (d) The consolidation of any Guarantor with, or the merger of any Guarantor
with or into, another corporation or the liquidation or dissolution of any
Guarantor following the conveyance or transfer of all or substantially all of
its assets, to another corporation upon the terms and conditions provided in
Article Five hereof and as long as permitted under the terms of the Senior Debt
incurred by such Guarantor shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section if such other
corporation shall, as a part of such

<PAGE>
                                      -89-


consolidation, merger, conveyance or transfer, assume such Guarantor's
obligations hereunder in accordance with Article Five hereof.

     SECTION 13.04. Holders of Guarantee Obligations
                    To Be Subrogated to Rights
                    of Holders of Guarantor Senior Debt.

     Subject to the payment in full, in cash in the case of the Credit Facility,
or in cash or Cash Equivalents (other than clause (vi) in the definition of Cash
Equivalents or investments in money market funds thereto) in the case of any
other Senior Debt, or such payment duly provided for to the satisfaction of the
holders of Senior Debt incurred by a Guarantor, of all such Senior Debt, the
Holders of Guarantee Obligations of a Guarantor shall be subrogated to the
rights of the holders of such Senior Debt incurred by such Guarantor to receive
payments or distributions of assets of such Guarantor applicable to such Senior
Debt until all amounts owing on or in respect of the Guarantee Obligations shall
be paid in full, in cash in the case of the Credit Facility, or in cash or Cash
Equivalents (other than clause (vi) in the definition of Cash Equivalents or
investments in money market funds thereto) in the case of any other Senior Debt,
and for the purpose of such subrogation no payments or distributions to the
holders of such Senior Debt by or on behalf of such Guarantor, or by or on
behalf of the Holders by virtue of this Article Thirteen, which otherwise would
have been made to the Holders shall, as between such Guarantor and the Holders,
be deemed to be payment by such Guarantor to or on account of such Senior Debt,
it being understood that the provisions of this Article Thirteen are and are
intended solely for the purpose of defining the relative rights of the Holders,
on the one hand, and the holders of such Senior Debt, on the other hand.

     If any payment or distribution to which the Holders would otherwise have
been entitled but for the provisions of this Article Thirteen shall have been
applied, pursuant to the provisions of this Article Thirteen, to the payment of
all amounts payable under such Senior Debt, then the Holders shall be entitled
to receive from the holders of such Senior Debt any such payments or
distributions received by such holders of such Senior Debt in excess of the
amount sufficient to pay all amounts payable under or in respect of such Senior
Debt in full, in cash in the case of the Credit Facility, or in cash or Cash
Equivalents (other than clause (vi) in the definition of Cash Equivalents or
investments in money market funds thereto) in the case of other Senior Debt, or
such payment duly provided for to the satisfaction of the holders of such Senior
Debt.

     Each Holder by purchasing or accepting a Note waives any and all notice of
the creation, modification, renewal, extension or accrual of any Senior Debt
incurred by the Guarantors and notice of or proof of reliance by any holder or
owner of Senior Debt incurred by the Guarantors upon this Article Thirteen and
the Senior Debt incurred by the Guarantors shall conclusively be deemed to have
been created, contracted or incurred in reliance upon this Article Thirteen, and
all dealings between the Guarantors and the holders and owners of the Senior
Debt incurred by the Guarantors shall be deemed to have been consummated in
reliance upon this Article Thirteen.

     SECTION 13.05. Obligations of the Guarantors Unconditional.

     Nothing contained in this Article Thirteen or elsewhere in this Indenture
or in the Guarantees is intended to or shall impair, as between the Guarantors
and the Holders, the obligation of the Guarantors, which is absolute and
unconditional, to pay to the Holders all amounts due and payable under the
Guarantees as and when the same shall become due and

<PAGE>
                                      -90-


payable in accordance with their terms, or is intended to or shall affect the
relative rights of the Holders and creditors of the Guarantors other than the
holders of Senior Debt incurred by a Guarantor, nor shall anything herein or
therein prevent the Trustee or any Holder from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article Thirteen, of the holders of such Senior Debt
in respect of cash, property or securities of the Guarantors received upon the
exercise of any such remedy. Upon any payment or distribution of assets of any
Guarantor referred to in this Article Thirteen, the Trustee, subject to the
provisions of Sections 7.01 and 7.02, and the Holders shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction in which
any liquidation, dissolution, winding-up or reorganization proceedings are
pending, or a certificate of the receiver, trustee in bankruptcy, liquidating
trustee or agent or other Person making any payment or distribution to the
Trustee or to the Holders for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of Senior Debt and
other Indebtedness incurred by any Guarantor, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article Thirteen. Nothing in this Article Thirteen
shall apply to the claims of, or payments to, the Trustee under or pursuant to
Section 7.07. The Trustee shall be entitled to rely on the delivery to it of a
written notice by a Person representing himself or itself to be a holder of any
Senior Debt incurred by a Guarantor (or a trustee on behalf of, or other
representative of, such holder) to establish that such notice has been given by
a holder of such Senior Debt or a trustee or representative on behalf of any
such holder.

     In the event that the Trustee determines in good faith that any evidence is
required with respect to the right of any Person as a holder of Senior Debt
incurred by a Guarantor to participate in any payment or distribution pursuant
to this Article Thirteen, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Debt incurred by a Guarantor held by such Person, the extent to which
such Person is enti tled to participate in such payment or distribution and any
other facts pertinent to the rights of such Person under this Article Thirteen,
and if such evidence is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to receive
such payment.

     SECTION 13.06. Trustee Entitled To Assume Payments
                    Not Prohibited in Absence of Notice.

     The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Notes pursuant to the provisions of this Article
Thirteen. Regardless of anything to the contrary contained in this Article
Thirteen or elsewhere in this Indenture. The Trustee shall not be charged with
knowledge of the existence of any default or event of default with respect to
any Senior Debt incurred by a Guarantor or of any other facts which would
prohibit the making of any payment to or by the Trustee unless and until the
Trustee shall have received notice in writing from the Company or the Guarantor,
or from a holder of such Senior Debt or a Representative therefor, together with
proof satisfactory to the Trustee of such holding of Senior Debt or of the
authority of such Representative, and, prior to the receipt of any such written
notice, the Trustee shall be entitled to assume (in the absence of actual
knowledge to the contrary) that no such facts exist.

     SECTION 13.07. Application by Trustee of Assets Deposited with It.


<PAGE>
                                      -91-


     U.S. Legal Tender or U.S. Government Obligations deposited in trust with
the Trustee pursuant to and in accordance with Sections 8.01 and 8.02 shall be
for the sole benefit of Holders of the Notes and, to the extent allocated for
the payment of Notes, shall not from and after the time of such deposit be
subject to the subordination provisions of this Article Thirteen. Otherwise, any
deposit of assets or securities by or on behalf of a Guarantor with the Trustee
or any Paying Agent (whether or not in trust) for payment of the Guarantees
shall be subject to the provisions of this Article Thirteen; provided, however,
that if prior to the second Business Day preceding the date on which by the
terms of this Indenture any such assets may become distributable for any purpose
(including, without limitation, the payment of either principal of or interest
on any Note) the Trustee or such Paying Agent shall not have received with
respect to such assets any notice provided for in Section 13.06, then the
Trustee or such Paying Agent shall have full power and authority to receive such
assets and to apply the same to the purpose for which they were received, and
shall not be affected by any notice to the contrary received by it on or after
such date. The foregoing shall not apply to the Paying Agent if the Company or
any Subsidiary or Affiliate of the Company is acting as Paying Agent. Nothing
contained in this Section 13.07 shall limit the right of the holders of Senior
Debt incurred by a Guarantor to recover payments as contemplated by this Article
Thirteen.

     SECTION 13.08. No Waiver of Subordination Provisions.

     (a) No right of any present or future holder of any Senior Debt incurred by
a Guarantor to enforce subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of any
Guarantor or by any act or failure to act, by any such holder, or by any
non-compliance by any Guarantor with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.

     (b) Without limiting the generality of subsection (a) of this Section
13.08, the holders of Senior Debt incurred by a Guarantor may, at any time and
from time to time, without the consent of or notice to the Trustee or the
Holders of the Notes, without incurring responsibility to the Holders of the
Notes and without impairing or releasing the subordination provided in this
Article Thirteen or the obligations hereunder of the Holders of the Notes to the
holders of Senior Debt, do any one or more of the following: (1) change the
manner, place, terms or time of payment of, or renew, refinance, replace or
alter, Senior Debt incurred by a Guarantor or any instrument evidencing the same
or any agreement under which Senior Debt incurred by a Guarantor is outstanding;
(2) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing Senior Debt incurred by a Guarantor; (3) release
any Person liable in any manner for the collection or payment of Senior Debt
incurred by a Guarantor; and (4) exercise or refrain from exercising any rights
against the Guarantors and any other Person.

     SECTION 13.09. Holders Authorize Trustee To Effectuate
                    Subordination of Guarantee Obligations.

     Each Holder of the Guarantee Obligations by its acceptance thereof
authorizes and expressly directs the Trustee on its behalf to take such action
as may be necessary or appropriate to effect the subordination provisions
contained in this Article Thirteen, and appoints the Trustee its
attorney-in-fact for such purpose, including, in the event of any liquidation,
dissolution, winding-up, reorganization, assignment for the benefit of creditors
or marshaling of assets of any Guarantor tending towards liquidation or
reorganization of the business and assets of any Guarantor, the immediate filing
of a claim for the unpaid balance under its or his Guarantee Obligations in the
<PAGE>
                                      -92-


form required in said proceedings and cause said claim to be approved. If the
Trustee does not file a proper claim or proof of debt in the form required in
such proceeding prior to 30 days before the expiration of the time to file such
claim or claims, then any of the holders of the Senior Debt incurred by a
Guarantor or their Representative is hereby authorized to file an appropriate
claim for and on behalf of the Holders of said Guarantee Obligations. Nothing
herein contained shall be deemed to authorize the Trustee or the holders of
Senior Debt incurred by a Guarantor or their Representative to authorize or
consent to or accept or adopt on behalf of any holder of Guarantee Obligations
any plan of reorganization, arrangement, adjustment or composition affecting the
Guarantee Obligations or the rights of any Holder thereof, or to authorize the
Trustee or the holders of Senior Debt incurred by a Guarantor or their
Representative to vote in respect of the claim of any holder of Guarantee
Obligations in any such proceeding.

     SECTION 13.10. Right of Trustee To Hold Guarantor Senior Debt.

     The Trustee shall be entitled to all of the rights set forth in this
Article Thirteen in respect of any Senior Debt incurred by a Guarantor at any
time held by it to the same extent as any other holder of Senior Debt incurred
by a Guarantor, and nothing in this Indenture shall be construed to deprive the
Trustee of any of its rights as such holder.

     SECTION 13.11. No Suspension of Remedies.

     The failure to make a payment in respect of the Guarantees by reason of any
provision of this Article Thirteen shall not be construed as preventing the
occurrence of a Default or an Event of Default under Section 6.01.

     Nothing contained in this Article Thirteen shall limit the right of the
Trustee or the Holders of Notes to take any action to accelerate the maturity of
the Notes pursuant to Article Six or to pursue any rights or remedies hereunder
or under applicable law, subject to the rights under this Article Thirteen of
the holders, from time to time, of Senior Debt incurred by a Guarantor.

     SECTION 13.12. No Fiduciary Duty of Trustee to
                    Holders of Guarantor Senior Debt.

     The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Debt incurred by a Guarantor, and it undertakes to perform or observe
such of its covenants and obligations as are specifically set forth in this
Article Thirteen, and no implied covenants or obligations with respect to the
Senior Debt incurred by a Guarantor shall be read into this Indenture against
the Trustee. The Trustee shall not be liable to any such holders (other than for
its willful misconduct or gross negligence) if it shall pay over or deliver to
the holders of Guarantee Obligations or the Guarantors or any other Person,
money or assets in compliance with the terms of this Indenture. Nothing in this
Section 13.12 shall affect the obligation of any Person other than the Trustee
to hold such payment for the benefit of, and to pay such payment over to, the
holders of Senior Debt incurred by a Guarantor or their Representative.

<PAGE>
                                      -93-


                                   SIGNATURES

     IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.

                                   PHILIPP BROTHERS CHEMICALS, INC.


                                   By:    /s/ Jack C. Bendheim
                                          -----------------------------
                                          Name:  J. C. Bendheim
                                          Title:   President



                                   CP CHEMICALS, INC., as Guarantor


                                   By:    /s/ Nathan Bistricer
                                          -----------------------------
                                          Name:  Nathan Bistricer
                                          Title:   Vice President


                                   PHIBRO-TECH, INC., as Guarantor


                                   By:    /s/ Nathan Bistricer
                                          -----------------------------
                                          Name:  Nathan Bistricer
                                          Title:   Vice President


                                   MRT MANAGEMENT CORP., as Guarantor


                                   By:    /s/ Nathan Bistricer
                                          -----------------------------
                                          Name:  Nathan Bistricer
                                          Title:   Vice President

<PAGE>
                                      -94-



                                   MINERAL RESOURCE TECHNOLOGIES,
                                   L.L.C., as Guarantor


                                   By:    MRT Management Corp.,
                                          Managing Member


                                   By:    /s/ Nathan Bistricer
                                          -----------------------------
                                          Name:  Nathan Bistricer
                                          Title:   Vice President


                                   PRINCE AGRIPRODUCTS, INC., as Guarantor


                                   By:    /s/ Nathan Bistricer
                                          -----------------------------
                                          Name:  Nathan Bistricer
                                          Title:   Vice President


                                   PHIBROCHEM, INC., as Guarantor


                                   By:    /s/ Nathan Bistricer
                                          -----------------------------
                                          Name:  Nathan Bistricer
                                          Title:   Vice President


                                   PHIBROCHEMICALS, INC., as Guarantor


                                   By:    /s/ Nathan Bistricer
                                          -----------------------------
                                          Name:  Nathan Bistricer
                                          Title:   Vice President


                                   WESTERN MAGNESIUM CORP.,
                                   as Guarantor


                                   By:    /s/ Nathan Bistricer
                                          -----------------------------
                                          Name:  Nathan Bistricer
                                          Title:   Vice President


                                   THE PRINCE MANUFACTURING COMPANY,
                                   as Guarantor


<PAGE>
                                      -95-


                                   By:    /s/ Nathan Bistricer
                                          -----------------------------
                                          Name:  Nathan Bistricer
                                          Title:   Vice President


                                   THE PRINCE MANUFACTURING COMPANY,
                                   as Guarantor


                                   By:    /s/ Nathan Bistricer
                                          -----------------------------
                                          Name:  Nathan Bistricer
                                          Title:   Vice President

                                   THE CHASE MANHATTAN BANK, as Trustee

                                   By:    /s/ Sheik Wiltshire
                                          -----------------------------
                                   Name:  Sheik Wiltshire
                                   Title: Second Vice President


<PAGE>

                                                                       EXHIBIT A

                             [FORM OF SERIES A NOTE]

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (2) AGREES THAT IT WILL NOT, PRIOR TO THE DATE THAT IS TWO YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE OF THIS SECURITY AND THE LAST DATE ON
WHICH THE COMPANY OR ANY AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS
SECURITY, RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY
OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)
INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS SECURITY), (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE
TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY
WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED
TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN,
THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.



                                       A-1

<PAGE>




                                                         CUSIP No.:


                        PHILIPP BROTHERS CHEMICALS, INC.
               9 7/8% SENIOR SUBORDINATED NOTE DUE 2008, SERIES A


No.                                                               $

     PHILIPP BROTHERS CHEMICALS, INC., a New York corporation (the "Company,"
which term includes any successor entities), for value received promises to pay
to or registered assigns the principal sum of Dollars on June 1, 2008.

     Interest Payment Dates: June 1 and December 1, commencing 1998.

     Record Dates: May 15 and November 15.

     Reference is made to the further provisions of this Note contained herein,
which will for all purposes have the same effect as if set forth at this place.

     IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.

                                           PHILIPP BROTHERS CHEMICALS, INC.


                                           By:

                                                    Name:
                                                    Title:


                                           By:

                                                    Name:
                                                    Title:


Dated:




                                                                             A-2

<PAGE>




Certificate of Authentication

     This is one of the 9 7/8% Senior Subordinated Notes due 2008, Series A,
referred to in the within-mentioned Indenture.

                                           THE CHASE MANHATTAN BANK, as Trustee

                                           By:

                                                    Authorized Signatory

Date of Authentication:



                                       A-3

<PAGE>


(REVERSE OF SECURITY)

     9 7/8% Senior Subordinated Note due 2008, Series A


     Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to them in the Indenture, dated as of June 11, 1998 (the
"Indenture"), and as amended from time to time, by and among Philipp Brothers
Chemicals, Inc., a New York corporation (the "Company"), the Guarantors named
therein and The Chase Manhattan Bank, as trustee (the "Trustee").

     (1) Interest. The Company promises to pay interest on the principal amount
of this Note at the rate per annum shown above. Interest on the Notes will
accrue from the most recent date on which interest has been paid or, if no
interest has been paid, from June 11, 1998. The Company will pay interest
semi-annually in arrears on each Interest Payment Date, commencing December 1,
1998. Interest will be computed on the basis of a 360-day year of twelve 30-day
months and, in the case of a partial month, the actual number of days elapsed.

     The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.

     (2) Method of Payment. The Company shall pay interest on the Notes (except
defaulted interest) to the Persons who are the registered Holders at the close
of business on the Record Date immediately preceding the Interest Payment Date
even if the Notes are canceled on registration of transfer or registration of
exchange (including pursuant to an Exchange Offer (as defined in the
Registration Rights Agreement)) after such Record Date. Holders must surrender
Notes to a Paying Agent to collect principal payments. The Company shall pay
principal and premium, if any, and interest in money of the United States that
at the time of payment is legal tender for payment of public and private debts
("U.S. Legal Tender"). However, the Company may pay principal and premium, if
any, and interest by check payable in such U.S. Legal Tender. The Company may
deliver any such interest payment to the Paying Agent or to a Holder at the
Holder's registered address.

     (3) Paying Agent and Registrar. Initially, the Trustee will act as Paying
Agent and Registrar. The Company may change any Paying Agent, Registrar or
co-Registrar without notice to the Holders.

     (4) Indenture. The Company issued the Notes under the Indenture. This Note
is one of a duly authorized issue of Notes of the Company designated as its 9
7/8% Senior Subordinated Notes due 2008, Series A (the "Initial Notes"), limited
in aggregate principal amount to $140,000,000, which may be issued under the
Indenture; provided the principal amount of Initial Notes issued on the Issue
Date will not exceed $100,000,000. The Notes include the Initial Notes, the
Private Exchange Notes and the Unrestricted Notes, as defined below, issued in
exchange for the Initial Notes pursuant to the Registration Rights Agreement.
The Initial Notes, the Private Exchange Notes and the Unrestricted Notes are
treated as a single class of securities under the Indenture. The terms of the
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939 (15 U.S. Code ss.ss. 77aaa-
77bbbb) (the "TIA"), as in effect on the date of the Indenture. Notwithstanding
anything to the


                                       A-4

<PAGE>




contrary herein, the Notes are subject to all such terms, and Holders of Notes
are referred to the Indenture and the TIA for a statement of such terms. The
Notes are general unsecured obligations of the Company. Payment on each Note is
guaranteed on a senior subordinated basis by the Guarantors pursuant to Articles
Twelve and Thirteen of the Indenture. Each Holder, by accepting a Note, agrees
to be bound by all of the terms and provisions of the Indenture, as the same may
be amended from time to time in accordance with its terms.

     (5) Redemption. The Notes are redeemable, at the Company's option, in whole
or in part, at any time on and after June 1, 2003 at the redemption prices
(expressed as percentages of the principal amount of the Notes) if redeemed
during the twelve-month period commencing on June 1 of the year set forth below,
plus, in each case, accrued and unpaid interest thereon, if any, to the
Redemption Date:




                                       A-5

<PAGE>





                            Year                                Percentage
                            ----                                ----------
                            2003                                 104.938%
                            2004                                 103.292%
                            2005                                 101.646%
                            2006 and thereafter                  100.000%

     The Notes are not entitled to the benefit of any sinking fund.

     Notwithstanding the foregoing, at any time prior to June 1, 2001, the
Company may, at its option, redeem up to 30% of the sum of (i) the initial
aggregate principal amount of the Notes issued in the Offering and (ii) the
respective initial aggregate principal amount of the Notes issued under the
Indenture after the Issue Date, on one or more occasions, with the net proceeds
of one or more Public Equity Offerings at 109 7/8% of the principal amount
thereof, plus accrued interest to the Redemption Date; provided, however, that
immediately after giving effect to such redemption, at least 70% of the sum of
(i) the initial aggregate principal amount of the Notes issued in the Offering
and (ii) the respective initial aggregate principal amount of the Notes issued
under the Indenture after the Issue Date remain outstanding (other than any
Notes owned by the Company or any of its Affiliates). In order to effect the
foregoing redemption with the proceeds of any Public Equity Offering, the
Company shall make such redemption not more than 90 days after the consummation
of any such Public Equity Offering.

     (6) Notice of Redemption. Notice of redemption will be mailed at least 30
but not more than 60 days before the Redemption Date to each Holder of Notes to
be redeemed at its registered address. Notes in denominations larger than $1,000
may be redeemed in part.

     Except as set forth in the Indenture, if monies for the redemption of the
Notes called for redemption shall have been deposited with the Paying Agent for
redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption will cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.

     (7) Offers to Purchase. Sections 4.15 and 4.16 of the Indenture provide
that, upon the occurrence of a Change of Control and after certain Asset Sales,
and subject to further limitations contained therein, the Company will make an
offer to purchase certain amounts of the Notes in accordance with the procedures
set forth in the Indenture.

     (8) Registration Rights. Pursuant to the Registration Rights Agreement
among the Company, the Guarantors and the Initial Purchaser, the Company and the
Guarantors will be obligated to consummate an exchange offer pursuant to which
the Holder of this Note shall have the right to exchange this Note for the
Company's 9 7/8% Senior Subordinated Notes due 2008, Series B (the "Unrestricted
Notes"), which will be registered under the Securities Act, in like principal
amount and having terms identical in all material respects as the Initial Notes.
The Holders of the Initial Notes shall be entitled to receive certain additional
interest payments in the event such exchange offer is not consummated and


                                       A-6

<PAGE>




upon certain other conditions, all pursuant to and in accordance with the terms
of the Registration Rights Agreement.

     (9) Denominations; Transfer; Exchange. The Notes are in registered form,
without coupons, and in denominations of $1,000 and integral multiples of
$1,000. A Holder shall register the transfer of or exchange of Notes in
accordance with the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
certain transfer taxes or similar governmental charges payable in connection
therewith as required by law or as permitted by the Indenture. The Registrar
need not register the transfer of or exchange of any Notes or portions thereof
selected for redemption except for the unredeemed portion of any Note being
redeemed in part.

     (10) Persons Deemed Owners. The registered Holder of a Note shall be
treated as the owner of it for all purposes.

     (11) Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for one year, the Trustee and the Paying Agent will pay the
money back to the Company. After that, all liability of the Trustee and such
Paying Agent with respect to such money shall cease.

     (12) Discharge Prior to Redemption or Maturity. If the Company at any time
deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, but including, under certain
circumstances, their obligation to pay the principal of and interest on the
Notes but without affecting the rights of the Holders to receive such amounts
from such deposits).

     (13) Amendment; Supplement; Waiver. Subject to certain exceptions set forth
in the Indenture, the Indenture or the Notes may be amended or supplemented with
the written consent of the Holders of not less than a majority in aggregate
principal amount of the Notes then outstanding, and any past Default or Event of
Default or noncompliance with any provision may be waived with the written
consent of the Holders of not less than a majority in aggregate principal amount
of the Notes then outstanding. Without notice to or consent of any Holder, the
parties thereto may amend or supplement the Indenture or the Notes to, among
other things, cure any ambiguity, defect or inconsistency, provide for
uncertificated Notes in addition to or in place of certificated Notes, comply
with any requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the TIA or comply with Article Five of the
Indenture or make any other change that does not adversely affect the rights of
any Holder of a Note in any material respect.

     (14) Restrictive Covenants. The Indenture imposes certain limitations on
the ability of the Company and the Restricted Subsidiaries to, among other
things, incur additional Indebtedness, make payments in respect of its Capital
Stock or certain Indebtedness, make certain Investments, create or incur liens,
enter into transactions with Affiliates, create dividend or other payment
restrictions affecting Restricted Subsidiaries, and on the ability of the
Company to merge or consolidate with any other Person or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of the Company's
and its Restricted Subsidiaries' assets or adopt a plan of liquidation.


                                       A-7

<PAGE>




Such limitations are subject to a number of important qualifications and
exceptions. Pursuant to Section 4.06 of the Indenture, the Company must annually
report to the Trustee on compliance with such limitations.

     (15) Subordination. The Notes are subordinated in right of payment, in the
manner and to the extent set forth in the Indenture, to the prior payment in
full in cash or Cash Equivalents of all obligations on Senior Debt of the
Company, whether outstanding on the date of the Indenture or thereafter created,
incurred, assumed or guaranteed. Each Holder by its acceptance hereof agrees to
be bound by such provisions and authorizes and expressly directs the Trustee, on
its behalf, to take such action as may be necessary or appropriate to effectuate
the subordination provided for in the Indenture and appoints the Trustee its
attorney-in-fact for such purposes.

     (16) Successors. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor, subject to certain exceptions, will be released from
those obligations.

     (17) Defaults and Remedies. Except as set forth in the Indenture, if an
Event of Default occurs and is continuing, the Trustee or the Holders of not
less than 25% in principal amount of Notes then outstanding may declare all the
Notes to be due and payable in the manner, at the time and with the effect
provided in the Indenture. Holders of Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. The Trustee is not obligated to
enforce the Indenture or the Notes unless it has received indemnity reasonably
satisfactory to it. The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Notes then outstanding to direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of Notes notice of any continuing
Default or Event of Default (except a Default in payment of principal or
interest when due, including defaults in payments to be made pursuant to a
Change of Control Offer or Asset Sale Offer, for any reason or a Default in
compliance with Article Five of the Indenture) if it determines that withholding
notice is in their interest.

     (18) Trustee Dealings with Company. The Trustee under the Indenture, in its
individual or any other capacity, may become the owner or pledgee of Notes and
may otherwise deal with the Company, its Subsidiaries or their respective
Affiliates as if it were not the Trustee.

     (19) No Recourse Against Others. No director, officer, employee,
incorporator, direct or indirect controlling person, stockholder, member,
partner or affiliate, as such, of the Company or any Guarantor, or successor
entity, as such, shall have any liability for any obligations of the Company or
any Guarantor under the Notes, the Indenture, the Guarantees or the Registration
Rights Agreement or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a Note, and the
Trustee, waives and releases all such liability. The waiver and release are part
of the consideration for the issuance of the Notes.

     (20) Guarantees. This Note will be entitled to the benefits of certain
Guarantees, if any, made for the benefit of the Holders. Reference is hereby
made to the Indenture for a statement of the respective rights, limitations of
rights, duties and obligations thereunder of the Guarantors, the Trustee and the
Holders.


                                      A-8

<PAGE>




     (21) Authentication. This Note shall not be valid until the Trustee or
Authenticating Agent manually signs the certificate of authentication on this
Note.

     (22) Governing Law. This Note and the Indenture shall be governed by and
construed in accordance with the laws of the State of New York, as applied to
contracts made and performed within the State of New York, without regard to
principles of conflict of laws. Each of the parties hereto and the Holders agree
to submit to the jurisdiction of the courts of the State of New York in any
action or proceeding arising out of or relating to this Note.

     (23) Abbreviations and Defined Terms. Customary abbreviations may be used
in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in
common), TEN ENT (= tenants by the entirety), JT TEN (= joint tenants with right
of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).

     (24) CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.

     The Company will furnish to any Holder of a Note upon written request and
without charge a copy of the Indenture, which has the text of this Note.
Requests may be made to: PHILIPP BROTHERS CHEMICALS, INC., One Fort Lee Plaza,
Fort Lee, New Jersey 07024.




                                       A-9

<PAGE>




                                 ASSIGNMENT FORM


     If you the Holder want to assign this Note, fill in the form below and have
your signature guaranteed:

I or we assign and transfer this Note to:






     ----------------------------------------------------------------------
                  (Print or type name, address and zip code and
                  social security or tax ID number of assignee)

and irrevocably appoint _______________________________________, agent to
transfer this Note on the books of the Company. The agent may substitute another
to act for him.


Dated: _____________________  Signed:___________________________
                                     (Sign exactly as your name appears
                                     on the other side of this Note)

Signature Guarantee:


     Signature must be guaranteed by an "eligible guarantor institution," that
is, a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.




                                      A-10

<PAGE>




                      [OPTION OF HOLDER TO ELECT PURCHASE]

     If you want to elect to have this Note purchased by the Company pursuant to
Section 4.15 or Section 4.16 of the Indenture, check the appropriate box:

                             Section 4.15 [     ]
                             Section 4.16 [     ]

     If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount you elect to have purchased:


$_______________________


Dated: _________________           _________________________________________
                                        NOTICE: The signature on this assignment
                                        must correspond with the name as it
                                        appears upon the face of the within Note
                                        in every particular without alteration
                                        or enlargement or any change whatsoever
                                        and be guaranteed.


Signature Guarantee:  __________________________



                                      A-11

<PAGE>




                                                                       EXHIBIT B


                                                                  CUSIP No.: [ ]

                        PHILIPP BROTHERS CHEMICALS, INC.
               9 7/8% SENIOR SUBORDINATED NOTE DUE 2008, SERIES B

No.                                                               $

     PHILIPP BROTHERS CHEMICALS, INC., a New York corporation (the "Company,"
which term includes any successor entities), for value received promises to pay
to or registered assigns the principal sum of Dollars on June 1, 2008.

     Interest Payment Dates: June 1 and December 1, commencing December 1, 1998.

     Record Dates: May 15 and November 15.

     Reference is made to the further provisions of this Note contained herein,
which will for all purposes have the same effect as if set forth at this place.

     IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.

                                        PHILIPP BROTHERS CHEMICALS, INC.



                                                 By:__________________________

                                                 Name:
                                                 Title:


Dated:

                                      B-1

<PAGE>




Certificate of Authentication

     This is one of the 9 7/8% Senior Subordinated Notes due 2008, Series B,
referred to in the within-mentioned Indenture.


                                             THE CHASE MANHATTAN BANK,
                                              as Trustee

                                             By:

                                                   Authorized Signatory

Date of Authentication:



                                       B-2


<PAGE>




(REVERSE OF SECURITY)

               9 7/8% Senior Subordinated Note due 2008, Series B


     Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to them in the Indenture, dated as of June 11, 1998 (the
"Indenture"), and as amended from time to time, by and among Philipp Brothers
Chemicals, Inc., a New York corporation (the "Company"), the Guarantors named
therein and The Chase Manhattan Bank, as trustee (the "Trustee").

     (1) Interest. The Company promises to pay interest on the principal amount
of this Note at the rate per annum shown above. Interest on the Notes will
accrue from the most recent date on which interest has been paid or, if no
interest has been paid, from June 11, 1998. The Company will pay interest
semi-annually in arrears on each Interest Payment Date, commencing December 1,
1998. Interest will be computed on the basis of a 360-day year of twelve 30-day
months and, in the case of a partial month, the actual number of days elapsed.

     The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.

     (2) Method of Payment. The Company shall pay interest on the Notes (except
defaulted interest) to the Persons who are the registered Holders at the close
of business on the Record Date immediately preceding the Interest Payment Date
even if the Notes are canceled on registration of transfer or registration of
exchange after such Record Date. Holders must surrender Notes to a Paying Agent
to collect principal payments. The Company shall pay principal and premium, if
any, and interest in money of the United States that at the time of payment is
legal tender for payment of public and private debts ("U.S. Legal Tender").
However, the Company may pay principal and premium, if any, and interest by
check payable in such U.S. Legal Tender. The Company may deliver any such
interest payment to the Paying Agent or to a Holder at the Holder's registered
address.

     (3) Paying Agent and Registrar. Initially, the Trustee will act as Paying
Agent and Registrar. The Company may change any Paying Agent, Registrar or
Co-Registrar without notice to the Holders.

     (4) Indenture. The Company issued the Notes under the Indenture. This Note
is one of a duly authorized issue of Exchange Notes of the Company designated as
its 9 7/8 % Senior Subordinated Notes due 2008, Series B (the "Unrestricted
Notes"), limited in aggregate principal amount to $140,000,000, which may be
issued under the Indenture; provided the principal amount of Initial Notes
issued on the Issue Date will not exceed $100,000,000. The Notes include the 9
7/8% Senior Subordinated Notes due 2008, Series A (the "Initial Notes"), the
Private Exchange Notes, and the Unrestricted Notes, issued in exchange for the
Initial Notes pursuant to the Registration Rights Agreement. The Initial Notes,
the Private Exchange Notes and


                                       B-3

<PAGE>




the Unrestricted Notes are treated as a single class of securities under the
Indenture. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S. Code ss.ss. 77aaa-77bbbb) (the "TIA"), as in effect on the date of the
Indenture. Notwithstanding anything to the contrary herein, the Notes are
subject to all such terms, and Holders of Notes are referred to the Indenture
and the TIA for a statement of such terms. The Notes are general unsecured
obligations of the Company. Payment on each Note is guaranteed on a senior
subordinated basis by the Guarantors pursuant to Articles Twelve and Thirteen of
the Indenture. Each Holder, by accepting a Note, agrees to be bound by all of
the terms and provisions of the Indenture, as the same may be amended from time
to time in accordance with its terms.

     (5) Redemption. The Notes are redeemable, at the Company's option, in whole
or in part, at any time on and after June 1, 2003 at the redemption prices
(expressed as percentages of the principal amount of the Notes) if redeemed
during the twelve-month period commencing on June 1 of the year set forth below,
plus, in each case, accrued and unpaid interest thereon, if any, to the
Redemption Date:




                                       B-4

<PAGE>





                          Year                                Percentage
                          ----                                ----------
                          2003                                  104.938%
                          2004                                  103.292%
                          2005                                  101.646%
                          2006 and thereafter                   100.000%

     The Notes are not entitled to the benefit of any striking sinking fund.

     Notwithstanding the foregoing, at any time prior to June 1, 2001, the
Company may, at its option, redeem up to 30% of the sum of (i) the initial
aggregate principal amount of the Notes issued in the Offering and (ii) the
respective initial aggregate principal amount of the Notes issued under the
Indenture after the Issue Date, on one or more occasions, with the net proceeds
of one or more Public Equity Offerings at 109 7/8% of the principal amount
thereof, plus accrued interest to the Redemption Date; provided, however, that
immediately after giving effect to such redemption, at least 70% of the sum of
(i) the initial aggregate principal amount of the Notes issued in the Offering
and (ii) the respective initial aggregate principal amount of the Notes issued
under the Indenture after the Issue Date remain outstanding (other than any
Notes owned by the Company or any of its Affiliates). In order to effect the
foregoing redemption with the proceeds of any Public Equity Offering, the
Company shall make such redemption not more than 90 days after the consummation
of any such Public Equity Offering.

     (6) Notice of Redemption. Notice of redemption will be mailed at least 30
but not more than 60 days before the Redemption Date to each Holder of Notes to
be redeemed at its registered address. Notes in denominations larger than $1,000
may be redeemed in part.

     Except as set forth in the Indenture, if monies for the redemption of the
Notes called for redemption shall have been deposited with the Paying Agent for
redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption will cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.

     (7) Offers to Purchase. Sections 4.15 and 4.16 of the Indenture provide
that, upon the occurrence of a Change of Control and after certain Asset Sales,
and subject to further limitations contained therein, the Company will make an
offer to purchase certain amounts of the Notes in accordance with the procedures
set forth in the Indenture.

     (8) Denominations; Transfer; Exchange. The Notes are in registered form,
without coupons, and in denominations of $1,000 and integral multiples of
$1,000. A Holder shall register the transfer of or exchange of Notes in
accordance with the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
certain transfer taxes or similar governmental charges payable in connection
therewith


                                       B-5

<PAGE>




as required by law or as permitted by the Indenture. The Registrar need not
register the transfer of or exchange of any Notes or portions thereof selected
for redemption, except for the unredeemed portion of any Note being redeemed in
part.

     (9) Persons Deemed Owners. The registered Holder of a Note shall be treated
as the owner of it for all purposes.

     (10) Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for one year, the Trustee and the Paying Agent will pay the
money back to the Company. After that, all liability of the Trustee and such
Paying Agent with respect to such money shall cease.

     (11) Discharge Prior to Redemption or Maturity. If the Company at any time
deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, including, under certain
circumstances, their obligation to pay the principal of and interest on the
Notes but without affecting the rights of the Holders to receive such amounts
from such deposit).

     (12) Amendment; Supplement; Waiver. Subject to certain exceptions set forth
in the Indenture, the Indenture or the Notes may be amended or supplemented with
the written consent of the Holders of not less than a majority in aggregate
principal amount of the Notes then outstanding, and any past Default or Event of
Default or noncompliance with any provision may be waived with the written
consent of the Holders of not less than a majority in aggregate principal amount
of the Notes then outstanding. Without notice to or consent of any Holder, the
parties thereto may amend or supplement the Indenture or the Notes to, among
other things, cure any ambiguity, defect or inconsistency, provide for
uncertificated Notes in addition to or in place of certificated Notes, comply
with any requirements of the Commission in order to effect or maintain the
qualificaqualification of the Indenture under the TIA or comply with Article
Five of the Indenture or make any other change that does not adversely affect
the rights of any Holder of a Note in any material respect.

     (13) Restrictive Covenants. The Indenture imposes certain limitations on
the ability of the Company and the Restricted Subsidiaries to, among other
things, incur additional Indebtedness, make payments in respect of its Capital
Stock or certain Indebtedness, make certain Investments, create or incur liens,
enter into transactions with Affiliates, create dividend or other payment
restrictions affecting Restricted Subsidiaries, and on the ability of the
Company to merge or consolidate with any other Person or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of the Company's
and its Restricted Subsidiaries' assets or adopt a plan of liquidation. Such
limitations are subject to a number of important qualifications and exceptions.
Pursuant to Section 4.06 of the Indenture, the Company must annually report to
the Trustee on compliance with such limitations.


                                       B-6

<PAGE>




     (14) Subordination. The Notes are subordinated in right of payment, in the
manner and to the extent set forth in the Indenture, to the prior payment in
full in cash or Cash Equivalents of all obligations on Senior Debt of the
Company, whether outstanding on the date of the Indenture or thereafter created,
incurred, assumed or guaranteed. Each Holder by its acceptance hereof agrees to
be bound by such provisions and authorizes and expressly directs the Trustee, on
its behalf, to take such action as may be necessary or appropriate to effectuate
the subordination provided for in the Indenture and appoints the Trustee its
attorney-in-fact for such purposes.

     (15) Successors. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor, subject to certain exceptions, will be released from
those obligations.

     (16) Defaults and Remedies. Except as set forth in the Indenture, if an
Event of Default occurs and is continuing, the Trustee or the Holders of not
less than 25% in principal amount of Notes then outstanding may declare all the
Notes to be due and payable in the manner, at the time and with the effect
provided in the Indenture. Holders of Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. The Trustee is not obligated to
enforce the Indenture or the Notes unless it has received indemnity reasonably
satisfactory to it. The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Notes then outstanding to direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of Notes notice of any continuing
Default or Event of Default (except a Default in payment of principal or
interest when due, including defaults in payments to be made pursuant to a
Change of Control Offer or Asset Sale Offer, for any reason or a Default in
compliance with Article Five of the Indenture) if it determines that withholding
notice is in their interest.

     (17) Trustee Dealings with Company. The Trustee under the Indenture, in its
individual or any other capacity, may become the owner or pledgee of Notes and
may otherwise deal with the Company, its Subsidiaries or their respective
Affiliates as if it were not the Trustee.

     (18) No Recourse Against Others. No director, officer, employee,
incorporator, direct or indirect controlling person, stockholder, member,
partner or affiliate, as such, of the Company or any Guarantor, or successor
entity, as such, shall have any liability for any obligations of the Company or
any Guarantor under the Notes, the Indenture, the Guarantees or the Registration
Rights Agreement or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a Note, and the
Trustee, waives and releases all such liability. The waiver and release are part
of the consideration for the issuance of the Notes.

     (19) Guarantees. This Note will be entitled to the benefits of certain
Guarantees, if any, made for the benefit of the Holders. Reference is hereby
made to the Indenture for a statement of the respective rights, limitations of
rights, duties and obligations thereunder of the Guarantors, the Trustee and the
Holders.


                                       B-7

<PAGE>




     (20) Authentication. This Note shall not be valid until the Trustee or
Authenticating Agent manually signs the certificate of authentication on this
Note.

     (21) Governing Law. This Note and the Indenture shall be governed by and
construed in accordance with the laws of the State of New York, as applied to
contracts made and performed within the State of New York, without regard to
principles of conflict of laws. Each of the parties hereto and the Holders agree
to submit to the jurisdiction of the courts of the State of New York in any
action or proceeding arising out of or relating to this Note.

     (22) Abbreviations and Defined Terms. Customary abbreviations may be used
in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in
common), TEN ENT (= tenants by the entirety), JT TEN (= joint tenants with right
of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).

     (23) CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.

     The Company will furnish to any Holder of a Note upon written request and
without charge a copy of the Indenture, which has the text of this Note.
Requests may be made to: PHILIPP BROTHERS CHEMICALS, INC., One Fort Lee Plaza,
Fort Lee, New Jersey, 07024.




                                       B-8

<PAGE>


                                 ASSIGNMENT FORM


     If you the Holder want to assign this Note, fill in the form below and have
your signature guaranteed:

I or we assign and transfer this Note to:






________________________________________________________________________________
                  (Print or type name, address and zip code and
                  social security or tax ID number of assignee)

and irrevocably appoint _______________________________________, agent to
transfer this Note on the books of the Company. The agent may substitute another
to act for him.


Dated: _____________________  Signed:

__________________________________         (Sign exactly as your name appears
                                            on the other side of this Note)

Signature Guarantee:


     Signature must be guaranteed by an "eligible guarantor institution," that
is, a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

                                       B-9

<PAGE>



                      [OPTION OF HOLDER TO ELECT PURCHASE]


     If you want to elect to have this Note purchased by the Company pursuant to
Section 4.15 or Section 4.16 of the Indenture, check the appropriate box:

                             Section 4.15 [     ]
                             Section 4.16 [     ]

     If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount you elect to have purchased:


$_______________________


Dated: _________________           _____________________________________________
                                        NOTICE: The signature on this assignment
                                        must correspond with the name as it
                                        appears upon the face of the within Note
                                        in every particular without alteration
                                        or enlargement or any change whatsoever
                                        and be guaranteed.


Signature Guarantee:  _______________________



                                      B-10

<PAGE>




                                                                       EXHIBIT C


UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY ANY SUCH NOMINEE OF THE
DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF SUCH SUCCESSOR DEPOSITORY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.17 OF THE INDENTURE.



                                       C-1

<PAGE>




                                                                       EXHIBIT D


                            Form of Certificate To Be
                          Delivered in Connection with
                    Transfers to Non-QIB Accredited Investors


                                                            ___________ __, ____


The Chase Manhattan Bank, as Registrar
450 West 33rd Street
New York, New York  10001
Attn.:  Corporate Trust Department

Ladies and Gentlemen:

     In connection with our proposed purchase of 9 7/8% Senior Subordinated
Notes due 2008 (the "Notes") of PHILIPP BROTHERS CHEMICALS, INC. (the
"Company"), we confirm that:

i.   We understand that any subsequent transfer of the Notes is subject to
     certain restrictions and conditions set forth in the Indenture relating to
     the Notes (the "Indenture") and the undersigned agrees to be bound by, and
     not to resell, pledge or otherwise transfer the Notes except in compliance
     with, such restrictions and conditions and the Securities Act of 1933, as
     amended (the "Securities Act"), and all applicable State securities laws.

ii.  We understand that the offer and sale of the Notes have not been registered
     under the Securities Act or any other applicable securities law, and that
     the Notes may not be offered or sold within the United States or to, or for
     the account or benefit of, U.S. persons except as permitted in the
     following sentence. We agree, on our own behalf and on behalf of any
     accounts for which we are acting as hereinafter stated, that if we should
     sell any Notes, we will do so only (i) to the Company or any subsidiary
     thereof, (ii) inside the United States in accordance with Rule 144A under
     the Securities Act to a person who we reasonably believe is a "qualified
     institutional buyer" (as defined in Rule 144A promulgated under the
     Securities Act), (iii) inside the United States to an institutional
     "accredited investor" (as defined below) that, prior to such transfer,
     furnishes (or has furnished on its behalf by a U.S. broker-dealer) to the
     Trustee (as defined in the Indenture) a signed letter containing certain
     representations and agreements relating to the restrictions on transfer of
     the Notes (the form of which letter can be obtained from the Trustee), (iv)
     outside the United States in accordance with Rule 904 of Regulation S
     promulgated under the Securities Act, (v) pursuant to the exemption from
     registration provided by Rule 144 under the Securities Act (if available),
     or (vi) pursuant to an effective registration statement under the
     Securities


                                       D-1

<PAGE>




     Act, and we further agree to provide to any person purchasing any of the
     Notes from us a notice advising such purchaser that resales of the Notes
     are restricted as stated herein.

iii. We understand that, on any proposed resale of any Notes, we will be
     required to furnish to the Trustee, the Company such certification, legal
     opinions and other information as the Trustee and the Company may
     reasonably require to confirm that the proposed sale complies with the
     foregoing restrictions. We further understand that the Notes purchased by
     us will bear a legend to the foregoing effect.

iv.  We are an institutional "accredited investor" (as defined in Rule
     501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
     have such knowledge and experience in financial and business matters as to
     be capable of evaluating the merits and risks of our investment in the
     Notes, and we and any accounts for which we are acting are each able to
     bear the economic risk of our or their investment, as the case may be.

v.   We are acquiring the Notes purchased by us for our account or for one or
     more accounts (each of which is an institutional "accredited investor") as
     to each of which we exercise sole investment discretion.

vi.  We acknowledge that we have had access to such financial and other
     information, have been afforded the opportunity to ask such questions of
     representatives of the Company and receive answers thereto as we deem
     necessary in connection with our decision to purchase the Notes and we have
     reviewed the "Transfer Restrictions" section from the Company's Final
     Offering Memorandum dated June 5, 1998.

     You, the Company, the Trustee, the Initial Purchaser and others are
entitled to rely upon this letter and are irrevocably authorized to produce this
letter or a copy hereof to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered hereby.

                                         Very truly yours,

                                         [Name of Transferee]


                                                  By:

                                                  Name:
                                                  Title:



                                       D-2

<PAGE>




                                                                       EXHIBIT E


                       Form of Certificate To Be Delivered
                          in Connection with Transfers
                            Pursuant to Regulation S


                                                         ______________ __, ____


The Chase Manhattan Bank, as Registrar
450 West 33rd Street
New York, New York  10001
Attn:  Corporate Trust Department

         Re: PHILIPP BROTHERS CHEMICALS, INC. (the "Company")
             9 7/8% Senior Subordinated Notes due 2008
             (the "Notes")
             ------------------------------------------

Ladies and Gentlemen:

     In connection with our proposed sale of $__________ aggregate principal
amount of the Notes, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and, accordingly, we represent that:

          (1) the offer of the Notes was not made to a person in the United
     States;

          (2) either (a) at the time the buy offer was originated, the
     transferee was outside the United States or we and any person acting on our
     behalf reasonably believed that the transferee was outside the United
     States, or (b) the transaction was executed in, on or through the
     facilities of a designated offshore securities market and neither we nor
     any person acting on our behalf knows that the transaction has been
     prearranged with a buyer in the United States;

          (3) no directed selling efforts have been made in the United States in
     contravention of the requirements of Rule 903(b) or Rule 904(b) of
     Regulation S, as applicable;

          (4) the transaction is not part of a plan or scheme to evade the
     registration requirements of the Securities Act; and

          (5) we have advised the transferee of the transfer restrictions
     applicable to the Notes.


                                       E-1

<PAGE>



     You, the Company and counsel for the Company are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof to
any interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.

                                               Very truly yours,

                                               [Name of Transferee]


                                               By:

                                                        Authorized Signature



                                       E-2

<PAGE>


                                                                       EXHIBIT F


                                    GUARANTEE


     For value received, the undersigned hereby unconditionally guarantees, as
principal obligor and not only as a surety, to the Holder of this Note the cash
payments in United States dollars of principal of, premium, if any, and interest
on this Note (and including Additional Interest payable thereon) in the amounts
and at the times when due and interest on the overdue principal, premium, if
any, and interest, if any, of this Note, if lawful, and the payment or
performance of all other obligations of the Company under the Indenture or the
Notes, to the Holder of this Note and the Trustee, all in accordance with and
subject to the terms and limitations of this Note, Articles Twelve and Thirteen
of the Indenture and this Guarantee. This Guarantee will become effective in
accordance with Article Twelve of the Indenture and its terms shall be evidenced
therein. The validity and enforceability of any Guarantee shall not be affected
by the fact that it is not affixed to any particular Note.

     Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Indenture dated as of June 11, 1998, among Philipp
Brothers Chemicals, Inc., a New York corporation, the Guarantors named therein
and The Chase Manhattan Bank, as trustee (the "Trustee"), as amended or
supplemented (the "Indenture").

     The obligations of the undersigned to the Holders of Notes and to the
Trustee pursuant to this Guarantee and the Indenture are expressly set forth in
Article Twelve and Thirteen of the Indenture and reference is hereby made to the
Indenture for the precise terms of the Guarantee and all of the other provisions
of the Indenture to which this Guarantee relates.

     THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS
OF LAW. Each Guarantor hereby agrees to submit to the jurisdiction of the courts
of the State of New York in any action or proceeding arising out of or relating
to this Guarantee.

     This Guarantee is subject to release upon the terms set forth in the
Indenture.




                                       F-1

<PAGE>




     IN WITNESS WHEREOF, each Guarantor has caused its Guarantee to be duly
executed.


Date:  ____________________


                                           [NAME OF GUARANTOR],
                                            as Guarantor



                                            By:
                                               ______________________________
                                               Name:
                                               Title:




                                            By:
                                               ______________________________
                                               Name:
                                               Title:




                                       F-2


<PAGE>




                                                                       EXHIBIT G


                    CERTIFICATE TO BE DELIVERED UPON EXCHANGE
                    OR REGISTRATION OF TRANSFER OF SECURITIES


Re:            9 7/8% Senior Subordinated Notes due 2008, Series A, and
               9 7/8% Senior Subordinated Notes due 2008, Series B (the
               "Notes"), of Philipp Brothers Chemicals, Inc.
               -------------------------------------------------


     This Certificate relates to $________ principal amount of Notes held in the
form of *_________ a beneficial interest in a Global Note or *_________ Physical
Notes by ___________ (the "Transferor").

The Transferor:*

     |_| has requested by written order that the Registrar deliver in exchange
for its beneficial interest in the Global Note held by the Depository a Physical
Note or Physical Notes in definitive, registered form of authorized
denominations and an aggregate number equal to its beneficial interest in such
Global Note (or the portion thereof indicated above); or

     |_| has requested by written order that the Registrar exchange or register
the transfer of a Physical Note or Physical Notes.

     In connection with such request and in respect of each such Note, the
Transferor does hereby certify that the Transferor is familiar with the
Indenture relating to the above-captioned Notes and the restrictions on
transfers thereof as provided in Section 2.17 of such Indenture, and that the
transfer of this Note does not require registration under the Securities Act of
1933, as amended (the "Act"), because*:

     |_| Such Note is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 2.17(a)(II)(A) or Section 2.17(d)(i)(A) of
the Indenture).

     |_| Such Note is being transferred to a "qualified institutional buyer" (as
defined in Rule 144A under the Act), in reliance on Rule 144A.

     |_| Such Note is being transferred to an institutional "accredited
investor" (within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule
501 under the Act).

     |_| Such Note is being transferred in reliance on Regulation S under the
Act.


                                       G-1

<PAGE>



     |_| Such Note is being transferred in reliance on Rule 144 under the Act.

     |_| Such Note is being transferred in reliance on and in compliance with an
exemption from the registration requirements of the Act other than Rule 144A or
Rule 144 or Regulation S under the Act to a person other than an institutional
"accredited investor."

                                             _________________________________
                                             [INSERT NAME OF TRANSFEROR]


                                             By:  ____________________________
                                                      [Authorized Signatory]
Date:  _____________________
                                                          *Check applicable box.




                                       G-2

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>REGISTRATION RIGHTS AGREEMENT
<TEXT>


<PAGE>
                                                                    Exhibit 10.1

================================================================================


                          REGISTRATION RIGHTS AGREEMENT

                            Dated as of June 11, 1998

                                  by and among

                        PHILIPP BROTHERS CHEMICALS, INC.,

                           THE GUARANTORS NAMED HEREIN

                                       and

                              SCHRODER & CO. INC.,
                              as Initial Purchaser

                                  $100,000,000

                    9 7/8% Senior Subordinated Notes due 2008


================================================================================

<PAGE>

                                TABLE OF CONTENTS
                                -----------------

                                                                           Page
                                                                           ----

1. Definitions.............................................................  1

2. Exchange Offer..........................................................  6

3. Shelf Registration...................................................... 11

4. Additional Interest..................................................... 13

5. Registration Procedures................................................. 15

6. Registration Expenses................................................... 26

7. Indemnification......................................................... 27

8. Rules 144 and 144A...................................................... 31

9. Underwritten Registrations.............................................. 32

10. Miscellaneous.......................................................... 32

      (a)  No Inconsistent Agreements...................................... 32
      (b)  Adjustments Affecting Registrable Notes......................... 33
      (c)  Amendments and Waivers.......................................... 33
      (d)  Notices......................................................... 33
      (e)  Successors and Assigns.......................................... 34
      (f)  Counterparts.................................................... 34
      (g)  Headings........................................................ 34
      (h)  Governing Law................................................... 34
      (i)  Severability.................................................... 35
      (j)  Securities Held by the Company or their
             Affiliates.................................................... 35
      (k)  Third Party Beneficiaries....................................... 35
      (l)  Attorneys' Fees................................................. 35
      (m)  Entire Agreement................................................ 35

                                       -i-
<PAGE>
                                       -1-

                          REGISTRATION RIGHTS AGREEMENT

        This Registration Rights Agreement (the "Agreement") is dated as of June
11, 1998, by and among PHILIPP BROTHERS CHEMICALS, INC., a New York corporation
(the "Company"), the subsidiaries of the Company listed on the signature pages
hereto as guarantors (the "Guarantors") and together with the Company (the
"Issuers"), and SCHRODER & CO. INC. (the "Initial Purchaser").

        This Agreement is entered into in connection with the Purchase
Agreement, dated as of June 5, 1998, among the Company, the Guarantors and the
Initial Purchaser (the "Purchase Agreement"), which provides for the sale by the
Company to the Initial Purchaser of $100,000,000 aggregate principal amount of
the Company's 9 7/8% Senior Subordinated Notes due 2008, guaranteed on a senior
subordinated basis by the Guarantors (the "Notes"). In order to induce the
Initial Purchaser to enter into the Purchase Agreement, the Issuers have agreed
to provide the registration rights set forth in this Agreement for the benefit
of the Initial Purchaser and any subsequent holder or holders of the Notes. The
execution and delivery of this Agreement is a condition to the Initial
Purchaser's obligation to purchase the Notes under the Purchase Agreement.

        The parties hereby agree as follows:

    Section 1. Definitions

        As used in this Agreement, the following terms shall have the following
meanings:

        "Additional Interest" shall have the meaning set forth in Section 4(a)
hereof.

        "Advice" shall have the meaning set forth in Section 5 hereof.

        "Agreement" shall have the meaning set forth in the introductory
paragraphs hereto.

        "Applicable Period" shall have the meaning set forth in Section 2(b)
hereof.

        "Business Day" shall mean a day that is not a Legal Holiday.

<PAGE>
                                       -2-

        "Company" shall have the meaning set forth in the preamble of this
Agreement and shall also include the Company's permitted successors and assigns.

        "Commission" shall mean the Securities and Exchange Commission.

        "Effectiveness Date" shall mean, (i) with respect to the Exchange Offer
Registration Statement, the 180th day after the Issue Date and (ii) with respect
to any other Registration Statement, the 60th day after the Filing Date with
respect thereto, but in no event prior to the 180th day after the Issue Date.

        "Effectiveness Period" shall have the meaning set forth in Section 3(a)
hereof.

        "Event Date" shall have the meaning set forth in Section 4(b) hereof.

        "Exchange Act" shall mean Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.

        "Exchange Notes" shall have the meaning set forth in Section 2(a)
hereof.

        "Exchange Offer" shall have the meaning set forth in Section 2(a)
hereof.

        "Exchange Offer Registration Statement" shall have the meaning set forth
in Section 2(a) hereof.

        "Filing Date" shall mean, (A) if no Registration Statement has been
filed by the Issuers pursuant to this Agreement, the 120th day after the Issue
Date; provided, however, that if a Shelf Filing Event shall have occurred within
10 days of the Filing Date, then the Filing Date with respect to the Initial
Shelf Registration shall be the 15th calendar day after the occurrence of the
Shelf Filing Event, but in no event prior to the 120th day after the Issue Date;
and (B) in each other case (which may be applicable notwithstanding the
consummation of the Exchange Offer), the 120th day after the occurrence of the
Shelf Filing Event.

        "Holder" shall mean any holder of a Registrable Note or Registrable
Notes.

<PAGE>
                                       -3-

        "Indemnified Person" shall have the meaning set forth in Section 7(c)
hereof.

        "Indemnifying Person" shall have the meaning set forth in Section 7(c)
hereof.

        "Indenture" shall mean the Indenture, dated as of June 11, 1998, by and
between the Company, the Guarantors and The Chase Manhattan Bank, as trustee,
pursuant to which the Notes are being issued, as amended or supplemented from
time to time in accordance with the terms thereof.

        "Initial Purchaser" shall have the meaning set forth in the preamble
hereof.

        "Initial Shelf Registration" shall have the meaning set forth in Section
3(a) hereof.

        "Inspectors" shall have the meaning set forth in Section 5(n) hereof.

        "Issue Date" shall mean June 11, 1998, the date of original issuance of
the Notes.

        "Issuers" shall have the meaning set forth in the preamble hereof.

        "Legal Holiday" shall mean a Saturday, a Sunday or a day on which
banking institutions in New York, New York are required by law, regulation or
executive order to remain closed.

        "NASD" shall have the meaning set forth in Section 5(s) hereof.

        "Notes" shall have the meaning set forth in the preamble hereof.

        "Participant" shall have the meaning set forth in Section 7(a) hereof.

        "Participating Broker-Dealer" shall mean any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Notes received by such broker-dealer in the Exchange Offer or any other person
with similar prospectus delivery requirements for use in connection with any
resale of Exchange Notes.

<PAGE>
                                       -4-

        "Person" shall mean an individual, trustee, corporation, partnership,
joint stock company, trust, unincorporated association, union, business
association, firm, government or agency or political subdivision thereof or
other legal entity.

        "Private Exchange" shall have the meaning set forth in Section 2(b)
hereof.

        "Private Exchange Notes" shall have the meaning set forth in Section
2(b) hereof.

        "Prospectus" shall mean the prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

        "Purchase Agreement" shall have the meaning set forth in the
introductory paragraphs hereof.

        "Records" shall have the meaning set forth in Section 5(n) hereof.

        "Registrable Notes" shall mean each Note, upon original issuance
thereof, and at all times subsequent thereto, each Exchange Note as to which
Section 2(c)(iv) hereof is applicable upon original issuance and at all times
subsequent thereto and each Private Exchange Note upon original issuance thereof
and at all times subsequent thereto, until in the case of any such Note,
Exchange Note or Private Exchange Note, as the case may be, the earliest to
occur of (i) the date on which any such Note has been exchanged by a person
other than a Participating Broker-Dealer for an Exchange Note (other than with
respect to an Exchange Note as to which Section 2(c)(iv) hereof applies)
pursuant to the Exchange Offer, (ii) with respect to Exchange Notes received by
Participating Broker-Dealers in the Exchange Offer, the earlier of (x) the date
on which such Exchange Note has been sold by such Participating Broker-Dealer by
means of the Prospectus contained in the Exchange Offer Registration Statement
and (y) the date on which the Exchange Offer Registration Statement has been
effective under the Securities Act for a period of 180 days after the date that
the

<PAGE>
                                       -5-

Exchange Offer has been consummated, (iii) a Shelf Registration covering such
Note, Exchange Note or Private Exchange Note has been declared effective by the
Commission and such Note, Exchange Note or Private Exchange Note, as the case
may be, has been disposed of in accordance with such effective Shelf
Registration, (iv) the date on which such Note, Exchange Note or Private
Exchange Note, as the case may be, is eligible for distribution to the public
without volume or manner of sale restrictions pursuant to Rule 144(k) or (v) the
date on which such Note, Exchange Note or Private Exchange Note, as the case may
be, ceases to be outstanding for purposes of the Indenture or any other
indenture under which such Exchange Note or Private Exchange Note was issued.

        "Registration Statement" shall mean any appropriate registration
statement of the Company and/or the Guarantors covering any of the Registrable
Notes pursuant to the provisions of this Agreement, including, but not limited
to, the Exchange Offer Registration Statement, filed with the Commission under
the Securities Act, and all amendments and supplements to any such Registration
Statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.

        "Rule 144" shall mean Rule 144 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than Rule
144A) or regulation hereafter adopted by the Commission providing for offers and
sales of securities made in compliance therewith resulting in offers and sales
by subsequent holders that are not affiliates of an issuer of such securities
being free of the registration and prospectus delivery requirements of the
Securities Act.

        "Rule 144A" shall mean Rule 144A promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule (other than
Rule 144) or regulation hereafter adopted by the Commission.

        "Rule 415" shall mean Rule 415 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission.

        "Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.

<PAGE>
                                       -6-

        "Shelf Filing Event" shall have the meaning set forth in Section 2(c)
hereof.

        "Shelf Registration" shall have the meaning set forth in Section 3(b)
hereof.

        "Subsequent Shelf Registration" shall have the meaning set forth in
Section 3(b) hereof.

        "TIA" shall mean the Trust Indenture Act of 1939, as amended.

        "Trustee" shall mean the trustee under the Indenture and the trustee (if
any) under any indenture governing the Exchange Notes and Private Exchange
Notes.

        "Underwritten registration or underwritten offering" shall mean a
registration in which securities of the Issuers are sold to an underwriter for
reoffering to the public.

   Section 2. Exchange Offer

(a) The Issuers shall file with the Commission, no later than the Filing Date, a
Registration Statement (the "Exchange Offer Registration Statement") on an
appropriate registration form with respect to a registered offer (the "Exchange
Offer") to exchange any and all of the Registrable Notes for a like aggregate
principal amount of notes, guaranteed on a senior subordinated basis by the
Guarantors of the Company (the "Exchange Notes"), that are identical in all
material respects to the Notes except that the Exchange Notes shall contain no
restrictive legend thereon. The Exchange Offer shall comply with all applicable
tender offer rules and regulations under the Exchange Act and other applicable
law. The Issuers shall use their best efforts to (x) cause the Exchange Offer
Registration Statement to be declared effective under the Securities Act on or
before the Effectiveness Date; (y) keep the Exchange Offer open for at least 20
Business Days (or longer if required by applicable law) after the date on which
the Exchange Offer Registration Statement is declared effective; and (z) on or
prior to the 30th day following the date on which the Exchange Offer
Registration Statement is declared effective by the Commission, issue Exchange
Notes for Notes tendered in the Exchange Offer. For purposes of this Section
2(a) only, if after the Exchange Offer Registration Statement is initially
declared effective by the Commission, the Exchange Offer or the issuance of the
Exchange Notes thereunder is interfered with by any stop order, or injunction or
other order of the Commission or any other governmental agency or

<PAGE>
                                       -7-

court, the Exchange Offer Registration Statement shall be deemed not to have
become effective for purposes of this Agreement.

        Each Holder that participates in the Exchange Offer will be required to
represent to the Issuers in writing (which may be contained in the applicable
letter of transmittal) that (i) any Exchange Notes to be received by it will be
acquired in the ordinary course of its business, (ii) such Holder will have no
arrangement or understanding with any Person to participate in the distribution
of the Exchange Notes in violation of the provisions of the Securities Act,
(iii) that such Holder is not an affiliate of any of the Issuers within the
meaning of the Securities Act or, if such Holder is such an affiliate, that it
will comply with the registration and prospectus delivery requirements of the
Securities Act applicable to it, (iv) if such Holder is not a broker-dealer,
that it is not engaged in, and does not intend to engage in, a distribution of
Exchange Notes and (v) if such Holder is a broker-dealer that will receive
Exchange Notes for its own account in exchange for Notes that were acquired as a
result of market-making or other trading activities, that it will deliver a
prospectus in connection with any resale of such Exchange Notes.

        Upon consummation of the Exchange Offer in accordance with this Section
2, the provisions of this Agreement shall continue to apply, mutatis mutandis,
solely with respect to Registrable Notes that are Private Exchange Notes,
Exchange Notes as to which Section 2(c)(iv) is applicable and Exchange Notes
held by Participating Broker-Dealers (as defined), and the Issuers shall have no
further obligation to register Registrable Notes (other than Private Exchange
Notes, if required and other than in respect of any Exchange Notes as to which
clause 2(c)(iv) hereof applies) pursuant to Section 3 hereof.

        No securities other than the Exchange Notes shall be included in the
Exchange Offer Registration Statement.

(b) The Issuers and the Initial Purchaser acknowledge that the staff of the
Commission has taken the position that any broker-dealer that elects to exchange
Notes that were acquired by such broker-dealer for its own account as a result
of market-making or other trading activities for Exchange Notes in the Exchange
Offer (a "Participating Broker-Dealer") may be deemed to be an "underwriter"
within the meaning of the Securities Act and must deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such
Exchange Notes (other than a resale of an unsold allotment resulting from the
original offering of the Notes).

<PAGE>
                                       -8-

        The Issuers and the Initial Purchaser also acknowledge that it is the
Commission staff's position that if the Prospectus contained in the Exchange
Offer Registration Statement includes a plan of distribution containing a
statement to the above effect and the means by which Participating
Broker-Dealers may resell the Exchange Notes, without naming the Participating
Broker- Dealers or specifying the amount of Exchange Notes owned by them, such
Prospectus may be delivered by Participating Broker-Dealers to satisfy their
prospectus delivery obligations under the Securities Act in connection with
resales of Exchange Notes for their own accounts, so long as the Prospectus
otherwise meets the requirements of the Securities Act.

        In light of the foregoing, if requested by a Participating Broker-Dealer
(a "Requesting Participating Broker- Dealer"), the Issuers agree (w) to use
their best efforts to keep the Exchange Offer Registration Statement
continuously effective for a period of up to 180 days after the date on which
the Exchange Registration Statement is declared effective, or such longer period
if extended pursuant to the last paragraph of Section 5 hereof (such period, the
"Applicable Period"), or such earlier date as all Requesting Participating
Broker-Dealers shall have notified the Issuers in writing that such Requesting
Participating Broker-Dealers have resold all Exchange Notes acquired in the
Exchange Offer, (x) to comply with the provisions of Section 5 of this
Agreement, as they relate to the Exchange Offer and the Exchange Offer
Registration Statement, (y) to use reasonable commercial efforts to deliver to
such Requesting Participating Broker-Dealer a "cold comfort" letter of the
independent public accountants of the Issuers and a legal opinion as to matters
reasonably requested by such Requesting Participating Broker-Dealer relating to
the Exchange Offer Registration Statement and the related Prospectus and any
amendments or supplements thereto, and (z) include a plan of distribution in
such Exchange Offer Registration Statement that meets the requirements set forth
in the preceding paragraph. The Initial Purchaser shall have no liability to any
Requesting Participating Broker-Dealer with respect to any request made pursuant
to this Section 2(b).

        In connection with the Exchange Offer, the Issuers shall:

                  (1) mail to each Holder entitled to participate in the
         Exchange Offer a copy of the Prospectus forming part of the Exchange
         Offer Registration Statement, together with an appropriate letter of
         transmittal and related documents;

<PAGE>
                                       -9-

                  (2) utilize the services of a depositary for the Exchange
         Offer with an address in the Borough of Manhattan, The City of New
         York;

                  (3) permit Holders to withdraw tendered Notes at any time
         prior to the close of business, New York time, on the last Business Day
         on which the Exchange Offer shall remain open; and

                  (4) otherwise comply in all material respects with all
         applicable laws, rules and regulations to which it is subject
         pertaining to the Exchange Offer.

        If, prior to consummation of the Exchange Offer, any Holder (including
the Initial Purchaser) holds any Notes acquired by it that have, or that are
reasonably likely to be determined to have, the status of an unsold allotment in
an initial distribution, or if any Holder is not entitled to participate in the
Exchange Offer, the Issuers upon the request of any such Holder shall
simultaneously with the delivery of the Exchange Notes in the Exchange Offer,
issue and deliver to any such Holder, in exchange (the "Private Exchange") for
such Notes held by any such Holder, a like principal amount of notes, guaranteed
on a senior subordinated basis by the Guarantors of the Company (the "Private
Exchange Notes"), that are identical in all material respects to the Exchange
Notes.

        As soon as practicable after the close of the Exchange Offer and the
Private Exchange, if any, the Issuers shall:

                  (1) accept for exchange all Notes or portions thereof validly
         tendered and not validly withdrawn pursuant to the Exchange Offer and
         the Private Exchange;

                  (2) deliver, or cause to be delivered, to the Trustee for
         cancellation all Notes so accepted for exchange; and

                  (3) issue, cause the Trustee to authenticate and deliver
         promptly to each Holder of Notes, Exchange Notes or Private Exchange
         Notes, as the case may be, equal in principal amount to the Notes of
         such Holder so accepted for exchange.

        The Exchange Offer and the Private Exchange shall not be subject to any
conditions, other than that (i) the Exchange Offer or Private Exchange, as the
case may be, does not violate applicable law or any applicable interpretation of
the staff of the Commission, (ii) no action or proceeding shall have been
instituted or threatened in any court or by any governmental

<PAGE>
                                      -10-

agency which might materially impair the ability of the Issuers to proceed with
the Exchange Offer or the Private Exchange, and no material adverse development
shall have occurred in any existing action or proceeding with respect to the
Issuers and (iii) all governmental approvals shall have been obtained, which
approvals the Issuers deem necessary for the consummation of the Exchange Offer
or Private Exchange.

        The Exchange Notes and the Private Exchange Notes shall be issued under
(i) the Indenture or (ii) an indenture identical in all material respects to the
Indenture (in either case, with such changes as are necessary to comply with any
requirements of the Commission to effect or maintain the qualification thereof
under the TIA) and which, in either case, has been qualified under the TIA and
shall provide that the Exchange Notes shall not be subject to the transfer
restrictions set forth in the Indenture. The Indenture or such indenture shall
provide that the Exchange Notes, the Private Exchange Notes and the Notes shall
vote and consent together on all matters as one class and that none of the
Exchange Notes, the Private Exchange Notes or the Notes will have the right to
vote or consent as a separate class on any matter. The Private Exchange Notes
shall bear the same CUSIP number as the Exchange Notes.

(c) If, (i) because of any applicable interpretations of the staff of the
Commission, the Issuers are not permitted to file the Exchange Offer
Registration Statement or to effect the Exchange Offer, (ii) the Exchange Offer
is not consummated within 210 days of the Issue Date, (iii) the Initial
Purchaser so requests with respect to Notes not eligible to be exchanged for
Exchange Notes in the Exchange Offer, (iv) any Holder of a Note notifies the
Issuers that (A) due to a change in law or policy it is not entitled to
participate in the Exchange Offer, (B) due to a change in law or policy it may
not resell Exchange Notes acquired by it in the Exchange Offer to the public
without delivering a prospectus and the Prospectus contained in the Exchange
Offer Registration Statement is not appropriate or available for such resales by
such holder or (C) it owns Notes (including the Initial Purchaser if it holds
Notes as part of an unsold allotment from the original offering of the Notes)
acquired directly from an Issuer or an affiliate of an Issuer or (v) any holder
of Private Exchange Notes so requests after the consummation of the Private
Exchange (each such event referred to in clauses (i) through (v) of this
sentence, a "Shelf Filing Event"), then the Issuers (x) shall promptly deliver
to the Holders and the Trustee written notice thereof in the case of clause (i)
or (ii) and (y) at their own expense shall file a Shelf Registration pursuant to
Section 3 hereof.

<PAGE>
                                      -11-

    Section 3. Shelf Registration

        If at any time a Shelf Filing Event shall occur, then:

(a) Shelf Registration. The Issuers shall file with the Commission a
Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415 covering all of the Registrable Notes not exchanged in the Exchange
Offer, Private Exchange Notes and Exchange Notes as to which Section 2(c)(iv) is
applicable (the "Initial Shelf Registration"). The Issuers shall use their best
efforts to file with the Commission the Initial Shelf Registration as promptly
as practicable, but in no event earlier than 120 days after the Issue Date. The
Initial Shelf Registration shall be on Form S-1 or another appropriate form
permitting registration of such Registrable Notes for resale by Holders in the
manner or manners designated by them (including, without limitation, one or more
underwritten offerings). The Issuers shall not permit any securities other than
the Registrable Notes to be included in the Initial Shelf Registration or any
Subsequent Shelf Registration (as defined below).

        The Issuers shall use their best efforts to cause the Initial Shelf
Registration to be declared effective under the Securities Act on or prior to
the Effectiveness Date and to keep the Initial Shelf Registration continuously
effective under the Securities Act for the period ending on the date which is
two years from the Issue Date, subject to extension pursuant to the last
paragraph of Section 5 hereof (the "Effectiveness Period"), or such shorter
period ending when (i) all Registrable Notes covered by the Initial Shelf
Registration have been sold in the manner set forth and as contemplated in the
Initial Shelf Registration or (ii) a Subsequent Shelf Registration covering all
of the Registrable Notes covered by and not sold under the Initial Shelf
Registration or an earlier Subsequent Shelf Registration has been declared
effective under the Securities Act; provided, however, that the Effectiveness
Period in respect of the Initial Shelf Registration shall be extended to the
extent required to permit dealers to comply with the applicable prospectus
delivery requirements of Rule 174 under the Securities Act and as otherwise
provided herein; provided, further, that the Issuers may suspend the
effectiveness of a Shelf Registration Statement by written notice to the Holders
for a period not to exceed 60 days in any calendar year if, (i) an event occurs
and is continuing as a result of which the Shelf Registration Statement would,
in the Issuers' good faith judgment, contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein not misleading and (ii) (a) the Issuers determine in good faith that

<PAGE>
                                      -12-

the disclosure of such event at such time would have a material adverse effect
on the business, operations or prospects of the Company and its subsidiaries,
taken as a whole, or (b) the disclosure otherwise relates to a previously
undisclosed pending material business transaction, the disclosure of which would
impede the Issuers' ability to consummate such transaction.

(b) Subsequent Shelf Registrations. If the Initial Shelf Registration or any
Subsequent Shelf Registration ceases to be effective for any reason at any time
during the Effectiveness Period (other than because of the sale of all of the
securities registered thereunder), the Issuers shall use their best efforts to
obtain the prompt withdrawal of any order suspending the effectiveness thereof,
and in any event shall as soon as practicable after such cessation amend the
Initial Shelf Registration in a manner to obtain the withdrawal of the order
suspending the effectiveness thereof, or file an additional "shelf" Registration
Statement pursuant to Rule 415 covering all of the Registrable Notes covered by
and not sold under the Initial Shelf Registration or an earlier Subsequent Shelf
Registration (each, a "Subsequent Shelf Registration"). If a Subsequent Shelf
Registration is filed, the Issuers shall use their reasonable best efforts to
cause the Subsequent Shelf Registration to be declared effective under the
Securities Act as soon as practicable after such filing and to keep such
Registration Statement continuously effective until the expiration of the
Effectiveness Period. As used herein the term "Shelf Registration" means the
Initial Shelf Registration and any Subsequent Shelf Registration.

(c) Supplements and Amendments. The Issuers shall promptly supplement and amend
the Shelf Registration if required by the rules, regulations or instructions
applicable to the registration form used for such Shelf Registration, if
required by the Securities Act, or if reasonably requested by the Holders of a
majority in aggregate principal amount of the Registrable Notes covered by such
Registration Statement or by any underwriter of such Registrable Notes.

    Section 4. Additional Interest

(a) The Issuers and the Initial Purchaser agree that the Holders will suffer
damages if the Issuers fail to fulfill their obligations under Section 2 or
Section 3 hereof and that it would not be feasible to ascertain the extent of
such damages with precision. Accordingly, the Issuers agree to pay, as
liquidated damages and not as a penalty, additional interest on the Notes
("Additional Interest") under the circumstances and to the extent

<PAGE>
                                      -13-

set forth below (each of which shall be given independent effect):

         (i) if (A) neither the Exchange Offer Registration Statement nor the
         Initial Shelf Registration has been filed on or prior to the applicable
         Filing Date or (B) notwithstanding that the Issuers have consummated or
         will consummate the Exchange Offer, the Issuers are required to file a
         Shelf Registration and such Shelf Registration is not filed on or prior
         to the Filing Date applicable thereto, then, commencing on the day
         after any such Filing Date, Additional Interest shall accrue on the
         principal amount of the Notes at a rate of 0.50% per annum for the
         first 90 days immediately following each such Filing Date, and such
         Additional Interest rate shall increase by an additional 0.25% per
         annum at the beginning of each subsequent 90-day period; or

         (ii) if (A) neither the Exchange Offer Registration Statement nor the
         Initial Shelf Registration is declared effective by the Commission on
         or prior to the relevant Effectiveness Date or (B) notwithstanding that
         the Issuers have consummated or will consummate the Exchange Offer, the
         Issuers are required to file a Shelf Registration and such Shelf
         Registration is not declared effective by the Commission on or prior to
         the Effectiveness Date in respect of such Shelf Registration, then,
         commencing on the day after such Effectiveness Date, Additional
         Interest shall accrue on the principal amount of the Notes at a rate of
         0.50% per annum for the first 90 days immediately following the day
         after such Effectiveness Date, and such Additional Interest rate shall
         increase by an additional 0.25% per annum at the beginning of each
         subsequent 90-day period; or

         (iii) if (A) the Issuers have not exchanged Exchange Notes for all
         Notes validly tendered in accordance with the terms of the Exchange
         Offer on or prior to the 210th day following the Issue Date or (B) the
         Exchange Offer Registration Statement or the Shelf Registration is
         declared effective but thereafter ceases to be effective at any time
         during the Effectiveness Period (except as permitted by Section 10(a)
         hereof) for a period of 15 consecutive days without being succeeded
         immediately by an additional Exchange Offer Registration Statement or
         Shelf Registration Statement, as the case may be, filed and declared
         effective, then Additional Interest shall accrue on the principal
         amount of the Notes at a rate of 0.50% per annum for the first 90 days
         commencing on the (x) 210th day after the Issue Date, in the case of
         (A) above, or (y) the 16th day after such Shelf

<PAGE>
                                      -14-

         Registration ceases to be effective in the case of (B) above, and such
         Additional Interest rate shall increase by an additional 0.25% per
         annum at the beginning of each such subsequent 90-day period;

provided, however, that the Additional Interest rate on the Notes may not exceed
at any one time in the aggregate 1.0% per annum; provided, further, however,
that (1) upon the filing of the applicable Exchange Offer Registration Statement
or the applicable Shelf Registration as required hereunder (in the case of
clause (i) above of this Section 4), (2) upon the effectiveness of the Exchange
Offer Registration Statement or the applicable Shelf Registration Statement as
required hereunder (in the case of clause (ii) of this Section 4), or (3) upon
the exchange of the applicable Exchange Notes for all Notes tendered (in the
case of clause (iii)(A) of this Section 4), or upon the effectiveness of the
applicable Exchange Offer Registration Statement or Shelf Registration Statement
which had ceased to remain effective (in the case of (iii)(B) of this Section
4), Additional Interest on the Notes in respect of which such events relate as a
result of such clause (or the relevant subclause thereof), as the case may be,
shall cease to accrue.

(b) The Issuers shall notify the Trustee within one Business Day after each and
every date on which an event occurs in respect of which Additional Interest is
required to be paid (an "Event Date"). Any amounts of Additional Interest due
pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section 4 will be payable in
cash semi-annually on the interest payment dates specified in the Indenture (to
the holders of record as specified in the Indenture), commencing with the first
such interest payment date occurring after any such Additional Interest
commences to accrue. The amount of Additional Interest will be determined by
multiplying the applicable Additional Interest rate by the principal amount of
the Registrable Notes, multiplied by a fraction, the numerator of which is the
number of days such Additional Interest rate was applicable during such period
(determined on the basis of a 360-day year comprised of twelve 30-day months
and, in the case of a partial month, the actual number of days elapsed), and the
denominator of which is 360.

    Section 5. Registration Procedures

        In connection with the filing of any Registration Statement pursuant to
Sections 2 or 3 hereof, the Issuers shall effect such registrations to permit
the sale of the securities covered thereby in accordance with the intended
method or methods of disposition thereof, and pursuant thereto and in connection

<PAGE>
                                      -15-

with any Registration Statement filed by the Issuers hereunder the Issuers
shall:

    (a)  Prepare and file with the Commission prior to the applicable Filing
         Date, a Registration Statement or Registration Statements as prescribed
         by Sections 2 or 3 hereof, and use their best efforts to cause each
         such Registration Statement to become effective and remain effective as
         provided herein; provided, however, that, if (1) such filing is
         pursuant to Section 3 hereof, or (2) a Prospectus contained in the
         Exchange Offer Registration Statement filed pursuant to Section 2
         hereof is required to be delivered under the Securities Act by any
         Participating Broker-Dealer who seeks to sell Exchange Notes during the
         Applicable Period relating thereto, before filing any Registration
         Statement or Prospectus or any amendments or supplements thereto, the
         Issuers shall furnish to and afford the Holders of the Registrable
         Notes covered by such Registration Statement or each such Participating
         Broker-Dealer, as the case may be, their counsel and the managing
         underwriters, if any, a reasonable opportunity to review copies of all
         such documents (including copies of any documents to be incorporated by
         reference therein and all exhibits thereto) proposed to be filed (in
         each case at least five Business Days prior to such filing). The
         Issuers shall not file any Registration Statement or Prospectus or any
         amendments or supplements thereto if the Holders of a majority in
         aggregate principal amount of the Registrable Notes covered by such
         Registration Statement, or any such Participating Broker-Dealer, as the
         case may be, their counsel, or the managing underwriters, if any, shall
         reasonably object, and shall have no liability or obligation to do so.

    (b)  Prepare and file with the Commission such amendments and
         post-effective amendments to each Shelf Registration Statement or
         Exchange Offer Registration Statement, as the case may be, as may be
         necessary to keep such Registration Statement continuously effective
         for the Effectiveness Period or the Applicable Period, as the case may
         be; cause the related Prospectus to be supplemented by any Prospectus
         supplement required by applicable law, and as so supplemented to be
         filed pursuant to Rule 424 (or any similar provisions then in force)
         promulgated under the Securities Act; and comply with the provisions of
         the Securities Act and the Exchange Act applicable to each of them with
         respect to the disposition of all securities covered by such
         Registration Statement as so amended or in such Prospectus as so
         supplemented and with respect to the subsequent resale of any
         securities being sold by a

<PAGE>
                                      -16-

         Participating Broker-Dealer covered by any such Prospectus, in each
         case, in accordance with the intended methods of distribution set forth
         in such Registration Statement or Prospectus, as so amended. The
         Issuers shall be deemed not to have used their best efforts to keep a
         Registration Statement effective during the Effective Period or the
         Applicable Period, as the case may be, relating thereto if the Issuers
         voluntarily take any action that would result in selling Holders of the
         Registrable Notes covered thereby or Participating Broker-Dealers
         seeking to sell Exchange Notes not being able to sell such Registrable
         Notes or such Exchange Notes during that period unless such action is
         required by applicable law (subject to the last paragraph of Section 5
         as it pertains to the events described in Section 5(c)(v) and
         5(c)(vi)).

    (c)  If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
         or (2) a Prospectus contained in the Exchange Offer Registration
         Statement filed pursuant to Section 2 hereof is required to be
         delivered under the Securities Act by any Participating Broker-Dealer
         who seeks to sell Exchange Notes during the Applicable Period relating
         thereto, notify the selling Holders of Registrable Notes, or each such
         Participating Broker-Dealer, as the case may be, their counsel and the
         managing underwriters, if any, as promptly as possible, and, if
         requested by any such Person, confirm such notice in writing, (i) when
         a Prospectus or any Prospectus supplement or post-effective amendment
         has been filed, and, with respect to a Registration Statement or any
         post-effective amendment, when the same has become effective under the
         Securities Act (including in such notice a written statement that any
         Holder may, upon request, obtain, at the sole expense of the Issuers,
         one conformed copy of such Registration Statement or post-effective
         amendment including financial statements and schedules, documents
         incorporated or deemed to be incorporated by reference and exhibits),
         (ii) of the issuance by the Commission of any stop order suspending the
         effectiveness of a Registration Statement or of any order preventing or
         suspending the use of any preliminary prospectus or the initiation of
         any proceedings for that purpose, (iii) if at any time when a
         prospectus is required by the Securities Act to be delivered in
         connection with sales of the Registrable Notes or resales of Exchange
         Notes by Participating Broker-Dealers the representations and
         warranties of the Issuers contained in any agreement (including any
         underwriting agreement) contemplated by Section 5(m) hereof cease to be
         true and correct in all material respects, (iv) of the receipt by the
         Issuers of any notification with respect to the suspension of the

<PAGE>
                                      -17-

         qualification or exemption from qualification of a Registration
         Statement or any of the Registrable Notes or the Exchange Notes to be
         sold by any Participating Broker-Dealer for offer or sale in any
         jurisdiction, or the initiation or threatening of any proceeding for
         such purpose, (v) of the happening of any event, the existence of any
         condition or any information becoming known to the Issuers that makes
         any statement made in such Registration Statement or related Prospectus
         or any document incorporated or deemed to be incorporated therein by
         reference untrue in any material respect or that requires the making of
         any changes in or amendments or supplements to such Registration
         Statement, Prospectus or documents so that, in the case of the
         Registration Statement, it will not contain any untrue statement of a
         material fact or omit to state any material fact required to be stated
         therein or necessary to make the statements therein not misleading, and
         that in the case of the Prospectus, it will not contain any untrue
         statement of a material fact or omit to state any material fact
         required to be stated therein or necessary to make the statements
         therein, in light of the circumstances under which they were made, not
         misleading, and (vi) of the Issuers determination that a post-effective
         amendment to a Registration Statement would be appropriate.

    (d)  If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
         or (2) a Prospectus contained in the Exchange Offer Registration
         Statement filed pursuant to Section 2 hereof is required to be
         delivered under the Securities Act by any Participating Broker-Dealer
         who seeks to sell Exchange Notes during the Applicable Period, use
         their best efforts to prevent the issuance of any order suspending the
         effectiveness of a Registration Statement or of any order preventing or
         suspending the use of a Prospectus or suspending the qualification (or
         exemption from qualification) of any of the Registrable Notes or the
         Exchange Notes to be sold by any Participating Broker-Dealer, for sale
         in any jurisdiction, and, if any such order is issued, to use their
         best efforts to obtain the withdrawal of any such order at the earliest
         practicable moment.

    (e)  If a Shelf Registration is filed pursuant to Section 3 and if
         requested by the managing underwriter or underwriters (if any), the
         Holders of a majority in aggregate principal amount of the Registrable
         Notes being sold in connection with an underwritten offering or any
         Participating Broker-Dealer, (i) promptly incorporate in a prospectus
         supplement or post-effective amendment such information as

<PAGE>
                                      -18-

         the managing underwriter or underwriters (if any), such Holders or any
         Participating Broker-Dealer (based upon advice of counsel) determine is
         reasonably necessary to be included therein, (ii) make all required
         filings of such prospectus supplement or such post-effective amendment
         as soon as practicable after the Issuers have received notification of
         the matters to be incorporated in such prospectus supplement or
         post-effective amendment; provided, however, that the Issuers shall not
         be required to take any action hereunder that would, in the written
         opinion of counsel to the Issuers, violate applicable laws, and (iii)
         supplement or make amendments to such Registration Statement (based
         upon advice of counsel).

    (f)  If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
         or (2) a Prospectus contained in the Exchange Offer Registration
         Statement filed pursuant to Section 2 hereof is required to be
         delivered under the Securities Act by any Participating Broker-Dealer
         who seeks to sell Exchange Notes during the Applicable Period, furnish
         to each selling Holder of Registrable Notes and to each such
         Participating Broker-Dealer who so requests and to counsel and each
         managing underwriter, if any, at the sole expense of the Issuers, one
         conformed copy of the Registration Statement or Registration Statements
         and each post-effective amendment thereto, including financial
         statements and schedules, and, if requested, all documents incorporated
         or deemed to be incorporated therein by reference and all exhibits.

    (g)  If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
         or (2) a Prospectus contained in the Exchange Offer Registration
         Statement filed pursuant to Section 2 hereof is required to be
         delivered under the Securities Act by any Participating Broker-Dealer
         who seeks to sell Exchange Notes during the Applicable Period, deliver
         to each selling Holder of Registrable Notes, or each such Participating
         Broker-Dealer, as the case may be, their respective counsel, and the
         underwriters, if any, at the sole expense of the Issuers, as many
         copies of the Prospectus or Prospectuses (including each form of
         preliminary prospectus) and each amendment or supplement thereto and
         any documents incorporated by reference therein as such Persons may
         reasonably request; and, subject to the last paragraph of this Section
         5, the Issuers hereby consent to the use of such Prospectus and each
         amendment or supplement thereto by each of the selling Holders of
         Registrable Notes or each such Participating Broker-Dealer, as the case
         may be, and the underwriters or agents, if any, and dealers (if any),
         in connection with the offering and sale of the Registrable

<PAGE>
                                      -19-

         Notes covered by, or the sale by Participating Broker-Dealers of the
         Exchange Notes pursuant to, such Prospectus and any amendment or
         supplement thereto.

    (h)  Prior to any public offering of Registrable Notes or any delivery
         of a Prospectus contained in the Exchange Offer Registration Statement
         by any Participating Broker-Dealer who seeks to sell Exchange Notes
         during the Applicable Period, use their best efforts to register or
         qualify, and to cooperate with the selling Holders of Registrable Notes
         or each such Participating Broker-Dealer, as the case may be, the
         managing underwriter or underwriters, if any, and their respective
         counsel in connection with the registration or qualification (or
         exemption from such registration or qualification) of, such Registrable
         Notes for offer and sale under the securities or Blue Sky laws of such
         jurisdictions within the United States as any selling Holder,
         Participating Broker-Dealer, or the managing underwriter or
         underwriters reasonably request; provided, however, that where Exchange
         Notes held by Participating Broker-Dealers or Registrable Notes are
         offered other than through an underwritten offering, the Issuers agree
         to cause the Issuers counsel to perform Blue Sky investigations and
         file registrations and qualifications required to be filed pursuant to
         this Section 5(h); keep each such registration or qualification (or
         exemption therefrom) effective during the period such Registration
         Statement is required to be kept effective and do any and all other
         acts or things reasonably necessary or advisable to enable the
         disposition in such jurisdictions of the Exchange Notes held by
         Participating Broker-Dealers or the Registrable Notes covered by the
         applicable Registration Statement; provided, however, that none of the
         Issuers shall be required to (A) qualify generally to do business in
         any jurisdiction where it is not then so qualified, (B) take any action
         that would subject it to general service of process in any such
         jurisdiction where it is not then so subject or (C) subject itself to
         taxation in excess of a nominal dollar amount in any such jurisdiction
         where it is not then so subject.

    (i)  If a Shelf Registration is filed pursuant to Section 3 hereof,
         cooperate with the selling Holders of Registrable Notes and the
         managing underwriter or underwriters, if any, to facilitate the timely
         preparation and delivery of certificates representing Registrable Notes
         to be sold, which certificates shall not bear any restrictive legends
         and shall be in a form eligible for deposit with The Depository Trust
         Company; and enable such Registrable Notes to be in such denominations
         and registered in such names as

<PAGE>
                                      -20-

         the managing underwriter or underwriters, if any, or Holders may
         request at least two Business Days prior to any sale of such
         Registrable Notes.

    (j)  Use their best efforts to cause the Registrable Notes covered by
         the Registration Statement to be registered with or approved by such
         other governmental agencies or authorities as may be reasonably
         necessary to enable the seller or sellers thereof or the underwriter or
         underwriters, if any, to consummate the disposition of such Registrable
         Notes, except as may be required solely as a consequence of the nature
         of such selling Holder's business, in which case the Issuers will
         cooperate in all reasonable respects with the filing of such
         Registration Statement and the granting of such approvals.

    (k)  If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
         or (2) a Prospectus contained in the Exchange Offer Registration
         Statement filed pursuant to Section 2 hereof is required to be
         delivered under the Securities Act by any Participating Broker-Dealer
         who seeks to sell Exchange Notes during the Applicable Period, upon the
         occurrence of any event contemplated by paragraph 5(c)(v) or 5(c)(vi)
         hereof, as promptly as practicable prepare and (subject to Section 5(a)
         hereof) file with the Commission, at the sole expense of the Issuers, a
         supplement or post-effective amendment to the Registration Statement or
         a supplement to the related Prospectus or any document incorporated or
         deemed to be incorporated therein by reference, or file any other
         required document so that, as thereafter delivered to the purchasers of
         the Registrable Notes being sold thereunder or to the purchasers of the
         Exchange Notes to whom such Prospectus will be delivered by a
         Participating Broker-Dealer, any such Prospectus will not contain an
         untrue statement of a material fact or omit to state a material fact
         required to be stated therein or necessary to make the statements
         therein, in the light of the circumstances under which they were made,
         not misleading.

    (l)  Prior to the effective date of the first Registration Statement
         relating to the Registrable Notes, (i) provide the Trustee with
         certificates for the Registrable Notes in a form eligible for deposit
         with The Depository Trust Company and (ii) provide a CUSIP number for
         the Registrable Notes.

    (m)  In connection with any underwritten offering of Registrable Notes
         pursuant to a Shelf Registration, enter into an underwriting agreement
         as is customary in underwritten offerings of debt securities similar to
         the Notes and take

<PAGE>
                                      -21-

         all such other actions as are reasonably requested by the managing
         underwriter or underwriters in order to expedite or facilitate the
         registration or the disposition of such Registrable Notes and, in such
         connection, (i) make such representations and warranties to, and
         covenants with, the underwriters with respect to the business of the
         Company and its subsidiaries (including any acquired business,
         properties or entity, if applicable) and the Registration Statement,
         Prospectus and documents, if any, incorporated or deemed to be
         incorporated by reference therein, in each case, as are customarily
         made by issuers to underwriters in underwritten offerings of debt
         securities similar to the Notes, and confirm the same in writing if and
         when requested; (ii) use their reasonable best efforts to obtain the
         written opinions of counsel to the Issuers and written updates thereof
         in form, scope and substance reasonably satisfactory to the managing
         underwriter or underwriters, addressed to the underwriters covering the
         matters customarily covered in opinions requested in underwritten
         offerings; (iii) unless not permitted to be issued under an applicable
         Statement of Accounting Standards, use their reasonable best efforts to
         obtain "cold comfort" letters and updates thereof in form, scope and
         substance reasonably satisfactory to the managing underwriter or
         underwriters from the independent certified public accountants of the
         Issuers (and, if necessary, any other independent certified public
         accountants of any subsidiary of the Company or of any business
         acquired by any of the Issuers for which financial statements and
         financial data are, or are required to be, included or incorporated by
         reference in the Registration Statement), addressed to each of the
         underwriters, such letters to be in customary form and covering matters
         of the type customarily covered in "cold comfort" letters in connection
         with underwritten offerings; and (iv) if an underwriting agreement is
         entered into, the same shall contain indemnification provisions and
         procedures no less favorable than those set forth in Section 7 hereof
         (or such other provisions and procedures acceptable to Holders of a
         majority in aggregate principal amount of Registrable Notes covered by
         such Registration Statement and the managing underwriter or
         underwriters or agents) with respect to all parties to be indemnified
         pursuant to said Section. The above shall be done at each closing under
         such underwriting agreement, or as and to the extent required
         thereunder.

    (n)  If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
         or (2) a Prospectus contained in the Exchange Offer Registration
         Statement filed pursuant to Section 2 hereof is

<PAGE>
                                      -22-

         required to be delivered under the Securities Act by any Participating
         Broker-Dealer who seeks to sell Exchange Notes during the Applicable
         Period, make available for inspection by a representative of any
         selling Holder of such Registrable Notes being sold, or each such
         Participating Broker-Dealer, as the case may be, and all underwriters
         participating in any such disposition of Registrable Notes, if any, and
         all attorneys, accountants or other agents retained by any such selling
         Holder or each such Participating Broker-Dealer, as the case may be,
         (the "Inspector"), at the offices where normally kept, during
         reasonable business hours, all financial and other records, pertinent
         corporate documents and instruments of the Company and its subsidiaries
         (collectively, the "Records") as shall be reasonably necessary to
         enable them to exercise any applicable due diligence responsibilities,
         and cause the officers, directors and employees of the Company and its
         subsidiaries to supply all information reasonably requested by such
         Inspector in connection with such Registration Statement and
         Prospectus. Such Inspector shall agree in writing that it will not
         disclose any records that the Issuers determine, in good faith, to be
         confidential and that it notifies the Inspectors in writing are
         confidential unless (i) the disclosure of such Records is necessary to
         avoid or correct a misstatement or omission in such Registration
         Statement or Prospectus, (ii) the release of such Records is ordered
         pursuant to a subpoena or other order from a court of competent
         jurisdiction, (iii) disclosure of such information is necessary or
         advisable in connection with any action, claim, suit or proceeding,
         directly or indirectly, involving or potentially involving such
         Inspector and arising out of, based upon, relating to, or involving
         this Agreement or the Purchase Agreement, or any transactions
         contemplated hereby or thereby or arising hereunder or thereunder, or
         (iv) the information in such Records has been made generally available
         to the public; provided, however, that such Inspector shall take such
         actions as are reasonably necessary to protect the confidentiality of
         such information (if practicable) to the extent such action is
         otherwise not inconsistent with, an impairment of or in derogation of
         the rights and interests of the Holder or any Inspector.

    (o)  Provide an indenture trustee for the Registrable Notes or the
         Exchange Notes, as the case may be, and cause the Indenture or the
         trust indenture provided for in Section 2(a) hereof, as the case may
         be, to be qualified under the TIA not later than the effective date of
         the first Registration Statement relating to the Registrable Notes;

<PAGE>
                                      -23-

         and in connection therewith, cooperate with the trustee under any such
         indenture and the Holders of the Registrable Notes, to effect such
         changes to such indenture as may be required for such indenture to be
         so qualified in accordance with the terms of the TIA; and execute, and
         use their best efforts to cause such trustee to execute, all documents
         as may be required to effect such changes, and all other forms and
         documents required to be filed with the Commission to enable such
         indenture to be so qualified in a timely manner.

    (p)  Comply in all material respects with all applicable rules and
         regulations of the Commission and make generally available to its
         securityholders earnings statements satisfying the provisions of
         Section 11(a) of the Securities Act and Rule 158 thereunder (or any
         similar rule promulgated under the Securities Act) no later than 45
         days after the end of any 12-month period (or 90 days after the end of
         any 12-month period if such period is a fiscal year) (i) commencing at
         the end of any fiscal quarter in which Registrable Notes are sold to
         underwriters in a firm commitment or best efforts underwritten offering
         and (ii) if not sold to underwriters in such an offering, commencing on
         the first day of the first fiscal quarter of the Company after the
         effective date of a Registration Statement, which statements shall
         cover said 12-month periods.

    (q)  Upon consummation of the Exchange Offer or a Private Exchange, use
         their reasonable best efforts to obtain an opinion of counsel to the
         Issuers, in a form customary for underwritten transactions, addressed
         to the Trustee for the benefit of all Holders of Registrable Notes
         participating in the Exchange Offer or the Private Exchange, as the
         case may be, that the Exchange Notes or Private Exchange Notes, as the
         case may be, and the related indenture constitute legal, valid and
         binding obligations of the Issuers, enforceable against each of the
         Issuers in accordance with its respective terms, subject to customary
         exceptions and qualifications.

    (r)  If the Exchange Offer or a Private Exchange is to be consummated,
         upon delivery of the Registrable Notes by Holders to the Company (or to
         such other Person as directed by the Company) in exchange for the
         Exchange Notes or the Private Exchange Notes, as the case may be, mark,
         or cause to be marked, on such Registrable Notes that such Registrable
         Notes are being cancelled in exchange for the Exchange Notes or the
         Private Exchange Notes, as the case may be; in no event shall such
         Registrable Notes be marked as paid or otherwise satisfied.

<PAGE>
                                      -24-

    (s)  Cooperate with each seller of Registrable Notes covered by any
         Registration Statement and each underwriter, if any, participating in
         the disposition of such Registrable Notes and their respective counsel
         in connection with any filings required to be made with the National
         Association of Securities Dealers, Inc. (the "NASD").

    (t)  Use their reasonable best efforts to take all other steps necessary
         or advisable to effect the registration of the Exchange Notes and/or
         Registrable Notes covered by a Registration Statement contemplated
         hereby.

        The Issuers may require each seller of Registrable Notes as to which any
registration is being effected to furnish to the Issuers such information
regarding such seller and the distribution of such Registrable Notes as the
Issuers may, from time to time, reasonably request. The Issuers may exclude from
such registration the Registrable Notes of any seller so long as such seller
fails to furnish such information within a reasonable time after receiving such
request. Each seller as to which any Shelf Registration is being effected agrees
to furnish promptly to the Issuers all information required to be disclosed in
order to make the information previously furnished to the Issuers by such seller
not materially misleading.

        If any such Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Issuers, then such Holder shall
have the right to require (i) the insertion therein of language, in form and
substance reasonably satisfactory to such Holder, to the effect that the holding
by such Holder of such securities is not to be construed as a recommendation by
such Holder of the investment quality of the securities covered thereby and that
such holding does not imply that such Holder will assist in meeting any future
financial requirements of the Issuers, or (ii) in the event that such reference
to such Holder by name or otherwise is not required by the Securities Act or any
similar federal statute then in force, the deletion of the reference to such
Holder in any amendment or supplement to the Registration Statement filed or
prepared subsequent to the time that such reference ceases to be required.

        Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by acquisition of such Registrable Notes or Exchange Notes to be sold by
such Participating Broker-Dealer, as the case may be, that, upon actual receipt
of any notice from the Issuers of the happening of any event of the kind
described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi) hereof, such
Holder will forthwith

<PAGE>
                                      -25-

discontinue disposition of such Registrable Notes covered by such Registration
Statement or Prospectus or Exchange Notes to be sold by such Holder or
Participating Broker-Dealer, as the case may be, until such Holder's or
Participating Broker-Dealer's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5(k) hereof, or until it is advised
in writing (the "Advice") by the Issuers that the use of the applicable
Prospectus may be resumed, and has received copies of any amendments or
supplements thereto. In the event that the Issuers shall give any such notice,
each of the Effectiveness Period and the Applicable Period shall be extended by
the number of days during such periods from and including the date of the giving
of such notice to and including the date when each seller of Registrable Notes
covered by such Registration Statement or Exchange Notes to be sold by such
Participating Broker-Dealer, as the case may be, shall have received (x) the
copies of the supplemented or amended Prospectus contemplated by Section 5(k)
hereof or (y) the Advice.

    Section 1. Registration Expenses

        All fees and expenses incident to the performance of or compliance with
this Agreement by the Issuers shall be borne by the Issuers, whether or not the
Exchange Offer Registration Statement or any Shelf Registration is filed or
becomes effective or the Exchange Offer is consummated, including, without
limitation, (i) all registration and filing fees (including, without limitation,
(A) fees with respect to filings required to be made with the NASD in connection
with an underwritten offering and (B) fees and expenses of compliance with state
securities or Blue Sky laws (including, without limitation, reasonable fees and
disbursements of counsel in connection with Blue Sky qualifications of the
Registrable Notes or Exchange Notes and determination of the eligibility of the
Registrable Notes or Exchange Notes for investment under the laws of such
jurisdictions (x) where the holders of Registrable Notes are located, in the
case of the Exchange Notes, or (y) as provided in Section 5(h) hereof, in the
case of Registrable Notes or Exchange Notes to be sold by a Participating
Broker-Dealer during the Applicable Period)), (ii) printing expenses, including,
without limitation, expenses of printing certificates for Registrable Notes or
Exchange Notes in a form eligible for deposit with The Depository Trust Company
and of printing prospectuses if the printing of prospectuses is requested by the
managing underwriter or underwriters, if any, by the Holders of a majority in
aggregate principal amount of the Registrable Notes included in any Registration
Statement or in respect of Registrable Notes or Exchange Notes to be sold by any
Participating Broker-Dealer during the Applicable Period, as the case may be,

<PAGE>
                                      -26-

(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Issuers and reasonable fees and disbursements of one special
counsel for all of the sellers of Registrable Notes (exclusive of any counsel
retained pursuant to Section 7 hereof), (v) fees and disbursements of all
independent certified public accountants of the Issuers referred to in Section
5(m)(iii) hereof (including, without limitation, the expenses of any special
audit and "cold comfort" letters required by or incident to such performance),
(vi) Securities Act liability insurance, if the Issuers desire such insurance,
(vii) fees and expenses of all other Persons retained by the Issuers, (viii)
internal expenses of the Issuers (including, without limitation, all salaries
and expenses of officers and employees of the Issuers performing legal or
accounting duties), (ix) the expense of any annual audit by the Issuers, (x) the
fees and expenses incurred in connection with the listing of the securities to
be registered on any securities exchange, and the obtaining of a rating of the
securities, in each case, if applicable, and (xi) the expenses relating to
printing, word processing and distributing all Registration Statements,
underwriting agreements, indentures and any other documents necessary in order
to comply with this Agreement. Notwithstanding the foregoing or anything to the
contrary, each Holder shall pay all underwriting discounts and commissions of
any underwriters with respect to any Registrable Notes sold by or on behalf of
it.

    Section 2. Indemnification

(a) The Issuers agree, jointly and severally, to indemnify and hold harmless
each Holder of Registrable Notes and each Participating Broker-Dealer selling
Exchange Notes during the Applicable Period, the officers and directors of each
such Person, and each Person, if any, who controls any such Person within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act (each, a "Participant"), from and against any and all losses, claims,
damages and liabilities (including, without limitation, the reasonable legal
fees and other expenses actually incurred in connection with any suit, action or
proceeding or any claim asserted) caused by, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto) or Prospectus (as amended or
supplemented if the Issuers shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by, arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in the case of
the Prospectus in the light of the circumstances under which they

<PAGE>
                                      -27-

were made, not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Participant furnished to the Issuers in writing by or on behalf
of such Participant expressly for use therein; provided, however, that the
foregoing indemnity with respect to any preliminary prospectus shall not inure
to the benefit of any Participant from whom the Person asserting such losses,
claims, damages or liabilities purchased Registrable Notes if (x) it is
established in the related proceeding that such Participant failed to send or
give a copy of the Prospectus (as amended or supplemented if such amendment or
supplement was furnished to such Participant prior to the written confirmation
of such sale) to such Person with or prior to the written confirmation of such
sale, if required by applicable law, and (y) the untrue statement or omission or
alleged untrue statement or omission was corrected in the Prospectus (as amended
or supplemented if amended or supplemented as aforesaid) and such Prospectus
does not contain any other untrue statement or omission or alleged untrue
statement or omission that was the subject matter of the related proceeding.

(b) Each Participant agrees, severally and not jointly, to indemnify and hold
harmless the Issuers, its directors, its officers and each Person who controls
any Issuer within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act to the same extent (but on a several, and not joint, basis)
as the foregoing indemnity from the Issuers to each Participant, but only with
reference to information relating to such Participant furnished to the Issuers
in writing by such Participant expressly for use in any Registration Statement
or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus.

(c) If any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any Person
in respect of which indemnity may be sought pursuant to either of the two
preceding paragraphs, such Person (the "Indemnified Person") shall promptly
notify the Persons against whom such indemnity may be sought (the "Indemnifying
Persons") in writing, and the Indemnifying Persons, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Persons may reasonably designate in such proceeding and shall pay
the fees and expenses actually incurred by such counsel related to such
proceeding; provided, however, that the failure to so notify the Indemnifying
Persons shall not relieve any of them of any obligation or liability which any
of them may have hereunder or

<PAGE>
                                      -28-

otherwise except to the extent of a showing of actual prejudice. In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless (i) the Indemnifying Persons and the Indemnified
Person shall have mutually agreed to the contrary, (ii) the Indemnifying Persons
shall have failed within a reasonable period of time to retain counsel
reasonably satisfactory to the Indemnified Person or (iii) the named parties in
any such proceeding (including any impleaded parties) include both any
Indemnifying Person and the Indemnified Person or any affiliate thereof and
representation of both parties by the same counsel would be inappropriate due to
differing interests between them. It is understood that, unless there exists a
conflict among Indemnified Persons, the Indemnifying Persons shall not, in
connection with any one such proceeding or separate but substantially similar
related proceeding in the same jurisdiction arising out of the same general
allegations, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be reimbursed promptly as they are incurred. Any
such separate firm for the Participants and such control Persons of Participants
shall be designated in writing by Participants who sold a majority in interest
of Registrable Notes and Exchange Notes sold by all such Participants and shall
be reasonably acceptable to the Issuers and any such separate firm for the
Issuers, their respective directors, their respective officers and such control
Persons of any of the Issuers shall be designated in writing by the Issuers and
shall be reasonably acceptable to the Holders. The Indemnifying Persons shall
not be liable for any settlement of any proceeding effected without its prior
written consent (which consent shall not be unreasonably withheld or delayed),
but if settled with such consent or if there be a final judgment for the
plaintiff for which the Indemnified Person is entitled to indemnification
pursuant to this Agreement, each of the Indemnifying Persons agrees to indemnify
and hold harmless each Indemnified Person from and against any loss or liability
by reason of such settlement or judgment. No Indemnifying Person shall, without
the prior written consent of the Indemnified Persons (which consent shall not be
unreasonably withheld or delayed), effect any settlement or compromise of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement (A) includes an unconditional
written release of such Indemnified Person, in form and substance reasonably
satisfactory to such Indemnified Person, from all liability on claims that are
the subject matter of such proceeding and (B) does not include any statement as
to an admission of fault, culpability or failure to act by or on behalf of such
Indemnified Person.

<PAGE>
                                      -29-

(d) If the indemnification provided for in the first and second paragraphs of
this Section 7 is for any reason unavailable to, or insufficient to hold
harmless, an Indemnified Person in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such
paragraphs, in lieu of indemnifying such Indemnified Person thereunder and in
order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
(i) the relative benefits received by the Indemnifying Person or Persons on the
one hand and the Indemnified Person or Persons on the other from the offering of
the Notes or (ii) if the allocation provided by the foregoing clause (i) is not
permitted by applicable law, not only such relative benefits but also the
relative fault of the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof) as well as any
other relevant equitable considerations. The relative benefits received by the
Issuers on the one hand and the Participants on the other shall be deemed to be
in the same proportion as the total proceeds from the offering (net of discounts
and commissions but before deducting expenses) of the Notes received by the
Issuers bears to the total proceeds received by such Participant from the sale
of Registrable Notes or Exchange Notes, as the case may be. The relative fault
of the parties shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Issuers on the one hand or such Participant or such other Indemnified Person, as
the case may be, on the other, the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission,
and any other equitable considerations appropriate in the circumstances.

(e) The parties agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by pro rata allocation (even if the
Participants were treated as one entity for such purpose) or by any other method
of allocation that does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an Indemnified Person as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any reasonable legal or
other expenses actually incurred by such Indemnified Person in

<PAGE>
                                      -30-

connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant has otherwise been required to pay or has paid by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.

(f) Any losses, claims, damages, liabilities or expenses for which an
Indemnified Person is entitled to indemnification or contribution under this
Section 7 shall be paid by the Indemnifying Person to the Indemnified Person as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Issuers set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Holder or any person who controls a
Holder, any of the Issuers, their respective directors or officers or any person
controlling any of the Issuers, and (ii) any termination of this Agreement.

(g) The indemnity and contribution agreements contained in this Section 7 will
be in addition to any liability which the Indemnifying Persons may otherwise
have to the Indemnified Persons referred to above.

    Section 3. Rules 144 and 144A

        Each of the Issuers covenants that it will use its reasonable best
efforts to file the reports required to be filed by it under the Securities Act
and the Exchange Act and the rules and regulations adopted by the Commission
thereunder in a timely manner in accordance with the requirements of the
Securities Act and the Exchange Act and, if at any time such Issuer is not
required to file such reports, it will, upon the request of any Holder or
beneficial owner of Registrable Notes, make available such information necessary
to permit sales pursuant to Rule 144A under the Securities Act. Each of the
Issuers further covenants that it will take such further action as any Holder of
Registrable Notes may reasonably request, all to the extent required from time
to time to enable such Holder to sell Registrable Notes without registration
under the Securities Act within the limitation of the exemptions provided by (a)
Rule

<PAGE>
                                      -31-

144(k) and Rule 144A under the Securities Act, as such Rules may be amended from
time to time, or (b) any similar rule or regulation hereafter adopted by the
Commission. Notwithstanding the foregoing, nothing in this Section 8 shall be
deemed to require any of the Issuers to register any of its securities pursuant
to the Exchange Act.

    Section 4. Underwritten Registrations

        If any of the Registrable Notes covered by any Shelf Registration are to
be sold in an underwritten offering, the investment banker or investment bankers
and manager or managers that will manage the offering will be selected by the
Holders of a majority in aggregate principal amount of such Registrable Notes
included in such offering and shall be reasonably acceptable to the Issuers.

        No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.

    Section 5. Miscellaneous

(a) No Inconsistent Agreements. None of the Issuers has, as of the date hereof,
and none of the Issuers shall, after the date of this Agreement, enter into any
agreement with respect to any of its securities that is inconsistent with the
rights granted to the Holders of Registrable Notes in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not conflict with and are not inconsistent with, in any
material respect, the rights granted to the holders of any of the Issuers' other
issued and outstanding securities under any such agreements. None of the Issuers
has entered and will not enter into any agreement with respect to any of its
securities which will grant to any Person piggy-back registration rights with
respect to any Registration Statement.

(b) Adjustments Affecting Registrable Notes. None of the Issuers shall, directly
or indirectly, take any action with respect to the Registrable Notes as a class
that would adversely affect the ability of the Holders of Registrable Notes to
include such Registrable Notes in a registration undertaken pursuant to this
Agreement.

<PAGE>
                                      -32-

(c) Amendments and Waivers. The provisions of this Agreement may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given except pursuant to a written agreement duly
signed and delivered by (I) the Issuers and (II)(A) the Holders of not less than
a majority in aggregate principal amount of the then outstanding Registrable
Notes and (B) in circumstances that would adversely affect the Participating
Broker-Dealers, the Participating Broker-Dealers holding not less than a
majority in aggregate principal amount of the Exchange Notes held by all
Participating Broker-Dealers; provided, however, that Section 7 and this Section
10(c) may not be amended, modified or supplemented except pursuant to a written
agreement duly signed and delivered by each Holder and each Participating
Broker-Dealer (including any person who was a Holder or Participating
Broker-Dealer of Registrable Notes or Exchange Notes, as the case may be,
disposed of pursuant to any Registration Statement) affected by any such
amendment, modification or supplement. Notwithstanding the foregoing, a waiver
or consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders of Registrable Notes whose
securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect, impair, limit or compromise the rights of other
Holders of Registrable Notes may be given by Holders of at least a majority in
aggregate principal amount of the Registrable Notes being sold pursuant to such
Registration Statement.

(d) Notices. All notices and other communications (including, without
limitation, any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or telecopier:

         (i) if to a Holder of the Registrable Notes or any Participating
         Broker-Dealer, at the most current address of such Holder or
         Participating Broker-Dealer, as the case may be, set forth on the
         records of the registrar under the Indenture.

         (ii) if to the Issuers, at the address as follows:

                  Philipp Brothers Chemicals, Inc.
                  One Parker Plaza
                  Fort Lee, NJ 07024
                  Facsimile No.:  (201) 944-6245
                  Attention:  Chief Executive Officer

<PAGE>
                                      -33-

         (iii) if to the Initial Purchaser, as provided in the Purchase
         Agreement.

        All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; when receipt is
acknowledged by the recipient's telecopier machine, if telecopied; and on the
next Business Day, if timely delivered to an air courier guaranteeing overnight
delivery.

        Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address and in the manner specified in such Indenture.

(e) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties hereto, the
Holders and the Participating Broker-Dealers; provided, however, that this
Agreement shall not inure to the benefit of or be binding upon a successor or
assign of a Holder unless and to the extent such successor or assign holds
Registrable Notes.

(f) Counterparts. This Agreement may be executed in any number of counterparts
and by the parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.

(g) Headings. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.

(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. THE ISSUERS HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION
OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF
NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF
NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT, AND EACH IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID
COURTS. Specified times of day refer to New York City time.

<PAGE>
                                      -34-

(i) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

(j) Securities Held by any of the Issuers or their Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by any of the Issuers or any of its
affiliates (as such term is defined in Rule 405 under the Securities Act) shall
not be counted in determining whether such consent or approval was given by the
Holders of such required percentage.

(k) Third Party Beneficiaries. Holders and beneficial owners of Registrable
Notes and Participating Broker-Dealers are intended third party beneficiaries of
this Agreement, and this Agreement
may be enforced by such Persons.

(l) Attorneys' Fees. As between the parties to this Agreement, in any action or
proceeding brought to enforce any provision of this Agreement, or where any
provision hereof is validly asserted as a defense, the successful party shall be
entitled to recover reasonable attorneys' fees in addition to its costs and
expenses and any other available remedy.

(m) Entire Agreement. This Agreement, together with the Purchase Agreement and
the Indenture, is intended by the parties as a final and exclusive statement of
the agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein and any and all prior oral or written
agreements, representations, or warranties, contracts, understandings,
correspondence, conversations and memoranda between the Holders on the one hand
and the Issuers on the other, or between or among any agents, representatives,
parents, subsidiaries, affiliates, predecessors in interest or successors in
interest with respect to the subject matter hereof and thereof are merged
herein and replaced hereby.

<PAGE>
                                      -35-

                  IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.

                                         PHILIPP BROTHERS CHEMICALS, INC.

                                         By:  /s/ Jack C. Bendheim
                                              -----------------------
                                              Name:  Jack C. Bendheim
                                              Title:  Pres.

<PAGE>
                                      -36-

The foregoing Registration Rights
Agreement is hereby confirmed and
accepted as of the date first above
written.

SCHRODER & CO. INC.

By:  /s/ William T. Clay
     --------------------------
     Name:  William T. Clay, IV
     Title:  Director

<PAGE>
                                      -37-

        Each of the subsidiaries of the Company specified below agrees to become
a party to this Registration Rights Agreement as a Guarantor as of the date
hereof:

                                             CP CHEMICALS, INC.

                                             By:  /s/ Nathan Bistricer
                                                  ----------------------
                                                  Name: Nathan Bistricer
                                                  Title: V.P.

                                             PHIBRO-TECH, INC.

                                             By:  /s/ Nathan Bistricer
                                                  ----------------------
                                                  Name: Nathan Bistricer
                                                  Title: V.P.

                                             MRT MANAGEMENT CORP.

                                             By:  MRT Management Corp.,
                                                  Managing Member

                                             By:  /s/ Nathan Bistricer
                                                  ----------------------
                                                  Name: Nathan Bistricer
                                                  Title: V.P.

                                             MINERAL RESOURCE TECHNOLOGIES,
                                             L.L.C.

                                             By:  /s/ Nathan Bistricer
                                                  ----------------------
                                                  Name: Nathan Bistricer
                                                  Title: V.P.

<PAGE>
                                     -38-

                                             PRINCE AGRIPRODUCTS, INC.

                                             By:  /s/ Nathan Bistricer
                                                  ----------------------
                                                  Name: Nathan Bistricer
                                                  Title: V.P.

                                             PHIBROCHEM, INC.

                                             By:  /s/ Nathan Bistricer
                                                  ----------------------
                                                  Name: Nathan Bistricer
                                                  Title: V.P.

                                             PHIBROCHEMICALS, INC.

                                             By:  /s/ Nathan Bistricer
                                                  ----------------------
                                                  Name: Nathan Bistricer
                                                  Title: V.P.

                                             WESTERN MAGNESIUM CORP.

                                             By:  /s/ Nathan Bistricer
                                                  ----------------------
                                                  Name: Nathan Bistricer
                                                  Title: V.P.

                                             THE PRINCE MANUFACTURING COMPANY

                                             By:  /s/ Nathan Bistricer
                                                  ----------------------
                                                  Name: Nathan Bistricer
                                                  Title: V.P.
<PAGE>
                                     -39-

                                             THE PRINCE MANUFACTURING COMPANY

                                             By:  /s/ Nathan Bistricer
                                                  ----------------------
                                                  Name: Nathan Bistricer
                                                  Title: V.P.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>6
<FILENAME>0006.txt
<DESCRIPTION>REVOLVING CREDIT, ACQUISITION TERM LOAN
              AND SECURITY AGREEMENT
<TEXT>


<PAGE>

                     REVOLVING CREDIT, ACQUISITION TERM LOAN
                             AND SECURITY AGREEMENT

                                      dated

                                 August 19, 1998
*
                                      among

                        PHILIPP BROTHERS CHEMICALS, INC.,
                                   as Borrower

                                       and

    PHIBRO-TECH, INC., C P CHEMICALS, INC., THE PRINCE MANUFACTURING COMPANY
          THE PRINCE MANUFACTURING COMPANY, PRINCE AGRIPRODUCTS, INC.,
          MINERAL RESOURCE TECHNOLOGIES, L.L.C., MRT MANAGEMENT CORP.,
               KOFFOLK, INC., PHIBRO-CHEM, INC., PHIBROCHEMICALS,
                             WESTERN MAGNESIUM CORP.

                                  as Guarantors

                                       and

                         PNC BANK, NATIONAL ASSOCIATION,
                               as Agent and Lender

                                       and

                     Other Lenders Listed on Signature Page
                                   as Lenders




<PAGE>




                         LIST OF EXHIBITS AND SCHEDULES


EXHIBITS


Exhibit 2.1(a)             Revolving Credit Note
Exhibit 2.2(b)             Acquisition Term Note
Exhibit 5.5(b)             Financial Projections
Exhibit 8.1(aa)            Power of Attorney
Exhibit 8.1(i)             Financial Condition Certificate
Exhibit 16.3               Commitment Transfer Supplement




SCHEDULES


Schedule 1.2A              Leasehold Interests
Schedule 1.2B              Permitted Encumbrances
Schedule 4.5               Equipment and Inventory Locations
Schedule 4.15(c)           Location of Executive Offices
Schedule 4.19              Real Property
Schedule 4.19(g)           Certain Locations Subject to Environmental
                           Remediation
Schedule 5.2(a)            States of Qualification and Good Standing
Schedule 5.2(b)            Subsidiaries
Schedule 5.4               Federal Tax Identification Number
Schedule 5.6               Prior Names
Schedule 5.7               Environmental
Schedule 5.8(b)            Litigation
Schedule 5.8(d)            Plans

Schedule 5.10              Licenses and Permits
Schedule 5.14              Labor Disputes
Schedule 5.25              Schedule of Other Billing Locations
Schedule 7.3               Guarantees




<PAGE>



                                                       INDEX
<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>          <C>                                                                                               <C>
I            DEFINITIONS..........................................................................................1
             1.1    Accounting Terms............................................................................. 1
             1.2    General Terms.................................................................................1
             1.3    Uniform Commercial Code Terms............................................................... 15
             1.4    Certain Matters of Construction..............................................................15

II           ADVANCES, CONDITIONS, PAYMENTS......................................................................16
             2.1    Revolving Advances/Individual Revolving Advances.............................................16
                    Discretionary Rights.........................................................................16
                    Use of Revolving Advances....................................................................16
             2.2    Acquisition Term Loan........................................................................17
                    Use of Acquisition Term Loans................................................................17
             2.3    Procedure for Revolving Advances Borrowing...................................................17
             2.4    Disbursement of Advance Proceeds.............................................................19
             2.5    Acquisition of Acquired Persons..............................................................19
             2.6    Maximum Advances.............................................................................20
             2.7    Repayment of Advances........................................................................21
             2.8    Repayment of Excess Advances.................................................................21
             2.9    Statement of Account.........................................................................21
             2.10   Letters of Credit............................................................................21
             2.11   Issuance of Letters of Credit................................................................22
             2.12   Requirements for Issuance of Letters of Credit...............................................22
             2.13   Additional Payments..........................................................................23
             2.14   Manner of Borrowing and Payment..............................................................23
             2.15   Mandatory Prepayments........................................................................25
             2.16   Use of Proceeds..............................................................................25
             2.17   Defaulting Lender............................................................................25

III          INTEREST AND FEES...................................................................................26
             3.1    Interest.....................................................................................26
             3.2    Letter of Credit Fees........................................................................26
             3.3    Closing Fee/Facility Fee.....................................................................26
             3.4    Collateral Monitoring Fee....................................................................27
             3.5    Computation of Interest and Fees.............................................................27
             3.6    Maximum Charges..............................................................................27
             3.7    Increased Costs..............................................................................27
             3.8    Basis for Determining Interest Rate Inadequate or Unfair.....................................28
             3.9    Capital Adequacy.............................................................................28

IV           COLLATERAL: GENERAL TERMS...........................................................................29
             4.1    Security Interest in the Collateral..........................................................29
             4.2    Perfection of Security Interest..............................................................29
             4.3    Disposition of Collateral....................................................................29
             4.4    Preservation of Collateral...................................................................29
</TABLE>


<PAGE>
<TABLE>
<S>          <C>                                                                                                <C>
             4.5    Ownership of Collateral......................................................................30
             4.6    Defense of Agent's and Lenders' Interests....................................................30
             4.7    Books and Records............................................................................30
             4.8    Financial Disclosure.........................................................................31
             4.9    Compliance with Laws.........................................................................31
             4.10   Inspection of Premises.......................................................................31
             4.11   Insurance....................................................................................31
             4.12   Failure to Pay Insurance.....................................................................32
             4.13   Payment of Taxes.............................................................................32
             4.14   Payment of Leasehold Obligations.............................................................32
             4.15   Receivables..................................................................................33
             4.16   Inventory....................................................................................35
             4.17   Maintenance of Equipment.....................................................................35
             4.18   Exculpation of Liability.....................................................................35
             4.19   Environmental Matters........................................................................35
             4.20   Financing Statements.........................................................................37
             4.21   Guaranty.....................................................................................37

V            REPRESENTATIONS AND WARRANTIES......................................................................37
             5.1    Authority....................................................................................37
             5.2    Formation and Qualification..................................................................37
             5.3    Survival of Representations and Warranties...................................................38
             5.4    Tax Returns..................................................................................38
             5.5    Financial Statements.........................................................................38
             5.6    Corporate Name...............................................................................39
             5.7    O.S.H.A. and Environmental Compliance........................................................39
             5.8    Solvency; No Litigation, Violation, Indebtedness or Default..................................39
             5.9    Patents, Trademarks, Copyrights and Licenses.................................................40
             5.10   Licenses and Permits.........................................................................41
             5.11   Default of Indebtedness......................................................................41
             5.12   No Default...................................................................................41
             5.13   No Burdensome Restrictions...................................................................41
             5.14   No Labor Disputes............................................................................41
             5.15   Margin Regulations...........................................................................41
             5.16   Investment Company Act.......................................................................41
             5.17   Disclosure...................................................................................41
             5.18   Swaps........................................................................................42
             5.19   Conflicting Agreements.......................................................................42
             5.20   Application of Certain Laws and Regulations..................................................42
             5.21   Business and Property of Borrower............................................................42
             5.22   Year 2000....................................................................................42
             5.23   Section 20 Subsidiaries......................................................................42
             5.24   Interest Expense Allocation..................................................................42
             5.25   Other Billing Locations......................................................................42
</TABLE>


<PAGE>
<TABLE>
<S>          <C>                                                                                                <C>
VI           AFFIRMATIVE COVENANTS...............................................................................43
             6.1    Payment of Fees..............................................................................43
             6.2    Conduct of Business and Maintenance of Existence and Assets..................................43
             6.3    Violations...................................................................................43
             6.4    Government Receivables.......................................................................43
             6.5    Domestic Net Worth...........................................................................43
             6.6    Interest Coverage Ratio......................................................................44
             6.7    Execution of Supplemental Instruments........................................................44
             6.8    Payment of Indebtedness......................................................................44
             6.9    Standards of Financial Statements............................................................44
             6.10   Domestic Debt Service Ratio..................................................................44

VII          NEGATIVE COVENANTS..................................................................................44
             7.1    Merger, Consolidation, Acquisition and Sale of Assets........................................45
             7.2    Creation of Liens............................................................................45
             7.3    Guarantees...................................................................................45
             7.4    Investments..................................................................................45
             7.5    Loans........................................................................................46
             7.6    Capital Expenditures.........................................................................46
             7.7    Dividends....................................................................................46
             7.8    [Indebtedness]...............................................................................47
             7.9    Nature of Business...........................................................................47
             7.10   Transactions with Affiliates.................................................................48
             7.11   Partnership, Joint Ventures..................................................................48
             7.12   Subsidiaries.................................................................................48
             7.13   Fiscal Year and Accounting Changes...........................................................48
             7.14   Intentionally left blank.....................................................................48
             7.15   Amendment of Articles of Incorporation, Bylaws...............................................48
             7.16   Compliance with ERISA........................................................................48
             7.17   Prepayment of Indebtedness...................................................................49
             7.18   Subordinated Debt Payments...................................................................49
             7.19   Interest Expense Allocation..................................................................49

VIII         CONDITIONS PRECEDENT................................................................................49
             8.1    Conditions to Initial Advances...............................................................49
             8.2    Conditions to Each Advance...................................................................52

IX           INFORMATION AS TO BORROWERS.........................................................................53
             9.1    Disclosure of Material Matters...............................................................53
             9.2    Schedules....................................................................................53
             9.3    Environmental Reports........................................................................53
             9.4    Litigation...................................................................................53
             9.5    Material Occurrences.........................................................................53
             9.6    Government Receivables.......................................................................54
             9.7    Annual Financial Statements..................................................................54
             9.8    Quarterly Financial Statements...............................................................54
             9.9    Monthly Financial Statements.................................................................55
             9.10   Other Reports................................................................................55
</TABLE>


<PAGE>
<TABLE>
<S>          <C>                                                                                                 <C>
             9.11   Additional Information.......................................................................55
             9.12   Projected Operating Budget...................................................................55
             9.13   Variances From Operating Budget..............................................................55
             9.14   Notice of Suits, Adverse Events..............................................................55
             9.15   ERISA Notices and Requests...................................................................56
             9.16   Additional Documents.........................................................................56

X            EVENTS OF DEFAULT...................................................................................56

XI           LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT..........................................................58
             11.1   Rights and Remedies..........................................................................58
             11.2   Agent's Discretion...........................................................................59
             11.3   Setoff.......................................................................................59
             11.4   Rights and Remedies not Exclusive............................................................59

XII          WAIVERS AND JUDICIAL PROCEEDINGS....................................................................59
             12.1   Waiver of Notice.............................................................................59
             12.2   Delay........................................................................................60
             12.3   Jury Waiver..................................................................................60

XIII         EFFECTIVE DATE AND TERMINATION......................................................................60
             13.1   Term.........................................................................................60
             13.2   Termination..................................................................................60

XIV          REGARDING AGENT.....................................................................................61
             14.1   Appointment..................................................................................61
             14.2   Nature of Duties.............................................................................61
             14.3   Lack of Reliance on Agent and Resignation....................................................61
             14.4   Certain Rights of Agent......................................................................62
             14.5   Reliance.....................................................................................62
             14.6   Notice of Default............................................................................62
             14.7   Indemnification..............................................................................63
             14.8   Agent in its Individual Capacity.............................................................63
             14.9   Delivery of Documents........................................................................63
             14.10  Borrowers' Undertaking to Agent..............................................................63

XV           MISCELLANEOUS.......................................................................................63
             15.1   Governing Law................................................................................63
             15.2   Entire Understanding.........................................................................64
             15.3   Successors and Assigns; Participations; New Lenders..........................................65
             15.4   Application of Payments......................................................................66
             15.5   Indemnity....................................................................................66
             15.6   Notice.......................................................................................67
             15.7   Survival.....................................................................................67
             15.8   Severability.................................................................................68
             15.9   Expenses.....................................................................................68
             15.10  Injunctive Relief............................................................................68
             15.11  Consequential Damages........................................................................68
</TABLE>

<PAGE>

<TABLE>
<S>          <C>                                                                                                 <C>
             15.12  Captions.....................................................................................68
             15.13  Counterparts; Telecopied Signatures..........................................................68
             15.14  Construction.................................................................................68
             15.15  Confidentiality; Sharing Information.........................................................68
             15.16  Publicity....................................................................................69
</TABLE>

<PAGE>

                     REVOLVING CREDIT, ACQUISITION TERM LOAN
                             AND SECURITY AGREEMENT


             Revolving Credit, Acquisition Term Loan and Security Agreement
dated August 19, 1998 among PHILIPP BROTHERS CHEMICALS, INC., a corporation
organized under the laws of the State of New York, ("Borrower"), Phibro-Tech,
Inc., a corporation organized under the laws of the State of Delaware, C P
Chemicals, Inc., a corporation organized under the laws of the State of New
Jersey, The Prince Manufacturing Company, a corporation organized under the laws
of the State of Pennsylvania, The Prince Manufacturing Company, a corporation
organized under the laws of the State of Illinois, Prince Agriproducts, Inc., a
corporation organized under the laws of the State of Delaware, Mineral Resource
Technologies, L.L.C., a limited liability company organized under the laws of
the State of Delaware, MRT Management Corp., a corporation organized under the
laws of the State of Delaware, Koffolk, Inc., a corporation organized under the
laws of the State of Delaware, Phibro-Chem, Inc., a corporation organized under
the laws of the State of New Jersey, PhibroChemicals, Inc., a corporation
organized under the laws of the State of New York, and Western Magnesium Corp.,
a corporation organized under the laws of the State of California (each a
"Guarantor" and collectively "Guarantors"), the financial institutions which are
now or which hereafter become a party hereto (collectively, the "Lenders" and
individually a "Lender") and PNC BANK, NATIONAL ASSOCIATION, a national banking
association ("PNC"), as agent for Lenders (PNC, in such capacity, the "Agent").

             IN CONSIDERATION of the mutual covenants and undertakings herein
contained, Borrower, Guarantors, Lenders and Agent hereby agree as follows:

I.       DEFINITIONS.

         1.1. Accounting Terms. As used in this Agreement, the Note, or any
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP; provided,
however, whenever such accounting terms are used for the purposes of determining
compliance with financial covenants in this Agreement, such accounting terms
shall be defined in accordance with GAAP as applied in preparation of the
audited financial statements of Obligors for the fiscal year ended June 30,
1998.

         1.2. General Terms. For purposes of this Agreement the following terms
shall have the following meanings:

                  "Accountants" shall have the meaning set forth in Section 9.7
hereof.

                  "Acquired Person" shall mean any partnership, corporation,
limited liability company or other legal business entity whereby Control of
which will be acquired by the Borrower with the use of the Acquisition Term Loan
or by a domestic Subsidiary of the Borrower with the use of Revolving Advances.
For the purposes of this definition, the term "Control" shall be defined to mean
the power, direct or indirect, (x) to vote fifty percent (50%) or more of the
securities having ordinary voting power for the election of directors or
managers of such Person or (y) to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.

                  "Acquisition Term Note" shall mean, collectively, the
promissory notes described in Section 2.2 hereof.

                  "Acquisition Term Loan" shall mean the Advances made pursuant
to Section 2.2 hereof.

                 "Acquisition Term Loan Rate" shall mean an interest rate per
annum equal to (a) the sum of the Base Rate plus three-quarters of one percent
(3/4%) with respect to Domestic Rate Loans, and (b) the sum of the Eurodollar
Rate plus two and one-half percent (2 1/2%) with respect to Eurodollar Rate
Loans.


<PAGE>



                  "Advances" shall mean and include the Revolving Advances,
Letters of Credit, as well as the Acquisition Term Loan.

                  "Advance Rates" shall have the meaning set forth in Section
2.1(a) hereof.

                  "Affiliate" of any Person shall mean (a) any Person (other
than a Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with such Person, or (b) any Person
who is a director or officer (i) of such Person, (ii) of any Subsidiary of such
Person or (iii) of any Person described in clause (a) above. For purposes of
this definition, control of a Person shall mean the power, direct or indirect,
(x) to vote 50% or more of the securities having ordinary voting power for the
election of directors or managers of such Person, or (y) to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise.

                  "Agent" shall have the meaning set forth in the preamble to
this Agreement and shall include its successors and assigns.

                  "Agreement" shall mean this Revolving Credit, Acquisition Term
Loan and Security Agreement and all exhibits and schedules annexed hereto, all
as from time to time be amended, supplemented, extended and/or restated.

                  "Applicable Margin" shall mean, initially, two percent (2%),
but shall reduce automatically commencing on July 1, 1999, to the percentage (%)
set forth below in column "B" upon the Obligors obtaining and maintaining the
Interest Coverage Ratio set forth in column "A":

                                     A                                   B
                           Interest Coverage Ratio                       %
                           -----------------------                     -----

                           1.50:1 to 2.49:1                            2%
                           2.50:1 to 3.49:1                            1 3/4%
                           3.50:1 to 4.49:1                            1 1/2%
                           4.50:1 and above                            1 1/4%


                  Performance with respect to the foregoing grid shall be tested
                  on a quarterly basis for the prior four quarters, but not
                  before July 1, 1998 and the Applicable Margin shall become
                  effective five (5) Business Days after delivery of the
                  quarterly financial statement of the Borrower as well as a
                  covenant calculation.


                  "Authority" shall have the meaning set forth in Section
4.19(d).

                  "Base Rate" shall mean the base commercial lending rate of PNC
as publicly announced to be in effect from time to time, such rate to be
adjusted automatically, without notice, on the effective date of any change in
such rate. This rate of interest is determined from time to time by PNC as a
means of pricing some loans to its customers and is neither tied to any external
rate of interest or index nor does it necessarily reflect the lowest rate of
interest actually charged by PNC to any particular class or category of
customers of PNC.

                  "Blocked Accounts" shall have the meaning set forth in Section
4.15(h).

                  "Borrower" shall have the meaning set forth in the preamble to
this Agreement and shall extend to all permitted successors and assigns of such
Persons.

                  "Borrower's Account" shall have the meaning set forth in
Section 2.8.


<PAGE>


                  "Business Day" shall mean, with respect to Eurodollar Rate
Loans, any day on which commercial banks are open for domestic and international
business, including dealings in Dollar deposits in London, England and New York,
New York and with respect to all other matters, any day other than a day on
which commercial banks in New York are authorized or required by law to close.

                  "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. "9601 et seq.

                  "Change of Control" shall mean (a) the occurrence of any event
(whether in one or more transactions) which results in a transfer of control of
a Person to a Person who is not an Original Owner or (b) any merger or
consolidation of or with such Person or sale of all or substantially all of the
property or assets of such Persons. For purposes of this definition, "control of
such Person" shall mean the power, direct or indirect (x) to vote 50% or more of
the securities having ordinary voting power for the election of directors of
such Person or (y) to direct or cause the direction of the management and
policies of such Person by contract or otherwise.

                  "Charges" shall mean all taxes, charges, fees, imposts, levies
or other assessments, including, without limitation, all net income, gross
income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation
and property taxes, custom duties, fees, assessments, liens, claims and charges
of any kind whatsoever, together with any interest and any penalties, additions
to tax or additional amounts, imposed by any taxing or other authority, domestic
or foreign (including, without limitation, the Pension Benefit Guaranty
Corporation or any environmental agency or superfund), upon the Collateral, any
Obligor or any of its Affiliates.

                  "Closing Date" shall mean August 19, 1998 or such other date
as may be agreed to by the parties hereto.

                  "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time and the regulations promulgated thereunder.

                  "Collateral" shall mean and include:

                           (a) all Receivables;

                           (b) all Inventory;

                           (c) all of each Obligor's right, title and interest
in and to, to the extent that the following directly relate to (a) or (b) above,
(i) its respective goods including, but not limited to, all merchandise returned
or rejected by Customers; (ii) all of each Obligor's rights as a consignor, a
consignee, an unpaid vendor, mechanic, artisan, or other similar lienor,
including stoppage in transit, setoff, detinue, replevin, reclamation and
repurchase; (iii) all additional amounts due to any Obligor from any Customer
with respect to the sale of Inventory or relating to Receivables; and (iv)
warranty claims relating to any Inventory,

                           (d) all proceeds and products of (a) or (b) above in
whatever form, including, but not limited to: cash, deposit accounts (whether or
not comprised solely of proceeds), certificates of deposit, insurance proceeds
(including hazard, flood and credit insurance), negotiable instruments and other
instruments for the payment of money, chattel paper, security agreements,
documents, eminent domain proceeds, condemnation proceeds and tort claim
proceeds; and

                           (e) any other goods, personal property or real
property now owned or hereafter acquired in which any Obligor expressly grants a
security interest to secure the Obligations by a separate agreement, or in any
amendment or supplement hereto or thereto.


<PAGE>


                  Notwithstanding the foregoing, Collateral shall not include
(except to the extent a security interest is specifically granted to secure the
Obligations by a separate agreement or in any amendment or supplement hereto or
thereto) Equipment, General Intangibles, Real Property and Intellectual
Property.

                  "Commitment Percentage" of any Lender shall mean the
percentage set forth below such Lender's name on the signature page hereof as
same may be adjusted upon any assignment by a Lender pursuant to Section 15.3(b)
hereof.

                  "Commitment Transfer Supplement" shall mean a document in the
form of Exhibit 16.3 hereto, properly completed and otherwise in form and
substance satisfactory to Agent by which the Purchasing Lender purchases and
assumes a portion of the obligation of Lenders to make Advances under this
Agreement.

                  "Consents" shall mean all filings and all licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
authorities and other third parties, domestic or foreign, necessary to carry on
any Obligor's business, including, without limitation, any Consents required
under all applicable federal, state or other applicable law.

                  "Contract Rate" shall mean, as applicable, the Revolving
Interest Rate or the Term Loan Rate.

                  "Controlled Group" shall mean all domestic members of a
controlled group of corporations and all domestic trades or businesses (whether
or not incorporated) under common control which, together with any Obligor, are
treated as a single employer under Section 414 of the Code.

                  "Customer" shall mean and include the account debtor with
respect to any Receivable and/or the purchaser of goods, services or both with
respect to any contract or contract right, and/or any party who enters into any
contract or other arrangement with any Obligor, pursuant to which such Obligor
is to deliver any Inventory or perform any services.

                  "Default" shall mean an event which, with the giving of notice
or passage of time or both, would constitute an Event of Default.

                  "Default Rate" shall have the meaning set forth in Section 3.1
hereof.

                  "Defaulting Lender" shall have the meaning set forth in
Section 2.16(a) hereof.

                  "Depository Accounts" shall have the meaning set forth in
Section 4.15(h) hereof.

                  "Documents" shall have the meaning set forth in Section 8.1(c)
hereof.

                  "Dollar" and the sign "$" shall mean lawful money of the
United States of America.

                  "Domestic Debt Service Coverage" shall be defined as EBITDA of
the Borrower and all of its domestic Subsidiaries, on a consolidated basis,
divided by all scheduled principal and interest payments during the periods in
question with respect to all Funded Indebtedness of the Borrower and all of its
domestic Subsidiaries, on a consolidated basis.

                  "Domestic Rate Loan" shall mean any Advance that bears
interest based upon the Base Rate.

                  "Early Termination Date" shall have the meaning set forth in
Section 13.1 hereof.

                  "Earnings Before Interest and Taxes" shall mean for any period
the sum of (i) net income (or loss) of Obligors on a consolidated basis for such
period (excluding extraordinary gains and including extraordinary losses), plus



<PAGE>


(ii) all interest expense of Obligors on a consolidated basis for such period,
plus (iii) all charges against income of Obligors on a consolidated basis for
such period for federal, state and local taxes. Notwithstanding the foregoing,
for the purpose of calculating the financial covenants set forth herein, those
losses resulting from charges for the fiscal year ending 1998 as described as
"Restructuring and Other Charges" in the Offering Memorandum dated June 5, 1998
with respect to $100,000,000 Philipp Brothers Chemicals, Inc. 9 7/8% Senior
Subordinated Notes due 2008, shall not be included as part of or deducted in
computing net income in calculating Earnings Before Interest and Taxes.

                  "EBITDA" shall mean for any period the sum of (i) Earnings
Before Interest and Taxes for such period plus (ii) depreciation expenses for
such period, plus (iii) amortization expenses for such period. Interest income
shall be included in calculating EBITDA.

                  "Eligible Inventory" shall mean and include Inventory located
within the Continental United States of America excluding work in process, with
respect to each Obligor valued at the lower of cost or market value, determined
on a first-in-first-out basis, which is not, in Agent's reasonable opinion,
obsolete, slow moving or unmerchantable and which Agent, in its reasonable
discretion, shall not deem ineligible Inventory, based on such considerations as
Agent may from time to time deem reasonably appropriate including, without
limitation, whether the Inventory is subject to a perfected, first priority
security interest in favor of Agent and whether the Inventory conforms to all
standards imposed by any governmental agency, division or department thereof
which has regulatory authority over such goods or the use or sale thereof.

                  "Eligible Receivables" shall mean and include with respect to
each Obligor, each Receivable of such Obligor arising in the ordinary course of
such Obligor's business and which Agent, in its reasonable credit judgment,
shall deem to be an Eligible Receivable, based on such considerations as Agent
may from time to time reasonably deem appropriate. A Receivable shall not be
deemed eligible unless such Receivable is subject to Agent's first priority
perfected security interest and no other Lien (other than Permitted
Encumbrances), and is evidenced by an invoice or other documentary evidence
reasonably satisfactory to Agent. In addition, no Receivable shall be an
Eligible Receivable if:

                  (a) it arises out of a sale made by any Obligor to an
Affiliate of any Obligor or to a Person controlled by an Affiliate of any
Obligor;

                  (b) with respect to sales to Customers not outside the
continental United States of America, Hawaii or Puerto Rico, it is due or unpaid
more than ninety (90) days after the original invoice date, and with respect to
sales to Customers outside the continental United States of America, Hawaii or
Puerto Rico, it is due or unpaid more than one hundred eighty (180) days after
the invoice date and is further excluded pursuant to subparagraph (f) below;

                  (c) twenty-five percent (25%) or more of the Receivables from
such Customer are not deemed Eligible Receivables hereunder. Such percentage
may, in Agent's reasonable discretion, be increased or decreased from time to
time;

                  (d) any covenant, representation or warranty contained in this
Agreement with respect to such Receivable has been breached;

                  (e) the Customer shall (i) apply for, suffer, or consent to
the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its property
or call a meeting of its creditors, (ii) admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations of its
present business, (iii) make a general assignment for the benefit of creditors,
(iv) commence a voluntary case under any state or federal bankruptcy laws (as
now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi)
file a petition seeking to take advantage of any other law providing for the
relief of debtors, (vii) acquiesce to, or fail to have dismissed, any petition
which is filed against it in any involuntary case under such bankruptcy laws, or
(viii) take any action for the purpose of effecting any of the foregoing;


<PAGE>


                  (f) the sale is to a Customer outside the continental United
States of America, Hawaii or Puerto Rico, unless the sale is on letter of
credit, guaranty or acceptance terms or the sale is subject to credit insurance,
in each case acceptable to Agent in its sole discretion;

                  (g) the sale to the Customer is on a bill-and-hold, guaranteed
sale, sale-and-return, sale on approval, consignment or any other repurchase or
return basis or is evidenced by chattel paper;

                  (h) Agent believes, in its reasonable judgment, that
collection of such Receivable is insecure or that such Receivable may not be
paid by reason of the Customer's financial inability to pay;

                  (i) the Customer is the United States of America, any state or
any department, agency or instrumentality of any of them, unless the applicable
Obligor assigns its right to payment of such Receivable to Agent pursuant to the
Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq.
and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise complied with other
applicable statutes or ordinances;

                  (j) the goods giving rise to such Receivable have not been
shipped and delivered to and accepted by the Customer or the services giving
rise to such Receivable have not been performed by the applicable Obligor and
accepted by the Customer or the Receivable otherwise does not represent a final
sale;

                  (k) the Receivables of the Customer exceed a credit limit
determined by Agent, in its reasonable discretion, to the extent such Receivable
exceeds such limit;

                  (l) the Receivable is subject to any offset, deduction,
defense, dispute, or counterclaim, the Customer is also a creditor or supplier
of a Obligor or the Receivable is contingent in any respect or for any reason;

                  (m) the applicable Obligor has made any agreement with any
Customer for any deduction therefrom, except for discounts, allowances or
rebates made in the ordinary course of business, all of which discounts or
allowances are reflected in the calculation of the face value of each respective
invoice related thereto and all of which rebates are reasonably estimated from
time to time on a monthly basis;

                  (n) shipment of the merchandise or the rendition of services
has not been completed;

                  (o) any return, rejection or repossession of the merchandise
has occurred;

                  (p) such Receivable is not payable to a Obligor;

                  (q) more than fifty percent (50%) in dollar value of the
aggregate Receivables due from a Customer are past due; or

                  (r) such Receivable is not otherwise satisfactory to Agent as
determined in good faith by Agent in the exercise of its discretion in a
reasonable manner.

                  "Environmental Complaint" shall have the meaning set forth in
Section 4.19(d) hereof.

                  "Environmental Laws" shall mean all federal, state and local
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection of the
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances and the rules, regulations, policies, guidelines, interpretations,
decisions, orders and directives of federal, state and local governmental
agencies and authorities with respect thereto.

                  "Equipment" shall mean and include goods (other than
Inventory) whether now owned or hereafter acquired and wherever located
including, without limitation, all equipment, machinery, apparatus, motor
vehicles,


<PAGE>


fittings, furniture, furnishings, fixtures, parts, accessories and all
replacements and substitutions therefor or accessions thereto.

                  "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time and the rules and regulations promulgated
thereunder.

                  "Eurodollar Rate" shall mean with respect to any Eurodollar
Rate Loan for any Interest Period, the interest rate per annum determined by the
Agent by dividing (the resulting quotient rounded upward to the nearest 1/100th
of 1% per annum) (i) the rate of interest determined by the Agent in accordance
with its usual procedures (which determination shall be conclusive and binding
upon the Borrower, absent manifest error on the part of the Agent) to be equal
to the offered rates for deposits in Dollars for the applicable Interest Period
which appear on Page 3750 of the TELERATE rate reporting system or other similar
system as of approximately 11:00 a.m., Greenwich Mean Time, two (2) Business
Days prior to the first day of such Interest Period for an amount comparable to
such Eurodollar Rate Loan and having a borrowing date and a maturity comparable
to such Interest Period by (ii) a number equal to 1.00 minus the Reserve
Percentage. The Eurodollar Rate may also be expressed by the following formula:

                                          Offered rate on TELERATE page 3750
                  Eurodollar Rate =       ----------------------------------
                                          1.00 - Reserve Percentage

If more than one offered rate appears on page 3750 of the TELERATE rate
reporting system or similar system, the rate will be the arithmetic mean of such
offered rates.

                  "Eurodollar Rate Loan" shall mean an Advance at any time that
bears interest based on the Eurodollar Rate.

                  "Fee Letter" shall mean that certain letter agreement between
the Agent and the Borrower regarding certain fees.

                  "Event of Default" shall mean the occurrence and continuance
of any of the events set forth in Article X hereof.

                  "Fixed Charge Coverage Ratio" shall mean the ratio of (a)
EBITDA minus unfinanced capitalized expenditures and cash taxes made during the
period being tested to (b) all scheduled principal and interest payments on all
Funded Indebtedness during the period being tested.

                  "Funded Indebtedness" shall mean (i) all indebtedness of such
Person for borrowed money or which is evidenced by a note, bond, indenture or
similar instrument, (ii) all obligations of such person to pay the deferred or
unpaid purchase price of property, which purchase price is due more than nine
(9) months after the placing of such property in service or taking delivery and
title thereto, (iii) all capitalized leases of such Person, (iv) all obligations
of such Person with respect to letters of credit, bankers' acceptances issued or
created for the account of such Person, (v) to the extent not otherwise included
in this definition, all net obligations of such Person under any interest rate
swap agreements, interest rate cap agreements, interest rate collar agreements
and other agreements or arrangements designed to protect such Person against
fluctuations in interest rates; (vi) to the extent not otherwise included in
this definition, all net obligations of such Person under all foreign exchange
contracts, currency swap agreements, and other similar agreements or
arrangements to protect such Person against fluctuations in currency values and
(vii) any other debt or obligation of such Person bearing interest (whether paid
or imputed).

                  "Formula Amount" shall have the meaning set forth in Section
2.1(a).

                  "GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.


<PAGE>


                  "General Intangibles" shall mean and include as to each
Obligor all of such Obligor's general intangibles, whether now owned or
hereafter acquired including, without limitation, all chooses in action, causes
of action, corporate or other business records (including, but not limited to,
ledger sheets, ledger cards, files, correspondence, records, books of account,
business papers, computers, computer software (owned by any Obligor or in which
it has an interest), tapes and disks), equipment formulations, manufacturing
procedures, quality control procedures, goodwill, registrations, licenses,
franchises, customer lists, tax refunds, tax refund claims, computer programs,
all claims under guaranties, security interests or other security held by or
granted to such Obligor, all rights of indemnification and all other intangible
property of every kind and nature (other than Receivables).

                  "Governmental Body" shall mean any nation or government, any
state or other political subdivision thereof or any entity exercising the
legislative, judicial, regulatory or administrative functions of or pertaining
to a government.

                  "Guarantor" shall mean Phibro-Tech, Inc., C P Chemicals, Inc.,
The Prince Manufacturing Co., The Prince Manufacturing Co., Prince Agriproducts,
Inc., Mineral Resource Technologies, L.L.C., MRT Management Corp., Koffolk,
Inc., PhibroChem, Inc., PhibroChemicals, Inc., and Western Magnesium Corp. and
any other Person who may hereafter guarantee payment or performance of the whole
or any part of the Obligations and "Guarantors" means collectively all such
Persons.

                  "Guaranty" shall mean the Continuing Unlimited and
Collateralized Guaranty and any other guaranty of the obligations of Borrower
executed by a Guarantor in favor of Agent for the ratable benefit of Lenders.

                  "Hazardous Discharge" shall have the meaning set forth in
Section 4.19(d) hereof.

                  "Hazardous Substance" shall mean, without limitation, any
flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or
related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, N.J.S.A.
58:10-23.11(b)(K) and N.J.A.C. 7:1E-1.7 or any other applicable Environmental
Law and in the regulations adopted pursuant thereto.

                  "Hazardous Wastes" shall mean all waste materials subject to
regulation under CERCLA, RCRA or applicable state law, and any other applicable
Federal and state laws now in force or hereafter enacted relating to hazardous
waste disposal.

                  "Inactive Subsidiaries" shall mean Phibrochemicals, Inc.,
Phibrochem, Inc. and Western Magnesium Corp.

                  "Indebtedness" of a Person at a particular date shall mean all
obligations of such Person which in accordance with GAAP would be classified
upon a balance sheet as liabilities (except capital stock and surplus earned or
otherwise) and in any event, without limitation by reason of enumeration, shall
include all debt and other similar monetary obligations of such Person whether
direct or guaranteed, and all premiums, if any, due at the required prepayment
dates of such Indebtedness, and all Indebtedness secured by a Lien on assets
owned by such Person, whether or not such Indebtedness actually shall have been
created, assumed or incurred by such Person, provided, however, if the
obligations secured by a Lien (other than a Permitted Encumbrance not securing
any liability that would itself constitute Indebtedness) or any assets or
property have not been assumed by such Person in full or are not such Person's
legal liability in full, the amount of such Indebtedness for purposes of this
definition shall be limited to the lesser of the amount of Indebtedness secured
by such Lien and the fair market value of the property subject to such Lien. In
addition, Indebtedness shall not include a government grant and any guarantee of
an Obligor required by such grant which obligates the Obligor to repay such
grant at the discretion of such government or upon the failure of the conditions
of such grant specified therein to be fulfilled, but which is forgiven solely by
reason of the passage of time or the fulfillment of such grant conditions (other
than repayment); provided that if the conditions for forgiveness of such
government grant


<PAGE>


lapse for whatever reason and the Obligor becomes obligated to repay such grant,
the grant shall be deemed Indebtedness which is incurred at the time such
obligation to repay is triggered. Redeemable preferred securities of any Person
shall not be deemed Indebtedness for the purposes hereof unless carried as a
liability on the balance sheet of such Person in accordance with GAAP.

                  "Indenture" shall mean a certain Indenture dated June 11, 1998
with respect to the issuance by Philipp Brothers Chemicals, Inc. of up to
$140,000,000 of its 9-7/8% Senior Subordinated Notes due 2008, Series A, and
9-7/8% Senior Subordinated Notes due 2008, Series B, of which the aggregate
principal amount presently outstanding is $100,000,000.

                  "Ineligible Security" shall mean any security which may not be
underwritten or dealt in by member banks of the Federal Reserve System under
Section 16 of the Banking Act of 1933 (12 U.S.C. section 24, Seventh), as
amended.

                  "Intellectual Property" all patents, patent applications,
trademarks, trademark applications, service marks, service mark applications,
copyrights, copyright applications, design rights, trade names, assumed names,
trade secrets, licenses, know-how, formulae, techniques, operational methods and
strategies owned and/or utilized by the Obligors.

                  "Interest Coverage Ratio" shall mean EBITDA of Borrower on a
consolidated basis (including all direct and indirect domestic and foreign
Subsidiaries) divided by interest on all Funded Indebtedness of the Borrower on
a consolidated basis (including all direct and indirect domestic and foreign
Subsidiaries).

                  "Interest Period" shall mean the period provided for any
Eurodollar Rate Loan pursuant to Section 2.2(b).

                  "Inventory" shall mean and include as to each Obligor all of
such Obligor's now owned or hereafter acquired goods and merchandise wherever
located, to be furnished under any contract of service or held for sale or
lease, all raw materials, work in process, finished goods and materials and
supplies of any kind, nature or description which are or might be used or
consumed in such Obligor's business or used in selling or furnishing such goods
and merchandise and all documents of title or other documents representing them.

                  "Inventory Advance Rate" shall have the meaning set forth in
Section 2.1(a)(y)(ii) hereof.

                  "Issuer" shall mean any Person who issues a Letter of Credit
and/or accepts a draft pursuant to the terms hereof.

                  "Leasehold Interests" shall mean all of each Obligor's right,
title and interest in and to the premises set forth on Schedule 1.2A.

                  "Lender" and "Lenders" shall have the meaning ascribed to such
term in the preamble to this Agreement and shall include each Person which
becomes a transferee, successor or assign of any Lender.

                  "Letter of Credit Fees" shall have the meaning set forth in
Section 3.2.

                  "Letters of Credit" shall have the meaning set forth in
Section 2.10.

                  "Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, security interest, lien (whether statutory or
otherwise), charge, claim or encumbrance, or priority or other security
agreement or preferential arrangement held or asserted in respect of any asset
of any kind or nature whatsoever including, without limitation, any conditional
sale or other title retention agreement, any lease having substantially the same
economic effect


<PAGE>


as any of the foregoing, and the filing of, or agreement to give, any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction.

                  "Material Adverse Effect" shall mean a material adverse effect
on (a) the condition, operations, assets, business of the Obligors taken as a
whole (b) the Obligors' ability to pay the Obligations in accordance with the
terms thereof, (c) the value of the Collateral, or Agent's Liens on the
Collateral or the priority of any such Lien or (d) the practical realization of
the benefits of Agent's and each Lender's rights and remedies under this
Agreement and the Other Documents.

                  "Maximum Loan Amount" shall mean $60,000,000.

                  "Maximum Revolving Advance Amount" shall mean $35,000,000.

                  "Monthly Advances" shall have the meaning set forth in Section
3.1 hereof.

                  "Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Sections 3(37) and 4001(a)(3) of ERISA.

                  "Net Worth" at a particular date, shall mean (a) the aggregate
amount of all assets of Obligors on a consolidated basis as may properly be
classified as such in accordance with GAAP consistently applied and such other
assets as are properly classified as "intangible assets", less (b) the aggregate
amount of all Indebtedness of Obligors.

                  "Note" shall mean collectively, the Acquisition Term Note and
the Revolving Credit Note.

                  "Obligations" shall mean and include any and all of each
Obligor's Indebtedness and/or liabilities to Agent or Lenders or any corporation
that directly or indirectly controls or is controlled by or is under common
control with Agent or any Lender, arising out of or in connection with this
Agreement or any Other Document, of every kind, nature and description, direct
or indirect, secured or unsecured, joint, several, joint and several, absolute
or contingent, due or to become due, now existing or hereafter arising,
contractual or tortious, liquidated or unliquidated, regardless of how such
Indebtedness or liabilities arise or by what agreement or instrument they may be
evidenced or whether evidenced by any agreement or instrument.

                  "Obligor" or "Obligors" shall mean the Borrower and the
Guarantors.

                  "Original Owners" shall mean (i) Jack Bendheim, (ii) each of
his spouses, siblings, and sisters, descendants (whether by blood, marriage or
adoption and including stepchildren) and the spouses, siblings, and sisters and
descendants thereof (whether by blood, marriage or adoption, and including
stepchildren) of each such natural persons, the beneficiaries, estates and legal
representatives of any of the foregoing, the trustee of any bona fide trust of
which any of the foregoing, individually or in the aggregate, are the majority
in interest beneficiaries or grantors, and (iii) all Affiliates controlled by
the individual named in clause (i) above.

                  "Other Billing Location" shall mean each location not owned by
such Person from which billing originates and/or at which books, records and
backup documentation exists with respect to Accounts and Inventory, to the
extent that same does not originate out of or exist at such Person's Chief
Executive Office.

                  "Other Documents" shall mean the Note, the Guaranty, the Power
of Attorney and any and all other agreements, instruments and documents,
including, without limitation, guaranties, pledges, powers of attorney,
consents, and all other writings heretofore, now or hereafter executed by any
Obligor and/or delivered to Agent or any Lender by any Obligor in respect of the
transactions contemplated by this Agreement, and all as amended, supplemented,
modified, extended and/or restated from time to time.


<PAGE>


                  "Parent" of any Person shall mean a corporation or other
entity owning, directly or indirectly at least 50% of the shares of stock or
other ownership interests having ordinary voting power to elect a majority of
the directors of the Person, or other Persons performing similar functions for
any such Person.

                  "Participant" shall mean each Person who shall be granted the
right by any Lender to participate in any of the Advances and who shall have
entered into a participation agreement in form and substance satisfactory to
such Lender.

                  "Payment Office" shall mean initially Two Tower Center
Boulevard, East Brunswick, New Jersey 08816; thereafter, such other office of
Agent, if any, which it may designate by notice to Borrower and to each Lender
to be the Payment Office.

                  "PBGC" shall mean the Pension Benefit Guaranty Corporation.

                  "Permitted Encumbrances" shall mean (a) Liens in favor of
Agent for the benefit of Agent and Lenders; (b) Liens for taxes, assessments or
other governmental charges not delinquent or being contested in good faith and
by appropriate proceedings and with respect to which proper reserves have been
taken by Obligors in accordance with GAAP; provided, that, the Lien shall have
no effect on the priority of the Liens in favor of Agent or the value of the
assets in which Agent has such a Lien and a stay of enforcement of any such Lien
shall be in effect; (c) Liens disclosed in the financial statements referred to
in Section 5.5; (d) deposits or pledges to secure obligations under worker's
compensation, social security or similar laws, or under unemployment insurance;
(e) deposits or pledges to secure bids, tenders, contracts (other than contracts
for the payment of money), leases, statutory obligations, surety and appeal
bonds and other obligations of like nature arising in the ordinary course of any
Obligor's business; (f) judgment Liens that have been stayed or bonded and
mechanics', workers', materialmen's or other like Liens arising in the ordinary
course of any Obligor's business with respect to obligations which are not due
or which are being contested in good faith by the applicable Borrower; (g) Liens
placed upon assets (including additions and substitutions therefor and proceeds
thereof) hereafter acquired to secure a portion of the purchase price thereof,
provided that (x) any such lien shall not encumber any other property of the
Obligors and (y) the aggregate amount of Indebtedness secured by such Liens
incurred as a result of such purchases during any fiscal year shall not exceed
the amount provided for in Section 7.6; and (h) Liens disclosed on Schedule
1.2B; (i) Liens arising with respect to capital leases, as permitted by Section
7.6 hereof, (j) Liens on property of foreign Subsidiaries acquired with the
proceeds of the Revolving Loans provided that such Liens do not extend to any
property of any domestic Obligor; (k) Liens in favor of customs and revenue
authorities arising as a matter of the law to secure the payment of customs and
duties in connection with the importation of goods (l) Liens securing
obligations arising from statutory, regulatory, contractual or warranty
requirements of any of the Obligors, including the performance of statutory
obligations, surety or appeal bonds or performance bonds or Landlords',
carriers', warehousemen's, mechanics', suppliers', materialmen's or any other
like Liens, in any case incurred in the ordinary course of business provided
that the foregoing does not apply to Receivables or Inventory; (m) Liens
securing Indebtedness of a Person existing at the time that such person is
merged into or consolidated with the Borrower or a Subsidiary; provided,
however, that such Liens were in existence prior to the contemplation of such
merger or consolidation and do not extend to any assets other than those of such
Person: (n) Liens on property acquired by Borrower or a Subsidiary; provided,
however, that such Liens were in existence prior to the contemplation of such
acquisition and do not extend to any other property other than those of the
Person merged or consolidated with Borrower or such Subsidiary; (o) Liens in
respect of interest rate agreement obligations and currency agreement
obligations entered into the ordinary course of business; (p) Liens in favor of
Borrower or any Subsidiary; (q) leases or subleases granted to others that do
not materially interfere with the ordinary course of business of Borrower and
its Subsidiaries; (r) Liens arising from filing Uniform Commercial Code
financing statements regarding leases; (s) Liens securing Indebtedness incurred
to amend, modify, renew, refund, replace or refinance Indebtedness that has been
secured by a Lien permitted under this Agreement, provided that (1) and such
Lien not extend to or cover any assets or property not securing the Indebtedness
so refinanced and (2) the refinancing Indebtedness secured by such Lien shall
have been permitted to be incurred under this Agreement and (t) pursuant to
Section 7.07 of the Indenture, liens on moneys held by the trustee under the
Indenture securing fees due to the Trustee.


<PAGE>


                  "Person" shall mean any individual, sole proprietorship,
partnership, corporation, business trust, joint stock company, trust,
unincorporated organization, association, limited liability company,
institution, public benefit corporation, joint venture, entity or government
(whether Federal, state, county, city, municipal or otherwise, including any
instrumentality, division, agency, body or department thereof).

                  "Plan" shall mean any employee benefit plan within the meaning
of Section 3(3) of ERISA, maintained for employees of Obligors or any member of
the Controlled Group or any such Plan to which any Obligor or any member of the
Controlled Group is required to contribute on behalf of any of its employees.

                  "Power of Attorney" shall mean each Power of Attorney executed
by each Obligor in favor of Agent for the ratable benefit of Lenders.

                  "Pro Forma Balance Sheet" shall have the meaning set forth in
Section 5.5(a) hereof.

                  "Pro Forma Financial Statements" shall have the meaning set
forth in Section 5.5(b) hereof.

                  "Projections" shall have the meaning set forth in Section
5.5(b) hereof.

                  "Purchasing Lender" shall have the meaning set forth in
Section 16.3 hereof.

                  "RCRA" shall mean the Resource Conservation and Recovery Act,
42 U.S.C. " 6901 et seq., as same may be amended from time to time.

                  "Real Property" shall mean all of each Borrower's right, title
and interest in and to the owned and leased premises identified on Schedule 4.19
hereto.

                  "Receivables" shall mean and include, as to each Obligor, all
of such Obligor's accounts, contract rights, instruments (including those
evidencing Indebtedness owed to Obligors by their Affiliates), documents,
chattel paper, drafts and acceptances, and all other forms of obligations owing
to such Obligor arising out of or in connection with the sale or lease of
Inventory or the rendition of services, all guarantees and other security
therefor, whether secured or unsecured, now existing or hereafter created, and
whether or not specifically sold or assigned to Agent hereunder.

                  "Receivables Advance Rate" shall have the meaning set forth in
Section 2.1(a)(y)(i) hereof.

                  "Release" shall have the meaning set forth in Section
5.7(c)(i) hereof.

                  "Reportable Event" shall mean a reportable event described in
Section 4043(b) of ERISA or the regulations promulgated thereunder.

                  "Required Lenders" shall mean Lenders holding at least
Sixty-Six and 2/3 percent (66-2/3%) of the Advances and, if no Advances are
outstanding, shall mean Lenders holding Sixty-Six and 2/3 percent (66-2/3%) of
the Commitment Percentages.

                  "Reserve Percentage" shall mean the maximum effective
percentage in effect on any day as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining the reserve
requirements (including, without limitation, supplemental, marginal and
emergency reserve requirements) with respect to euroccurency funding.

                  "Revolving Advances" shall mean Advances made other than
Letters of Credit and the Acquisition Term Loan.

                  "Revolving Credit Note" shall have the meaning set forth in
Section 2.1(a) hereof.

<PAGE>

                  "Revolving Interest Rate" shall mean an interest rate per
annum equal to (a) the sum of the Base Rate with respect to Domestic Rate Loans,
and (b) the sum of the Eurodollar Rate plus the Applicable Margin with respect
to Eurodollar Rate Loans.

                  "Section 20 Subsidiary" shall mean the Subsidiary of the bank
holding company controlling any Lender, which Subsidiary has been granted
authority by the Federal Reserve Board to underwrite and deal in certain
Ineligible Securities.

                  "Senior Subordinated Notes" shall mean all notes issued
pursuant to the Indenture.

                  "Settlement Date" shall mean the Closing Date and thereafter
Wednesday of each week unless such day is not a Business Day in which case it
shall be the next succeeding Business Day.

                  "Shareholders Agreement" shall mean (i) the Shareholders
Agreement dated December 29, 1987, by and between Marvin S. Sussman and the
Borrower; (ii) the Shareholders Agreement dated February 21, 1995, among
Phibro-Tech, Inc., I. David Paley, Nathan Z. Bistricer and James O. Herlands;
(iii) the Limited Liability Company Agreement of MRT dated November 21, 1995;
and (iv) each of the Severance Agreements between Phibro- Tech, Inc. and I.
David Paley, Nathan Z. Bistricer and James O. Herlands, respectively, each dated
February 21, 1995; each as amended and in effect on the date hereof and as
hereafter amended, except for any amendment subsequent to the date hereof which
causes the terms of such Agreement to be less favorable to an Obligor, each as
amended and in effect on the date hereof, and as thereafter amended, except for
any amendment subsequent to the date hereof which causes the terms of such
agreement to be less favorable to an Obligor.

                  "Subordinated Debt Payments" shall mean and include all cash
actually expended to make payments of principal and interest pursuant to the
Indenture.

                  "Subsidiary" shall mean a corporation or other entity of whose
shares of stock or other ownership interests having ordinary voting power (other
than stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.

                  "Term" shall have the meaning set forth in Section 13.1
hereof.

                  "Termination Event" shall mean (i) a Reportable Event with
respect to any Plan or Multiemployer Plan; (ii) the withdrawal of any Obligor or
any member of the Controlled Group from a Plan or Multiemployer Plan during a
plan year in which such entity was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to
terminate a Plan in a distress termination described in Section 4041(c) of
ERISA; (iv) the institution by the PBGC of proceedings to terminate a Plan or
Multiemployer Plan; (v) any event or condition (a) which would constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan or Multiemployer Plan, or (b) that may
result in termination of a Multiemployer Plan pursuant to Section 4041A of
ERISA; or (vi) the partial or complete withdrawal within the meaning of Sections
4203 and 4205 of ERISA, of any Obligor or any member of the Controlled Group
from a Multiemployer Plan.

                  "Toxic Substance" shall mean and include any material present
on the Real Property or the Leasehold Interests which has been shown to have
significant adverse effect on human health or which is subject to regulation
under the Toxic Substances Control Act (TSCA), 15 U.S.C.: 2601 et seq.,
applicable state law, or any other applicable Federal or state laws now in force
or hereafter enacted relating to toxic substances. "Toxic Substance" includes
but is not limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based
paints.

                  "Transactions" shall have the meaning set forth in Section 5.5
hereof.

                  "Transferee" shall have the meaning set forth in Section
15.3(b) hereof.


<PAGE>


                  "Undrawn Availability" at a particular date shall mean an
amount equal to (a) the lesser of (i) the Formula Amount or (ii) the Maximum
Revolving Advance Amount, minus (b) the sum of (i) the outstanding amount of
Advances (other than the Acquisition Term Loan) plus (ii) all amounts due and
owing to Obligors' trade creditors which are outstanding sixty (60) days beyond
normal trade terms, all as determined by the Agent.

                  "Week" shall mean the time period commencing with the opening
of business on a Wednesday and ending on the end of business the following
Tuesday.

         1.3. Uniform Commercial Code Terms. All terms used herein and defined
in the Uniform Commercial Code as adopted in the State of New Jersey shall have
the meaning given therein unless otherwise defined herein.

         1.4. Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context, terms
used herein in the singular also include the plural and vice versa. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. Unless otherwise provided, all
references to any instruments or agreements to which Agent is a party,
including, without limitation, references to any of the Other Documents, shall
include any and all modifications or amendments thereto and any and all
extensions or renewals thereof.


II.      ADVANCES, CONDITIONS, PAYMENTS.

         2.1. (a) Revolving Advances. Subject to the terms and conditions set
forth in this Agreement, each Lender, severally and not jointly, will make
Revolving Advances to Borrower in aggregate amounts outstanding at any time
equal to such Lender's Commitment Percentage of the lesser of (x) the Maximum
Revolving Advance Amount less the aggregate amount of outstanding Letters of
Credit or (y) an amount equal to the sum of:

                           (i) 85%, subject to the provisions of Section 2.1(b)
hereof ("Receivables Advance Rate"), of Eligible Receivables, plus

                           (ii) the lesser of (A) 60%, subject to the provisions
of Section 2.1(b) hereof ("Inventory Advance Rate"), of the value of the
Eligible Inventory (the Receivables Advance Rate and the Inventory Advance Rate
shall be referred to collectively, as the "Advance Rates") or (B) $15,000,000 in
the aggregate at any one time, minus

                           (iii) the aggregate amount of outstanding Letters of
Credit, minus

                           (iv) such reserves as Agent may reasonably deem
proper and necessary from time to time.

         The amount derived from the sum of (x) Sections 2.1(a)(y)(i) and (ii)
minus (y) Section 2.1 (a)(y) (iv) at any time and from time to time shall be
referred to as the "Formula Amount". The Revolving Advances shall be evidenced
by the secured promissory note ("Revolving Credit Note") substantially in the
form attached hereto as Exhibit 2.1(a).

                  (b) Discretionary Rights. The Advance Rates may be increased
or decreased by Agent at any time and from time to time in the exercise of its
reasonable discretion. Borrower consents to any such increases or decreases and
acknowledges that decreasing the Advance Rates or increasing the reserves may
limit or restrict Advances requested by Borrower.

                  (c) Use of Revolving Advances. Revolving Advances may be
utilized for Borrower's working capital purposes and, so long as the provisions
of Section 2.5(b)(i), (ii) and (iii) are satisfied, to make loans to domestic
Subsidiaries of the Obligors, which shall also be or become Obligors; provided
that Revolving Advances lent by the Borrower to domestic Subsidiaries of the
Obligors, which shall also be Obligors, to be utilized to fund the acquisition


<PAGE>


of an Acquired Person by such domestic Subsidiary, shall be limited such that:
(x) the aggregate principal amount of such Revolving Advances do not exceed
$25,000,000, (y) there exists an Undrawn Availability after giving effect to
such acquisition of at least $10,000,000, and (z) the Borrower satisfies the
conditions set forth in Section 2.5(b) hereof.

                  Notwithstanding any contained hereto the contrary, at no time
shall Revolving Advances lent by the Borrower to any domestic Subsidiary of the
Obligor, which shall also be Obligors, exceed the Formula Amount of said
domestic Subsidiary, provided, however, funds lent to a domestic Subsidiary of
an Obligor, which shall also be or become an Obligor, may utilize said proceeds
to fund the acquisition of an Acquired Person (subject to the limitations
described herein) or for any other purpose, including distributing or otherwise
transferring said funds to a parent of such domestic Subsidiary, other than in
satisfaction of such debt, or any other Obligor (without regard to the Formula
Amount referred above, since said Formula Amount has already been satisfied upon
the initial loan of the Revolving Advance made by the Borrower to the original
domestic Subsidiary).

         2.2 (a) Acquisition Term Loan. Subject to the terms and conditions set
forth in this Agreement, each Lender, severally and not jointly, will make
Acquisition Term Loans to Borrower, from time to time during the period
commencing on the Closing Date and ending on August 20, 2000, in aggregate
principal amounts outstanding at any time equal to such Lender's Commitment
Percentage of up to $25,000,000.

             (b) Use of Acquisition Term Loans. Acquisition Term Loans may only
be utilized to fund the acquisition of an Acquired Person, subject to
satisfaction of the conditions set forth in Section 2.5(a) hereof, and each
Acquisition Term Loan shall be evidenced by an Acquisition Term Note
substantially in the form of Exhibit 2.2(b), provided: (x) the Acquired Person
is organized and maintains its principal place of business in the United States,
(y) no Acquisition Term Loan shall be in an amount greater than $10,000,000, (z)
the amount of each Acquisition Term Loan shall be limited to the value, as
determined by the Lenders, of the assets of Acquired Person, (aa) each
Acquisition Term Loan shall be fully secured by all assets of the Acquired
Person, (bb) evidence, in form and substance reasonably satisfactory to the
Agent and the Required Lenders, must be delivered to the Agent showing that the
Borrower, on a consolidated basis (including all direct and indirect domestic
but not foreign Subsidiaries), twelve (12) months before the acquisition, has
maintained a Fixed Charge Coverage Ratio of at least 1.25 to 1.00, (cc)
evidence, in form and substance reasonably satisfactory to the Agent and the
Required Lenders, is delivered to the Agent showing that the Acquired Company,
has maintained for the prior twelve months and is reasonably expected to
maintain a Fixed Charge Coverage Ratio of at least 1.25 to 1.00, and (dd) the
Chief Financial Officer of the Borrower shall deliver a certification to the
Required Lenders on behalf of the Borrower indicating that the Borrower and the
Acquired Company, on a consolidated basis, will continue to maintain a Fixed
Charge Coverage Ratio of at least 1.25 to 1.00 (the Fixed Charge Coverage Ratio
to be calculated under (bb), (cc) and (dd) with respect to said twelve (12)
month period shall be determined on an annual basis), (ee) there exist at the
time of said Acquisition Term Loan, after giving effect to such acquisition,
Undrawn Availability of at least $10,000,000 under the Revolving Loan and (ff)
no Acquisition Term Loan shall be utilized to fund the acquisition of a foreign
person without the prior written consent of the Agent and all Lenders, which
consent shall be in their sole and absolute discretion. Notwithstanding anything
contained herein to the contrary, no proceeds of any Acquisition Term Loan or
those of any Revolving Advances may be utilized collectively to fund the
acquisition of the same Acquired Person.

         2.3. Procedure for Obtaining Advances.

                  (a) Borrower may notify Agent prior to 11:00 a.m. on a
Business Day of Borrower's request to incur, on that day, a Revolving Advance
hereunder. Should any amount required to be paid as interest hereunder, or as
fees or other charges under this Agreement or any other agreement with Agent or
Lenders, or with respect to any other Obligation, become due, same shall be
deemed a request for a Revolving Advance as of the date such payment is due and
are not paid, in the amount required to pay in full such interest, fee, charge
or Obligation under this Agreement or any other agreement with Agent or Lenders,
and such request shall be irrevocable.

                  (b) Notwithstanding the provisions of (a) above, in the event
any Borrower desires to obtain a Eurodollar Rate Loan, Borrower shall give Agent
at least three (3) Business Days' prior written notice, specifying (i) the


<PAGE>


date of the proposed borrowing (which shall be a Business Day), (ii) the type of
borrowing and the amount on the date of such Advance to be borrowed, which
amount shall be an integral multiple of $1,000,000, and (iii) the duration of
the first Interest Period therefor. Eurodollar Rate Loans shall be for one, two
or three months; provided, if an Interest Period would end on a day that is not
a Business Day, it shall end on the next succeeding Business Day unless such day
falls in the next succeeding calendar month in which case the Interest Period
shall end on the next preceding Business Day. No Eurodollar Rate Loan shall be
made available to Borrower during the continuance of a Default or an Event of
Default.

                  (c) Each Interest Period of a Eurodollar Rate Loan shall
commence on the date such Eurodollar Rate Loan is made and shall end on such
date as Borrower may elect as set forth in (b)(iii) above provided that the
exact length of each Interest Period shall be determined in accordance with the
practice of the interbank market for offshore Dollar deposits and no Interest
Period shall end after the last day of the Term.

         Borrower shall elect the initial Interest Period applicable to a
Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to
Section 2.3(b) or by its notice of conversion given to Agent pursuant to Section
2.3(d), as the case may be. Borrower shall elect the duration of each succeeding
Interest Period by giving irrevocable written notice to Agent of such duration
not less than three (3) Business Days prior to the last day of the then current
Interest Period applicable to such Eurodollar Rate Loan. If Agent does not
receive timely notice of the Interest Period elected by Borrower, Borrower shall
be deemed to have elected to convert to a Domestic Rate Loan subject to Section
2.3(d) hereinbelow.

                  (d) Provided that no Event of Default shall have occurred and
be continuing, Borrower may, on the last Business Day of the then current
Interest Period applicable to any outstanding Eurodollar Rate Loan, or on any
Business Day with respect to Domestic Rate Loans, convert any such loan into a
loan of another type in the same aggregate principal amount provided that any
conversion of a Eurodollar Rate Loan shall be made only on the last Business Day
of the then current Interest Period applicable to such Eurodollar Rate Loan. If
Borrower desires to convert a loan, Borrower shall give Agent not less than
three (3) Business Days' prior written notice to convert from a Domestic Rate
Loan to a Eurodollar Rate Loan or one (1) Business Day's prior written notice to
convert from a Eurodollar Rate Loan to a Domestic Rate Loan, specifying the date
of such conversion, the loans to be converted and if the conversion is from a
Domestic Rate Loan to any other type of loan, the duration of the first Interest
Period therefor.

                  (e) At its option and upon three (3) Business Days' prior
written notice, Borrower may prepay the Eurodollar Rate Loans in whole at any
time or in part from time to time, without premium or penalty, but with accrued
interest on the principal being prepaid to the date of such repayment. Borrower
shall specify the date of prepayment of Advances which are Eurodollar Rate Loans
and the amount of such prepayment. In the event that any prepayment of a
Eurodollar Rate Loan is required or permitted on a date other than the last
Business Day of the then current Interest Period with respect thereto, such
Borrower shall indemnify Agent and Lenders therefor in accordance with Section
2.3(f) hereof.

                  (f) Borrower shall indemnify Agent and Lenders and hold Agent
and Lenders harmless from and against any and all losses or expenses that Agent
and Lenders may sustain or incur as a consequence of any prepayment, conversion
of or any default by Borrower in the payment of the principal of or interest on
any Eurodollar Rate Loan or failure by Borrower to complete a borrowing of, a
prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof
has been given, including, but not limited to, any interest payable by Agent or
Lenders to lenders of funds obtained by it in order to make or maintain its
Eurodollar Rate Loans hereunder. A certificate as to any additional amounts
payable pursuant to the foregoing sentence submitted by Agent or any Lender to
Borrower shall be presumptive evidence absent manifest error.

                  (g) Notwithstanding any other provision hereof, if any new
applicable law, treaty, regulation or directive, or any change in any new or
existing law, treaty, regulation or directive or in the interpretation or
application thereof, shall make it unlawful for any Lender (for purposes of this
subsection (g), the term "Lender" shall include any Lender and the office or
branch where any Lender or any corporation or bank controlling such Lender makes
or maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate
Loans, the obligation of Lenders to make Eurodollar


<PAGE>


Rate Loans hereunder, shall forthwith be canceled and Borrower shall, if any
affected Eurodollar Rate Loans are then outstanding, promptly upon request from
Agent, either pay all such affected Eurodollar Rate Loans or convert such
affected Eurodollar Rate Loans into loans of another type. If any such payment
or conversion of any Eurodollar Rate Loan is made on a day that is not the last
day of the Interest Period applicable to such Eurodollar Rate Loan, Borrower
shall pay Agent, upon Agent's request, such amount or amounts as may be
necessary to compensate Lenders for any loss or expense sustained or incurred by
Lenders in respect of such Eurodollar Rate Loan as a result of such payment or
conversion, including (but not limited to) any interest or other amounts payable
by Lenders to lenders of funds obtained by Lenders in order to make or maintain
such Eurodollar Rate Loan. A certificate as to any additional amounts payable
pursuant to the foregoing sentence submitted by Lenders to Borrower shall be
presumptive evidence absent manifest error.

         2.4. Disbursement of Advance Proceeds. All Advances shall be disbursed
from whichever office or other place in the United States of America Agent may
designate from time to time and, together with any and all other Obligations of
Borrower to Agent or Lenders, shall be charged to Borrower's Account on Agent's
books. During the Term, Borrower may use the Revolving Advances by borrowing,
prepaying and reborrowing, all in accordance with the terms and conditions
hereof. The proceeds of each Revolving Advance requested by Borrower or deemed
to have been requested by Borrowers under Section 2.2(a) hereof shall, with
respect to requested Revolving Advances to the extent Lenders make such
Revolving Advances, be made available to the Borrower on the day so requested by
way of credit to such Borrower's operating account at PNC, or such other bank as
Borrower may designate following notification to Agent, in immediately available
federal funds or other immediately available funds or, with respect to Revolving
Advances deemed to have been requested by Borrower, be disbursed to Agent to be
applied to the outstanding Obligations giving rise to such deemed request.

         2.5. Acquisition of Acquired Persons.

                  (a) The Lenders agree to extend the Acquisition Term Loans,
subject to the provisions of Section 2.2, and provided further that:

                           (i) the Borrower provides the Agent with at least
thirty (30) days notice of its request for said Acquisition Term Loan ; and

                           (ii) the Borrower provides the Agent with
documentation and information relative to the Acquired Person and the proposed
acquisition in form and substance reasonably satisfactory to the Agent and its
counsel; and

                           (iii) the Borrower delivers to Agent, in form and
substance reasonably satisfactory to the Agent, (i) evidence that the Agent has
received a first and only perfected security interest in substantially all the
assets of the Acquired Person and (ii) landlords' waivers and consents for the
chief executive office and each Other Billing Location of said Acquired Person
and each location of the Acquired Person where assets borrowed against are
located; and

                           (iv) each Acquired Person shall deliver a Guaranty to
the Agent, in the form and substance reasonably satisfactory to the Agent, which
Guaranty shall be secured by substantially all assets of the Acquired Company.

                  Notwithstanding anything contained herein to the contrary, the
Agent and the Lenders reserve the right to perform such due diligence as they
deem necessary prior to including any Acquired Assets in the Advance Formula,
which shall not, in any case, include the assets of any foreign Acquired Person.

                  (b) The Lenders agree to extend Revolving Advances which may
be relent to domestic Subsidiaries of the Borrower, which are Obligors, to be
utilized to fund the acquisition of Acquired Persons, subject to the provisions
of Subsection 2.1 hereof, and further provided that:


<PAGE>


                           (i) each domestic Subsidiary of an Obligor (including
any new formed domestic Subsidiary of an Obligor, including any domestic
Acquired Person) shall have executed and delivered to the Borrower a grid note
in the amount of $35,000,000, in form and substance satisfactory to the Bank,
each of which grid note shall be assigned and delivered to the Agent; and

                           (ii) each time such Revolving Advance is made, the
amount of such Revolving Advance shall be noted on the applicable grid note; and

                           (iii) the Borrower and each domestic Obligor shall
deliver to the Agent, on a monthly basis, a Borrowing Base Certificate in
accordance with Section 9.9 hereof; and

                           (iv) each newly formed domestic Subsidiary of an
Obligor created to acquire an Acquired Person and each domestic Acquired Person
shall deliver to the Agent a Guaranty, in the form and substance reasonably
satisfactory to the Agent, which Guaranty shall be secured by substantially all
of the assets of said domestic Subsidiary or Acquired Person; and

                           (v) each newly formed domestic Subsidiary of the
Borrower created to acquire an Acquired Person and each domestic Acquired Person
shall deliver to Agent, in form and substance satisfactory to the Agent, (i)
evidence that the Agent has received a first and only perfected security
interest in substantially all the assets of said domestic Subsidiary and/or
Acquired Person and (ii) landlords' waivers and consents for the chief executive
office and Other Billing Location of said Acquired Person and each location of
said domestic Subsidiary to the extent that the Inventory of such domestic
Subsidiary is to be considered Eligible Inventory.

         2.6. Maximum Advances. The aggregate balance of Revolving Advances
outstanding at any time shall not exceed the lesser of (a) Maximum Revolving
Advance Amount or (b) the Formula Amount. The aggregate amount outstanding of
the Acquisition Term Loan shall not exceed $25,000,000 and no single Advance
shall be in an amount of more than $10,000,000 without prior written consent of
the Agent and the Required Lenders, in their sole and absolute discretion.

         2.7. Repayment of Advances.

                  (a) The Revolving Advances shall be due and payable in full on
the last day of the Term subject to earlier prepayment as herein provided. Each
Advance under the Acquisition Term Loan shall be repaid based upon a five-year
amortization of principal and interest with a final payment due and payable on
the last day of the Term.

                  (b) Borrower recognizes that the amounts evidenced by checks,
notes, drafts or any other items of payment relating to and/or proceeds of
Collateral may not be collectible by Agent on the date received. In
consideration of Agent's agreement to conditionally credit Borrower's Account as
of the Business Day on which Agent receives those items of payment, Borrower
agrees that, in computing the charges under this Agreement, all items of payment
shall be deemed applied by Agent on account of the Obligations one (1) Business
Day after the Business Day Agent receives such payments via wire transfer or
electronic depository check. Agent is not, however, required to credit
Borrower's Account for the amount of any item of payment which is unsatisfactory
to Agent and Agent may charge Borrower's Account for the amount of any item of
payment which is returned to Agent unpaid.

                  (c) All payments of principal, interest and other amounts
payable hereunder, or under any of the related agreements shall be made to Agent
at the Payment Office not later than 1:00 P.M. (New York Time) on the due date
therefor in lawful money of the United States of America in federal funds or
other funds immediately available to Agent. Agent shall have the right to
effectuate payment on any and all Obligations due and owing hereunder by
charging Borrower's Account or by making Advances as provided in Section 2.3
hereof.

                  (d) Borrower shall pay principal, interest, and all other
amounts payable hereunder, or under any related agreement, without any deduction
whatsoever, including, but not limited to, any deduction for any setoff or
counterclaim.


<PAGE>


         2.8. Repayment of Excess Advances. The aggregate balance of Advances
outstanding at any time in excess of the maximum amount of Advances permitted
hereunder shall be immediately due and payable without the necessity of any
demand, at the Payment Office, whether or not a Default or Event of Default has
occurred.

         2.9. Statement of Account. Agent shall maintain, in accordance with its
customary procedures, a loan account ("Borrower's Account") in the name of
Borrower in which shall be recorded the date and amount of each Advance made by
Agent and the date and amount of each payment in respect thereof; provided,
however, the failure by Agent to record the date and amount of any Advance shall
not adversely affect Agent or any Lender. Each month, Agent shall send to
Borrower a statement showing the accounting for the Advances made, payments made
or credited in respect thereof, and other transactions between Agent and
Borrower, during such month. The monthly statements shall be deemed correct and
binding upon Borrower in the absence of manifest error and shall constitute an
account stated between Lenders and Borrower unless Agent receives a written
statement of Borrower's specific exceptions thereto within thirty (30) days
after such statement is received by Borrower. The records of Agent with respect
to the loan account shall be presumptive evidence absent manifest error of the
amounts of Advances and other charges thereto and of payments applicable
thereto.

         2.10. Letters of Credit. Subject to the terms and conditions hereof,
Agent shall (a) issue or cause the issuance of Letters of Credit ("Letters of
Credit") on behalf of Borrower; provided, however, that Agent will not be
required to issue or cause to be issued any Letters of Credit to the extent that
the face amount of such Letters of Credit would then cause the sum of (i) the
outstanding Revolving Advances plus (ii) outstanding Letters of Credit to exceed
the lesser of (x) the Maximum Revolving Advance Amount or (y) the Formula
Amount. The maximum amount of outstanding Letters of Credit shall not exceed
$7,500,000 in the aggregate at any time. All disbursements or payments related
to Letters of Credit shall be deemed to be Revolving Advances and shall bear
interest at the applicable Contract Rate; Letters of Credit that have not been
drawn upon shall not bear interest.

         2.11. Issuance of Letters of Credit.

                  (a) Borrower, may request Agent to issue or cause the issuance
of a Letter of Credit by delivering to Agent at the Payment Office, Agent's form
of Letter of Credit Application (the "Letter of Credit Application") completed
to the satisfaction of Agent; and, such other certificates, documents and other
papers and information as Agent may reasonably request. Borrower also has the
right to give instructions and make agreements with respect to any application,
any applicable letter of credit and security agreement, any applicable letter of
credit reimbursement agreement and/or any other applicable agreement, any letter
of credit and the disposition of documents, disposition of any unutilized funds,
and to agree with Agent upon any amendment, extension or renewal of any Letter
of Credit.

                  (b) Each Letter of Credit shall, among other things, (i)
provide for the payment of sight drafts or acceptances of usance drafts when
presented for honor thereunder in accordance with the terms thereof and when
accompanied by the documents described therein and (ii) have an expiry date
(subject to any renewal) not later than twelve (12) months after such Letter of
Credit's date of issuance and in no event later than the last day of the Term.
Each Letter of Credit shall be subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, and any amendments or revision thereof adhered to by the
Issuer and, to the extent not inconsistent therewith, the laws of the State of
New Jersey.

                  (c) Agent shall use its reasonable efforts to notify Lenders
of the request by Borrower for a Letter of Credit hereunder.

         2.12. Requirements For Issuance of Letters of Credit.

                  (a) In connection with the issuance of any Letter of Credit,
Borrower shall indemnify, save and hold Agent, each Lender and each Issuer
harmless from any loss, cost, expense or liability, including, without
limitation, payments made by Agent, any Lender or any Issuer and expenses and
reasonable attorneys' fees incurred by Agent, any Lender or Issuer arising out
of, or in connection with, any Letter of Credit to be issued or created for
Borrower.


<PAGE>


Borrower shall be bound by Agent's or any Issuer's regulations and good faith
interpretations of any Letter of Credit issued or created for Borrower's
Account, although this interpretation may be different from its own; and,
neither Agent, nor any Lender, nor any Issuer nor any of their correspondents
shall be liable for any error, negligence, or mistakes, whether of omission or
commission, in following Borrower's instructions or those contained in any
Letter of Credit or of any modifications, amendments or supplements thereto or
in issuing or paying any Letter of Credit, except for Agent's, any Lender's, any
Issuer's or such correspondents' willful misconduct or gross negligence.

                  (b) Borrower shall authorize and direct any Issuer to name the
Borrower or any Obligor as the "Applicant" or "Account Party" of each Letter of
Credit. If Agent is not the Issuer of any Letter of Credit, Borrower shall
authorize and direct the Issuer to deliver to Agent all instruments, documents,
and other writings and property received by the Issuer pursuant to the Letter of
Credit and to accept and rely upon Agent's instructions and agreements with
respect to all matters arising in connection with the Letter of Credit, the
application therefor or any acceptance therefor.

                  (c) In connection with all Letters of Credit issued or caused
to be issued or created by Agent under this Agreement, Borrower hereby appoints
Agent, or its designee, as its attorney, with full power and authority, (i) to
sign and/or endorse Borrower's name upon any warehouse or other receipts, letter
of credit applications and acceptances; (ii) to sign Borrower's name on bills of
lading; (iii) to clear Inventory through the United States of America Customs
Department ("Customs") in the name of Borrower or Agent or Agent's designee, and
to sign and deliver to Customs officials powers of attorney in the name of such
Borrower for such purpose; and (iv) to complete in Borrower's name or Agent's,
or in the name of Agent's designee, any order, sale or transaction, obtain the
necessary documents in connection therewith, and collect the proceeds thereof.
Neither Agent nor its attorneys will be liable for any acts or omissions nor for
any error of judgment or mistakes of fact or law, except for Agent's or its
attorney's willful misconduct or gross negligence. This power, being coupled
with an interest, is irrevocable as long as any Letters of Credit remain
outstanding.

                  (d) Each Lender shall to the extent of the percentage amount
equal to the product of such Lender's Commitment Percentage times the aggregate
amount of all unreimbursed reimbursement obligations arising from disbursements
made or obligations incurred with respect to the Letters of Credit be deemed to
have irrevocably purchased an undivided participation in each such unreimbursed
reimbursement obligation. In the event that at the time a disbursement is made
the unpaid balance of Revolving Advances exceeds or would exceed, with the
making of such disbursement, the lesser of the Maximum Revolving Advance Amount
or the Formula Amount, and such disbursement is not reimbursed by Borrower
within two (2) Business Days, Agent shall promptly notify each Lender and upon
Agent's demand each Lender shall pay to Agent such Lender's proportionate share
of such unreimbursed disbursement together with such Lender's proportionate
share of Agent's unreimbursed costs and expenses relating to such unreimbursed
disbursement. Upon receipt by Agent of a repayment from any Borrower of any
amount disbursed by Agent for which Agent had already been reimbursed by
Lenders, Agent shall deliver to each Lender that Lender's pro rata share of such
repayment. Each Lender's participation commitment shall continue until the last
to occur of any of the following events: (A) Agent ceases to be obligated to
issue or cause to be issued Letters of Credit hereunder; (B) no Letter of Credit
issued hereunder remains outstanding and uncancelled or (C) all Persons (other
than the Borrower) have been fully reimbursed for all payments made under or
relating to Letters of Credit.

         2.13. Additional Payments. Any sums expended by Agent or any Lender due
to Borrower's failure to perform or comply with its obligations under this
Agreement or any Other Document including, without limitation, Borrower's
obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be
charged to Borrower's Account as a Revolving Advance and added to the
Obligations.

         2.14. Manner of Borrowing and Payment.

                  (a) Each borrowing of Revolving Advances shall be advanced
according to the applicable Commitment Percentages of Lenders. The Acquisition
Term Loan shall be advanced according to the Commitment Percentages of Lenders.


<PAGE>


                  (b) Each payment (including each prepayment) by Borrower on
account of the principal of and interest on the Revolving Advances, shall be
applied to the Revolving Advances pro rata according to the applicable
Commitment Percentages of Lenders. Each payment (including each prepayment) by
Borrower on account of the principal of and interest on the Acquisition Term
Note, shall be made from or to, or applied to that portion of the Acquisition
Term Loan evidenced by the Acquisition Term Note pro rata according to the
Commitment Percentages of Lenders. Except as expressly provided herein, all
payments (including prepayments) to be made by any Borrower on account of
principal, interest and fees shall be made without set off or counterclaim and
shall be made to Agent on behalf of the Lenders to the Payment Office, in each
case on or prior to 1:00 P.M., New York time, in Dollars and in immediately
available funds.

                  (c) (i) Notwithstanding anything to the contrary contained in
Sections 2.14(a) and (b) hereof, commencing with the first Business Day
following the Closing Date, each borrowing of Revolving Advances shall be
advanced by Agent and each payment by Borrower on account of Revolving Advances
shall be applied first to those Revolving Advances advanced by Agent. On or
before 1:00 P.M., New York time, on each Settlement Date commencing with the
first Settlement Date following the Closing Date, Agent and Lenders shall make
certain payments as follows: (I) if the aggregate amount of new Revolving
Advances made by Agent during the preceding Week (if any) exceeds the aggregate
amount of repayments applied to outstanding Revolving Advances during such
preceding Week, then each Lender shall provide Agent with funds in an amount
equal to its applicable Commitment Percentage of the difference between (w) such
Revolving Advances and (x) such repayments and (II) if the aggregate amount of
repayments applied to outstanding Revolving Advances during such Week exceeds
the aggregate amount of new Revolving Advances made during such Week, then Agent
shall provide each Lender with funds in an amount equal to its applicable
Commitment Percentage of the difference between (y) such repayments and (z) such
Revolving Advances.

                           (ii) Each Lender shall be entitled to earn interest
at the applicable Contract Rate on outstanding Advances which it has funded.

                           (iii) Promptly following each Settlement Date, Agent
shall submit to each Lender a certificate with respect to payments received and
Advances made during the Week immediately preceding such Settlement Date. Such
certificate of Agent shall be conclusive in the absence of manifest error.

                  (d) If any Lender or Participant (a "benefitted Lender") shall
at any time receive any payment of all or part of its Advances, or interest
thereon, or receive any Collateral in respect thereof (whether voluntarily or
involuntarily or by set-off) in a greater proportion than any such payment to
and Collateral received by any other Lender, if any, in respect of such other
Lender's Advances, or interest thereon, and such greater proportionate payment
or receipt of Collateral is not expressly permitted hereunder, such benefitted
Lender shall purchase for cash from the other Lenders a participation in such
portion of each such other Lender's Advances, or shall provide such other Lender
with the benefits of any such Collateral, or the proceeds thereof, as shall be
necessary to cause such benefitted Lender to share the excess payment or
benefits of such Collateral or proceeds ratably with each of Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Each Lender so purchasing a portion of another
Lender's Advances may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.

                  (e) Unless Agent shall have been notified by telephone,
confirmed in writing, by any Lender that such Lender will not make the amount
which would constitute its applicable Commitment Percentage of the Advances
available to Agent, Agent may (but shall not be obligated to) assume that such
Lender shall make such amount available to Agent on the next Settlement Date
and, in reliance upon such assumption, make available to Borrower a
corresponding amount. Agent will promptly notify Borrower of its receipt of any
such notice from a Lender. If such amount is made available to Agent on a date
after such next Settlement Date, such Lender shall pay to Agent on demand an
amount equal to the product of (i) the daily average Federal Funds Rate
(computed on the basis of a year of 360 days) during such period as quoted by
Agent, times (ii) such amount, times (iii) the number of days from and including
such Settlement Date to the date on which such amount becomes immediately
available to Agent. A certificate of Agent submitted to


<PAGE>


any Lender with respect to any amounts owing under this paragraph (e) shall be
conclusive, in the absence of manifest error. If such amount is not in fact made
available to Agent by such Lender within three (3) Business Days after such
Settlement Date, Agent shall be entitled to recover such an amount, with
interest thereon at the rate per annum then applicable to such Revolving
Advances hereunder, on demand from Borrower; provided, however, that Agent's
right to such recovery shall not prejudice or otherwise adversely affect
Borrower's rights (if any) against such Lender.

         2.15. Mandatory Prepayments.

                  (a) When any Obligor sells or otherwise disposes of any
Collateral other than Inventory in the ordinary course of business, Borrowers
shall repay the Advances in an amount equal to the net proceeds of such sale
(i.e., gross proceeds less the reasonable costs of such sales or other
dispositions), such repayments to be made promptly but in no event more than one
(1) Business Day following receipt of such net proceeds, and until the date of
payment, such proceeds shall be held in trust for Agent. The foregoing shall not
be deemed to be implied consent to any such sale otherwise prohibited by the
terms and conditions hereof. Such repayments shall be applied first, ratably to
the outstanding principal installments on the Acquisition Term Loan in the
inverse order of the maturities thereof and, second, to the remaining Advances
in such order as Agent may determine, subject to Borrower's ability to reborrow
Revolving Advances in accordance with the terms hereof.

         2.16. Use of Proceeds. Borrowers shall apply the proceeds of Advances
for the purposes set forth in Sections 2.1(c) and 2.2(b).

         2.17. Defaulting Lender.

                  (a) Notwithstanding anything to the contrary contained herein,
in the event any Lender (x) has refused (which refusal constitutes a breach by
such Lender of its obligations under this Agreement) to make available its
portion of any Advance or (y) notifies either Agent or Borrower that it does not
intend to make available its portion of any Advance (if the actual refusal would
constitute a breach by such Lender of its obligations under this Agreement)
(each, a "Lender Default"), all rights and obligations hereunder of such Lender
(a "Defaulting Lender") as to which a Lender Default is in effect and of the
other parties hereto shall be modified to the extent of the express provisions
of this Section 2.17 while such Lender Default remains in effect.

                  (b) Advances shall be incurred pro rata from Lenders (the
"Non-Defaulting Lenders") which are not Defaulting Lenders based on their
respective Commitment Percentages, and no Commitment Percentage of any Lender or
any pro rata share of any Advances required to be advanced by any Lender shall
be increased as a result of such Lender Default. Amounts received in respect of
principal of any type of Advances shall be applied to reduce the applicable
Advances of each Lender pro rata based on the aggregate of the outstanding
Advances of that type of all Lenders at the time of such application; provided,
that, such amount shall not be applied to any Advances of a Defaulting Lender at
any time when, and to the extent that, the aggregate amount of Advances of any
Non-Defaulting Lender exceeds such Non-Defaulting Lender's Commitment Percentage
of all Advances then outstanding.

                  (c) A Defaulting Lender shall not be entitled to give
instructions to Agent or to approve, disapprove, consent to or vote on any
matters relating to this Agreement and the Other Documents. All amendments,
waivers and other modifications of this Agreement and the Other Documents may be
made without regard to a Defaulting Lender and, for purposes of the definition
of "Required Lenders", a Defaulting Lender shall be deemed not to be a Lender
and not to have Advances outstanding.

                  (d) Other than as expressly set forth in this Section 2.17,
the rights and obligations of a Defaulting Lender (including the obligation to
indemnify Agent) and the other parties hereto shall remain unchanged. Nothing in
this Section 2.17 shall be deemed to release any Defaulting Lender from its
obligations under this Agreement and the Other Documents, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which Borrower, Agent or any Lender may
have against any Defaulting Lender as a result of any default by such Defaulting
Lender hereunder.


<PAGE>


                  (e) In the event a Defaulting Lender retroactively cures to
the satisfaction of Agent the breach which caused a Lender to become a
Defaulting Lender, such Defaulting Lender shall no longer be a Defaulting Lender
and shall be treated as a Lender under this Agreement.


III.     INTEREST AND FEES.

         3.1. Interest. Interest on Advances shall be payable in arrears on the
last day of each month with respect to Domestic Rate Loans and, with respect to
Eurodollar Rate Loans, at the end of each Interest Period. Interest charges
shall be computed on the actual principal amount of Advances outstanding during
the month (the "Monthly Advances") at a rate per annum equal to (i) with respect
to Revolving Advances, the Revolving Interest Rate and (ii) with respect to the
Acquisition Term Loan, the Acquisition Term Loan Rate (as applicable, the
"Contract Rate"). Whenever, subsequent to the date of this Agreement, the Base
Rate is increased or decreased, the applicable Contract Rate for Domestic Rate
Loans shall be similarly changed without notice or demand of any kind by an
amount equal to the amount of such change in the Base Rate during the time such
change or changes remain in effect. The Eurodollar Rate shall be adjusted with
respect to Eurodollar Rate Loans without notice or demand of any kind on the
effective date of any change in the Reserve Percentage as of such effective
date. Upon and after the occurrence of an Event of Default, and during the
continuation thereof, the Obligations shall bear interest at the applicable
Contract Rate plus two (2%) percent per annum, (the "Default Rate").

         3.2. Letter of Credit Fees.

                  (a) Borrower shall pay (x) to Agent, for the benefit of
Lenders, fees for each Letter of Credit for the period from and excluding the
date of issuance of same to and including the date of expiration or termination,
equal to the average daily face amount of each outstanding Letter of Credit
multiplied by two percent (2%) per annum with respect to Standby Letters of
Credit and by one-half of one percent (1/2%) with respect to Documentary Letters
of Credit, such fees to be calculated on the basis of a 360-day year for the
actual number of days elapsed and to be payable monthly in arrears on the first
day of each month and on the last day of the Term and (y) to the Issuer, any and
all customary fees and expenses as agreed upon by the Issuer and the Borrower in
connection with any Letter of Credit, including, without limitation, in
connection with the opening, amendment or renewal of any such Letter of Credit
and any acceptances created thereunder and shall reimburse Agent for any and all
customary fees and expenses, if any, paid by Agent to the Issuer (all of the
foregoing fees, the "Letter of Credit Fees"). All such charges shall be deemed
earned in full on the date when the same are due and payable hereunder and shall
not be subject to rebate or proration upon the termination of this Agreement for
any reason. Any such charge in effect at the time of a particular transaction
shall be the charge for that transaction, notwithstanding any subsequent change
in the Issuer's prevailing charges for that type of transaction.

         3.3. Facility Fee. If, for any month during the Term, the average daily
unpaid balance of the Advances for each day of such month does not equal the
Maximum Loan Amount, then Borrower shall pay to Agent for the ratable benefit of
Lenders a fee at a rate equal to 3/8 of one percent (3/8%) per annum on the
amount by which the Maximum Loan Amount exceeds such average daily unpaid
balance. Such fee shall be payable to Agent in arrears on the last day of each
month.

         3.4 Fee Letter. The Borrower shall pay to the Agent all fees set forth
in the Fee Letter.

         3.5. Computation of Interest and Fees. Interest and fees hereunder
shall be computed on the basis of a year of 360 days and for the actual number
of days elapsed. If any payment to be made hereunder becomes due and payable on
a day other than a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and interest thereon shall be payable at the
applicable Contract Rate during such extension.

         3.6. Maximum Charges. In no event whatsoever shall interest and other
charges charged hereunder exceed the highest rate permissible under law. In the
event interest and other charges as computed hereunder would otherwise exceed
the highest rate permitted under law, such excess amount shall be first applied
to any unpaid principal balance


<PAGE>


owed by Borrower, and if the then remaining excess amount is greater than the
previously unpaid principal balance, Lenders shall promptly refund such excess
amount to Borrower and the provisions hereof shall be deemed amended to provide
for such permissible rate.

         3.7. Increased Costs. In the event that any new applicable law, treaty
or governmental regulation, or any change in any new or existing law, treaty,
regulation or directive or in the interpretation or application thereof, or
compliance by any Lender (for purposes of this Section 3.7, the term "Lender"
shall include Agent or any Lender and any corporation or bank controlling Agent
or any Lender) and the office or branch where Agent or any Lender (as so
defined) makes or maintains any Eurodollar Rate Loans with any request or
directive (whether or not having the force of law) from any central bank or
other financial, monetary or other authority, shall:

                  (a) subject Agent or any Lender to any tax of any kind
whatsoever with respect to this Agreement or any Other Document or change the
basis of taxation of payments to Agent or any Lender of principal, fees,
interest or any other amount payable hereunder or under any Other Documents
(except for changes in the rate of tax on the net income of Agent or any Lender
by any jurisdiction in which it maintains its principal office);

                  (b) impose, modify or hold applicable any reserve, special
deposit, assessment or similar requirement against assets held by, or deposits
in or for the account of, advances or loans by, or other credit extended by, any
office of Agent or any Lender, including (without limitation) pursuant to
Regulation D of the Board of Governors of the Federal Reserve System; or

                  (c) impose on Agent or any Lender or the London interbank
Eurodollar market any other condition with respect to this Agreement or any
Other Document;

and the result of any of the foregoing is to increase the cost to Agent or any
Lender of making, renewing or maintaining its Advances hereunder by an amount
that Agent or such Lender reasonably deems to be material or to reduce the
amount of any payment (whether of principal, interest or otherwise) in respect
of any of the Advances by an amount that Agent or such Lender reasonably deems
to be material, then, in any case Borrower shall promptly pay Agent or such
Lender, upon its demand, such additional amount as will compensate Agent or such
Lender for such additional cost or such reduction, as the case may be. Agent or
such Lender shall certify the amount of such additional cost or reduced amount
to Borrower, and such certification shall be presumptive evidence absent
manifest error.

         3.8. Basis For Determining Interest Rate Inadequate or Unfair. In the
event that Agent or any Lender shall have determined that:

                  (a) reasonable means do not exist for ascertaining the
Eurodollar Rate applicable pursuant to Section 2.3 hereof for any Interest
Period; or

                  (b) Dollar deposits in the relevant amount and for the
relevant maturity are not available in the London interbank Eurodollar market,
with respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate
Loan, or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate
Loan;

then Agent shall give Borrower prompt written, telephonic or telegraphic notice
of such determination. If such notice is given, (i) any such requested
Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrower
shall notify Agent no later than 10:00 a.m. (New York City time) two (2)
Business Days prior to the date of such proposed borrowing, that its request for
such borrowing shall be canceled or made as an unaffected type of Eurodollar
Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have
been converted to an affected type of Eurodollar Rate Loan shall be continued as
or converted into a Domestic Rate Loan, or, if Borrower shall notify Agent, no
later than 10:00 a.m. (New York City time) two (2) Business Days prior to the
proposed conversion, shall be maintained as an unaffected type of Eurodollar
Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans shall be
converted into a Domestic Rate Loan, or, if Borrower shall notify Agent, no
later than 10:00 a.m. (New York City time) two (2) Business Days prior to the
last Business Day of the then current Interest Period applicable to such
affected Eurodollar


<PAGE>


Rate Loan, shall be converted into an unaffected type of Eurodollar Rate Loan,
on the last Business Day of the then current Interest Period for such affected
Eurodollar Rate Loans. Until such notice has been withdrawn, Lenders shall have
no obligation to make an affected type of Eurodollar Rate Loan or maintain
outstanding affected Eurodollar Rate Loans and Borrower shall have the right to
convert a Domestic Rate Loan or an unaffected type of Eurodollar Rate Loan into
an affected type of Eurodollar Rate Loan.

         3.9. Capital Adequacy.

                  (a) In the event that Agent or any Lender shall have
determined that any new applicable law, rule, regulation or guideline regarding
capital adequacy, or any change in any new or existing law, rule, regulation or
guideline regarding capital adequacy, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Agent or any Lender (for purposes of this Section 3.9, the term "Lender"
shall include Agent or any Lender and any corporation or bank controlling Agent
or any Lender) and the office or branch where Agent or any Lender (as so
defined) makes or maintains any Eurodollar Rate Loans with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on Agent or any Lender's capital as a
consequence of its obligations hereunder to a level below that which Agent or
such Lender could have achieved but for such adoption, change or compliance
(taking into consideration Agent's and each Lender's policies with respect to
capital adequacy) by an amount reasonably deemed by Agent or any Lender to be
material, then, from time to time, Borrower shall pay upon demand to Agent or
such Lender such additional amount or amounts as will compensate Agent or such
Lender for such reduction. In determining such amount or amounts, Agent or such
Lender may use any reasonable averaging or attribution methods. The protection
of this Section 3.9 shall be available to Agent and each Lender regardless of
any possible contention of invalidity or inapplicability with respect to the
applicable law, regulation or condition.

                  (b) A certificate of Agent or such Lender setting forth such
amount or amounts as shall be necessary to compensate Agent or such Lender with
respect to Section 3.9(a) hereof when delivered to Borrower shall be presumptive
evidence absent manifest error.


IV.      COLLATERAL AND GUARANTY:  GENERAL TERMS

         4.1. Security Interest in the Collateral. To secure the prompt payment
and performance to Agent and each Lender of the Obligations, each Obligor hereby
assigns, pledges and grants to Agent for the ratable benefit of each Lender a
continuing security interest in and to all of its Collateral, whether now owned
or existing or hereafter acquired or arising and wheresoever located. Each
Obligor shall mark its books and records as may be necessary or appropriate to
evidence, protect and perfect Agent's security interest and shall cause its
financial statements to reflect such security interest.

         4.2. Perfection of Security Interest. Each Obligor shall take all
action that may be necessary or desirable, or that Agent may request, so as at
all times to maintain the validity, perfection, enforceability and priority of
Agent's security interest in the Collateral or to enable Agent to protect,
exercise or enforce its rights hereunder and in the Collateral, including, but
not limited to, (i) immediately discharging all Liens other than Permitted
Encumbrances, (ii) obtaining landlords' or mortgagees' lien waivers, (iii)
delivering to Agent, endorsed or accompanied by such instruments of assignment
as Agent may specify, and stamping or marking, in such manner as Agent may
specify, any and all chattel paper, instruments, letters of credits and advices
thereof and documents evidencing or forming a part of the Collateral, (iv)
entering into warehousing, lockbox and other custodial arrangements satisfactory
to Agent, and (v) executing and delivering financing statements, instruments of
pledge, mortgages with respect to Collateral, notices and assignments, in each
case in form and substance reasonably satisfactory to Agent, relating to the
creation, validity, perfection, maintenance or continuation of Agent's security
interest under the Uniform Commercial Code or other applicable law. Agent is
hereby authorized to file financing statements signed by Agent instead of
Borrower in accordance with Section 9-402(2) of Uniform Commercial Code as
adopted in the State of New Jersey. All charges, expenses and fees Agent may


<PAGE>


incur in doing any of the foregoing, and any local taxes relating thereto, shall
be charged to Borrower's Account as a Revolving Advance of a Domestic Rate Loan
and added to the Obligations, or, at Agent's option, shall be paid to Agent for
the ratable benefit of Lenders immediately upon demand.

         4.3. Disposition of Collateral. Each Obligor will safeguard and protect
all Collateral for Agent's general account and make no disposition thereof
whether by sale, lease or otherwise except the sale of Inventory in the ordinary
course of business.

         4.4. Preservation of Collateral. In addition to the rights and remedies
set forth in Section 11.1 hereof, Agent, to the extent the Agent deems it
reasonably necessary to protect the Agent's interest in and to preserve the
Collateral: (a) may hire of such security guards or place other security
protection measures as Agent may deem reasonably appropriate; (b) may employ and
maintain at any Obligor's premises a custodian who shall have full authority to
do all acts necessary to protect Agent's interests in the Collateral; (c) may
lease warehouse facilities to which Agent may move all or part of the
Collateral; (d) may use any Obligor's owned or leased lifts, hoists, trucks and
other facilities or equipment for handling or removing the Collateral; and (e)
shall have, and is hereby granted, a right of ingress and egress to the places
where the Collateral is located, and may proceed over and through any of
Obligor's owned or leased property. Each Obligor shall cooperate fully with
Agent's efforts to preserve the Collateral and will take such actions to
preserve the Collateral as Agent may reasonably direct. All of Agent's expenses
of preserving the Collateral, including any expenses relating to the bonding of
a custodian, shall be charged to Obligor's Account as a Revolving Advance of a
Domestic Rate Loan and added to the Obligations.

         4.5. Ownership of Collateral. With respect to the Collateral, at the
time the Collateral becomes subject to Agent's security interest: (a) each
Obligor shall be the sole owner of and fully authorized and able to sell,
transfer, pledge and/or grant a first priority security interest in each and
every item of the its respective Collateral to Agent, subject to Permitted
Encumbrances, and, except for Permitted Encumbrances, the Collateral shall be
free and clear of all Liens and encumbrances whatsoever; (b) each document and
agreement executed by each Obligor or delivered to Agent or any Lender in
connection with this Agreement shall be true and correct in all material
respects; (c) all signatures and endorsements of each Obligor that appear on
such documents and agreements shall be genuine and each Obligor shall have full
capacity to execute same; and (d) each Obligor's Inventory shall be located as
set forth on Schedule 4.5 and shall not be removed from such location(s) without
prior written notice to Agent except with respect to the sale, manufacture or
processing of Inventory in the ordinary course of business, provided, however,
that no such removal shall be effected before all filings required to preserve
the first priority security interest of the Agent in the Inventory shall have
been made and landlord's waivers and/or warehousemen's waivers, in form and
substance satisfactory to the Agent, for such new locations shall have been
delivered to the Agent to the extent that such Inventory is to be considered
Eligible Inventory.

         4.6. Defense of Agent's and Lenders' Interests. Until (a) payment and
satisfaction in full of all payment Obligations (whether in the form of
principal, interest, reimbursement obligations, fees, charges, expenses,
penalties or otherwise) with the exception of indemnification obligations
arising under this Agreement for which no claim subject thereto has been made
and has not been terminated, satisfied released or withdrawn and (b) termination
of this Agreement, Agent's interests in the Collateral shall continue in full
force and effect. During such period no Obligor shall, without Agent's prior
written consent, pledge, sell (except Inventory in the ordinary course of
business to the extent permitted in Section 4.3 hereof), assign, transfer,
create or suffer to exist a Lien upon or encumber or allow or suffer to be
encumbered in any way except for Permitted Encumbrances, any part of the
Collateral. Each Obligor shall defend Agent's interests in the Collateral
against any and all Persons whatsoever. At any time following demand by Agent in
accordance with the terms hereof for payment of all Obligations, Agent shall
have the right to take possession of the indicia of the Collateral and the
Collateral in whatever physical form contained, including without limitation:
labels, stationery, documents, instruments and advertising materials. If Agent
exercises this right to take possession of the Collateral, Obligors shall, upon
demand, assemble it in the best manner possible and make it available to Agent
at a place reasonably convenient to Agent. In addition, with respect to all
Collateral, Agent and Lenders shall be entitled to all of the rights and
remedies set forth herein and further provided by the Uniform Commercial Code or
other applicable law. Each Obligor shall, and Agent may, at its option, instruct
all suppliers, carriers, forwarders, warehouses or others


<PAGE>


receiving or holding cash, checks, Inventory, documents or instruments in which
Agent holds a security interest to deliver same to Agent and/or subject to
Agent's order and if they shall come into any Obligor's possession, they, and
each of them, shall be held by such Borrower in trust as Agent's trustee, and
such Obligor will immediately deliver them to Agent in their original form
together with any necessary endorsement.

         4.7. Books and Records. Each Obligor shall (a) keep proper books of
record and account in which full, true and correct entries will be made of all
dealings or transactions of or in relation to its business and affairs; (b) set
up on its books accruals with respect to all taxes, assessments, charges, levies
and claims; and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables, advances and investments and
all other proper accruals (including without limitation by reason of
enumeration, accruals for premiums, if any, due on required payments and
accruals for depreciation, obsolescence, or amortization of properties), which
should be set aside from such earnings in connection with its business. All
determinations pursuant to this subsection shall be made in accordance with, or
as required by, GAAP consistently applied in the opinion of such independent
public accountant as shall then be regularly engaged by Obligors.

         4.8. Financial Disclosure. Each Obligor hereby irrevocably authorizes
and directs all accountants and auditors employed by such Obligor at any time
during the Term to exhibit and deliver to Agent and each Lender, at the request
of Agent and/or such Lenders, copies of any of any Obligor's financial
statements, trial balances or other accounting records of any sort in the
accountant's or auditor's possession, and to disclose to Agent and each Lender
any information such accountants may have concerning such Obligor's financial
status and business operations. Each Obligor hereby authorizes all federal,
state and municipal authorities to furnish to Agent and each Lender copies of
reports or examinations relating to such Obligor, whether made by such Obligor
or otherwise; however, Agent and each Lender will attempt to obtain such
information or materials directly from such Obligor prior to obtaining such
information or materials from such accountants or such authorities.

         4.9. Compliance with Laws. Each Obligor shall comply with all acts,
rules, regulations and orders of any legislative, administrative or judicial
body or official applicable to its respective Collateral or any part thereof or
to the operation of such Borrower's business the non-compliance with which could
reasonably be expected to have a Material Adverse Effect. The Collateral at all
times shall be maintained in accordance with the requirements of all insurance
carriers which provide insurance with respect to the Collateral so that such
insurance shall remain in full force and effect.

         4.10. Inspection of Premises. At all reasonable times Agent and each
Lender shall have full access to and the right to audit, check, inspect and make
abstracts and copies from each Obligor's books, records, audits, correspondence
and all other papers relating to the Collateral and the operation of each
Obligor's business. Agent, any Lender and their agents may enter upon any of
Obligor's premises at any time during business hours and at any other reasonable
time, and from time to time, for the purpose of inspecting the Collateral and
any and all records pertaining thereto and the operation of such Obligor's
business.

         4.11. Insurance. Each Obligor shall bear the full risk of any loss of
any nature whatsoever with respect to the Collateral. At each Obligor's own cost
and expense in amounts and with carriers reasonably acceptable to Agent, each
Borrower shall (a) keep all its material insurable properties and properties in
which each Obligor has an interest insured against the hazards of fire, flood
(where customary or if required by law), sprinkler leakage, those hazards
covered by extended coverage insurance and such other hazards, and for such
amounts, as is customary in the case of companies engaged in businesses similar
to such Obligor's including, without limitation, business interruption
insurance;, (b) maintain a bond in such amounts as is customary in the case of
companies engaged in businesses similar to such Obligor insuring against
larceny, embezzlement or other criminal misappropriation of insured's officers
and employees who may either singly or jointly with others at any time have
access to the assets or funds of such Obligor either directly or through
authority to draw upon such funds or to direct generally the disposition of such
assets; (c) maintain public and product liability insurance against claims for
personal injury, death or property damage suffered by others as is customary in
the case of entities engaged in businesses similar to such Obligor; (d) maintain
all such worker's compensation or similar insurance as may be required under the
laws of any state or jurisdiction in which such Obligor is engaged in business;
(e) furnish Agent with (i) copies of all policies and evidence of the
maintenance of such policies by the renewal


<PAGE>


thereof at least thirty (30) days before any expiration date, and (ii)
appropriate loss payable endorsements in form and substance reasonably
satisfactory to Agent, naming Agent as lender loss payee with respect to all
insurance coverage referred to in clause (a) above as it relates to the
Collateral and an additional insured with respect to all insurance coverage
referred to in clause (c) above, and providing (A) that all proceeds thereunder
(except proceeds of insurance referred to in clause (a) above not relating to
the Collateral, proceeds of insurance referred to in clause (a) above relating
to the Collateral to the extent said proceeds are less than $50,000 and proceeds
of insurance referred to in clause (c) provided said proceeds are paid to the
party seeking damages such that neither the Agent nor any Lender shall have any
liability to said party) shall be payable to Agent, (B) no such insurance shall
be affected by any act or neglect of the insured or owner of the property
described in such policy, and (C) that such policy and lender loss payable and
additional insured clauses may not be canceled, amended or terminated unless at
least thirty (30) days' prior written notice is given to Agent. Except as
provided for in (A) above, in the event of any loss or claim the carriers named
therein hereby are directed by Agent and the applicable Obligor to make payment
for such loss to Agent and not to such Obligor and Agent jointly. If any such
insurance losses are paid by check, draft or other instrument payable to any
Obligor and Agent jointly, Agent may endorse such Obligor's name thereon and do
such other things as Agent may deem advisable to reduce the same to cash. Agent
is hereby authorized to adjust and compromise claims under insurance coverage
referred to in clauses (a) and (b) above. Except as hereinafter provided, all
loss recoveries received by Agent upon any Collateral may be applied to the
Obligations, in such order as Agent in its sole discretion shall determine. Any
surplus shall be paid by Agent to Obligors or applied as may be otherwise
required by law. Any deficiency thereon shall be paid by Obligors to Agent, on
demand.

         4.12. Failure to Pay Insurance. If any Obligor fails to obtain
insurance as hereinabove provided, or to keep the same in force, Agent, if Agent
so elects, may obtain such insurance and pay the premium therefor on behalf of
Borrower, and charge Obligors' Account therefor as a Revolving Advance of a
Domestic Rate Loan and such expenses so paid shall be part of the Obligations.

         4.13. Payment of Taxes. Each Obligor will pay, when due, all taxes,
assessments and other Charges lawfully levied or assessed upon such Obligor or
any of the Collateral including, without limitation, real and personal property
taxes, assessments and charges and all franchise, income, employment, social
security benefits, withholding, and sales taxes, except if being contested in
good faith and by appropriate proceedings and with respect to which proper
reserves have been taken by the Obligors. If any tax by any governmental
authority is or may be imposed on or as a result of any transaction between any
Obligor and Agent or any Lender which Agent or any Lender may be required to
withhold or pay or if any taxes, assessments, or other Charges remain unpaid
after the date fixed for their payment, or if any claim shall be made which, in
Agent's or any Lender's reasonable opinion, may create a valid Lien on the
Collateral, Agent may without notice to Obligors pay the taxes, assessments or
other Charges and each Obligor hereby indemnifies and holds Agent and each
Lender harmless in respect thereof. Agent will not pay any taxes, assessments or
Charges to the extent that any Obligor has contested or disputed those taxes,
assessments or Charges in good faith, by expeditious protest, administrative or
judicial appeal or similar proceeding provided that any related tax lien is
stayed and sufficient reserves are established to the reasonable satisfaction of
Agent to protect Agent's security interest in or Lien on the Collateral. The
amount of any payment by Agent under this Section 4.13 shall be charged to
Borrower's Account as a Revolving Advance and added to the Obligations and,
until Borrower shall furnish Agent with an indemnity therefor (or supply Agent
with evidence satisfactory to Agent that due provision for the payment thereof
has been made), Agent may hold without interest any balance standing to
Borrower's credit and Agent shall retain its security interest in any and all
Collateral held by Agent.

         4.14. Payment of Leasehold Obligations. Each Obligor shall at all times
pay, when and as due, its rental obligations under all leases under which it is
a tenant, and shall otherwise comply, in all material respects, with all other
terms of such leases and keep them in full force and effect and, at Agent's
request will provide evidence of having done so, where the failure to so pay,
comply or keep in full force and effect could reasonably be expected to have a
Material Adverse Effect.


<PAGE>


         4.15. Receivables.

                  (a) Nature of Receivables. Each of the Eligible Receivables
shall be a bona fide and valid account representing a bona fide Indebtedness
incurred by the Customer therein named, for a fixed sum as set forth in the
invoice relating thereto (provided immaterial or unintentional invoice errors
shall not be deemed to be a breach hereof) with respect to an absolute sale or
lease and delivery of goods upon stated terms of a Obligor, or work, labor or
services theretofore rendered by a Obligor as of the date each Receivable is
created. Same shall be due and owing in accordance with the applicable Obligor's
standard terms of sale without dispute, setoff or counterclaim except as may be
stated on the accounts receivable schedules delivered by Obligors to Agent.

                  (b) Solvency of Customers. Each Customer, to the best of each
Obligor's knowledge, as of the date each Eligible Receivable is created, is and
is expected to be solvent and able to pay all Eligible Receivables on which the
Customer is obligated in full when due or with respect to such Customers of any
Obligor who are not solvent such Obligor has set up on its books and in its
financial records bad debt reserves adequate to cover such Receivables in
accordance with GAAP.

                  (c) Locations of Borrower. Each Obligor's chief executive
office is located at the addresses set forth on Schedule 4.15(c) hereto. Until
written notice is given to Agent by Borrower of any Other Billing Location at
which any Obligor keeps its records pertaining to Receivables, all such records
shall be kept at such executive office. No Obligor shall change its chief
executive office or Other Billing Location without prior written notice to the
Agent, provided, however, that no such change shall be effected before all
filings required to preserve the first priority security interest of the Agent
in the Collateral shall have been made and landlord waivers and/or
warehousemen's waivers, as the case may be, in form and substance reasonably
satisfactory to the Agent, for such new location shall have been delivered to
the Agent.

                  (d) Collection of Receivables. Until any Obligor's authority
to do so is terminated by Agent (which notice Agent may give at any time
following the occurrence of an Event of Default or a Default or when Agent in
its reasonable discretion deems it to be in Lenders' best interest to do so),
each Obligor will, at such Obligor's sole cost and expense, but on Agent's
behalf and for Agent's account, collect as Agent's property and in trust for
Agent all amounts received on Receivables, and shall not commingle such
collections with any Obligor's funds or use the same except to pay Obligations.
Each Obligor shall, upon request, deliver to Agent, or deposit in the Blocked
Account, in original form and on the date of receipt thereof, all checks,
drafts, notes, money orders, acceptances, cash and other evidences of
Indebtedness received in respect of Receivables.

                  (e) Notification of Assignment of Receivables. Agent shall
have the right (at any time following the occurrence and during the continuance
of an Event of Default or a Default or when Agent in its reasonable discretion
deems it to be in Lenders' best interest to do so) to send notice of the
assignment of, and Agent's security interest in, the Receivables to any and all
Customers or any third party holding or otherwise concerned with any of the
Collateral. Thereafter, Agent shall have the sole right to collect the
Receivables, take possession of the Collateral, or both. Agent's actual
collection expenses, including, but not limited to, stationery and postage,
telephone and telegraph, secretarial and clerical expenses and the salaries of
any collection personnel used for collection, may be charged to Borrowers'
Account and added to the Obligations.

                  (f) Power of Agent to Act on Obligors' Behalf. Agent shall
have the right to receive, endorse, assign and/or deliver in the name of Agent
or any Obligor any and all checks, drafts and other instruments for the payment
of money relating to the Receivables, and each Obligor hereby waives notice of
presentment, protest and non-payment of any instrument so endorsed. Each Obligor
hereby constitutes Agent or Agent's designee as such Obligor's attorney with
power (i) to endorse such Obligor's name upon any notes, acceptances, checks,
drafts, money orders or other evidences of payment or Collateral; (ii) to sign
such Obligor's name on any invoice or bill of lading relating to any of the
Receivables, drafts against Customers, assignments and verifications of
Receivables; (iii) to send verifications of Receivables to any Customer; (iv) to
sign such Obligor's name on all financing statements or any other documents or
instruments deemed necessary or appropriate by Agent to preserve, protect, or
perfect Agent's interest in


<PAGE>


the Collateral and to file same; (v) to demand payment of the Receivables; (vi)
to enforce payment of the Receivables by legal proceedings or otherwise; (vii)
to exercise all of Borrowers' rights and remedies with respect to the collection
of the Receivables and any other Collateral; (viii) to settle, adjust,
compromise, extend or renew the Receivables; (ix) to settle, adjust or
compromise any legal proceedings brought to collect Receivables; (x) to prepare,
file and sign such Obligor's name on a proof of claim in bankruptcy or similar
document against any Customer; (xi) to prepare, file and sign such Obligor's
name on any notice of Lien, assignment or satisfaction of Lien or similar
document in connection with the Receivables; and (xii) to do all other acts and
things necessary to carry out this Agreement; provided that with respect to
items (v) through (xii) above, said power shall be exercised by the Agent at any
time following the occurrence and during the continuance of an Event of Default
or a Default or when Agent in its reasonable discretion deems it to be in the
Lenders' best interests to do so. No power of Attorney shall be utilized by the
Agent in a manner contrary to the foregoing provisions. All acts of said
attorney or designee are hereby ratified and approved, and said attorney or
designee shall not be liable for any acts of omission or commission nor for any
error of judgment or mistake of fact or of law, unless done maliciously or with
gross (not mere) negligence; this power being coupled with an interest is
irrevocable while any of the Obligations remain unpaid. Agent shall have the
right at any time to change the address for delivery of mail addressed to any
Obligor to such address as Agent may designate and to receive, open and dispose
of all mail addressed to any Obligor.

                  (g) No Liability. Neither Agent nor any Lender shall, under
any circumstances or in any event whatsoever, have any liability for any error
or omission or delay of any kind occurring in the settlement, collection or
payment of any of the Receivables or any instrument received in payment thereof,
or for any damage resulting therefrom. Agent may, without notice or consent from
any Obligor, sue upon or otherwise collect, extend the time of payment of,
compromise or settle for cash, credit or upon any terms any of the Receivables
or any other securities, instruments or insurance applicable thereto and/or
release any obligor thereof. At any time following the occurrence and during an
Event of Default or a Default or when Agent in its reasonable discretion deems
it to be in the Lenders' best interest to do so, Agent is authorized and
empowered to accept the return of the goods represented by any of the
Receivables, without notice to or consent by any Obligor, all without
discharging or in any way affecting any Borrower's liability hereunder.

                  (h) Establishment of a Lockbox Account, Dominion Account. All
proceeds of Collateral shall, at the direction of Agent, be deposited by
Obligors into a lockbox account, dominion account or such other "blocked
account" maintained with the Agent ("Blocked Accounts"). All funds deposited in
such "blocked account" shall immediately become the property of Agent. Neither
Agent nor any Lender assumes any responsibility for such "blocked account"
arrangement, including without limitation, any claim of accord and satisfaction
or release with respect to deposits accepted by any bank thereunder.
Alternatively, notwithstanding the foregoing, until such time as the Undrawn
Availability is less than $10,000,000 or an Event of Default has occurred, the
Borrower shall establish with the Agent (i) its primary operating accounts
("Operating Accounts") and (ii) depository accounts ("Depository Accounts") and
Obligors shall deposit all proceeds of Collateral or cause same to be deposited,
in kind, in such Depository Accounts.

                  (i) Adjustments. No Obligor will, without Agent's consent,
compromise or adjust any Receivables (or extend the time for payment thereof) or
accept any returns of merchandise or grant any additional discounts, allowances
or credits thereon except for those compromises, adjustments, returns,
discounts, credits and allowances as have been heretofore customary in the
business of such Obligor.

         4.16. Inventory. To the extent Inventory held for sale or lease has
been produced by any Obligor, it has been and will be produced by such Obligor
materially in accordance with the Federal Fair Labor Standards Act of 1938, as
amended, and all rules, regulations and orders thereunder.

         4.17. Maintenance of Equipment. The Equipment shall be maintained in
good operating condition and repair (reasonable wear and tear excepted) and all
necessary replacements of and repairs thereto shall be made so that all
Equipment materially necessary for each Obligor to properly operate and conduct
its business shall be maintained and preserved in all material respects. No
Obligor shall use or operate the Equipment in violation of any law, statute,
ordinance, code, rule or regulation where such use or operation could reasonably
be expected have a Material Adverse


<PAGE>


Effect. Each Obligor shall have the right to sell Equipment in the ordinary
course of its business so long as the sale of such Equipment could not
reasonably be expected to have a Material Adverse Effect.

         4.18. Exculpation of Liability. Nothing herein contained shall be
construed to constitute Agent or any Lender as any Obligor's agent for any
purpose whatsoever, nor shall Agent or any Lender be responsible or liable for
any shortage, discrepancy, damage, loss or destruction of any part of the
Collateral wherever the same may be located and regardless of the cause thereof.
Neither Agent nor any Lender, whether by anything herein or in any assignment or
otherwise, assume any of any Obligor's obligations under any contract or
agreement assigned to Agent or such Lender, and neither Agent nor any Lender
shall be responsible in any way for the performance by any Obligor of any of the
terms and conditions thereof.

         4.19. Environmental Matters. (a) Except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect, Obligors
shall ensure that the Real Property remains in compliance in all material
respects with all Environmental Laws and they shall not place or permit to be
placed any Hazardous Substances on any Real Property except as not prohibited by
applicable law or appropriate governmental authorities.

                  (b) Except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect, Obligors shall establish and
maintain a system to assure and monitor continued compliance in all material
respects with all applicable Environmental Laws which system shall include
periodic reviews of such compliance.

                  (c) Except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect, obligors shall (i) employ in
connection with the use of the Real Property appropriate technology necessary to
maintain compliance with any applicable Environmental Laws and (ii) dispose of
any and all Hazardous Waste generated at the Real Property only at facilities
and with carriers that maintain valid permits under RCRA and any other
applicable Environmental Laws. Except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect, obligors shall use
their best efforts to obtain required certificates of disposal, such as
hazardous waste manifest receipts, from all treatment, transport, storage or
disposal facilities or operators employed by Obligors in connection with the
transport or disposal of any Hazardous Waste generated at the Real Property.

                  (d) In the event any Obligor obtains, gives or receives notice
of any Release or threat of Release of a reportable quantity of any Hazardous
Substances at the Real Property (any such event being hereinafter referred to as
a "Hazardous Discharge") or receives any notice of violation, request for
information or notification that it is potentially responsible for investigation
or cleanup of environmental conditions at the Real Property, demand letter or
complaint, order, citation, or other written notice with regard to any Hazardous
Discharge or violation of Environmental Laws affecting the Real Property or any
Obligor's interest therein (any of the foregoing is referred to herein as an
"Environmental Complaint") from any Person, including any state agency
responsible in whole or in part for environmental matters in the state in which
the Real Property is located or the United States Environmental Protection
Agency (any such person or entity hereinafter the "Authority"), and the facts
and circumstances surrounding such Hazardous Discharge or Environmental
Complaint could reasonably be expected to have a Material Adverse Effect, then
Borrower shall, within five (5) Business Days, give written notice of same to
Agent detailing facts and circumstances of which any Obligor is aware giving
rise to the Hazardous Discharge or Environmental Complaint. Such information is
not intended to create nor shall it create any obligation upon Agent or any
Lender with respect thereto.

                  (e) Obligors shall promptly forward to Agent copies of any
request for information, notification of potential liability, demand letter
relating to potential responsibility with respect to the investigation or
cleanup of Hazardous Substances which could be reasonably be expected to have a
Material Adverse Effect at any other site owned, operated or used by any Obligor
to dispose of Hazardous Substances and shall continue to forward copies of
correspondence between any Borrower and the Authority regarding such claims to
Agent until the claim is settled. Obligors shall promptly forward to Agent
copies of all documents and reports concerning a Hazardous Discharge at the Real
Property that any Borrower is required to file under any Environmental Laws
which could be reasonably be expected to have a Material Adverse Effect . Such
information is to be provided solely to allow Agent to protect Agent's security
interest in the Collateral.


<PAGE>


                  (f) Obligors shall respond promptly to any Hazardous Discharge
or Environmental Complaint ifthe facts and circumstances surrounding said
Hazardous Discharge or Environmental Complaint could reasonably be expected to
have a Material Adverse Effect and take all necessary action in order to
safeguard the health of any Person and to avoid subjecting the Collateral or
Real Property to any Lien (other than Permitted Encumbrances). If any Obligor
shall fail to respond promptly to any Hazardous Discharge or Environmental
Complaint and the facts and circumstances surrounding said Hazardous Discharge
or Environmental Complaint could reasonably be expected to have a Material
Adverse Effect or any Obligor shall fail to comply with any of the requirements
of any Environmental Laws and failure could reasonably be expected to have a
Material Adverse Effect, Agent on behalf of Lenders may, but without the
obligation to do so, for the sole purpose of protecting Agent's interest in
Collateral: (A) give such notices or (B) enter onto the Real Property (or
authorize third parties to enter onto the Real Property) and take such actions
as Agent (or such third parties as directed by Agent) deem reasonably necessary
or advisable, to clean up, remove, mitigate or otherwise deal with any such
Hazardous Discharge or Environmental Complaint. All reasonable costs and
expenses incurred by Agent and Lenders (or such third parties) in the exercise
of any such rights, including any sums paid in connection with any judicial or
administrative investigation or proceedings, fines and penalties, together with
interest thereon from the date expended at the Default Rate for Domestic Rate
Loans constituting Revolving Advances shall be paid upon demand by Borrower, and
until paid shall be added to and become a part of the Obligations secured by the
Liens created by the terms of this Agreement or any other agreement between
Agent, any Lender and any Obligor.

                  (g) Promptly upon the written request of Agent and after the
occurrence of a Default, Obligors shall provide Agent, at Obligors' expense,
with an environmental site assessment or environmental audit report prepared by
an environmental engineering firm acceptable in the reasonable opinion of Agent,
to assess with a reasonable degree of certainty the existence of a Hazardous
Discharge and the potential costs in connection with abatement, cleanup and
removal of any Hazardous Substances found on, under, at or within the Real
Property. Any report or investigation of such Hazardous Discharge proposed and
acceptable to an appropriate Authority that is charged to oversee the clean-up
of such Hazardous Discharge shall be acceptable to Agent. Except with respect to
the amounts and locations disclosed on Schedule 4.19(g) hereof, if such
estimates, individually or in the aggregate, exceed $1,000,000, Agent shall have
the right to require Obligors to post a bond, letter of credit or other security
reasonably satisfactory to Agent to secure payment of these costs and expenses.

                  (h) Obligors shall defend and indemnify Agent and Lenders and
hold Agent, Lenders and their respective employees, agents, directors and
officers harmless from and against all loss, liability, damage and expense,
claims, costs, fines and penalties, including attorney's fees, suffered or
incurred by Agent or Lenders under or on account of any Environmental Laws,
including, without limitation, the assertion of any Lien thereunder, with
respect to any Hazardous Discharge, the presence of any Hazardous Substances
affecting the Real Property, whether or not the same originates or emerges from
the Real Property or any contiguous real estate, including any loss of value of
the Real Property as a result of the foregoing except to the extent such loss,
liability, damage and expense is attributable to any Hazardous Discharge
resulting from actions on the part of Agent or any Lender. Borrowers'
obligations under this Section 4.19 shall arise upon the discovery of the
presence of any Hazardous Substances at the Real Property, whether or not any
federal, state, or local environmental agency has taken or threatened any action
in connection with the presence of any Hazardous Substances. Obligors'
obligation and the indemnifications hereunder shall survive the termination of
this Agreement.

                  (i) For purposes of Section 4.19 and 5.7, all references to
Real Property shall be deemed to include all of Obligors' right, title and
interest in and to its owned and leased premises.

         4.20. Financing Statements. Except as respects the financing statements
filed by Agent and the financing statements described on Schedule 1.2, no
financing statement covering any of the Collateral or any proceeds thereof is on
file in any public office.

         4.21 Guaranty. The Guarantors shall guaranty the Obligations of the
Borrower and to secure said guaranty, shall assign, pledge and grant to the
Agent for the ratable benefit of each Lender a continuing security interest in
and to all of their Collateral, whether now owned or existing or hereafter
acquired or arising and wheresoever located.


<PAGE>


V.       REPRESENTATIONS AND WARRANTIES.

         Each Obligor represents and warrants as follows:

         5.1. Authority. Each Obligor has full power, authority and legal right
to enter into this Agreement and the Other Documents and to perform all its
respective Obligations hereunder and thereunder. The execution, delivery and
performance of this Agreement and of the Other Documents (a) are within such
Obligor's corporate powers, have been duly authorized, are not in contravention
of law or the terms of such Obligor's bylaws, certificate of incorporation or
other applicable documents relating to such Obligor's formation or to the
conduct of such Obligor's business or of any material agreement or undertaking
to which such Obligor is a party or by which such Obligor is bound, and (b) will
not conflict with nor result in any breach in any of the provisions of or
constitute a default under or result in the creation of any Lien except
Permitted Encumbrances upon any asset of such Obligor under the provisions of
any agreement, charter document, instrument, by-law, or other instrument to
which such Obligor or its property is a party or by which it may be bound.

         5.2. Formation and Qualification. (a) Each Obligor is duly incorporated
and in good standing (other than Inactive Subsidiaries) under the laws of the
state listed on Schedule 5.2(a) and is qualified to do business and is in good
standing in the states listed on Schedule 5.2(a) which constitute all states in
which qualification and good standing are necessary for such Obligor to conduct
its business and own its property and where the failure to so qualify could
reasonably be expected to have a Material Adverse Effect. Each Obligor has
delivered to Agent true and complete copies of its certificate of incorporation
and by-laws and will promptly notify Agent of any amendment or changes thereto.

                  (b) As of the date of this Agreement, the only Subsidiaries of
each Obligor are listed on Schedule 5.2(b). The Obligors shall supplement said
Schedule upon the formation of any new Subsidiaries, as permitted by the terms
hereof.

         5.3. Survival of Representations and Warranties. All representations
and warranties of such Obligor contained in this Agreement and the Other
Documents shall be true at the time of such Obligor's execution of this
Agreement and the Other Documents, and shall survive the execution, delivery and
acceptance thereof by the parties thereto and the closing of the transactions
described therein or related thereto.

         5.4. Tax Returns. Each Obligor's federal tax identification number is
set forth on Schedule 5.4. Each Borrower has filed all federal, state and local
tax returns and other material reports each is required by law to file and has
paid all taxes, assessments, fees and other governmental charges that are due
and payable. Federal, state and local income tax returns of each Obligor have
been examined and reported upon by the appropriate taxing authority or closed by
applicable statute and satisfied for all fiscal years prior to and including the
fiscal year ending June 30, 1997. The provision for taxes on the books of each
Obligor are adequate in all material respects for all years not closed by
applicable statutes, and for its current fiscal year, and no Borrower has any
knowledge of any material deficiency or additional material assessment in
connection therewith not provided for on its books.

         5.5. Financial Statements.

                  (a) The pro forma balance sheet of Obligors on a consolidated
and consolidating basis (the "Pro Forma Balance Sheet") heretofore furnished to
Agent reflects the consummation of the transactions contemplated under this
Agreement (the "Transactions") and fairly reflects the financial condition of
Obligors on a consolidated and consolidating basis as of the Closing Date after
giving effect to the Transactions, and has been prepared in accordance with
GAAP, consistently applied. The Pro Forma Balance Sheet has been certified as
fairly reflecting the financial condition of the Obligors, on behalf of the
Obligors by the Chief Financial Officer of Borrower. All financial statements
referred to in this subsection 5.5(a), including the related schedules and notes
thereto, have been prepared, in accordance with GAAP, except for the absence of
year-end and normal audit adjustments and notes thereto and as may be disclosed
in such financial statements.


<PAGE>


                  (b) The twelve-month cash flow projections of the Obligors on
a consolidated and consolidating basis and their projected balance sheets as of
the Closing Date, copies of which are annexed hereto as Exhibit 5.5(b) (the
"Projections") were prepared on behalf of the Obligors by the Chief Financial
Officer of Borrower, are based on underlying assumptions which are believed to
provide a reasonable basis for the projections contained therein and reflect
Obligors' judgment based on present circumstances of the most likely set of
conditions and course of action for the projected period. The cash flow
Projections together with the Pro Forma Balance Sheet, are referred to as the
"Pro Forma Financial Statements".

                  (c) The consolidated and consolidating balance sheets of the
Obligors, and such other Persons described therein as of December 31, 1997, and
the related statements of income, changes in stockholder's equity, and changes
in cash flow for the period ended on such date, all (except for consolidating
statements) accompanied by reports thereon containing opinions without
qualification by independent certified public accountants, copies of which have
been delivered to Agent, have been prepared in accordance with GAAP,
consistently applied (except for changes in application in which such
accountants concur and present fairly the financial position of the Obligors at
such date and the results of their operations for such period. Since December
31, 1997 there has been no change in the condition, financial or otherwise, of
Obligors as shown on the consolidated balance sheet as of such date and no
change in the aggregate value of machinery, equipment and Real Property owned by
Obligors, except changes in the ordinary course of business, none of which
individually or in the aggregate could reasonably be expected to have a Material
Adverse Effect.

         5.6. Corporate Name. No Obligor has been known by any other corporate
name in the past five years and does not sell Inventory under any other name
except as set forth on Schedule 5.6, nor has any Obligor been the surviving
corporation of a merger or consolidation or acquired all or substantially all of
the assets of any Person during the preceding five (5) years.

         5.7. O.S.H.A. and Environmental Compliance.

                  Except as disclosed on Schedule 5.7 hereto:

                  (a) Each Obligor has duly complied with, and its facilities,
business, assets, property, leaseholds and Equipment are in compliance in all
respects with, the provisions of the Federal Occupational Safety and Health Act,
the Environmental Protection Act, RCRA and all other Environmental Laws except
where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect; there have been no outstanding citations, notices or
orders of non-compliance issued to any Obligor or relating to its business,
assets, property, leaseholds or Equipment under any such laws, rules or
regulations except where the facts and circumstances surrounding said citations,
notices or notices could not reasonably be expected to have a Material Adverse
Effect.

                  (b) Each Obligor has been issued all required federal, state
and local licenses, certificates or permits relating to all applicable
Environmental Laws where the failure to be so issued could reasonably be
expected to have a Material Adverse Effect.

                  (c) (i) There are no visible signs of releases, spills,
discharges, leaks or disposal (collectively referred to as "Releases") of
Hazardous Substances at, upon, under or within any Real Property or any premises
leased by any Obligor where said Releases could reasonably be expected to have a
Material Adverse Effect; (ii) there are no underground storage tanks or
polychlorinated biphenyls on the Real Property or any premises leased by any
Obligor, except in all material respects in accordance with applicable laws;
(iii) neither the Real Property nor any premises leased by any Obligor have ever
been used as a treatment, storage or disposal facility of Hazardous Waste,
except in all material respects in accordance with applicable laws; and (iv) no
Hazardous Substances are present on the Real Property or any premises leased by
Borrower, excepting such quantities as are handled in accordance with all
applicable manufacturer's instructions and governmental regulations and in
proper storage containers and as are necessary for the operation of the
commercial business of any Obligor or of its tenants, except in each case where
the failure to do so could not reasonably be expected to have a Material Adverse
Effect.


<PAGE>


         5.8. Solvency; No Litigation, Violation, Indebtedness or Default.

                  (a) Obligors are solvent, able to pay their debts as they
mature, have capital sufficient to carry on their business and all businesses in
which they are about to engage, and (i) as of the Closing Date, the fair present
saleable value of their assets, calculated on a going concern basis, is in
excess of the amount of their liabilities and (ii) subsequent to the Closing
Date, the fair saleable value of their assets (calculated on a going concern
basis) will be in excess of the amount of their liabilities.

                  (b) Except as disclosed in Schedule 5.8(b), no Obligor has (i)
any pending or, to Obligors' knowledge, threatened litigation, arbitration,
actions or proceedings which involve the possibility of having a Material
Adverse Effect, and (ii) any liabilities nor Indebtedness for borrowed money
other than the Obligations.

                  (c) No Obligor is in violation of any applicable statute,
regulation or ordinance in any respect which could reasonably be expected to
have a Material Adverse Effect, nor is any Obligor in violation of any order of
any court, governmental authority or arbitration board or tribunal which could
reasonably be expected to have a Material Adverse Effect.

                  (d) No Obligor nor any member of the Controlled Group
maintains or contributes to any domestic Plan other than those listed on
Schedule 5.8(d) hereto. Except as set forth in Schedule 5.8(d), (i) no Plan has
incurred any "accumulated funding deficiency," as defined in Section 302(a)(2)
of ERISA and Section 412(a) of the Code, whether or not waived, and each Obligor
and each member of the Controlled Group has met all applicable minimum funding
requirements under Section 302 of ERISA in respect of each Plan, (ii) each Plan
which is intended to be a qualified plan under Section 401(a) of the Code as
currently in effect has been determined by the Internal Revenue Service to be
qualified under Section 401(a) of the Code and the trust related thereto is
exempt from federal income tax under Section 501(a) of the Code, (iii) no
Obligor nor any member of the Controlled Group has incurred any material
liability to the PBGC other than for the payment of premiums, and there are no
premium payments which have become due which are unpaid, (iv) no Plan has been
terminated by the plan administrator thereof nor by the PBGC, and there is no
occurrence which would cause the PBGC to institute proceedings under Title IV of
ERISA to terminate any Plan, (v) at this time, the current value of the assets
of each Plan exceeds the present value of the accrued benefits and other
liabilities of such Plan and no Obligor nor any member of the Controlled Group
knows of any facts or circumstances which would materially change the value of
such assets and accrued benefits and other liabilities, (vi) no Obligor nor any
member of the Controlled Group has breached any of the responsibilities,
obligations or duties imposed on it by ERISA with respect to any Plan, (vii) no
Obligor nor any member of a Controlled Group has incurred any significant
liability for any excise tax arising under Section 4972 or 4980B of the Code,
and no fact exists which could give rise to any such liability, (viii) no
Obligor nor any member of the Controlled Group nor any fiduciary of, nor any
trustee to, any Plan, has engaged in a "prohibited transaction" described in
Section 406 of the ERISA or Section 4975 of the Code nor taken any action which
would constitute or result in a Termination Event with respect to any such Plan
which is subject to ERISA, (ix) each Obligor and each member of the Controlled
Group has made all contributions due and payable with respect to each Plan, (x)
there exists no event described in Section 4043(b) of ERISA, for which the
thirty (30) day notice period contained in 29 CFR '2615.3 has not been waived,
(xi) no Obligor nor any member of the Controlled Group has any fiduciary
responsibility for investments with respect to any plan existing for the benefit
of persons other than employees or former employees of any Borrower and any
member of the Controlled Group, and (xii) no Obligor nor any member of the
Controlled Group has withdrawn, completely or partially, from any Multiemployer
Plan so as to incur liability under the Multiemployer Pension Plan Amendments
Act of 1980.

         5.9. Patents, Trademarks, Copyrights and Licenses. The Obligors own or
have the right to use all patents, patent applications, trademarks, trademark
applications, service marks, service mark applications, copyrights, copyright
applications, design rights, trade names, assumed names, trade secrets and
licenses owned or utilized by any Obligor which are necessary for the operation
of its business and where the failure to do so could reasonably be expected to
have a Material Adverse Effect; there is no objection to or pending challenge to
the validity of any such material patent, trademark, copyright, design right,
trade name, trade secret or license and no Obligor is aware of any grounds for
any challenge where such objection or challenge could reasonably be expected to
have a Material Adverse Effect. Each


<PAGE>



patent, patent application, patent license, trademark, trademark application,
trademark license, service mark, service mark application, service mark license,
copyright, copyright application and copyright license owned or held by any
Obligor and all trade secrets used by any Obligor consist of original material
or property developed by such Obligor or was lawfully acquired or licensed by
such Obligor, except where the failure to do so or to have done so could not
reasonably be expected to have a Material Adverse Effect. Each of such items has
been maintained so as to preserve the value thereof from the date of creation or
acquisition thereof.

         5.10. Licenses and Permits. Except as set forth in Schedule 5.10, each
Obligor (a) is in compliance with and (b) has procured and is now in possession
of, all material licenses or permits required by any applicable federal, state,
or local law or regulation for the operation of its business in each
jurisdiction wherein it is now conducting or proposes to conduct business and
where the failure to comply with or procure such licenses or permits could have
a Material Adverse Effect.

         5.11. Default of Indebtedness. No Obligor is in default in the payment
of the principal of or interest on any Indebtedness, which individual and/or
collectively aggregates $250,000 or more, or under any instrument or agreement
under or subject to which any Indebtedness, which individual and/or collectively
aggregates [$250,000] or more, has been issued and no event has occurred under
the provisions of any such instrument or agreement which with or without the
lapse of time or the giving of notice, or both, constitutes or would constitute
an event of default thereunder.

         5.12. No Default. No Obligor is in default in the payment or
performance of any of its contractual obligations where such default could
reasonably be expected to have a Material Adverse Effect.

         5.13. No Burdensome Restrictions. No Obligor is party to any contract
or agreement the performance of which could reasonably be expected to have a
Material Adverse Effect. No Obligor has agreed or consented to cause or permit
in the future (upon the happening of a contingency or otherwise) any of its
property, whether now owned or hereafter acquired, to be subject to a Lien which
is not a Permitted Encumbrance.

         5.14. No Labor Disputes. No Obligor is involved in any labor dispute;
there are no strikes or walkouts or union organization of any Obligor's
employees threatened or in existence and no labor contract is scheduled to
expire during the Term other than as set forth on Schedule 5.14 hereto.

         5.15. Margin Regulations. No Obligor is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" within
the respective meanings of each of the quoted terms under Regulation U or
Regulation G of the Board of Governors of the Federal Reserve System as now and
from time to time hereafter in effect. No part of the proceeds of any Advance
will be used for "purchasing" or "carrying" "margin stock" as defined in
Regulation U of such Board of Governors.

         5.16. Investment Company Act. No Obligor is an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, nor is it controlled by such a company.

         5.17. Disclosure. No representation or warranty made by any Obligor in
this Agreement or in any financial statement, report, certificate or any other
document furnished in connection herewith contains any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading. There is no fact known to Obligors
or which reasonably should be known to Obligors which Obligors have not
disclosed to Agent in writing with respect to the transactions contemplated by
this Agreement which could reasonably be expected to have a Material Adverse
Effect.

         5.18. Swaps. No Obligor is a party to, nor will it be a party to, any
swap agreement whereby such Obligor has agreed or will agree to swap interest
rates or currencies unless same provides that damages upon termination following
an event of default thereunder are payable on an unlimited "two-way basis"
without regard to fault on the part of either party.


<PAGE>



         5.19. Conflicting Agreements. No provision of any material mortgage,
indenture, contract, agreement, judgment, decree or order binding on any Obligor
or affecting the Collateral materially conflicts with, or requires any Consent
which has not already been obtained to, or would in any way prevent the
execution, delivery or performance of, the terms of this Agreement or the Other
Documents.

         5.20. Application of Certain Laws and Regulations. No Obligor nor any
domestic Affiliate of any Obligor is subject to any statute, rule or regulation
which regulates the incurrence of any Indebtedness, including without
limitation, statutes or regulations relative to common or interstate carriers or
to the sale of electricity, gas, steam, water, telephone, telegraph or other
public utility services.

         5.21. Business and Property of Borrower. Upon and after the Closing
Date, Obligors do not propose to engage in any business other than manufacturing
and marketing specialty and industrial chemicals and activities necessary to
conduct or reasonably related or complementary to the foregoing. On the Closing
Date, each Obligor will own all the property and possess all of the rights and
Consents necessary for the conduct of the business of such Obligor where the
failure to so own and/or possess could reasonably be expected to have a Material
Adverse Effect.

         5.22. Year 2000. The Obligors and their Subsidiaries have reviewed the
areas within their business and operations which could be materially and
adversely affected by, and have developed or are developing a program to address
on a timely basis, the risk that certain computer applications used by the
Obligors, or their Subsidiaries (or any of their respective material suppliers,
customers or vendors) may be unable to recognize and perform properly
date-sensitive functions involving dates prior to and after December 31, 1999
(the "Year 2000 Problem"). The Year 2000 Problem will not have a Material
Adverse Effect.

         5.23. Section 20 Subsidiaries. The Borrower does not intend to use and
shall not use any portion of the proceeds of the Advances, directly or
indirectly, to purchase during any underwriting period, or for 30 days
thereafter, Ineligible Securities being underwritten by a Section 20 Subsidiary.

         5.24. Interest Expense Allocation. Interest expense with respect to the
Indenture will be allocated to the Borrower and each Obligor based upon that
portion of Indebtedness evidenced by the Senior Subordinated Notes being
assigned to the same parties in accordance with GAAP.

         5.25. Other Billing Locations. Other than the chief executive offices
of the Obligors, and except as disclosed on Schedule 5.25 attached hereto, there
are no Other Billing Locations.

         5.26. Western Magnesium Corporation does not presently and shall not in
the future conduct any business activity in any State.
VI.      AFFIRMATIVE COVENANTS.

         Unless the prior written consent of the Required Lenders shall have
been obtained, each Obligor shall, until payment and satisfaction in full of all
payment Obligations (whether in the form of principal, interest, reimbursement
obligations, fees, penalties, charges, expenses or otherwise) with the exception
indemnification obligations under this Agreement for which no claim recited
thereunder has arisen) and termination of this Agreement:

         6.1. Payment of Fees. Pay to Agent on demand all usual and customary
fees and expenses which Agent incurs in connection with (a) the forwarding of
Advance proceeds and (b) the establishment and maintenance of any Blocked
Accounts or Depository Accounts as provided for in Section 4.15(h). Agent may,
without making demand, charge Obligors' Account for all such fees and expenses.

         6.2. Conduct of Business and Maintenance of Existence and Assets. (a)
Conduct continuously and operate actively its business and maintain all of its
properties in good working order and condition (reasonable wear and tear
excepted and except as may be disposed of as permitted by with the terms of this
Agreement), including, without limitation, all licenses, patents, copyrights,
design rights, trade names, trade secrets and trademarks and take all actions


<PAGE>



necessary to enforce and protect the validity of any intellectual property right
or other right, where the failure to so operate or maintain could reasonably be
expected to have a Material Adverse Effect; (b) keep in full force and effect
its existence and comply in all material respects with the laws and regulations
governing the conduct of its business where the failure to do so could
reasonably be expected to have a Material Adverse Effect; and (c) make all such
reports and pay all such franchise and other taxes and license fees and do all
such other acts and things as may be lawfully required to maintain its rights,
licenses, leases, powers and franchises under the laws of the United States or
any political subdivision thereof, where the failure to do so could reasonably
be expected to have a Material Adverse Effect.

         6.3. Violations. Promptly notify Agent in writing of any violation of
any law, statute, regulation or ordinance of any Governmental Body, or of any
agency thereof, applicable to any Obligor which could reasonably be expected to
have a Material Adverse Effect.

         6.4. Government Receivables. Except to the extent not included as part
of the Formula Amount, take all steps necessary to protect Agent's interest in
the Collateral under the Federal Assignment of Claims Act or other applicable
state or local statutes or ordinances and deliver to Agent appropriately
endorsed, any instrument or chattel paper connected with any Receivable arising
out of contracts between any Obligor and the United States, any state or any
department, agency or instrumentality of any of them.

         6.5. Domestic Net Worth. Maintain with respect to the Borrower and each
of its direct and indirect domestic Subsidiaries, at all times, to be tested
monthly, minimum Net Worth in an amount not less than the Net Worth on the
Closing Date of the Borrower and all direct and indirect domestic Subsidiaries
of the Borrower, to increase annually by fifty percent (50%) of the net earnings
of the Borrower and all said domestic Subsidiaries (before equity pick-up from
earnings of foreign Subsidiaries), and no event less than the prior years'
ending said Net Worth (except that during the course of year, said Net Worth may
temporarily decline below the prior years ending Net Worth but no event less
than the following percentages of said prior years ending Net Worth):

                  Year 1                                    50%
                  Year 2                                    65%
                  Year 3 thru 5                             75%

         In no event may the Borrower and any of direct or indirect domestic
Subsidiaries, on a consolidated basis, sustain any annual net loss. Furthermore,
in calculating the Net Worth of the Borrower and each of its direct and indirect
subsidiaries all foreign assets owned by said entities and foreign liabilities
and operations shall be excluded from the calculation of their Net Worth.

         6.6. Interest Coverage Ratio. Maintain at all times a Interest Coverage
Ratio of not less than 1.5 to 1.0, to be tested on a rolling four (4) quarters
basis.

         6.7. Execution of Supplemental Instruments. Execute and deliver to
Agent from time to time, upon demand, such supplemental agreements, statements,
assignments and transfers, or instructions or documents relating to the
Collateral, and such other instruments as Agent may request, in order that the
full intent of this Agreement may be carried into effect.

         6.8. Payment of Indebtedness. Pay, discharge or otherwise satisfy at or
before maturity (subject, where applicable, to specified grace periods and, in
the case of the trade payables, to normal payment practices) all its obligations
and liabilities of whatever nature, except when the failure to do so could not
reasonably be expected to have a Material Adverse Effect or when the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and each Obligor shall have provided for reserves in accordance with
GAAP, subject at all times to any applicable subordination arrangement in favor
of Lenders.

         6.9. Standards of Financial Statements. Cause all financial statements
referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.13 and 9.14 as to
which GAAP is applicable to fairly present in all material respects (subject, in
the


<PAGE>


case of interim financial statements, to normal year-end audit adjustments) the
financial condition of such companies and to be prepared in reasonable detail
and in accordance with GAAP applied consistently throughout the periods
reflected therein (except as concurred in by such reporting accountants or
officer, as the case may be, and disclosed therein).

         6.10. Domestic Debt Service Ratio. In the event that the Borrower
utilizes the Acquisition Line, maintain at all such times a Domestic Debt
Service Coverage of not less than 1.20 to 1.00, to be tested on a rolling four
quarter basis.

         6.11 Movement of Inventory. If at any time the value of the Inventory
is located within the States of Illinois, South Carolina, California,
Pennsylvania, New Jersey, Texas and Delaware is less than eighty percent (80%)
of the Inventory for all of the Obligors or the chief executive office of any
Obligor is changed to another state, the Obligors shall, if requested by the
Agent, deliver such opinions of counsel, in form and substance reasonably
satisfactory to the Agent, stating that the Agent has a perfected security
interest in all Collateral which has been moved to such jurisdictions or has
been affected by such move.


VII.     NEGATIVE COVENANTS.

         Without the prior written consent of the Required Lenders, no Obligor
shall, until satisfaction in full of the payment Obligations (whether in the
form of principal, interest, reimbursement obligations, fees, penalties,
charges, expenses or otherwise) with the exception of indemnification
obligations under this Agreement for which no claim subject thereto has been
made and has not been terminated, satisfied released or withdrawn) and
termination of this Agreement:

         7.1. Merger, Consolidation, Acquisition and Sale of Assets.

                  (a) Enter into any merger, consolidation or other
reorganization with or into any other Person or acquire all or a substantial
portion of the assets or stock of any Person or permit any other Person to
consolidate with or merge with it, except as permitted by the terms of Sections
2.1(c) and 2.2(b) hereof, and except that (i) Obligors may acquire or form a
foreign Subsidiary without the use of the proceeds of either Revolving Advances
or Acquisition Term Loans provided that, said Obligors shall provide the Agent
with evidence, in form and substance reasonably satisfactory to the Agent, of
the source of funds for said acquisition or formation and at the time of said
acquisition or formation no Default or Event of Default has occurred and is
continuing and (ii) Obligors may acquire or form domestic Subsidiaries without
the use of the proceeds of either Revolving Advances or Acquisition Term Loans,
provided that (A) said Obligors cause said domestic Subsidiary to execute and
deliver to the Agent a guaranty, in form and substance reasonably satisfactory
to the Agent, which guaranty shall be secured by those assets of the domestic
Subsidiary consisting of Collateral, said Obligors shall provide the Agent with
evidence, in form and substance satisfactory to the Agent, of the source of
funds for said acquisition or formation and at the time of said acquisition or
formation no Default or Event of Default has occurred and is continuing or (B)
said Obligors receive the written consent of the Agent and the Required Lenders,
which consent shall be granted if to the satisfaction of the Agent and the
Required Lenders (i) inventory and receivables of said domestic Subsidiary shall
not be deemed Eligible Inventory or Eligible Receivables, (ii) said domestic
Subsidiary shall be prohibited from receiving from any Obligor advances, loans,
extensions of credit, guarantees, funds or other personal property unless
otherwise specifically permitted hereunder with respect to an unaffiliated party
of such Obligor, (iii) said domestic Subsidiary shall be treated as an
unaffiliated party of each Obligor with respect to the Obligors' rights and
obligations hereunder, including all financial covenants set forth herein, (iv)
the Obligors shall provide for adjustments to all financial statements and other
reporting requirements hereunder to account for said domestic Subsidiary's
status as an unaffiliated party, and (v) such other requirements are satisfied,
as requested by the Required Lenders.

                  (b) Sell, lease, transfer or otherwise dispose of any of its
properties or assets, except (1) in the case of properties or assets
constituting Collateral (i) in the ordinary course of its business and (ii) out
of the ordinary course of business up to $250,000 per fiscal year provided that
the proceeds received from said sales out of the ordinary


<PAGE>


course of business shall be utilized to prepay the outstanding principal amount
of Revolving Advances and/or Acquisition Term Loans and (2) in the case of
properties or assets not constituting Collateral where the disposition thereof
could not reasonably be expected to have a Material Adverse Effect.

         7.2. Creation of Liens. Create or suffer to exist any Lien or transfer
upon or against any of its property or assets now owned or hereafter acquired,
except Permitted Encumbrances.

         7.3. Guaranties. Become liable upon the obligations of any Person by
assumption, endorsement or guaranty thereof or otherwise (other than to Lenders)
except (i) as contemplated by the terms hereof, (ii) as disclosed on Schedule
7.3,(iii) the endorsement of checks in the ordinary course of business, (iv)
guaranties by the Obligors with respect to any of their or their Subsidiaries'
obligations, provided that said guaranties are unsecured; and (v) to the extent
any said assumption, endorsement or guarantee otherwise qualifies as a Permitted
Encumbrance.

         7.4. Investments. Purchase or acquire obligations or stock of, or any
other interest in, any Person, except (a) obligations issued or guaranteed by
the United States of America or any agency thereof, (b) commercial paper with
maturities of not more than 180 days and a published rating of not less than A-1
or P-1 (or the equivalent rating), (c) certificates of time deposit and bankers'
acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank if
(i) such bank has a combined capital and surplus of at least $500,000,000, or
(ii) its debt obligations, or those of a holding company of which it is a
Subsidiary, are rated not less than A (or the equivalent rating) by a nationally
recognized investment rating agency, (d) U.S. money market funds that invest
solely in obligations issued or guaranteed by the United States of America or an
agency thereof, (e) investments in any Subsidiary of an Obligor, whether foreign
or domestic and (f) non-majority interests in any corporation or other entity
involved in a business related to that of any Obligor; so long as the aggregate
amount per fiscal year invested shall not exceed, together with the limitations
imposed under Section 7.11 with respect to contributions to Partnerships, Joint
Ventures, $3,000,000 provided that to the extent in any given fiscal year the
Obligors invest less than said $3,000,000 amount, said unused portion may be
carried forward for one additional year, provided that no more than $6,000,000
is utilized for the purposes hereof in any fiscal year, (g) any investment in or
in securities of a Person engaged in a related business (an "Invested Person")
if, as a result of such investment, (i) the Invested Person, subject to the
provisions of Section 7.1 hereof, becomes a wholly owned Subsidiary, or (ii) the
Invested Person either (1) is merged, consolidated or amalgamated with or into
an Obligor and an Obligor is the surviving person, or (2) transfers or conveys
substantially all of its assets to, or is liquidated into, an Obligor; (h) any
notes, obligations or other securities received in connection with an asset sale
that complies with Section 7.1(b) above; and (i) interest rate agreement
obligations and currency agreement obligations permitted pursuant to Section
7.8; (j) investments in or acquisitions of capital stock or similar interests in
Persons received in the bankruptcy or reorganization of or by such Person or any
exchange of such investment with the issuer thereof or taken in settlement of or
other resolution of claims or disputes.

         7.5. Loans. Make advances, loans or extensions of credit to any Person,
including without limitation, any Parent, Subsidiary or Affiliate except with
respect to (a) the extension of commercial trade credit in connection with the
sale of Inventory in the ordinary course of its business, (b) loans to its
employees in the ordinary course of business not to exceed the aggregate amount
of $500,000 at any time outstanding, (c) advances, loans or extensions of credit
to Subsidiaries of the Obligors (whether domestic or foreign) and (d) as
otherwise permitted by the terms of Section 7.4 hereof.

         7.6. Capital Expenditures. Contract for, purchase or make any
expenditure or commitments for fixed or capital assets (including capitalized
leases, but excluding acquisitions permitted under Section 7.1 hereof) in an
amount in excess of $15,000,000 for any fiscal year provided that to the extent
in any given fiscal year, the Obligors utilize less than $15,000,000, said
unused portion, up to $5,000,000, may be carried forward for one additional year
provided that no more than $20,000,000 is utilized for the purposes hereof in
any fiscal year.

         7.7. Dividends. Declare, pay or make any dividend or distribution on
any shares of the common stock or preferred stock of any Obligor (other than
dividends or distributions payable in its stock, or split-ups or
reclassifications


<PAGE>


of its stock) or apply any of its funds, property or assets to the purchase,
redemption or other retirement of any common or preferred stock, or of any
options to purchase or acquire any such shares of common or preferred stock of
any Obligor, except for (a) dividends or distributions to the Borrower or any
other Obligor; (b) up to fifty percent (50%) of the net earnings (minus those
net earnings utilized pursuant to Section 7.7(b) hereof) per fiscal year of the
Borrower and all of its domestic Subsidiaries, but in no event more than
$2,000,000 per fiscal year, provided that if more than $1,000,000 is to be
distributed from said net earnings there must exist at said time at least
$5,000,000 of Undrawn Availability after giving affect to said dividends and/or
distributions; (c) to pay the redemption price of stock being redeemed pursuant
to the Shareholders Agreement, provided that during the Term the aggregate
amount of all said redemptions shall not exceed $5,000,000 plus up to 50% of the
net earnings (minus those net earnings utilized in Section 7.7(b) hereof) per
fiscal year of the Borrower and all of its domestic Subsidiaries, and each time
said redemption occurs there shall exist at least $2,500,000 of Undrawn
Availability after giving effect to said redemption; (d) to pay the redemption
price of stock being redeemed to the extent that said redemption is funded by
insurance proceeds; and (e) to pay shareholders' "S" corporation or members'
limited liability company tax liability associated with the income derived from
the respective Obligor.

         7.8. Indebtedness. Create, incur, assume or suffer to exist any Funded
Indebtedness (exclusive of trade debt) except in respect of (i) Funded
Indebtedness to Lenders; (ii) Funded Indebtedness incurred for capital
expenditures permitted under Section 7.6 hereof; (iii) Funded Indebtedness due
under the Indenture; (iv) any other Funded Indebtedness so long as the aggregate
principal amount of the same outstanding at any time does not exceed $5,000,000;
(v) Funded Indebtedness representing the redemption price of stock being
redeemed pursuant to the Shareholders Agreement to the extent that payment
thereof is restricted by the terms of Section 7.7(c) hereof, (vi) Indebtedness
owned or issued by any Subsidiary to Borrower or to another Subsidiary, or owed
or issued by Borrower to any Subsidiary; provided, however, that any such
Indebtedness shall at all times be held by a Person which is either Borrower or
a Subsidiary; provided, further, however, that upon either (a) the transfer or
other disposition of any such Indebtedness to a Person other than Borrower or
another Subsidiary or (b) the sale, lease, transfer or other disposition of
shares of capital stock (including by consolidation or merger) of any such
Subsidiary to a Person other than the Borrower or another Subsidiary, the
incurrence of such Indebtedness shall be deemed to be an incurrence that is not
permitted by this clause; (vii) Indebtedness arising with respect to interest
rate agreement obligations and currency agreement obligations incurred for the
purpose of fixing or hedging interest rate risk or currency risk with respect to
any fixed or floating rate indebtedness that is permitted by the terms of this
Agreement to be outstanding or with respect to any receivable or liability the
payment of which is determined by reference to a foreign currency; (viii)
Indebtedness represented by performance, completion, guarantee, surety and
similar bonds and assurances provided by or for Borrower or any Subsidiary in
the ordinary course of business; (ix) any Indebtedness incurred in connection
with or given in exchange for the renewal, extension, substitution, refunding,
defeasance, refinancing or replacement, in whole or in part (a "refinancing"),
of any Indebtedness incurred or permitted under this Agreement ("Refinancing
Indebtedness"); provided, however, that (a) the principal amount of such
Refinancing Indebtedness shall not exceed the principal amount (or accreted
amount, if less, or in the case of a revolving credit facility the maximum
amount of the facility, if more) of the Indebtedness so refinanced (plus the
premiums and reasonable expenses to be paid in connection therewith, which, with
respect to such premiums, shall not exceed the stated amount of any premium or
other payment required to be paid in connection with such a refinancing pursuant
to the terms of the Indebtedness being refinanced); and (b) the obligor on such
Refinancing Indebtedness shall be the obligor on the Indebtedness being
refinanced or the Borrower; (x) Indebtedness in respect of purchase money
obligations for property acquired, constructed or improved in the ordinary
course of business and any refinancings thereof, which taken together in the
aggregate principal amount do not exceed the greater of (i) $5.0 million and
(ii) 5% of consolidated tangible assets of Borrower at any one time outstanding;
(xi) commodity agreements entered into in the ordinary course of business to
protect against fluctuations in the price of raw materials and not for
speculative purposes; and (xii) Indebtedness incurred by Borrower or any
Subsidiary constituting reimbursement obligations with respect to letters of
credit issued in the ordinary course of business, including, without limitation,
letters of credit in respect of workers' compensation claims or self-insurance,
or other Indebtedness with respect to reimbursement-type obligations regarding
workers' compensation claims or self-insurance.

         7.9. Nature of Business. Substantially change the nature of the
business in which it is presently engaged, which shall not prohibit any Obligor
from engaging in any business that is reasonably related to or complementary to


<PAGE>


its present business, nor except as specifically permitted hereby, purchase or
invest, directly or indirectly, in any assets or property other than in the
ordinary course of business for assets or property which are useful in,
necessary for and are to be used in such business.

         7.10. Transactions with Affiliates. Directly or indirectly, purchase,
acquire or lease any property from, or sell, transfer or lease any property to,
or otherwise deal with, any Affiliate, except transactions disclosed in the
ordinary course of business, on an arm's-length basis on terms no less favorable
than terms which would have been obtainable from a Person other than an
Affiliate, and except (i) employment agreements or compensation or employee
benefit arrangements with any officer, director or employee of Borrower or any
of its Subsidiaries entered into in the ordinary course of business (including
customary benefits thereunder and including reimbursement or advancement of
out-of-pocket expenses, and director's and officer's liability insurance), (ii)
any transaction entered into by or among Borrower or one of its Subsidiaries
with one or more Subsidiaries of Borrower, (iii) any transaction permitted by
Section 7.5, 7.7 or 7.11, (iv) transactions permitted by, and complying with,
the provisions described under Section 7.1, and (v) any transactions described
under the caption "Use of Proceeds" in the Offering Memorandum delivered in
connection with the Senior Subordinated Notes.

         7.11 Partnership, Joint Ventures. Enter into any partnership, joint
venture or similar arrangement, except for a joint venture and/or joint ventures
which do not in aggregate require commitments, contributions and/or transfers of
moneys or assets, together with the limitations imposed under Section 7.4 with
respect to Investments, in excess of $3,000,000 per fiscal year (provided the
Obligors may carry forward the unutilized portion of said $3,000,000 for one
year additional fiscal year, provided that no more than $6,000,000 is utilized
for said purposes in any fiscal year), provided that (i) no such commitment,
contribution and/or transfer shall involve any of the Collateral and (ii)
notwithstanding the foregoing Intellectual Property of MRT may be contributed or
licensed to joint ventures.

         7.12. Subsidiaries.

                  Form any domestic Subsidiary unless (i) such Subsidiary
expressly joins in this Agreement as a borrower or guarantor and becomes jointly
and severally liable for the obligations of Obligors hereunder, under the Note,
and under any other agreement between any Obligor and Lenders and (ii) Agent
shall have received all documents, including legal opinions, it may reasonably
require to establish compliance with each of the foregoing conditions.

         7.13. Fiscal Year and Accounting Changes. Change its fiscal year from
June 30 or make any significant change without providing the Agent at least
thirty (30) days prior written notice (i) in accounting treatment and reporting
practices except as required by GAAP or (ii) in tax reporting treatment except
as required by law, provided that Obligors shall cooperate with and agree to
such amendments to the Loan Documents as is reasonably required by the Agent to
take into account such changes and make the Loan Documents, including the
financial covenants, consistent with the parties original intentions.

         7.14. Intentionally left blank.

         7.15. Amendment of Articles of Incorporation, Bylaws. Amend, modify or
waive any term or material provision of its Articles of Incorporation or Bylaws
unless required by law in any manner which could reasonably be expect to have a
Material Adverse Effect on such Obligor.

         7.16. Compliance with ERISA. In each case if the failure to do so could
be reasonably expected to have a Material Adverse Effect, (i) (x) Maintain, or
permit any member of the Controlled Group to maintain, or (y) become obligated
to contribute, or permit any member of the Controlled Group to become obligated
to contribute, to any Plan, other than those Plans disclosed on Schedule 5.8(d),
(ii) engage, or permit any member of the Controlled Group to engage, in any
non-exempt "prohibited transaction", as that term is defined in section 406 of
ERISA and Section 4975 of the Code, (iii) incur, or permit any member of the
Controlled Group to incur, any "accumulated funding deficiency", as that term is
defined in Section 302 of ERISA or Section 412 of the Code, (iv) terminate, or
permit any member of the Controlled Group to terminate, any Plan where such
event could result in any liability of any Obligor or any member of


<PAGE>


the Controlled Group or the imposition of a lien on the property of any Obligor
or any member of the Controlled Group pursuant to Section 4068 of ERISA, (v)
assume, or permit any member of the Controlled Group to assume, any obligation
to contribute to any Multiemployer Plan not disclosed on Schedule 5.8(d), (vi)
incur, or permit any member of the Controlled Group to incur, any withdrawal
liability to any Multiemployer Plan; (vii) fail promptly to notify Agent of the
occurrence of any Termination Event, (viii) fail to comply, or permit a member
of the Controlled Group to fail to comply, with the requirements of ERISA or the
Code or other applicable laws in respect of any Plan, (ix) fail to meet, or
permit any member of the Controlled Group to fail to meet, all minimum funding
requirements under ERISA or the Code or postpone or delay or allow any member of
the Controlled Group to postpone or delay any funding requirement with respect
of any Plan.

         7.17. Prepayment of Indebtedness. Except as permitted pursuant to
Section 7.18 hereof, , directly or indirectly, prepay any Indebtedness (other
than to Lenders), or repurchase, redeem, retire or otherwise acquire any
Indebtedness of any Obligor if a Default or an Event of Default would result
therefrom or at such time there exists a Default or an Event of Default.

         7.18. Subordinated Debt Payments. At any time, directly or indirectly,
pay, prepay, repurchase, redeem, retire or otherwise acquire, or make any
payment on account of any principal of, interest on or premium payable in
connection with the repayment or redemption of the Subordinated Debt Payment,
except as expressly permitted by the terms of the Indenture as in effect on the
Closing Date.

         7.19 Interest Expense Allocation. At any time, change the interest
expense allocation with respect to the Indenture other than in accordance with
Subsection 5.24.


VIII.    CONDITIONS PRECEDENT.

         8.1. Conditions to Initial Advances. The agreement of Lenders to make
the initial Advance requested to be made on the Closing Date is subject to the
satisfaction, or waiver by Lenders, immediately prior to or concurrently with
the making of such Advance, of the following conditions precedent:

                  (a) Note. Agent shall have received the Note duly executed and
delivered by an authorized officer of each Borrower;

                  (b) Filings, Registrations and Recordings. Each document
(including, without limitation, any Uniform Commercial Code financing statement)
required by this Agreement, any related agreement or under law or reasonably
requested by the Agent to be filed, registered or recorded in order to create,
in favor of Agent, a perfected security interest in or lien upon the Collateral
shall have been properly filed, registered or recorded in each jurisdiction in
which the filing, registration or recordation thereof is so required or
requested, and Agent shall have received an acknowledgment copy, or other
evidence satisfactory to it, of each such filing, registration or recordation
and satisfactory evidence of the payment of any necessary fee, tax or expense
relating thereto;

                  (c) Corporate Proceedings of Obligors. Agent shall have
received a copy of the resolutions in form and substance reasonably satisfactory
to Agent, of the Board of Directors of each Obligor authorizing (i) the
execution, delivery and performance of this Agreement, the Note, the Guaranty,
the Power of Attorney, and any related agreements, (collectively the
"Documents") and (ii) the granting by each Obligor of the security interests in
and liens upon the Collateral in each case certified on behalf of such Obligor
by the Secretary or an Assistant Secretary of such Obligor as of the Closing
Date; and, such certificate shall state that the resolutions thereby certified
have not been amended, modified, revoked or rescinded as of the date of such
certificate;

                  (d) Incumbency Certificates of Obligors. Agent shall have
received a certificate of the Secretary or an Assistant Secretary on behalf of
each Obligor, dated the Closing Date, as to the incumbency and signature of the


<PAGE>


officers of such Obligor executing this Agreement, any certificate or other
documents to be delivered by it pursuant hereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary;

                  (e) Certificates. Agent shall have received a copy of the
Articles or Certificate of Incorporation of each Obligor, and all amendments
thereto, certified on behalf of each Obligor by the Secretary of State or other
appropriate official of its jurisdiction of incorporation together with copies
of the By-Laws of each Obligor and all agreements of each Obligor's shareholders
certified on behalf of such Obligor as accurate and complete by the Secretary of
such Obligor;

                  (f) Good Standing Certificates. Agent shall have received good
standing certificates for each Obligor dated not more than 30 days prior to the
Closing Date, issued by the Secretary of State or other appropriate official of
each Obligor's jurisdiction of incorporation and each jurisdiction where the
conduct of each Borrower's business activities or the ownership of its
properties necessitates qualification;

                  (g) Legal Opinion. Agent shall have received the executed
legal opinion of Golenbock, Eiseman, Assor & Bell in form and substance
satisfactory to Agent which shall cover such matters incident to the
transactions contemplated by this Agreement, the Note, and related agreements as
Agent may reasonably require and each Obligor hereby authorizes and directs such
counsel to deliver such opinions to Agent and Lenders;

                  (h) No Litigation. Except as disclosed on the schedules
attached to this Agreement: (i) No litigation, investigation or proceeding
before or by any arbitrator or Governmental Body shall be continuing or
threatened against any Obligor or against the officers or directors of any
Obligor (A) in connection with the Other Documents or any of the transactions
contemplated thereby and which, in the reasonable opinion of Agent, is deemed
material or (B) which could, in the reasonable opinion of Agent, have a Material
Adverse Effect; and (ii) no injunction, writ, restraining order or other order
of any nature materially adverse to any Obligor or the conduct of its business
or inconsistent with the due consummation of the Transactions shall have been
issued by any Governmental Body;

                  (i) Financial Condition Certificates. Agent shall have
received an executed Financial Condition Certificate in the form of Exhibit
8.1(i).

                  (j) Collateral Examination. Agent shall have completed
Collateral examinations and received appraisals, the results of which shall be
satisfactory in form and substance to Lenders, of the Receivables, Inventory,
and General Intangibles, of each Obligor and all books and records in connection
therewith;

                  (k) Fees. Agent shall have received all fees payable to Agent
and Lenders on or prior to the Closing Date pursuant to Article III hereof;

                  (l) Pro Forma Financial Statements. Agent shall have received
a copy of the Pro Forma Financial Statements;

                  (m) Guaranties, Other Documents. Agent shall have received
executed Guaranties and all Other Documents;

                  (n) Insurance. Agent shall have received in form and substance
reasonably satisfactory to Agent, certified copies of Obligors' casualty
insurance policies, together with loss payable endorsements on Agent's standard
forms of loss payee endorsement naming Agent as loss payee to the extent
required by Section 4.11, and certified copies of Borrowers' liability insurance
policies, together with endorsements naming Agent as a additional insured;

                  (o) Power of Attorney. Agent shall have received executed
Powers of Attorney from each Obligor in the form of Exhibit 8.1(aa); and

                  (p) Payment Instructions. Agent shall have received written
instructions from Obligors directing the application of proceeds of the initial
Advances made pursuant to this Agreement;


<PAGE>


                  (q) Blocked Accounts. Agent shall have received duly executed
agreements establishing the Blocked Accounts or Depository Accounts with
financial institutions acceptable to Agent for the collection or servicing of
the Receivables and proceeds of the Collateral;

                  (r) Consents. Agent shall have received any and all Consents
necessary to permit the effectuation of the transactions contemplated by this
Agreement and the Other Documents; and, Agent shall have received such Consents
and waivers of such third parties (excluding landlords' and warehousemen's
waivers) as might assert claims with respect to the Collateral, as Agent and its
counsel shall deem necessary;

                  (s) No Adverse Material Change. (i) Since December 31, 1997,
there shall not have occurred any event, condition or state of facts which could
reasonably be expected to have a Material Adverse Effect and (ii) no
representations made or written information supplied to Agent shall have been
proven to be inaccurate or misleading in any material respect;

                  (t) Leasehold Agreements. Agent shall have received landlord,
mortgagee or warehouseman agreements satisfactory to Agent with respect to all
premises leased by Obligors which is the chief executive office or Other Billing
Location of any Obligor or where Inventory is located to the extent such
Inventory is to be considered Eligible Inventory;

                  (u) Indenture. Agent shall have received final executed copies
of the Indenture which shall contain such terms and provisions including,
without limitation, subordination terms, satisfactory to Agent;

                  (v) Net Worth. Agent shall have received an audited Balance
Sheet of the Borrower and all of its domestic Subsidiaries as of June 30, 1998,
within forty-five (45) days of the date hereof, reflecting a Net Worth for the
Borrower and all direct and indirect domestic Subsidiaries of the Borrower
excluding the Subordinated Indebtedness after giving effect to the Transactions
of at least $2,000,000 (for purposes of calculating the financial covenants
hereunder said actual Net Worth reflected on said Balance Sheet shall be
utilized);

                  (w) Contract Review. Agent shall have reviewed all material
contracts of Obligors including, without limitation, leases, union contracts,
labor contracts, vendor supply contracts, license agreements and distributorship
agreements and such contracts and agreements shall be satisfactory in all
respects to Agent;

                  (x) Closing Certificate. Agent shall have received a closing
certificate signed on behalf of each Obligor by the Chief Financial Officer of
such Obligor dated as of the date hereof, stating that (i) all representations
and warranties set forth in this Agreement and the Other Documents are true and
correct in all material respects on and as of such date, (ii) Obligors are on
such date in compliance in all material respects with all the terms and
provisions set forth in this Agreement and the Other Documents and (iii) on such
date no Default or Event of Default has occurred or is continuing;

                  (y) Borrowing Base. Agent shall have received evidence from
Obligors that the aggregate amount of Eligible Receivables and Eligible
Inventory is sufficient in value and amount to support as contemplated by
Section 2.1(c) hereof, Revolving Advances and the advances of the same to
domestic Subsidiaries of the Borrower to be made on the Closing Date;

                  (z) Undrawn Availability. After giving effect to the initial
Advances hereunder, Obligors shall have Undrawn Availability of at least
$10,000,000;

                  (aa) Landlord's and Warehousemen's Waivers. Landlords waivers
and warehousemen's waivers, in form and substance reasonably satisfactory to the
Agent, with respect to each location leased or warehoused by any Obligor which
location is the chief executive office or Other Billing Location of any Obligor
or where Inventory is maintained to the extent that said Inventory is to be
considered Eligible Inventory.


<PAGE>


                  (bb) Grid Notes and Assignments. Grid notes from each domestic
Subsidiary of the Borrower and assignments thereof to the Bank, as contemplated
by Section 2.5(b) hereof.

                  (cc) Other. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
Transactions shall be reasonably satisfactory in form and substance to Agent and
its counsel.

         8.2. Conditions to Each Advance. The agreement of Lenders to make any
Advance requested to be made on any date (including, without limitation, the
initial Advance), is subject to the satisfaction of the following conditions
precedent as of the date such Advance is made:

                  (a) Representations and Warranties. Each of the
representations and warranties made by any Obligor in or pursuant to this
Agreement and any related agreements to which it is a party, and each of the
representations and warranties contained in any certificate, document or
financial or other statement furnished at any time under or in connection with
this Agreement or any Other Document shall be true and correct in all material
respects on and as of such date as if made on and as of such date, except for
changes or other matters permitted under this Agreement;

                  (b) No Default. No Event of Default or Default shall have
occurred and be continuing on such date, or would exist after giving effect to
the Advances requested to be made, on such date; provided, however that Lenders,
in their sole discretion, may continue to make Advances notwithstanding the
existence of an Event of Default or Default and that any Advances so made shall
not be deemed a waiver of any such Event of Default or Default; and

                  (c) Maximum Advances. In the case of any Advances requested to
be made, after giving effect thereto, the aggregate Advances shall not exceed
the maximum amount of Advances permitted under Section 2.1 hereof.

Each request for an Advance by any Obligor hereunder shall constitute a
representation and warranty by each Obligor as of the date of such Advance that
the conditions contained in this subsection shall have been satisfied.


IX.      INFORMATION AS TO OBLIGORS.

         Each Obligor shall, until satisfaction in full of the payment
Obligations (whether in the form of principal, interest, reimbursement
obligations, fees, penalties, charges, expenses or otherwise) with the exception
of indemnification obligations under this Agreement for which no claim recited
thereunder has arisen) and the termination of this Agreement:

         9.1. Disclosure of Material Matters. Immediately upon learning thereof,
report to Agent all matters materially affecting the value, enforceability or
collectibility of any portion of the Collateral including, without limitation,
any Obligor's reclamation or repossession of, or the return to any Obligor of, a
material amount of goods or claims or disputes asserted by any Customer or other
obligor.

         9.2. Schedules. Deliver to Agent on or before the twentieth (20th) day
of each month as and for the prior month (a) accounts receivable ageings, (b)
accounts payable schedules and (c) Inventory reports. In addition, each Obligor
will deliver to Agent at such intervals as Agent may require: (i) confirmatory
assignment schedules, (ii) copies of Customer's invoices, (iii) evidence of
shipment or delivery, and (iv) such further schedules, documents and/or
information regarding the Collateral as Agent may require including, without
limitation, trial balances and test verifications. Agent shall have the right to
confirm and verify all Receivables by any reasonable manner and through any
medium it considers advisable and do whatever it may deem reasonably necessary
to protect its interests hereunder. The items to be provided under this Section
are to be in form satisfactory to Agent and executed by each Obligor and
delivered to Agent from time to time solely for Agent's convenience in
maintaining records of the Collateral, and any Obligor's failure to deliver any
of such items to Agent shall not affect, terminate, modify or otherwise limit
Agent's Lien with respect to the Collateral.


<PAGE>


         9.3. Environmental Reports. Furnish Agent, concurrently with the
delivery of the financial statements referred to in Sections 9.7 and 9.8, with a
certificate signed on behalf of each Obligor by an Executive Officer of each
Obligor stating, to the best of his knowledge, that each Obligor is in
compliance in all respects with all federal, state and local laws relating to
environmental protection and control and occupational safety and health, except
where the failure to be in compliance could not reasonably be expected to have a
Material Adverse Effect. To the extent any Obligor is not in compliance with the
foregoing laws as discussed above, the certificate shall set forth with
specificity all areas of non-compliance and the proposed action such Obligor
will implement in order to achieve full compliance.

         9.4. Litigation. Promptly notify Agent in writing of any litigation,
suit or administrative proceeding affecting any Obligor, whether or not the
claim is covered by insurance, and of any suit or administrative proceeding,
which in any such case could reasonably be expected to have a Material Adverse
Effect.

         9.5. Material Occurrences. Promptly notify Agent in writing upon the
occurrence of (a) any Event of Default or Default; (b) any event of default
under the Indenture; (c) any event which with the giving of notice or lapse of
time, or both, would constitute an event of default under the Indenture; (d) any
event, development or circumstance whereby any financial statements or other
reports furnished to Agent fail in any material respect to present fairly, in
accordance with GAAP consistently applied, the financial condition or operating
results of any Obligor as of the date of such statements; (e) any accumulated
retirement plan funding deficiency which, if such deficiency continued for two
plan years and was not corrected as provided in Section 4971 of the Code, could
subject any Obligor to a tax imposed by Section 4971 of the Code; (f) each and
every default by any Obligor which might result in the acceleration of the
maturity of any Indebtedness, which when added to all other such Indebtedness
aggregates $500,000 or more, including the names and addresses of the holders of
such Indebtedness with respect to which there is a default existing or with
respect to which the maturity has been or could be accelerated, and the amount
of such Indebtedness; and (g) any other development in the business or affairs
of any Obligor which could reasonably be expected to have a Material Adverse
Effect; in each case describing the nature thereof and the action Obligors
propose to take with respect thereto.

         9.6. Government Receivables. Notify Agent immediately if any of its
Receivables included in the Formula Amount arise out of contracts between any
Obligor and the United States, any state, or any department, agency or
instrumentality of any of them.

         9.7. Annual Financial Statements. Furnish Agent within ninety (90) days
after the end of each fiscal year of Obligors, financial statements of the
Borrower and all of its direct and indirect Subsidiaries, and financial
statements of the Borrower and all of its domestic Subsidiaries, all on a
consolidating and consolidated basis including, but not limited to, statements
of income and stockholders' equity and cash flow from the beginning of the
current fiscal year to the end of such fiscal year and the balance sheet as at
the end of such fiscal year, all prepared in accordance with GAAP applied on a
basis consistent with prior practices, and in reasonable detail and reported
upon (except for the consolidating statements) without qualification by an
independent certified public accounting firm selected by Obligors and
satisfactory to Agent (the "Accountants"). The report of the Accountants shall
be accompanied by a statement of the Accountants certifying that (i) they have
caused the Loan Agreement to be reviewed, (ii) in making the examination upon
which such report was based either no information came to their attention which
to their knowledge constituted an Event of Default or a Default under this
Agreement or any related agreement or, if such information came to their
attention, specifying any such Default or Event of Default, its nature, when it
occurred and whether it is continuing, and such report shall contain or have
appended thereto calculations which set forth Obligors' compliance with the
requirements or restrictions imposed by Sections 6.5, 6.6, 6.7, 6.8, 7.6 and
7.11 hereof. In addition, the reports shall be accompanied by a certificate on
behalf of each Obligor by its Chief Financial Officer which shall state that,
based on an examination sufficient to permit him to make an informed statement,
no Default or Event of Default exists, or, if such is not the case, specifying
such Default or Event of Default, its nature, when it occurred, whether it is
continuing and the steps being taken by such Obligor with respect to such event,
and such certificate shall have appended thereto calculations which set forth
Obligors' compliance with the requirements or restrictions imposed by Sections
6.5, 6.6, 7.6 and 7.11 hereof.

         9.8. Quarterly Financial Statements. Furnish Agent within 45 days after
the end of each fiscal quarter, an unaudited balance sheet of the Borrower and
all of its direct and indirect Subsidiaries, and an unaudited balance sheet


<PAGE>


statement of the Borrower and all of its domestic Subsidiaries, all on a
consolidated and consolidating basis and unaudited statements of income and
stockholders' equity and cash flow of for each of the same, on a consolidated
and consolidating basis reflecting results of operations from the beginning of
the fiscal year to the end of such quarter and for such quarter, prepared on a
basis consistent with prior practices and fairly present, in all material
respects such financial condition, subject to normal year end and audit
adjustments. The reports shall be accompanied by a certificate on behalf of each
Obligor by the Chief Financial Officer of such Obligor, which shall state that,
based on an examination sufficient to permit him to make an informed statement,
no Default or Event of Default exists, or, if such is not the case, specifying
such Default or Event of Default, its nature, when it occurred, whether it is
continuing and the steps being taken by Obligors with respect to such default
and, such certificate shall have appended thereto calculations which set forth
Obligors' compliance with the requirements or restrictions imposed by Sections
6.5, 6.6, 7.6 and 7.11 hereof.

         9.9. Monthly Financial Statements and Borrowing Base Certificates.
Furnish Agent within thirty (30) days after the end of each month, an unaudited
statement of profit and loss of the Borrower and all of its direct and indirect
Subsidiaries and of the Borrower and all of its domestic Subsidiaries, all on a
consolidated and consolidating basis reflecting results of operations from the
beginning of the fiscal year to the end of such month and for such month,
prepared on a basis consistent with prior practices and fairly present, in all
material respects such financial condition, subject to normal year end and audit
adjustments. The reports shall be accompanied by a certificate on behalf of each
Obligor by the Chief Financial Officer of such Obligor, which shall state that,
based on an examination sufficient to permit it to make an informed statement,
no Default or Event of Default exists, or, if such is not the case, specifying
such Default or Event of Default, its nature, when it occurred, whether it is
continuing and the steps being taken by Obligors with respect to such event and,
such certificate shall have appended thereto calculations which set forth
Obligors' compliance with the requirements or restrictions imposed by Sections
6.5, 6.6, 7.6 and 7.11 hereof. Furnish Agent within three (3) days after the end
of each month a Borrowing Base Certificate for the Borrower and its domestic
Subsidiaries, on a consolidated basis, and for each domestic Obligor, in form
and reasonably satisfactory to the Agent.

         9.10. Other Reports. Furnish Agent as soon as available, but in any
event within ten (10) days after the issuance thereof, (i) with copies of such
financial statements, reports and returns as each Obligor shall send to its
stockholders and (ii) copies of all notices sent pursuant to the Indenture.

         9.11. Additional Information. Furnish Agent with such additional
information as Agent shall reasonably request in order to enable Agent to
determine whether the terms, covenants, provisions and conditions of this
Agreement and the Note have been complied with by Obligors including, without
limitation and without the necessity of any request by Agent, (a) copies of all
materially adverse environmental audits and reviews, (b) at least thirty (30)
days prior thereto, notice of any Obligor's opening of any new office or place
of business or any Borrower's closing of any existing office or place of
business, and (c) promptly upon any Borrower's learning thereof, notice of any
labor dispute to which any Obligor may become a party, any strikes or walkouts
relating to any of its plants or other facilities, and the expiration of any
labor contract to which any Obligor is a party or by which any Obligor is bound.

         9.12. Projected Operating Budget. Furnish Agent, no later than thirty
(30) days prior to the beginning of each Borrower's fiscal years commencing with
fiscal year 1998, a quarter by quarter projected operating budget and cash flow
of Obligors on a consolidated and consolidating basis for such fiscal year
(including an income statement for each quarter and a balance sheet as at the
end of the last quarter), such projections to be accompanied by a certificate
signed on behalf of Obligors by the President or Chief Financial Officer of each
Obligor to the effect that such projections have been prepared on the basis of
reasonable financial planning practice.

         9.13. Variances From Operating Budget. Furnish Agent, concurrently with
the delivery of the financial statements referred to in Section 9.7 and each
quarterly report, a written report summarizing all material variances from
budgets submitted by Obligors pursuant to Section 9.12 and a discussion and
analysis by management with respect to such variances.

         9.14. Notice of Suits, Adverse Events. Furnish Agent with prompt notice
of (i) any lapse or other termination of any Consent issued to any Obligor by
any Governmental Body or any other Person that is material to the


<PAGE>


operation of any Borrower's business, (ii) any refusal by any Governmental Body
or any other Person to renew or extend any such Consent; and (iii) copies of any
periodic or special reports filed by any Obligor with any Governmental Body or
Person, if such reports indicate any material change in the business,
operations, affairs or condition of any Obligor, or if copies thereof are
requested by Lender, and (iv) copies of any material notices and other
communications from any Governmental Body or Person which specifically relate to
any Obligor.

         9.15. ERISA Notices and Requests. Furnish Agent with immediate written
notice in the event, which event could reasonably be expected to have a Material
Adverse Effect, that (i) any Borrower or any member of the Controlled Group
knows or has reason to know that a Termination Event has occurred, together with
a written statement describing such Termination Event and the action, if any,
which such Obligor or member of the Controlled Group has taken, is taking, or
proposes to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, Department of Labor or PBGC with
respect thereto, (ii) any Obligor or any member of the Controlled Group knows or
has reason to know that a prohibited transaction (as defined in Sections 406 of
ERISA and 4975 of the Code) has occurred together with a written statement
describing such transaction and the action which such Obligor or any member of
the Controlled Group has taken, is taking or proposes to take with respect
thereto, (iii) a funding waiver request has been filed with respect to any Plan
together with all communications received by any Borrower or any member of the
Controlled Group with respect to such request, (iv) any increase in the benefits
of any existing Plan or the establishment of any new Plan or the commencement of
contributions to any Plan to which any Obligor or any member of the Controlled
Group was not previously contributing shall occur, (v) any Obligor or any member
of the Controlled Group shall receive from the PBGC a notice of intention to
terminate a Plan or to have a trustee appointed to administer a Plan, together
with copies of each such notice, (vi) any Obligor or any member of the
Controlled Group shall receive any unfavorable determination letter from the
Internal Revenue Service regarding the qualification of a Plan under Section
401(a) of the Code, together with copies of each such letter; (vii) any Obligor
or any member of the Controlled Group shall receive a notice regarding the
imposition of withdrawal liability, together with copies of each such notice;
(viii) any Obligor or any member of the Controlled Group shall fail to make a
required installment or any other required payment under Section 412 of the Code
on or before the due date for such installment or payment; (ix) any Obligor or
any member of the Controlled Group knows that (a) a Multiemployer Plan has been
terminated, (b) the administrator or plan sponsor of a Multiemployer Plan
intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted or
will institute proceedings under Section 4042 of ERISA to terminate a
Multiemployer Plan.

         9.16. Additional Documents. Execute and deliver to Agent, upon request,
such documents and agreements as Agent may, from time to time, reasonably
request to carry out the purposes, terms or conditions of this Agreement.


X.       EVENTS OF DEFAULT.

         The occurrence of any one or more of the following events shall
constitute an "Event of Default":

         10.1. failure by any Obligor to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant
to the terms of this Agreement or by notice of intention to prepay, or by
required prepayment or failure to pay any other liabilities or make any other
payment, fee or charge provided for herein when due or in any Other Document;

         10.2. any representation or warranty made or deemed made by any Obligor
in this Agreement or any related agreement or in any certificate, document or
financial or other statement furnished at any time in connection herewith or
therewith shall prove to have been misleading in any material respect on the
date when made or deemed to have been made;

         10.3. failure by any Obligor to (i) furnish financial information
within fifteen (15) days of when due, or (ii) permit the inspection of its books
or records;


<PAGE>


         10.4. issuance of a notice of Lien (other than Permitted Encumbrances),
levy, assessment, injunction or attachment against a material portion of any
Obligor's property, which within thirty (30) days of receipt by any Obligor of
such notice is not either satisfied, stayed, fully bonded or discharged of
record;

         10.5. except as otherwise provided for in Sections 10.1 and 10.3,
failure or neglect of any Obligor to perform, keep or observe any term,
provision, condition, covenant herein contained, or contained in any other
agreement or arrangement, now or hereafter entered into between any Obligor and
Agent or any Lender;

         10.6. any judgment or judgments are rendered or judgment liens filed
against any Obligor for an aggregate amount in excess of $$1,000,000 which
within thirty (30) days of such rendering or filing is not either satisfied,
stayed, fully bonded or discharged of record;

         10.7. any Obligor shall (i) apply for, consent to or suffer the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of creditors, (iii)
commence a voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a
petition seeking to take advantage of any other law providing for the relief of
debtors, (vi) acquiesce to, or fail to have dismissed, within thirty (30) days,
any petition filed against it in any involuntary case under such bankruptcy
laws, or (vii) take any action for the purpose of effecting any of the
foregoing;

         10.8. any Obligor shall admit in writing its inability, or be generally
unable, to pay its debts as they become due or, with the exception of Inactive
Subsidiaries, cease operations of its present business;

         10.9. Intentionally Omitted.

         10.10. any change in any Obligor's condition or affairs (financial or
otherwise) which in Agent's opinion has a Material Adverse Effect;

         10.11. any Lien created hereunder or provided for hereby or under any
related agreement for any reason ceases to be or is not a valid and perfected
Lien having a first priority interest (subject to Permitted Encumbrances);

         10.12. an event of default has occurred and been declared under the
Indenture which default shall not have been cured or waived within any
applicable grace period;

         10.13. a default by one or more Obligors or by any foreign Subsidiary
of any Obligor with respect to Indebtedness, individually or collectively
aggregating $500,000 or more, or a default of the obligations of any Obligor or
any foreign Subsidiary of any Obligor under any other agreement to which it is a
party shall occur which in the reasonable judgment of Agent, would have a
Material Adverse Effect, which defaults are not cured within any applicable
grace period;

         10.14. termination or breach of any Guaranty or similar agreement
executed and delivered to Agent in connection with the Obligations of any
Obligor, or if any Guarantor attempts to terminate, challenges the validity of,
or its liability under, any such Guaranty or similar agreement;

         10.15. any Change of Control shall occur;

         10.16. any material provision of this Agreement shall, for any reason,
cease to be valid and binding on any Obligor, or any Obligor shall so claim in
writing to Agent;

         10.17. (i) any Governmental Body shall (A) revoke, terminate, suspend
or adversely modify any license, permit, patent trademark or trade name of any
Obligor, the continuation of which is material to the continuation of any
Obligor's business, or (B) commence proceedings to suspend, revoke, terminate or
adversely modify any such license,


<PAGE>


permit, trademark, trade name or patent and such proceedings shall not be
dismissed or discharged within sixty (60) days, or (c) schedule or conduct a
hearing on the renewal of any license, permit, trademark, trade name or patent
necessary for the continuation of any Obligor's business and the staff of such
Governmental Body issues a report recommending the termination, revocation,
suspension or material, adverse modification of such license, permit, trademark,
trade name or patent; (ii) any agreement which is necessary or material to the
operation of any Borrower's business shall be revoked or terminated and not
replaced by a substitute acceptable to Agent within thirty (30) days after the
date of such revocation or termination, and such revocation or termination and
non-replacement would reasonably be expected to have a Material Adverse Effect
on any Obligor;

         10.18. any portion of the Collateral shall be seized or taken by a
Governmental Body, or any Obligor or the title and rights of any Obligor or any
Original Owner which is the owner of any material portion of the Collateral
shall have become the subject matter of litigation which is reasonably likely,
in the reasonable opinion of Agent, upon final determination, result in
impairment or loss of the security provided by this Agreement or the Other
Documents;

         10.19. the operations of any Obligor's manufacturing facility are
interrupted which interruption could reasonably be expected to have a Material
Adverse Effect; or

         10.20. an event or condition specified in Sections 7.16 or 9.15 hereof
shall occur or exist with respect to any Plan and, as a result of such event or
condition, together with all other such events or conditions, any Obligor or any
member of the Controlled Group shall incur a liability to a Plan or the PBGC (or
both) which, in the reasonable judgment of Agent, would have a Material Adverse
Effect.


XI.      LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.

         11.1. Rights and Remedies. Upon the occurrence of (i) an Event of
Default pursuant to Section 10.7 all Obligations shall be immediately due and
payable and this Agreement and the obligation of Lenders to make Advances shall
be deemed terminated; and, (ii) any of the other Events of Default and at any
time thereafter (such default not having previously been cured), at the option
of Required Lenders all Obligations shall be immediately due and payable and
Lenders shall have the right to terminate this Agreement and to terminate the
obligation of Lenders to make Advances and (iii) a filing of a petition against
Obligor in any involuntary case under any state or federal bankruptcy laws, the
obligation of Lenders to make Advances hereunder shall be terminated other than
as may be required by an appropriate order of the bankruptcy court having
jurisdiction over any Obligor. Upon the occurrence of any Event of Default,
Agent shall have the right to exercise any and all other rights and remedies
provided for herein, under the Uniform Commercial Code and at law or equity
generally, including, without limitation, the right to foreclose the security
interests granted herein and to realize upon any Collateral by any available
judicial procedure and/or to take possession of and sell any or all of the
Collateral with or without judicial process. Agent may enter any of Obligor's
premises or other premises without legal process and without incurring liability
to any Obligor therefor, and Agent may thereupon, or at any time thereafter, in
its discretion without notice or demand, take the Collateral and remove the same
to such place as Agent may deem advisable and Agent may require Obligors to make
the Collateral available to Agent at a convenient place. With or without having
the Collateral at the time or place of sale, Agent may sell the Collateral, or
any part thereof, at public or private sale, at any time or place, in one or
more sales, at such price or prices, and upon such terms, either for cash,
credit or future delivery, as Agent may elect. Except as to that part of the
Collateral which is perishable or threatens to decline speedily in value or is
of a type customarily sold on a recognized market, Agent shall give Obligors
reasonable notification of such sale or sales, it being agreed that in all
events written notice mailed to Obligors at least five (5) days prior to such
sale or sales is reasonable notification. At any public sale Agent or any Lender
may bid for and become the purchaser, and Agent, any Lender or any other
purchaser at any such sale thereafter shall hold the Collateral sold absolutely
free from any claim or right of whatsoever kind, including any equity of
redemption and such right and equity are hereby expressly waived and released by
each Obligor. The proceeds realized from the sale of any Collateral shall be
applied as follows: first, to the reasonable costs, expenses and attorneys' fees
and expenses incurred by Agent for collection and for acquisition, completion,
protection, removal, storage, sale and delivery of the Collateral; second, to
interest due upon any of the Obligations and any fees payable under this
Agreement; and, third,


<PAGE>


to the principal of the Obligations. If any deficiency shall arise, Obligors
shall remain liable to Agent and Lenders therefor. The Agent shall return any
surplus to the Obligors, subject to any duty imposed by law upon the Agent
and/or Lenders, including but not limited to any duty owed to the holder of a
subordinated security interest in any Collateral. Each Obligor hereby assigns,
transfers and conveys to the Agent, for the benefit of the Lenders, effective
upon the occurrence of any Event of Default hereunder, the right and license to
use all Intellectual Property, Equipment and General Intangibles owned or used
by such Obligor to the extent necessary to enable the Agent to dispose of the
Inventory, for the purpose of completing the manufacturing of unfinished goods,
collecting Receivables or to otherwise liquidate, transfer or realize on the
Collateral. Such right and license is granted free of charge, without
requirement of any monetary payment whatsoever to be made to any Obligor by the
Agent. The Obligors shall cooperate with all reasonable directions of and
execute and deliver all documentation reasonably requested by the Agent for the
purpose of implementing the foregoing provisions.

         11.2. Agent's Discretion. Agent shall have the right in its sole
discretion to determine which rights, Liens, security interests or remedies
Agent may at any time pursue, relinquish, subordinate, or modify or to take any
other action with respect thereto and such determination will not in any way
modify or affect any of Agent's or Lenders' rights hereunder.

         11.3. Setoff. In addition to any other rights which Agent or any Lender
may have under applicable law, upon the occurrence of an Event of Default
hereunder, Agent and such Lender shall have a right to apply any Obligor's
property held by Agent and such Lender to reduce the Obligations.

         11.4. Rights and Remedies not Exclusive. The enumeration of the
foregoing rights and remedies is not intended to be exhaustive and the exercise
of any right or remedy shall not preclude the exercise of any other right or
remedies provided for herein, in any Guaranty or otherwise provided by law, all
of which shall be cumulative and not alternative.


XII.     WAIVERS AND JUDICIAL PROCEEDINGS.

         12.1. Waiver of Notice. Each Obligor hereby waives notice of
non-payment of any of the Receivables, demand, presentment, protest and notice
thereof with respect to any and all instruments, notice of acceptance hereof,
notice of loans or advances made, credit extended, Collateral received or
delivered, or any other action taken in reliance hereon, and all other demands
and notices of any description, except such as are expressly provided for
herein.

         12.2. Delay. No delay or omission on Agent's or any Lender's part in
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.

         12.3. Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.


<PAGE>


XIII.    EFFECTIVE DATE AND TERMINATION.

         13.1. Term. This Agreement, which shall inure to the benefit of and
shall be binding upon the respective successors and permitted assigns of each
Obligor, Agent and each Lender, shall become effective on the date hereof and
shall continue in full force and effect until August 19, 2003 (the "Term")
unless sooner terminated as herein provided. Borrower may terminate this
Agreement at any time upon sixty (60) days' prior written notice upon payment in
full of the payment Obligations (whether in the form of principal, interest,
reimbursement obligations, fees, penalties, charges, expenses or otherwise) with
the exception of indemnification obligations under this Agreement for which no
claim recited thereunder has arisen) . In the event the Obligations are prepaid
in full prior to third anniversary date of the Closing Date (the date of such
prepayment hereinafter referred to as the "Early Termination Date"), Borrower
shall pay to Agent for the benefit of Lenders an early termination fee in an
amount equal to $350,000 if the Early Termination Date occurs on or after the
Closing Date to and including the date immediately preceding the third
anniversary of the Closing Date.

         13.2. Termination. The termination of the Agreement shall not affect
any Obligor's, Agent's or any Lender's rights, or any of the Obligations having
their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have been fully
disposed of, concluded or liquidated. The security interests, Liens and rights
granted to Agent and Lenders hereunder and the financing statements filed
hereunder shall continue in full force and effect, notwithstanding the
termination of this Agreement or the fact that Borrower's Account may from time
to time be temporarily in a zero or credit position, until all of the payment
Obligations (whether in the form of principal, interest, reimbursement
obligations, fees, penalties, charges, expenses or otherwise) with the exception
of indemnification obligations under this Agreement for which no claim subject
thereto has been made and has not been terminated, satisfied released or
withdrawn) of each Obligor have been paid and satisfied in full after the
termination of this Agreement or each Obligor has furnished Agent and Lenders
with an indemnification satisfactory to Agent and Lenders with respect thereto.
Accordingly, each Obligor waives any rights which it may have under Section
9-404(1) of the Uniform Commercial Code to demand the filing of termination
statements with respect to the Collateral, and Agent shall not be required to
send such termination statements to each Obligor, or to file them with any
filing office, unless and until this Agreement shall have been terminated in
accordance with its terms and all payment Obligations (whether in the form of
principal, interest, reimbursement obligations, fees, penalties, charges,
expenses or otherwise) with the exception of indemnification obligations under
this Agreement for which no claim subject thereto has been made and has not been
terminated, satisfied released or withdrawn) paid in full in immediately
available funds. All representations, warranties, covenants, waivers and
agreements contained herein shall survive termination hereof until all
Obligations are paid or performed in full. Notwithstanding anything contained
herein to the contrary all indemnification obligations under this Agreement
shall survive termination of this Agreement.


XIV.     REGARDING AGENT.

         14.1. Appointment. Each Lender hereby designates PNC to act as Agent
for such Lender under this Agreement and the Other Documents. Each Lender hereby
irrevocably authorizes Agent to take such action on its behalf under the
provisions of this Agreement and the Other Documents and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal and interest, fees (except the fees set forth in Sections
3.2(a), charges and collections (without giving effect to any collection days)
received pursuant to this Agreement, for the ratable benefit of Lenders. Agent
may perform any of its duties hereunder by or through its agents or employees.
As to any matters not expressly provided for by this Agreement (including
without limitation, collection of the Note) Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding; provided, however, that Agent shall not be
required to take any action which exposes Agent to liability or which is
contrary to this Agreement or the Other Documents or applicable law unless Agent
is furnished with an indemnification reasonably satisfactory to Agent with
respect thereto.


<PAGE>


         14.2. Nature of Duties. Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement and the Other Documents.
Neither Agent nor any of its officers, directors, employees or agents shall be
(i) liable for any action taken or omitted by them as such hereunder or in
connection herewith, unless caused by their gross (not mere) negligence or
willful misconduct, or (ii) responsible in any manner for any recitals,
statements, representations or warranties made by any Obligor or any officer
thereof contained in this Agreement, or in any of the Other Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any of the
Other Documents or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, or any of the Other Documents
or for any failure of any Obligor to perform its obligations hereunder. Agent
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any of the Other Documents, or to inspect the
properties, books or records of any Borrower. The duties of Agent as respects
the Advances to Borrower shall be mechanical and administrative in nature; Agent
shall not have by reason of this Agreement a fiduciary relationship in respect
of any Lender; and nothing in this Agreement, expressed or implied, is intended
to or shall be so construed as to impose upon Agent any obligations in respect
of this Agreement except as expressly set forth herein.

         14.3. Lack of Reliance on Agent and Resignation. Independently and
without reliance upon Agent or any other Lender, each Lender has made and shall
continue to make (i) its own independent investigation of the financial
condition and affairs of each Obligor in connection with the making and the
continuance of the Advances hereunder and the taking or not taking of any action
in connection herewith, and (ii) its own appraisal of the creditworthiness of
each Obligor. Agent shall have no duty or responsibility, either initially or on
a continuing basis, to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before making of the
Advances or at any time or times thereafter except as shall be provided by any
Obligor pursuant to the terms hereof. Agent shall not be responsible to any
Lender for any recitals, statements, information, representations or warranties
herein or in any agreement, document, certificate or a statement delivered in
connection with or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any Other
Document, or of the financial condition of any Obligor, or be required to make
any inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement, the Note, the Other Documents or the
financial condition of any Borrower, or the existence of any Event of Default or
any Default.

         Agent may resign on sixty (60) days' written notice to each of Lenders
and Borrower and upon such resignation, the Required Lenders will promptly
designate a successor Agent reasonably satisfactory to Borrower.

         Any such successor Agent shall succeed to the rights, powers and duties
of Agent, and the term "Agent" shall mean such successor agent effective upon
its appointment, and the former Agent's rights, powers and duties as Agent shall
be terminated, without any other or further act or deed on the part of such
former Agent. After any Agent's resignation as Agent, the provisions of this
Article XIV shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.

         14.4. Certain Rights of Agent. If Agent shall request instructions from
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from the Required Lenders; and Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, Lenders shall not have any right of action whatsoever against Agent
as a result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.

         14.5. Reliance. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, order or other
document or telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to this Agreement and the Other Documents and
its duties hereunder, upon advice of counsel selected by it. Agent may employ
agents and attorneys-in-fact and shall not be liable for the default or
misconduct of any such agents or attorneys-in-fact selected by Agent with
reasonable care.


<PAGE>


         14.6. Notice of Default. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder or under
the Other Documents, unless Agent has received notice from a Lender or a Obligor
referring to this Agreement or the Other Documents, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that Agent receives such a notice, Agent shall give notice thereof to
Lenders. Agent shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Lenders; provided, that,
unless and until Agent shall have received such directions, Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of Lenders.

         14.7. Indemnification. To the extent Agent is not reimbursed and
indemnified by Obligors, each Lender will reimburse and indemnify Agent in
proportion to its respective portion of the Advances (or, if no Advances are
outstanding, according to its Commitment Percentage), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against Agent in performing its
duties hereunder, or in any way relating to or arising out of this Agreement or
any Other Document; provided that, Lenders shall not be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent's gross
(not mere) negligence or willful misconduct.

         14.8. Agent in its Individual Capacity. With respect to the obligation
of Agent to lend under this Agreement, the Advances made by it shall have the
same rights and powers hereunder as any other Lender and as if it were not
performing the duties as Agent specified herein; and the term "Lender" or any
similar term shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity as a Lender. Agent may engage in business with
any Obligor as if it were not performing the duties specified herein, and may
accept fees and other consideration from any Obligor for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders.

         14.9. Delivery of Documents. To the extent Agent receives financial
statements required under Sections 9.7, 9.8, and 9.9 from any Obligor pursuant
to the terms of this Agreement, Agent will promptly furnish such documents and
information to Lenders.

         14.10. Borrower's Undertaking to Agent. Without prejudice to their
respective obligations to Lenders under the other provisions of this Agreement,
Borrower hereby undertakes with Agent to pay to Agent from time to time on
demand all amounts from time to time due and payable by it for the account of
Agent or Lenders or any of them pursuant to this Agreement to the extent not
already paid. Any payment made pursuant to any such demand shall pro tanto
satisfy the relevant Borrower's obligations to make payments for the account of
Lenders or the relevant one or more of them pursuant to this Agreement.


XV.      MISCELLANEOUS.

         15.1. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey applied to contracts to
be performed wholly within the State of New Jersey. Any judicial proceeding
brought by or against any Borrower with respect to any of the Obligations, this
Agreement or any related agreement may be brought in any court of competent
jurisdiction in the State of New Jersey, United States of America, and, by
execution and delivery of this Agreement, each Obligor accepts for itself and in
connection with its properties, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement. Each Obligor hereby
waives personal service of any and all process upon it and consents that all
such service of process may be made by registered mail (return receipt
requested) directed to Borrower at its address set forth in Section 15.6 shall
be deemed completed five (5) days after the same shall have been so deposited in
the mails of the United States of America. Nothing herein shall affect the right
to serve process in any manner permitted by law or shall limit the right of
Agent or any Lender to bring proceedings against any Obligor in the courts of
any other jurisdiction. Each Obligor waives any objection to jurisdiction and
venue of any action instituted hereunder and shall not assert any defense based
on lack of jurisdiction or venue or based upon forum


<PAGE>


non conveniens. Any judicial proceeding by any Obligor against Agent or any
Lender involving, directly or indirectly, any matter or claim in any way arising
out of, related to or connected with this Agreement or any related agreement,
shall be brought only in a federal or state court located in the County of
Middlesex, State of New Jersey.

         15.2. Entire Understanding. (a) This Agreement and the documents
executed concurrently herewith contain the entire understanding between each
Obligor, Agent and each Lender and supersedes all prior agreements and
understandings, if any, relating to the subject matter hereof. Any promises,
representations, warranties or guarantees not herein contained and hereinafter
made shall have no force and effect unless in writing, signed by each Obligor's,
Agent's and each Lender's respective officers. Neither this Agreement nor any
portion or provisions hereof may be changed, modified, amended, waived,
supplemented, discharged, canceled or terminated orally or by any course of
dealing, or in any manner other than by an agreement in writing, signed by the
party to be charged. Each Obligor acknowledges that it has been advised by
counsel in connection with the execution of this Agreement and Other Documents
and is not relying upon oral representations or statements inconsistent with the
terms and provisions of this Agreement.

                  (b) The Required Lenders, Agent with the consent in writing of
the Required Lenders, and Borrower may, subject to the provisions of this
Section 15.2 (b), from time to time enter into written supplemental agreements
to this Agreement or the Other Documents executed by Obligors, for the purpose
of adding or deleting any provisions or otherwise changing, varying or waiving
in any manner the rights of Lenders, Agent or Obligors thereunder or the
conditions, provisions or terms thereof of waiving any Event of Default
thereunder, but only to the extent specified in such written agreements;
provided, however, that no such supplemental agreement shall, without the
consent of all Lenders:

                           (i) increase the Commitment Percentage or Commitment
Amount of any Lender.

                           (ii) extend the maturity of any Note or the due date
for any amount payable hereunder, or decrease the rate of interest or reduce any
fee payable by Obligors to Lenders pursuant to this Agreement.

                           (iii) alter the definition of the term Required
Lenders or alter, amend or modify this Section 15.2(b).

                           (iv) release any Collateral during any calendar year
(other than in accordance with the provisions of this Agreement) having an
aggregate value in excess of $1,000,000.

                           (v) change the rights and duties of Agent.

                           (vi) permit any Revolving Advance to be made if after
giving effect thereto the total of Advances outstanding hereunder would exceed
the Formula Amount for more than sixty (60) consecutive Business Days or exceed
one hundred and ten percent (110%) of the Formula Amount.

                           (vii) increase the Advance Rates above the Advance
Rates in effect on the Closing Date.

                           (viii) increase the Maximum Revolving Advance Amount
or permit any Revolving Advance to be made if after giving effect thereto the
total of Revolving Advances outstanding hereunder would exceed the Formula
Amount for more than sixty (60) consecutive Business Days or exceed one hundred
ten percent (110%) of the Formula Amount.

Any such supplemental agreement shall apply equally to each Lender and shall be
binding upon Obligor, Lenders and Agent and all future holders of the
Obligations. In the case of any waiver, Obligors, Agent and Lenders shall be
restored to their former positions and rights, and any Event of Default waived
shall be deemed to be cured and not continuing, but no waiver of a specific
Event of Default shall extend to any subsequent Event of Default (whether or not
the subsequent Event of Default is the same as the Event of Default which was
waived), or impair any right consequent thereon.


<PAGE>


         In the event that Agent requests the consent of a Lender in writing
pursuant to this Section 15.2 and such Lender shall not respond or reply to
Agent in writing within ten (10) days of delivery of such request, such Lender
shall be deemed to have consented to matter that was the subject of the request.
In the event that Agent requests the consent of a Lender pursuant to this
Section 15.2 and such consent is denied, then PNC may, at its option, require
such Lender to assign its interest in the Advances to PNC or to another Lender
or to any other Person designated by the Agent (the "Designated Lender"), for a
price equal to the then outstanding principal amount thereof plus accrued and
unpaid interest and fees due such Lender, which interest and fees shall be paid
when collected from Borrower. In the event PNC elects to require any Lender to
assign its interest to PNC or to the Designated Lender, PNC will so notify such
Lender in writing within forty five (45) days following such Lender's denial,
and such Lender will assign its interest to PNC or the Designated Lender no
later than five (5) days following receipt of such notice pursuant to a
Commitment Transfer Supplement executed by such Lender, PNC or the Designated
Lender, as appropriate, and Agent.

         15.3. Successors and Assigns; Participations; New Lenders.

                  (a) This Agreement shall be binding upon and inure to the
benefit of Obligors, Agent, each Lender, all future holders of the Obligations
and their respective successors and assigns, except that no Obligor may assign
or transfer any of its rights or obligations under this Agreement without the
prior written consent of Agent and each Lender.

                  (b) Each Obligor acknowledges that in the regular course of
commercial banking business one or more Lenders may at any time and from time to
time sell participating interests in the Advances to other financial
institutions (each such transferee or purchaser of a participating interest, a
"Transferee"). Each Transferee may exercise all rights of payment (including
without limitation rights of set-off) with respect to the portion of such
Advances held by it or other Obligations payable hereunder as fully as if such
Transferee were the direct holder thereof provided that Obligors shall not be
required to pay to any Transferee more than the amount which it would have been
required to pay to Lender which granted an interest in its Advances or other
Obligations payable hereunder to such Transferee had such Lender retained such
interest in the Advances hereunder or other Obligations payable hereunder and in
no event shall Obligors be required to pay any such amount arising from the same
circumstances and with respect to the same Advances or other Obligations payable
hereunder to both such Lender and such Transferee. Each Obligor hereby grants to
any Transferee a continuing security interest in any deposits, moneys or other
property actually or constructively held by such Transferee as security for the
Transferee's interest in the Advances.

                  (c) Any Lender may with the consent of Agent which shall not
be unreasonably withheld or delayed sell, assign or transfer all or any part of
its rights under this Agreement and the Other Documents to one or more
additional banks or financial institutions and one or more additional banks or
financial institutions may commit to make Advances hereunder (each a "Purchasing
Lender"), in minimum amounts of not less than $5,000,000, pursuant to a
Commitment Transfer Supplement, executed by a Purchasing Lender, the transferor
Lender, and Agent and delivered to Agent for recording. Upon such execution,
delivery, acceptance and recording, from and after the transfer effective date
determined pursuant to such Commitment Transfer Supplement, (i) Purchasing
Lender thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Lender
thereunder with a Commitment Percentage as set forth therein, and (ii) the
transferor Lender thereunder shall, to the extent provided in such Commitment
Transfer Supplement, be released from its obligations under this Agreement, the
Commitment Transfer Supplement creating a novation for that purpose. Such
Commitment Transfer Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of the Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this Agreement and the
Other Documents. Obligors hereby consent to the addition of such Purchasing
Lender and the resulting adjustment of the Commitment Percentages arising from
the purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement and the Other
Documents. Obligors shall execute and deliver such further documents and do such
further acts and things in order to effectuate the foregoing.


<PAGE>


                  (d) Agent shall maintain at its address a copy of each
Commitment Transfer Supplement delivered to it and a register (the "Register")
for the recordation of the names and addresses of the Advances owing to each
Lender from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and Obligors, Agent and Lenders may treat each
Person whose name is recorded in the Register as the owner of the Advance
recorded therein for the purposes of this Agreement. The Register shall be
available for inspection by Obligors or any Lender at any reasonable time and
from time to time upon reasonable prior notice. Agent shall receive a fee in the
amount of $3,500 payable by the applicable Purchasing Lender upon the effective
date of each transfer or assignment to such Purchasing Lender.

                  (e) Obligors authorize each Lender to disclose, on a
confidential basis, to any Transferee or Purchasing Lender and any prospective
Transferee or Purchasing Lender any and all financial information in such
Lender's possession concerning Obligors which has been delivered to such Lender
by or on behalf of Obligors pursuant to this Agreement or in connection with
such Lender's credit evaluation of Obligors.

         15.4. Application of Payments. Agent shall have the continuing and
exclusive right to apply or reverse and re-apply any payment and any and all
proceeds of Collateral to any portion of the Obligations. To the extent that any
Obligor makes a payment or Agent or any Lender receives any payment or proceeds
of the Collateral for any Obligor's benefit, which are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, debtor in possession, receiver, custodian or any other party under
any bankruptcy law, common law or equitable cause, then, to such extent, the
Obligations or part thereof intended to be satisfied shall be revived and
continue as if such payment or proceeds had not been received by Agent or such
Lender.

         15.5. Indemnity. Each Obligor shall indemnify Agent, each Lender and
each of their respective officers, directors, Affiliates, employees and agents
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever (including, without limitation, fees and disbursements
of counsel) which may be imposed on, incurred by, or asserted against Agent or
any Lender in any litigation, proceeding or investigation instituted or
conducted by any governmental agency or instrumentality or any other Person with
respect to any aspect of, or any transaction contemplated by, or referred to in,
or any matter related to, this Agreement or the Other Documents, whether or not
Agent or any Lender is a party thereto, except to the extent that any of the
foregoing arises out of the willful misconduct or gross negligence of the party
being indemnified.

         15.6. Notice. Any notice or request hereunder may be given to any
Obligor or to Agent or any Lender at their respective addresses set forth below
or at such other address as may hereafter be specified in a notice designated as
a notice of change of address under this Section. Any notice or request
hereunder shall be given by (a) hand delivery, (b) overnight courier, (c)
registered or certified mail, return receipt requested, (d) telex or telegram,
subsequently confirmed by registered or certified mail, or (e) telecopy to the
number set out below (or such other number as may hereafter be specified in a
notice designated as a notice of change of address) with electronic confirmation
of its receipt. Any notice or other communication required or permitted pursuant
to this Agreement shall be deemed given (a) when personally delivered to any
officer of the party to whom it is addressed, (b) on the earlier of actual
receipt thereof or three (3) days following posting thereof by certified or
registered mail, postage prepaid, or (c) upon actual receipt thereof when sent
by a recognized overnight delivery service or (d) upon actual receipt thereof
when sent by telecopier to the number set forth below with electronic
confirmation of its receipt, in each case addressed to each party at its address
set forth below or at such other address as has been furnished in writing by a
party to the other by like notice:

    (A)  If to Agent or                     PNC Bank, National Association
             PNC at:                        Two Tower Center Boulevard
                                            East Brunswick, New Jersey 08816
                                            Attention:  Peter R. Schryver,
                                                        Sr. Vice President
                                            Telephone:  732-220-4334
                                            Telecopier: 732-220-4399

<PAGE>

             with a copy to:                Wilentz, Goldman & Spitzer
                                            90 Woodbridge Center Driver
                                            Woodbridge, New Jersey 07095
                                            Attention:  Stuart A. Hoberman, Esq.
                                            Telephone:  732-855-6052
                                            Telecopier: 732-855-6117

             (B) If to a Lender other than Agent, as specified on the signature
pages hereof

             (C)  If to Obligors at:        Philipp Brothers Chemicals, Inc.
                                            One Parker Plaza
                                            Fort Lee, New Jersey  07024
                                            Attention: Nathan Bistricer, CFO
                                            Telephone: 201-944-6020
                                            Telecopier: 201-944-6425

                  with a copy to:           Golenbock, Eiseman, Assor & Bell
                                            437 Madison Avenue
                                            New York, New York  10022
                                            Attention: Nathan E. Assor, Esq.
                                            Telephone: 212-907-7300
                                            Telecopier: 212-754-0330

         15.7. Survival. The obligations of Borrowers under Sections 2.3(f),
3.7, 3.8, 3.9, 4.19(h), 14.7 and 15.5 shall survive termination of this
Agreement and the Other Documents and payment in full of the Obligations.

         15.8. Severability. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.

         15.9. Expenses. All costs and expenses including, without limitation,
reasonable attorneys' fees (including the allocated costs of in house counsel)
and disbursements incurred by Agent, Agent on behalf of Lenders and Lenders (a)
in all efforts made to enforce payment of any Obligation or effect collection of
any Collateral, or (b) in connection with the entering into, modification,
amendment, administration and enforcement of this Agreement or any consents or
waivers hereunder and all related agreements, documents and instruments, or (c)
in instituting, maintaining, preserving, enforcing and foreclosing on Agent's
security interest in or Lien on any of the Collateral, whether through judicial
proceedings or otherwise, or (d) in defending or prosecuting any actions or
proceedings arising out of or relating to Agent's or any Lender's transactions
with any Obligor, or (e) in connection with any advice given to Agent or any
Lender with respect to its rights and obligations under this Agreement and all
related agreements, may be charged to Borrower's Account and shall be part of
the Obligations.

         15.10. Injunctive Relief. Each Obligor recognizes that, in the event
any Obligor fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to Lenders; therefore, Agent, if Agent so requests, shall be entitled to
temporary and permanent injunctive relief in any such case without the necessity
of proving that actual damages are not an adequate remedy.

         15.11. Consequential Damages. Neither Agent nor any Lender, nor any
agent or attorney for any of them, shall be liable to any Obligor for
consequential damages arising from any breach of contract, tort or other wrong
relating to the establishment, administration or collection of the Obligations.

         15.12. Captions. The captions at various places in this Agreement are
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.

<PAGE>

         15.13. Counterparts; Telecopied Signatures. This Agreement may be
executed in any number of and by different parties hereto on separate
counterparts, all of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.

         15.14. Construction. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.

         15.15. Confidentiality; Sharing Information. (a) Agent, each Lender and
each Transferee shall hold all non-public information obtained by Agent, such
Lender or such Transferee pursuant to the requirements of this Agreement in
accordance with Agent's, such Lender's and such Transferee's customary
procedures for handling confidential information of this nature; provided,
however, Agent, each Lender and each Transferee may disclose such confidential
information (a) to its examiners, affiliates, outside auditors, counsel and
other professional advisors, (b) to Agent, any Lender or to any prospective
Transferees and Purchasing Lenders, and (c) as required or requested by any
Governmental Body or representative thereof or pursuant to legal process;
provided, further that (i) unless specifically prohibited by applicable law or
court order, Agent, each Lender and each Transferee shall use its best efforts
prior to disclosure thereof, to notify the applicable Obligor of the applicable
request for disclosure of such non-public information (A) by a Governmental Body
or representative thereof (other than any such request in connection with an
examination of the financial condition of a Lender or a Transferee by such
Governmental Body) or (B) pursuant to legal process and (ii) in no event shall
Agent, any Lender or any Transferee be obligated to return any materials
furnished by any Obligor other than those documents and instruments in
possession of Agent or any Lender in order to perfect its Lien on the Collateral
once the Obligations have been paid in full and this Agreement has been
terminated.

                  (b) Borrower acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
such Obligor or one or more of its Affiliates (in connection with this Agreement
or otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such
Lender and each Obligor hereby authorizes each Lender to share any information
delivered to such Lender by such Obligor and its Subsidiaries pursuant to this
Agreement, or in connection with the decision of such Lender to enter into this
Agreement, to any such Subsidiary or Affiliate of such Lender, it being
understood that any such Subsidiary or Affiliate of any Lender receiving such
information shall be bound by the provision of Section 15.15 as if it were a
Lender hereunder. Such authorization shall survive the repayment of the other
Obligations and the termination of the Loan Agreement.

         15.16. Publicity. Agent may, with the prior written consent of the
Borrower, which consent shall not be unreasonably withheld, make appropriate
announcements of the financial arrangement entered into among Obligors, Agent
and Lenders, including, without limitation, announcements which are commonly
known as tombstones, in such publications and to such selected parties
designated by Agent.

<PAGE>

         Each of the parties has signed this Agreement as of the day and year
first above written.

                                           PHILIPP BROTHERS CHEMICALS, INC.
ATTEST:

BY:  /s/ Joseph M. Katzenstein             By:  /s/ Nathan Z. Bistricer
     ---------------------------------          ------------------------------
      Joseph M. Katzenstein, Secretary     Nathan Z. Bistricer, Vice President
                                           One Parker Plaza
                                           Fort Lee, N.J. 07024


                                           PHIBRO-TECH, INC.
ATTEST:

BY:  /s/ Joseph M. Katzenstein             By:  /s/ Nathan Z. Bistricer
     ---------------------------------     -----------------------------------
      Joseph M. Katzenstein, Secretary     Nathan Z. Bistricer, Vice President
                                           One Parker Plaza
                                           Fort Lee, N.J. 07024


                                           C P CHEMICALS, INC.
ATTEST:

BY:  /s/ Joseph M. Katzenstein             By:  /s/ Nathan Z. Bistricer
     ---------------------------------          ------------------------------
      Joseph M. Katzenstein, Secretary     Nathan Z. Bistricer, Vice President
                                           One Parker Plaza
                                           Fort Lee, N.J. 07024


                                           THE PRINCE MANUFACTURING COMPANY (PA)
ATTEST:

BY:  /s/ Joseph M. Katzenstein             By:  /s/ Nathan Z. Bistricer
     ---------------------------------          -------------------------------
      Joseph M. Katzenstein, Secretary     Nathan Z. Bistricer, Vice President
                                           700 Lehigh Street
                                           Bowmanstown, P.A. 18030


                                           THE PRINCE MANUFACTURING COMPANY (IL)
ATTEST:

<PAGE>

BY:  /s/ Joseph M. Katzenstein             By:  /s/ Nathan Z. Bistricer
     ---------------------------------          -------------------------------
      Joseph M. Katzenstein, Secretary     Nathan Z. Bistricer, Vice President
                                           One Prince Plaza
                                           P.O. Box 1009
                                           Quincy, Il. 62306


                                           PRINCE AGRIPRODUCTS, INC.
ATTEST:

BY:  /s/ Joseph M. Katzenstein             By:  /s/ Nathan Z. Bistricer
     ---------------------------------          -------------------------------
      Joseph M. Katzenstein, Secretary     Nathan Z. Bistricer, Vice President
                                           One Prince Plaza
                                           P.O. Box 1009
                                           Quincy, Il. 62306


                                           MINERAL RESOURCE TECHNOLOGIES, L.L.C.

                                           By:  MRT MANAGEMENT CORP.,
                                                  as Managing Member
ATTEST:

BY:  /s/ Joseph M. Katzenstein             By:  /s/ Nathan Z. Bistricer
     ---------------------------------          -------------------------------
      Joseph M. Katzenstein, Secretary     Nathan Z. Bistricer, Vice President
                                           120 Interstate North Parkway East
                                           Suite 440
                                           Atlanta, G.A. 30339

<PAGE>

                                           MRT MANAGEMENT CORP.
ATTEST:

BY:  /s/ Joseph M. Katzenstein             By:  /s/ Nathan Z. Bistricer
     ---------------------------------          -------------------------------
      Joseph M. Katzenstein, Secretary     Nathan Z. Bistricer, Vice President
                                           120 Interstate North Parkway East
                                           Suite 440
                                           Atlanta, G.A. 30339


                                           KOFFOLK, INC.
ATTEST:



BY:  /s/ Joseph M. Katzenstein             By:  /s/ Nathan Z. Bistricer
     ---------------------------------          -------------------------------
      Joseph M. Katzenstein, Secretary     Nathan Z. Bistricer, Vice President
                                           One Parker Plaza
                                           Fort Lee, N.J. 07024


                                           PHIBRO-CHEM, INC.
ATTEST:

BY:  /s/ Joseph M. Katzenstein             By:  /s/ Nathan Z. Bistricer
     ---------------------------------          -------------------------------
      Joseph M. Katzenstein, Secretary     Nathan Z. Bistricer, Vice President
                                           One Parker Plaza
                                           Fort Lee, N.J. 07024


                                           PHIBROCHEMICALS, INC.
ATTEST:

BY:  /s/ Joseph M. Katzenstein             By:  /s/ Nathan Z. Bistricer
     ---------------------------------          -------------------------------
      Joseph M. Katzenstein, Secretary     Nathan Z. Bistricer, Vice President
                                           One Parker Plaza
                                           Fort Lee, N.J. 07024

<PAGE>

                                           WESTERN MAGNESIUM CORP.
ATTEST:

BY:  /s/ Joseph M. Katzenstein             By:  /s/ Nathan Z. Bistricer
     ---------------------------------          -------------------------------
      Joseph M. Katzenstein, Secretary     Nathan Z. Bistricer, Vice President
                                           One Parker Plaza
                                           Fort Lee, N.J. 07024


                                           PNC BANK, NATIONAL ASSOCIATION, as
                                             Lender and as Agent

                                           By:  /s/ Peter J. Mardaga
                                                -------------------------------
                                           Name:  PETER J. MARDAGA
                                           Title:  VICE PRESIDENT

                                           Two Tower Center Boulevard
                                           East Brunswick, New Jersey 08816
                                           Commitment Percentage:  100%


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>7
<FILENAME>0007.txt
<DESCRIPTION>MANUFACTURING AGREEMENT
<TEXT>


<PAGE>

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.

<PAGE>

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

                                        2

<PAGE>

         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;

                                        3
<PAGE>

                  (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

                                       4


<PAGE>

         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.

                                        5

<PAGE>

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

                                        6

<PAGE>

         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

                                        7

<PAGE>

         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, [


                                        8

<PAGE>

                                                    ].

         (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.

                                       9
<PAGE>

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.

[                   ]
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>8
<FILENAME>0008.txt
<DESCRIPTION>CONTRACT OF DISTRIBUTION
<TEXT>


<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.

[                    ]

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>9
<FILENAME>0009.txt
<DESCRIPTION>ASSET PURCHASE AND TRADEMARK
              ASSIGNMENT AGREEMENT
<TEXT>


<PAGE>

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

                ASSET PURCHASE AND TRADEMARK ASSIGNMENT AGREEMENT


         ASSET PURCHASE AND TRADEMARK ASSIGNMENT AGREEMENT entered
between KOFFOLK, Inc., a Delaware corporation ("Purchaser"), having an address
at One Parker Plaza, Fort Lee, New Jersey 07024, U.S. and MERCK & CO., INC., a
New Jersey corporation ("Seller"), having an address at One Merck Drive,
Whitehouse Station, New Jersey 08889 and having an Effective Date of August 5,
1996.

                            ARTICLE 1 -- DEFINITIONS


         The following terms as used in this Agreement shall have the meanings
set forth below:

          SECTION 1.1 "Acquired Assets" means the United States ("U.S.")
trademark NICARB(R), as set forth in Schedule A, and United States Food and Drug
Administration New Animal Drug Application for the Products, as set forth in
Schedule B, but specifically excluding all Excluded Assets.

          SECTION 1.2 "Affiliate" means with respect to a party to this
Agreement (i) any corporation or business entity fifty (50%) percent or more of
the voting stock of which is owned directly or indirectly by a party; or (ii)
any corporation or business entity which directly or indirectly owns fifty (50%)
percent or more of the voting stock of a party; or (iii) any corporation or
business entity under the direct or indirect control of a corporation or
business entity as described in clause (i) or (ii).

          SECTION 1.3 "Agreement" or "this Agreement" means this Asset Purchase
and Trademark Assignment Agreement, including all Schedules hereto.

          SECTION 1.4 "Assumed Liabilities" means the liabilities to be assumed
by Purchaser pursuant hereto, namely all claims and complaints (including,
without limitation, all damages, losses, expenses and liabilities), relating to
any or all of the Acquired Assets, following the Effective Date including,
without limitation, (i) all liabilities arising out of the sale, purchase,
consumption or use of the Products following the Effective Date and (ii) all
liabilities arising out of any generation, treatment, storage, transportation,
disposal or release, of any hazardous material, substance, waste, or any toxic
or other material regulated by any federal, state, or local environmental
statute, rule or regulation following the Effective Date.

          SECTION 1.5 "Excluded Assets" means all assets of Seller other than
the Acquired Assets, including without limitation, the animal drug Applications
for nicarbazin and trademark NICARB(R) as registered by Seller outside of the
U.S., and any other trademark, tradename, New Drug and/or New Animal Drug
Application, product registration, intellectual

<PAGE>

property, information, know-how and other assets of Seller.

          SECTION 1.6 "Excluded Liabilities" means the liabilities retained by
Seller pursuant hereto, namely all claims and complaints (including, without
limitation, all damages, losses, expenses and liabilities), relating to any or
all of the Acquired Assets, prior to the Effective Date including, without
limitation, (i) all liabilities arising out of the sale, purchase, consumption
or use of the Products prior to the Effective Date and (ii) all liabilities
arising out of any generation, treatment, storage, transportation, disposal or
release, of any hazardous material, substance, waste or any toxic or other
material regulated by any federal, state or local environmental statute, rule or
regulation prior to the Effective Date.

          SECTION 1.7 "Execution Date" means the date as provided in Section
          3.1.

          SECTION 1.8 "Liens and Encumbrances" means, with respect to the
Acquired Assets, any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, including, without limitation, the interest of a vendor
or lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.

          SECTION 1.9 "New Animal Drug Applications" and "NADAs" mean the
applications for the Product prepared in conformance with applicable U.S. Food
and Drug Administration ("FDA") regulations for filing with the FDA for
marketing authorization of the Products within the United States, as described
in Schedule B.

          SECTION 1.10 "Person" means an individual, a corporation, a
partnership, an association, a trust, or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.

          SECTION 1.11 "Product" or "Products" means the nicarbazin based
products for treatment of coccidiosis in poultry marketed by Seller in the U.S.
under the trademark NICARB(R).

          SECTION 1.12 "Trademark" or "Trademarks" means the trademark and
trademark registrations for the Products as set forth in Schedule A.

                         ARTICLE II -- PURCHASE AND SALE

          SECTION 2.1 Purchase and Sale. On the terms and conditions set forth
in this Agreement, Seller agrees to sell, convey, assign and transfer to
Purchaser, and Purchaser agrees to purchase, on the Effective Date, the Acquired
Assets, subject only to Seller's retained right to use any information within
the Acquired Assets to the extent it relates to the Excluded Assets or to any
products hereinafter developed by Seller. The Purchaser shall not acquire
pursuant hereto any assets or rights of any kind or nature, real or personal,
tangible or intangible, other than the Acquired Assets and such rights as may be
set forth herein, and Seller shall retain all other assets, including, with ut
limitation, the Excluded Assets.

                                        2

<PAGE>

          SECTION 2.2 Assumption of Liabilities. On the terms and subject to the
conditions of this Agreement, the Purchaser agrees to assume the Assumed
Liabilities. The parties understand and agree that Purchaser does not and should
not assume or become liable for any liabilities, obligations, commitments or
debts, contingent or otherwise, of Seller, including without limitation, any
claims arising from the sale, purchase, consumption, or use of Products sold by
Seller prior to the Execution Date. However, nothing in this Section 2.2 shall
restrict, reduce or in any way affect the obligations of Purchaser pursuant to
Section 8.3 of this Agreement.


          SECTION 2.3 Purchase Price.

                      (a) Purchaser shall pay to Seller, in consideration for
the Acquired Assets [

                                    ]:

[                                         ]

[                                         ]

                      (b) [



                     ] by federal wire funds according to the wire transfer fund
instructions above.

          SECTION 2.4 Personal Guaranty. On the Execution Date, Purchaser will
deliver to Seller a Letter and Personal Guaranty, in the form attached hereto as
Schedule C from its owner, guaranteeing all of Purchaser's payments required
under this Agreement.

          SECTION 2.5 Interest on Late Payments/Acceleration of Payments. In the
event that any payment by Purchaser under this Agreement is made thirty (30) or
more days later than when due, Purchaser shall pay interest to Seller, on all
such payments, in the amount of the prime rate reported in the Wall Street
Journal on the payment due date, plus one percentage point, such interest to be
accrued on a daily basis. Purchaser shall indemnify Seller for all costs and
expenses (including but not limited to attorney's fees) incurred in attempt(s)
to collect any payments due under this Agreement. In the event Purchaser fails
to make any payment required under this Agreement within sixty (60) days of the
date when due, Seller shall provide notice to Purchaser of its default in
payment, and shall permit Purchaser an additional sixty (60) days from the date
of such notice within which to make all payments then due to Seller, together
with any interest owed. If Purchaser fails within that period to make the
requisite payment(s), Seller shall be entitled to [

                                    ].

                                        3

<PAGE>

          SECTION 2.6 Breach; Notice. Except as provided in Section 2.5, in the
event that either party breaches its obligations under this Agreement, the
non-breaching party shall provide notice of the breach to the breaching party
and shall permit the breaching party sixty (60) days in which to cure the
breach.

                            ARTICLE III -- EXECUTION

          SECTION 3.1 The Execution.

                      (a) The Execution cf this Agreement shall take place on
July 17, 1996 ("Execution Date"). Purchaser and Seller shall on that date sign
two (2) originals, one (1) fully executed original to be provided to each party.

                      (b) On the Execution Date, Seller shall provide to
Purchaser an appropriately executed and authenticated Trademark Assignment to
the Purchaser, in the form of Schedule D hereto. Purchaser shall hold the
Trademark Assignment in escrow for filing with the U.S. Patents and Trademarks
Office on or after August 5,1996.

                      (c) Purchaser shall pay to Seller the [
                     ]  by wire transfer in federal funds available to Seller
on August 2, 1996, payable to such entities as designated in Section 2.3(b).

                      (d) Seller shall pay or cause to be paid any and all
transfer, stamp, sales or other similar taxes or duties payable in connection
with the sale or transfer of the Acquired Assets to Purchaser.

                      (e) Purchaser shall pay or cause to be paid any and all
costs and expenses relating to the transfer and assignment to Purchaser of the
Trademarks, including, without limitation, all costs and taxes with respect to
recordation of transfer. Recordation of transfer and assignment of the
Trademarks shall be the responsibility of Purchaser.

                      (f) At any time or from time to time after the closing,
Seller shall, at the request of Purchaser and Purchaser's expense, execute and
deliver any further instruments or documents and take such further action as
Buyer may reasonably request in order to accomplish consummation of the
transactions contemplated hereby.

              ARTICLE IV -- SELLER'S REPRESENTATIONS AND WARRANTIES

          Seller represents and warrants that:

          SECTION 4.1 Corporate Existence and Authorization; Contravention.

                      (a) Seller is a corpolation duly organized, validly
existing and in good standing under the laws of the State of New Jersey.

                      (b) The execution, delivery and performance by Seller of
this

                                        4

<PAGE>

Agreement is within Seller's corporate power, have been duly authorized by all
necessary corporate action and do not contravene or constitute a default under
any provision of the certificate of incorporation or by-laws of Seller or any
provision of applicable law or regulation or of any judgment, injunction, order
or decree binding upon Seller or to which any Acquired Asset is subject, or any
indenture, bank loan, credit, or other agreement binding upon Seller or to which
the Acquired Assets are subject. This Agreement is a legal, valid and binding
agreement of Seller enforceable in accordance w th its terms.

                      (c) Except for the requirement that both Purchaser and
Seller provide written notice, in the form attached hereto as Schedule E, of the
transfer of title to the NADA from Seller to Purchaser, the execution, delivery
and performance by Seller of this Agreement, and the consummation by Seller of
the transactions contemplated hereby, require no action by or in respect of, or
filing with, any gvernmental body, agency or official or any other consent of
any person, firm or other entity.

          SECTION 4.2 Title to Acquired Assets.

                      (a) Seller has good title to all of the Acquired Assets,
free and clear of all Liens and Encumbrances.

                      (b) (i) To the best of Seller's knowledge, no product,
formula, formulation, Trademark, process, method, substance, or other material
(an "Item") which is part of the Acquired Assets infringes any rights owned or
held by any other person other than Seller, and (ii) to the best of Seller's
knowledge no Item currently being manufactured, distributed, sold or used by any
person infringes any rights of Seller to the Acquired Assets.

          SECTION 4.3 Litigation.

                      (a) There are no private or governmental proceedings,
claims, actions, or investigations in the United States of America against
Seller relating to the Products pending or, to the knowledge of Seller,
threatened, which are likely (either individually or in the aggregate) to result
in an adverse decision imposing a judgment, fine or penalty.

                      (b) There are no judgments, decrees or orders of any
court or other governmental body in the United States of America binding upon
Seller relating to the Products.

          SECTION 4.4 Compliance with Laws. (i) Seller is in compliance in all
material respects with all applicable U.S. federal, state or local laws,
regulations or orders or other requirements of any governmental, regulatory or
administrative agency or authority or court or other tribunal in the United
States of America relating to the Products (including, without limitation, the
U.S. Food, Drug & Cosmetic Act, as amended, the regulations thereunder, and the
transfer of the Acquired Assets pursuant to this Agreement is in compliance
therewith), and (ii) Seller is not now charged with, and to the best of the
knowledge of Seller is not now under investigation with respect to, any
violation of any applicable law, regulation, order or requirements in the United
States of America which relate to the Products. Seller has filed all reports
relating to the Products required to be filed with any governmental, regulatory
or

                                        5

<PAGE>

administrative agency or authority in the United States of America if failure to
file such report would result in a fine or a penalty.

          SECTION 4.5 Sufficiency of Transfer. The Acquired Assets and the
rights transferred under this Agreement include all assets used or held by
Seller for use primarily in connection with the Products as of the date hereof,
except for the Excluded Assets. Upon consummation of the transactions
contemplated hereby, Purchaser will have acquired good title in and to the
Acquired Asset in each case free and clear of all Liens and Encumbrances.

          SECTION 4.6 Transfer Document. The assignments and transfer documents
to be delivered to Purchaser pursuant to Section 3.1 will be in appropriate form
and sufficient to convey, transfer and assign to Purchaser good title to the
Acquired Assets.

          SECTION 4.7 NADA Review. Seller has provided Purchaser with the
opportunity to review the true, accurate and complete NADAs for the Products,
which include information concerning any side effects, injury, toxicity or
sensitivity reaction, or any unexpected incidents, whether or not serious or
unexpected, relating to the Products ("Adverse Experiences"), which Seller has
reported to the FDA during the three (3) years immediately preceding the
Execution Date. Any additional information regarding Adverse Experiences
received by Seller before the Effective Date but not yet reported to the FDA,
will be provided to Purchaser within fourteen (14) days after Effective Date.
For purposes of this Section 4.7, "serious" is deemed to have the meaning set
forth in Section 6.4 of this Agreement. Additionally, Seller has allowed
Purchaser to meet with officials of the Food and Drug Administration, Centers
for Veterinary Medicine to review the approval status of the NADAs for the
Products.

          SECTION 4.8 Disclosure. No representation or warranty by Seller in
this Agreement contains any untrue statement of material facts.

             ARTICLE V -- PURCHASER'S REPRESENTATIONS AND WARRANTIES

          Purchaser represents and warrants that:

          SECTION 5.1 Corporate Existence and Authorization; Contravention.
Purchaser is a corporation duly organized and validly existing under the laws of
the State of Delaware. The execution, delivery and performaiice by Purchaser of
this Agreement are within Purchaser's power, have been duly authorized by all
necessary action and do not contravene or constitute a default under the
constitutive documents of Purchaser or of applicable law or regulation or of any
agreement, judgment, injunction, order, decree or other instrument binding upon
Purchaser. This Agreement is a legal, valid and binding agreement of Purchaser
enforceable in accordance with its terms. To the best of Purchaser's knowledge,
except for the requirement that both Purchaser arid Seller provide written
notice, in the form attached hereto as Schedule E, of the transfer of title to
the NADA from Seller to Purchaser, the execution, delivery and performance by
Purchaser of this Agreement require no action by or in respect of, or filing
with, any governmental body, agency or official, or any other consent.

          SECTION 5.2 Solvency. Purchaser is financially sound and fully solvent
and has no reason to anticipate any inability to perform, or material difficulty
performing, any of its

                                        6

<PAGE>

obligations set forth in this Agreement.

          SECTION 5.3 Disclosure. No representation or warranty by Purchaser in
this Agreement contains any untrue statement of material fact.

                        ARTICLE VI -- SELLER'S COVENANTS

          Seller agrees that:

          SECTION 6.1 Filings. Seller will use its reasonable efforts in good
faith to file or cause to be filed with the FDA, by the Effective Date, the
notice (substantially in the form of Schedule E attached hereto), required to be
filed by it in connection with its sale of the NADA and to make promptly any
further filings pursuant thereto as may be necessary to consummate the
transactions contemplated hereby.

          SECTION 6.2 No Encumbrances. Any Liens and Encumbrances with respect
to any of the Acquired Assets represented, created or secured by a mortgage,
deed of trust, security agreement or similar instrument shall be satisfied of
record on or prior to the Execution Date by Seller.

          SECTION 6.3 Confidentiality. For a period often (10) years following
the Execution Date, Seller will, and will cause each of its Affiliates and
employees to, preserve the confidentiality of all confidential, proprietary and
trade secret information used or held for use primarily in connection with the
Acquired Assets, provided that (i) Seller may use and disclose any such
information which has been publicly disclosed (other than by Seller or any
Affiliate thereof in breach of its obligations under this Section) or as
otherwise permitted under this Agreement; or to the extent such information
related to Excluded Assets, provided that, if such information relates to both
Acquired Assets and Excluded Assets, Seller will maintain its confidentiality
only to the extent that maintenance of its confidentiality does not unreasonably
interfere with Seller's ability to use, market or sell any or all of the
Excluded Assets; and (ii) to the extent that Seller or any Affiliate thereof may
become legally compelled to disclose any of such information. Seller or such
Affiliate may (to the extent so compelled) disclose such information if they
shall have first used reasonable efforts in good faith, and shall have afforded
Purchaser the opportunity, to obtain an appropriate protective order, or other
satisfactory assurance of confidential treatment, for the information required
to be so disclosed.

          SECTION 6.4 Adverse Reaction Reporting. Seller shall notify Purchaser
of any information concerning any side effect, injury, toxicity, sensitivity
reaction, or any incidents, whether or not serious or unexpected, relating to
the Products, of which Seller receives notice on or after the Execution Date,
including providing copies of all such adverse experience reports within two (2)
weeks of Seller's receipt of such reports. For purposes of this Section 6.4 and
for purposes of Section 7.7, "serious" means an experience which is (1) one
resulting in severe disability or death of one or more animals, (2) one that is
life threatening to man, or (3) one involving a large number of animals; and
"unexpected" means a condition or development not listed in the then-current
FDA-approved labeling for the Product, and includes those experiences that show
a significant increase in incidence or severity over what appears on the
labeling of the Product or in NADA trials or that are a failure of the Product
to achieve claimed activity.

                                        7

<PAGE>

                      ARTICLE VII -- PURCHASER'S COVENANTS

          Purchaser agrees that:

          SECTION 7.1 Confidentiality. For a period of ten (10) years following
the Execution Date, Purchaser will, and will cause each of its Affiliates and
employees to, preserve the confidentiality of all confidential, proprietary and
trade secret information and material included within the Acquired Assets, or
disclosed hereunder, which relates to any Excluded Assets, provided that (i)
Purchaser may use and disclose any such information which has been publicly
disclosed (other than by Purchaser or an" Affiliate thereof in breach of its
obligations under this Section) or as otherwise permitted under this Agreement;
or to the extent such information relates to the Acquired Assets, provided that,
if such information relates to both Acquired Assets and Excluded Assets,
Purchaser will maintain its confidentiality only to the extent that maintenance
of its confidentiality does not unreasonably interfere with Purchaser's ability
to use, market, or sell units of the Products in the ordinary course of
business; and (ii) to the extent that Purchaser or any Affiliate thereof may
become legally compelled to disclose any of such information, Purchaser or such
Affiliate may (to the extent so compelled) disclose such information if they
shall have first used reasonable efforts in good faith, and shall have afforded
Seller the opportunity to obtain an appropriate protective order, or other
satisfactory assurance of confidential treatment, for the information required
to be so disclosed.

          SECTION 7.2 FDA Filings. Purchaser will use its reasonable efforts in
good faith to file or cause to be filed with the FDA, by August 5,1996, the
notice, documents and/or other materials required to be filed by it in
connection with its purchase of the Acquired Assets and to make promptly any
further filings and take any actions required of it as may be necessary to
consummate the transactions contemplated hereby.

          SECTION 7.3 Post-Closing; Use of Names. Beginning on the Effective
Date Purchaser will mark clearly all units of the Products manufactured to
indicate Purchaser's ownership of the Products and will not use the words, names
or combined letters "Merck", "Merck & Co., Inc.", "Merck AgVet", "MSD AGVTR",
"MMD", "Merck Sharp & Dohme", or any variation thereof or other word, name or
letter combination substantially similar thereto, or any other trade name or
trademark of Seller in connection with the Products, or as part of the name of
the Purchaser or any Affiliate, after the Execution Date, except to the extent
necessary to comply with its obligations pursuant to the Toll Manufacturing
Agreement relating to the Products entered into between Purchaser and Seller
effective August 5,1996.

          SECTION 7.4 Cooperation in Litigation. From and after the Effective
Date, Purchaser agrees that in the defense of any litigation, hearing,
regulatory proceeding or investigation or other similar matter relating to tho
Acquired Assets, Purchaser will make available to Seller during normal business
hours, but without unreasonably disrupting its business, all personnel and
records as to the Acquired Assets held by Purchaser and reasonably necessary to
permit the effective defense or investigation of such matters.

                                        8

<PAGE>

          SECTION 7.5 Adverse Reaction Reporting. Effective on the Effective
Date, Purchaser shall be responsible for reporting adverse experiences with
respect to the Products in conformance with all applicable laws, rules and
regulations and shall send to Seller, throughout the term of this Agreement,
copies of all such adverse experience reports, with all serious and unexpected
adverse experiences (and government forms) sent within two (2) weeks of
Purchaser's receipt, and all non-serious adverse experiences (and government
forms) sent to Seller on a quarterly basis addressed to Seller.

          SECTION 7.6 Resale; Abandonment. Purchaser agrees not to resell or
abandon the NADA for the Products, or effect any substantial change in ownership
or control of Purchaser, on or before payments required under Section 2.3 are
made. If Purchaser resells or abandons such NADA, or effects such a substantial
change of ownership or control after payment in full of the payments required
under Section 2.3, Purchaser agrees to provide advance written notice of same to
Seller. Notwithstanding the foregoing, Purchaser shall be entitled to transfer
the Acquired Assets or any interest in Purchaser to an Affiliate of Purchaser
without violating the provisions of this section, provided that no such transfer
shall operate to release Purchaser from any of its obligations hereunder. In the
event of Purchaser's breach of this Section 7.8, in addition to all other
remedies available to Seller in law or equity, Seller is entitled to accelerate
and receive immediate payment by Purchaser of all payments required under this
Agreement during the term of this Agreement, whether or not such payments are
yet due.

          SECTION 7.7 Territorial Limitation; Other Products. Purchaser agrees
to sell units of the Products only within the United States. Except for
submissions to be made by Purchaser in connection with CODEX/JECFA, Purchaser
further agrees that it will use the information and data contained within the
NADA(s) for the Product solely for maintaining the registration(s) for Product
in the United States arid will make no use whatsoever of the information and
data contained in the NADA(s) outside of the United States.

          SECTION 7.8 Authorization for Manufacture of the Products. Purchaser
agrees that Seller shall continue to toll manufacture the Products after the
Effective Date pursuant to the terms of the Toll Manufacturing Agreement entered
between the parties effective August 5, 1996.

          SECTION 7.9 Change in Corporate Status/Ownership or Control of
Purchaser. Except as provided for in Section 7.6, in the event of any
substantial change in the status, ownership or control of Purchaser, Seller is
entitled to accelerate and receive immediate payment by Purchaser of all
payments required under this Agreement during the term of this Agreement,
regardless of whether or not such payments are yet due.

                    ARTICLE VIII -- SURVIVAL; INDEMNIFICATION

                                        9

<PAGE>

          SECTION 8.1 Survival: Remedy for Breach. All representations,
warranties and indemnities of the parties contained herein shall survive the
Execution Date forever. The covenants and agreements of Seller and Purchaser
hereunder that require by their terms performance or compliance on and after the
Execution Date shall continue in force thereafter in accordance with their
terms.

          SECTION 8.2 Indemnification by Seller. Seller shall indemnify
Purchaser against and defend Purchaser against any and all damage, loss,
liability and expense (including, without limitation, reasonable expense s of
investigation and attorneys' fees and expenses in connection with any action,
suit or proceeding brought against Purchaser and/or its Affiliate(s) and
penalties and the cost of remedial action under applicable laws and regulations)
incurred or suffered by Purchaser arising out of (i) any misrepresentation or
breach of covenant, agreement, representation or warranty of Seller contained in
this Agreement or (ii) any Excluded Liability, provided, however, that Purchaser
shall not be entitled to any indemnification under this Section 8.2, except for
claims under sections 4.2 and 4.5, unless and until the amount of claims for
which Purchaser is entitled to be indemnified exceeds in the aggregate $100,000
(the "Deductible"), in which event Purchaser is entitled to receive with respect
to such claims the entire amount of the Deductible.

          SECTION 8.3 Indemnification by Purchaser.

                      (a) Purchaser shall indemnify Seller against and agrees
to hold Seller harmless from any and all damage, loss, liability and expense
(including without limitation, reasonable expenses of investigation and
attorneys' fees and expenses in connection with any action, suit or proceeding
brought against Seller and/or its Affiliate(s)) and suffered by Seller and/or
its Affiliate(s) arising out of (i) any misrepresentation or breach of covenant,
agreement, representation or warranty of Purchaser contained in this Agreement,
or (ii) any Assumed Liability.

                      (b) If Seller or any Affiliate thereof has retained any
liability which would otherwise be an Assumed Liability as a result of the
failure to obtain the consent of a third party to transfer such liability to
Purchaser, Purchaser shall indemnify Seller against and agrees to hold Seller
harmless from any such liability incurred with respect to any period beginning
on or after the Execution Date, provided that Seller notifies Purchaser of the
existence of such failure to obtain consent in a notice expressly referring to
this Section 8.3 (b).

          SECTION 8.4 Indemnification; Notice and Settlements. A party seeking
indemnification pursuant to Section 8.2 or 8.3 (an "indemnified party") shall
give prompt notice to the party from whom such indemnification is sought (the
"indemnifying party") of the assertion of any claim, or the commencement of any
action or proceeding, in respect of which indemnity may be sought hereunder. The
indemnifying party shall have the right to, and shall at the request of the
indemnified party, assume the defense, with counsel reasonably satisfactory to
the indemnified party, or any such suit, action or proceeding at its own
expense. An indemnifying party shall not be liable under Section 8.2 or 8.3 for
any settlement effected without its consent of any claim, litigation or
proceeding in respect of which indemnity may be sought hereunder, which consent
shall not be unreasonably withheld.

                                       10

<PAGE>

                           ARTICLE IX -- MISCELLANEOUS

          SECTION 9.1 Notices. All notices, requests and other communications to
any party hereunder shall be in writing and shall be given:

                            if to Seller to:

                            Merck & Co., Inc.
                            P.O. Box 2000
                            Rahway, New Jersey 0706 3
                            Attention:
                                       President
                                       Merck AgVet Division

                            if to Purchaser to:

                            Koffolk, Inc.
                            One Parker Plaza
                            Fort Lee, New Jersey 07024
                            Attention: President

or such other address as such party may hereafter specify by written notice to
the other party. Each such notice, request or other communication shall be
effective when received at the address specified in this Section 9.1

          SECTION 9.2 Expenses. All legal and other costs and expenses incurred
in connection herewith and the transactions contemplated hereby shall (except as
otherwise provided herein) be paid by the party incurring such expenses.

          SECTION 9.3 Bulk Sales Statutes. Purchaser hereby waives compliance by
Seller with any applicable bulk sales statutes in any jurisdiction in connection
with the transactions under this Agreement.

          SECTION 9.4 Limitation on Sellers Representations and Warranties.
PURCHASER ACKNOWLEDGES THAT EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES CONTAINED IN THIS AGREEMENT, SELLER HAS MADE NO REPRESENTATION OR
WARRANTY WHATSOEVER AND PURCHASER HAS NOT RELIED ON ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, EXCEPT THOSE EXPRESSLY SET FORTH IN THIS
AGREEMENT. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, PURCHASER
ACKNOWLEDGES THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, PURCHASER IS
ACQUIRING THE ACQUIRED ASSETS WITHOUT ANY EXPRESS OR IMPLIED WARRANTIES AS TO
THE FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY OR CONDITION OF THE
ACQUIRED ASSETS OR AS TO ANY

                                       11

<PAGE>

OTHER MATTER.

          SECTION 9.5 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties and their respective
successors and assigns; provided that this Agreement may not be assigned by
either party without the written consent of the other party hereto.

          SECTION 9.6 Entire Agreement; Amendment. This Agreement, including,
without limitation, the Schedules hereto, embodies the entire agreement of the
parties hereto with respect to the subject matter hereof and supersedes any and
all prior agreements with respect thereto. This Agreement may be amended, and
any provisions hereof waived, but only in writing signed by both parties.

          SECTION 9.7 Captions; Construction. Captions herein are inserted for
convenience of reference only and shall be ignored in the construction or
interpretation of this Agreement. Unless otherwise specified, the words
"herein", "hereof" and terms of like import shall be deemed to refer to the
Agreement as a whole and not merely to a single part thereof.

          SECTION 9.8 Public Announcement. No press release, public
announcement, confirmation or other information regarding this Agreement or
related matters shall be made by either party without the prior written consent
of the other party (other than as necessary to perform the provisions of this
Agreement or to its employees or as may be required by law or by any applicable
rules of any stock exchange; provided that disclosure to employees shall not
result in a requirement of public disclosure under such applicable law or
rules).

          SECTION 9.9 Returned Products. For purposes of this Section 9.9,
"Returned Products" means any Products sold by Seller before the Execution Date
and returned to Purchaser. Purchaser shall notify Seller of receipt of any
Returned Products and shall immediately remit all such Returned Products to
Seller at: Merck & Co., Inc., Branch Operations, 4545 Oleatha Ave. St. Louis,
Missouri 63115, at the sole expense of Seller. All credits and/or reimbursements
that may be due customers for Returned Products shall be the sole responsibility
of Seller.

          SECTION 9.10 Governing Law; Jurisdiction. 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 or laws or renvoi. In the event of any controversy or claim
arising out 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

                                       12

<PAGE>

of the merits of the dispute.

          SECTION 9.11 Cooperation. Each party agrees to execute such further
papers, agreements, documents, instruments and the like as may be reasonably
necessary or desirable to effect the purpose of this Agreement and to carry out
its provisions.

          SECTION 9.11 Waiver. No waiver by any party in one or more instances
of any of the provisions of this Agreement or the breach thereof shall establish
a precedent for any other instance with respect to that or any other provision.
Furthermore, in case of waiver of a particular provision, all other provisions
of this Agreement will continue in full force and effect.

          SECTION 9.13 Severance. If any provision of this Agreement is held to
be invalid or unenforceable, all other provisions shall nevertheless continue in
full force and effect.


          IN WITNESS WHEREOF, this Agreement has been signed by authorized
representatives on behalf of each of the parties hereto as of the day and year
first above written.




MERCK & CO., INC.                          KOFFOLK, INC.


By: /s/ John M. Preston                    By: /s/ Jack C. Bendheim
    -------------------                        --------------------
        Dr. John M. Preston                    Jack C. Bendheim
        President                              President
        Merck AgVet Division



                                       13

<PAGE>

                                   SCHEDULE A


                               TRADEMARKS
                               ----------
TRADEMARK                REG. NO./LOCATION         REG. DATE

NICARB(R)              631617/United States         July 31, 1956
                                                    July 31, 1976 (renewed)


<PAGE>

                                   SCHEDULE B

                        U.S. NEW ANIMAL DRUG APPLICATION

                                                        NADA #
                                                        ------

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

[                                                ]


<PAGE>

                                   SCHEDULE C

Personal Guaranty

Merck & Co., Inc.
One Merck Drive
P.O. Box 100
Whitehouse Station, NJ 08889-0100

Gentlemen:

I understand that Koffolk, Inc., a wholly-owned subsidiary of Phillips Brothers,
is indebted to you by virtue of an Asset Purchase and Trademark Transfer
Agreement ("Agreement") entered into between Merck & Co., Inc. and Koffolk and
effective as of August 5, 1996. I further understand that it is your desire to
obtain a personal guarantee of the payments under this Agreement by me. I also
understand that as consideration for your executing this Agreement, this
personal guarantee of payment by me is required by you.

Therefore, I have determined that it is in my best interests as the owner of
Koffolk, Inc. to personally guarantee payment of the payment obligations of
Koffolk, Inc. to you under this Agreement.

I agree as follows:

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

[

]


                                               By:     ____________________
                                                       Jack C. Bendheim


State of __________________

County of ________________


Subscribed and sworn to before


<PAGE>


me this ____ day of _______ 1996



- ---------------------------------
Notary Public


<PAGE>

                                   SCHEDULE D

                            U.S. TRADEMARK ASSIGNMENT


          WHEREAS, MERCK & CO., INC., a New Jersey corporation, having its
principal offices at One Merck Drive, Whitehouse Station, New Jersey 08889-0100,
has adopted, used, is using and is the owner of the following trademarks now
registered in the United States Patent and Trademark Office:


TRADEMARK          REGISTRATION NO.            DATE OF REGISTRATION
- ---------          ----------------            --------------------
NICARB(R)               631617                     July 31, 1956
                                                   July 31, 1976 (renewed)


          WHEREAS, Koffolk, Inc., a Delaware corporation having its principal
offices at One Parker Plaza, Fort Lee, New Jersey 07024, U.S.A., is desirous of
acquiring said registered trademarks,

          NOW, THEREFORE, in consideration of the sum of One ($1.00) Dollar and
other good and valuable consideration, the receipt of which is hereby
acknowledged, MERCK & CO., INC., as of August 5,1996 hereby assigns to Koffolk,
Inc. all right, title and interest in the United States in and to said
trademarks together with the goodwill of the business symbolized by said
trademarks and registrations thereof.

Signed this 17th day of July, 1996


                                           MERCK & CO., INC.


                                           By: ______________________________
                                                    Dr. John M. Preston
                                                    President
                                                    Merck AgVet Division

State of
                              ss.
County of


Subscribed and sworn to before
me this day of 1996.


- --------------------
Notary Public


<PAGE>

                                   SCHEDULE E


Food and Drug Administration
5600 Fishers Lane
Rockville, MD 20857

Dear _____________


Pursuant to 21 CFR 514.106, we are notifying you that as of August 5,1996, Merck
Research Laboratories is transferring ownership and all rights and
responsibilities for [                                   ] to Koffolk, Inc.

Please direct questions or need for additional information concerning the
transfer of these NADAs to Ms. Rosalind Dunn, Associate Director, Regulatory
Affairs, Coordination and Planning, Merck & Co., Inc. (Phone (908)594-4624/Fax
(908)594-4395).

Beginning today, August 5,1996, all communication to the sponsor should be
addressed to:


                                Koffolk, Inc.
                                One Parker Plaza
                                Fort Lee, New Jersey 07024
                                Attn: Jack C. Bendheim
                                      President


                                      Sincerely yours,


                                      Rosalind S. Dunn
                                      Associate Director
                                      Regulatory Affairs
                                      Coordination & Planning

Certified No.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>10
<FILENAME>0010.txt
<DESCRIPTION>DISTRIBUTORSHIP AGREEMENT
<TEXT>


<PAGE>

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

                           DISTRIBUTORSHIP AGREEMENT

         THIS AGREEMENT, dated as of the 5th day of August, 1996, by and
between Merck & Co., Inc., a corporation duly organized and existing under the
laws of the state of New Jersey having an address at One Merck Drive,
Whitehouse Station, New Jersey 08889 and operating through its Merck AgVet
Division, (hereinafter referred to as "MERCK")

                                      AND

Koffolk, Inc., a business entity duly organized and existing under the laws of
the state of Delaware having an address at One Parker Plaza, Fort Lee, New
Jersey 07024 (hereinafter referred to as "KOFFOLK").

                                  WITNESSETH:

         WHEREAS, MERCK is the inventor, developer and supplier of products
used for animal health purposes; and

         WHEREAS, KOFFOLK desires to distribute, promote, advertise and sell
certain of such products for animal health purposes in the United States in
accordance with the Food and Drug Administration registration obtained by
MERCK; and

         WHEREAS, KOFFOLK shall maintain the necessary sales force and
organization to properly service the territory;

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

1.       DEFINITIONS

         Each term defined below shall, for the purpose of this Agreement,
have the following meaning and shall include the singular and the plural:

         (a) "Product" or "Products" shall mean the finished animal health
products containing amprolium as the active ingredient [

                           ].

         (b) "Territory" shall mean the United States of America, excluding
its territories and possessions.

         (c) "Trademark(s)" shall mean the trademarks AMPROL, AMPROL Plus or
other appropriate trademarks designated by Merck AgVet, which are licensed to
KOFFOLK in the Territory by MERCK pursuant to the Trademark License Agreement
of even date.

         (d) "Exclusive Distribution Period" shall mean that period of
[                    ] from the Effective Date of the Agreement and any
applicable renewal periods.

         (e)"Affiliate" shall mean with respect to a party to this Agreement
(i) any corporation or business entity, fifty percent (50%) or more of the
voting stock of which is owned directly or indirectly by a party; (ii) any


<PAGE>

corporation or business entity which directly or indirectly owns fifty percent
(50%) or more of the voting stock of a party; or (iii) any corporation or
business entity under the direct or indirect control of a corporation or
business entity as described in clause (i) or (ii).

         (f)"Promotional Literature" shall mean all Products-related or
disease-related material, or similar material with respect to competitive
Products, written, oral, graphic or other prepared for distribution to or use
with the veterinary or allied professions, sales representatives, the trade,
and/or consumers.

         (g) "Calendar Year" shall mean that twelve (12) month period
commencing January 1st and ending December 31st of each year of the Agreement.

         (h) "License Agreement" shall mean the Trademark License Agreement of
even date between MERCK and KOFFOLK.

         (i) "Marketing Plan" shall mean that document prepared by KOFFOLK on
an annual basis and submitted to MERCK that contains sales forecasts and
promotional efforts of KOFFOLK for sale of the Product for the succeeding
Calendar Year.

         (j) "Effective Date" shall mean August 5,1996.

         (k) "Like Kind Exchange" shall mean an arrangement whereby MERCK
divests itself of Product via a non-cash exchange for a third party's
product(s) or rights to market and/or distribute a third party's product(s).

         (l) "Promotional Efforts" shall mean the expense, not including
salaries and related overhead expenses, associated with the planning,
production, publication and distribution of Product support material, market
support trials, meetings, merchandising allowance funds, and market research
necessary to facilitate the marketing effort.

2.       APPOINTMENT OF KOFFOLK

         (a) Subject to [

                           ], MERCK hereby appoints KOFFOLK as an exclusive
distributor in the Territory for the Products.

         (b) KOFFOLK shall sell the Products for its own account. All orders
by KOFFOLK's customers shall be promptly filled by KOFFOLK and KOFFOLK shall
assume all credit risks.

3.       PURCHASE OF PRODUCTS

         (a) MERCK shall sell, and KOFFOLK shall purchase, the Products from
MERCK at the product supply price specified in Schedule B. Product supply
prices are [                          ]. All orders shall be subject to
acceptance by MERCK or such Affiliate and all sales shall be subject to the then
current Terms and Conditions of Sale. To the extent there is any inconsistency
in the Terms and Conditions of Sale and this Agreement, this Agreement shall
govern.

         (b) KOFFOLK shall make payment to MERCK for the Product within ninety
(90) days of the date of the invoice, in the currency stated on the invoice.

         (c) KOFFOLK shall provide MERCK with a [                 ] forecast of
its expected requirements of Products, updated on a monthly basis, divided into
[                  ] of Products by pack size as of the beginning of each
[                  ]. Purchase orders shall be in writing and submitted by

                                      2

<PAGE>

KOFFOLK to MERCK by January 15 of each Calendar Year and shall specify by
product the [                                             ]. [                ].
Delivery shall be made as close to such requested dates as possible. The terms
of such purchase order shall be consistent with the provisions of this
Agreement and where inconsistent, this Agreement shall govern.

         (d) MERCK shall use reasonable efforts to fill orders that are in
excess of the quantity forecasts provided by KOFFOLK, giving consideration to
the quantity of the Products available at the time, the requirements of other
customers and the capacity of the production facility.

         (e) KOFFOLK shall inspect the Products and shall inform MERCK in
writing of any complaints regarding the quantity or quality of the same within
three (3) days of receipt of the Products by KOFFOLK. In the event that a
quality defect is not discoverable by reasonable inspection, such claim for
the quality defect shall be made in writing within three (3) days of
discovery. No quantity of the Products shall be returned to MERCK without
MERCK's express written permission, which permission shall not be unreasonably
withheld. Once permission has been given, Product will be returned to MERCK
and, at MERCK's option, either subsequently replaced within ninety (90) days
at no charge to KOFFOLK or a credit for the amount of defective Product will
be provided to KOFFOLK within thirty (30) days of its return.

4.       CERTAIN SPECIFIC RESPONSIBILITIES OF KOFFOLK

         (a) KOFFOLK shall prepare and submit to MERCK on an annual basis, a
written marketing plan for the Products which shall include sales forecasts
and promotional efforts for the year. The marketing plan for Calendar Year
1997 shall be provided by December 1,1996. Thereafter, the marketing plan for
each succeeding Calendar Year shall be provided by KOFFOLK to MERCK by
September 1st of the preceding Calendar Year.

         (b) KOFFOLK shall actively promote and distribute and use its best
efforts to expand the sales of the Products in the Territory by all
appropriate means available through the maintenance of its sales organization.

         (c) KOFFOLK shall [

]

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

         (d) If in any two (2) consecutive Calendar Years, KOFFOLK fails to
meet the Guaranteed Amounts, MERCK may terminate this Agreement upon sixty
(60) days notice to KOFFOLK.

         (e) KOFFOLK shall keep MERCK informed on a quarterly basis, in
writing, of the Promotional Efforts it will be making in connection with the
Products. Thereafter, KOFFOLK's expenditure for Promotional Efforts for each
subsequent Calendar Year shall be contained in the Marketing Plan as developed
by KOFFOLK. MERCK reserves the right to request, and KOFFOLK shall provide,
documentation to substantiate the amount spent by KOFFOLK on Promotional
Efforts in each Calendar Year of the Agreement.

         (f) KOFFOLK shall maintain sufficient stocks of the Products to
satisfy the demand for them in the Territory. Specifically, its inventory
shall, at any given time, not fall below the equivalent of the total estimated
sales for each Product in the upcoming two (2) months. The Products shall be
handled and stored in accordance with instructions provided by MERCK.

         (g) KOFFOLK acknowledges that it is aware of the terms of MERCK's
Ethical Business Practices

                                      3
<PAGE>

Policy, a copy of which is attached hereto as Attachment I and made part of
this Agreement. KOFFOLK agrees to comply fully with the requirements of said
Policy and agrees to indemnify and hold MERCK harmless from and against any
and all liabilities resulting from the violation of said policy by KOFFOLK, or
any third party that KOFFOLK has instructed to act on its behalf.

         (h) KOFFOLK agrees to develop at its own expense Promotional Literature
to be used in conjunction with the sale of the Products in the Territory. All
Promotional Literature must be consistent with the safety and efficacy data
supplied by MERCK and reviewed and approved by MERCK according to the
following provisions prior to its use:

                  (i) All Promotional Literature relating to the Products must
be submitted for approval to publish shall be addressed to:

Merck & Co., Inc.
Merck Ag Vet Division
Mr. Steve Vandeberg
Associate Director, Marketing Communications
U.S. Operations
P.O. Box 2000, WBF-224
Rahway, NJ 07065-0912

                  (ii) Within twenty (20) working days of receipt, MERCK will
either approve or reject the submission. No Promotional Literature may be
printed, published or put into use until a signed approval is received from
MERCK by KOFFOLK. Facsimile transmission will be deemed acceptable.

                  (iii) Approval of each promotional text is valid for one (1)
year unless new Product information or new regulations affecting the Products
or text become available. In the absence of any such changes, approved
literature may be printed, reprinted, used and distributed during this period.

                  (iv) An approved text may not be changed for publication
without the written authority of MERCK. This applies to all Promotional
Literature covered by this procedure. If even the most minor change of an
approved literature piece is required, the revised text must be submitted for
MERCK's approval.

                  (v) KOFFOLK shall submit, within five (5) days of
production, ten (10) printed specimens of each approved literature piece for
after-the-fact review, accompanied by a confirmation from an authorized
representative of KOFFOLK that it is worded exactly as was approved by MERCK.
Specimens and confirmations should be addressed to:

Merck & Co., Inc.
Merck AgVet Division
Mr. Steve Vandeberg
Associate Director, Marketing Communications
U.S. Operations
P.O. Box 2000, WBF-224
Rahway, NJ 07065-0912

                   (vi) Pricing information or bulletins for KOFFOLK's
internal use only that contain no safety, efficacy or other Products-related
claims are excluded from review under this procedure.

         (i) KOFFOLK shall provide MERCK with a quarterly report of (i) all
sales of Products by package size and (ii) and inventory status of the
Products which report shall be provided by the twentieth (20th) day of the

                                      4

<PAGE>

month immediately following the close of the quarterly period. Additionally,
KOFFOLK shall keep MERCK advised on a regular basis of general market,
economic and regulatory developments which may affect the promotion and sale
of the Products in the Territory.

         (j) KOFFOLK shall not make any claim, either orally or in writing,
with respect to the safety or effectiveness of the Products that is
inconsistent with and/or goes beyond approved claims for the Products, nor
shall KOFFOLK recommend the combination of the Products with any other
products, without MERCK's prior written consent.

         (k) KOFFOLK shall do nothing which will jeopardize the goodwill of
MERCK or any of its Affiliates or the reputation of the Products. The
appointment of KOFFOLK as a distributor hereunder shall not create a joint
venture, or principal-agency relationship, or franchise relationship and
nothing hereunder shall be deemed to authorize KOFFOLK to act for, represent,
or bind MERCK or any of its Affiliates, unless specific authority to act on
MERCK's behalf is granted to KOFFOLK in writing.

         (l) Both parties agree to comply with all laws and regulations and
other requirements in the Territory governing the performance of their
activities under an agreement such as this.

         (m) KOFFOLK shall be responsible for ensuring that its customers
obtain approval of form FDA 1900 with the FDA. In order to ensure that
existing customers of the Products have obtained such approvals, MERCK shall
provide KOFFOLK, within forty-five (45) days of the Effective Date, with
copies of all forms FDA 1900 (or Forms FDA 1800, if applicable) covering the
Products which it has in its possession.

         (n) Except as required by law, neither party shall make any public
announcement in connection with the subject matter of this Agreement without
the prior approval of the other party.

5.       PROMOTIONAL AND MARKETING EXPENSES

         (a) KOFFOLK agrees to pay for all promotional, selling and marketing
costs of Products, including but not limited to customer feed assay costs,
advertising expenses, freight and distribution costs and carrying costs of
accounts receivable.

         (b) MERCK agrees to provide customer feed assays to KOFFOLK in 1996 [
                   ].

6.       CONFIDENTIALITY

         (a) For the term of this Agreement plus five (5) years thereafter all
information which is received by KOFFOLK or MERCK from the other party during
the term of this Agreement shall be maintained in strict confidence by the
receiving party. All information whether generated by KOFFOLK or MERCK shall
be disclosed only to MERCK or KOFFOLK employees and consultants who have been
instructed to treat such information in strict confidence and on a "need to
know" basis. This information shall be protected from disclosure to third
parties with at least the same degree of care used by such employees when
dealing with their employer's confidential information. Further, such
information shall not be disclosed to any other person, firm, or agency,
governmental or private, or used for purposes other than set forth herein
without the prior written consent of the disclosing party.

         (b) With respect to tangible materials provided by MERCK to KOFFOLK
under this Agreement, including samples of Products, KOFFOLK agrees to (i) not
provide such materials to third parties, (ii) not conduct demonstration trials
or protocols for the promotional use of the product except with the prior
written permission of MERCK, and (iii) return unused portions of such
materials to MERCK.

                                      5

<PAGE>


         (c) In the event KOFFOLK desires to disclose to MERCK any information
considered confidential and proprietary to KOFFOLK ("KOFFOLK Confidential
Information") during the course of this Agreement, KOFFOLK shall first provide
MERCK with notice of KOFFOLK's intent to disclose KOFFOLK Confidential
Information, then for the term of this Agreement plus three (3) years
thereafter, MERCK shall keep KOFFOLK Confidential Information confidential by
not disclosing to any third party, and shall not use for any purpose other
than pursuant to this Agreement.

         (d) The foregoing obligations shall not apply when and to the extent
such information:(I)is or becomes a part of the public domain without the
breach of this Agreement;(ii)is already known to the receiving party prior to
its disclosure or development hereunder(iii)can be shown to have been
independently developed by or on behalf of MERCK without reference or access
to KOFFOLK Confidential Information as evidenced by MERCK's written records;
or(iv)is disclosed to the receiving party by an independent third party not
under an obligation of confidence to the disclosing party with respect
thereto.

         (e) This Agreement shall not supersede any existing Confidentiality
Agreement between MERCK and KOFFOLK and/or its Affiliates with respect to any
information already or hereafter disclosed between the parties, and shall be
deemed additive to those confidentiality obligations that may have already
been assumed.

7.       PRODUCT REGISTRATION

         Registrations for the Products with the Food and Drug Administration
shall be maintained by MERCK. All fees and other expenses in connection with
the registration of the Products shall be for the account of MERCK. Product
registrations shall be in the name of MERCK or a designated Affiliate under
the separate Trademarks as owned by MERCK as set forth in Paragraph 8 and
listed in Schedule A. All product registrations so obtained shall be and
remain the property of MERCK or such Affiliate. Any registrations required
pursuant to state law to allow for distribution of the Products by KOFFOLK in
each state in the Territory, including distribution licenses, shall be applied
for, maintained by, be the property of, and for the account of KOFFOLK only.

8.       PACKAGING AND LABELING

                  KOFFOLK will promote and market the Products under labeling
and package design approved by MERCK. All packages will bear the name and logo
of MERCK, and shall identify that the Products are manufactured by MERCK.

9.       TRADEMARKS

         (a)      [

                           ], KOFFOLK shall have the exclusive right to use the
Trademarks in the Territory pursuant to the terms of this Agreement and the
Trademark License Agreement of even date annexed as Attachment 2.

         (b) Except as provided by this Agreement and/or the Trademark License
Agreement, nothing in this Agreement shall be construed as granting to KOFFOLK
any right, title, interest, or license under or to any intellectual property
of MERCK relating to the Product.

10.      REGULATORY MATTERS

         (a) The Product covered by this Agreement is registered with the
Center for Veterinary Medicine of the Food and Drug Administration (FDA).

         (b) (i) KOFFOLK agrees that it shall undertake in accordance with
applicable FDA regulations, and any other applicable laws or regulations, the
submitting of periodic drug experience reports to MERCK.

                                      6

<PAGE>

                  (ii) KOFFOLK further agrees to report to MERCK in writing
all adverse experience and adverse physical occurrence information of which it
becomes aware associated with the Products relating to hazards,
contraindications, side effects, injuries, toxicity, sensitivity reactions,
Product defects and mix-ups, whether or not the adverse experience or physical
occurrence is determined to be causally related to the Products. This
reporting obligation shall be in full compliance with the MERCK Policy and
Procedure No. 4, "Reporting Adverse Experiences and Adverse Physical
Occurrences for Animal Health Products," a copy of which is attached as
Attachment 3 and incorporated herein by reference. KOFFOLK shall submit a copy
of such report to MERCK within five (5) working days after learning of the
adverse experience or physical occurrence using the required RA 1932 Form, a
blank copy of which is attached as Attachment 4.

                  (iii) When complete information is not available within the
five-day period, KOFFOLK shall submit any available information within the
five-day period, and also submit a supplement as soon as further details
become available. MERCK shall be authorized to submit such adverse experience
or physical occurrence information to government authorities as it considers
appropriate. KOFFOLK agrees to permit MERCK to audit KOFFOLK's files for
adverse drug experience or physical occurrence on a routine basis as
determined necessary by MERCK. If MERCK becomes aware of adverse experiences
or physical occurrences which in its opinion may require a change in label
content, MERCK shall provide KOFFOLK with all information relating to such
adverse experiences or physical occurrences.

                  (iv) KOFFOLK agrees to provide a signed statement
identifying the category of its operation (i.e., wholesaler, retailer) and
stating that it will distribute the Products only under labeling provided for
in the new animal drug application for Product and approved by MERCK; that any
other labeling or advertising for the drug will prescribe, recommend and/or
suggest its use only under the conditions stated in the labeling provided for
in the application; and that it is regularly and lawfully engaged in the
distribution of Product.

                  (v) KOFFOLK will advise MERCK immediately concerning any FDA
inspections, notices, or enforcement action with respect to the Product.

11.      FORCE MAJEURE

         Neither of the parties hereto shall be liable or be in breach of any
provision hereof for any failure or delay on its part to perform any
obligation (other than the obligation to make payments when due) under any
provision of this Agreement because of force majeure, including, but not
limited to, war, riot, fire, explosion, flood, sabotage, accident or breakdown
of machinery; unavailability of fuel, labor, containers, or transportation
facilities; accidents of navigation or breakdown or damage of vessels, or
other conveyances for air, land or sea; other impediments or hindrances to
transportation; strike or other labor disturbances; government restraints or
any other cause beyond the control of the party thus failing to perform or
whose performance is thus delayed.

12.      TERM AND TERMINATION

         (a) This Agreement shall have an Effective Date as defined herein,
and unless sooner terminated as provided herein, shall remain in full force
and effect for a period of [                  ] from the Effective Date subject
to the terms and conditions set forth herein. Thereafter the Agreement shall
be renewed for successive one (1) year periods upon mutual agreement of the
parties expressed in writing at least ninety (90) days prior to expiration of
this Agreement and each successive renewal term.

         (b) Should either MERCK or KOFFOLK cease to do business or be
adjudicated as bankrupt or make an assignment for the benefit of creditors or
become involved in any insolvency proceeding or receivership proceeding, this
Agreement shall terminate immediately.

         (c) This Agreement may also be terminated by MERCK on one hundred and
eighty (180) days prior

                                      7

<PAGE>

written notice to KOFFOLK in the event that maintenance of the Product
registration or manufacture of the Product becomes infeasible as reasonably
determined by MERCK or MERCK divests Product via a Like Kind Exchange
arrangement with a third party.

         (d) Either party may terminate the Agreement in case of material
breach by the other party, such termination to be effected by sixty (60) days
prior written notice which specifically identifies the breach and provides the
opportunity for the breach to be cured within that sixty (60) day period. By
way of example without limitation, failure by KOFFOLK to follow and comply
with Paragraph 4(h) (promotional material) and Paragraph 10 (regulatory
matters) shall be considered a material breach.

         (e) MERCK may terminate this Agreement upon thirty (30) days written
notice upon a change in management or in the event that a majority of the
stock, assets or control of KOFFOLK is acquired by any other party(s) which
MERCK determines, in its sole judgment, is prejudicial to its interests. In
the event of such-change in management or control, notwithstanding the
provisions of Paragraph 13, MERCK shall have the right in its sole discretion
to purchase back any and all remaining inventory of Products at KOFFOLK's full
purchase price.

         (f) Upon termination of this Agreement in accordance with its terms,
KOFFOLK shall make no claim or request compensation of any kind because of
such termination. KOFFOLK agrees to waive any statutory amount which may be
allowable or imposed for such termination such as liquidated damages or other
such statutory payments, if any.

         (g) Termination shall not extinguish obligations and liabilities of
the parties accrued prior to termination or non-renewal.

13.      TRANSITION PERIOD

         At the conclusion of the Exclusive Distribution Period, or in the
event of earlier termination under Paragraph 12 with the exception of
Paragraph 12 (e), KOFFOLK shall have the right to sell any remaining MERCK
product bearing the Product label in its inventory for a period not to exceed
three (3) months from the conclusion of the Exclusive Distribution Period or
the date of termination. KOFFOLK shall notify MERCK in writing of its existing
inventory of Products at the beginning of that three (3) month period. KOFFOLK
shall exercise its best efforts to sell existing inventory of Products during
this three (3) month period. KOFFOLK further agrees to take all reasonable
steps necessary to minimize the amount of product inventory bearing the
Product label remaining on the first day immediately following conclusion of
the Exclusive Distribution Period. The parties' respective rights and
obligations under the Agreement shall remain in full force and effect during
the Transition Period.

14.      RECALL

         (a) In the event MERCK shall be required or shall voluntarily decide
to recall any Product distributed by KOFFOLK pursuant to this Agreement, then
KOFFOLK shall fully cooperate with MERCK in connection with the recall. If
such recall is initiated because of the negligence or failure of MERCK to
comply with the terms of this Agreement, then MERCK will credit KOFFOLK for
the price it invoiced KOFFOLK for all Product returned and, in addition, MERCK
will reimburse KOFFOLK for all reasonable recall expenses in connection
therewith. If such recall is initiated because of the negligence or failure of
KOFFOLK to comply with the terms of this Agreement, then KOFFOLK will
reimburse MERCK for all reasonable recall expenses in connection therewith.

         (b) KOFFOLK agrees to abide by all decisions of MERCK to recall
Product and both parties shall fully cooperate with each other in the event of
any recall of Product under this Agreement.

15.      JURISDICTION/CHOICE OF LAW

                                      8

<PAGE>

         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 renvois. In
the event of any controversy or claim arising out 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.

16.      PRODUCT WARRANTIES AND INDEMNIFICATION

         (a) MERCK warrants that the Products shall meet the ingredient
specifications contained on the label and conform to MERCK's specifications
for the Products when it leaves MERCK's control. MERCK makes no other
warranties, either express or implied, including warranties of merchantability
or of fitness for a particular use.

         (b) MERCK shall defend and indemnify KOFFOLK against all expenses,
claims, demands, liabilities or money judgments, including recall, incurred by
KOFFOLK arising from the negligence or fault of MERCK or from MERCK's failure
to comply with the terms of this Agreement, except to the extent that said
expenses, claims, demands, liability or money judgments are caused by the
negligence or fault on the part of KOFFOLK or KOFFOLK's failure to comply with
the terms of this Agreement.

         (c) KOFFOLK shall defend and indemnify MERCK against all expenses,
claims, demands, liabilities or money judgments, including recall, incurred by
MERCK arising from the negligence or fault of KOFFOLK or from KOFFOLK's
failure to comply with the terms of this Agreement, except to the extent that
said expenses, claims, demands, liability or money judgments are caused by the
negligence or fault on the part of MERCK or MERCK's failure to comply with the
terms of this Agreement.

17.      ENTIRE AGREEMENT

         This Agreement and Trademark License Agreement of even date comprises
the entire Agreement between the parties and merges all prior agreements
between them relative to the Products hereunder. This Agreement may not be
amended except in writing, signed by both parties referencing this Agreement.

18.      NOTICES

         All notices hereunder required to be in writing shall be sufficient
if sent by certified mail, return receipt requested, postage prepaid,
addressed as follows:

If to MERCK:      Merck & Co., Inc.
                  P.O. Box 2000
                  Rahway, NJ 07065-0912
                  Attention: President
                  Merck AgVet Division

If to KOFFOLK:    Koffolk, Inc.
                  One Parker Plaza
                  Fort Lee, New Jersey 07024

                                      9

<PAGE>

                  Attn: President

19.      SEVERABILITY

         In the event that any one or more of the provisions contained in this
Agreement shall for any reason be held invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions contained in this Agreement. If any one or more of the
provisions contained in this Agreement shall for any reason be held to be
excessively broad as to time, duration, geographical scope, activity or
subject, it shall be construed by limiting and reducing it so as to be
enforceable to the extent compatible with applicable law.

20.      TITLES

         The titles to each paragraph of this Agreement are for reference only
and shall not be used to interpret said paragraph. All interpretations of the
meaning of each paragraph to this Agreement shall rely solely upon the wording
of the Agreement and shall not incorporate the paragraph titles for its
interpretation.

21.      AMENDMENT

         Except as otherwise expressly stated herein, this Agreement cannot be
amended or modified except by a written instrument which shall state that it
is an amendment or modification of this Agreement and which shall be signed
and dated by the parties hereto.

22.      WAIVER

         Failure by MERCK or KOFFOLK at any time to enforce any of the terms
or conditions of this Agreement shall not be deemed a continuing waiver as to
such terms or conditions, and shall not affect the right of MERCK or KOFFOLK
to later avail itself of such remedies as it may have for any subsequent
breach of such terms or conditions under the provisions of this Agreement in
equity or at law.

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

KOFFOLK, INC.

By: /s/ J.C. Bendheim
    -----------------
Name:  J. C. Bendheim
Title:  Pres.

MERCK & CO, INC.

By:  /s/ John M. Preston
     -------------------
Name:  John M. Preston
Title:  President

                                      10

<PAGE>



SCHEDULE A

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

[                                                             ]

[                                                             ]

[                                                             ]

[                                                             ]

[                                                             ]


<PAGE>


SCHEDULE B

MINIMUM SUPPLY PRICES

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

[                                                             ]

[                                                             ]

[                                                             ]

[                                                             ]

[                                                             ]




<PAGE>


SCHEDULE C

GUARANTEED PURCHASES

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

[                                                             ]




<PAGE>


ATTACHMENT 1

ETHICAL BUSINESS PRACTICES

KOFFOLK agrees to comply with Merck & Co., Inc.'s Ethical Business Practices
policy which reflects the highest standard of corporate and individual
behavior. KOFFOLK shall adhere to business practices which are in accordance
with the letter and spirit of applicable laws and ethical principles. KOFFOLK
agrees that all transactions in connection with MERCK's business will be
accurately reflected in its books and records, and that no funds or other
assets shall be paid directly or indirectly to government officials or persons
acting on their behalf for the purpose of influencing government decisions or
actions with respect to MERCK's business. Violation of this policy on the part
of KOFFOLK, its employees, or representatives, shall result in the immediate
termination of this Agreement.


<PAGE>


ATTACHMENT 2

                          TRADEMARK LICENSE AGREEMENT

         AGREEMENT, effective as of August 5, 1 996 by and between MERCK &
CO., INC., a corporation organized and existing under the laws of the State of
New Jersey, U.S.A., with an office at Whitehouse Station, New Jersey, U.S.A.
(hereinafter "Licensor"), and KOFFOLK, INC. (including its affiliates and
subsidiaries), a business entity duly organized and existing under the laws of
Delaware (hereinafter "Licensee").

         WHEREAS, Licensor is the owner in the United States of America and
its territories (hereinafter the "Territory") of the right, title and interest
in and to the trademarks, AMPROL(R) (amprolium) and AMPROL(R) Plus and the
applications for registration and registrations thereof (hereinafter
"Trademarks'); and

         WHEREAS, Licensee desires the right and license to use the
Trademarks, in the Territory on and in association with the sale of certain
pharmaceutical preparations containing amprolium as an active ingredient [ ]
(hereinafter "Products") pursuant to the Distributorship Agreement dated
August 5, 1996 between Merck AgVet, a division of Merck & Co., Inc. and
KOFFOLK, USA (hereinafter "Distributorship Agreement");

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties herein agree as
follows:

1.       Licensor hereby grants to Licensee, for the term of the
         Distributorship Agreement, and Licensee accepts, an exclusive,
         royalty-free, non-sublicensable, non-assignable license to use the
         Trademarks in the Territory solely in connection with the packaging,
         promotion, and sale of the Products.

2.       Licensee shall use the Trademarks only for the Products supplied by
         Licensor. From time to time, upon request of Licensor, Licensee shall
         submit samples of any of the Products to Licensor or its duly appointed
         agent to insure compliance with Licensor's storage and handling
         specifications. Licensor, or its duly appointed agent, shall have the
         right to inspect the premises of Licensee, and Licensee shall permit
         such inspection, at any reasonable time, to confirm that Licensee is
         adhering to Licensor's standards and specifications used in the
         repackaging, storage and sale of the Products, pursuant to the
         Distributorship Agreement under which Licensee is licensed herein to
         use the Trademarks. Licensee shall not sell or otherwise dispose of,
         any of the Products under the Trademarks that fail to comply with the
         standards and specifications of Licensor as determined by Licensor.
         Any economic loss resulting from the failure of Product to conform to
         Licensor's quality control standards and requirements, caused by an
         action or failure to act by Licensee pursuant to the terms of the
         Distributorship Agreement, shall be borne by Licensee.

3.       Licensee shall use the Trademarks only in such form and manner as shall
         be approved in writing from time to time by Licensor. Licensee
         undertakes to comply with all laws pertaining to the Trademarks in
         force at any time in the Territory including, but not limited to,
         compliance with marking requirements. Use of the Trademarks by
         Licensee on labels and packaging or on other printed material shall
         be presented as AMPROL and AMPROL(R)Plus accompanied by an
         appropriate statement that such trademarks are "Licensed Trademarks",
         or such other appropriate legend as Licensor shall direct. The
         Trademarks shall always be given distinctive typographical treatment
         when used by Licensee. Copies of all labels, packaging and other
         printed material on which the Trademarks is used shall be submitted
         to Licensor for approval prior to use in accordance with the terms of
         the Distributorship Agreement. Licensee shall not use the Trademarks
         in any manner whatsoever which may jeopardize the significance,
         distinctiveness or validity thereof.

4.       The Trademarks shall at all times remain the exclusive property of
         Licensor and all use of the Trademarks

<PAGE>

         hereunder shall inure to the benefit of Licensor. Nothing in this
         Agreement shall be construed as granting or transferring to Licensee
         any right, title or interest in and to the Trademarks either by
         operation of law or otherwise except the right to use the same during
         the term of this Agreement, as provided in this Agreement and in the
         Distributorship Agreement.

5.       Licensee agrees that it shall not use the Trademarks in combination
         with any other trademark or trade name of its own or any third party
         or as a component of its business name or to characterize its
         business in any other way; and that it will use the Trademarks only
         on, or in connection with, the Products, and will not use or permit
         use of the Trademarks in connection with goods other than the
         Products; and that the Trademarks and the goodwill associated
         therewith, are and shall continue to be the exclusive property of
         Licensor.

6.       Licensor agrees to maintain the trademark registrations for the
         Trademarks. However, if the Trademarks are not in use in a particular
         jurisdiction of the Territory, Licensor may allow the registration to
         expire. Licensee agrees to cooperate with Licensor in providing
         information, specimens, and documentation that may be useful or
         required in order to effect trademark registrations, or for
         maintenance and renewal of trademark registrations for the
         Trademarks.

7.       Licensee shall, at all times, execute any documents reasonably
         required by Licensor to record Licensee as a registered user or
         licensee of the Trademarks. Licensee agrees to cooperate as requested
         by Licensor in arranging for such recordings and/or entries, or in
         maintaining, varying or canceling such recordings and/or entries in
         the event of amendment to, or termination of, this Agreement for any
         reason.

8.       In the event that Licensee learns of any infringement or threatened
         infringement of the Trademarks, or any passing-off, Licensee shall
         immediately notify Licensor or its authorized representative in
         writing giving particulars thereof and Licensee shall provide
         necessary information and assistance to Licensor or its authorized
         representatives in the event that Licensor decides that proceedings
         should be commenced or defended. The commencement, strategies,
         termination and settlement of any action relating to the validity
         and/or infringement of the Trademarks shall be decided. by Licensor.
         Any such proceedings shall be at the expense of Licensor, and any
         recoveries shall be to the benefit of Licensor. Nothing herein,
         however, shall be deemed to require Licensor to enforce the
         Trademarks against others.

9.       Licensee shall promptly notify Licensor of any claims arising out of
         the use of the Trademarks, and Licensor will provide for the defense
         thereof with counsel of its own selection and will pay all costs and
         expenses incurred in so defending against such claims, provided such
         use of the Trademarks by Licensee was in accordance with the terms of
         this Agreement and the Distributorship Agreement. Licensee shall also
         have the right to participate in the defense of any such claim with
         attorneys of its own selection, at its own expense, however, the
         extent to which any such claim shall be prosecuted, defended or
         settled, will be solely within the discretion of Licensor. Licensor
         hereby indemnifies and shall hold harmless Licensee from and against
         the cost and expenses of any claims, demands, causes of action,
         judgments, damages or liabilities, arising out of the use by Licensee
         of the Trademarks in accordance with the terms of this Agreement,
         provided that written notice of such claim, demand or cause of action
         is promptly given to Licensor and Licensee cooperates fully with
         Licensor in the defense of such claim, demand or cause of action.

10.      Licensee agrees to indemnify and hold Licensor harmless from and
         against any and all claims and agrees to reimburse Licensor for any
         and all losses, damages, costs, fees, expenses, liabilities and
         obligations of any kind (including reasonable attorney's fees and
         other reasonable legal costs and expenses) that Licensor may at any
         time suffer or incur, or become subject to as a result of or arising
         from the unauthorized use of the Trademarks by Licensee. Licensee
         shall have the right to defend any such action or proceeding with
         attorneys of its own selection, and Licensor shall have the right to
         be represented by attorneys of its

<PAGE>

         selection.

11.      This Agreement shall be effective as of the date first written above
         and shall continue in force for as long as the Distributorship
         Agreement remains in effect, and shall terminate upon termination of
         the Distributorship Agreement.

12.      This Agreement shall terminate immediately and automatically in the
         event that Licensee makes any assignment for the benefit of creditors
         or shall file for, or have filed against it, a petition for
         bankruptcy; or if Licensee is dissolved or loses its charter by
         forfeit or otherwise or if a trustee or receiver is appointed for
         Licensee or for any of its property in any proceeding, or if any
         court takes jurisdiction of the property of Licensee by foreclosure
         or otherwise.

13.      In the event that Licensee defaults or breaches any of the provisions
         of this Agreement, Licensor shall have the right to terminate this
         Agreement upon thirty(30) days written notice to Licensee, provided,
         however, that if Licensee, within the said thirty (30) day period,
         cures the default or breach to the satisfaction of Licensor, the
         Agreement shall continue in full force and effect.

14.      Upon termination of this Agreement for whatever reason, Licensee
         shall promptly discontinue any further use of the Trademarks, and
         shall not use any trademark which, in the reasonable opinion of
         Licensor, is confusingly similar to the Trademarks, except that after
         termination of this Agreement, Licensee may for a period of twelve
         (12) months immediately following termination, sell existing stocks
         of the Products bearing the Trademarks without removing the
         Trademarks provided that such Products comply with the standards and
         specifications of Licensor, in force at the time of termination.

15.      The failure of a party to require the performance of any term of this
         Agreement or the waiver by a party of any breach of this Agreement
         shall not prevent a subsequent enforcement of such term nor be deemed
         a waiver of any subsequent breach.

16.      Should Licensee be or become aware of any applicable laws or
         regulations which are inconsistent with the provisions of this
         Agreement, Licensee shall promptly notify Licensor of such
         inconsistency.

17.      The remedies provided for in this Agreement are not exclusive of other
         remedies available to the parties.

18.      This Agreement may be assigned by Licensor to an affiliate without
         approval, otherwise it may be assigned by either party only with the
         written approval of the other party.

19.      This Agreement shall be binding upon and inure to the benefit of any
         successors in interest of each party.

20.      All notices provided for herein shall be deemed sufficient if in
         writing and delivered or sent by pre-paid registered or certified
         mail, facsimile, cablegram or telex to the party hereto at its
         address specified in Paragraph 18 of the Distributorship Agreement or
         to such other business address as may have been furnished in writing
         by the intended recipient to the sender. The date of mailing, faxing,
         cabling or telexing shall be deemed to be the date on which such
         notice or request has been given.

21.      This Agreement, and its construction, interpretation, performance and
         breach shall be governed according to the laws of the State of New
         Jersey.

22.      This Agreement and the Distributorship Agreement constitute the
         entire agreement and understanding between the parties and supersedes
         all previous agreements between them concerning the matters covered
         herein, whether written, oral or implied. This Agreement may only be
         changed or modified by written agreement signed by both parties.

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives.

KOFFOLK, INC.

By: /s/ J.C. Bendheim
    -----------------
Name:  J. C. Bendheim
Title:  Pres.


MERCK & CO, INC.

By:  /s/ John M. Preston
     -------------------
Name:  John M. Preston
Title:  President


<PAGE>


MERCK AGVET DIVISION POLICY AND PROCEDURE
REPORTING ADVERSE EXPERIENCES AND ADVERSE PHYSICAL OCCURRENCES FOR ANIMAL
HEALTH PRODUCTS
Date:    03/01/94
Supercedes:   10/30/92

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

[                                                             ]

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>11
<FILENAME>0011.txt
<DESCRIPTION>LICENSE AGREEMENT
<TEXT>


<PAGE>

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

                                LICENSE AGREEMENT


                  THIS AGREEMENT is effective this 30th day of May, 1996 and is
by and between MICHIGAN TECHNOLOGICAL UNIVERSITY, a body corporate organized and
existing under the laws of the State of Michigan located in Houghton, Michigan
(hereinafter referred to as MTU) and doing business as the INSTITUTE OF
MATERIALS PROCESSING one of its Research Institutes (hereinafter referred as
IMP) arid MINERAL RESOURCE TECHNOLOGIES, LLC a limited liability company
organized and existing under the laws of the State of Delaware and having a
place of business in Atlanta, Georgia (hereinafter referred to as MRT).

                  WHEREAS, MTU is the owner of the entire right, title and
interest in and to the LICENSED PATENTS (hereinafter defined) and further
represents that it has the right and power to grant licenses of the scope herein
granted; and

                  WHEREAS, MTU has the facilities, personnel and expertise to
conduct research in the area of fly ash recovery and processing of recovered fly
ash and to cooperate in the commercial development of the results of that
research; and

                  WHEREAS, MRT has the facilities, personnel and expertise to
conduct research in the area of fly ash recovery and processing of recovered fly
ash including producing salable products, made from recovered fly ash; and

                  WHEREAS, MRT has the facilities, personnel and expertise to
construct and operate installations for the commercial exploitation of fly ash
recovery and processing of recovered fly ash including producing salable
products made from recovered, fly ash; and

                  WHEREAS, MRT wishes to secure and MTU is willing to grant to
MRT an exclusive license under the LICENSED PATENTS; and

                  WHEREAS, MRT and MTU wish to cooperate in future research in
the area of fly ash recovery and processing of recovered fly ash including
producing salable products, made from recovered fly ash; and

                  WHEREAS, MRT and MTU wish to cooperate in the construction and
operation of installations for the commercial exploration of fly ash recovery
and processing of recovered fly ash including producing salable products made
from recovered fly ash.

                  NOW, THEREFORE, MTU and MRT hereby agree and covenant as
follows:

I.       LICENSED PATENTS

         1.   For purposes of this Agreement, LICENSED PATENTS shall mean
[                           ], including reissues, divisions, continuations or
extensions thereof and future patents as provided for hereinafter and
applicable to the manufacture, use and/or sale of research services, processing
equipment and products as contemplated by this Agreement.

II.      GRANT

<PAGE>

         1. (a) MTU hereby grants and MRT hereby accepts an exclusive right and
license under the LICENSED PATENTS to manufacture, use, and/or sell processes,
equipment and/or product, throughout the United States of America, its
territories and possession. As applications for letters patent are filed and
letters patent become effective in countries foreign to the United States under
paragraph V-1(d), the grant of this license shall, extend to those foreign
countries. (b) MTU shall retain the right to do research coming within the scope
of the LICENSED PATENTS.

III.     ROYALTIES AND PAYMENTS

         1.     Upon execution of this Agreement, [

                                    ]. Thereafter and in order to maintain the
exclusivity of the license granted herein, MRT shall pay MTU either as earned
royalties under paragraph III-4 or in lieu thereof a minimum royalty payment per
Agreement Year in the following amounts:

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

[                    ]

For purposes of this Agreement, an "Agreement Year" shall be the twelve (12)
months beginning with the effective date of this Agreement and with each annual
anniversary date of the effective date. After the second Agreement Year, in the
event the earned royalties under paragraph III-4 do not equal the above minimum
amounts in a particular Agreement Year, MTU shall have the option of notifying
MRT that the license under this Agreement will be reduced to non-exclusive
license. If within the immediately following Agreement Year MRT makes a payment
to MTU in an amount equal to the difference between the minimum payment due for
the prior Agreement Year and the amount of earned royalties actually paid in
that prior Agreement Year ("shortfall payment') this Agreement shall continue as
an exclusive, if the shortfall payment is not made within that time period this
Agreement shall reduce to a non-exclusive in accordance with the notice.

         2. The payments of paragraph III-1 due beginning with the second
Agreement Year shall be payable [                                       ].

         3. [


                                    ].

         4. MRT shall pay MTU a royalty based on the Net Selling Price of
product on the following schedule:

Net Selling Price                   Royalty as percent of
Per Ton of product                  Net Selling Price

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

[                                 ]

                                        2
<PAGE>

For the first eighteen (18) months of the sale of product from a facility
operating pursuant to this Agreement, [                                  ].

         5. If patents issue as provided for in Article V in which an employee
of MRT is named as sole inventor or joint inventor with an employee of MTU and

         i. the claimed subject matter of such patent is used in production of
product as contemplated by this Agreement, and

         ii. the claimed subject matter results in a value added to the product
and an increase in the Net Selling Price per ton of product (incremental
increase in Net Selling Price), then [
                                                                   ].

         6. In the event MRT sells process technology and/or equipment to an
entity which will in turn operate its own facility and/or manufacture and sell
product using the LICENSED PATENTS, MTU shall be compensated by one of either:

            [


                                         ]

         7. For purposes of this Agreement, Net Selling Price shall mean the
invoice price of products less transportation.

         8. If MRT makes a sale to an Associated Company on which a royalty
would be payable, the same royalty shall be paid as if the same quantity had
been sold to a third party. The Net Selling Price of the same Quantity of
product from the last arm's length sale to a third party shall be used in
computing the royalty.

         9. Product shall be considered as sold when invoiced, or if not
invoiced, when delivered, shipped or mailed, whichever occurs first.

         10. MRT is to deliver yearly to MTU four written reports, in duplicate,
pertaining to MRT's manufacture, use and/or sale of product or facilities under
this Agreement, and shall specifically set forth any freight deductions. Each
report shall relate to a calendar quarter and shall be delivered within the
months of July, October, January, and April. The first report shall be delivered
within thirty (30) days after the end of the calendar quarter current when this
Agreement becomes effective. Payments due under paragraphs III-4 or III-6-ii
shall accompany the reports under this paragraph III-10.

         11. The reports provided for in paragraph III-11 shall contain all
necessary data commensurate to accounting in accordance with the true intent of
this Agreement; if in any quarter MRT has not made, used and/or sold any product
or sold any facilities for which royalties are payable, it shall so report.

         12. MRT is to keep true and correct books of account of its production,
use and sale of product under this Agreement in sufficient detail to enable an
accountant to determine the correctness of the reports submitted by MRT, which
books of account shall be open at all reasonable business hours for inspection
by an independent certified public accountant (CPA) mutually acceptable to MRT
and MTU who shall have the right to examine said books. It is the intent of the
parties to this Agreement that the certified public accountant shall not
disclose to MTU any business details which may be found in the books of MRT
while making such inspection except as needed to verify the reports. MRT shall
have the right to refuse acceptance of the CPA if the CPA does not execute a
Confidentiality Agreement with MRT relating to the books of account which are to
be inspected. Acceptance of the

                                        3

<PAGE>

CPA will not be unreasonably withheld by either party. MTU shall be responsible
for the expense of the inspection contemplated by this paragraph III-12;
provided, however, if the inspection shows the amounts paid as being at least
ten percent (10%) less than that actually owed then MRT shall be responsible for
the cost of the inspection. MTU may exercise this right of inspection once in
each Agreement Year and once in the two (2) years immediately following
termination.

IV.      RESEARCH

         1. [                     ] of the earned royalties paid to MTU pursuant
to paragraph 111-4, but not minimums paid pursuant to paragraph III-1, shall be
distributed to IMP. In the first Agreement Year that a royalty is paid, IMP will
allocate [                     ] of that amount to fly ash research, and MRT and
MTU shall jointly direct that fly ash research. The [                ] allocated
shall reduce by [                  ] in each successive Agreement Year, that is
in the second Agreement Year after royalty payments commence, the allocation
shall be [                           ]. [                                     ]

         2. Immediately after signing this Agreement and to the extent that MTU
is legally permitted to do so, MTU will make available and provide copies to MRT
of the results of research conducted under DOE contracts and in the area of fly
ash drying and beneficiation. Any printed material will be transmitted as copies
to MRT, any results not in printed form shall be delivered to MRT at IMP in
Houghton, Michigan. In addition and to the extent permissible under the
particular DOE contracts, MTU shall make available to MRT any results of
research conducted after the effective date of this Agreement with respect to
fly ash drying and beneficiation under DOE contracts in existence as of the
effective date of this Agreement.

         3. (a) After signing this Agreement, MTU and MRT will jointly pursue a
DOE grant for [





                                      ]

            (b) [



                         ].

         (c) If the DOE grant is received, the principal investigators or other
responsible individuals of MTU and MRT shall confer at least once within each
calendar half-year to apprise the other of the progress and direction and of
their respective efforts under the grant. MRT and MTU will furnish each other
with copies of any reports which are generated relating to efforts under the
grant these report copies shall be furnished within ten (10) days of completion.

         (d) If MRT, in its sole discretion decides to fund additional fly ash

research, [                                    ] may be credited against future
royalties under paragraph III-5 but not the fees of paragraph III-1. If the
research funding by MRT is at MTU's request, the amount of the credit against
future royalties shall be [                     ].

V.       FUTURE IMPROVEMENTS AND PAYMENT

                                       4

<PAGE>

         1. (a) MTU and MRT shall each keep the other currently advised of all
future improvements or developments made jointly or solely by either of them
without joint inventorship of the other's personnel, or others on behalf of
either MTU or MRT, relating to the results of activities under the DOE grant or
research sponsored by MRT. If such improvements or developments involve or
include patentable subject matter. MTU and MRT will jointly decide whether to
pursue patent protection, in which case MTU will file for and attempt to obtain
letters patent thereon in the United States. Such letters patent shall be the
property of MTU and shall be included within this Agreement the same as a
LICENSED PATENT and shall be effective to extend the term of this Agreement.

         (b) If either party concludes that a patent application should not be
filed in the United States, the other party may proceed at it's own expense and
any patent to issue will be owned by MTU and come under this Agreement as a
Licensed Patent. If the filing party is MRT, MRT shall be entitled to credit the
costs involved against future earned royalties.

         (c) Subject to MRT's credit under subparagraph (b) above, the party
filing in the U.S. shall be responsible for the cost of filing and prosecuting
applications for letters patent in the United States, and for maintaining any
such issued letters patent in the United States.

         (d) MTU and MRT shall decide in which countries foreign to the United
States to file patent applications based on any U.S. patent application, and any
patents issuing thereon shall come under this Agreement as a LICENSED PATENT and
shall be effective to extend the term of this Agreement with respect to the
particular country involved. The cost of filing and prosecuting any agreed upon
foreign patent applications shall be shared equally by MTU and MRT, for each
filing corresponding to a U.S. patent application MRT's share shall not exceed
Fifteen Thousand Dollars ($15,000.00).

         (e) Costs and fees incurred in maintaining a foreign patent
application, an issued foreign letters patent, and, in the case of the European
Patent Office, the cost of individual country validation shall be shared equally
by MTU and MRT, fifty percent (50%) to each; provided, however, that either MTU
and MRT may decide not to participate in such cost the effect of which shall be:

             (i) in the case of MRT, it shall relinquish license rights in any
patent property in which it elects not to participate, arid

             (ii) in the case of MTU, it shall relinquish the right to receive
royalties attributable to activity under any patent property in which it elects
not to participate.

         (f) Any costs incurred by MRT under this paragraph V-l(d) and (e) may
be credited against royalty payments due MTU from royalty payments attributable
to activity of MRT outside of the United States. As with other credits, this
credit shall not exceed [
                  ].

         (g) Suits to enjoin or recover for infringement of a LICENSED PATENT,
may be instituted and prosecuted jointly by the parties hereto and in such event
the cost and expense thereof and all sums recovered therein shall be shared
equally by them. MTU may elect, in its sole discretion, to take the lead role in
any such suit. If MTU does not elect to take the lead role MRT may do so. Either
party may, however, elect not to join or share in the expense or cost of any
such suit, or having once elected to join, may thereafter elect to withdraw and
in either such event the other party may proceed therewith at its own expense
and shall be entitled to all sums recovered therein or in settlement thereof;
provided, however, that if either party at any time elects not to share in such
Suit, such party agrees to be made a nominal party to the suit but only at the
expense of the other party.

         (h) If either MTU or MRT becomes aware of the apparent infringement of
a LICENSED PATENT, it shall promptly notify the other in writing and in
reasonable detail.
                                       5

<PAGE>

         (i) In the event that any of the claims of a LICENSED PATENT shall be
held invalid or shall be awarded to a third party as a result of a decision or a
decree of a competent court that becomes final, no royalties shall be payable by
MRT after said date on apparatus covered only by such claim or claims. A
decision shall not be considered to be final as long as a party to a suit has
recourse to the United States Supreme Court. As of the effective date of the
decision or decree of the competent court, MRT may suspend all royalty payments
and minimum payments. If the decision or decree is reversed by an appellate
court, MRT shall pay MTU all suspended payments and resume royalty payments and
minimum commitments, suspended payments will be made in the interest calculated
at two (2) percentage points above prime.

         (j) MTU does not warrant that the use of the rights granted MRT under
this Agreement will not infringe letters patent of a third party; provided,
however, that MTU does represent that it does not have any present knowledge of
letters patent that would be infringed.

         2. MRT shall have the right of first refusal to include in this
Agreement any letters patent obtained by MTU and relating to ash derived
products and technology provided, however, that the letters patent are not the
result of externally funded research and MTU is free to do so. In the exercise
of this right. MTU shall promptly advise MRT of the filing of an application for
letters patent and MRT shall have sixty (60) days in which to affirmatively
exercise this right of first refusal, in which case any letters patent issuing
from the application shall come under this Agreement as a LICENSED PATENT and
shall be effective to extend the term of this Agreement. If MRT declines to
exercise this option within the sixty (60) day period or does not respond within
the sixty (60) day period, MTU shall be free to pursue said patent application
without any further obligation to MRT.

VI.      TERM AND TERMINATION

         1. (a) MRT may terminate this Agreement without cause between
twenty-four (24) and thirty-six (36) months from the effective date of the
Agreement. Termination under this paragraph VI-1 can only be exercised by MRT
giving MTU six (6) months prior written notice.

            (b) The respective rights and obligations of MTU and MRT under the
DOE grant shall survive termination under paragraph VI-1(a) with respect to
sharing results of activities under the DOE grant and MTU ownership of any
improvements, patentable or unpatentable, resulting therefrom; provided,
however, MRT shall relinquish any license rights in those patents.

         2. (a) Either MTU or MRT may terminate this Agreement in the event of
breach or default thereof by the other, without waiver of any other remedy, by
service on the other of notice of termination effective not less than 60 days
after service specifying the particulars of the others breach or default. If
within 60 days following notice the breach or default is remedied, the license
shall continue in full force and effect, otherwise it shall terminate in
accordance with the notice.

            (b) In the event of termination under paragraph VI-2(a) due to MRT's
breach, MRT shall relinquish its license rights under this Agreement.

            (c) In the event of termination under paragraph VI-2(a) due to MTU's
breach, MRT's license rights shall be converted to a royalty free, non-exclusive
license effective as of the date of termination.

         3. In the event enactment of any federal law renders impossible
performance by MRT under this Agreement, MRT may terminate this Agreement for
the United States by written notice of an intent to terminate and such
termination shall be effective as of receipt of that notice by MTU.

         4. Subject to paragraph III-3, the term of this Agreement shall be for
the last to expire of the LICENSED PATENTS; provided, however, MRT shall be
obligated to pay royalties only with respect to such of

                                       6

<PAGE>

the LICENSED PATENTS as have not expired.

         5. Termination of this Agreement shall be without prejudice to MTU's
right to recover any royalty sums due at the time of such termination, or to any
cause of action or claim accrued or to accrue on account of any such breach or
default arid the license granted hereunder shall cease at the time of such
termination.

         6. Waiver by MTU or MRT of any particular breach or default by the
other shall be considered as applicable only to such particular case and shall
not be construed as a waiver of any provision of this Agreement or of any
subsequent breach, violation or default.

VII.     MISCELLANEOUS

         1. In case MRT files a petition in bankruptcy, or in case a petition in
bankruptcy is filed against MRT, and such petition is not dismissed within 90
days thereafter, or if MRT is adjudged bankrupt or shall make a general
assignment of the benefit of its creditors or any assignment in the nature of
such a general assignment, or in case a receiver is appointed for its business,
this Agreement may be terminated at MTU's option.

         2. MRT shall have the right to use MTU's name and that of its Institute
of Minerals Processing and any applicable MTU trademarks; provided, however,
such use shall be subject to written approval by MTU prior to any such usage.
MTU shall have the right to approve the form and content of any material using
such names or trademarks. MRT may also use the name of individual MTU employees;
provided, however, the prior written consent of the individual is obtained by
MRT.

         3. Notices under this Agreement shall be in writing and shall be
sufficient' if sent by registered mail. Notices and reports under this Agreement
shall be addressed as follows:

For MRT:

Mr. Hugh P. Shannonhouse
Mineral Resource Technologies, LLC
120 Interstate North Parkway East
Suite 440
Atlanta, GA 30339

Copy to:

Jody H. Armstrong, Esq.
Killworth, Gottman, Hagan & Schaeff
One Dayton Centre
One South Main Street, Suite 500
Dayton, Ohio 45402-2023

For MTU:
Dr. Jian-Yang Hwang
Institute of Minerals Processing
Michigan Technological University
1400 Townsend Drive
Houghton, MI 49931

copies to:


                                        7
<PAGE>

Ms. Sandra Gayk
Intellectual Property Office
Michigan Technological University
1400 Townsend Drive
Houghton, MI 49931

Joseph A. Gemignani
Michael, Best & Friedrich
100 East Wisconsin Avenue
Milwaukee, WI 53202

         4. If calculation of royalties due involves foreign currencies, the Net
Selling Price and royalty due shall be converted to U.S. Dollars at the time the
royalties are paid.


         5. This Agreement may not be assigned by either party without the prior
written consent of the other party except MRT may assign this Agreement as a
part of sale of at least that portion of its business to which this Agreement
relates by giving MTU ninety (90) days notice thereof.

         6. This Agreement constitutes the complete agreement between the
parties and no modifications shall be binding upon the party against whom
enforcement of such modification is sought unless it is made in writing
referring to this Agreement and is signed on behalf of such party by one of its
officers.

         7. This Agreement shall be interpreted in accordance with the laws of
the State of Michigan and shall be binding on each of the legal representatives
of the parties hereto.

         8. If any of the terms and conditions of this Agreement are invalid, in
whole or in part, such invalidity shall not affect the remaining terms and
conditions hereof, and this Agreement shall be construed as though such terms
and conditions held to have been invalid and never been included herein. In such
cases, this Agreement shall be supplemented by a provision which, as far is
legally possible, comes nearest to the mutual intent of the parties as reflected
in the text of this Agreement.

         IN WITNESS WHEREOF, this Agreement has been executed on behalf of the
parties by their duly authorized representative as of the day and year first
written above.

MINERAL RESOURCE TECHNOLOGIES, INC.
By: /s/ Hugh P. Shannonhouse
    -------------------------
Hugh P. Shannonhouse
President

Witness:
/s/
- ---

MICHIGAN TECHNOLOGICAL UNIVERSITY
By: /s/ Frederick J. Dobney
    -----------------------
Frederick J. Dobney
Executive Vice President

Witness:
/s/
- ---
                                        8
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.8
<SEQUENCE>12
<FILENAME>0012.txt
<DESCRIPTION>LEASE BETWEEN PHILIPP BROTHERS CHEMICALS, INC.
              AND 400 KELBY ASSOCIATES, AS AMENDED
<TEXT>


<PAGE>

                                      LEASE


                              400 KELBY ASSOCIATES,

                                    Landlord


                                       TO


                        PHILIPP BROTHERS CHEMICALS INC.,

                                     Tenant


Premises: Parker Plaza, 400 Kelby Street, Fort Lee, New Jersey


The Land affected by the Within Instrument Lies in Block 4502 on the Tax Map of
the Borough of Fort Lee, County of Bergen (Tax Lots 1 and 2).

<PAGE>

                                      INDEX

<TABLE>
<CAPTION>
Article     Caption                                                                                    Page
- -------     -------                                                                                    ----
<S>         <C>                                                                                        <C>
    1.      Demise, Premises, Term, Rents................................................................1
    2.      Use..........................................................................................3
    3.      Completion of Renovation of the Building and Preparation of the
            Demised Premises.............................................................................4
    4.      When Demised Premises Ready for Occupancy....................................................6
    5.      Adjustments of Rent..........................................................................7
    6.      Deleted Prior to Execution..................................................................15
    7.      Subordination, Notice to Lessors and Mortgagees.............................................15
    8.      Quiet Enjoyment.............................................................................17
    9.      Assignment and Subletting...................................................................17
   10.      Compliance with Laws and Requirements of Public Authorities.................................24
   11.      Insurance...................................................................................25
   12.      Rules and Regulations.......................................................................28
   13.      Tenant's Changes............................................................................28
   14.      Tenant's Property...........................................................................31
   15.      Repairs and Maintenance.....................................................................32
   16.      Electricity.................................................................................33
   17.      Heat, Ventilation and Air Conditioning......................................................39
   18.      Landlord's Other Services...................................................................40
   19.      Access, Changes in Building Facilities, Name................................................41
   20.      Notices of Accidents........................................................................43
   21.      Non-Liability and Indemnification...........................................................43
   22.      Destruction or Damage.......................................................................44
   23.      Eminent Domain..............................................................................45
   24.      Surrender...................................................................................47
   25.      Conditions of Limitation....................................................................48
   26.      Re-Entry by Landlord........................................................................49
   27.      Damages.....................................................................................50
   28.      Waiver......................................................................................52
   29.      No Other Waivers or Modifications...........................................................53
   30.      Curing Tenant's Defaults, Additional Rent...................................................53
   31.      Broker......................................................................................55
</TABLE>

                                     -(i)-
<PAGE>
<TABLE>
<S>         <C>                                                                                        <C>
   32.      Notices.....................................................................................55
   33.      Estoppel Certificate, Memorandum............................................................55
   34.      Arbitration.................................................................................56
   35.      No Other Representations, Construction, Governing Law, Consents.............................57
   36.      Parties Bound...............................................................................57
   37.      Certain Definitions and Construction........................................................58
   38.      Adjacent Excavation and Construction-Shoring................................................58
   39.      Supplemental Air Conditioning System........................................................59
            Testimonium and Signatures..................................................................60
            Acknowledgments.............................................................................61
            Exhibit A - Description.....................................................................62
            Exhibit 3 - Floor Plan......................................................................63
            Exhibit C - Work Letter.....................................................................64
            Exhibit D - Rules and Regulations...........................................................75
            Exhibit E - Definitions.....................................................................78
            Exhibit F - Cleaning Specifications.........................................................80
</TABLE>

         This index is included only as a matter of convenience of reference and
shall not be deemed or construed in any way to define or limit the scope of the
following lease or the intent of any provision thereof.

                                     -(ii)-

<PAGE>

                                      LEASE

LEASE dated July 25, 1986, between 400 KELBY ASSOCIATES, a New Jersey limited
partnership having an office at 104-70 Queens Boulevard, P.O. Box 400, Forest
Hills, New York 11375 (hereinafter referred to as "Landlord") and PHILIPP
BROTHERS CHEMICALS, INC., a New York corporation having an office at 10 Columbus
Circle, New York, New York 10019 (hereinafter referred to as "Tenant").


                              W I T N E S S E T H:

                                    ARTICLE I

                          Demise, Premises, Term, Rents

                  1.01 Landlord hereby leases to Tenant, and Tenant hereby hires
from Landlord, the premises hereinafter described, in the building located at
400 Kelby Street; in the Borough of Fort Lee, County of Bergen, State of New
Jersey (the "Building"), on the parcel of land more particularly described in
Exhibit A (the "Land"), for the term hereinafter stated, for the rents
hereinafter reserved and upon and subject to the conditions (including
limitations, restrictions and reservations) and covenants hereinafter provided.
Each party hereby expressly covenants and agrees to observe and perform all of
the conditions and covenants herein contained on its part to be observed and
performed.

                  1.02 The premises hereby leased to Tenant is the entire
fourteenth (14th) floor of the Building, as shown on the floor plan annexed
hereto as Exhibit B. Said premises together with all fixtures and equipment
which at the commencement, or during the term, of this lease are thereto
attached (except items not deemed to be included therein and removable by Tenant
as provided in Article 14) constitute and are hereinafter referred to as the
"Demised Premises".

                  1.03 The term of this lease, for which the Demised Premises
are hereby leased, shall commence on a date (herein referred to as the
"Commencement Date") which shall be (i) the later of (a) October 1, 1986 or (b)
the day on which the Demised Premises are ready for occupancy (as defined in
Article 4) or (ii) the day Tenant, or anyone claiming under or through Tenant,
first occupies the Demised Premises for business, whichever occurs earlier, and
shall end at noon of the last day of the calendar month in which occurs the day
preceding the tenth (10th) anniversary of the Commencement Date, which ending
date is hereinafter referred to as the "Expiration Date", or shall end on such
earlier date upon which said term may expire or be cancelled or terminated
pursuant to any of the conditions or covenants of this lease or pursuant to law.
Promptly following the Commencement Date the parties hereto (hereinafter
sometimes referred to as the "parties") shall enter into a recordable
supplementary agreement fixing the dates of the Commencement Date and the
Expiration Date and if they cannot agree thereon within fifteen (15) days after
Landlord's request therefor, such dates shall be determined by arbitration in
the manner provided in Article 34.

                  1.04 The "rents" reserved under this lease, for the term
thereof, shall be and consist of:

                       (a)   "fixed rent" of

                             (i) $477,351.00 per year ($39,779.25 per month)
from the Commencement Date through the day preceding the first anniversary of
the Commencement Date;

                             (ii) $488,716.50 per year ($40,726.38 per month)
from the first anniversary of the Commencement Date through the day preceding
the second anniversary of the Commencement Date;

                             (iii) $511,447.50 per year ($42,620.63 per month)
from the second anniversary of the Commencement Date through the day preceding
the third anniversary of the Commencement Date;

                             (iv) $522,813.00 per year ($43,567.75 per month)
from the third anniversary of the Commencement Date through the day preceding
the fourth anniversary of the Commencement Date;


<PAGE>

                             (v) $545,544.00 per year ($45,462.00 per month)
from the fourth anniversary of the Commencement Date through the day preceding
the fifth anniversary of the Commencement Date; and

                             (vi) $636,468.00 per year ($53,039.00 per month)
from the fifth anniversary of the Commencement Date and continuing thereafter
for the remainder of the term of this lease,

which shall be payable in equal monthly installments in advance on the first day
of each and every calendar month during the term of this lease (except that
Tenant shall pay, upon the execution and delivery of this lease by Tenant, the
sum of $39,779.25 to be applied against the first rents becoming due under this
lease); and

                       (b)   "additional rent" consisting of all such other
sums of money as shall become due from and payable by Tenant to Landlord
hereunder (for default in payment of which Landlord shall have the same remedies
as for a default in payment of fixed rent),

all to be paid to Landlord at its office, or such other place, or to such agent
and at such place, as Landlord may designate by notice to Tenant, in lawful
money of the United States of America.

                  1.05 Tenant shall pay the fixed rent and additional rent
herein reserved promptly as and when the same shall become due and payable,
without demand therefor and without any abatement, deduction or setoff
whatsoever except as expressly provided in this lease.

                  1.06 If the Commencement Date occurs on a day other than the
first day of a calendar month, the fixed rent for such calendar month shall be
prorated and the balance of the first month's fixed rent theretofore paid shall
be credited against the next monthly installment of fixed rent.

                                    ARTICLE 2

                                       Use

                  2.01 Tenant shall use and occupy the Demised Premises for
executive and general offices and for no other purpose. Additionally, subject
to, and in accordance with, the laws and requirements of public authorities, and
only if, and to the extent that the same is permitted under the Certificate of
Occupancy for the Demised Premises or for the Building and subject to the
following conditions, Tenant may use portions of the Demised Premises for the
following specific purposes:

                       (a)   installation, maintenance and operation of a
kitchen and cafeteria not exceeding 400 square feet in aggregate area containing
equipment for the warming (as opposed to the cooking) of food for use
exclusively by Tenant, any permitted subtenants of Tenant and their respective
employees and business invitees solely in conjunction with the conduct of the
business of Tenant;

                       (b)   installation, maintenance and operation of a
pantry and kitchen not exceeding 150 square feet in aggregate area containing
equipment for the warming (as opposed to the cooking) of food for use
exclusively by Tenant, any permitted subtenants of Tenant and their respective
employees and business invitees solely in conjunction with the conduct of the
business of Tenant;

                       (c)   installation, maintenance and operation of a
computer room furnished with computers and peripheral related equipment, not
exceeding 700 square feet in aggregate area, for the sole use of Tenant, any
permitted subtenants of Tenant and their respective employees solely in
conjunction with the conduct of the business of Tenant; and

                       (d)   installation, maintenance and operation of an
exercise room furnished with nautilus, universal or other comparable exercise
equipment and peripheral related equipment together with one (1) shower and

                                       -2-
<PAGE>

one (1) bathroom for men and one (1) shower and one (1) bathroom for women, not
exceeding 500 square feet in aggregate area, for the sole use of Tenant, any
permitted subtenants of Tenant and their respective employees.

Notwithstanding the foregoing, however, Tenant shall immediately discontinue
using portions of the Demised Premises for any one or more of the above-listed
specific purposes listed in Subdivisions (a), (b) and (d) above if the same
shall materially interfere with the use and/or occupancy of all or a part of the
common areas of the Building or of any space in the Building leased to other
tenants until such interference is abated.

                  2.02 If any governmental license or permit, other than a
Certificate of Occupancy, shall be required for the proper and lawful conduct of
Tenant's business in the Demised Premises, or any part thereof, and if failure
to secure such license or permit would in any way affect Landlord, Tenant, at
its expense, shall duly procure and thereafter maintain such license or permit
and submit the same for inspection by Landlord. Tenant shall at all times comply
with the terms and conditions of each such license or permit. Landlord
represents that no other licenses or permits, other than a Certificate of
Occupancy, shall be required for the occupancy of the Demised Premises merely as
executive and general offices, without regard to the nature of Tenant's business
or particular manner of use.

                  2.03 Tenant shall not at any time use or occupy, or suffer or
permit anyone to use or occupy, the Demised Premises, or do or permit anything
to be done in the Demised Premises, in violation of the Certificate of Occupancy
for the Demised Premises or for the Building.

                                    ARTICLE 3

                 Completion of Construction of the Building and
                       Preparation of the Demised Premises

                  3.01 Landlord shall use reasonable speed and diligence in
completing the construction of the Building and in preparing the Demised
Premises for Tenant's occupancy. In the event that the Premises are not ready
for occupancy in accordance with the provisions of Article 4 hereof by August 1,
1987 (the "Outside Cancellation Date") or within such period after the Outside
Cancellation Date as shall equal the aggregate period Landlord may have been
delayed in doing so due to any of the reasons set forth in Section 4.02 hereof,
then Tenant shall have the right to cancel and terminate this lease by giving
written notice to Landlord within twenty (20) days after the applicable date to
the effect that this lease will be deemed terminated on a designated date which
shall be at least thirty (30) days from the date of such notice. Upon the
designated date set forth in the aforesaid notice, this lease shall fully expire
and be deemed terminated, Landlord shall pay Tenant any sums previously paid to
Landlord under Section 1.04 of this lease and Tenant shall be fully released of
all obligations of this lease unless prior to such designated date, the Demised
Premises shall have been made ready for occupancy in accordance with the
provisions of Article 4 hereof, in which event, the notice of termination shall
be rendered null and void and the lease shall not so expire and be deemed
terminated but shall continue in full force and effect and binding upon the
parties hereto. The right of cancellation herein provided shall be Tenant's
exclusive remedy under this lease in the event of Landlord's failure to comply
with the provisions of this Section 3.01, subject, however, to "Landlord's
Reimbursement Obligation" as set forth in Section 3.04 hereof.

                  3.02 Landlord shall complete the construction of the Building
so as to include all the features and facilities required by this lease without
change therefrom, except:

                       (a)   as may be consented to in writing by Tenant
(which consent shall not be unreasonably withheld or delayed); or

                       (b)   as may be necessary to comply with any applicable
law or requirement of public authority and will not (i) materially and adversely
affect any of the services to be rendered by Landlord to Tenant pursuant to this
lease, (ii) materially and adversely affect (A) the layout, (B) the utility of
the Demised Premises, or (C) the usable area of the Demised Premises.

                                       -3-
<PAGE>

                  3.03 The Demised Premises shall be completed and prepared for
Tenant's occupancy in the manner, and subject to the terms, conditions and
covenants, set forth in Exhibit C. The facilities, materials and work so to be
furnished, installed and performed in the Demised Premises by Landlord at its
expense are hereinafter and in Exhibit C referred to as "Landlord's Work". Such
other installations, materials and work which may be undertaken by or for the
account of Tenant to equip, decorate and furnish the Demised Premises for
Tenant's occupancy, are hereinafter and in Exhibit C referred to as "Tenant's
Work."

                  3.04 In the event the Demised Premises are not ready for
Tenant's occupancy by February 1, 1987, as such date may be extended by the
number of days of any delay due to any of the causes set forth in Sections 4.02
or 21.03 of this lease (the "Outside Completion Date"), due to the failure of
Landlord or any of its employees, agents, contractors to substantially complete
Landlord's Work and that portion of Tenant's Work to be performed by Landlord on
or before the Outside Completion Date, then Landlord shall reimburse Tenant for
any rent paid by Tenant (on a per diem basis) from the Commencement Date through
the date (the "Tenant's Prior Lease Obligation Date") of the calendar month in
which the Commencement Date shall occur in connection with an extension or
holding over of or under those certain leases dated (i) October 1, 1976, (ii)
March 30, 1979 and (iii) May 1, 1979 by and between Triborough Bridge and Tunnel
Authority, as Landlord and Tenant ("Tenant's Prior Lease") for a portion of the
fourteenth (14th) floor of the building known as 10 Columbus Circle, New York,
New York ("Landlord's Reimbursement Obligation"). (For example, if the Outside
Completion Date is February 1, 1987 and the Commencement Date is February 16,
1987, then Landlord shall reimburse Tenant for 15 days of rent for February,
1987.) If (i) Landlord is incorrect in estimating a date for Tenant's occupancy,
as set forth in Section 4.01, (ii) the Demised Premises are not ready for
Tenant's occupancy, on the date set forth in the preliminary notice as provided
therein (the "Preliminary Notice Date"), unless such failure shall be due to any
of the reasons set forth in Section 4.02 hereof, and (iii) Tenant, or anyone
claiming through or under Tenant, shall not have occupied the Demised Premises
for business, then Landlord will, in addition, reimburse Tenant for any rent
paid by Tenant (on a per diem basis) from the Preliminary Notice Date through
the Tenant's Prior Lease Obligation Date. Except as specifically set forth in
this Section 3.04, Landlord shall have no liability whatsoever to Tenant for
Landlord's failure to substantially complete Landlord's Work and that portion of
Tenant's Work to be performed by Landlord on or before the Outside Completion
Date, and Landlord's Reimbursement Obligation shall constitute Tenant's
exclusive remedy under this lease in the event of such failure by Landlord,
subject, however, to Tenant's right of cancellation as set forth in Section 3.01
hereof.

                                    ARTICLE 4

                    When Demised Premises Ready For Occupancy

                  4.01 The Demised Premises shall be deemed ready for Occupancy
on the earliest date on which all of the following conditions have been met:

                       (a)   a Certificate of Occupancy (temporary or final)
has been issued by the governmental authority having jurisdiction over the
Building, permitting Tenant's use of the Demised Premises for the purposes for
which the same have been leased;

                       (b)   Landlord's Work has been substantially completed;
and it shall be so deemed notwithstanding the fact that minor or insubstantial
details of construction, mechanical adjustment, or decoration remain to be
performed, the noncompletion of which does not materially interfere with
Tenant's use of the Demised Premises;

                       (c)   reasonable means of access and facilities necessary
to Tenant's use and occupancy of the Demised Premises, including corridors,
elevators and stairways and heating, ventilating, Air Conditioning, sanitary,
water, and electrical facilities, have been installed and are in reasonably good
operating order and available to Tenant; and

                       (d)   at such time when that portion of Tenant's Work,
to be performed by Landlord, has been substantially completed; and it shall be
so deemed notwithstanding the fact that (i) there is a delay in the completion
of such work for any of the reasons set forth in Part F of Exhibit C, provided
that Landlord, promptly after

                                       -4-
<PAGE>

Landlord learns of such delay, has given Tenant reasonable notice of such delay,
in which event the provisions of Section 4.02 and Part F of Exhibit C shall
apply, and (ii) minor or insubstantial details of construction, mechanical
adjustment, or decoration remain to be performed, the noncompletion of which
does not materially interfere with Tenant's use of the Demised Premises.

Landlord shall give Tenant a preliminary notice, estimating when the conditions
listed in Subsections (a) through (d) above will be met, on a date which shall
be at least thirty (30) days prior to the estimated date set forth in such
preliminary notice. Subject to the provisions of Section 3.04, any variance
between the date so estimated and the date such conditions are met shall be of
no consequence.

                  4.02 If the occurrence of any of the conditions listed in
Section 4.01, and thereby the making of the Demised Premises ready for
occupancy, shall be delayed due to:

                           (a) any act or omission of Tenant or any of its
employees, agents or contractors or any failure (not due to any act or omission
of Landlord or any of its employees, agents or contractors) to plan or execute
Tenant's Work diligently and expeditiously, which shall continue after Landlord
shall have given Tenant reasonable notice that such act, omission or failure
would result in delay, and such delay shall have been unavoidable by Landlord in
the exercise of reasonable diligence and prudence,

                           (b) the nature of any items of Tenant's Work that
Landlord undertakes to perform for the account of Tenant (including any delays
incurred by Landlord, after making reasonable efforts, in procuring any
materials, equipment or fixtures of a kind or nature not used by Landlord as
part of its standard construction and provided that Landlord, promptly after
Landlord learns of such delay, has given Tenant reasonable notice of such
delay), then the Demised Premises shall be deemed ready for occupancy on the
date when they would have been ready but for such delay.

                  4.03 If and when Tenant shall take actual possession of the
Demised Premises, it shall be conclusively presumed that the same were in
satisfactory condition (except for latent defects) as of the date of such taking
of possession, unless within one (1) year after the Commencement Date Tenant
shall give Landlord notice specifying the respects in which the Demised Premises
were not in satisfactory condition.

                                    ARTICLE 5

                               Adjustments Of Rent

                  5.01 Tax Escalation. For the purpose of Sections 5.01-5.06:

                       (a)   "Taxes" shall mean the real estate taxes and
assessments and special assessments imposed upon the Building and the Land. If
any assessments or special assessments are payable in installments without the
imposition of interest or penalty, Taxes shall only include those installments
becoming due during the term of this lease for the Tax Year in which such
installments are payable, whether or not such assessments or special assessments
were levied or imposed before or during the term hereof. If at any time during
the term of this lease the methods of taxation prevailing at the commencement of
the term hereof shall be altered so that in lieu of or as an addition to or as a
substitute for the whole or any part of the taxes, assessments, levies,
impositions or charges now levied, assessed or imposed on real estate and the
improvements thereon, there shall be levied, assessed or imposed (i) a tax,
assessment, levy, imposition or charge wholly or partially as capital levy or
otherwise on the rents received therefrom, or (ii) a tax, assessment, levy,
imposition or charge measured by or based in whole or in part upon the Demised
Premises and imposed upon Landlord, or (iii) a license fee measured by the rents
payable by Tenant to Landlord, then all such taxes, assessments, levies,
impositions or charges, or the part thereof so measured or based, shall be
deemed to be included within the term "Taxes" for the purposes hereof; Landlord
and Tenant hereby agree that in the event and to the extent that the Taxes
payable upon the Land and Building are increased solely as a result of the
addition of rentable area of or to the Building (hereinafter referred to as
"additions"), Tenant shall have no obligation to pay Tenant's Proportionate

                                      -5-
<PAGE>

Share of such increase on account of additions, unless (i) Tenant shall have
first approved of the additions in writing, or (ii) such additions were
requested by Tenant or generally benefit all tenants of the Building.

                       (b)   Base Tax Rate" shall mean $475,000.00;

                       (c)   "Tax Year" shall mean the fiscal year (presently a
calendar year) for which Taxes are levied by the governmental authority;

                       (d)   "Tenant's Proportionate Share" shall mean for
purposes of this lease and all calculations in connection herewith seven and
8/10 percent (7.8%), which has been computed on the basis of a fraction, the
numerator of which is the agreed rentable square foot area of the Demised
Premises as set forth below (which rentable square foot area is hereinafter
sometimes referred to as the "Multiplication Factor") and the denominator of
which is the agreed rentable square foot area of the Building above grade level
as set forth below. The parties agree that the rentable square foot area of the
Demised Premises shall be deemed to be 22,731 square feet and that the agreed
rentable square foot area of the Building shall be deemed to 291,504 square feet
(hereinafter referred to as the "Building Area").

                       (e)   "Tenant's Projected Share of Taxes" shall mean
either (i) for any Tax Year where no Tax Payment (as hereinafter defined) shall
have been payable by Tenant for the immediately preceding Tax Year, the product
of (x) six (6%) percent of The Base Tax Rate, multiplied by (y) Tenant's
Proportionate Share, or (ii) for any Tax Year where a Tax Payment shall have
been payable by Tenant for the immediately preceding Tax Year, the Tax Payment,
payable by Tenant for the immediately prior Tax Year in each case divided by
twelve (12) and payable monthly by Tenant to Landlord as additional rent.

                  5.02 Subject to the terms of Section 5.06 hereof, if the Taxes
for any Tax Year shall be more than the Base Tax Rate, Tenant shall pay, as
additional rent for such Tax Year, an amount equal to Tenant's Proportionate
Share of the amount by which the Taxes for such Tax Year are greater than the
Base Tax Rate. (The amount payable by Tenant is hereinafter referred to as the
"Tax Payment".) The Tax Payment and the Base Tax Rate shall be appropriately
prorated, if necessary, to correspond with that portion of a Tax Year occurring
within the Term of this lease. The Tax Payment shall be payable by Tenant within
ten (10) days after receipt of a demand from Landlord therefor, which demand
shall be accompanied by a copy of the tax bill together with Landlord's
computation of the Tax Payment. If the Taxes for any Tax Year are payable to the
taxing authority on an installment basis, Landlord may serve such demands upon,
and the Tax Payment for such Tax Year shall be payable by Tenant, on a
corresponding installment basis.

                  5.03 Notwithstanding the fact that the increase in rent is
measured by an increase in Taxes, such increase is additional rent and shall be
paid by Tenant as provided herein regardless of the fact that Tenant may be
exempt, in whole or in part, from the payment of any taxes by reason of Tenant's
diplomatic or other tax exempt status or for any other reason whatsoever.

                  5.04 Only Landlord shall be eligible to institute tax
reduction or other proceedings to reduce the assessed valuation of the Land and
Building. Should Landlord be successful in any such reduction proceedings and
obtain a rebate or a reduction in assessment for periods during which Tenant has
paid or is obligated to pay Tenant's Proportionate Share of increases in Taxes
then either (a) Landlord shall, in the event a rebate is obtained, return
Tenant's Proportionate Share of such rebate to Tenant after deducting Landlord's
expenses, including without limitation, attorneys' fees and disbursements in
connection with such rebate (such expenses incurred with respect to a rebate or
reduction in assessment being hereinafter referred to as "Tax Expenses"),
provided, however, that Tenant shall not be required to pay any amount to
Landlord on account of Tax Expenses in excess of Tenant's Proportionate Share of
such rebate, or, (b) if a reduction in assessment is obtained prior to the date
Tenant would be required to pay Tenant's Proportionate Share of such increase in
Taxes, Tenant shall pay to Landlord, upon written request, Tenant's
Proportionate Share of such Tax Expenses, provided, however, that with respect
to subdivision (b), Tax Expenses shall not exceed the amount that such reduction
in assessment would have reduced Taxes, had such reduction been obtained after
the date Tenant would be required to pay Tenant's Proportionate Share of such
increase in Taxes.

                                      -6-
<PAGE>

                  5.05 Within sixty (60) days after the expiration of any Tax
Year, Landlord shall furnish Tenant with a statement setting forth Tenant's
Proportionate Share of Taxes. The statement furnished under this Section 5.05 is
hereinafter referred to as a "Tax Statement".

                  5.06 (a) Commencing with the first Tax Year after Landlord
shall be entitled to receive a Tax Payment, Tenant shall pay to Landlord, as
additional rent for the then Tax Year, Tenant's Projected Share of Taxes. Upon
each date that a Tax Payment or an installment on account thereof shall be due
from Tenant pursuant to the terms of Section 5.02 hereof, Landlord shall apply
the aggregate of the installments of Tenant's Projected Share of Taxes then on
account with Landlord against the Tax Payment or installment thereof then due
from Tenant. In the event that such aggregate amount shall be insufficient to
discharge such Tax Payment or installment, Landlord shall so notify Tenant in a
demand served upon Tenant pursuant to the terms of Section 5.02, and the amount
of Tenant's payment obligation with respect to such Tax Payment or installment
pursuant to Section 5.02 shall be equal to the amount of the insufficiency. If,
however, such aggregate amount shall be greater than the Tax Payment or
installment, Landlord shall forthwith either (a) pay the amount of excess
directly to Tenant concurrently with the notice or (b) permit Tenant to credit
the amount of such excess against the next payment of Tenant's Projected Share
of Taxes due hereunder and, if the credit of such payment is not sufficient to
liquidate the entire amount of such excess, Landlord shall then pay the amount
of any difference to Tenant;

                       (b)   Anything in this Article 5 to the contrary
notwithstanding, in the event that the holder of any superior mortgage or the
lessor of any superior lease (as such terms are defined in Section 7.01 hereof)
shall require advance payments from the Landlord on account of Taxes, then
Tenant will pay Tenant's Proportionate Share of any amounts required to be paid
in advance by Landlord with the holder of the superior mortgage or the lessor of
the superior lease to the extent that such payments made by Landlord exceed the
Base Tax Rate. Such payments, to be made by Tenant, shall not exceed Tenant's
Projected Share of Taxes. Any payments to be made by Tenant under this Section
5.06(b) shall be made ten (10) days prior to the date Landlord is required to
make such payments to the holder of the superior mortgage or the lessor of the
superior lease;

                       (c)   Anything in Sections 5.01 through 5.06 to the
contrary notwithstanding, in no event whatsoever shall the fixed rent be reduced
below the fixed rent initially set forth in Section l.04(a) hereof as same may
be increased by provisions of this lease other than Sections 5.01 through 5.06;
and

                       (d)   Notwithstanding the provisions of Sections 5.01
through 5.06, there will be no Tax Payment or payments on account of Tenant's
Projected Share of Taxes for any increases in Taxes attributable to the twelve
(12) month period commencing on the Commencement Date.

                  5.07 Expense Escalation.  For purposes of this Article:

                       (a)   "Operating Expenses" shall mean any and all
expenses incurred by Landlord in connection with the operation of the Building
including all expenses incurred as a result of Landlord's compliance with any of
its obligations hereunder other than Landlord's Work and such expenses shall
include: (i) salaries, wages, medical, surgical and general welfare benefits,
(including group life insurance) pension payments and other fringe benefits of
employees of Landlord engaged in the operation and maintenance of the Building
(the salaries and other benefits aforesaid of such employees servicing the
Building shall be comparable to those of employees servicing buildings similar
to the Building, located in the Borough of Fort Lee); (ii) payroll taxes,
workmen's compensation, uniforms and dry cleaning for the employees referred to
in subdivision (i); (iii) the cost of all charges for steam, heat, ventilation,
Air Conditioning and water (including sewer rental) furnished to the Building
and/or used in the operation of all of the service facilities of the Building
and the cost of all charges for electricity furnished to the public and service
areas of the Building and/or used in the operation of all of the service
facilities of the Building including any taxes on any of such utilities; (iv)
the cost of all charges for rent, casualty, war risk insurance (if obtainable
from the United States government) and of liability insurance for the Building
to the extent that such insurance is required to be carried by Landlord under
any superior lease or superior mortgage or if not required under any superior
lease or superior mortgage then to the extent such insurance is carried by
owners of Buildings comparable to the Building; (v) the cost of all building and
cleaning supplies for the common areas of the Building and charges for telephone
for the Building;

                                      -7-
<PAGE>

(vi) the cost of all charges for management, window cleaning and service
contracts for the Building (if no managing agent is employed by Landlord or an
affiliate of Landlord is engaged as managing agent, there shall be included in
Operating Expenses a sum equal to 5.0% of all rents, additional rents and other
charges collected from tenants or other permitted occupants of the Building);
and (vii) the cost of rentals of capital equipment designed to result in savings
or reductions in Operating Expenses. Operating Expenses shall not include (viii)
administrative wages and salaries; (ix) renting commissions; (x) franchise taxes
or income taxes of Landlord; (xi) Taxes on the Land and Building; (xii) costs of
performing work or making installations, painting and decorating for any
occupant's space; (xiii) interest and amortization under mortgages; (xiv)
expenditures for capital improvements except (1) those which under generally
applied real estate practice are expenses or regarded as deferred expenses and
(2) for capital improvements required by law or (3) for capital improvements
which are designed to result in a saving in the amount of Operating Expenses, in
any of such cases the cost thereof shall be included in Operating Expenses for
the Operational Year in which the costs are incurred and subsequent Operational
Years, on a straight-line basis, to the extent that such items are amortized
over an appropriate period, but not more than ten years, with an interest factor
equal to two (2%) percent above the prime rate of Chase Manhattan Bank, N.A. at
the time of Landlord's having incurred said expenditure; (xv) costs of services
provided to other tenants of the Building to the extent that such services shall
exceed the services provided to Tenant hereunder without additional expense to
Tenant; (xvi) the cost of any items for which Landlord is reimbursed by payments
by Tenant, by any other tenant(s) or occupant(s) of the Building (except under
rent adjustment provisions similar to those contained in this Article 5), by any
other third party or parties, or by insurance proceeds or condemnation awards;
(xvii) salaries of executives who maintain an equity interest in Landlord; and
(xviii) the cost of completing construction of the Building. Operating Expenses
shall be subject to adjustment based upon the Occupancy Adjustment for each
Operational Year (as such terms are hereinafter defined) in which less than
ninety (90%) percent of the Building shall be occupied (on a rentable square
foot basis) during the term of this lease.

                       (b)   "Operational Year" shall mean each calendar year
or part thereof occurring during the Term of this lease excluding the Initial
Operational Year;

                       (c)   "Base Operating Expenses" shall mean $982,000.00;

                       (d)   "Adjusted Base Operating Expenses" shall mean
Base Operating Expenses multiplied by a fraction (i) the numerator of which is
the number of days between the Commencement Date and the expiration of the
Initial Operational Year (as hereinafter defined) and (ii) the denominator of
which is 360;

                       (e)   "Initial Operational Year" shall mean the
calendar year in which the Commencement Date occurs;

                       (f)   "Initial Operating Period" shall mean that
portion of the Initial Operational Year between the Commencement Date and the
expiration of the Initial Operational Year;

                       (g)   "Actual Initial Operating Expense Differential"
shall mean the actual difference between the Operating Expenses incurred by
Landlord for the Initial Operating Period (i.e., the Initial Operating Expenses
(as hereinafter defined) multiplied by a fraction, the numerator of which is the
number of days between the Commencement Date and the expiration of the Initial
Operational Period, and the denominator of which is the number of days between
the day Landlord opens the Building for occupancy by Tenants and the expiration
of the Initial Operating Period) and the Adjusted Base Operating Expense;

                       (h)   "Tenant's Initial Projected Share of Operating
Expense Increase" shall mean one-twelfth (1/12th) of the product of (i)
Tenant's Operational Proportionate Share multiplied by (ii) the Actual Initial
Operating Expense Differential annualized to reflect a full calendar year;

                       (i)   "Tenant's Initial Actual Proportionate Share of
Operating Expense Increase" shall mean the Actual Initial Operating Expense
Differential multiplied by Tenant's Operational Proportionate Share;

                                      -8-

<PAGE>

                       (j)   "Initial Operating Expenses" shall mean the actual
amount of Operating Expenses incurred by Landlord during the Initial Operational
Year;

                       (k)   "Tenant's Operational Proportionate Share" shall
mean 7.8%;

                       (l)   "Actual Operating Expense Differential" shall mean
the amount by which the Operating Expenses actually incurred by Landlord for the
recently expired Operational Year actually exceeded the Base Operating Expenses;

                       (m)   "Tenant's Projected Share of Operating Expense
Increase" shall mean one-twelfth (1/12th) of the product of (i) Tenant's
Operational Proportionate Share, multiplied by (ii) the Actual Operating Expense
Differential for the recently expired Operational Year;

                       (n)   "Tenant's Actual Share of Operating Expense
Increase" shall mean the product of (i) the Actual Operating Expense
Differential multiplied by (ii) Tenant's Operational Proportionate Share; and

                       (o)   "Occupancy Adjustment shall mean the amount by
which Operating Expenses shall be deemed to be increased to reflect ninety (90%)
percent occupancy (on a rentable square foot basis) of the Building during any
Operational Year in which the Building is less than ninety (90%) percent
occupied (on a rentable square foot basis).

                  5.08 (a)   After the expiration of the Initial Operational
Year, Landlord shall furnish Tenant with a written detailed statement (the
"Initial Operating Statement") indicating (i) Initial Operating Expenses, (ii)
Actual Initial Operating Expense Differential, (iii) Adjusted Base Operating
Expenses, (iv) Tenant's Initial Actual Proportionate Share of Operating Expense,
and (v) Landlord's computation of Tenant's Initial Projected Share of Operating
Expense Increase for the upcoming Operational Year;

                       (b)   After the expiration of the first Operational Year
after the Initial Operational Year and each Operational Year thereafter,
Landlord shall furnish Tenant with a written detailed statement (a "Subsequent
Operating Statement") indicating (i) actual amount of Operating Expenses for the
recently expired Operational Year, (ii) Landlord's computation of Tenant's
Projected Share of Operating Expense Increase for the upcoming Operational Year,
and (iii) the amount of any discrepancy between Tenant's Actual Share of
Operating Expense Increase and Tenant's Initial Projected Share of Operating
Expense Increase or Tenant's Projected Share of Operating Expense Increase, as
the case may be, for the recently expired Operational Year.

                       (c)   Payments of rental in accordance with the Initial
Operating Statement and Subsequent Operating Statements shall be made at the
times specified in Section 5.09.

                  5.09 (a)   Tenant shall pay to Landlord as additional rent for
the Initial Operating Period, Tenant's Initial Actual Proportionate Share of
Operating Expense Increase within ten (10) days after receipt of the Initial
Operating Statement;

                       (b)   Tenant shall pay to Landlord, as additional rent
during the first Operational Year after the Initial Operational Period, Tenant's
Initial Projected Share of Operating Expense Increase, which shall be payable in
equal monthly installments, the first payment representing the payments
retroactive to the first day of the current Operational Year and including the
current month shall be made ten (10) days after Tenant receives the Initial
Operating Statement, and thereafter normal monthly payments shall be made on the
first day of each month throughout the upcoming Operational Year and thereafter
until receipt of the first Subsequent Operating Statement. If the first
Subsequent Operating Statement furnished by Landlord to Tenant for the recently
expired Operational Year shall indicate that Tenant's Initial Projected Share of
Operating Expense Increase exceeded Tenant's Actual Share of Operating Expense
Increase, Landlord shall forthwith either (a) pay the amount of excess directly
to Tenant concurrently with the first Subsequent Operating Statement or (b)
permit Tenant to credit the amount of such excess against the subsequent
payments of rent due hereunder. If, however, the first Subsequent Operating
Statement shall

                                      -9-
<PAGE>

indicate that Tenant's Actual Share of Operating Expense Increase exceeded
Tenant's Initial Projected Share of Operating Expense Increase, Tenant shall,
within ten (10) days, pay the amount of such excess to Landlord as additional
rent;

                       (c)   Tenant shall pay to Landlord, as additional rent
during each subsequent Operational Year, Tenant's projected Share of Operating
Expense Increase, which shall be payable in equal monthly installments, the
first payment representing the payments retroactive to the first day of the
current Operational Year and including the current month after crediting Tenant
with payments made for the current Operational Year but prior to the receipt of
a Subsequent Operating Statement, and which shall be made ten (10) days after
Tenant receives a Subsequent Operating Statement, and thereafter normal monthly
payments shall be made on the first day of each month throughout the upcoming
Operational Year and thereafter until receipt of the next Subsequent Operating
Statement. If a Subsequent Operating Statement furnished by Landlord to Tenant
for a recently expired Operational Year shall indicate that Tenant's Projected
Share of Operating Expense Increase exceeded Tenant's Actual Share of Operating
Expense Increase, Landlord shall forthwith either (a) pay the amount of excess
directly to Tenant concurrently with the Subsequent Operating Statement or (b)
permit Tenant to credit the amount of such excess against the subsequent
payments of rent due hereunder. If, however, the Subsequent Operating Statement
shall indicate that Tenant's Actual Share of Operating Expense Increase exceeded
Tenant's Projected Share of Operating Expense Increase, Tenant shall, within ten
(10) days, pay the amount of such excess to Landlord as additional rent;

                       (d)   Anything in Sections 5.07 through 5.10 to the
contrary notwithstanding, in no event whatsoever shall the fixed rent be reduced
below the fixed rent initially set forth in Section 1.04(a) hereof as same may
be increased by provisions of this lease other than Sections 5.07 through 5.10.
The amounts payable pursuant to Sections 5.07 through 5.10 shall be prorated, if
necessary, to correspond with that portion of an Operational Year occurring
within the term of this lease; and

                       (e)   Notwithstanding the provisions of Sections 5.07
through 5.10, Tenant shall not be required to pay either (i) Tenant's Actual
Share of Operating Expense Increase or (ii) Tenant's Initial Projected Share of
Operating Expense Increase or Tenant's Projected Share of Operating Expense
Increase, as the case may be, attributable to the twelve (12) month period
commencing on the Commencement Date.

                  5.10 The Initial Operating Statement and every Subsequent
Operating Statement given by Landlord shall be conclusive and binding upon
Tenant unless Tenant shall (a) notify Landlord within ninety (90) days after its
receipt of such statement that it disputes the correctness thereof, specifying
the item or items with respect to which Tenant desires to conduct its audit as
hereinafter provided which, in Tenant's sole judgment, may be incorrect and (b)
conduct an audit, upon reasonable advance notice to Landlord, solely with
respect to those items which Tenant specifies in its notice as set forth in
Subsection (a) hereof. If such dispute cannot be settled by agreement between
Landlord and Tenant within sixty (60) days after the completion of Tenant's
audit, Tenant may submit its dispute to arbitration within thirty (30) days
after the expiration of such sixty (60) day period. Pending the resolution of
such dispute by agreement or arbitration as aforesaid, Tenant shall, within ten
(10) days after receipt of such disputed Initial Operating Statement or
Subsequent Operating Statement, as the case may be, pay any additional rent due
in accordance therewith, but such payment shall be without prejudice to Tenant's
right to dispute such statement. If the dispute shall be resolved in Tenant's
favor, Landlord shall, within ten (10) days after Tenant's demand, pay Tenant
the amount of the overpayment, if any, resulting from Tenant's compliance with
the disputed Initial Operating Statement or Subsequent Operating Statement.
Landlord agrees to grant Tenant reasonable access to Landlord's books and
records for the purpose of verifying the specified items of Operating Expenses
and to make copies of any and all bills and vouchers relating thereto.

                  5.11 Landlord's failure during the lease term to prepare and
deliver any of the tax bills, statements, notice or bills set forth in this
Article 5, or Landlord's failure to make a demand, shall not in any way cause
Landlord to forfeit or surrender its rights to collect any of the foregoing
items of additional rent which may have become due during the term of this
lease. Tenant's liability for the amounts due under this Article 5 shall survive
the expiration of the Term.

                                      -10-
<PAGE>

                                    ARTICLE 6

                           Deleted Prior to Execution


                                    ARTICLE 7

                 Subordination, Notice To Lessors And Mortgagees

                  7.01 This lease, and all rights of Tenant hereunder, are and
shall be subject and subordinate in all respects to all ground leases,
overriding leases and underlying leases of the Land and/or the Building now or
hereafter existing and to all mortgages which may now or hereafter affect the
Land and/or the Building and/or any of such leases, whether or not such
mortgages shall also cover other lands and/or buildings, to each and every
advance made or hereafter to be made under such mortgages, and to all renewals,
modifications, replacements and extensions of such leases and such mortgages and
spreaders and consolidations of such mortgages. This Section shall be
self-operative and no further instrument of subordination shall be required. In
confirmation of such subordination, Tenant shall promptly execute and deliver
any instrument that Landlord, the lessor of any such lease or the holder of any
such mortgage or any of their respective successors in interest may reasonably
request to evidence such subordination. The leases to which this lease is, at
the time referred to, subject and subordinate pursuant to this Article are
hereinafter sometimes referred to as "superior leases" and the mortgages to
which this lease is, at the time referred to, subject and subordinate are
hereinafter sometimes referred to as "superior mortgages" and the lessor of a
superior lease or its successor in interest at the time referred to is sometimes
hereinafter referred to as a "lessor".

                  7.02 In the event of any act or omission of Landlord which
would give Tenant the right, immediately or after lapse of a period of time, to
cancel or terminate this lease, or to claim a partial or total eviction, Tenant
shall not exercise such right (i) until it has given written notice of such act
or omission to the holder of each superior mortgage and the lessor of each
superior lease whose name and address shall previously have been furnished to
Tenant in writing, and (ii) unless such act or omission shall be one which is
not capable of being remedied by Landlord or such mortgage holder or lessor
within a reasonable period of time, until a reasonable period for remedying such
act or omission shall have elapsed following the giving of such notice and
following the time when such holder or lessor shall have become entitled under
such superior mortgage or superior lease, as the case may be, to remedy the same
(which reasonable period shall in no event be less than the period to which
Landlord would be entitled under this lease or otherwise, after similar notice,
to effect such remedy), provided such holder or lessor shall with due diligence
give Tenant written notice of intention to, and commence and continue to remedy
such act or omission.

                  7.03 If the holder of a superior mortgage shall succeed to the
rights of Landlord under this lease, whether through possession or foreclosure
action or delivery of a new lease or deed, then at the request of such patty so
succeeding to Landlord's rights (herein sometimes referred to as "successor
landlord") and upon successor landlord's written agreement to accept Tenant's
attornment, Tenant shall attorn to and recognize such successor landlord as
Tenant's landlord under this lease, and shall promptly execute and deliver any
instrument that such successor landlord may reasonably request to evidence such
attornnent. Upon such attornment this lease shall continue in full force and
effect as, or as if it were, a direct lease between the successor landlord and
Tenant upon all of the terms, conditions and covenants as are set forth in this
lease and shall be applicable after such attornment except that the successor
landlord shall not:

                       (a)   be liable for any previous act or omission of
Landlord under this lease;

                       (b)   be subject to any offset, not expressly provided
for in this lease, which shall have theretofore accrued to Tenant against
Landlord;

                       (c)   be bound by any previous modification of this
lease, not expressly provided for in this lease, or by any previous prepayment
of more than one month's fixed rent, unless such modification or prepayment
shall have been expressly approved in writing by the lessor of the superior
lease or the holder of the

                                      -11-
<PAGE>

superior mortgage through or by reason of which the successor landlord shall
have succeeded to the rights of Landlord under this lease.

                  7.04 The subordination of this lease to ground, overriding or
underlying leases in accordance with Section 7.01 is subject to the express
condition that, so long as this lease shall be in full force and effect in the
event of termination of the term of any such ground, overriding or underlying
lease by reentry, notice, summary proceedings or other action or proceeding or
if the term of such ground, overriding or underlying lease shall otherwise
terminate or expire before the termination or expiration of the term of this
lease, (a) Tenant shall not be made a party to any action or proceeding to
remove or evict Tenant or to disturb its possession by reason of or based upon
such termination or expiration of the term of such ground, overriding or
underlying lease, and (b) this lease shall continue in full force and effect as
a direct lease between Tenant and the then owner of the fee or lessor of such
ground, overriding or underlying lease, as the case may be, upon all of the
obligations of this lease, except that said owner or lessor shall not:

                       (i)   be liable for any previous act or omission of
Landlord under this lease,

                       (ii) be subject to any offset, not expressly provided for
in the lease documents (as such term is hereinafter defined), that shall have
theretofore accrued to Tenant against Landlord,

                       (iii) be bound by any previous modification of this
lease, not expressly provided for in this lease, or by any previous prepayment
of more than one month's fixed rent or any additional rent then due, unless such
modification or prepayment shall have been expressly approved in writing by the
lessor of the superior lease through or by reason of which said owner or lessor
shall have succeeded to the rights of Landlord under this lease.

                  7.05 Landlord agrees that upon written notice from Tenant, it
will request a non-disturbance agreement for the benefit of Tenant from the
holders of any superior mortgages now existing or hereafter created during the
term of this lease. Such non-disturbance agreement shall provide, in effect,
that so long as Tenant is not in default in the payment of rent or any other
covenant or condition of this lease for longer than the respective periods
provided in Article 25 hereof and provided Tenant attorns as herein specified
(i) its rights as tenant hereunder shall not be affected or terminated, (ii) its
possession of the Demised Premises shall not be disturbed, (iii) no action or
proceeding shall be commenced to remove or evict Tenant and (iv) this lease
shall at all times continue in full force and effect notwithstanding the
foreclosure of the superior mortgage. The inability of Landlord to obtain such
non-disturbance agreement referred to in the preceding sentence shall not be
deemed a default on Landlord's part of its obligations hereunder, or impose any
claim in favor of Tenant against Landlord by reason thereof or affect the
validity of this lease.

                                    ARTICLE 8

                                 Quiet Enjoyment

                  8.01 So long as Tenant pays all of the fixed rent and
additional rent due hereunder and performs all of Tenant's other obligations
hereunder, Tenant shall peaceably and quietly have, hold and enjoy the Demised
Premises subject, nevertheless, to the obligations of this lease and, as
provided in Article 7, to the superior leases and the superior mortgages.

                                    ARTICLE 9

                            Assignment And Sublettinq

                  9.01 Tenant, for itself, its heirs, distributees, executors,
administrators, legal representatives, successors and assigns, expressly
covenants that it shall not assign, mortgage or encumber this agreement, nor
underlet, nor suffer, nor permit the Demised Premises or any part thereof to be
used or occupied by others, without the prior written consent of Landlord in
each instance, if this lease be assigned, or if the Demised Premises or any part
thereof be underlet or occupied by anybody other than Tenant, Landlord may,
after default by Tenant, collect rent from the

                                      -12-

<PAGE>

assignee, undertenant or occupant, and apply the net amount collected to the
rent herein reserved, but no assignment, underletting, occupancy or collection
shall be deemed a waiver of the provisions hereof, the acceptance of the
assignee, undertenant or occupant as tenant, or a release of Tenant from the
further performance by Tenant of covenants on the part of Tenant herein
contained. The consent by Landlord to an assignment or underletting shall not in
any wise be construed to relieve Tenant from obtaining the express consent in
writing of Landlord to any further assignment or underletting. In no event shall
any permitted sublessee assign or encumber its sublease or further sublet all or
any portion of its sublet space, or otherwise suffer or permit the sublet space
or any part thereof to be used or occupied by others, without Landlord's prior
written consent in each instance.

                  9.02 If Tenant shall at any time or times during the term of
this lease desire to assign this lease or sublet all or part of the Demised
Premises, Tenant shall give notice thereof to Landlord, which notice shall be
accompanied by (a) a conformed or photostatic copy of the proposed assignment or
sublease, the effective or commencement date of which shall be not less than 30
nor more than 180 days after the giving of such notice, (b) a statement setting
forth in reasonable detail the identity of the proposed assignee or subtenant,
the nature of its business and its proposed use of the Demised Premises, and (c)
current financial information with respect to the proposed assignee or
subtenant, including, without limitation, its most recent financial report, if
available. Such notice shall be deemed an offer from Tenant to Landlord whereby
Landlord (or Landlord's designee) may, at its option, (i) sublease such space
(hereinafter referred to as the "Leaseback Space") from Tenant upon the terms
and conditions hereinafter set forth (if the proposed transaction is a sublease
of all or part of the Demised Premises), (ii) terminate this lease (if the
proposed transaction is an assignment or a sublease of all or substantially all
of the Demised Premises), or (iii) terminate this lease with respect to the
Leaseback Space (if the proposed transaction is a sublease of part of the
Demised Premises). Said options may be exercised by Landlord by notice to Tenant
at any time within 30 days after such notice has been given by Tenant to
Landlord; and during such 30 day period Tenant shall not assign this lease nor
sublet such space to any person.

                  9.03 If Landlord exercises its option to terminate this lease
in the case where Tenant desires either to assign this lease or sublet all or
substantially all of the Demised Premises, then, this lease shall end and expire
on the date that such assignment or sublet was to be effective or commence, as
the case may be, and the fixed rent and additional rent shall be paid and
apportioned to such date.

                  9.04 If Landlord exercises its option to terminate this lease
in part in any case where Tenant desires to sublet part of the Demised Premises,
then, (a) this Lease shall end and expire with respect to such part of the
Demised Premises on the date that the proposed sublease was to commence; (b)
from and after such date the fixed rent and additional rent shall be adjusted,
based upon the proportion that the rentable area of the Demised Premises
remaining bears to the total rentable area of the Demised Premises; and (c)
Tenant shall pay to Landlord, upon demand, the costs incurred by Landlord in
physically separating such part of the Demised Premises from the balance of the
Demised Premises and in complying with any laws and requirements of any public
authorities relating to such separation, except that, to the extent that
Landlord makes a profit from the reletting of such part of the Demised Premises
(that is, rents, additional charges and other consideration payable under and as
consideration for the execution of the new lease(s) of the Demised Premises for
what would be the balance of the term of this lease shall be greater than the
rents, additional charges and other consideration that would be payable under
this lease for the same space during such balance, had this lease not been
terminated, which is hereinafter referred to as Landlord's Reletting Profit"),
such costs shall be borne by Landlord.

                  9.05 If Landlord exercises its option to sublet the Leaseback
Space, such sublease to Landlord or its designee (as subtenant) shall be at the
lower of (i) the rental rate per rentable square foot of fixed rent and
additional rent then payable pursuant to this lease or (ii) the rentals set
forth in the proposed sublease, and shall be for the same term as that of the
proposed subletting, and such sublease shall:

                       (a)   be expressly subject to all of the covenants,
agreements, terms, provisions and conditions of this lease except such as are
irrelevant or inapplicable, and except as otherwise expressly set forth to the
contrary in this Section;

                                      -13-
<PAGE>

                       (b)   be upon the same terms and conditions as those
contained in the proposed sublease, except such as are irrelevant or
inapplicable and except as otherwise expressly set forth to the contrary in this
Section;

                       (c)   give the sublessee the unqualified and
unrestricted right, without Tenant's permission, to assign such sublease or any
interest therein and/or to sublet the Leaseback Space or any part or parts of
the Leaseback Space and to make any and all changes, alterations, and
improvements in the space covered by such sublease and if the proposed sublease
will result in all or substantially all of the Demised Premises being sublet,
grant Landlord or its designee the option to extend the term of such sublease
for the balance of the term of this lease less one (1) day;

                       (d)   provide that any assignee or further subtenant, of
Landlord or its designee, may, at the election of Landlord, be permitted to make
alterations, decorations and installations in the Leaseback Space or any part
thereof and shall also provide in substance that any such alterations,
decorations and installations in the Leaseback Space therein made by any
assignee or subtenant of Landlord or its designee may be removed, in whole or in
part, by such assignee or subtenant, at its option, prior to or upon the
expiration or other termination of such sublease provided that such assignee or
subtenant, at its expense, shall repair any damage and injury to that portion of
the Leaseback Space so sublet caused by such removal; and

                       (e)   also provide that (i) the parties to such
sublease expressly negate any intention that any estate created under such
sublease be merged with any other estate held by either of said parties, (ii)
any assignment or subletting by Landlord or its designee (as the subtenant) may
be for any purpose or purposes that Landlord, in Landlord's uncontrolled
discretion, shall deem suitable or appropriate, (iii) Tenant, at Tenant's
expense, shall and will at all times provide and permit reasonably appropriate
means of ingress to and egress from the Leaseback Space so sublet by Tenant to
Landlord or its designee, (iv) Landlord, at Tenant's expense, may make such
alterations as may be required or deemed necessary by Landlord to physically
separate the Leaseback Space from the balance of the Demised Premises and to
comply with any laws and requirements of public authorities relating to such
separation, except that, to the extent that Landlord makes Landlord's Reletting
Profit from the reletting of the Leaseback Space, the cost of such alterations
and physical separation shall be borne by Landlord, and (v) that at the
expiration of the term of such sublease, Tenant will accept the space covered by
such sublease in its then existing condition, subject to the obligations of the
sublessee to make such repairs thereto as may be necessary to preserve the
premises demised by such sublease in good order and condition.

                  9.06 (a)   If Landlord exercises its option to sublet the
Leaseback Space, Landlord shall indemnify and save Tenant harmless from all
obligations under this lease as to the Leaseback Space during the period of time
it is so sublet to Landlord;

                       (b)   Performance by Landlord, or its designee, under a
sublease of the Leaseback Space shall be deemed performance by Tenant of any
similar obligation under this lease and any default under any such sublease
shall not give rise to a default under a similar obligation contained in this
Lease, nor shall Tenant be liable for any default under this lease or deemed to
be in default hereunder if such default is occasioned by or arises from any act
or omission of the Tenant under such sublease or is occasioned by or arises from
any act or omission of any occupant holding under or pursuant to any such
sublease; and

                       (c)   Tenant shall have no obligation, at the expiration
or earlier termination of the term of this lease, to remove any alteration,
installation or improvement made in the Leaseback Space by Landlord.

                  9.07 In the event Landlord does not exercise an option
provided to it pursuant to Section 9.02 and providing that Tenant is not in
default of any of Tenant's obligations under this lease after notice and the
expiration of any applicable grace period, Landlord's consent (which must be in
writing and in form reasonably satisfactory to Landlord) to the proposed
assignment or sublease shall not be unreasonably withheld or delayed, provided
and upon condition that:

                                      -14
<PAGE>

                       (a)   Tenant shall have complied with the provisions of
Section 9.02 and Landlord shall not have exercised any of its options under said
Section 9.02 within the time permitted therefor;

                       (b)   In Landlord's reasonable judgment the proposed
assignee or subtenant is engaged in a business and the Demised Premise; or the
relevant part thereof, will be used in a manner which (i) is in keeping with the
then standards of the Building, (ii) is limited to the use expressly permitted
under this lease, and (iii) will not violate any negative covenant as to use
contained in any other lease of space in the Building;

                       (c)   The proposed assignee or subtenant is a reputable
person of good character and with sufficient financial worth considering the
responsibility involved, and Landlord has been furnished with reasonable proof
thereof;

                       (d)   Provided that there shall be comparable space
available, or becoming available within one (1) year, for lease in the Building,
neither (i) the proposed assignee or sublessee nor (ii) any person which,
directly or indirectly, controls, is controlled by, or is under common control
with, the proposed assignee or sublessee or any person who controls the proposed
assignee or sublessee, is then an occupant of any part of the Building;

                       (e)   The proposed assignee or sublessee is not a
person with whom Landlord is then negotiating to lease space in the Building;

                       (f)   The form of the proposed lease shall be in form
reasonably satisfactory to Landlord and shall comply with the applicable
provisions of this Article;

                       (g)   There shall not be more than three (3) subtenants
(including Landlord or its designee) of the Demised Premises other than
"Affiliates" (as such term is hereinafter defined);

                       (h)   Deleted prior to execution.

                       (i)   Tenant shall not have (i) advertised or publicized
in any way the availability of the Demised Premises without prior notice to and
approval by Landlord, which shall not be unreasonably withheld nor shall any
advertisement state the name (as distinguished from the address) of the Building
or the proposed rental, (ii) listed the Premises for subletting or assignment,
with a broker, agent or representative other than the then managing agent of the
Building or other agent designated by Landlord, or otherwise at a rental rate
less than the fixed rent and additional rent at which Landlord is then offering
to lease other space in the Building, and Landlord agrees, upon reasonable
notice from Tenant, to provide Tenant with such offering rental rate;

                       (j)   The sublease shall not allow the use of the
Demised Premises or any part thereof for (i) the preparation and/or sale of food
for on or off premises consumption other than the existing kitchen in the
Demised Premises which may be used only by the subtenant(s) and its employees or
(ii) for use by a foreign or domestic governmental agency.

                             Except for any subletting by Tenant to Landlord or
                             its designee pursuant to the provisions of this
                             Article, each subletting pursuant to this Article
                             shall be subject to all of the covenants,
                             agreements, terms, provisions and conditions
                             contained in this lease. Notwithstanding any such
                             subletting to Landlord or any such subletting to
                             any other subtenant and/or acceptance of rent or
                             additional rent by Landlord from any subtenant,
                             Tenant shall and will remain fully liable for the
                             payment of the fixed rent and additional rent due
                             and to become due hereunder and for the
                             performance of all the covenants, agreements,
                             terms, provisions and conditions contained in this
                             lease on the part of Tenant to be performed and
                             all acts and omissions of any licensee or
                             subtenant or anyone claiming under or through any
                             subtenant which shall be in violation of any of

                       -15-
<PAGE>

                             the obligations of this lease, and any such
                             violation shall be deemed to be a violation by
                             Tenant. Tenant further agrees that notwithstanding
                             any such subletting, no other and further
                             subletting of the Premises by Tenant or any person
                             claiming through or under Tenant (except as
                             provided in Section 9.05) shall or will be made
                             except upon compliance with and subject to the
                             provisions of this Article. If Landlord shall
                             decline to give its consent to any proposed
                             assignment or sublease, or if Landlord shall
                             exercise any of its options under Section 9.02,
                             Tenant shall indemnify, defend and hold harmless
                             Landlord against and from any and all loss,
                             liability, damages, costs and expenses (including
                             reasonable counsel fees) resulting from any claims
                             that may be made against Landlord by the proposed
                             assignee or sublessee or by any brokers or other
                             persons claiming a commission or similar
                             compensation in connection with the proposed
                             assignment or sublease. If Landlord shall decline
                             to give its consent to any proposed assignment or
                             sublease and Landlord shall not have exercised any
                             of its options under Section 9.02, Landlord shall,
                             promptly after Tenant's request, provide Tenant
                             with a statement setting forth in reasonable
                             detail the reason(s) for such denial.

                       (k)   Tenant shall reimburse Landlord on demand for any
reasonable costs that may be incurred by Landlord in connection with any
proposed assignment or sublease, including, without limitation, the costs of
making investigations as to the acceptability of the proposed assignee or
subtenant, and legal costs incurred in connection with the granting of any
requested consent.

                  9.08 In the event that (a) Landlord fails to exercise any of
its options under Section 9.02 and consents to a proposed assignment or
sublease, and (b) Tenant fails to execute and deliver the assignment or sublease
to which Landlord consented within 90 days after the giving of such consent,
then, Tenant shall again comply with all of the provisions and conditions of
Section 9.02 before assigning this lease or subletting all or part of the
Demised Premises.

                  9.09 With respect to each and every sublease or subletting
authorized by Landlord under the provisions of this lease, it is further agreed:

                       (a)   no subletting shall be for a term ending later
than one day prior to the expiration date of this lease;

                       (b)   no sublease shall be valid, and no subtenant shall
take possession of the Demised Premises or any part thereof, until an executed
counterpart of such sublease has been delivered to Landlord;

                       (c)   each sublease shall provide that it is subject
and subordinate to this lease and to the matters to which this lease is or shall
be subordinate, and that in the event of termination, reentry or dispossess by
Landlord under this lease Landlord may, at its option, take over all of the
right, title and interest of Tenant, as sublessor, under such sublease, and such
subtenant shall, at Landlord's option, attorn to Landlord pursuant to the then
executory provisions of such sublease, except that Landlord shall not (i) be
liable for any previous act or omission of Tenant under such sublease, (ii) be
subject to any offset, not expressly provided in such sublease, which
theretofore accrued to such subtenant against Tenant, or (iii) be bound by any
previous modification of such sublease or by any previous prepayment of more
than one month's rent.

                  9.10 If the Landlord shall give its consent to any assignment
of this lease or to any sublease, Tenant shall in consideration therefor, pay to
Landlord, as additional rent:

                       (a)   in the case of an assignment, fifty (50%) percent
of an amount equal to all sums and other considerations paid to Tenant by the
assignee for or by reason of such assignment (including, but not

                                      -16-

<PAGE>

limited to, sums paid for the sale to the assignee or an affiliate thereof of
Tenant's fixtures, leasehold improvements, equipment, furniture, furnishings or
other personal property, less, in the case of a sale thereof, the then net
unamortized or undepreciated cost thereof determined on the basis of Tenant's
federal income tax returns); and

                       (b)   in the case of a sublease, fifty (50%) percent of
any rents, additional charge or other consideration payable under the sublease
to Tenant by the subtenant which is in excess of the fixed rent and additional
rent accruing during the term of the sublease in respect of the subleased space
(at the rate per square foot payable by Tenant hereunder) pursuant to the terms
hereof (including, but not limited to, sums paid for the sale or rental to the
sublessee or an affiliate thereof of Tenant's fixtures, leasehold improvements,
equipment, furniture or other personal property, less, in the case of the sale
or rental thereof, the then net unamortized or undepreciated cost thereof
determined on the basis of Tenant's Federal income tax returns). The sums
payable under this Section 9.10(b) shall be paid to Landlord as and when payable
by the subtenant to tenant.

                  9.11 If Tenant is a corporation, the provisions of Section
9.01 shall apply to a transfer (by one or more transfers) of a majority of the
stock of Tenant (other than transfers of stock among Charles H. Bendheim and his
direct lineal descendants or his or their spouses) as if such transfer of a
majority of the stock of Tenant were an assignment of this lease, but said
provisions shall not apply to transactions with any of the following entities
(an "Affiliate"): (a) a corporation into or with which Tenant is merged or
consolidated or to which substantially all of Tenant's assets are transferred,
or (b) any corporation which controls or is controlled by Tenant or is under
common control with Tenant or which is controlled by Charles H. Bendheim or his
direct lineal descendants or his or their spouses, or (c) any trust for the
benefit of Charles H. Bendheim or his direct lineal descendants or his or their
spouses, provided that in any of such events (i) the successor to Tenant has a
net worth computed in accordance with generally accepted accounting principles
at least equal to the greater of (1) the net worth of Tenant immediately prior
to such merger, consolidation or transfer, or (2) the net worth of Tenant herein
named on the date of this lease, and (ii) proof satisfactory to Landlord of such
net worth shall have been delivered to Landlord at least 10 days prior to the
effective date of any such transaction. For purposes of this Section 9.11, with
respect to a corporation, the term "control" shall mean the ownership, or common
ownership, as the case may be, of at least 51% of the voting stock of the
corporation involved. Landlord agrees that Tenant may sublet, without obtaining
Landlord's consent, all or a portion of the Demised Premises to an Affiliate
provided that Tenant shall have complied with the provisions of Section 9.09
hereof (and the provisions of Sections 9.02 and 9.10 shall not apply thereto).

                  9.12 Any assignment or transfer, whether made with Landlord's
consent pursuant to Section 9.01 or without Landlord's consent pursuant to
Section 9.11, shall be made only if, and shall not be effective until, the
assignee shall execute, acknowledge and deliver to Landlord an agreement in form
and substance satisfactory to Landlord whereby the assignee shall assume the
obligations of this lease on the part of Tenant to be performed or observed and
whereby the assignee shall agree that the provisions in Section 9.01 shall,
notwithstanding such assignment or transfer, continue to be binding upon it in
respect of all future assignments and transfers. The original named Tenant
covenants that, notwithstanding any assignment or transfer, whether or not in
violation of the provisions of this lease, and notwithstanding the acceptance of
fixed rent and/or additional rent by Landlord from an assignee, transferee, or
any other party, the original named Tenant shall remain fully liable for the
payment of the fixed rent and additional rent and for the other obligations of
this lease on the part of Tenant to be performed or observed.

                  9.13 The joint and several liability of Tenant and any
immediate or remote successor in interest of Tenant and the due performance of
the obligations of this lease on Tenant's part to be performed or observed shall
not be discharged, released or impaired in any respect by any agreement or
stipulation made by Landlord extending the time of or modifying any of the
obligations of, this lease, or by any waiver or failure of Landlord to enforce
any of the obligations of this lease.

                  9.14 The listing of any name other than that of Tenant,
whether on the doors of the Premises or the Building directory, or otherwise,
shall not operate to vest any right or interest in this lease or in the
Premises,

                                      -17-
<PAGE>

nor shall it be deemed to be the consent of Landlord to any assignment or
transfer of this lease or to any sublease of the Premises or to the use or
occupancy thereof by others.

                                   ARTICLE 10

                      Compliance With Laws And Requirements
                                       of
                               Public Authorities

                  10.01 Tenant shall give prompt notice to Landlord of any
notice it receives of the violation of any law or requirement of public
authority, and at its expense shall comply with all laws and requirements of
public authorities which shall, with respect to the Demised Premises or the use
and occupation thereof, or the abatement of any nuisance, impose any violation,
order or duty on Landlord or Tenant, arising from (i) Tenant's use of the
Demised Premises other than Tenant's mere occupancy of the Demised Premises for
executive and general office purposes, (ii) the manner of conduct of Tenant's
business or operation of its installations, equipment or other property therein,
(iii) any cause or condition created by or at the instance of Tenant, other than
by Landlord's performance of any work for or on behalf of Tenant, or (iv) breach
of any of Tenant's obligations hereunder. However, Tenant shall not be so
required to make any structural or other substantial change in the Demised
Premises unless the requirement arises from a cause or condition referred to in
clause (ii), (iii) or (iv) above. Furthermore, Tenant need not comply with any
such law or requirement of public authority so long as Tenant shall be
contesting the validity thereof, or the applicability thereof to the Demised
Premises, in accordance with Section 10.02. Landlord, at its expense, shall
comply with all other such laws and requirements of public authorities as shall
affect the Demised Premises, but may similarly contest the same subject to
conditions reciprocal to Subsections (a), (b) and (d) of Section 10.02.

                  10.02 Tenant may, at its expense (and if necessary, in the
name of but without expense to Landlord) contest, by appropriate proceedings
prosecuted diligently and in good faith, the validity, or applicability to the
Demised Premises, of any law or requirement of public authority, and Landlord
shall cooperate with Tenant in such proceedings, provided that:

                       (a)   Landlord shall not be subject to criminal penalty
or to prosecution for a crime nor shall the Demised Premises or any part thereof
be subject to being condemned or vacated, by reason of non-compliance or
otherwise by reason of such contest;

                       (b)   Tenant shall defend, indemnify and hold harmless
Landlord against all liability, loss or damage which Landlord shall suffer by
reason of such noncompliance or contest, including reasonable attorney's fees
and other expenses reasonably incurred by Landlord;

                       (c)   such non-compliance or contest shall not constitute
or result in any violation of any superior lease or superior mortgage, or if
such superior lease and/or superior mortgage shall permit such non-compliance or
contest on condition of the taking of action or furnishing of security by
Landlord, such action shall be taken and such security shall be furnished at the
expense of Tenant; and

                       (d)   Tenant shall keep Landlord advised as to the
status of such proceedings.

Without limiting the application of Subsection (a) above thereto, Landlord shall
be deemed subject to prosecution for a crime within the meaning of said
Subsection, if Landlord, or any officer of Landlord individually, is charged
with a crime of any kind or degree whatever, whether by service of a summons or
otherwise, unless such charge is withdrawn before Landlord or such officer (as
the case may be) is required to plead or answer thereto.

                                   ARTICLE 11

                                    Insurance

                                      -18-
<PAGE>

                  11.01 Tenant shall not violate, or permit the violation of,
any condition imposed by the standard fire insurance policy then issued for
office buildings in the Borough of Fort Lee, County of Bergen, and shall not do,
or permit anything to be done, or keep or permit anything to be kept in the
Demised Premises which would subject Landlord to any liability or responsibility
for personal injury or death or property damage, or which would increase the
fire or other casualty insurance rate on the Building or the property therein
over the rate which would otherwise then be in effect (unless Tenant pays the
resulting premium as provided in Section 11.03) or which would result in
insurance companies of good standing refusing to insure the Building or any of
such property in amounts reasonably satisfactory to Landlord.

                  11.02 Tenant covenants to provide on or before the
Commencement Date and to keep in force during the term hereof the following
insurance coverage:

                       (a)   for the benefit of Landlord and Tenant a
comprehensive policy of liability insurance protecting Landlord and Tenant
against any liability whatsoever occasioned by accident on or about the Demised
Premises or any appurtenances thereto. Such policy is to be written by good and
solvent insurance companies authorized to do business in the State of New Jersey
and the limits of liability thereunder shall not be less than the amount of
Three Million ($3,000,000.00) Dollars combined single limit coverage on a per
occurrence basis. Such insurance may be carried under a blanket policy covering
the Demised Premises and other locations of Tenant, if any;

                       (b)   Fire and Extended coverage in an amount adequate
to cover the cost of replacement of all personal property, fixtures, furnishing
and equipment, including Tenant's Work located in the Demised Premises. Such
policy shall be written by good and solvent insurance companies authorized to do
business in the State of New Jersey.

                       Prior to the time such insurance is first required to be
carried by Tenant and thereafter, at least thirty (30) days prior to the
expiration of any such policies, Tenant agrees to deliver to Landlord either
duplicate originals of the aforesaid policies or certificates evidencing such
insurance, provided said certificate contains an endorsement that such insurance
may not be modified or cancelled except upon thirty (30) days' notice to
Landlord, together with evidence of payment for the policy. Tenant's failure to
provide and keep in force the aforementioned insurance shall be regarded as a
material default hereunder, entitling Landlord to exercise any or all of the
remedies as provided in this lease in the event of Tenant's default.

                  11.03 Landlord and Tenant shall each endeavor to secure an
appropriate clause in, or an endorsement upon, each fire or extended coverage
policy obtained by it and covering the Building, the Demised Premises or the
personal property, fixtures and equipment located therein or thereon, pursuant
to which the respective insurance companies waive subrogation or permit the
insured, prior to any loss, to agree with a third party to waive any claim it
might have against said third party. The waiver of subrogation or permission for
waiver of any claim hereinbefore referred to shall extend to the agents of each
party and its employees and, in the case of Tenant, shall also extend to all
other persons and entities occupying or using the Demised Premises in accordance
with the terms of this lease. If and to the extent that such waiver or
permission can be obtained only upon payment of an additional charge then,
except as provided in the following two paragraphs, the party benefitting from
the waiver or permission shall pay such charge upon demand, or shall be deemed
to have agreed that the party obtaining the insurance coverage in question shall
be free of any further obligations under the provisions hereof relating to such
waiver or permission.

                  In the event that Landlord shall be unable at any time to
obtain one of the provisions referred to above in any of its insurance policies,
at Tenant's option Landlord shall cause Tenant to be named in such policy or
policies as one of the assured, but if any additional premium shall be imposed
for the inclusion of Tenant as such as assured, Tenant shall pay such additional
premium upon demand. In the event that Tenant shall have been named as one of
the assured in any of Landlord's policies in accordance with the foregoing,
Tenant shall endorse promptly to the order of Landlord, without recourse, any
check, draft or order for the payment of money representing the proceeds of any
such policy or any other payment growing out of or connected with said policy
and Tenant hereby irrevocably waives any and all rights in and to such proceeds
and payments.

                                      -19-
<PAGE>

                  In the event that Tenant shall be unable at any time to obtain
one of the provisions referred to above in any of its insurance policies, Tenant
shall cause Landlord to be named in such policy or policies as one of the
assured, but if any additional premium shall be imposed for the inclusion of
Landlord as such an assured, Landlord shall pay such additional premium upon
demand or Tenant shall be excused from its obligations under this paragraph with
respect to the insurance policy or policies for which such additional premiums
would be imposed. In the event that Landlord shall have been named as one of the
assured in any of Tenant's policies in accordance with the foregoing, Landlord
shall endorse promptly to the order of Tenant, without recourse, any check,
draft or order for the payment of money representing the proceeds of any such
policy or any other payment growing out of or connected with said policy and
Landlord hereby irrevocably waives any and all rights in and to such proceeds
and payments.

                  Subject to the foregoing provisions of this Section 11.03, and
insofar as may be permitted by the terms of the insurance policies carried by
it, each party hereby releases the other with respect to any claim (including a
claim for negligence) which it might otherwise have against the other party for
loss, damages or destruction with respect to its property by fire or other
casualty (including rental value or business interruption, as the case may be)
occurring during the term of this lease.

                  11.04 If, by reason of a failure of Tenant to comply with the
provisions of Section 10.01 or Section 11.01, the rate of fire insurance with
extended coverage on the Building or equipment or other property of Landlord
shall be higher than it otherwise would be, Tenant shall reimburse Landlord, on
demand, for that part of the premiums for fire insurance and extended coverage
paid by Landlord because of such failure on the part of Tenant.

                  11.05 If any dispute shall arise between Landlord and Tenant
with respect to the incurrence or amount of any additional insurance premium
referred to in Section 11.03, the dispute shall be determined by arbitration.

                  11.06 A schedule or makeup of rates for the Building or the
Demised Premises, as the case may be, issued by the New Jersey Fire Insurance
Rating Organization or other similar body making rates for fire insurance and
extended coverage for the premises concerned, shall be conclusive evidence of
the facts therein stated and of the several items and charges in the fire
insurance rate with extended coverage then applicable to such premises.

                                   ARTICLE 12

                              Rules And Regulations

                  12.01 Tenant and its employees and agents shall faithfully
observe and comply with the Rules and Regulations annexed hereto as Exhibit D,
and such reasonable changes therein (whether by modification, elimination or
addition) as Landlord at any time or times hereafter may make and communicate in
writing to Tenant, which do not unreasonably affect the conduct of Tenant's
business in the Demised Premises except as required by any governmental law,
rule, regulation, ordinance or similar decree; provided, however, that in case
of any conflict or inconsistency between the provisions of this lease and any of
the Rules and Regulations as originally promulgated or as changed, the
provisions of this lease shall control.

                  12.02 Nothing in this lease contained shall be construed to
impose upon Landlord any duty or obligation to Tenant to enforce the Rules and
Regulations or the terms, covenants or conditions in any other lease, as against
any other tenant, and Landlord shall not be liable to Tenant for violation of
the same by any other tenant or its employees, agents or visitors. However,
Landlord shall not enforce any of the Rules and Regulations in such manner as to
discriminate against Tenant or anyone claiming under or through Tenant.

                                   ARTICLE 13

                                Tenant's Changes

                  13.01 Tenant may from time to time during the term of this
lease, at its expense, make such other alterations, additions, installations,
substitutions, improvements and decorations (hereinafter collectively referred
to as "changes" and, as applied to changes provided for in this Article,
"Tenant's Changes") in and to the Demised Premises,

                                      -20-

<PAGE>

excluding structural changes, as Tenant may reasonably consider necessary for
the conduct of its business in the Demised Premises, on the following
conditions:

                       (a)   the outside appearance or the strength of the
Building or of any of its structural parts shall not be affected;

                       (b)   no part of the Building outside of the Demised
Premises shall be physically affected;

                       (c)   the proper functioning of any of the mechanical,
electrical, sanitary and other service systems of the Building shall not be
adversely affected or the usage of such systems by Tenant shall not be
increased;

                       (d)   in performing the work involved in making such
changes, Tenant shall be bound by and observe all of the conditions and
covenants contained in the following Sections of this Article;

                       (e) before proceeding with any Tenant's Changes,
Tenant will advise Landlord thereof and shall submit to Landlord proof
reasonably satisfactory of the cost thereof and shall submit the names of the
contractors or subcontractors who will be performing Tenant's Changes for
Landlord's approval, which approval shall not be unreasonably withheld or
delayed. Additionally, before proceeding with any Tenant's Changes, Tenant shall
submit to Landlord plans and specifications and all changes and revisions
thereto, for the work to be done for Landlord's approval and Tenant shall, upon
demand of Landlord, pay to Landlord the reasonable costs incurred by Landlord
for the review of such plans and specifications and all changes and revisions
thereto by its architect, engineer and other consultants. Landlord may as a
condition of its approval require Tenant to make revisions in and to the plans
and specifications and to post a bond or other security reasonably satisfactory
to Landlord to insure the completion of such change. Notwithstanding the
foregoing, Landlord's approval of plans and specifications shall not be required
in connection with any non-structural change, the estimated cost of which, in
the aggregate, does not exceed $25,000.00 (exclusive of the costs of decorating
work and items constituting Tenant's Property, as defined in Article 14, and any
architect's and engineer's fees).

                  13.02 Tenant, at its expense, shall obtain all necessary
governmental permits and certificates for the commencement and prosecution of
Tenant's Changes and for final approval thereof upon completion and shall
furnish copies thereof to Landlord, and shall cause Tenant's Changes to be
performed in compliance therewith and with all applicable laws and requirements
of public authorities, and with all applicable requirements of insurance bodies,
and in good and workmanlike manner, using new materials and equipment at least
equal in quality and class to the original installations in the Building.
Tenant's Changes shall be performed in such manner as not to unreasonably
interfere with or delay and (unless Tenant shall indemnify Landlord therefor to
the latter's reasonable satisfaction) as not to impose any additional expense
upon, Landlord in the construction, maintenance or operation of the Building or
any portion thereof. Throughout the performance of Tenant's Changes, Tenant, at
its expense, shall carry, or cause to be carried, workmen's compensation
insurance in statutory limits and general liability insurance for any occurrence
in or about the Building as set forth in Section 11.02 hereof, in which Landlord
and its agents shall be named as parties insured, in such limits as Landlord may
reasonably prescribe, with insurers reasonably satisfactory to Landlord. Tenant
shall furnish Landlord with satisfactory evidence that such insurance is in
effect at or before the commencement of Tenant's Changes and, on request, at
reasonable intervals thereafter during the continuance of Tenant's Changes. If
any of Tenant's Changes shall involve the removal of any fixtures, equipment or
other property in the Demised Premises which are not Tenant's Property (as
defined in Article 14), such fixtures, equipment or other property shall be
promptly replaced, at Tenant's expense, with new fixtures, equipment or other
property (as the case may be) of like utility and at least equal value unless
Landlord shall otherwise expressly consent in writing and Tenant shall, upon
Landlord's request, store and preserve, at Tenant's sole cost and expense, any
such fixtures, equipment or property so removed and shall return same to
Landlord upon the expiration or sooner termination of this lease. All electrical
and plumbing work in connection with Tenant's changes shall be performed by
contractors or subcontractors licensed therefor by all governmental agencies
having or asserting jurisdiction. Upon the completion of Tenant's Changes,
Tenant shall furnish to Landlord a complete set of "as built" plans and
specifications.

                                      -21-
<PAGE>

                  13.03 Tenant, at its expense, and with diligence and dispatch,
shall procure the cancellation or discharge of all notices of violation arising
from or otherwise connected with Tenant's Changes which shall be issued by the
Department of Buildings or any other public or quasi-public authority having or
asserting jurisdiction. Tenant shall defend, indemnify and save harmless
Landlord against any and all mechanic's and other liens filed in connection with
Tenant's Changes, including the liens of any security interest in, conditional
sales of, or chattel mortgages upon, any materials, fixtures or articles so
installed in and constituting part of the Demised Premises and against all
costs, expense and liabilities incurred in connection with any such lien,
security interest, conditional sale or chattel mortgage or any action or
proceeding brought thereon. Tenant, at its expense, shall procure the
satisfaction or discharge of all such liens within fifteen (15) days after
Landlord makes written demand therefor. However, nothing herein contained shall
prevent Tenant from contesting, in good faith and at its own expense, any such
notice of violation, provided that Tenant shall comply with the provisions of
Section 10.02.

                  13.04 Tenant agrees that the exercise of its rights pursuant
to the provisions of this Article 13 or any other provision of this lease shall
not be done in a manner which would create any work stoppage, picketing, labor
disruption or dispute or violate Landlord's union contracts affecting the Land
and/or Building nor interference with the business of Landlord or any Tenant or
occupant of the Building. In the event of the occurrence of any condition
described above arising from the exercise by Tenant of its right pursuant to the
provisions of this Article 13 or any other provision of this lease, Tenant
shall, immediately upon notice from Landlord, cease the manner of exercise of
such right giving rise to such condition. In the event Tenant fails to cease
such manner of exercise of its rights as aforesaid, Landlord, in addition to any
rights available to it under this lease and pursuant to law, shall have the
right to injunction without notice. With respect to Tenant's Changes, Tenant
shall make all arrangements for, and pay all expenses incurred in connection
with, use of the freight elevators servicing the Demised Premises.

                                   ARTICLE 14

                                Tenant's Property

                  14.01 All fixtures, equipment, improvements and appurtenances
attached to or built into the Demised Premises at the commencement of or during
the term of this lease, whether or not by or at the expense of
Tenant, shall be and remain a part of the Demised Premises, shall be deemed the
property of Landlord and shall not be removed by Tenant, except as hereinafter
in this Article expressly provided.

                  14.02 All paneling, movable partitions, lighting fixtures,
special cabinet work, other business and trade fixtures, machinery and
equipment, communications equipment and office equipment, whether or not
attached to or built into the Demised Premises, which are installed in the
Demised Premises by or for the account of Tenant, without expense to Landlord,
and can be removed without permanent structural damage to the Building, and all
furniture, furnishings and other articles of movable personal property owned by
Tenant and located in the Demised Premises, all of which are sometimes referred
to as "Tenant's Property", shall be and shall remain the property of Tenant and
may be removed by it at any time during the term of this lease; provided that if
any of Tenant's Property is removed, Tenant or any party or person entitled to
remove same shall repair or pay the cost of repairing any damage to the Demised
Premises or to the Building resulting from such removal. Any equipment or other
property for which Landlord shall have granted any allowance or credit to Tenant
or which has replaced such items originally provided by Landlord at Landlord's
expense shall not be deemed to have been installed by or for the account of
Tenant, without expense to Landlord, and shall not be considered Tenant's
Property.

                  14.03 At or before the Expiration Date, or the date of any
earlier termination of this lease, or as promptly as practicable after such an
earlier termination date, Tenant at its expense, shall remove from the Demised
Premises all of Tenant's Property except such items thereof as Tenant shall have
expressly agreed in writing with Landlord were to remain and to become the
property of Landlord, and shall fully repair any damage to the Demised Premises
or the Building resulting from such removal. Tenant's obligation herein shall
survive the termination of the lease. Tenant shall not be required to remove
pipes, wires and the like from the walls, ceilings or floors, provided that
Tenant properly cuts, disconnects and caps such pipes and wires and seals them
off, if necessary, in a safe and lawful manner.

                                      -22-
<PAGE>

                  14.04 Any other items of Tenant's Property (except money,
securities and other like valuables) which shall remain in the Demised Premises
after the Expiration Date or after a period of fifteen (15) days following an
earlier termination date, may, at the option of the Landlord, be deemed to have
been abandoned, and in such case either may be retained by Landlord as its
property or may be disposed of, without accountability, at Tenant's expense in
such manner as Landlord may see fit.






                                      -23-



<PAGE>

                                   ARTICLE 15

                             Repairs And Maintenance

                  15.01 Tenant shall take good care of the Demised Premises,
provided, however, that such obligation shall not be deemed to require Tenant to
make any repairs other than those set forth in this Section 15.01. Tenant, at
its expense, shall promptly make all repairs, ordinary or extraordinary,
interior or exterior, structural or otherwise, in and about the Demised Premises
and the Building as shall be required by reason of (i) the performance or
existence of Tenant's Work not performed by Landlord or Tenant's Changes, (ii)
the installation, use or operation of Tenant's Property in the Demised Premises,
(iii) the moving of Tenant's Property in or out of the Building, or (iv) the
misuse or neglect of Tenant or any of its employees, agents or contractors; but
Tenant shall not be responsible for any of such repairs as are required by
reason of Landlord's neglect or other fault in the manner of performing any of
Tenant's Work or Tenant's Changes which may be undertaken by Landlord for
Tenant's account or are otherwise required by reason of neglect or other fault
of Landlord or its employees, agents or contractors. Except if required by the
neglect or other fault of Landlord or its employees, agents or contractors,
Tenant, at its expense, shall replace all scratched, damaged or broken doors or
other glass (other than exterior windows) in or about the Demised Premises and
shall be responsible for all repairs, maintenance and replacement of wall and
floor coverings in the Demised Premises and, for the repair and maintenance of
all lighting fixtures therein.

                  15.02 (a)  Landlord, at its expense, shall keep and maintain
the Building and its fixtures, appurtenances, systems, exterior windows and
facilities serving the Demised Premises, in good working order, condition and
repair and shall make all repairs, structural and otherwise, interior and
exterior, as and when needed in or about the Demised Premises, except for those
repairs for which Tenant is responsible pursuant to any other provisions of this
lease.

                       (b)   During the first (1st) year of the term of this
lease, Landlord at its expense, shall promptly make all repairs, in and about
the Demised Premises as shall be required by reason of any defects in the
performance or existence of Landlord's Work, or Tenant's Work performed by
Landlord, unless such defect or any damage is caused by reason of the negligence
or acts of Tenant or its agents, employees, contractors, guests or invitees.

                  15.03 Except as expressly otherwise provided in this lease,
Landlord shall have no liability to Tenant by reason of any inconvenience,
annoyance, interruption or injury to business arising from Landlord's making any
repairs or changes which Landlord is required or permitted by this lease, or
required by law, to make in or to any portion of the Building or the Demised
Premises, or in or to the fixtures, equipment or appurtenances of the Building
or the Demised Premises, provided that Landlord shall use due diligence with
respect thereto and shall perform such work, except in case of emergency, at
times reasonably convenient to Tenant and otherwise in such manner as will not
materially interfere with Tenant's use of the Demised Premises provided that
Landlord shall use reasonable efforts to effect such repairs or changes promptly
and in such manner as to minimize such inconvenience, annoyance, interruption or
injury to Tenant's business.

                                   ARTICLE 16

                                   Electricity

                  16.01 Subject to the terms of Section 16.03, Landlord shall
furnish electrical service to the Demised Premises during business hours (i.e.,
8:00 A.M. to 6:00 P.M. on Mondays through Fridays, except such days as are
observed by the State or Federal government as legal holidays and those days
designated as holidays by the applicable Building service union employees
contract) and subject to the terms of Sections 16.04 and 16.06, during other
than business hours, for lighting the same and for the operation of office
equipment installed or used in the Demised Premises as part of Tenant's initial
installations approved by Landlord (even if installed within a reasonable period
of time after the Commencement Date). Except as provided to the contrary in
Sections 16.04, 16.06, 16.07, 16.08 and 16.09 of this Article, such electrical
service shall be furnished without specific measurement, on any meter or
otherwise, and without additional specific charge to Tenant, the charge for the
furnishing of such electrical service being included

                                      -24-

<PAGE>

in the fixed rent reserved under this lease, subject to adjustment as provided
in Section 16.04 of this Article. Notwithstanding the foregoing, however, Tenant
agrees that Landlord shall not in anywise be liable or responsible to Tenant for
any loss, damage or expense that Tenant may sustain or incur if either the
quantity or character of electrical service is changed, is no longer available,
or is unsuitable for Tenant's requirements, provided that such loss, damage or
expense is not caused by Landlord's willful acts. At Landlord's option, Tenant
shall purchase from Landlord or its agent all lamps, starters, ballasts, or
bulbs used in the Demised Premises, provided that the charges for such items are
comparable to charges for similar items in similar buildings in the vicinity in
which the Building is located.

                  16.02 Tenant covenants and agrees that, at all times, its use
of electric current shall never exceed the capacity of the feeders to the
Building or the risers or wiring installation thereof. In connection therewith,
Tenant expressly agrees that all installations, alterations and additions of and
to the electrical fixtures, appliances, or equipment within the Demised
Premises, other than Tenant's initial installation as approved by Landlord and
the replacement of office and lighting equipment using small amounts of
electricity (such as typewriters, calculators, desk or floor lamps and
dictaphone machines) with similar office equipment using comparable amounts of
electric energy, shall be subject to Landlord's prior written approval, and, if
such approval shall be given (or expressly not required as provided above),
rigid conduit only shall be permitted. If, in connection with any request for
such approval, Landlord shall, in its sole judgment, determine that the risers
of the Building servicing the Demised Premises shall be insufficient to supply
Tenant's electrical requirements with respect thereto, Landlord shall, at the
sole cost and expense of Tenant, install any additional feeder(s) that Landlord
shall deem necessary with respect thereto, provided, however, that, if Landlord
shall determine, in its sole judgment, that the same will cause permanent damage
or injury to the Building or to the Demised Premises, cause or create a
dangerous or hazardous condition, entail excessive or unreasonable alterations,
repairs, or expense, or interfere with, or disturb, the other tenants or
occupants of the Building, then Landlord shall not be obligated to make such
installation, and Tenant shall not make the installation, alteration, or
addition with respect to which Tenant requested Landlord's consent. In addition
to the installation of such riser or risers, Landlord will also, at the sole
cost and expense of Tenant, install all other equipment necessary and proper in
connection therewith, subject to the aforesaid terms and conditions. All of the
aforesaid costs and expenses are chargeable and collectible as additional rent,
and shall be paid by Tenant to Landlord within five (5) days after rendition of
any bill or statement to Tenant therefor.

                  16.03 Provided that (a) it is physically possible for Tenant
to receive electric current in the Demised Premises directly from the public
utility company serving the area in which the Building is located and (b) the
discontinuance of electrical service by Landlord will not cause a material
interruption in electrical service to Tenant during business hours (unless, with
respect to Subdivision (b) hereof, discontinuance of electrical service as
aforesaid is required by law or other regulation or requirement of any
governmental or quasi-governmental authority having jurisdiction thereof
("Requirements") and, in such event, Landlord shall use reasonable diligence to
effectuate such discontinuance in such a manner as to minimize inconvenience,
annoyance, interruption or injury to Tenant's business), Landlord may
discontinue the aforesaid service upon thirty (30) days' notice to Tenant
without being liable to Tenant therefor and without in any way affecting this
lease or the liability of Tenant hereunder, and the same shall not be deemed to
be a lessening or diminution of services within the meaning of any law, rule, or
regulation now or hereafter enacted, promulgated, or issued. In the event that
Landlord gives such notice of discontinuance, Landlord shall permit Tenant to
receive such service directly from such public utility company and shall permit
Landlord's wires and conduits, to the extent available, suitable and safely
capable, to be used for such purpose. Any additional wires, conduits, or other
equipment necessary and proper in connection therewith shall be installed by
Landlord in accordance with the terms of, and subject to the conditions
contained in, Section 16.02 of this Article, except that Landlord shall pay for
same, and Tenant agrees that Landlord's cost therefor may be included in
Operating Expenses as a capital improvement that is included in Operating
Expenses as provided in Section 5.07(a) of this lease. In the event that
Landlord exercises its rights under this Section 16.03, then: (i) Tenant shall
contract for such electrical service directly with the said public utility for
all of Tenant's electric current requirements and (ii) as of the date upon which
Landlord discontinues furnishing electric current to Tenant, (a) the fixed rent
reserved under this lease shall be reduced by $22,731.00 (as such amount may
have been previously increased in accordance with the provisions of Sections
16.04 and 16.05 of this Article) and (b) any Increased Usage Charge (as such
term is defined in Section 16.06 of this Article) shall be discontinued. The
amount set forth in Subsubdivision (a) of Subdivision (ii) above is hereinafter
called the Initial Electricity factor, and the said amount, as the same may,
from time to time hereafter, be increased pursuant to the terms of Sections
16.04 and 16.05 of this Article, is hereinafter called the Electricity Factor.

                                      -25-

<PAGE>

                  16.04 After the Commencement Date, Landlord's Consultant (as
such term is defined in Section 16.06 of this Article) shall have the right to
make a survey hereinafter called the Initial Survey) of the Demised Premises,
which shall include all of Tenant's initial installations approved by Landlord
(even if installed within a reasonable period of time after the Commencement
Date) of fixtures, appliances or equipment in the Demised Premises, indicating
the lighting load, office equipment and electrical usage of Tenant (whether or
not during business hours) as of the date of the Initial Survey and shall
specifically exclude any electrical usage of Tenant for the Supplemental Air
Conditioning System (as such term is defined in Article 39 hereof). Based upon
the Initial Survey, Landlord's Consultant shall compute the value to Tenant of
the estimated electrical service to be furnished to Tenant for the succeeding
twelve (12) month period (hereinafter called the Initial Electrical Value),
which computation shall be made utilizing the higher of (i) the service
classification under which Landlord is billed by the utility company for such
electrical service or (ii) the service classification under which Tenant would
be billed by the utility company if Tenant purchased such electrical service
directly from such utility company. Landlord's Consultant shall notify Landlord
and Tenant of this computation of the Initial Electrical Value (which shall be
binding upon both parties). Regardless of the result of the Initial Survey,
there shall be no adjustment in the fixed rent herein reserved and the
Electricity factor; the Initial Electrical Value shall be used as a base against
which any Subsequent Survey (as such term is hereinafter defined) shall be
compared.

                  16.05 If the public utility rate schedule for the supply of
electric current to the Building shall be increased, if any surcharge
(including, without limitation, a surcharge of the nature of a fuel or other
adjustment) with respect thereto shall be imposed or increased and/or if the
service classification for the Building shall be changed so as to result in an
increase in Landlord's cost of purchasing electricity for the Building during
the term of this lease, the fixed rent herein reserved and Electricity Factor
shall each be adjusted to reflect the resulting increase by adding thereto an
amount equal to the product of (i) the then current Electricity Factor,
multiplied by (ii) the percentage of increase in Landlord's cost of purchasing
electricity for the Building. Any such percentage increase in Landlord's cost of
purchasing electricity for the Building shall be computed by the application of
the average consumption (energy and demand) of electricity for the entire
Building for the twelve (12) full months immediately prior to the rate increase
and/or service classification change to the new rate and/or service
classification. When the amount of the increase in the fixed rent and the
Electricity Factor is determined, the parties shall execute an agreement
supplementary hereto to reflect such increase, which shall be effective from the
effective date of such increase in the public utility rate schedule and/or such
change in the service classification for the Building; but such increase in the
fixed rent and in the Electricity Factor shall be effective from such date
whether or not such a supplementary agreement is executed. In addition, if any
tax is imposed upon Landlord by any Municipal, State, or Federal Agency with
respect to the purchase, sale, or resale of electrical energy supplied to Tenant
hereunder, Tenant covenants and agrees that, where permitted by law, Tenant's
pro rata share of such taxes shall be passed on to, included in the bill of and
paid by Tenant to Landlord.

                  16.06 Tenant shall not, without prior written notice to
Landlord in each instance, connect any fixtures, appliances, or equipment (in
addition to those installed as part of Tenant's initial installation approved by
Landlord (even if installed within a reasonable period of time after the
Commencement Date) and shown on the Initial Survey) to the Building electric
distribution system, or make any alteration or addition to the electric system
of the Demised Premises, that shall result in Increased Usage (as such term is
hereinafter defined) except for the replacement of small office equipment which
will not require Landlord's consent or approval. In the event that Tenant (i)
installs equipment, increases the lighting load beyond the amount thereof on the
date of the Initial Survey, or (ii) operates during longer than business hours
in excess of that shown on the Initial Survey, or (iii) installs a Supplemental
Air Conditioning System (the foregoing are herein collectively called the
"Increased Usage"), Tenant shall pay to Landlord, as additional rent hereunder
payable on a monthly basis together with the fixed rent herein reserved, an
amount to be computed as hereafter provided and subject to adjustment as set
forth in Section 16.07 of this Article. If Landlord is of the opinion that
Increased Usage exists, Landlord shall engage an independent electrical engineer
or electrical consulting firm (hereinafter called Landlord's Consultant") who
shall make a survey (hereinafter called the "Subsequent Survey") of the Demised
Premises, indicating the lighting load, office equipment and electrical usage of
Tenant as of the date of the Subsequent Survey, and shall compute the monthly
amount (hereinafter called the "Increased Usage Charge") to be paid by Tenant
for the furnishing of Increased Usage as a service by Landlord in excess of the
usage shown on the Initial Survey. Landlord's Consultant shall base his
computations on value to Tenant of the estimated Increased Usage to be furnished
to Tenant for the succeeding twelve (12) month period, and such computation
shall be made

                                      -26-
<PAGE>

utilizing the higher of (i) the service classification under which Landlord is
billed by the utility company for such electrical service or (ii) the service
classification under which Tenant would be billed by the utility company if
Tenant purchased such electrical service directly from such utility company.
Landlord's Consultant shall notify Landlord and Tenant of his computation of the
Increased Usage Charge (which shall be binding upon both parties). The fees of
Landlord's Consultant shall be borne by Landlord and Tenant equally. Tenant
shall have the right as hereinafter provided, to contest any amounts determined
by Landlord's Consultant as shall be due to Landlord as a result of Increased
Service based upon a Subsequent Survey. In the event that Tenant fails to send a
written notice (the "Objection Notice") to Landlord within thirty (30) days
after Tenant's receipt of a written notice containing the amount of the
Increased Usage Charge (the "Increase Notice"), such notice shall become
conclusive and binding upon Tenant. If Tenant disputes any Increase Notice by
sending an Objection Notice within the time and in the manner hereinbefore
provided, then Tenant shall, at its sole cost and expense, have the right to
engage an electrical engineer or electrical consulting firm (the "Tenant's
Consultant") who shall promptly make a survey (the "Disputing Survey"),
indicating Tenant's electrical usage in the Demised Premises. In the event that
Landlord and Tenant are unable to agree on the increase, with respect to the
Increase Notice within thirty (30) days after the date Tenant furnishes Landlord
with a copy of the Disputing Survey, then Landlord's Consultant and Tenant's
Consultant shall select a mutually acceptable electrical engineer or electrical
consulting firm (the "Third Consultant") within ten (10) days after the
expiration of such thirty (30) day period.

Landlord's Consultant and Tenant's Consultant shall submit the dispute to the
Third Consultant and the determination of any such increased electrical energy
charge, by the Third Consultant shall be conclusive and binding upon Landlord
and Tenant. During the pendency of any such dispute, Tenant shall pay to
Landlord the amount set forth in the Increase Notice until the dispute is
finally determined in accordance with the provisions of this Section and, in the
event that such final determination is less than the amount set forth in the
Increase Notice, Landlord shall, at Tenant's election, refund to Tenant the
amount of such excess payment or credit any such excess against any amounts then
due or becoming due to Landlord under this lease. The cost of the Third
Consultant shall be borne equally by Landlord and Tenant.

                  16.07 After the same shall be determined pursuant to the terms
of Section 16.06 of this Article, the Increased Usage Charge shall continue to
be paid on a monthly basis until Landlord's Consultant determines in a
Subsequent Survey that there has been a further increase or a decrease in the
Increased Usage. The amount of the Increased Usage Charge may be appropriately
increased or decreased at any time and from time to time throughout the term of
this lease to reflect a change in the rates charged by the utility company
servicing the Building (including, without limitation, a change in any taxes
assessed, levied, or imposed with respect to such electrical service) in
accordance with the provisions of Section 16.05 of this Article.

                  16.08 For purposes of Sections 16.08, 16.09 and 16.10 of this
Article:

                       (i)   "Usage" shall mean actual usage of electricity as
measured by the metering system described in Section 16.09 for each calendar
month or such other period as Landlord shall determine during the term of this
lease and shall include the quantity and peak demand (kilowatt hours and
kilowatts) and all applicable taxes, surcharges, demand charges, energy charges,
fuel adjustment charges, time of day charges and other adjustments made from
time to time by the public utility company supplying electric current to the
Building or any governmental authority having jurisdiction;

                       (ii)  "Landlord's Rate" shall mean the service
classification (including all applicable taxes, surcharges, demand charges,
energy charges, fuel adjustment charges, time of day charges and other sums
payable in respect thereof) pursuant to which Landlord purchases electric
current for the Building from the public utility company supplying electric
current to the Building;

                       (iii) "Basic Cost" shall mean the product of (a)
Usage multiplied by (b) Landlord's Rate.

                       (iv)  "Tenant's Cost" shall mean an amount equal to
the sum of (a) the Basic Cost plus (b) ten (10%) percent of the Basic Cost for
Landlord's overhead and expenses in connection with submetering.

                                      -27-

<PAGE>

                  16.09 Landlord shall have the option (hereinafter called the
"Submetering Option"), which shall be exercisable in its sole discretion and
upon thirty (30) days' notice to Tenant given at any time during the term of
this lease, to discontinue charging for electric current on a rent inclusion
basis and, instead, to charge for electric current as hereinafter provided as
additional rent. If Landlord exercises the Submetering Option, then (i) Landlord
shall, at its sole cost and expense, install a meter or meters for the purpose
of measuring the electric current consumed in the Demised Premises provided,
however, that at no time shall Landlord thereby cause a material interruption in
electric service to Tenant during business hours, and (ii) as of the date
(hereinafter called the "Conversion Date") upon which Landlord discontinues
charging Tenant for electric current on a rent inclusion basis, (a) the fixed
rent reserved under this lease shall be reduced by the then current Electricity
Factor and (b) any Increased Usage Charge shall be discontinued. With respect to
the Demised Premises and/or any portion(s) thereof that are not contiguous with
the balance of the same, if the same shall constitute less than a full floor of
the Building, Landlord may, at its option, either (x) install a meter to measure
the amount of Usage with respect solely to the Demised Premises and/or to such
portion(s) or (y) measure the amount of Usage with respect thereto through
common meter(s). After the Conversion Date, Landlord shall, from time to time,
furnish Tenant with a statement indicating the appropriate period during which
the Usage was measured and the amount of Tenant's Cost payable by Tenant to
Landlord for furnishing electrical current. Within five (5) days after receipt
of each such statement, Tenant shall pay the amount of Tenant's Cost set forth
thereon to Landlord as additional rent. In addition, if any tax is imposed upon
Landlord by any municipal, state or Federal agency or subdivision with respect
to the purchase, sale or resale of electrical energy supplied to Tenant
hereunder, Tenant covenants and agrees that, where permitted by law, Tenant's
Proportionate Share of such taxes shall be passed on to, included in the bill to
and paid by, Tenant to Landlord, as additional rent.

                  16.10 (i) With respect to any meter system which shall measure
more than one (1) tenant's electrical consumption (hereinafter referred to as a
"Multi-Tenant Meter"), Tenant shall pay its pro rata share (which, together with
any recomputations thereof based upon a "Recomputation Notice" as provided in
this Subdivision (i) or a "Survey" as provided in Subdivision (ii), is
hereinafter referred to as "Tenant's Pro Rata Share") of the Usage measured by
such Multi-Tenant Meter. Tenant's Pro-Rats Share shall be expressed as a
percentage and shall be computed on the basis of a fraction, the numerator of
which shall be the Multiplication Factor and the denominator of which shall be
the total square foot area of the space occupied by tenants whose electrical
consumption is measured by such Multi-Tenant Meter (hereinafter referred to as
the "Shared Meter Space"). Landlord, using the formula set forth above, shall
compute Tenant's Pro Rata Share as of the Conversion Date. Landlord shall
recompute Tenant's Pro Rata Share after a change in occupancy in the Shared
Meter Space occurs, and shall send Tenant notice thereof (such notice and the
notice of a new Tenant's Pro Rata Share based upon a new Survey as provided in
Subdivision (ii) of this Section 16.10 are hereinafter referred to as a
"Recomputation Notice"), such recomputation to be retroactive to the date of
such change in occupancy. Tenant's Pro-Rata Share shall be payable by Tenant as
additional rent within ten (10) days after the rendition by Landlord of bills
therefor.

                        (ii) In the event that at any time Tenant or any other
tenant of the Shared Meter Space (thereinafter referred to as the "Disputing
Tenant") shall dispute the accuracy of its pro rata share as so computed by
Landlord, the Disputing Tenant shall have the right, at the Disputing Tenant's
sole cost and expense, to make a survey (hereinafter referred to as the
"Survey") of electrical usage in the space leased to all tenants of the Shared
Meter Space using an independent electrical engineer (hereinafter referred to as
the "Surveyor") acceptable to all tenants of the Shared Meter Space. The
Surveyor shall compute the pro rata share of each of the tenants of the Shared
Meter Space, provided, however, that the aggregate pro rata shares of all
tenants of the Shared Meter Space as so computed shall in no event be less than
100%. The Survey shall be conclusive and binding upon all tenants of the Shared
Meter Space. Until completion of the first Survey made pursuant to this
Subdivision (ii) and receipt thereof by Tenant, Tenant shall continue to pay
Tenant's Pro Rata Share as determined by Landlord, and Landlord shall not be
required to retroactively adjust any amount paid by Tenant prior to the date of
the completion of the first Survey. After completion of a Survey and receipt
thereof by Tenant, all tenants of the Shared Meter Space shall, effective as of
the date of the Survey, and continuing thereafter until completion of a new
Survey and receipt thereof by Tenant (or the receipt by Tenant of a
Recomputation Notice as provided in Subdivision (i) above), pay their pro rata
share based on the Survey retroactively adjusted to the date of the Survey.
Tenant shall cooperate with any Disputing Tenant and the Surveyor in the making
of the Survey. In the event the tenants of the Shared Meter Space are unable to
agree upon a Surveyor, upon request

                                      -28-

<PAGE>

of any Disputing Tenant, Landlord shall designate a Surveyor to make the Survey.
In no event shall Landlord have any liability or responsibility with respect to
the accuracy of any survey or the fees of the Surveyor.


                                   ARTICLE 17

                     Heat, Ventilation And Air Conditioning

                           17.01 Landlord, at its expense, shall maintain and
operate the heating, ventilating and Air Conditioning systems (hereafter
referred to as the "systems") and, subject to energy conservation requirements
of governmental authorities, shall furnish heat, ventilating and Air
Conditioning (hereinafter collectively referred to as the "air-conditioning
service") in the Demised Premises through the systems, which shall be in
compliance with the performance specifications of the systems installed by
Landlord in the Building. Air Conditioning shall be provided from May 15 through
October 15 during "regular hours" (that is between the hours of 8:00 A.M. and
6:00 P.M.) of "business days" (which term is used herein to mean all days except
Saturdays, Sundays and days now or hereafter observed by the Federal or New
Jersey State government as legal holidays and those now or hereafter designated
by the applicable Building service union employees service contract or by the
applicable Operating Engineers contract (collectively "holidays") throughout the
year. Heating and ventilation shall be provided during other periods of the year
as may be required for comfortable occupancy of the Demised Premises during
regular hours of business days. If Tenant shall require heating, ventilating or
Air Conditioning service at any other time (hereinafter referred to as "after
hours), Landlord shall furnish such after hours service upon reasonable advance
notice from Tenant, and Tenant shall pay on demand Landlord's cost plus fifteen
(15%) percent. In the event the after hours service is shared by other tenants,
the cost thereof shall be prorated among all such tenants. Notwithstanding
anything in the foregoing to the contrary, after hours Air Conditioning service
may only be requested from May 15 through October 15. Anything contained in this
Section 17.01 to the contrary notwithstanding, Landlord agrees that upon not
less than forty-eight (48) hours prior notice, it shall provide Tenant with Air
Conditioning service on not more than five (5) Sundays during any calendar year
from 9:00 a.m. to 1:00 p.m. ("Tenant's Limited Special Hours") and that during
Tenant's Limited Special Hours, Tenant shall only be required to pay Landlord,
upon demand, Landlord's labor and other out-of-pocket costs for providing Air
Conditioning service to Tenant during Tenant's Limited Special Hours.

                  17.02 Use of the Demised Premises, or any part thereof, in a
manner exceeding the design conditions (including occupancy and connected
electrical load) specified in Exhibit C for the systems, rearrangement of
partitioning or opening of windows in the Demised Premises while the systems are
in operation which interferes with normal operation of the heat, ventilation and
Air Conditioning in the Demised Premise, may require changes in the systems.
Such changes, so occasioned, shall be made by Tenant, at its expense, as
Tenant's Changes pursuant to Article 13.

                                   ARTICLE 18

                            Landlords Other Services

                  18.01 Landlord, at its expense, shall provide public elevator
service, passenger and freight, by elevators serving the floor on which the
Demised Premises are situated during regular hours of business days, and shall
have at least one passenger elevator subject to call at all other times.

                  18.02 Landlord, at its expense, shall cause the Demised
Premises to be cleaned in accordance with the cleaning specifications annexed
hereto as Exhibit F. Tenant shall pay to Landlord on demand the costs incurred
by Landlord for (a) extra cleaning work in the Demised Premises required because
of (i) misuse or neglect on the part of Tenant or its employees or visitors,
(ii) use of portions of the Demised Premises for preparation, serving or
consumption of food or beverages, data processing or reproducing operations;
private lavatories or toilets or other special purposes requiring greater or
more difficult cleaning work than office areas, (iii) unusual quantity of
interior glass surfaces, (iv) non-Building standard materials or finishes
installed by Tenant or at its request, and (b) removal from the Demised Premises
and the Building of so much of any refuse and rubbish of Tenant as shall exceed
that ordinarily accumulated daily in the routine of business office occupancy.
Landlord, its cleaning contractor and their employees shall have after

                                      -29-
<PAGE>

hours access to the Demised Premises and the free use of light, power and water
in the Demised Premises as reasonably required for the purpose of cleaning the
Demised Premises in accordance with Landlord obligations hereunder (and the
usage thereof shall be included in the Initial Survey).

                  18.03 Landlord, at its expense, shall furnish adequate hot and
cold water to the floor on which the Demised Premises are located for drinking,
lavatory and cleaning purposes. If Tenant uses water for any other purpose
Landlord, at Tenant's expense, shall install meters to measure Tenant's
consumption of cold water and/or hot water for such other purposes, other than
drinking, lavatory and cleaning purposes, and/or steam, as the case may be.
Tenant shall pay for the quantities of cold water and hot water, other than
drinking, lavatory and cleaning purposes, shown on such meters, at Landlord's
cast thereof, on the rendition of Landlord's bills therefor.

                  18.04 Landlord, at its expense, and on Tenant's request, shall
maintain the original listings on the Building directory of the names of Tenant,
and the names of any of their officers and employees, provided that the names so
listed shall not take up more than 7.8% of the difference between (i) total
number of lines on the Building directory and (ii) ten (10). In the event Tenant
shall require additional or substitute listings on the Building directory,
Landlord shall, to the extent space for such additional or substitute listing is
available, maintain such listings and Tenant shall pay to Landlord an amount
equal to Landlord's reasonable charge for such listings.

                  18.05 Tenant shall have the right to use sixty-six (66)
parking spaces as assigned by Landlord in parking areas designated by Landlord
in and around the Building. Landlord reserves the right to assign different
spaces to Tenant or to designate different parking areas for Tenant's use
without any liability to Tenant and Tenant agrees that any change in assignment
of spaces or reassignment of parking areas shall not give rise to any claims or
offset against Landlord hereunder.

                  18.06 Landlord reserves the right, without any liability to
Tenant, except as otherwise expressly provided in this lease, to stop service of
any of the heating, ventilating, Air Conditioning, electric, sanitary, elevator
or other Building systems serving the Demised Premises, or the rendition of any
of the other services required of Landlord under this lease, whenever and for so
long as may be necessary, by reason of accidents, emergencies, strikes or the
making of repairs or changes which Landlord is required by this lease or by law
to make or in goad faith deems necessary, by reason of difficulty in securing
proper supplies of fuel, steam, water, electricity, labor or supplies, or by
reason of any "other cause beyond Landlord's reasonable control (hereinafter
collectively referred to as Landlords delay"). Landlord shall use reasonable
diligence to restore the heating, ventilating, Air Conditioning, electric,
sanitary, elevator, or other building systems serving the Demised Premises or
other service required to be provided by Landlord as soon as reasonably
practicable after the abatement of any Landlord's delay in such a manner as to
minimize inconvenience, annoyance, interruption or injury to Tenant's business.

                                   ARTICLE 19

                  Access, Changes In Building Facilities, Name

                  19.01 All except the inside surfaces of all walls, windows and
doors bounding the Demised Premises (including exterior Building walls, core
corridor walls and doors and any core corridor entrance) and any space in or
adjacent to the Demised Premises used for shafts, stacks, pipes, conduits, fan
rooms, ducts, electric or other utilities, sinks or other Building facilities,
and the use thereof, as well as access thereto through the Demised Premises for
the purpose of operation, maintenance, decoration and repair, are reserved to
Landlord.

                  19.02 Tenant shall permit Landlord to install, use, replace
and maintain pipes, ducts and conduits within the demising walls, bearing
columns and ceilings of the Demised Premises.

                  19.03 Landlord or Landlord's agent shall have the right, upon
request (except in emergency under Clause (ii) hereof) to enter and/or pass
through the Demised Premises or any part thereof, at reasonable times during
reasonable hours, (i) to examine the Demised Premises and to show them to the
fee owners, lessors of superior leases, holders of superior mortgages, or
prospective purchasers, mortgagees or lessees of the Building as an entirety,
and (ii)

                                      -30-
<PAGE>

for the purpose of making such repairs or changes in or to the Demised Premises
or in or its facilities, as may be provided for by this lease or as may be
mutually agreed upon by the parties or as Landlord may be required to make by
law or in order to repair and maintain said structure or its fixtures or
facilities. Landlord shall be allowed to take all materials into and upon the
Demised Premises that may be required for such repairs, changes, repainting or
maintenance, without liability to Tenant, but Landlord shall not unreasonably
interfere with Tenant's use of the Demised Premises. Landlord shall also have
the right to enter on and/or pass through the Demised Premises, or any part
thereof, at such times as such entry shall be required by circumstances of
emergency affecting the Demised Premises or said structure.

                  19.04 During the period of twelve (12) months prior to the
Expiration Date Landlord may exhibit the Demised Premises to prospective
tenants.

                  19.05 Landlord reserves the right, at any time, without
incurring any liability to Tenant therefor, to make such changes in or to the
Building and the fixtures and equipment thereof, as well as in or to the garage
and street entrances, public spaces, parking spaces, plazas, common areas,
halls, passages, elevators, escalators and stairways thereof, as it may deem
necessary or desirable, provided that Tenant's access to the Building or Demised
Premises shall not be materially impaired. Landlord agrees that when making such
changes, it shall use reasonable efforts to minimize inconvenience, annoyance,
interruption or injury to Tenant's business.

                  19.06 Landlord may adopt any name for the Building. Landlord
reserves the right to change the name or address of the Building at any time.

                  19.07 For the purposes of Article 19, the term "Landlord"
shall include lessors of leases and the holders of mortgages to which this lease
is subject and subordinate as provided in Article 7.

                                   ARTICLE 20

                               Notice Of Accidents

                  20.01 Tenant shall give notice to Landlord, promptly after
Tenant learns thereof, of (i) any accident in or about the Demised Premises for
which Landlord might be liable, (ii) all fires in the Demised Premises, (iii)
all damages to or defects in the Demised Premises, including the fixtures,
equipment and appurtenances thereof, for the repair of which Landlord might be
responsible, and (iv) all damage to or defects in any parts or appurtenances of
the Building's sanitary, electrical, heating, ventilating, Air Conditioning,
elevator and other systems located in or passing through the Demised Premises or
any part thereof.

                                   ARTICLE 21

                        Non-Liability And Indemnification

                  21.01 Neither Landlord nor any agent or employee of Landlord
shall be liable to Tenant for any injury or damage to Tenant or to any other
person or for any damage to, or loss (by theft or otherwise) of, any property of
Tenant or of any other person, irrespective of the cause of such injury, damage
or loss, unless caused by or due to the negligence of Landlord, its agents or
employees occurring within the scope of their respective employments without
negligence on the part of Tenant, it being understood that no property, other
than such as might normally be brought upon or kept in the Demised Premises as
an incident to the reasonable use of the Demised Premises for the purpose herein
permitted, will be brought upon or be kept in the Demised Premises.

                  21.02 Tenant shall indemnify and save harmless Landlord and
its agents against and from (a) any and all claims (i) arising from (x) the
conduct or management of the Demised Premises or of any business therein, or (y)
any work or thing whatsoever done, or any condition created (other than by
Landlord for Landlord's or Tenant's account) in or about the Demised Premises
during the term of this lease or during the period of time, if any, prior to the
Commencement Date that Tenant may have been given access to the Demised
Premises, or (ii) arising from any

                                      -31-
<PAGE>

negligent or otherwise wrongful act or omission of Tenant or any of its
subtenants or licensees or its or their employees, agents or contractors, and
(b) all costs, expenses and liabilities incurred in or in connection with each
such claim or action or proceeding brought thereon. In case any action or
proceeding be brought against Landlord by reason of any such claim, Tenant, upon
notice from Landlord, shall resist and defend such action or proceeding.

                  21.03 Except as otherwise expressly provided in this lease,
this lease and the obligations of Tenant hereunder shall be in no wise affected,
impaired or excused because Landlord is unable to fulfill, or is delayed in
fulfilling, any of its obligations under this lease by reason of strike, other
labor trouble, governmental preemption or priorities or other controls in
connection with a national or other public emergency or shortages of fuel,
supplies or labor resulting therefrom, acts of Cod or other like cause beyond
Landlord's reasonable control (collectively "unavoidable delays"). Landlord
agrees to use reasonable diligence to fulfill any of such obligations as soon as
reasonably practicable after the abatement of the relevant unavoidable delay.


                                   ARTICLE 22

                              Destruction Or Damage

                  22.01 If the Building or the Demised Premises shall be
partially or totally damaged or destroyed by fire or other cause, then, whether
or not the damage or destruction shall have resulted from the fault or neglect
of Tenant, or its employees, agents or visitors (and if this lease shall not
have been terminated as in this Article hereinafter provided), Landlord shall
repair the damage and restore and rebuild the Building and/or the Demised
Premises, at its expense, with reasonable dispatch after notice to it of the
damage or destruction; provided, however, that Landlord shall not be required to
repair or replace any of Tenant's Property nor to restore any Tenant's Work.

                  22.02 If the Building or the Demised Premises shall be
partially damaged or partially destroyed by fire or other cause, the rents
payable hereunder shall be abated to the extent that the Demised Premises shall
have been rendered untenantable and for, the period from the date of such damage
or destruction to the date the damage shall be repaired or restored. If the
Demised Premises or a major part thereof shall be totally (which shall be deemed
to include substantially totally) damaged or destroyed or rendered completely
(which shall be deemed to include substantially completely) untenantable on
account of fire or other cause, the rents shall abate as of the date of the
damage or destruction and until Landlord shall repair, restore and rebuild the
Building and the Demised Premises, provided, however, that should Tenant
reoccupy a portion of the Demised Premises during the period the restoration
work is taking place and prior to the date that the same are made completely
tenantable, rents allocable to such portion shall be payable by Tenant from the
date of such occupancy.

                  22.03 If the Building or the Demised Premises shall be totally
damaged or destroyed by fire or other cause, or if the Building shall be so
damaged or destroyed by fire or other cause (whether or not the Demised Premises
are damaged or destroyed) as to require a reasonably estimated expenditure of
more than 40% of the full insurable value of the Building immediately prior to
the casualty, then in either such case Landlord may terminate this lease by
giving Tenant notice to such effect within one hundred eighty (180) days after
the date of the casualty. In case of any damage or destruction mentioned in this
Article Tenant may terminate this lease, by notice to Landlord, if (i) within
thirty (30) days after Landlord's final insurance adjustment, Landlord either
(x) notifies Tenant that it does not intend to repair and restore same, or (y)
notifies Tenant that Landlord has reasonably and in good faith determined that
the required repairs or restoration are not capable of being completed in less
than twelve (12) months using due diligence, or (ii) Landlord has not completed
the making of the required repairs and restored and rebuilt the Building and the
Demised Premises within twelve (12) months from the date of such damage or
destruction, or within such period after such date (not exceeding six months) as
shall equal the aggregate period Landlord may have been delayed in doing so by
adjustment of insurance, labor trouble, governmental controls, act of Cod, or
any other cause beyond Landlord's reasonable control.

                  22.04 No damages, compensation or claim shall be payable by
Landlord for inconvenience, loss of business or annoyance arising from any
repair or restoration of any portion of the Demised Premises or of the

                                      -32-

<PAGE>

Building pursuant to this Article. Landlord shall use its best efforts to effect
such repair or restoration promptly and in such manner as to not unreasonably
interfere with Tenant's use and occupancy.

                  22.05 Notwithstanding any of the foregoing provisions of this
Article, if Landlord or the lessor of any superior lease or the holder of any
superior mortgage shall be unable to collect all of the insurance proceeds
(including rent insurance proceeds) applicable to damage or destruction of the
Demised Premises or the Building by fire or other cause, by reason of some
action or inaction on the part of Tenant or any of its employees, agents or
contractors, which constitutes a breach of any of Tenant's obligations under
this lease, then, without prejudice to any other remedies which may be available
against Tenant, there shall be no abatement of Tenant's rents, but the total
amount of such rents not abated (which would otherwise have been abated) shall
not exceed the amount of the uncollected insurance proceeds.

                  22.06 Landlord will not carry insurance of any kind on
Tenant's Property or Tenant's Work, and, except as provided by law or by reason
of its fault or its breach of any of its obligations hereunder, shall not be
obligated to repair any damage thereto or replace the same.

                  22.07 The provisions of this Article shall be considered an
express agreement governing any case of damage or destruction of the Demised
Premises by fire or other casualty, and any provision, law or statute of the
State of New Jersey, providing for such a contingency in the absence of an
express agreement, now or hereafter in force, shall have no application in such
case.

                                   ARTICLE 23

                                 Eminent Domain

                  23.01 If the whole of the Building shall be lawfully taken by
condemnation or in any other manner for any public or quasi-public use or
purpose, this lease and the term and estate hereby granted shall forthwith
terminate as of the date of vesting of title in such taking (which date is
hereinafter also referred to as the "date of the taking"), and the rents shall
be prorated and adjusted as of such date.

                  23.02 If only a part of the Building shall be so taken, this
lease shall be unaffected by such taking, except that Tenant may elect to
terminate this lease in the event of a partial taking, if the remaining area of
the Demised Premises shall not be reasonably sufficient for Tenant to continue
feasible operation of its business. Tenant shall give notice of such election to
Landlord not later than thirty (30) days after (i) notice of such taking is
given by Landlord to Tenant, or (ii) the date of such taking, whichever occurs
sooner. Upon the giving of such notice by Tenant this lease shall terminate on
the date of such taking and the rents shall be prorated as of such termination
date. Upon such partial taking and this lease continuing in force as to any part
of the Demised Premises, the rents apportioned to the part taken shall be
prorated and adjusted as of the date of taking and from such date the fixed rent
for the Demised Premises and additional rent shall be payable pursuant to
Article 5 according to the rentable area remaining.

                  23.03 Landlord shall be entitled to receive the entire award
in any proceeding with respect to any taking provided for in this Article
without deduction therefrom for any estate vested in Tenant by this lease and
Tenant shall receive no part of such award, except as hereinafter expressly
provided in this Article. Tenant hereby expressly assigns to Landlord all of its
right, title and interest in or to every such award. Notwithstanding anything
herein to the contrary, Tenant may, at its sole cost and expense, make a claim
with the condemning authority for (i) Tenant's moving expenses, (ii) the value
of Tenant's fixtures or Tenant's Changes which do not become part of the
Building or property of the Landlord and (iii) the value of Tenant's Work which
does not become part of the Building or the property of Landlord, the original
cost of which is in excess of $272,772.00, provided, however, that in any of
such events, Landlord's award is not thereby reduced or otherwise adversely
affected.

                  23.04 If the temporary use or occupancy of all or any part of
the Demised Premises shall be lawfully taken by condemnation or in any other
manner for any public or quasi-public use or purpose during the term of this
lease, Tenant shall be entitled, except as hereinafter set forth, to receive
that portion of the award for such taking

                                      -33-

<PAGE>

which represents compensation for the use and occupancy of the Demised Premises
and, if so awarded, for the taking of Tenant's Property and for moving expenses,
and Landlord shall be entitled to receive that portion which represents
reimbursement for the cost of restoration of the Demised Premises. This lease
shall be and remain unaffected by such taking and Tenant shall continue
responsible for all of its obligations hereunder insofar as such obligations are
not affected by such taking and shall continue to pay in full the fixed rent and
additional rent when due. If the period of temporary use or occupancy shall
extend beyond the Expiration Date, that part of the award which represents
compensation for the use or occupancy of the Demised Premises (or a part
thereof) shall be divided between Landlord and Tenant so that Tenant shall
receive so much thereof as represents the period prior to the Expiration Date
and Landlord shall receive so much thereof as represents the period subsequent
to the Expiration Date. All moneys received by Tenant as, or as part of, an
award for temporary use and occupancy for a period beyond the date to which the
rents hereunder have been paid by Tenant shall be received, held and applied by
Tenant as a trust fund for payment of the rents falling due hereunder. in the
event of a temporary taking during the tenth (lOth) year of the term of this
lease, Tenant shall have the right ("Tenant's Condemnation Termination Right")
to terminate this lease provided the temporary taking shall affect all or a
substantial part of the Demised Premises by sending written notice thereof (the
"Condemnation Termination Notice") to Landlord by certified mail, return receipt
requested on or before the tenth (10th) day after Tenant receives notice of such
temporary taking. If Tenant shall send the Condemnation Termination Notice to
Landlord within the time and in the manner hereinbefore provided, then the term
of this lease shall end and expire on the later date to occur of (a) the
effective date of such temporary taking, or (b) ten (10) days after the
Condemnation Termination Notice as if such day were the Expiration Date and
Tenant shall thereupon assign all of its right, title and interest in and to any
portion of the award to which Tenant might otherwise be entitled. If Tenant
shall fail to send the Condemnation Termination Notice within the time and in
the manner hereinbefore provided, then Tenant's Condemnation Termination Right
shall expire and Tenant shall have no further right to terminate this lease.

                  23.05 In the event of any taking of less than the whole of the
Building which does not result in a termination of this lease, or in the event
of a taking for a temporary use or occupancy of all or any part of the Demised
Premises which does not extend beyond the Expiration Date, Landlord, at its
expense, and to the extent any award or awards shall be sufficient for the
purpose, shall proceed with reasonable diligence to repair, alter and restore
the remaining parts of the Building and the Demised Premises to substantially a
Building standard condition to the extent that the same may be feasible and so
as to constitute a complete and tenantable Building and Demised Premises.

                  23.06 Should any part of the Demised Premises be taken to
effect compliance with any law or requirement of public authority other than in
the manner hereinabove provided in this Article, then (i) if such compliance is
the obligation of Tenant under this lease, Tenant shall not be entitled to any
diminution or abatement of rent or other compensation from Landlord therefor,
but (ii) if such compliance is the obligation of Landlord under this lease, the
fixed rent hereunder shall be reduced and additional rents under Article 5 shall
be adjusted in the same manner as is provided in Section 23.02 according to the
reduction in rentable area of the Demised Premises resulting from such taking.

                  23.07 Any dispute which may arise between the parties with
respect to the meaning or application of any of the provisions of this Article
shall be determined by arbitration in the manner provided in Article 34.

                                   ARTICLE 24

                                    Surrender

                  24.01 On the last day of the term of this lease, or upon any
earlier termination of this lease, or upon any re-entry by Landlord upon the
Demised Premises, Tenant shall quit and surrender the Demised Premises to
Landlord in good order, condition and repair, except for ordinary wear and tear
(i.e. superficial marks on the partitions, holes caused by nails or bolts that
can be repaired by patching and repainting, and similar ordinary deterioration
for executive and general office use) and Tenant shall remove all of Tenants
Property therefrom except free standing partitions (which may be removed or left
in the Demised Premises at Tenant's option) and as otherwise expressly provided
in this lease and shall restore the Demised Premises wherever such removal
results in damage thereto.

                                      -34-

<PAGE>

                                   ARTICLE 25

                            Conditions Of Limitation

                  25.01 To the extent permitted by applicable law this lease and
the term and estate hereby granted are subject to the limitation that whenever
Tenant shall make an assignment of the property of Tenant for the benefit of
creditors, or shall file a voluntary petition under any bankruptcy or insolvency
law, or an involuntary petition alleging an act of bankruptcy or insolvency
shall be filed against Tenant under any bankruptcy or insolvency law, or
whenever a petition shall be filed or against Tenant under the reorganization
provisions of the United States Bankruptcy Act or under the provisions of any
law of like import, or whenever a petition shall be filed by Tenant under the
arrangement provisions of the United States Bankruptcy Act or under the
provisions of any law of like import, or whenever a permanent receiver of Tenant
or of or for the property of Tenant shall be appointed, then, Landlord, (a) if
such event occurs with the acquiescence of Tenant, at any time after receipt of
notice of the occurrence of any such event, or (b) if such event occurs without
the acquiescence of Tenant, at any time after the event continues for one
hundred twenty (120) days, Landlord may give Tenant a notice of intention to end
the term of this lease at the expiration of five (5) days from the date of
service of such notice of intention, and upon the expiration of said five (5)
day period this lease and the term and estate hereby granted, whether or not the
term shall theretofore have commenced, shall terminate with the same effect as
if that day were the Expiration Date, but Tenant shall remain liable for damages
as provided in Article 27.

                  25.02 This lease and the term and estate hereby granted are
subject to the further limitation that:

                        (a)  whenever Tenant shall default in the payment of any
installment of fixed rent, or in the payment of any additional rent or any other
charge payable by Tenant to Landlord, on any day upon which the same ought to be
paid, and such default shall continue for three (3) business days after Landlord
shall have given Tenant a notice specifying such default; or

                        (b)  whenever Tenant shall do or permit anything to be
done, whether by action or inaction, contrary to any of Tenant's obligations
hereunder, and if such situation shall continue and shall not be remedied by
Tenant within thirty (30) days after Landlord shall have given to Tenant a
notice specifying the same, or, in the case of a happening or default which
cannot with due diligence be cured within a period of thirty (30) days and the
continuance of which for the period required for cure will not subject Landlord
to the risk of criminal liability (as more particularly described in Section
10.02) or termination of any superior lease or foreclosure of any superior
mortgage, if Tenant shall not, (i) within said thirty (30) day period advise
Landlord of Tenant's intention to duly institute all steps necessary to remedy
such situation, (ii) duly institute within said thirty (30) day period, and
thereafter diligently prosecute to completion all steps necessary to remedy the
same and (iii) complete such remedy within such time after the date of the
giving of said notice of Landlord as shall reasonably be necessary; or

                       (c)   whenever any event shall occur or any contingency
shall arise whereby this lease or the estate hereby granted or the unexpired
balance of the term hereof would, by operation of law or otherwise, devolve upon
or pass to any person, firm or corporation other than Tenant, except as
expressly permitted by Article 9; or

                       (d)   whenever Tenant shall abandon the Demised Premises
(unless as a result of a casualty), or

                       (e)   when Tenant shall be in default in the observance
or performance of its obligations under any other lease in the Building, then in
any of said cases set forth in the foregoing Subsections (a), (5), (c) (d) and
(e), Landlord may give to Tenant a notice of intention to end the term of this
lease at the expiration of five (5) days from the date of the service of such
notice of intention, and upon the expiration of said five (5) days this lease
and the term and estate hereby granted, whether or not the term shall
theretofore have commenced, shall terminate with the same effect as if that day
were the Expiration Date, but Tenant shall remain liable for damages as provided
in Article 27.

                                      -35-

<PAGE>

                                   ARTICLE 26

                              Re-Entry By Landlord

                  26.01 If Tenant shall default in the payment of any
installment of fixed rent, or of any additional rent, on any date upon which the
same ought to be paid, and if such default shall continue for three (3) business
days after Landlord shall have given to Tenant a notice specifying such default,
or if this lease shall expire as in Article 25 provided, Landlord or Landlord's
agents and employees may immediately or at any time thereafter re-enter the
Demised Premises, or any part thereof, in the name of the whole, either by
summary dispossess proceedings or by any suitable action or proceeding at law,
or by force or otherwise, without being liable to indictment, prosecution or
damages therefor, and may repossess the same, and may remove any persons
therefrom, to the end that Landlord may have, hold and enjoy the Demised
Premises again as and of its first estate and interest therein. The word
re-enter, as herein used, is not restricted to its technical legal meaning. In
the event of any termination of this lease under the provisions of Article 25 or
if Landlord shall re-enter the Demised Premises under the provisions of this
Article or in the event of the termination of this lease, or of re-entry, by or
under any summary dispossess or other proceeding or action or any provision of
law by reason of default hereunder on the part of Tenant, Tenant shall thereupon
pay to Landlord the fixed rent and additional rent payable by Tenant to Landlord
up to the time of such termination of this lease, or of such recovery of
possession of the Demised Premises by Landlord, as the case may be, and shall
also pay to Landlord damages as provided in Article 27.

                  26.02 In the event of a breach or threatened breach by Tenant
of any of its obligations under this lease, Landlord shall also have the right
of injunction. The special remedies to which Landlord may resort hereunder are
cumulative and are not intended to be exclusive of any other remedies or means
of redress to which Landlord may lawfully be entitled at any time and Landlord
may invoke any remedy allowed at law or in equity as if specific remedies were
not provided for herein.

                  26.03 If this lease shall terminate under the provisions of
Article 25, or if Landlord shall re-enter the Demised Premises under the
provisions of this Article, or in the event of the termination of this lease, or
of re-entry, by or under any summary dispossess or other proceeding or action or
any provision of law by reason of default hereunder on the part of Tenant,
Landlord shall be entitled to retain all moneys, if any, paid by Tenant to
Landlord, whether as advance rent, security or otherwise, but such moneys shall
be credited by Landlord against any fixed rent or additional rent due from
Tenant at the time of such termination or re-entry or, at Landlord's option,
against any damages payable by Tenant under Article 27 or pursuant to law.


                                   ARTICLE 27

                                     Damages

                  27.01 If this lease is terminated under the provisions of
Article 25, or if Landlord shall re-enter the Demised Premises under the
provisions of Article 26, or in the event of the termination of this lease, or
of re-entry, by or under any summary dispossess or other proceeding or action or
any provision of law by reason of default hereunder on the part of Tenant,
Tenant shall pay to Landlord as damages, at the election of Landlord, either:

                       (a)   a sum which at the time of such termination of
this lease or at the time of any such re-entry by Landlord, as the case may be,
represents the then value of the excess, if any, of:

                             (1)  the aggregate of the fixed rent and the
additional rent payable hereunder which would have been payable by Tenant
(conclusively presuming the additional rent to be the same as was payable for
the year immediately preceding such termination) for the period commencing with
such earlier termination of this lease or the date of any such re-entry, as the
case may be, and ending with the Expiration Date, had this lease not so
terminated or had Landlord not so re-entered the Demised Premises; over

                             (2)  the aggregate rental value of the Demised
Premises for the same period; or

                                      -36-
<PAGE>

                       (b)   sums equal to the fixed rent and the additional
rent (as above presumed) payable hereunder which would have been payable by
Tenant had this lease not so terminated, or had Landlord not so re-entered the
Demised Premises, payable upon the due dates therefor specified herein following
such termination or such re-entry and until the Expiration Date, provided,
however, that if Landlord shall relet the Demised Premises during said period,
Landlord shall credit Tenant with the net rents received by Landlord from such
reletting, such net rents to be determined by first deducting from the gross
rents as and when received by Landlord from such reletting the expenses incurred
or paid by Landlord in terminating this lease or in re-entering the Demised
Premises and in securing possession thereof, as well as the expenses of
reletting, including altering and preparing the Demised Premises for new
tenants, brokers' commissions, and all other expenses properly chargeable
against the Demised Premises and the rental therefrom; it being understood that
any such reletting may be for a period shorter or longer than the remaining term
of this lease; but in no event shall Tenant be entitled to receive any excess of
such net rents over the sums payable by Tenant to Landlord hereunder, nor shall
Tenant be entitled in any suit for the collection of damages pursuant to this
Subsection to a credit in respect of any net rents from a reletting, except to
the extent that such net rents are actually received by Landlord. If the Demised
Premises or any part thereof should be relet in combination with other space,
then proper apportionment on a square foot basis (for equivalent space) shall be
made of the rent received from such reletting and of the expenses of reletting.

                  If the Demised Premises or any part thereof be relet by
Landlord for the unexpired portion of the term of this lease, or any part
thereof, before presentation of proof of such damages to any court, commission
or tribunal, the amount of rent reserved upon such reletting shall, prima facie,
be the fair and reasonable rental value for the Demised Premises, or part
thereof, so relet during the term of the reletting.

                  In the event that (i) Landlord shall terminate this lease or
re-enter the Demised Premises as aforesaid and (ii) Landlord elects to collect
damages as provided in Subsection (b) of this Section 27.01, then Landlord shall
use reasonable efforts to relet the whole or any part or parts of the Demised
Premises from time to time, either in the name of Landlord or otherwise, to such
tenant or tenants, for such term or terms ending before, on or after the
Expiration Date, at such rental or rentals and upon such other conditions, which
may include concessions and free rent periods, as Landlord, in its sole
discretion, may determine; provided, however, that Landlord shall have no
obligation whatsoever to relet the Demised Premises or any part thereof prior to
the letting of any other space in the Building or space in other Buildings owned
by Landlord in Bergen County, New Jersey, and shall in no event be liable for
failure to relet the Demised Premises or any part thereof, or, in the event of
any such reletting, for failure to collect any rent due upon any such reletting,
and no such failure shall operate to relieve Tenant of any liability under this
Lease or otherwise affect any such liability, and Landlord, at Landlord's
option, may make such repairs, replacements, alterations, additions,
improvements, decorations and other physical changes in and to the Demised
Premises and pay such brokerage commissions and legal fees as Landlord, in its
sole discretion, considers advisable or necessary in connection with any such
reletting or proposed reletting, without relieving Tenant of any liability under
this Lease or otherwise affecting any liability.

                  27.02 Suit or suits for the recovery of such damages, or any
installments thereof, may be brought by Landlord from time to time at its
election, and nothing contained herein shall be deemed to require Landlord to
postpone suit until the date when the term of this lease would have expired if
it had not been so terminated under the provisions of Article 25, or under any
provision of law, or had Landlord not re-entered the Demised Premises. Nothing
herein contained shall be construed to limit or preclude recovery by Landlord
against Tenant of any sums or damages to which, in addition to the damages
particularly provided above, Landlord may lawfully be entitled by reason of any
default hereunder on the part of Tenant. Nothing herein contained shall be
construed to limit or prejudice the right of Landlord to prove for and obtain as
liquidated damages by reason of the termination of this lease or re-entry on the
Demised Premises for the default of Tenant under this lease, an amount equal to
the maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which, such damages are to be proved whether or
not such amount be greater, equal to, or less than any of the sums referred to
in Section 27.01.

                                   ARTICLE 28

                                     Waiver

                                      -37-
<PAGE>

                  28.01 Tenant, for Tenant, and on behalf of any and all persons
claiming through or under Tenant, including creditors of all kinds, does hereby
waive and surrender all right and privilege which they or any of them might have
under or by reason of any present or future Law, to redeem the Demised Premises
or to have a continuance of this lease for the term hereby demised after being
dispossessed or ejected therefrom by process of law or under the terms of this
lease or after the termination of this lease as herein provided.

                  28.02 In the event that Tenant is in arrears in payment of
fixed rent or additional rent hereunder after notice and the expiration of any
applicable cure period, then (i) Tenant waives Tenant's right, if any, to
thereafter designate the items against which any payments made by Tenant are to
be credited, and (ii) Tenant agrees that Landlord may apply any payments made by
Tenant to any items it sees fit, irrespective of and notwithstanding any
designation or request by Tenant as to the items against which any such payments
shall be credited.

                  28.03 Landlord and Tenant hereby waive trial by jury in any
action, proceeding or counterclaim brought by either against the other on any
matter whatsoever arising out of or in any way connected with this lease, the
relationship of Landlord and Tenant, Tenant's use or occupancy of the Demised
Premises, including any claim of injury or damage, or any emergency or other
statutory remedy with respect thereto.

                  28.04 The provisions of Articles 17 and 18 shall be considered
expressed agreements governing the services to be furnished by Landlord, and
Tenant agrees that any laws and/or requirements of public authorities, now or
hereafter in force, shall have no application in connection with any enlargement
of Landlord's obligations with respect to such services unless Tenant agrees, in
writing, to pay to Landlord, as additional rent, Landlord's reasonable charges
for any additional services provided.

                                   ARTICLE 29

                        No Other Waivers Or Modifications

                  29.01 The failure of either party to insist in any one or more
instances upon the strict performance of any one or more of the obligations of
this lease, or to exercise any election herein contained, shall not be construed
as a waiver or relinquishment for the future of the performance of such one or
more obligations of this lease or of the right to exercise such election, but
the same shall continue and remain in full force and effect with respect to any
subsequent breach, act or omission. No executory agreement hereafter made
between Landlord and Tenant shall be effective to change, modify, waive,
release, discharge, terminate or effect an abandonment of this lease, in whole
or in part, unless such executory agreement is in writing, refers expressly to
this lease and is signed by the party against whom enforcement of the change,
modification, waiver, release, discharge or termination or effectuation of the
abandonment is sought.

                  29.02 The following specific provisions of this Section shall
not be deemed to limit the generality of any of the foregoing provisions of this
Article:

                        (a)  no agreement to accept a surrender of all or any
part of the Demised Premises shall be valid unless in writing and signed by
Landlord. The delivery of keys to an employee of Landlord or of its agent shall
not operate as a termination of this lease or a surrender of the Demised
Premises. If Tenant shall at any time request Landlord to sublet the Demised
Premises for Tenant's account, Landlord or its agent is authorized to receive
said keys for such purposes without releasing Tenant from any of its obligations
under this lease, and Tenant hereby releases Landlord from any liability for
loss or damage to any of Tenant's property in connection with such subletting;

                        (b)  the receipt by Landlord of rent with knowledge of
breach of any obligation of this lease shall not be deemed a waiver of such
breach; and

                        (c)  no payment by Tenant or receipt by Landlord of a
lesser amount than the correct fixed rent or additional rent due hereunder shall
be deemed to be other than a payment on account, nor shall any

                                      -38-

<PAGE>

endorsement or statement on any check or any letter accompanying any check or
payment be deemed an accord and satisfaction, and Landlord may accept such check
or payment without prejudice to Landlord's right to recover the balance or
pursue any other remedy in this lease or at law provided.

                                   ARTICLE 30

                    Curinq Tenant's Defaults, Additional Rent

                  30.01 (a) if Tenant shall default in the performance of any of
Tenant's obligations under this lease, Landlord, without thereby waiving such
default, may (but shall not be obligated to) perform the same for the account
and at the expense of Tenant, without notice, in a case of emergency, and in any
other case, only if such default continues after the expiration of (i) three (3)
business days from the date Landlord gives Tenant notice of intention so to do,
or (ii) the applicable grace period provided in Section 25.02 or elsewhere in
this lease for cure of such default, whichever occurs later;

                        (b)  if Tenant is late in making any payment due to
Landlord from Tenant under this lease for five (5) or more days, then interest
shall become due and owing to Landlord on such payment from the date when it was
due computed at the following rates:

                             (i)  for an individual or partnership tenant,
computed at the maximum legal rate of interest;

                             (ii) for a corporate tenant, computed at the
greater of (A) one and 25/100 (1.25%) percent per month or (B) two (2%) percent
per annum over the then prime rate of Chase Manhattan Bank, N.A. but in no event
in excess of the maximum legal rate of interest chargeable to corporations in
the State of New Jersey.

                  30.02 Bills for any expenses incurred by Landlord in
connection with any such performance by it for the account of Tenant, and bills
for all cost; expenses and disbursements of every kind and nature whatsoever,
including reasonable counsel fees, involved in collecting or endeavoring to
collect the fixed rent or additional rent or any part thereof or enforcing or
endeavoring to enforce any rights against Tenant, under or in connection with
this lease, or pursuant to law, including any such cost, expense and
disbursement involved in instituting and prosecuting summary proceedings, as
well as bills for any property, material, labor or services provided, furnished,
or rendered, by Landlord or at its instance to Tenant, may be sent by Landlord
to Tenant monthly, or immediately, at Landlord's option, and, shall be due and
payable in accordance with the terms of such bills.

                  30.03 If Landlord shall default in the performance of any of
Landlord's repair obligations under this lease with respect to the Demised
Premises (other than the shafts, stacks, pipes, conduits, ducts, electric,
heating, ventilating, Air Conditioning, plumbing, elevator or other Building
systems or other utilities, or the Building's exterior, common areas or
structural elements), Tenant may (but shall not be obligated to), upon giving
Landlord thirty (30) days prior written notice of such default stating Tenant's
intention to perform such repair, provided that Landlord has failed to commence
such repair prior to the expiration of such thirty (30) day period, perform the
same for the account and at the expense of Landlord, in the event that Landlord
shall fail to commence such repair within such thirty (30) day period and
thereafter proceed with same to completion, subject to unavoidable delays,
Tenant may make such repair using contractors first approved by Landlord, after
completion of which Tenant may request reimbursement from Landlord, provided
that Tenant's request be accompanied by paid receipted invoices for all labor
and materials furnished in connection with such repair. In the event that
Landlord fails to reimburse Tenant for the cost of such repair within thirty
(30) days after Tenant's request is made as aforesaid, Tenant's sole remedy
shall be to bring a separate action against Landlord for such reimbursement
without any right of offset, deduction, abatement or counterclaim under this
lease whatsoever.

                                   ARTICLE 31

                                     Broker

                                      -39-
<PAGE>

                  31.01 Tenant covenants, warrants and represents that there was
no broker or finder except Bender & Company, Inc., Cushman and Wakefield, Inc.,
and Newmark & Co. instrumental in consummating this lease and that no
conversations or negotiations were had with any broker or finder except Bender &
Company, Inc., Cushman and Wakefield, Inc., and Newmark & Co. concerning the
renting of the Demised Premises. Tenant agrees to hold Landlord harmless against
any claims for a brokerage, finder or other commission or fee arising out of any
conversations or negotiations had by Tenant with any broker or finder except
Bender & Company, Inc., Cushman and Wakefield, Inc., and Newmark & Co.

                                   ARTICLE 32

                                     Notices

                  32.01 Any notice, statement, demand or other communication
required or permitted to be given, rendered or made by either party to the
other, pursuant to this lease or pursuant to any applicable law or requirement
of public authority, shall be in writing (whether or not so stated elsewhere in
this lease) and shall be deemed to have been properly given, rendered or made,
if sent by registered or certified mail, return receipt requested, addressed to
the other party at the address hereinabove set forth (except that after the
Commencement Date, Tenant's address, unless Tenant shall give notice to the
contrary, shall be the Building), with copies of any notice, statement, demand
or other communication required or permitted to be given, other than ordinary
statements and demands for rent and additional rent to (a) in the case of
notices given to Landlord, to Dreyer and Traub, 101 Park Avenue, New York, New
York 10178, Attn: Robert J. Ivanhoe, Esq. and (b) in the case of notices given
to Tenant, to Weitzner, Levine, Hamburg and Walzer, 230 Park Avenue, New York,
New York, Attn: Martin Walzer, Esq., and shall be deemed to have been given,
rendered or made on the day so mailed, unless mailed outside of the State of New
Jersey, in which case it shall be deemed to have been given, rendered or made on
the expiration of the normal period of time for delivery of mail from the post
office of origin to the post office of destination. Either party may, by notice
as aforesaid, designate a different address or addresses for notices,
statements, demand or other communications intended for it.

                                   ARTICLE 33

                        Estoppel Certificate, Memorandum

                  33.01 Each party agrees, at any time and from time to time, as
requested by the other party, upon not less than ten (10) days' prior notice, to
execute and deliver to the other a statement certifying (a) that this lease is
unmodified and in full force and effect (or if there have been modifications,
that the same is in full force and effect as modified and stating the
modifications) and whether any options granted to Tenant pursuant to the
provisions of this lease have been exercised, (b) certifying the dates to which
the fixed rent and additional rent have been paid and the amounts thereof, and
stating whether or not, to the best knowledge of the signer, the other party is
in default in performance of any of its obligations under this lease, and, if
so, specifying each such default of which the signer may have knowledge, it
being intended that any such statement delivered pursuant hereto may be relied
upon by others with whom the party requesting which certificate may be dealing.
Additionally, Tenant's Statement shall contain such other information as shall
be required by the holder or proposed holder of any superior mortgage or the
lessor or proposed lessor under any superior lease.

                  33.02 Tenant agrees that it shall not record this lease or a
copy hereof. At the request of either party, Landlord and Tenant shall promptly
execute, acknowledge and deliver a memorandum with respect to this lease
sufficient for recording. Such memorandum shall not in any circumstances be
deemed to change or otherwise affect any of the obligations or provisions of
this lease.

                                   ARTICLE 34

                                   Arbitration

                                      -40-
<PAGE>

                  34.01 Either party may request arbitration of any matter in
dispute wherein arbitration is expressly provided in this lease as the
appropriate remedy. The party requesting arbitration shall do so by giving
notice to that effect to the other party, and both parties shall promptly
thereafter jointly apply to the American Arbitration Association (or any
organization successor thereto) in the Borough of Fort Lee, County of Bergen for
the appointment of a single arbitrator.

                  34.02 The arbitration shall be conducted in accordance with
the then prevailing rules of the American Arbitration Association (or any
organization successor thereto) in the Town of Fort Lee, County of Bergen. In
rendering such decision and award, the arbitrator shall not add to, subtract
from or otherwise modify the provisions of this lease.

                  34.03 If for any reason whatsoever a written decision and
award of the arbitrator shall not be rendered within sixty (60) days after the
appointment of such arbitrator, then at any time thereafter before such decision
and award shall have been rendered either party may apply to the Supreme Court
of the State of New Jersey or to any other court having jurisdiction and
exercising the functions similar to those now exercised by such court, by
action, proceeding or otherwise (but not by a new arbitration proceeding) as may
be proper to determine the question in dispute consistently with the provisions
of this lease.

                  34.04 All the expenses of the arbitration shall be borne by
the parties equally.

                                   ARTICLE 35

         No Other Representation; Construction, Governing Law, Consents

                  35.01 Tenant expressly acknowledges and agrees that Landlord
has not made and is not making, and Tenant, in executing and delivering this
lease, is not relying upon, any warranties, representations, promises or
statements, except to the extent that the same are expressly set forth in this
lease or in any other written agreement which may be made between the parties
concurrently with the execution and delivery of this lease and shall expressly
refer to this lease. This lease and said other written agreement(s) made
concurrently herewith are hereinafter referred to as the "lease documents". It
is understood and agreed that all understandings and agreements heretofore had
between the parties are merged in the lease documents, which alone fully and
completely express their agreements and that the same are entered into after
full investigation, neither party relying upon any statement or representation
not embodied in the lease documents, made by the other.

                  35.02 If any of the provisions of this lease, or the
application thereof to any person or circumstances, shall, to any extent, be
invalid or unenforceable, the remainder of this lease, or the application of
such provision or provisions to persons or circumstances other than those as to
whom or which it is held invalid or unenforceable, shall not be affected
thereby, and every provision of this lease shall be valid and enforceable to the
fullest extent permitted by law.

                  35.03 This lease shall be governed in all respects by the laws
of the State of New Jersey.

                  35.04 Wherever in this lease it is specifically provided that
Landlord's consent or approval shall not be unreasonably withheld, such consent
or approval shall not be unreasonably delayed. If Landlord shall refuse such
consent or approval, Tenant in no event shall be entitled to make, nor shall
Tenant make, any claim, and Tenant hereby waives any claim, for money damages
(nor shall Tenant claim any money damages by way of set-off, counterclaim or
defense) based upon any claim or assertion by Tenant that Landlord unreasonably
withheld or unreasonably delayed its consent or approval. Tenant's sole remedy
shall be an action or proceeding to enforce any such provision, for specific
performance, injunction or declaratory judgment.

                                   Article 36

                                  Parties Bound

                                      -41-
<PAGE>

                  36.01 The obligations of this lease shall bind and benefit the
successors and assigns of the parties with the same effect as if mentioned in
each instance where a party is named or referred to, except that no violation of
the provisions of Article 9 shall operate to vest any rights in any successor or
assignee of Tenant and that the provisions of this Article shall not be
construed as modifying the conditions of limitation contained in Article 25.
However, the obligations of Landlord under this lease shall not be binding upon
Landlord herein named with respect to any period subsequent to the transfer of
its interest in the Building as owner or lessee thereof and in event of such
transfer said obligations shall thereafter be binding upon each transferee of
the interest of Landlord herein named as such owner or lessee of the Building,
but only with respect to the period ending with a subsequent transfer within the
meaning of this Article.

                  36.02 If Landlord shall be an individual, joint venture,
tenancy in common, copartnership, unincorporated association, or other
unincorporated aggregate of individuals and/or entities or a corporation, Tenant
shall look only to such Landlord's estate and property in the Building (or the
proceeds thereof) and, where expressly so provided in this lease, to offset
against the rents payable under this lease, for the satisfaction of Tenant's
remedies for the collection of a judgment (or other judicial process) requiring
the payment of money by Landlord in the event of any default by Landlord
hereunder, and no other property or assets of such Landlord or any partner,
member, officer or director thereof, disclosed or undisclosed shall be subject
to levy, execution or other enforcement procedure for the satisfaction of
Tenant's remedies under or with respect to this lease,. the relationship of
Landlord and Tenant hereunder or Tenant's use or occupancy of the Demised
Premises.

                                   ARTICLE 37

                      Certain Definitions And Construction

                  37.01 For the purposes of this lease and all agreements
supplemental to this lease, unless the context otherwise requires the
definitions set forth in Exhibit E annexed hereto shall be utilized.

                  37.02 The various terms which are italicized and defined in
other Articles of this lease or are defined in Exhibits annexed hereto, shall
have the meanings specified in such other Articles and such Exhibits for all
purposes of this lease and all agreements supplemental thereto, unless the
context shall otherwise require.

                                   ARTICLE 38

                  Adjacent Excavation And Construction-Shorinq

                  38.01 If an excavation or other substructure work shall be
made upon land adjacent to the Demised Premises, or shall be authorized to be
made, Tenant shall afford to the person causing or authorized to cause such
excavation, license to enter upon the Demised Premises for the purpose of doing
such work as shall be necessary to preserve the wall of or the Building from
injury or damage and to support the same by proper foundations without any claim
for damages or indemnity against Landlord, or diminution or abatement of rent.

                                   ARTICLE 39

                      Supplemental Air Conditioning Systems

                  39.01 Landlord agrees that Tenant may install, at Tenant's own
cost and expense, an additional Air Conditioning system, including a separate
water riser and cooling tower (the "Supplemental Air Conditioning System"), to
enable Tenant to receive up to an additional twenty (20) tons of Air
Conditioning for the Demised Premises subject to and in accordance with the
provisions of this Article 39. The costs of installation, maintenance and
operation of the Supplemental Air Conditioning System shall be borne by Tenant.

                                      -42-

<PAGE>

                  39.02 Tenant may, at its sole cost and expense, connect its
Supplemental Air Conditioning System to Landlord's condenser water riser or the
separate water riser attached to Tenant's separate cooling tower, as the case
may be, at a location designated by Landlord, which connection shall be subject
to Landlord's prior written approval. If Tenant connects to Landlord's condenser
water riser, Landlord shall furnish condenser water through its risers for use
by Tenant in connection with its Supplemental Air Conditioning System on such
days as same is being produced for the operation at the Building's
air-conditioning system and available for distribution to tenants, during
"regular hours" (that is between the hours of 8:00 a.m. and 6:00 p.m.) of
"business days" (which terms are used herein to mean all days except Saturdays,
Sundays and holidays observed by the Federal or New York State Government as
legal holidays) for Tenant's Supplemental Air Conditioning System and in such
event, Tenant covenants and agrees to pay Landlord for its use of condenser
water at the rate of twenty cents (20(cent)) (the "Base Rate") per rated ton of
cooling capacity of the Air Conditioning system installed by Tenant for every
hour of usage thereof as measured by clocks or other devices satisfactory to
Landlord and installed by Tenant at Tenant's sole cost and expense. The rate
shall be subject to adjustment for increases in the cost to Landlord in
connection with the creating and furnishing of condenser water over the costs
which exist as of the date hereof. In the event that either (a) a separate water
riser and cooling tower is installed and Landlord shall supply condenser water
to Tenant's Supplemental Air Conditioning System during the business hours
and/or after hours of operation thereof, or (b) Tenant requires condenser water
through Landlord's water risers for the after hours operation of Tenant's Air
Conditioning system, Landlord shall furnish such condenser water to Tenant and
Tenant shall pay Landlord for Tenant's use of condenser water at the rate then
charged by Landlord for furnishing condenser water to tenants of the Building,
for supplemental Air Conditioning use (including any surcharge then charged by
Landlord for the provision of such service after hours not to exceed fifteen
(15%) percent of Landlord's Cost) per rated ton of cooling capacity of the Air
Conditioning equipment installed by Tenant for every hour of usage thereof, as
measured by clocks or other devices satisfactory to Landlord and installed at
Tenant's sole cost and expense as a part of the installation of Tenant's
Supplemental Air Conditioning System but in no event less than the Base Rate as
from time to time adjusted as aforesaid. All payment due under this Section
shall be payable by Tenant within ten (10) days after receipt of a demand from
Landlord therefor and shall be deemed to constitute additional rent payable
under this lease. Tenant may, at its sole cost and expense connect to Landlord's
Building waste lines in connection with the operation of the Supplemental Air
Conditioning System and the manner of such connection shall be subject to
Landlord's prior written approval. All facilities, machinery and equipment
relating to the Supplemental Air Conditioning System shall be connected by
Tenant and operated by Tenant solely at Tenant's cost and expense. All such
facilities, except the cooling tower and condenser water riser, if installed by
Tenant, shall be installed by Tenant solely within the Demised Premises.
Tenant's Air Conditioning facilities, equipment and machinery shall be
water-cooled in design and operation. Tenant's blowers, chilling equipment, fans
and other facilities, equipment and machinery used in connection with Tenant's
Supplemental Air Conditioning System shall operate on electricity purchased by
Tenant in accordance with the provisions of Article 16 of this lease. Prior to
installing any facilities, equipment, machinery and ducts in connection with the
Supplemental Air Conditioning System or commencing any work in connection
therewith, Tenant shall submit to Landlord plans and specifications for the work
to be done for Landlord's approval. In performing any work or making any
installation in connection with the Supplemental Air Conditioning System after
the Commencement Date, Tenant shall comply with and be bound by the provisions
of Article 13 of this lease. All facilities; equipment, machinery and ducts
installed by Tenant in connection with the Supplemental Air Conditioning System
and the connection to Landlord's condenser water and waste lines shall (a) be
subject to Landlord's prior written approval which shall not be unreasonably
withheld or delayed, (b) comply with Landlord's reasonable requirements as to
installation, maintenance and operation, and (c) comply with all other terms,
covenants and conditions of this lease applicable thereto. Tenant agrees at all
times to cooperate fully with Landlord and to abide by all the regulations and
requirements which Landlord may reasonably prescribe for the proper functioning
and protection of said facilities.

                  IN WITNESS WHEREOF, Landlord and Tenant have duly executed
this lease as of the day and year first above written.


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

                                      -43-
<PAGE>

STATE OF NEW YORK   )
                    ) ss.:
COUNTY OF NEW YORK  )

            On this ____ day of July, 1986, before me personally came
________________________, to me known who, being by me duly sworn, did depose
and say that he resides in ____________________________ ; that he is the
____________________ of PHILIPP BROTHERS CHEMICALS, INC., the corporation
described in and which executed the foregoing instrument; as TENANT; and that he
signed his name thereto by order of the board of directors of said corporation,
by like order.


                                                   ----------------------------
                                                            Notary Public

                                      -44-
<PAGE>

                                    EXHIBIT A

                                   DESCRIPTION


               ALL that certain lot, piece or parcel of land, situate, lying
and being in the Town of Fort Lee, County of Bergen and State of New Jersey,
bounded and described as follows:

               BEGINNING at a point where the Northeasterly right of way line
of Lewis Street (50 feet wide) intersects the Northwesterly right-of-way line of
Linwood Avenue (50 feet wide) and running Thence:

               1.   Along the Northeasterly right-of-way line of Lewis Street,
                    North 51 degrees 22 minutes 11 seconds West, 539.80 feet to
                    a point; Thence

               2.   Along the Southeasterly right-of-way line of Fletcher
                    Avenue (60 feet wide), North 38 degrees 43 minutes 09
                    seconds East, 54.43 feet to a point of curvature; Thence

               3.   Along the Southerly line of Kelby Street (50 feet wide),
                    Northeasterly and Southeasterly on a curve to the right
                    having a radius of 106.82 feet, an arc length of 122.46 feet
                    to a point of curvature; Thence

               4.   Still along the same, Southeasterly on a curve to the
                    right having a radius of 548.78 feet, an arc length of
                    232.02 feet to a point of tangency; Thence

               5.   Still along the same, South 51 degrees 22 minutes 11 seconds
                    East, 206.01 feet to a point of curvature; Thence

               6.   Southeasterly and Southerly on a curve to the right having
                    a radius of 42.00 feet, an arc length of 66.63 feet to a
                    point of tangency; Thence

               7.   Along a widened section of Linwood Avenue South 39 degrees
                    31 minutes 19 seconds West, 7.37 feet to a point; Thence

               8.   South 51 degrees 22 minutes 11 seconds East, 3.00 feet to
                    a point; Thence

               9.   Along the widened section of Linwood Avenue, South 37
                    degrees 13 minutes 46 seconds West, 50.00 feet to a point;
                    Thence

               10.  South 51 degrees 22 minutes 11 seconds East, 1.00 feet to
                    a point; Thence

               11.  Along the right of way line of Linwood Avenue (50 feet
                    wide), South 39 degrees 31 minutes 19 seconds West, 100.00
                    feet to the point or place of Beginning.


                              Reverse to "positive"


                                      -45-
<PAGE>




                                [GRAPHIC OMITTED]




                                      -46-

<PAGE>

                                    EXHIBIT C

                                   WORK LETTER


PART A:           Tenant's Plan; Specifications and Drawings:

                  1. On or before the dates listed below, Tenant shall, at its
sole cost and expense, prepare and submit to Landlord, for Landlord's approval,
the following descriptive information, detailed architectural drawings and
specifications and detailed information in connection with mechanical and
engineering drawings to be prepared byo Landlord (herein referred to as
"Tenant's Plans") for any work to be done by Landlord under Parts B or D hereof
in connection with Tenant's layout of the Demised Premises, which Tenant's Plans
shall be prepared by an architect or space planner designated by Landlord at
Tenant's sole cost and expense:

                  Phase 1: On or before July 25, 1986:

                  Preliminary architectural drawings including:

                  (a)  Location, loads and dimensions of telephone equipment
rooms.

                  (b)  Partition locations and type.

                  (c)  Door Locations, size and type, hardware schedule.

                  (d)  Reflected ceiling plans.

                  (e)  Any structural architectural installations.

                  (f)  Cabinet work and any other information affecting other
trades.

                  (g)  Non-building standard ceiling heights and/or materials,
and any other information not specified in Phases 2 and 3 below.

                  Phase 2: On or before July 30, 1986:

                  1.   Detailed information required by Landlord in connection
with final mechanical and engineering drawings to be prepared by Landlord
including:

                  (a)  Total electrical load, including lighting for entire
space and location of electrical and telephone outlets, and showing amount and
location of areas requiring loads in excess of Building Standard.

                  (b)  Air Conditioning loads.

                  (c)  specific plumbing requirements, including plans,
specifications and sections.

                  2.   Final Architectural working drawings f or the items set
forth in Phase 1.

                  Phase 3: On or before August 8, 1986:

                  (a)  Decorative plans, including paint schedule, floor
coverings and wall coverings.

                  (b)  Non-structural architectural detailing.

                                      -47-

<PAGE>

                  1. Utilizing the information shown on Tenant's Plans, Landlord
 shall cause mechanical and structural plans to be prepared at Tenant's sole
 cost and expense.

                  2. All plans and specifications for all work to be performed
in and to the Demised Premises (including, without limitation, Tenant's Plans)
are subject to Landlord's prior written approval, which shall not be
unreasonably withheld. Within ten (10) days after notification from Landlord of
any objections to Tenant's Plans, Tenant shall submit to Landlord new plans (the
"Revised Tenant's Plans") curing Landlord's objections. If Tenant's Plans, the
Revised Tenant's Plans or Revisions (as hereinafter defined) require any
materials, services, or installations that will result in a delay in
construction, Landlord may reject those items of Tenant's Plans, the Revised
Tenant's Plans or Revisions which will occasion such delay. Tenant shall pay to
Landlord, as additional rent, within five (5) days after submission to Tenant of
a statement therefor, the costs incurred by Landlord for review of Tenant's
Plans, Revised Tenant's Plans and Revisions.

                  3. Tenant's Plans and the Revised Tenant's Plans shall comply
with and conform to the plans of the Building filed with the Department of
Buildings of the Town of Fort Lee, and with all rules, regulations and/or other
requirements of any governmental department having jurisdiction over the
construction of the Building and/or the Demised Premises. Landlord shall, at
Tenant's expense, file all necessary architectural plans, together with any
mechanical plans and specifications, in such form (building notice, alteration,
or other form) as may be necessary, with the appropriate governmental agencies.
Any changes required by any governmental department affecting the construction
of the Building and/or the completion of the Demised Premises shall be complied
with by Landlord in completing the construction of the Building and/or the
completion of the Demised Premises and shall not be deemed to be a violation of
Tenant's Plans or the Revised Tenant's Plans or any provisions of this Work
Letter. Landlord agrees, that prior to making any changes required by any
governmental department to notify Tenant thereof and to provide Tenant with any
alternative changes that are acceptable to such governmental department. If such
governmental department has given such alternative changes to Landlord, Tenant
may designate, within five (5) days after Landlord's notice to Tenant thereof,
which alternative that it desires Landlord to utilize for such change. If the
governmental department fails to give Landlord alternatives for changes or
Tenant fails to notify Landlord which alternative that it desires Landlord to
utilize within said five (5) day period, then such changes shall be made by
Landlord as required or the alternative selected by Landlord, as the case may
be, shall not be deemed a violation of Tenant's Plans, Revised Tenant's Plans or
any provisions of this Work Letter and shall be deemed automatically accepted
and approved by Tenant and shall, subject to Tenant's prior approval which shall
not be unreasonably withheld, provided that Tenant's approval shall be deemed
granted if Tenant fails to disapprove such changes within five (5) days after
Landlord's notice to Tenant requesting such approval, Tenant's approval shall be
deemed given. Additionally, any change in the base Building or any compliance
with any rules, regulations and/or other requirements of any governmental agency
having jurisdiction necessitated by Tenant's Plans or the Revised Plans (whether
such change or compliance is required prior to or during the course or after
completion of the work to be performed in the Demised Premises and whether or
not Landlord shall have previously approved such Tenant's Plans or the Revised
Tenant's Plans) shall be accomplished at Tenant's sole cost and expense. The
granting by Landlord of its approval to Tenant's Plans or the Revised Tenant's
Plans shall in no manner constitute or be deemed to constitute a judgment or
acknowledgment by Landlord as to their legality or compliance with governmental,
quasi-governmental or other requirements.

                  4. Tenant shall have the right to make changes from time to
time in Tenant's Plans or the Revised Tenant's Plans (other than changes
necessitated by Landlord's objections) by submitting to Landlord revised plans
and specifications (herein referred to as the "Revisions"). All Revisions shall
be subject to Landlord's prior written approval, which shall not be unreasonably
withheld. Upon receipt and approval of any Revisions, Landlord shall submit the
Revisions so approved to the contractors or subcontractors performing the trade
or trades involved in the Revisions, and, if applicable and as requested by
Tenant, obtain and deliver to Tenant "Estimates (as such term is defined in Part
D) in connection therewith. The cost of any Revisions shall be borne solely by
Tenant and shall be subject to the "Contractors Fee" (as such term is defined in
Part D). Landlord shall have the right to disapprove any Revisions that would,
in Landlord's reasonable opinion, delay the Commencement Date, unless, in
conjunction with submitting the same, Tenant agrees in a writing satisfactory to
Landlord to commence to pay the

                                      -48-

<PAGE>

rental reserved under the Lease on the date upon which the Commencement Date
would have occurred but for Landlord's performance of the Revisions.

                  5. Any architect, space planner and engineer that Tenant
elects or is required to utilize shall be subject to the prior written approval
of Landlord, which approval shall not be unreasonably withheld or delayed.

                  6. All amounts payable by Tenant for work to be done by
Landlord pursuant to this Work Letter shall be paid by Tenant within five (5)
days after the submission to Tenant of statements, bills or invoices therefore.
Such statements, bills or invoices shall be conclusive and binding on Tenant
unless Tenant shall notify Landlord within thirty (30) days after its receipt of
such statement, bill or invoice that it disputes the correctness thereof,
specifying the particular respects in which the statement, bill or invoice is
claimed to be incorrect. Pending the resolution of such dispute by agreement
between the parties or otherwise, Tenant shall pay all amounts due in accordance
with the statement, bill or invoice, but such payment shall be without prejudice
to Tenant's right to dispute same. If the dispute shall be resolved in Tenant's
favor, Landlord shall, within five (5) days after Tenant's demand pay Tenant the
amount of the overpayment, if any, resulting from Tenant's compliance with such
statement, bill or invoice.




                                      -49-

<PAGE>

PART B:

                  Landlord shall provide and install the following facilities
and materials and complete the following work as part of "Landlord's Work" (as
hereinafter defined) in accordance with Tenant's Plans or the Revised Tenant's
Plant For purposes of this lease, "Landlord's Work" shall be:

                  1.       Partitions:

                  lA)      Interior Office Partitions

                  Furnish and install drywall partitioning with 2-1/2" metal
studs and Building Standard gypsum board where designated by Lessee but limited
to the lineal footage equal to 50 lineal feet per 1,000 square feet of the
Lessee's rentable area as outlined in the Lease. Interior office partitions as
hereinafter defined shall extend from floor to underside of ceiling tiles. Any
jogs, curves, or angles in any partition is not included.

                  1B)      Demising Wall Partitions

                  Furnish and install drywall partitioning between Lessees, and
between Lessee and corridors; with 2-1/2" metal studs and gypsum board. Amount
of lineal footage shall be equal to 75 lineal feet of demising wall partitions
per 5,000 rentable square feet. These partitions shall extend from floor to
underside of slab above.
Partitions shall include insulation.

                  2.       Doors:

                  2A)      Interior Doors

                  Furnish and install one (1) Building Standard door and frame
complete with latch set for each 40 lineal feet of partition as outlined in Item
1(A).

                  Doors within tenant space to be 3'O" x 7'0" solid wood, stain
grade, KD frame. No special undercutting shall be provided. Latchset to be
Corbin 863 x410 or equal as selected by Landlord.

                  2B)      Entrance Doors

                  Furnish and install one (1) Building Standard single door and
frame including closer and lockset, masterkeyed to Building System for each
10,000 rentable square feet of Tenant's area as outlined in lease.

                  Entrance door to be 3'0" x 9'0" solid core white oak.

                  Lockset to be Corbin (lever type) or equal as selected by
Landlord. Closer to be Corbin or equal as selected by Landlord.

                                      -50-

<PAGE>

                  3.       Painting:

                  a.       Interior wall surfaces required to be furnished by
Landlord hereunder shall receive one (1) coat of primer and one (1) coat of
Building Standard color paint.

                  b.       Wood doors required to be furnished by Landlord
hereunder will receive one (1) coat of primer and one (1) coat of Building
Standard color paint.

                  c.       Metal doors required to be furnished by Landlord
hereunder not having baked enamel finish shall receive two (2) coats of Building
Standard enamel paint over one (1) coat of primer.

                  d.       Paint manufacturer to be utilized is Benjamin Moore
or equal.

                  4.       Flooring:

                  a.       An allowance of $10.00 per square yard will be given
to Tenant towards the purchase and installation of carpet and base in areas
where VAT is not installed by Landlord, which shall be allowed to Tenant even if
Tenant furnishes and installs carpet as provided in Section 4(d) hereof.

                  b.       Deleted prior to execution.

                  c.       Supply rooms, telephone and equipment rooms, and
mailrooms will receive vinyl asbestos tile and base to be selected from
Landlord's supplier. An allowance of seventy-five (75) cents per square foot
will be given towards this purchase.

                  d.       Tenant shall have the right, upon reasonable advance
notice to Landlord, to furnish and install all carpet in the Demised Premises as
Rejected Tenant's Work was such term is hereinafter defined).

                  5.       Lighting:

                  a.       Furnish and install one (1) Building Standard light
fixture per 80 rentable square feet. Landlord shall supply and install initial
lamps and ballasts, and Tenant will be responsible for the furnishings and
installations of any and all additional lamps and ballasts.

                  b.       Building Standard light fixture is Keystone
#2A440-EXA-GW-SH-277 with energy saving ballast and energy saving lamps.

                  6.       Heating, Ventilating and Air Conditioning:

                  a.       Furnish and install Building Standard air
conditioning outlets at one (1) diffuser per 200 rentable square feet of
enclosed office area. There will be no credits towards additional diffusers if
the enclosed office areas are less than 200 square feet.

                                      -51-

<PAGE>

                  b.       Furnish and install Building Standard diffusers at
three (3) diffusers per 1,000 rentable square feet open space.

                  c.       Building Standard diffusers are 24" x 24" lay-in
grills and/or registers connected to a 6" duct.

                  d.       If Tenant's equipment (i.e. computers, etc.) requires
air conditioning above and beyond Building Standard, said additional air
conditioning, including cost of operation as stipulated in the lease) shall be
paid for by Tenant as an extra cost. Any special exhaust requirements will also
be an extra cost to be paid by Tenant.

                  e.       Landlord will provide one (1) smoke exhaust fan per
tenant.

                  7.       Electrical:

                  a.       Furnish and install one (1) Building Standard duplex
receptacle per 125 rentable square feet. The aforesaid outlets are to be located
only in the ceiling high partitions at Building Standard mounting heights. The
Building proper will contain wires, risers, conduits, feeders and panel
equipment necessary to furnish the premises with electrical energy in an amount
equal to (i) 2.2 watts per rentable square foot of space for lighting and (ii)
1.8 watts per rentable square foot of space for other electrical consumption.

                  8.       Switches:

                  a.       Furnish and install Building Standard switches to
service ceiling fixtures as required by the underwriters code at one switch per
room.

                  9.       Life Safety System:

                  a.       Full floor tenants (occupying floors 7 through 18)
will be provided with 132 sprinkler heads per floor, which may be pre-installed.
Tenants leasing a partial floor will be provided only with the sprinklers
pre-installed in Tenant's space. Revisions to pre-installed sprinkler systems
required by any tenant, and any work required to be performed as a result of
such revisions, including without limitation, removal, revision and/or
reinstallation of any ceiling tiles and/or ceiling grids, shall be at Tenant's
expense.

                  10.      Telephone Service:

                  a.       The Landlord shall arrange with New Jersey Bell
Telephone Company for telephone service within the equipment room in the
building core.

                  b.       All telephone work and wiring in partitions, floors,
and ceilings to be arranged for by Tenant with New Jersey Bell Telephone Company
or other qualified installer selected by Tenant.

Non-completion of the telephone work will not delay Tenant's acceptance of the
demised premises or the payment of rent. All electrical load centers, special
wiring, and plywood supplied by Landlord for telephone equipment shall be an
extra cost to be paid by Tenant.

                  11.      Window Covering:

                  a.       Furnish and install Building Standard horizontal
blinds with color as established by Landlord for all exterior windows. No
substitutions are permitted.

                  12.      Ceiling:

                                      -52-
<PAGE>

                  a.       Lay-in tile ceilings shall be 24" x 48" exposed
 T spline.

                  b.       Ceiling heights to be 9'O" on office floors.

                  As used in this Work Letter, the term "Building Standard"
shall mean such materials as Landlord may elect to use as part of its standard
construction substantially throughout the Building.

PART C:           Substitutions and Credits

                  1.       Tenant may request that Landlord substitute alternate
materials, equipment and fixtures for those specified in Part B provided that
such substitute items are new and are of a quality at least comparable to those
replaced. In addition, Tenant may request that Landlord omit the installation of
any item or items not theretofore installed, in which event Landlord shall
thereupon be released from any obligation to install the same at any time
thereafter.

                  2.       If, upon Tenant's request, Landlord shall utilize
materials, or install equipment or fixtures, other than those described in Part
B, Tenant shall pay to Landlord, on demand as additional rent under the Lease,
an amount equal to the sum of (a) Landlord's Cost (as hereinafter defined) for
the substitute item, plus (b) an amount equal to Landlord's cost for its
overhead for administration and handling of the substitution, not to exceed
fifteen (15%) percent of Landlord's Cost. Notwithstanding such payment by
Tenant, the substitute item shall be and remain the property of Landlord and
shall not be removed by Tenant either before or after the Expiration Date.

                  3.       In the event that, upon Tenant's request, Landlord
shall omit the installation of any item or items described in Part B, whether by
reason of substitution or otherwise, Landlord, subject to the further provisions
of this paragraph 3, shall credit the amount, if any, allowed to Landlord by
Landlord's materialmen for returning such item or items against any amounts due
to Landlord in connection with the substitution of other item or items therefor
or in connection with Landlord's installation of any additional item or items of
like kind pursuant to the terms of Part D and such credits shall be allowed only
after such amounts due to Landlord have been determined. In no event, however,
shall Landlord (a) pay any cash credit to Tenant, (b) allow a credit to Tenant
against fixed or additional rent (except as otherwise set forth in this
paragraph 3), (c) allow a credit to Tenant against amounts due to Landlord for
the installation of any substitute or additional item or items of a kind,
nature, or character different from that omitted, (d) allow a credit to Tenant
for such omitted item in an amount to exceed the amount allowed or credited to
Landlord by the materialmen furnishing the omitted item upon a return or non-
utilization thereof or (e) allow a credit to Tenant of any kind for partitioning
omitted or otherwise not installed.

                  4.       For purposes of this Work Letter, "Landlord's Cost"
shall mean amounts charged by Landlord's contractor; subcontractors and
materialmen for furnishing and installing any item or performing any work,
including, without limitation, labor costs and costs for general conditions in
connection therewith (which general conditions shall include, without
limitation, rubbish removal, hoisting and other items generally included within
the term "general conditions" in the Metropolitan New York Area.

PART D:           Landlord's Performance of Items of Tenant's Work:

                  1.       If Tenant shall desire that Landlord perform any work
(the "Tenant's Work") in and to the Demised Premises in addition to the work set
forth in Part B same shall be clearly identified in Tenant's Plans or the
Revised Tenant's Plans submitted by Tenant for such work pursuant to Part A.
With reasonable dispatch, but not more thin sixty (60) days after receipt of
such request and plans, Landlord shall notify Tenant as to whether Landlord
agrees to perform all or any part of the Tenant's Work, which notice shall be
sent to Tenant together with Landlord's written estimates (the "Estimates") of
the cost of those parts of the Tenant's Work which Landlord is willing to
perform (the "Acceptable Tenant's Work"). Within ten (10) working days after
Tenant's receipt of the Estimates, Tenant shall notify Landlord in writing as to
which of the Estimates it accepts and desires that Landlord proceed with the
Acceptable Tenant's Work covered by the acceptable Estimates. If Tenant shall
fail to respond to all Estimates within such ten (10) working day period, then
(a) the Estimates not accepted by Tenant shall be

                                      -53-

<PAGE>

deemed disapproved in all respects by Tenant, (b) Landlord shall not be
obligated to proceed on any of the Acceptable Tenant's Work including the items
covered by Estimates acceptable to Tenant (in which event Landlord shall send
Tenant a notice (the "Rejection Notice") indicating the items of Acceptable
Tenant's Work as to which Landlord refuses to proceed), and (c) Tenant shall
perform all of the Acceptable Tenant's Work which Landlord will not perform as
well as the balance of the Tenant's Work, or Tenant will cause the same to be
performed, through its own contractors or subcontractors in accordance with the
terms of Part E. Notwithstanding anything in this Work Letter to the contrary,
any Tenant's Work involving items relating to any of the Building systems or
which will be physically attached to the Demised Premises or portions thereof
(including, without limitation built-in cabinetry and similar items) and items
that will be electrified or have electrical wiring or equipment running through
or attached to same (all such items are hereafter referred to as "Required
Items"), must be requested by Tenant to be performed by Landlord and if Landlord
agrees to perform same, such work must be performed by Landlord and Tenant may
not elect to have same performed by another party or parties, and, with respect
to such Required Items, the provisions of Part D l.(c), shall not be applicable.

                  2.       If Landlord shall agree, and Tenant shall authorize
Landlord, to perform any Acceptable Tenant's Work as provided in paragraph 1
above, Landlord shall perform such Acceptable Tenant's Work for the account of
Tenant, and Tenant shall pay Landlord therefor, as additional rent under the
Lease, an amount equal to the sum of (a) Landlord's Cost of performing such
Acceptable Tenant's Work , plus (b) a "Contractors Fee", which shall be an
amount equal to Landlord's Cost for its overhead and supervision for the
administration of the performance of such Acceptable Tenant's Work by Landlord
and/or its contractor not to exceed fifteen (15%) percent of Landlord's Cost.
Landlord or its contractor may submit monthly statements to Tenant for sums due
to it under this paragraph 2, for such Acceptable Tenant's Work performed by
Landlord or the contractor to date and/or for materials delivered to the job
site during the previous month, and the same shall be payable by Tenant to
Landlord or its designee within five (5) days thereafter.

PART E:   Tenant's Performance of Items of Tenant's Work:

                  1.       Landlord shall permit Tenant and its agents to enter
upon the Demised Premises prior to the Commencement Date so that Tenant may
perform, through its own contractors (to be first approved in writing by
Landlord) and in accordance with Tenant's Plans or the Revised Tenant's Plans
(as approved in writing by Landlord in accordance with Part A hereof), that
portion of Tenant's Work (the "Rejected Tenant's Work") which is other than
Acceptable Tenant's Work covered by Estimates approved by Tenant in accordance
with paragraph 1 of Part D and which items were not covered in the Rejection
Notice and are not Required Items. The approved contractors performing the
Rejected Tenant's Work may perform the Rejected Tenant's Work at the same time
that Landlord's contractors are working in the Demised Premises, provided,
however, that (a) the construction of the Building and of the Demised Premises,
and all installations required to be made by Landlord therein, shall have
reached a point at which, in Landlord's sole judgment, the performance of the
Rejected Tenant's Work will not delay or hamper Landlord in the completion of
the same and (b) Tenant and its contractors shall work in harmony and shall not
interfere with Landlord, Landlord's contractors, any other tenant, or such
tenants' contractors. Landlord may, at any time, deny access to the Demised
Premises to Tenant and/or to any of its contractors in the event that Landlord
shall, in its sole discretion, determine that the performance or manner of
performance of the Rejected Tenant's Work interferes with, delays, hampers, or
prevents Landlord from proceeding with the completion of the construction of the
Building and/or the completion of the Demised Premises or the Acceptable
Tenant's Work at the earliest possible time. Within twenty-four (24) hours after
Landlord's direction (which need not be given in writing and may be given by
Landlord or its agents or contractors to Tenant or its agents or contractors),
Tenant shall, and cause its contractors to, withdraw from the Building and the
Demised Premises and cease all work being performed by it or on its behalf by
any person, firm, or corporation (other than Landlord). Tenant shall pay to
Landlord, as additional rent, within five (5) days after submission to Tenant of
a statement therefor, an amount equal to all costs incurred by Landlord or its
contractor or otherwise, in connection with such early entry by Tenant
including, without limitation, costs for utilities, freight elevator service and
hoisting. All requests for any utility or freight elevator service or hoisting
shall be made by Tenant in writing.

                                      -54-
<PAGE>

                  2.       In the event that Tenant shall be permitted to enter
upon the Demised Premises prior to the Commencement Date pursuant to the terms
of paragraph 1 above, such entry shall be deemed to be upon all of the terms,
provisions and conditions of the Lease, except as to the covenant to pay fixed
rent and additional rent payable under Article 5 of this lease. In connection
therewith, Tenant and/or its contractors shall provide to Landlord, and shall
maintain at all times during the performance of any Rejected Tenant's Work,
worker's compensation, public liability and property damage insurance policies,
all of which shall contain limits, be with companies and be in form satisfactory
to Landlord. Certificates of the same shall be furnished to Landlord before
Tenant or its contractors commence to perform the Rejected Tenant's Work.
Landlord shall not be liable in any way for any injury, loss or damage that may
occur to any of Tenant's or Tenant's contractors' decorations, fixtures,
installations, supplies, materials, or equipment prior to the Commencement Date;
any such entry by Tenant and/or its contractors being at their sole risk.

                  3.       To the extent that Tenant shall perform the Rejected
Tenant's Work pursuant to the terms of paragraph 1, whether on or prior to the
Commencement Date or thereafter, Tenant shall pay to Landlord, upon demand, as
additional rent under the lease and in addition to Landlord's contractor
charges, an amount equal to the sum of (a) the cost to Landlord for rubbish
removal, hoisting and similar items in connection with the Rejected Tenant's
Work, plus (b) an amount equal to Landlord's cost for overhead and supervision
of the Rejected Tenant's Work, not to exceed the product of (i) fifteen (15%)
percent and (ii) the amounts charged by the subcontractors and materialmen for
the furnishing and installation of items of Rejected Tenant's Work including,
without limitation, general conditions (as defined in Part C 4. hereof) in
connection therewith. In connection with the Rejected Tenant's Work, no
equipment or materials shall be delivered to, or removed from, the Building or
the Demised Premises by Tenant or its contractor during business days between
the hours of 8:00 A.M. and 3:30 P.M. without the prior written authorization, in
each instance, of Landlord or its agent.

PART F:  Delays Caused By Tenant: Additional Expenses:

                  Tenant has been advised of the importance to Landlord of
completing the construction of the Building and completing the Demised Premises
as quickly as possible and of the great financial loss to Landlord that would
result from a delay in such completion. If Tenant, or persons within Tenant's
control, delays the progress of completion of work required to be performed by
Landlord hereunder or which Landlord has agreed to perform hereunder or pursuant
to any separate agreement by (i) failing to submit to Landlord, within the time
period set forth in Part A hereof, any phase of Tenant's Plans, or failing to
approve any Estimates or failing to make necessary revisions in Tenant's Plans
or the Revised Tenant's Plans within the time required or delaying any
selections of materials to be made by Tenant or (ii) submitting one or more
Revisions to Landlord or (iii) requesting materials, finishes or installations
other than Building standard, provided Landlord uses reasonable dispatch in
obtaining Estimates as provided in Paragraph 1 of Part D or (iv) otherwise
interfering with, or delaying, Landlord's completion of the construction of the
Building or the completion of the Demised Premises, then the date of substantial
completion of the Demised Premises shall be deemed to be the date (the
"Completion Date") upon which the Demised Premises would have been substantially
completed but for the acts or omissions of Tenant or persons within Tenant's
control, and Tenant shall reimburse Landlord for an amount equal to what the
fixed and additional rent for the period of such delay would have been had the
Lease commenced on the Completion Date within five days after submission of a
bill therefor, whether or not this lease has commenced. In addition, in the
event the occurrence of any of the events sets forth in (i) - (iv) above results
in any additional expenses to Landlord relating to the sequence in which any of
the work to be done by Landlord under this Work Letter is accomplished, such
additional expenses shall be borne solely by Tenant and shall be paid within
five (5) days after submission of a bill therefor, whether or not this lease has
commenced. The above provisions shall be in addition to, and not in limitation
of, any other rights that Landlord shall have under this lease or at law.
Landlord agrees to notify Tenant of any delays set forth in (i) - (iv) above
with reasonable promptness after Landlord's learning of such delay.

                  In the event that Landlord, in connection with the performance
of any Landlord's Work or Acceptable Tenant's Work, is required to utilize
overtime help either (a) by reason of industry or trade conditions or union
requirements or (b) in order to facilitate, in Landlord's reasonable discretion,
the timely and orderly

                                      -55-
<PAGE>

completion of Landlord's Work or Acceptable Tenant s Work, Tenant shall pay to
Landlord, within five (5) days of demand therefor, the additional cost to
Landlord of such overtime help.

PART C:  Landlord's Payment of a Portion of Acceptable Tenant's Work:

                  Landlord agrees that it will pay up to the sum of (i) fifty
(50%) percent of Landlord's Cost of furnishing items 5, 6, 7, 9, 11 and 12(a) of
Landlord's Work as set forth in Part B of this Work Letter, plus (ii)
$272,772.00 on account of Acceptable Tenant's Work to be performed in the
Demised Premises ("Landlord's Contribution"). In the event Tenant fails to spend
the entire amount of Landlord's Contribution on account of Acceptable Tenant's
Work, fifty (50%) percent of the remaining balance shall be paid to Tenant
within sixty (60) days after the completion of Landlord's Work and any
Acceptable Tenant's Work performed by Landlord in the Demised Premises,
whereupon Landlord shall have no further obligation or liability to Tenant with
respect to Landlord's Contribution.


                                      -56-
<PAGE>

                                    EXHIBIT D

                              RULES AND REGULATIONS


                  1.       The rights of tenants in the entrances, corridors and
elevators of the Building are limited to ingress to and egress from the tenants'
premises for the tenants and their employees, licensees and invitees, and no
tenant shall use, or permit the use of, the entrances, corridors, or elevators
for any other purpose. No tenant shall invite to the tenant's premises, or
permit the visit of, persons in such numbers or under such conditions as to
interfere with the use and enjoyment of any of the entrances, corridors,
elevators and other facilities of the Building by other tenants. Fire exits and
stairways are for emergency use only, and they shall not be used for any other
purpose by the tenants, their employees, licensees or invitees. No tenant shall
encumber or obstruct, or permit the encumbrance or obstruction of any of the
sidewalks, entrances, corridors, elevators, fire exits or stairways of the
Building. The Landlord reserves the right to control and operate the public
portions of the Building and the public facilities, as well as facilities
furnished for the common use of the tenants, in such manner as it deems best for
the benefit of the tenants generally.

                  2.       The Landlord may refuse admission to the Building
outside of ordinary business hours to any person not known to the watchman in
charge or not having a pass issued by the Landlord or the tenant whose premises
are to be entered or not otherwise properly identified, and may require all
persons admitted to or leaving the Building outside of ordinary business hours
to register. Any person whose presence in the Building at any time shall, in the
judgment of the Landlord, be prejudicial to the safety, character, reputation
and interests of the Building or of its tenants may be denied access to the
Building or may be ejected therefrom. In case of invasion, riot, public
excitement or other commotion, the Landlord may prevent all access to the
Building during the continuance of the same, by closing the doors or otherwise,
for the safety of the tenants and protection of property in the Building. The
Landlord may require any person leaving the Building with any package or other
object to exhibit a pass from the tenant from whose premises the package or
object is being removed, but the establishment and enforcement of such
requirement shall not impose any responsibility on the Landlord for the
protection of any tenant against the removal of property from the premises of
the tenant. The Landlord shall, in no way, be liable to any tenant for damages
or loss arising from the admission, exclusion or ejection of any person to or
from the tenant's premises or the Building under the provisions of this rule.
Canvassing, soliciting or peddling in the Building is prohibited and every
tenant shall cooperate to prevent the same.

                  3.       No tenant shall obtain or accept for use in its
premises ice, drinking water, food, beverage, towel, barbering, boot blacking,
floor polishing, lighting maintenance, cleaning or other similar services from
any persons not authorized by the Landlord in writing to furnish such services,
provided that the charges for such services by persons authorized by the
Landlord are not excessive. Such services shall be furnished only at such hours,
in such places within the tenant's premises and under such reasonable
regulations as may be fixed by the Landlord.

                  4.       The cost of repairing any damage to the public
portions of the Building or the public facilities or to any facilities used in
common with other tenants, caused by a tenant or the employees, licensees or
invitees of the tenant, shall be paid by such tenant.

                  5.       No lettering, sign, advertisement, notice or object
shall be displayed in or on the windows or doors, or on the outside of any
tenant's premises, or at any point inside any tenant's premises where the same
might be visible outside of such premises, except that the name of the tenant
may be displayed on the entrance door of the tenant's premises, and in the
elevator lobbies of the floors which are occupied entirely by any tenant,
subject to the approval of the Landlord as to the size, color and style of such
display. The inscription of the name of the tenant on the door of the tenant's
premises shall be done by the Landlord at the expense of the tenant. Listing of
the name of the tenant on the directory boards in the Building shall be done by
the Landlord at its expense; any other listings shall be in the discretion of
the Landlord.

                  6.       No awnings or other projections over or around the
windows shall be installed by any tenant, and only such window blinds as are
supplied or permitted by the Landlord shall be used in a tenant's premises.
Linoleum, tile or other floor covering shall be laid in a tenant's premise only
in a manner approved by the Landlord.

                                      -57-
<PAGE>

                  7.       The Landlord shall have the right to prescribe the
weight and position of safes and other objects of excessive weight, and no safe
or other object whose weight exceeds the lawful load for the area upon which it
would stand shall be brought into or kept upon a tenant's premises. If, in the
judgment of the Landlord, it is necessary to distribute the concentrated weight
of any heavy object, the work involved in such distribution shall be done at the
expense of Tenant and in such manner as the Landlord shall determine. The moving
of safes and other heavy objects shall take place only outside of ordinary
business hours upon previous notice to the Landlord, and the persons employed to
move the same in and out of the Building shall be reasonably acceptable to the
Landlord and, if so required by law, shall hold a Master Riggers license.
Freight, furniture, business equipment, merchandise and bulky matter of any
description shall be delivered to and removed from the premises only in the
freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by the Landlord. Arrangements will be made
by the Landlord with any tenant for moving large quantities of furniture and
equipment into or out of the building.

                  8.       No machines or mechanical equipment of any kind,
other than typewriters and other ordinary portable business machines, may be
installed or operated in any tenant's premises without Landlord's prior written
consent, and in no case (even where the same are of a type so accepted or as so
consented to by the Landlord) shall any machines or mechanical equipment be so
placed or operated as to disturb other tenants but machines and mechanical
equipment which may be permitted to be installed and used in a tenant's premises
shall be so equipped, installed and maintained by such tenant as to prevent any
disturbing noise, vibration or electrical or other interference from being
transmitted from such premises to any other area of the Building.

                  9.       No noise, including the playing of any musical
instruments, radio or television, which, in the judgment of the Landlord, might
disturb other tenants in the Building, shall be made or permitted by any tenant,
and no cooking shall be done in the tenant's premises, except as expressly
approved by the Landlord. Nothing shall be done or permitted in any tenant's
premises, and nothing shall be brought into or kept in any tenant's premises,
which would impair or interfere with any of the Building services or the proper
and economic heating, cleaning or other servicing of the Building or the
premises, or the use or enjoyment by any other tenant of any other premises, nor
shall there be installed by any tenant any ventilating, air conditioning,
electrical or other equipment of any kind which, in the judgment of the
Landlord, might cause any such impairment or interference. No dangerous,
inflammable, combustible or explosive object or material shall be brought into
the Building by any tenant or with the permission of any tenant. Any cuspidors
or similar containers or receptacles used in any tenant's premises shall be
cared for and cleaned by and at the expense of the tenant.

                  10.      No acids, vapors or other materials shall be
discharged or permitted to be discharged into the waste lines, vents or flues of
the Building which may damage them. The water and wash closets and other
plumbing fixtures in or serving any tenant's premises shall not be used for any
purpose other than the purposes for which they were designed or constructed, and
no sweepings, rubbish, rags, acids or other foreign substances shall be
deposited therein.

                  11.      No additional locks or bolts of any kind shall be
placed upon any of the doors. or windows in any tenant's premises and no lock on
any door therein shall be changed or altered in any respect. Additional keys for
a tenant's premises and toilet rooms shall be procured only from the Landlord,
which may make a reasonable charge therefor. Upon the termination of a tenant's
lease, all keys of the tenant's premises and toilet rooms shall be delivered to
the Landlord.

                  12.      All entrance doors in each tenant's premises shall be
left locked and all windows shall be left closed by the tenant when the tenant's
premises are not in use. Entrance doors shall not be left open at any time.

                  13.      Hand trucks not equipped with rubber tires and side
guards shall not be used within the Building.

                  14.      All windows in each tenant's premises shall be kept
closed and all blinds therein, if any, above the ground floor shall be lowered
when and as reasonably required because of the position of the sun, during the
operation of the Building air conditioning system to cool or ventilate the
tenant's premises.

                                      -58-
<PAGE>

                  15.      The Landlord reserves the right to rescind, alter
or waive any rule or regulation at any time prescribed for the Building when, in
its judgment, it deems it necessary, desirable or proper for its best interest
and for the best interests of the tenants, and no alteration or waiver of any
rule or regulation in favor of one tenant shall operate as an alteration or
waiver in favor of any other tenant. The Landlord shall not be responsible to
any tenant for the non-observance or violation by any other tenant of any of
the rules and regulations at any time prescribed for the Building.

                                      -59-
<PAGE>

                                    EXHIBIT E

                                   DEFINITIONS


                  (a) The term mortgage shall include an indenture of mortgage
and deed of trust to a trustee to secure an issue of bonds, and the term
mortgagee shall include such a trustee.

                  (b) The terms include, including and such as shall each be
construed as if followed by the phrase "without being limited to".

                  (c) The term obligations of this lease, and words of like
import, shall mean the covenants to pay rent and additional rent under this
lease and all of the other covenants and conditions contained in this lease. Any
provision in this lease that one party or the other or both shall do or not do
or shall cause or permit or not cause or permit a particular act, condition, or
circumstance shall be deemed to mean that such party so covenants or both
parties so covenant, as the case may be.

                  (d) The term Tenant's obligations hereunder, and words of like
import, and the term Landlord's obligations hereunder, and words of like import,
shall mean the obligations of this lease which are to be performed or observed
by Tenant, or by Landlord, as the case may be. Reference to performance of
either party's obligations under this lease, shall be construed as "performance
and observance".

                  (e) Reference to Tenant being or not being in default
hereunder, or words of like import, shall mean that Tenant is in default in the
performance of one or more of Tenant's obligations hereunder, or that Tenant is
not in default in the performance of any of Tenant's obligations hereunder, or
that a condition of the character described in Section 25.01 has occurred and
continues or has not occurred or does not continue, as the case may be.

                  (f) References to Landlord as having no liability to Tenant or
being without liability to Tenant, shall mean that Tenant is not entitled to
terminate this lease, or to claim actual or constructive eviction, partial or
total, or to receive any abatement or diminution of rent, or to be relieved in
any manner of any of its other obligations hereunder, or to be compensated for
loss or injury suffered or to enforce any other kind of liability whatsoever
against Landlord under or with respect to this lease or with respect to Tenant's
use or occupancy of the Demised Premises.

                  (g) The term laws and/or requirements of public authorities
and words of like import shall mean laws and ordinances of any or all of the
Federal, state, city, county and borough governments and rules, regulations,
orders and/or directives of any or all departments, subdivisions, bureaus,
agencies or offices thereof, or of any other governmental, public or
quasi-public authorities, having jurisdiction in the premises, and/or the
direction of any public officer pursuant to law.

                  (h) The term requirements of insurance bodies and words of
like import shall mean rules, regulations, orders and other requirements of the
New Jersey Board of Fire Underwriters and/or the New Jersey Fire Insurance
Rating Organization and/or any other similar body performing the same or similar
functions and having jurisdiction or cognizance of the Building and/or the
Demised Premises.

                  (i) The term repair shall be deemed to include restoration and
replacement as may be necessary to achieve and/or maintain goad working order
and condition.

                  (j) Reference to termination of this lease includes expiration
or earlier termination of the term of this lease or cancellation of this lease
pursuant to any of the provisions of this lease or to law. Upon a termination of
this lease, the term and estate granted by this lease shall end at noon of the
date of termination as if such date were the date of expiration of the term of
this lease and neither party shall have any further obligation or liability to
the other after such termination (i) except as shall be expressly provided for
in this lease, or (ii) except for such obligation as by

                                      -60-


<PAGE>

its nature or under the circumstances can only be, or by the provisions of this
lease, may be, performed after such termination, and, in any event, unless
expressly otherwise provided in this lease, any liability for a payment which
shall have accrued to or with respect to any period ending at the time of
termination shall survive the termination of this lease.

                  (k) The term in full force and effect when herein used in
reference to this lease as a condition to the existence or exercise of a right
on the part of Tenant shall be construed in each instance as including the
further condition that at the time in question no default on the part of Tenant
exist, and no event has occurred which has continued to exist for such period of
time (after the notice, if any, required by this lease), as would entitle
Landlord to terminate this lease or to dispossess Tenant.

                  (l) The term Tenant shall mean Tenant herein named or any
assignee or other successor in interest (immediate or remote) of Tenant herein
named, while such Tenant or such assignee or other successor in interest, as the
case may be, is in possession of the Demised Premises as owner of the Tenant's
estate and interest granted by this lease and also, if Tenant is not an
individual or a corporation, all of the persons, firms and corporations then
comprising Tenant.

                  (m) Words and phrases used in the singular shall be deemed to
include the plural and vice versa, and nouns and pronouns used in any particular
gender shall be deemed to include any other gender.

                  (n) The rule of ejusdem generis shall not be applicable to
limit a general statement following or referable to an enumeration of specific
matters to matters similar to the matters specifically mentioned.

                  (o) All references in this lease to numbered Articles,
numbered Sections and lettered Exhibits are references to Articles and Sections
of this lease, and Exhibits annexed to (and thereby made part of) this lease, as
the case may be, unless expressly otherwise designated in the context.

                                      -61-

<PAGE>

                                    EXHIBIT F

                             CLEANING SPECIFICATIONS


1.                General

                  All linoleum, rubber, asphalt tile and other similar types of
                  flooring (that may be waxed) to be swept nightly, using
                  approved dust-check type of mop.

                  All carpeting and rugs to be carpet swept nightly and vacuum
                  cleaned weekly.

                  Hand dust and wipe clean all furniture, fixtures and window
                  sills nightly; wash sills when necessary.

                  Empty and clean all waste receptacles nightly and remove waste
                  paper and waste materials.

                  Empty and clean all ash trays and screen all sand urns nightly
                  including all ash trays in all toilets.

                  Dust interior of all waste disposal cans and baskets nightly;
                  damp-dust as necessary.

                  Wash clean all water fountains and coolers nightly.

                  Hand dust all door and other ventilating louvres within reach,
                  as necessary.

                  Dust all telephones as necessary.

                  Sweep all private stairway structures nightly.


2.                Lavatories in the Core

                  Sweep and wash all lavatory floors nightly using proper
                  disinfectants. Wash and polish all mirror; powder shelves,
                  bright work and enameled surfaces in all lavatories nightly.

                  Scour, wash and disinfect all basins, bowls and urinals
                  throughout all lavatories, nightly.

                  Wash all toilet seats, nightly.

                  Empty paper towel receptacles and transport wastepaper to
                  designated area in basements, nightly (towels, soap and
                  receptacles to be furnished by Tenant).

                  Fill toilet tissue holders nightly.

                  Empty sanitary disposal receptacles, nightly.


                                      -62-

<PAGE>

                  Thoroughly wash and polish all wall tile and stall surface as
                  often as necessary.


3.                High Dusting

                  Dust all Venetian blinds, frames, charts, graphs and similar
                  wall hangings and vertical surfaces not reached in nightly
                  cleaning, quarterly.

                  Cleaning of light fixtures shall be for account of Tenant.


4.                Glass

                  Exterior windows to be cleaned inside and outside
                  approximately once every three (3) months (or more often, if
                  required by Landlord), weather permitting.


5.                Conditions

                  As herein used "nightly" means five nights a week, Monday
                  through Friday, during regular cleaning hours (between 6:00
                  P.M. and 6:00 A.M.) and excludes legal and union holidays.

                  Tenant will pay for electricity, power and hot and cold water
                  in the Demised Premises for cleaning during the regular
                  cleaning hours which are after hours.




                                      -63-

<PAGE>

Airborne Express


January 6, 1995

Mr. Nathan Bistricer
Philipp Brothers Chemicals, Inc.
One Parker Plaza
Fort Lee, New Jersey 07046

Re:      Premises First Modification and Extension of Lease by and between 400
         Kelby Associates, as Landlord, and Philipp Brothers Chemicals, Inc, as
         Tenant A portion of the fourteenth (14th) floor at One Parker Plaza,
         Fort Lee, New Jersey

Dear Mr. Bistricer:

Enclosed herewith, please find one (1) fully executed, original counterpart with
regard to the above referenced lease modification and extension. I trust this
document will complete your files.

If you have any questions, please do not hesitate to contact me.

Very truly yours,


/s/ Bradley R. Siegel
- ---------------------


BRS:jp

enclosure
cc:               Stanley Berkowitz w/encl
                  Lou Ferrari w/encl
                  Richard Gordon, Esq. w/o encl
                  Jean Pierre Vaganay w/o encl
                  Steve Frank w/encl

<PAGE>

         FIRST MODIFICATION AND EXTENSION OF LEASE DATED AS OF DECEMBER
           1994 BETWEEN 400 KELBY ASSOCIATES, AS LANDLORD, AND PHILIPP
            BROTHERS CHEMICALS, INC., AS TENANT FOR LEASE OF PREMISES
          LOCATED ON THE FOURTEENTH (14TH) FLOOR IN THE BUILDING AT 400
                       KELBY STREET, FORT LEE, NEW JERSEY


                  WHEREAS, the parties hereto executed a Lease dated July 25,
1986 between 400 Kelby Associates, a New Jersey Limited Partnership with offices
at 104-70 Queens Boulevard, Forest Hills, New York 11375, as Landlord and
Philipp Brothers Chemicals, Inc., a New York corporation having an address at 10
Columbus Circle, New York, New York 10019, as Tenant, (hereinafter the "Original
Lease");

                  WHEREAS, the parties executed a Supplementary Agreement on or
about December 1, 1986, whereby the Commencement Date was fixed at December 1,
1986 and the Expiration Date was fixed at November 30, 1996; and

                  WHEREAS, the parties hereto desire to modify and extend the
Original Lease as set forth herein:

                  NOW, THEREFORE, in consideration of the premises and the
mutual terms, covenants and conditions contained in the Original Lease, Landlord
and Tenant hereby agree as follows:

                  1.       All capitalized terms herein shall have the same
meanings as contained in the Original Lease.

                  2.       Except as amended herein, the terms of the Original
Lease shall remain in full force and effect

                  3.       In the event of any inconsistencies between the terms
of this First Modification and Extension to Lease (the "First Modification and
Extension to Lease") and the Original Lease, the terms of this First
Modification and Extension to Lease shall govern.


<PAGE>

                  4.       Article 1 of the Original Lease is amended as
follows:

                  (a)      Paragraph 1.03 shall be amended to reflect that the
Expiration Date will be 12:00 P.M. on December 31, 2004.

                  (b)      Paragraph 1.04 (a) is hereby amended to include the
following as "fixed rent":

Term                                       Annual Rent       Monthly Rent
- ----                                       -----------       ------------
January 1, 1995 - December 31, 1999        $591,006.00        $49,250.50
January 1, 2000 - December 31, 2004        $653,516.25        $54,459.69

                  5.       Articles 3 and 4 are deleted in their entirety and
the following language is substituted in place of Article 3:

                  3.01     Neither Landlord or Landlord's agents have made any
representations or promises with respect to the physical condition of the
Building, the Demised Premises, or the Land except as expressly set forth
herein. Tenant has inspected the Building and the Demised Premises and is
thoroughly acquainted with their condition and agrees to take the same "as is"
and acknowledges that the taking of possession of the Demised Premises by Tenant
shall be conclusive evidence that the said Demised Premises and the Building
were in good and satisfactory condition at the time such possession was so
taken.

                  Notwithstanding the foregoing, Landlord agrees to provide
Tenant with an allowance of $187,993.00 towards work to be performed by Landlord
in the Demised Premises, ("Landlord's Work"), as reflected in the space plan
drawing submitted by BFI Planning and Design dated October 3, 1994 (the "BFI
Plans"). Tenant may make changes or revisions to the BFI Plans, however, Tenant
will be responsible for any fees, expenses or any aspect of Landlord's Work at
the Demised Premises that results in a cost above $187,993.00. Landlord agrees
to use its best efforts to commence Landlord's Work within a reasonable period
of time after all required permits have been issued from the Borough of Fort
Lee. Tenant agrees to sign off on the final architectural plan prior to
submission to the Borough of Fort Lee for the aforementioned permits.

                  In addition, Landlord shall reimburse Tenant $1,500.00 for
space planning services within 30 days after Tenant submits a bill for same to
Landlord. Landlord will also provide construction drawings based on the BFI
Plans at its sole cost and expense. Tenant acknowledges that Landlord's Work
will be performed while Tenant is in possession of the Demised Premises.
Landlord will use its best efforts to minimize any inconvenience to Tenant and
will use its best efforts to complete a portion of the work after business
hours. Tenant will be responsible for installing any and all of its computers or
computer network systems and its telephone equipment and/or relocating said
equipment at its sole cost and expense, and at absolutely no liability to
Landlord.

                  6.       Paragraph 5.01(b) shall be amended to reflect that
the "Base Tax Rate", defined in Paragraph 5.01(b) shall mean the Tax Rate for
the calendar year 1994. Notwithstanding any other provision in the Lease, the
Tenant shall not be responsible for any increase in taxes and/or operating
expenses during the 1995 calendar year.

                  7.       Paragraph 5.07(a)(iii) shall be modified to exclude
overtime charges for HVAC use by other tenants.

                  8.       Paragraph 5.07(a)(xii) shall be amended to include
advertising and other costs related to the procurement of new tenants for the
building.

                  9.       Paragraph 5.07(c) shall be amended to reflect that
"the Base Operating Expenses", defined in Paragraph 5.07(c) shall mean the
Operating Expenses for the calendar year 1994.

                  10.      Section 9.02(a), (c)(ii) and (c)(iii) shall be
amended to read as follows:


<PAGE>

                  (a)      a term sheet, or draft of the proposed assignment or
sublease, the effective or commencement date of which shall be not less than 30
nor more than 180 days after the giving of such notice,

                  (c)(ii)  terminate this lease (if the proposed transaction is
an assignment or a sublease of all or substantially all of the Demised Premises,
and if said sublease terminates within two (2) years prior to the expiration
date of the lease).

                  (c)(iii) terminate this lease with respect to the Leaseback
Space (if the proposed transaction is a sublease of part of the Demised Premises
and terminates within two (2) years prior to the expiration date of the lease).

                  11.      Section 9.07 shall be modified to include that if
Landlord consents to the proposed assignment or sublease, said consent shall be
given within thirty (30) days after notice from Tenant pursuant to Section 9.02
provided Tenant is in complete compliance with Article 9.

                  12.      Section 9.08(b) shall be modified to reflect that
tenant shall have 120 days to execute and deliver the assignment or sublease to
Landlord.

                  13.      Paragraph 16.03(b)(ii)(a) shall be amended a reflect
a rent reduction of $28,413.75 should Landlord exercise its option to
discontinue furnishing electrical service to the Tenant

                  14.      Paragraph 18.05 amended to reflect a total number of
sixty-five (65) parking spaces.

                  15.      Article 31 shall be amended to add the following
language:

                  Article 31  Broker

                  31.01    Both parties covenant, warrant and represent that
there was no broker or finder except C.B. Commercial Real Estate Group, Inc. and
Edward S. Gordon Company of New Jersey in consummating this First Modification
and Extension of Lease and that no conversations or negotiations were had with
any broker or finder except C.B. Commercial Real Estate Group, Inc. and Edward
S. Gordon Company of New Jersey concerning the Demised Premises. Both parties
agree to hold the other harmless against any claims for a brokerage, finder or
other commission or fee arising out of any claim by any broker or finder except
C.B. Commercial Real Estate Group, Inc. Tenant represents that Edward S. Gordon
Company of New Jersey has represented Tenant as its Broker in connection with
this First Modification and Extension of Lease. Notwithstanding this, Landlord
agrees, that upon execution of the First Modification and Extension of Lease, it
shall be solely responsible for any brokerage fees in connection with realty
services by C.B. Commercial Real Estate Group, Inc. and Edward S. Gordon Company
of New Jersey.

                  16.      Renewal Option: The following Article 40 shall be
added to the Lease:

                  40.01    Provided that the Original Lease as modified and
extended by the Fee Modification and Extension of Lease (the "Modified Lease"),
shall be in full force and effect on the Expiration Date without default on the
part of Tenant hereunder, Tenant shall have the option (hereinafter referred to
as the "Renewal Option") to renew the Modified Lease for a renewal term
(hereinafter referred to as the "Renewal Term") of five (5) years, to commence
on the day after the Expiration Date (hereinafter referred to as the "Renewal
Term Commencement Date") and to expire five (5) years thereafter (herein
referred to as the "Renewal Term Expiration Date"). Tenant shall exercise the
Renewal Option by sending a written notice thereof (which notice is hereinafter
referred to as the "Renewal Notice") to Landlord by certified mail, return
receipt requested, not less than twelve (12) months prior to the Expiration
Date. If Tenant shall send the Renewal Notice within the time and in the manner
hereinbefore provided, the Modified Lease shall be deemed renewed for the
Renewal Term upon the terms, covenants and

<PAGE>

conditions hereinafter contained. If Tenant shall fail to send the Renewal
Notice within the time and in a manner hereinbefore provided, the Renewal Option
shall cease and terminate, and Tenant shall have no further option to renew the
Modified Lease. If the Modified Lease has been assigned or if greater than
twenty-five (25%) percent of the Demised Premises has been sublet, this Renewal
Option shall be deemed null and void and neither Tenant nor any assignee or
subtenant shall have the right to exercise such option during the term of such
assignment or sublease. If the Tenant assigns or subleases to an Affiliate as
defined by Section 9.11 of the Original Lease, the renewal option shall remain
in effect provided Tenant remains responsible for all obligations arising under
the Modified Lease.


                  40.02    The Renewal Term, if any, shall be upon, and subject
to, all of the terms, covenants and conditions provided in the Modified Lease
for the original term hereof, except that:

                  (a)      any terms, covenants, or conditions hereof that are
expressly or by their nature inapplicable to the Renewal Term (including,
without limitation, Articles 3, 4, 39 and 40 hereof) shall not apply during such
Renewal Term;

                  (b)      the annual fixed rent payable by Tenant during each
year of the Renewal Term (hereinafter referred to as the "Renewal Rent"),
subject to adjustment as otherwise provided in the Modified Lease provided,
shall be an amount equal to the fair market rental value of the Demised
Premises, to be determined as provided in Section 40.03 hereof and to be
calculated as the Renewal Term Commencement Date on the basis of a new five (5)
year lease of the Demised Premises;

                  (c)      effective upon the Renewal Term Commencement Date,
the Tenant shall also pay additional rent pursuant to Article 5; and (i) the
Base Tax Year shall be deemed to be the year set forth in Section 5.01(b), and
(ii) the Base Operating Expenses shall be deemed to be the amount set forth in
Section 5.07(c).

                  40.03    In the event that Tenant shall exercise the Renewal
Option as provided in Section 40.01 hereof, the Renewal Rent shall be determined
jointly by Landlord and Tenant, and such determination shall be confirmed in a
writing (hereinafter referred to as a "Rental Agreement") to be executed in
recordable form by Landlord and Tenant not later than the day (hereinafter
referred to as the Determination Date) which shall be ninety (90) days next
preceding the Expiration Date. In the event that Landlord and Tenant shall have
failed to join in executing a Rental Agreement on or before the Determination
Date because of their failure to agree upon the Renewal Rent then the Renewal
Rent shall be determined by arbitration as follows:

                  (a)      Landlord and Tenant shall each appoint an arbitrator
by written notice given to the other party hereto not later than thirty (30)
days after the Determination Date. If either Landlord or Tenant shall have
failed to appoint an arbitrator within such period of time and thereafter shall
have failed to do so by written notice given within a period of five (5) days
after notice by the other party requesting the appointment of such arbitrator,
then such arbitrator shall be appointed by the American Arbitration Association
or its successor (the branch office of which is located in or closest to the
Borough of Fort Lee, County of Bergen), upon request of either Landlord or
Tenant, as the case may be;

                  (b)      the two (2) arbitrators appointed as above provided
shall appoint a third (3rd) arbitrator by written notice given to both Landlord
and Tenant, and, if they fail to do so by written notice given within thirty
(30) days after their appointment, such third (3rd) arbitrator shall be
appointed as above provided for the appointment of an arbitrator in the event
either party fails to do so;

                  (c)      all of such arbitrators shall be real estate
appraisers having not less than ten (10) years experience in appraising the fair
market rental value of real estate similar to the Building located within or
adjacent to the Borough of Fort Lee, County of Bergen and whose appraisals are
acceptable to savings banks or life insurance companies doing business in the
State of New Jersey;

<PAGE>

                  (d)      the three (3) arbitrators, selected as aforesaid,
forthwith shall convene and render their decision in accordance with the then
applicable rules of the American Arbitration Association or its successor, which
decision shall be strictly limited to a determination of the Renewal Rent as the
case may be, within twenty (20) days after the appointment of the third (3rd)
arbitrator. The decision of such arbitrators shall be in writing and the vote of
the majority of them shall be the decision of all and, insofar as the same is in
compliance with the provisions and conditions of this Section 40.03 and of
Section 40.04 hereof shall be binding upon Landlord and Tenant. Duplicate
original counterparts of such decision shall be sent forthwith by the
arbitrators by certified mail, return receipt requested, to both Landlord and
Tenant. The arbitrators, in arriving at their decision, shall be entitled to
consider all testimony and documentary evidence that may be presented at any
hearing, as well as facts and data which the arbitrators may discover by
investigation and inquiry outside such hearings. If, for any reason whatsoever,
a written decision of the arbitrators shall not be rendered within thirty (30)
days after the appointment of the third (3rd) arbitrator, then, at any time
thereafter before such decision shall have been rendered, either party may apply
to a court of competent jurisdiction sitting in the Borough of Fort Lee, County
of Bergen, State of New Jersey (but not by a new arbitration proceeding) as may
be proper, to determine the question in dispute consistently with the provisions
of this lease. The cost and expense of such arbitration, action, proceeding, or
otherwise shall be borne equally by Landlord and Tenant

                  40.04    Notwithstanding anything to the contrary contained in
Section 40.03 hereof, the Renewal Rent shall in no event be less than an amount
(hereinafter referred to as the "Renewal Minimum Rent") equal to the fixed rent
reserved in Section 1.04(a) hereof.

                  40.05    In the event that Tenant shall exercise the Renewal
Option as provided in Section 40.01 hereof and the Renewal Rent shall not be
finally determined pursuant to the terms of Section 40.03 hereof on or before
the Renewal Term Commencement Date then:

                  (a)    The annual fixed rent payable by Tenant during the
Renewal Term until the Renewal Rent shall be so finally determined shall,
subject to adjustment as therein provided, be equal to the Renewal Minimum Rent
calculated at the then market rate per square foot as Base Rent, plus additional
rent charges for Operating Expenses, Real Estate Taxes and other adjustments as
set forth in Article 5 herein. Thereafter, when the Renewal Rent finally becomes
determined pursuant to the provisions of this Article 42, the Renewal Rent shall
be re-computed with appropriate retroactive charges or credits to Landlord for
the period in which Tenant paid any sums below the newly determined Renewal
Rent; and,

                  (b)      In the event that the Renewal Rent as finally
determined pursuant to the terms of Section 40.03 hereof, shall be greater than
the Renewal Minimum Rent (i) the annual fixed rent payable by Tenant for the
balance of the Renewal Term shall be and become the Renewal Rent as finally
determined, and (ii) Tenant shall forthwith pay to Landlord an amount equal to
the difference between (x) the sum of the actual rental payments paid to
Landlord during the Renewal Term before such final determination and (y) the sum
of the rental payments that Tenant would have paid to Landlord if the Renewal
Rent were finally determined prior to the Renewal Term

<PAGE>

Commencement Date plus additional rent charges for Operating Expenses, Real
Estate Taxes and other adjustments as set forth in Article 5 herein.

                  Exhibit C is deleted in its entirety.

                  IN WITNESS WHEREOF, the parties hereto have hereunto set their
hands and seals on the date and year first written above.

400 KELBY ASSOCIATES
By:  Lynwood Construction Co., Inc., General Partner

By: /s/
       -------------------------------------

PHILIPP BROTHERS CHEMICAL, INC.

By: /s/
       -------------------------------------


STATE OF NEW JERSEY                 )
                                    )   ss:
COUNTY OF BERGEN                    )

                  On this 30th day of December, 1994 before me personally came
N. Bistricer to me known, who, being duly sworn, did depose and say that he
resides in Brooklyn, NY and that he is the Vice President of Philipp Brothers
Chemical, Inc., the corporation in and who executed the foregoing instrument as
TENANT, and that he duly acknowledged to me that he executed the same.

/s/ Joseph M. Katzenstein
- -------------------------
Notary Public

JOSEPH M. KATZENSTEIN
Notary Public, State of New Jersey
# 2033060
Comm. Expires 8-14-87

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>13
<FILENAME>0013.txt
<DESCRIPTION>LEASE BETWEEN FIRST DICE ROAD CO.
              AND PHILBRO-TECH, INC.,
              AS AMENDED MAY 1998
<TEXT>


<PAGE>

                           STANDARD INDUSTRIAL LEASE
                  AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

1.       Parties. this Lease, dated, for reference purposes only, June 30,
         1995, is made by and between FIRST DICE ROAD COMPANY, A California
         Limited Partnership (herein called "Lessor") and Phibro-Tech, Inc., a
         Delaware Corporation (herein called "Lessee").

2.       Premises.  Lessor hereby leases to Lessee and Lessee leases
         from Lessor for the term, at the rental, and upon all of the
         conditions set forth herein, that certain real property
         situated in the County of Los Angeles, State of California,
         commonly known as 8851 Dice Road, Santa Fe Springs,
         California and described as on Schedule "A" annexed,
         together with all tangible personal property of Lessor
         located at the Premises.  Said real property including the
         land and all improvements thereon, is herein called "the
         Premises."

3.       Term.

         3.1      The term of this Lease shall be for Ten (10) Years
                  commencing on June 30, 1995 and ending on June 29, 2005
                  unless sooner terminated pursuant to any provision
                  hereof.

4.       Rent.  Lessee shall pay to Lessor as annual rent for the
         Premises Two Hundred Fifty Thousand dollars ($250,000),
         payable in equal monthly installments of $20,833.33, in
         advance, on the first day of each month of the term hereof.
         Lessee shall pay Lessor upon the execution hereof.  Rent for
         any period during the term hereof which is for less than one
         month shall be a pro rata portion of the month installment.
         Rent shall be payable in lawful money of the United States
         to Lessor at the address stated herein or to such other
         persons or at such other places as Lessor may designate in
         writing.

5.       Security Deposit.  Lessee shall deposit with Lessor upon
         execution hereof $ None  as security for Lessee's faithful
         performance of Lessee's obligations hereunder.  If Lessee
         fails to pay rent or other charges due hereunder, or
         otherwise defaults with respect to any provision of this
         Lessee, Lessor may use, apply or retain all or any portion
         of said deposit for the payment of any rent or other charge
         in default or for the payment of any other sum to which
         Lessor may become obligated by reason of Lessee's default,

<PAGE>


         or to compensate Lessor for any loss of damage which Lessor may
         suffer thereby. If Lessor so uses or applies all or any portion of
         said deposit, Lessee shall within ten (10) days after written demand
         therefor deposit cash with Lessor in an amount sufficient to restore
         said deposit to the full amount hereinabove stated and Lessee's
         failure to do so shall be a material breach of this Lease. Lessor
         shall not be required to keep said deposit separate from its general
         accounts. If Lessee performs all of Lessee's obligations hereunder,
         said deposit, or so much thereof as has not theretofore been applied
         by Lessor, shall be returned, without payment of interest or other
         increment for its use, to Lessee for, at Lessor's option, to the last
         assignee, if any, of Lessee's interest hereunder) at the expiration
         of the term hereof, and after Lessee has vacated the Premises.

6.       Use.

         6.1 Use. The Premises shall be used and occupied only for any lawful
purpose.

         6.2 Compliance with Law. Lessee shall, at Lessee's expense, comply
promptly with all applicable statutes, ordinances, rules, regulations, orders
and requirements in effect during the term or any part of the term hereof,
regulating the use by Lessee of the Premises. Lessee shall not use or permit
the use of the Premises in any manner that will tend to create waste or a
nuisance or, if there shall be more than one tenant of the building containing
the Premises, which shall tend to disturb such other tenants.

         6.3 Condition of Premises. Lessee hereby accepts the Premises in
their condition existing as of the date of the execution hereof, subject to
all applicable zoning, municipal, county and state laws, ordinances and
regulations governing and regulating the use of the Premises, and accepts this
Lease subject thereto and to all matters disclosed thereby and by any exhibits
attached hereto. Lessee acknowledges that neither Lessor nor Lessor's agent
has made any representation or warranty as to the suitability of the Premises
for the conduct of Lessee's business.

7.       Maintenance, Repairs and Alterations.

         7.1 Lessor's Obligations. Subject to the provisions of Article 9,
Lessee, Lessee's shall keep in good order, condition and repair, the
foundations, exterior walls and the exterior roof of the Premises. Lessor
shall have no obligation to make Lessee expressly waivers the benefits of any
statute now or hereafter in


                                       2
<PAGE>


effect which would otherwise afford Lessee the right to make repairs at
Lessor's expense or to terminate this Lease because of Lessor's failure to
keep the Premises in good order, condition and repair. *the entire premises
including

         7.2      Lessee's Obligations.

                  (a) Subject to the provisions of Paragraph 9, Lessee, at
Lessee's expense, shall keep in good order, condition and repair the Premises
and every part thereof (regardless of whether the damaged proportion of the
Premises or the means of repairing the same are accessible to Lessee),
including, without limiting the generality of the foregoing, all plumbing,
heating, air conditioning, ventilating, electrical and lighting facilities and
equipment within the Premises, fixtures, interior walls and interior surface
of exterior walls, ceilings, windows, doors, plate glass, and skylights,
located within the Premises and all sidewalks, landscaping, driveways, parking
lots, fences and signs located in the areas which are adjacent to and included
with the Premises.

                  (b) If Lessee fails to perform Lessee's obligations under
this Paragraph 7.2 or 7.1, Lessor may at Lessor's option enter upon the
Premises after 10 days' prior written notice to Lessee, and put the same in
good order, condition and repair, and the cost thereof together with interest
thereon at the rate of 10% per annum shall be due and payable as additional
rent to Lessor together with Lessee's next rental installment.

                  (c) On the last day of the term hereof, or on any sooner
termination. Lessee shall surrender the Premises to Lessor in the same
condition as received, broom clean, ordinary wear and ten excepted. Lessee
shall repair any damage to the Premises occasioned by the removal of its trade
fixtures, furnishings and equipment pursuant to Paragraph 7.3(c), which repair
shall include the patching and filling of holes and repair of structural
damage.

         7.3      Alterations and Additions.

                  (a) Lessee may make any alterations, improvements,
additions, or utility installations in, on or about the Premises.

                  (b) Lessee shall pay when due, all claims for labor or
materials furnished or alleged to have been furnished to or for Lessee or for
use in the Premises which claims are or may be secured by any mechanics' or
material man's lien against the Premises or any interest therein Lessee shall
give Lessor not


                                       3
<PAGE>


less than ten (10) days' notice prior to the commencement of any work in the
Premises, and Lessor shall have the right to post notices of
non-responsibility in or on the Premises as provided by law.

                  (c) All alterations, improvements, additions and utility
installations (whether or not such utility installations constitute trade
fixtures of Lessee, which may be made on the Premises, shall become the
property of Lessor and remain upon and be surrendered with the Premises at the
expiration of the term. Notwithstanding the provisions of this Paragraph
7.3(c), Lessee's machinery and equipment, other than that which is affixed to
the Premises so that it cannot be removed without material damage to the
Premises shall remain the property of Lessee and may be removed by Lessee
subject to the provisions of Paragraph 7.2(c).

8.       Insurance; Indemnity.

         8.1 Liability Insurance. Lessee shall, at Lessee's expense, obtain
and keep in force during the terms of the Lease a policy of comprehensive
public liability insurance insuring Lessor and Lessee against any liability
arising out of the ownership, use, occupancy or maintenance of the Premises
and all areas appurtenant thereto.

         8.2 Property Insurance. Lessee shall obtain and keep in force during
the term of this Lease a policy or policies of insurance covering loss or
damage to the Premises, providing protection against all perils included
within the classification of fire, extended coverage, vandalism, malicious
mischief, special extended perils (all risk).

         8.3 Waiver of Subrogation. Lessee and Lessor each hereby waives any
and all rights or recovery against the other, or against the officers,
employees, agents and representatives of the other, for loss of or damage to
such waiving party or its property or the property of others under its
control, where such loss or damage is insured against under any insurance
policy in force at the time of such loss or damage. Lessee and Lessor shall,
upon obtaining the policies of insurance required hereunder, give notice to
the insurance carrier or carriers that the foregoing mutual waiver of
subrogation is contained in this Lease.

         8.4 Indemnity. Lessee shall indemnify and hold harmless Lessor from
and against any and all claims arising from Lessee's use of the Premises, or
from the conduct of Lessee's business or from any activity, work or things
done, permitted or suffered by


                                       4
<PAGE>


Lessee in or about the Premises or elsewhere and shall further indemnify and
hold harmless Lessor from and against any and all claims arising from any
breach or default in the performance of any obligation on Lessee's part to be
performed under the terms of this Lease, or arising from any negligence of the
Lessee, or any of the Lessee's agents, contractors, or employees, and from and
against all costs, attorney's fees, expenses and liabilities incurred in the
defense of any such claim or any action or proceeding brought thereon: and in
case any action or proceeding be brought against Lessor by reason of any such
claim. Lessee upon notice from Lessor shall defend the same at Lessee's
expense by counsel satisfactory to Lessor. Lessee, as a material part of the
consideration to Lessor, hereby assumes all risk of damage to property or
injury to persons, in, upon or about the Premises arising from any cause and
Lessee hereby waives all claims in respect thereof against Lessor.

         8.5. Exemption of Lessor from Liability. Lessee hereby agrees that
Lessor shall not be liable for injury to Lessee's business or any loss of
income therefrom or for damage to the goods, wares, merchandise or other
property of Lessee. Lessee's employees, invitees, customers, or any other
person in or about the Premises, nor shall Lessor be liable for injury to the
person of Lessee, Lessee's employees, agents or contractors, whether such
damage or injury is caused by or results from fire, steam, electricity, gas,
water or rain, or from the leakage, obstruction or other defects of pipes,
sprinklers, wires, appliances, plumbing, air conditioning or lighting
fixtures, or from any other cause, whether the said damage or injury results
from conditions, arising upon the Premises or upon other portions of the
building of which the Premises are a part, or from other sources or places,
and regardless of whether the cause of such damage or injury or the means of
repairing the same its inaccessible to Lessee, Lessor shall not be liable for
any damages arising from any act or neglect of any other tenant, if any, of
the building in which the Premises are located.

9.       Damage or Destruction.

         9.1 Partial Damage-Insured. Subject to the provisions of Paragraph
9.4, if the Premises are damaged and such damage was caused by a casualty
covered under an insurance policy required to be maintained pursuant to
Paragraph 8.2. Lessee shall at Lessee's expense repair such damage as soon as
reasonably possible and this Lessee shall continue in full force and effect.

         9.2      Partial Damage-Uninsured.  Subject to the provisions of
Paragraph 9.4, if at any time during the term hereof the Premises


                                       5
<PAGE>


are damaged, except by a negligent or willful act of Lessee, and such damage
was caused by a casualty not covered under an insurance policy required to be
maintained by Lessee pursuant to Paragraph 8.2. Lessor may at Lessor's option
either (i) repair such damage as soon as reasonably possible at Lessee's
expense in which event this Lease shall continue in full force and effect, or
(ii) give written notice to Lessee within thirty (30) days after the date of
the occurrence of such damage of Lessor's intention to cancel and terminate
this Lease as of the date of the occurrence of such damage. In the event
Lessor elects to give such damage notice of Lessor's intention to cancel and
terminate this Lease, Lessee shall have the right within ten (10) days after
the receipt of such notice to give written notice to Lessor of Lessee's
intention to repair such damage at Lessee's expense, without reimbursement
from Lessor, in which event this Lease shall continue in full force and
effect, and Lessee shall proceed to make such repairs as soon as reasonably
possible. If Lessee does not give such notice within such 10 day period this
Lease shall be canceled and terminated as of the date of the occurrence of
such damage.

         9.3 Total Destruction. If at any time during the term hereof the
Premises are totally destroyed from any cause whether or not covered by the
insurance required to be maintained by Lessee pursuant to Paragraph 8.2
(including any total destruction required by any authorized public authority)
this Lease shall automatically terminate as of the date of such total
destruction.

         9.4 Damage Near End of Term. If the Premises are partially destroyed
or damaged during the last six months of the term of this Lease, Lessor may at
Lessor's option cancel and terminate this Lease as of the date of occurrence
of such damage by giving written notice to Lessee of Lessor's election to do
so within 30 days after the date of occurrence of such damage.

         9.5      Abatement of Rent; Lessee's Remedies.

                  (a) If the Premises are partially destroyed or damaged and
Lessor or Lessee repairs or restores them pursuant to the provisions of this
Article, the rent payable hereunder for the period during which such damage,
repair or restoration continues shall be abated in proportion to the degree to
which Lessee's use of the Premises is impaired. Except for abatement of rent,
if any, Lessee shall have no claim against Lessor for any damage suffered by
reason of any such damage, destruction, repair or restoration.


                                       6
<PAGE>


                  (b) If Lessor shall be obligated to repair or restore the
Premises under the provisions of this Paragraph 9 shall not commence such
repair or restoration within 90 days after such obligations shall accrue,
Lessee may at Lessee's option cancel and terminate this Lease by giving Lessor
written notice of Lessee's election to do so at any time prior to the
commencement of such repair or restoration. In such event this Lease shall
terminate as of the date of such notice. Any abatement in rent shall be
computed as provided in Paragraph 9.5(a).

         9.6 Termination-Advance Payments. Upon termination of this Lease
pursuant to this Paragraph 9, an equitable adjustment shall be made concerning
advance rent and any advance payments made by Lessee to Lessor, Lessor shall,
in addition, return to Lessee so much of Lessee's security deposit as has not
theretofore been applied by Lessor.

10.      Real Property Taxes.

         10.1     Payment of Tax Increase.  Lessee shall pay all real
property taxes applicable to the Premises;

         10.2 Joint Assessment. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the real property
leases for all of the land and improvements included within the tax parcel
assessed, such proportion to be determined by Lessor from the respective
valuations assigned in the assessor's work sheets of such other information as
may be reasonably suitable. Lessor's reasonable determination thereof, in good
faith, shall be conclusive.

         10.3     Personal Property Taxes.

                  (a) Lease shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Lease contained in the Premises or elsewhere. When
possible, Lessee shall cause said trade fixtures, furnishings, equipment and
all other personal property to be assessed and billed separately from the real
property of Lessor.

11.      [PARAGRAPH NOT LEGIBLE]

12.  Assignment and Subletting.

         12.1 Lessor's Consent Required. Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet or otherwise transfer or
encumber all or any part of Lessee's interest in this Lease or in the
Premises, without


                                       7
<PAGE>


Lessor's prior written consent, which Lessor shall not unreasonably withhold.
Any attempted assignment, transfer, mortgage, encumbrance or subletting
without such consent shall be void, and shall constitute a breach of this
Lease.

         12.2 No Release of Lessee. Regardless of Lessor's consent, no
subletting or assignment shall release Lessee of Lessee's obligation or alter
the primary liability of Lessee to pay the rent and to perform all other
obligations to be performed by Lessee hereunder. The acceptance of rent by
Lessor from any other person shall not be deemed to be a waiver by Lessor of
any provision hereof. consent to one assignment or subletting shall not be
deemed consent to any subsequent assignment or subletting.

         12.3 Attorney's Fees. In the event that Lessor shall consent to a
sublease or assignment under Paragraph 12.1, Lessee shall pay Lessor's
reasonable attorneys' fees not to exceed $100 incurred in connection with
giving such consent.

13.      Defaults; Remedies

         13.1 Defaults. The occurrence of any one or more of the following
events shall constitute a material default and breach of this Lease by Lessee:

                  (a)      The vacating or abandonment of the Premises by
Lessee.

                  (b) The failure by Lessee to make any payment of rent or any
other payment required to be made by Lessee hereunder, as and when due, where
such failure shall continue for a period of ___ days after written notice
thereof from Lessor or Lessee.

                  (c) The failure by Lessee to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or performed
by Lessee, other than described in paragraph (b) above, where such failure
shall continue for a period of 30 days after written notice hereof from Lessor
to Lessee: provided, however, that if the nature of Lessee's default is such
that more than 30 days are reasonably required for it cure, then Lessee shall
not be deemed to be in default if Lessee commenced such cure within said
30-day period and thereafter diligently prosecutes such cure to completion.

                  (d) (i) The making by Lessee of any general assignment, or
general arrangement for the benefit of creditors; (ii) the filing by or
against Lessee of a petition to have Lessee adjudged a bankrupt or a petition
for reorganization or


                                       8
<PAGE>


arrangement under any law relating to bankruptcy unless, in the case of a
petition filed against Lessee, the same is dismissed within 60 days; (iii) the
appointment of a trustee or receiver to take possession of substantially all
of Lessee's assets located at the Premises or of Lessee's interest in this
Lease, where possession is not restored to Lessee within 30 days or (iv) the
attachment, execution or other judicial seizure of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where such seizure is not discharged within 30 days.

                  13.2 Remedies. In the event of any such material default or
breach by Lessee, Lessor may at any time thereafter, without notice or demand
and without limiting Lessor in the exercise of any right or remedy which
Lessor may have by reason of such default or breach:

                           (a)      Terminate Lessee's right to possession of
the Premises by any lawful means, in which case this Lease shall terminate and
Lessee shall immediately surrender possession of the Premises to Lessor. In
such event Lessor shall be entitled to recover from Lessee all damages
incurred by Lessor by reason of Lessee's default including, but not limited
to, the cost of recovering possession of the Premises; expenses of resetting,
including necessary renovation and alteration of the Premises, reasonable
attorney's fees, and any rest estate commission actually paid; the worth at
the time of award by the court having jurisdiction thereof of the amount by
which the unpaid rent for the balance of the term alter the time of such award
excess the amount of such rental loss for the same period that Lessee proves
could be reasonably avoided: that portion of the leasing commission paid by
Lessor pursuant to Article 15 applicable to the unexpired term of this Lease.
Unpaid installments of rent or other sums shall bear interest from the date
due at the rate of 10% per annum. In the event Lessee shall have abandoned the
Premises, Lessor shall have the option of (i) retaking possession of the
Premises and recovering from Lessee the amount specified in this Paragraph
13.2(a), or (ii) proceeding under Paragraph 13.2(b).

                  (b) Maintain Lessee's right to possession in which case this
Lease shall continue in effect whether or not Lessee shall have abandoned the
Premises. In such event Lessor shall be entitled to enforce all of Lessor's
rights and remedies under this Lease, Including the right to recover the rent
as it becomes due hereunder.


                                       9
<PAGE>


                  (c) Pursue any other remedy now or hereafter available to
Lessor under the laws or judicial decisions of the State of California.

         13.3 Default by Lessor, Lessor shall not be in default unless Lessor
fails to perform obligations required of Lessor within a reasonable time, but
in no event later than thirty (30) days after written notice by Lessee to
Lessor and to the holder of any first mortgage or deed of trust covering the
Premises whose name and address shall have theretofore been furnished to
Lessee in writing, specifying wherein Lessor has failed to perform such
obligation: provided, however, that if the nature of Lessor's obligation is
such that more than thirty (30) days are required for performance than Lessor
shall not be in default if Lessor commences performance within such 30-day
period and thereafter diligently prosecutes the same to completion.

         13.4 Late Charges. Lessee hereby acknowledges that late payment by
Lessee to Lessor of rent and other sums due hereunder may cause Lessor to
incur late charges which may be imposed on Lessor by the terms of any mortgage
or trust deed covering the Premises. Accordingly, if any installment of rent
or any other sum due from Lessee shall not be received by Lessor or Lessor's
designee within ten (10) days after such amount shall be due. Lessee shall pay
to Lessor a late charge equal to the late charge imposed under any mortgage or
trust deed. Acceptance of such late charge by Lessor shall in no event
constitute a waiver of Lessee's default with respect, to such overdue amount,
nor prevent Lessor from exercising any of the other rights and remedies
granted hereunder.

14. Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain, or sold under the threat of the exercise of said
poser (all of which are herein called "condemnation:), this Lease shall
terminate as to the part so taken as of the date the condemning authority
takes title or possession, whichever first occurs. If more than 10% of the
floor area of the improvements on the premises, or more than 25% of the land
area of the Premises which is not occupied by any improvements, is taken by
condemnation, Lessee may, at Lessee's option, to be exercised in writing only
within ten (10) days after Lessor shall have given Lessee written notice of
such taking for in the absence of such notice, within ten (10 days after the
condemning authority shall have taken possession) terminate this Lease as of
the date the condemning authority takes such possession. If Lessee does not
terminate this Lease in accordance with the foregoing, this Lease shall remain
in full force and effect as to the effect as to the portion of the


                                      10
<PAGE>


Premises remaining, except that the rent shall be reduced in the proportion
that the floor area taken bears to the total floor area of the building
situated on the Premises. Any award for the taking of all or any part of the
Premises under the power of eminent domain or any payment made under threat of
the exercise of such power shall be the property of Lessor, whether such award
shall be made as compensation for diminution in value of the leasehold or for
the taking of the fee, or as severance damages: provided, however, that Lessee
shall be entitled to any award for loss of or damage to Lessee's trade
fixtures and removable personal property. In the event that this Lessee is not
terminated by reason of such condemnation. Lessor shall, to the extent of
severance damages received by Lessor in connection with such condemnation,
repair any damage to the Premises caused by such condemnation except to the
extent that Lessee has been reimbursed therefor by the condemning authority,
Lessee shall pay any amount in excess of such severance damages required to
complete such repair.

15. Cancellation and/or Modification. This lease shall not be modified or
canceled without the express written consent of NatWest Bank, N.A., unless the
loan of $1,500,000 made to Jack C. Bendheim by NatWest Bank, N.A. on June 30,
1995 shall have been paid in full.

16.      General Provisions.

         16.1     Estoppel Certificate.

                  (a) Lessee shall at any time upon not less than ten (10)
days' prior written notice from Lessor execute, acknowledge and deliver to
Lessor a statement in writing (i) certifying that this Lease is unmodified and
in full force and effect for, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full force
and effect and the date to which the rent and other charges are paid in
advance, if any, and (ii) acknowledging that there are not, to Lessee's
knowledge, any uncured defaults on the part of Lessor hereunder, or specifying
such defaults if any are claimed. Any such statement may be conclusively
relied upon by any prospective purchaser or encumbrances of the Premises.

                  (b) Lessee's failure to deliver such statement within such
time shall be conclusive upon Lessee (i) that this Lessee is in full force and
effect, without modification except as may be represented by Lessor, (ii) that
there are no uncured defaults in Lessor's performance, and (iii) that not more
than one month's rent has been paid in advance.


                                      11
<PAGE>


                  (c) If Lessor desires to finance or refinance the Premises,
or any part thereof, Lessee hereby agrees to deliver to any lender designated
by Lessor such financial statements of Lessee as may be reasonably required by
such lender. Such statements shall include the past three weeks financial
statements of Lessee. All such financial statements shall be received by
Lessor in confidence and shall be used only for the purposes herein set forth.

         16.2 Lessor's Liability. The term "Lessor" as used herein shall mean
only the owner or owners at the time in question of the fee title or a
lessee's interest in a ground lease of the Premises, and except as expressly
provided in Paragraph 15, in the even of any transfer of such title or
interest, Lessor herein named (and in case of any subsequent transfers the
then grantor) shall be relieved from and after the date of such transfer of
all liability as respects Lessor's obligations thereafter to be performed,
provided that any funds in the hands of Lessor or the then grantor at the time
of such transfer, in which Lessee has an interest, shall be delivered to the
grantee. The obligations contained in this Lease to be performed by the Lessor
shall, subject as aforesaid, be binding on Lessor's successors and assigns,
only during their respective periods of ownership.

         16.3 Severability. The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.

         16.4 Interest on Past-due Obligations. Except as expressly herein
provided, any amount due to Lessor not paid when due shall bear interest at
10% per annum from the dat due. Payment of such interest shall not excuse or
cure any default by Lessee under the Lease.

         16.5     Time of Essence. Time is of the essence.

         16.6     Captions.  Article and paragraph captions are not a
part hereof.

         16.7 Incorporation of Prior Agreements; Amendments. this Lease
contains all agreements of the parties with respect to any matter mentioned
herein. No prior agreement or understanding pertaining to any such matter
shall be effective. This Lease may be modified in writing only, signed by the
parties in interest at the time of the modification.

         16.8     Notices.  Any notice required or permitted to be given
hereunder shall be in writing and may be served personally or by


                                      12
<PAGE>


regular mail, addressed to Lessor and Lessee respectively at the addresses set
forth after their signatures at the end of this Lease.

         16.9 Waivers. No waiver by Lessor of any provision hereof shall be
deemed a waiver of any other provision hereof or of any subsequent breach by
Lessee of the same or any other provision. Lessor's consent to or approval of
any act shall not be deemed to render unnecessary the obtaining of Lessor's
consent to or approval of any subsequent act by Lessee. The acceptance of rent
hereunder by Lessor shall not be a waiver of any preceding breach by Lessee of
any provision hereof, other than the failure of Lessee to pay the particular
rent so accepted, regardless of Lessor's knowledge of such preceding reach at
the time of acceptance of such rent.

         16.10 Recording. Lessee shall not record this Lease without Lessor's
prior written consent, and such recording shall, at the option of Lessor,
constitute a non-curable default of Lessee hereunder. Either party shall, upon
request of the other, execute, acknowledge and deliver to the other a "short
form" memorandum of this Lease for recording purposes.

         16.11 Holding Over. If Lessee remains in possession of the Premises
or any part thereof after the separation of the term hereof without the
express written consent of Lessor, such occupancy shall be a tenancy from
month to month at a rental in the amount of the last monthly rental plus all
other charges payable hereunder, and upon all the terms hereof applicable to a
month-to-month tenancy.

         16.12 Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall, whenever possible, be cumulative with all other
remedies at law or in equity.

         16.13 Covenants and Conditions. Each provision of this Lease
performable by lessee shall be both a covenant and as condition.

         16.14 Binding Effect: choice of Law. Subject to any provisions hereof
restricting assignment or subletting by Lessee and subject to the provisions
of Paragraph 16.2, this Lease shall bind the parties, their personal
representatives, successors and assigns. This Lease shall be governed by the
Laws of the State of California.


                                      13
<PAGE>


         16.15 Subordination.

                  (a) This Lease, at Lessor's option, shall be subordinate to
any ground lease, mortgage, deed of trust, or any other hypothecation for
security now or hereafter placed upon the real property of which the Premises
are a part and to any and all advances made on the security thereof and to all
renewals, modifications, consolidations, replacements and extensions thereof.
Notwithstanding such subordination. Lessee's right to quiet possession of the
Premises shall not be disturbed if Lessee is not in default and so long as
Lessee shall pay the rent and observe and perform all of the provisions of
this Lease, unless this Lease is otherwise terminated pursuant to its terms.
If any mortgagee, trustee or ground lessor shall elect to have this Lease
prior to the lien of its mortgage, deed of trust or ground lease, and shall
give written notice thereof to Lessee, this Lease shall be deemed prior to
such mortgage, deed of trust or ground lease, whether this Lease is dated
prior or subsequent to the date of said mortgage, deed of trust or ground
lease or the date of recording thereof.

                  (b) Lessee agrees to execute any documents required to
effectuate such subordination or to make this Lease prior to the lien of any
mortgage, deed of trust or ground lease, as the case may be, and failing to do
so within ten (10) days after written demand, does hereby make, constitute and
irrevocably appoint Lessor as Lessee's attorney in fact and in Lessee's name,
place and stead, to do so.

         16.16 Attorney's Fees. If either party or the broker named herein
brings an action to enforce the terms hereof or declare rights hereunder the
prevailing party in any such action, on trial or appeal, shall be entitled to
this reasonable attorney's fees to be paid by the losing party as fixed by the
court. The provisions of this paragraph shall inure to the benefit or the
broker named herein who seeks to enforce a right hereunder.

         16.17 Lessor's Access. Lessor and Lessor's agents shall have the
right to enter the Premises at reasonable times for the purpose of inspecting
the same, showing the same to prospective purchases, or lenders, and making
such alterations, repairs, or additions to the Premises or to the building of
which they are a part as lessor may deem necessary or desirable. Lessor may at
any time place on or about the Premises any ordinary "For Sale" signs and
Lessor may at any time during the last 120 days of the term hereof place on or
about the Premises any ordinary "For Lease" signs, all without rebate of rent
or liability to Lessee.


                                      14
<PAGE>


         16.18 Signs and Auctions. Lessee shall not place any sign upon the
Premises or conduct any auction thereon without Lessor's prior written
consent.

         16.19 Merger. The voluntary or other surrender of this Lease by
Lessee, or a mutual cancellation thereof, shall not work a merger, and shall,
at the option of Lessor, terminate all or any existing subtenancies or may, at
the option of Lessor, operate as an assignment to Lessor of any or all of such
subtenancies.

         16.20 Corporate Authority. If Lessee is a corporation, each
individual executing this Lease on behalf of said corporation represents and
warrants that he is duly authorized to execute and deliver this Lease on
behalf of said corporation.

         17.1 Payment of Taxes. Lessee shall pay the real property tax as
defined in paragraph 10.2, applicable to the Premises during the term of this
Lease. All such payments shall be made at least ten (10) days prior to the
delinquency date of such payment. Lessee shall promptly furnish Lessor with
satisfactory evidence that such taxes have been paid. If any such taxes paid
by Lessee shall cover any period of time prior to or after the expiration term
thereof, Lessee's share of such taxes shall be equitably prorated to cover
only the period of time within the tax fiscal year during which this Lease
shall be in effect and Lessor shall reimburse Lessee to the extent required.
If Lessee shall fail to pay any such taxes, Lessor shall have the right to pay
the same, in which case Lessee shall repay such amount to Lessor with Lessee's
next rent installments together with interest at the maximum rate then
allowable by law.

         17.2 Definitions of "Real Property Tax". As said herein, the term
"real Property tax" shall include any form of real estate tax or assessments,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than interference,
personal income or estate taxes) imposed on the Premises by any authority
having the direct or indirect power to tax, including any city, state or
federal government, or any school, agricultural, sanitary, agricultural,
street, drainage or other improvement district thereof, as against any legal
or equitable interest of Lessor in the Premises or in the real property of
which the Premises are a part, as against Lessor's right to rent or other
income therefrom, and as against Lessor's business of leasing the Premises.
The term "real property tax" shall also include any tax, fee, levy, assessment
or charge (i) in substitution of, partially or totally, any tax, fee, levy,


                                      15
<PAGE>


assessment or charge herein above included within the definition of "real
property tax" or (ii) the nature of which was hereinbefore included with the
definition of "real property tax", or (iii) which is imposed for a service or
right not charged prior to June 1, 1978, or, if previously charged, has been
increased since June 1, 1978, or (iv) which is imposed as a result of a
transfer, either partial or total of Lessor's interest in the Premises or
which is added to a tax or charge hereinbefore included within the definition
of real property tax by reason of such transfer, or (v) which is imposed by
reason of this transaction, any modification or charges hereto or any
transfers hereof.

         The parties hereto have executed this Lease at the place and on the
dates specified immediately adjacent to their respective signatures.

FIRST DICE COMPANY, A CALIFORNIA LIMITED PARTNERSHIP
By:  WESTERN MAGNESIUM CORP., General Partner
By:  /s/ Jack C. Bendheim
     --------------------
Jack C. Bendheim, President
"Lessor"
Executed at Epstein, Epstein, Brown & Bosch on June 30, 1995.
Address:  245 Green Village Rd., Chatham, N.J. 07928-0901

PHIBRO-TECH, INC.
By:  /s/ Nathan Bistricer
     --------------------
V.P. CFO
"Lessee"
Executed at Epstein, Epstein, Brown & Bosch on June 30, 1995.
Address:  245 Green Village Rd., Chatham, N.J. 07928-0901


                                      16
<PAGE>


                                 DESCRIPTION

                                 SCHEDULE "A"

PARCEL 1 OF THE PARCEL MAP 16989, IN THE CITY OF SANTA FE SPRINGS, COUNTY OF
LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 181 PAGE 76 OF
PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

ALSO, THAT PORTION OF DICE ROAD AS SHOWN ON PARCEL MAP NO. 16589, IN THE CITY
OF SANTA FE SPRINGS, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, FILED IN BOOK
181 PAGE 76 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY AS DESCRIBED IN THE DEED TO THE CITY OF SANTA FE SPRINGS, RECORDED JULY
26, 1968 AS INSTRUMENT NO. 2723 OF OFFICIAL RECORDS OF SAID COUNTY, BOUNDED IN
THE NORTH BY THE EASTERLY PROLONGATION OF THAT CERTAIN COURSE IN THE NORTHERLY
BOUNDARY OF SAID PARCEL MAP NO. 16989 AS HAVING A BEARING AND LENGTH OF "NORTH
78 DEGREES 25 MINUTES 00 SECONDS WEST 349.97 FEET" AND BOUNDED ON THE SOUTH BY
THE EASTERLY PROLONGATION OF THE SOUTHERLY LINE OF SAID PARCEL MAP NO. 16589.

EXCEPT THEREFROM THE PROPERTY HEREBY CONVEYED THAT PORTION THEREOF LYING BELOW
A DEPTH OF 500 FEET, MEASURED VERTICALLY, FROM THE CONTOUR OF THE SURFACE OF
SAID PROPERTY; HOWEVER, GRANTOR, OR ITS SUCCESSORS AND ASSIGNS, SHALL NOT HAVE
THE RIGHT FOR ANY PURPOSE WHATSOEVER TO ENTER UPON, INTO OR THROUGH THE
SURFACE OF SAID PROPERTY OR ANY PART THEREOF LYING BETWEEN SAID SURFACE AND
500 FEET BELOW SAID SURFACE, AS SHOWN IN DEED RECORDED OCTOBER 24, 1985 AS
INSTRUMENT NO. 85-1254948.


                                      17

<PAGE>
                            FIRST AMENDMENT TO LEASE

         THIS FIRST AMENDMENT TO LEASE is made and entered into this ____ day
of May, 1998 by and between First Dice Road Company, a California Limited
Partnership ("Landlord") and Phibro-Tech, Inc., a Delaware corporation
("Tenant")

         WHEREAS, Landlord and Tenant entered into a certain lease dated June
30, 1995 (the "Lease") pursuant to which Landlord leased to Tenant the Demised
Premises set forth on Schedule A annexed to the Lease; and

         WHEREAS, Landlord and Tenant have agreed to amend the Lease;

         NOW, THEREFORE, for $10.00 and other good and valuable consideration,
the receipt and legal adequacy of which are hereby acknowledged, the parties do
hereby agree as follows:

                  1. The term of the Lease, originally scheduled to expire on
June 29, 2005, is hereby extended through December 31, 2008;

                  2. Except as modified hereby, the Lease is unamended and
shall continue in full force and effect, and the parties hereto ratify all the
terms and conditions of the Lease; and

                  3. This First Amendment to Lease may be executed in
counterparts, each of which shall be deemed an original, but all of which shall
be deemed part of one and the same instrument.

                                           FIRST DICE COMPANY
Witness:                                   a California Limited Partnership

 /s/ Joseph M. Katzenstein                 By:      Western Magnesium Corp.
- ---------------------------                         its general partner


                                           By:  /s/ Jack C. Bendheim
                                                -------------------------------
                                                    Jack C. Bendheim


Witness:                                   PHIBRO-TECH, INC.

/s/ Joseph M. Katzenstein
- ---------------------------                By:  /s/ I. David Paley
                                                -------------------------------
                                                Name:  I. David Paley
                                                       ------------------------
                                                Title: CEO
                                                       ------------------------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.11
<SEQUENCE>14
<FILENAME>0014.txt
<DESCRIPTION>MASTER LEASE AGREEMENT BETWEEN GENERAL ELECTRIC
              CAPITAL CORP., PHILIPP BROTHERS CHEMICALS, INC.
              AND PHIBRO-TECH, INC.
<TEXT>


<PAGE>

                            MASTER LEASE AGREEMENT
                                    (Quasi)


       THIS MASTER LEASE AGREEMENT, dated as of 2/27/98 ("Agreement"), between
General Electric Capital Corporation, with an office at 44 Old Ridgebury Road,
Danbury, CT, 06810-5105 (hereinafter called, together with its successors and
assigns, if any, "Lessor"), and Philip Brothers Chemicals, Inc. & Phibro-Tech,
Inc. a corporation(s) organized and existing under the laws of the State of
New Jersey with their mailing address and chief place of business at One
Parker Plaza, Fort Lee, NJ 07024 (each jointly and severally being a "Lessee"
and collectively hereinafter called "Lessee").

                                  WITNESSETH:

I.    LEASING:
(a) Subject to the terms and conditions set forth below, Lessor agrees to
lease to Lessee, and Lessee agrees to lease from Lessor, the equipment
("Equipment") described in Annex A to any schedule hereto ("Schedule"). Terms
defined in a Schedule and not otherwise defined herein shall have the meanings
ascribed to them in such Schedule. (b) The obligation of Lessor to purchase
Equipment from the manufacturer or supplier thereof ("Supplier") and to lease
the same to Lessee under any Schedule shall be subject to receipt by Lessor,
prior to the Lease Commencement Date (with respect to such Equipment), of each
of the following documents in form and substance satisfactory to Lessor: (i) a
Schedule relating to the Equipment then to be leased hereunder, (ii) paid in
full invoice or other evidence of ownership of the Equipment, (iii) evidence
of insurance which complies with the requirements of Section IX and (iv) such
other documents as Lessor may reasonably request. As a further condition to
such obligations of Lessor, Lessee shall, upon delivery of such Equipment (but
not later than the Last Delivery Date specified in the applicable Schedule)
execute and deliver to Lessor a Certificate of Acceptance (in the form of
Annex C to the applicable Schedule) covering such Equipment. Lessor hereby
appoints Lessee its agent for inspection and acceptance of the Equipment from
the Supplier. Upon execution by Lessee of any Certificate of Acceptance, the
Equipment described thereon shall be deemed to have been delivered to, and
irrevocably accepted by, Lessee for lease hereunder.

II.   TERM, RENT AND PAYMENT:
(a) The rent payable hereunder and Lessee's right to use the Equipment shall
commence on the date of execution by Lessee of the Certificate of Acceptance
for such Equipment ("Lease Commencement Date"). The term of this Agreement
shall be the period specified in the applicable Schedule. If any term is
extended, the word "term" shall be deemed to refer to all extended terms, and
all provisions of this Agreement shall apply during any extended terms, except
as may be otherwise specifically provided in writing. (b) Rent shall be paid
to Lessor at its address stated above, except as otherwise directed by Lessor.
Payments of rent shall be in the amount set forth in, and due in accordance
with, the provisions of the applicable Schedule. If one or more Advance
Rentals are payable, such Advance Rental shall be (a) set forth on the
applicable Schedule, (ii) due upon acceptance by Lessor of such Schedule, and
(iii) when received by Lessor, applied to the first rent payment and the
balance, if any, to the final rental payment(s) under such Schedule. In no
event shall any Advance Rental or any other rent payments be refunded to
Lessee. If rent is not paid within ten days of its due date, Lessee agrees to
pay a late charge of five cents ($0.05) per dollar on, and in addition to, the
amount of such rent but not exceeding the lawful maximum, if any.

III.  TAXES:
Lessee shall have no liability for taxes imposed by the United States of
America or any State or political subdivision thereof which are on or measured
by the net income of Lessor. Lessee shall report (to the extent that it is
legally permissible) and pay promptly all other taxes, fees and assessments
due, imposed, assessed or levied against any Equipment (or the purchase,
ownership, delivery, leasing, possession, use or operation thereof), this
Agreement (or any rentals or receipts hereunder), any Schedule, Lessor or
Lessee by any foreign, federal, state or local government or taxing authority
during or

<PAGE>

related to the term of this Agreement including, without limitation, all
license and registration fees, and all sales, use, personal property, excise,
gross receipts, franchise, stamp or other taxes, imposts, duties and charges,
together with any penalties, fines or interest thereon (all hereinafter called
"Taxes"). Lessee shall (i) reimburse Lessor upon receipt of written request
for reimbursement for any Taxes charged to or assessed against Lessor, (ii) on
request of Lessor, submit to Lessor written evidence of Lessee's payment of
Taxes, (iii) send a copy thereof to Lessor.

IV.   REPORTS:
(a) Lessee will notify Lessor in writing, within ten days after any tax or
other lien shall attach to any Equipment, of the full particulars thereof and
of the location of such Equipment on the date of such notification. (b) Lessee
will within 90 days of the close of each fiscal year of Lessee, deliver to
Lessor, Lessee's balance sheet and profit and loss statement, certified by a
recognized firm of certified public accountants. Upon request Lessee will
deliver to Lessor quarterly, within 90 days of the close of each fiscal
quarter of Lessee, in reasonable detail, copies of Lessee's quarterly
financial report certified by the chief financial officer of Lessee. (c)
Lessee will permit Lessor to inspect any Equipment during normal business
hours. (d) Lessee will keep the Equipment at the Equipment Location (specified
in the applicable Schedule) and will promptly notify Lessor of any relocation
of Equipment. Upon the written request of Lessor, Lessee will notify Lessor
forthwith in writing of the location of any Equipment as of the date of such
notification. (e) Lessee will promptly and fully report to Lessor in writing
if any Equipment is lost or damaged (where the estimated repair costs would
exceed 10% of its then fair market value), or is otherwise involved in an
accident causing personal injury or property damage. If within 60 days after
any request by Lessor, Lessee will furnish a certificate of an authorized
officer of Lessee stating that he has reviewed the activities of Lessee and
that, to the best of his knowledge, there exists no default (as described in
Section XI) or event which with notice or lapse of time (or both) would become
such a default.

V. DELIVERY, USE AND OPERATION:
(a) All Equipment shall be shipped directly from the Supplier to Lessee. (b)
Lessee agrees that the Equipment will be used by Lessee solely in the conduct
of its business and in a manner complying with all applicable federal, state,
and local laws and regulations. (c) LESSEE SHALL NOT ASSIGN, MORTGAGE, SUBLET
OR HYPOTHECATE ANY EQUIPMENT, OR THE INTEREST OF LESSEE HEREUNDER, NOR SHALL
LESSEE REMOVE ANY EQUIPMENT FROM THE CONTINENTAL UNITED STATES, WITHOUT THE
PRIOR WRITTEN CONSENT OF THE LESSOR. (d) Lessee will keep the Equipment free
and clear of all liens and encumbrances other than those which are granted in
favor of or result from acts of Lessor.

VI.  SERVICE:
(a) Lessee will, at its sole expense, maintain each unit of Equipment in good
operating order, repair, condition and appearance in accordance with
manufacturer's recommendations, normal wear and tear excepted. Lessee shall,
if at any time requested by Lessor, affix in a prominent position on each unit
of Equipment plates, tags or other identifying labels showing ownership
thereof by Lessee and Lessor's security interest therein. (b) Lessee will not,
without the prior consent of Lessor, affix or install any accessory, equipment
or device on any Equipment if such addition will impair the originally
intended function or use of such Equipment. All additions, repairs, parts,
supplies, accessories, equipment and devices furnished, attached or affixed to
any Equipment which are not readily removable shall be made only in compliance
with applicable law, and shall become subject to the lien of Lessor. Lessee
will not, without the prior written consent of Lessor and subject to such
conditions as Lessor may impose for its protection, affix or install any
Equipment to or in any other personal or real property. (c) Any alterations or
modifications to the Equipment that may, at any time during the term of this
Agreement, be required to comply with any applicable law, rule or regulation
shall be made at the expense of Lessee.

VII.  STIPULATED LOSS VALUE:
Lessee shall promptly and fully notify Lessor in writing if any unit of
Equipment shall be or become worn out, lost, stolen, destroyed, irreparably
damaged in the reasonable

<PAGE>

determination of Lessee, or permanently rendered unfit for use from any cause
whatsoever (such occurrences being hereinafter called "Casualty Occurrences").
On the rental payment date next succeeding a Casualty Occurrence (the "Payment
Date"), Lessee shall pay Lessor the sum of (x) the Stipulated Loss Value of
such unit calculated as of the rental payment date next preceding such
Casualty Occurrence ("Calculation Date"); and (y) all rental and other amounts
which are due hereunder as of the Payment Date. Upon payment of all sums due
hereunder, the term of this lease as to such unit shall terminate and (except
in the case of the loss, theft or complete destruction of such unit) Lessor
shall be entitled to recover possession of such unit.

VIII.  LOSS OR DAMAGE:
Lessee hereby assumes and shall bear the entire risk of any loss, theft,
damage to, or destruction of, any unit of Equipment from any cause whatsoever
from the time the Equipment is shipped to Lessee.

IX. INSURANCE:
Lessee agrees, at its own expense, to keep all Equipment insured for such
amounts and against such hazards as Lessor may require, including, but not
limited to, insurance for damage to or loss of such Equipment and liability
coverage for personal injuries, death or property damage, with Lessor named as
additional insured and with a loss payable clause in favor of Lessor, as its
interest may appear, irrespective of any breach of warranty or other act or
omission of Lessee. The insurance shall provide (i) liability coverage in an
amount equal to at least ONE MILLION U.S. DOLLARS ($1,000.000.00) total
liability per occurrence, and (ii) casualty/property damage coverage in an
amount equal to the higher of the Stipulated Loss value or the full
replacement cost of the Equipment, or at such other amounts as may be required
by Lessor All such policies shall be with companies, and on terms,
satisfactory to Lessor. Lessee agrees to deliver to Lessor evidence of
insurance satisfactory to Lessor. No insurance shall be subject to any
co-insurance clause. Lessee hereby appoints Lessor as Lessee's
attorney-in-fact to make proof of loss and claim for insurance, and to make
adjustments with insurers and to receive payment of and execute or endorse all
documents, checks or drafts in connection with payments made as a result of
such insurance policies. Any expense of Lessor in adjusting or collecting
insurance shall be borne by Lessee. Lessee will not make adjustments with
insurers except (i) with respect to claims for damage to any unit of Equipment
where the repair costs do not exceed 10% of such unit's fair market value, or
(ii) with Lessor's written consent. Said policies shall provide that the
insurance may not be altered or canceled by the insurer until after thirty
(30) days written notice to Lessor. Lessor may, at its option, apply proceeds
of insurance, in whole or in part, to (i) repair or replace Equipment or any
portion thereof, or (ii) satisfy any obligation of Lessee to Lessor hereunder.

X.     RETURN OF EQUIPMENT:
(a) Upon any expiration or termination of this Agreement or any Schedule,
Lessee shall promptly, at its own cost and expense: (i) perform any testing
and repairs required to place the affected units of Equipment in the same
condition and appearance as when received by Lessee (reasonable wear and tear
excepted) and in good working order for their originally intended purpose;
(ii) if reinstallation, disassembly or crating is required, cause such units
to be reinstalled, disassembled and crazed by an authorized manufacturer's
representative or such other service person as is satisfactory to Lessor, and
(iii) return such units to a location within the continental United States as
Lessor shall direct. (b) Until Lessee has fully complied with the requirements
of Section X(a) above, Lessee's rent payment obligation and all other
obligations under this Agreement shall continue from month to month
notwithstanding any expiration or termination of the lease term. Lessor may
terminate such continued leasehold interest upon ten (10) days notice to
Lessee.

XI.    DEFAULT:
(a) Lessor may in writing declare this Agreement in default if Lessee breaches
its obligation to pay rent or any other sum when due and fails to cure the
breach within ten (10) days; Lessee breaches any of its insurance obligations
under Section I; Lessee breaches any of its other obligations to Lessor
hereunder or under any instrument, document or agreement between Lessor and
Lessee and fails to cure that breach within


<PAGE>

thirty (30) days after written notice thereof; any representation or warranty
made by Lessee in connection with this Agreement shall be false or misleading
in any material respect; Lessee becomes insolvent or ceases to do business as
a going concern; any Equipment is illegally used; or a petition is filed by or
against Lessee under any bankruptcy or insolvency laws. Such declaration shall
apply to all Schedules except as specifically excepted by Lessor. (b) After
default, at the request of Lessor, Lessee shall comply with the provisions of
Section X(a). Lessee hereby authorizes Lessor to enter, with or without legal
process, any premises where any Equipment is believed to be and take
possession thereof. Lessee shall, without further demand, forthwith pay to
Lessor (i) as liquidated damages for loss of a bargain and not as a penalty,
the Stipulated Loss Value of the Equipment (calculated as of the rental next
preceding the declaration of default), and (ii) all rentals and other sums
then due hereunder. Lessor may, but shall not be required to, sell Equipment
at private or public sale, in bulk or in parcels, with or without notice, and
without having the Equipment present at the place of sale; or Lessor may, but
shall not be required to, lease, otherwise dispose of or keep idle all or part
of the Equipment; and Lessor may use Lessees, premises for any or all of the
foregoing without liability for rent, costs, damages or otherwise. The
proceeds of sale, lease or other disposition, if any, shall be applied in the
following order of priorities: (1) to pay all of Lessor's costs, charges and
expenses incurred in taking, removing, holding, repairing and selling, leasing
or otherwise disposing of Equipment; then, (2) to the extent not previously
paid by Lessee, to pay Lessor all sums due from Lessee hereunder; then (3) to
reimburse to Lessee any sums previously paid by Lessee as liquidated damages;
and (4) any surplus shall be retained by Lessor. Lessee shall pay any
deficiency in (1) and (2) forthwith. (c) The foregoing remedies are
cumulative, and any or all thereof may be exercised in lieu of or in addition
to each other or any remedies at law, in equity, or under statute. Lessee
waives notice of sale or other disposition (and the time and place thereof),
and the manner and place of any advertising. Lessee shall pay Lessor's actual
attorney's fees incurred in connection with the enforcement, assertion,
defense or preservation of Lessor's rights and remedies hereunder, or if
prohibited by law, such lesser sum as may be permitted. Waiver of any default
shall not be a waiver of any other or subsequent default. Any default under
the terms of this or any other agreement between Lessor and Lessee may be
declared by Lessor a default under this and any such other agreement.

XII.   ASSIGNMENT:
Lessor may, without the consent of Lessee, assign this Agreement or any
Schedule. Lessee agrees that if Lessee receives written notice of an
assignment from Lessor, Lessee will pay all rent and other amounts payable
under any assigned Equipment Schedule to such assignee or as instructed by
Lessor. Lessee further agrees to confirm in writing receipt of a notice of
assignment as may be reasonably requested by assignee. Lessee hereby waives
and agrees not to assert against any such assignee any defense, set-off,
recoupment claim or counterclaim which Lessee has or may at any time have
against Lessor for any reason whatsoever.

XIII. NET LEASE; NO SET-OFF, ETC:
This Agreement is a net lease. Lessee's obligation to pay rent and other
amounts due hereunder shall be absolute and unconditional. Lessee shall not be
entitled to any abatement or reductions of, or set-offs against, said rent or
other amounts, including, without limitation, those arising or allegedly
arising out of claims (present or future, alleged or actual, and including
claims arising out of strict tort or negligence of Lessor) of Lessee against
Lessor under this Agreement or otherwise. Nor shall this Agreement terminate
or the obligations of Lessee be affected by reason of any defect in or damage
to, or loss of possession, use or destruction of, any Equipment from
whatsoever cause. It is the intention of the parties that rents and other
amounts due hereunder shall continue to be payable in all events in the manner
and at the times set forth herein unless the obligation to do so shall have
been terminated pursuant to the express terms hereof.

XIV.   INDEMNIFICATION:
(a)      Lessee hereby agrees to indemnify, save and keep harmless Lessor, its
agents,

<PAGE>

employees, successors and assigns from and against any and all losses,
damages, penalties, injuries, claims, actions and suits, including legal
expenses, of whatsoever kind and nature, in contract or tort, whether caused
by the active or passive negligence of Lessor or otherwise, and including, but
not limited to, Lessor's strict liability in tort, arising out of (i) the
selection, manufacture, purchase, acceptance or rejection of Equipment, the
ownership of Equipment during the term of this Agreement, and the delivery,
lease, possession, maintenance, uses, condition, return or operation of
Equipment (including, without limitation, latent and other defects, whether or
not discoverable by Lessor or Lessee and any claim for patent, trademark,
copyright infringement or environmental damage) or (ii) the condition of
Equipment sold or disposed of after use by Lessee, any sublease or employees
of Lessee. Lessee shall, upon request, defend any actions based on, or arising
out of, any of the foregoing. (b) All of Lessor's rights, privileges and
indemnities contained in this Section XIV shall survive the expiration or
other termination of this Agreement and the rights, privileges and indemnities
contained herein are expressly made for the benefit of and shall be
enforceable by Lessor, its successors and assign.

XV.     DISCLAIMER:
LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE EQUIPMENT WITHOUT ANY ASSISTANCE
FROM LESSOR, ITS AGENTS OR EMPLOYEES. LESSOR DOES NOT MAKE, HAS NOT MADE, NOR
SHALL BE DEEMED TO MAKE OR HAVE MADE, ANY WARRANTY OR REPRESENTATION, EITHER
EXPRESS OR IMPLIED, WRITTEN OR ORAL, With RESPECT TO THE EQUIPMENT LEASED
HEREUNDER OR ANY COMPONENT THEREOF, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTY AS TO DESIGN, COMPLIANCE WITH SPECIFICATIONS, QUALITY OF MATERIALS OR
WORKMANSHIP, MERCHANTABILITY, FITNESS FOR ANY PURPOSE, USE OR OPERATION,
SAFETY, PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, OR TITLE. All such risks,
as between Lessor and Lessee, are to be borne by Lessee. Without limiting the
foregoing, Lessor shall have no responsibility or liability to Lessee or any
other person with respect to any of the following, regardless of any
negligence of Lessor (i) any liability, loss or damage caused or alleged to be
caused directly or indirectly by any Equipment, any inadequacy thereof, any
deficiency or defect (latent or otherwise) therein, or any other circumstance
in connection therewith; (ii) the use, operation or performance of any
Equipment or any risks relating thereto; (iii) any interruption of service,
loss of business or anticipated profits or consequential damages; or (iv) the
delivery, operation, servicing, maintenance, repair, improvement or
replacement of any Equipment. If, and so long as, no default exists under this
Lease, Lessee shall be, and hereby is, authorized during the term of this
Lease to assert and enforce, at Lessee's sole cost and expense, from time to
time, in the name of and for the account of Lessor and/or Lessee, as their
interests may appear, whatever claims and rights Lessor may have against any
Supplier of the Equipment.

XVI.    REPRESENTATIONS AND WARRANTIES OF LESSEE:
Lessee hereby represents and warrants to Lessor that on the date hereof and on
the date of execution of each Schedule: (a) Lessee has adequate power and
capacity to enter into, and perform under, this Agreement and all related
documents (together, the "Documents") and is duly qualified to do business
wherever necessary to carry on its present business and operations, including
the jurisdiction(s) where the Equipment is or is to be located. (b) The
Documents have been duly authorized, executed and delivered by Lessee and
constitute valid, legal and binding agreements, enforceable in accordance with
their terms, except to the extent that the enforcement of remedies therein
provided may be limited under applicable bankruptcy and insolvency laws. (c)
No approval, consent or withholding of objections is required from any
governmental authority or instrumentality with respect to the entry into or
performance by Lessee of the Documents except such as have already been
obtained. (d) The entry into and performance by Lessee of the Documents will
not: (i) violate any judgment, order, law or regulation applicable to Lessee
or any provision of Lessee's Certificate of Incorporation or by-laws; or (ii)
result in any breach of, constitute a default under or result in the creation
of any lien, charge, security interest or other encumbrance upon any Equipment
pursuant to any indenture, mortgage, deed of trust, bank loan or credit
agreement or other instrument (other than this Agreement) to which Lessee is a
party. (e) There are no suits or proceedings pending or threatened in court or
before any commission, board or other administrative agency against or
affecting Lessee, which will have a material adverse effect on the ability of
Lessee to fulfill its obligations under this Agreement. (F) The Equipment
accepted under any Certificate of Acceptance is and will remain tangible
personal property. (g) Each

<PAGE>

Balance Sheet and Statement of Income delivered to Lessor has been prepared in
accordance with generally accepted accounting principles, and since the date
of the most recent such Balance Sheet and Statement of Income, there has been
no material adverse change. (h) Lessee is and will be at all times validly
existing and in good standing under the laws of the State of its incorporation
(specified in the first sentence of this Agreement). (i) The Equipment will at
all times be used for commercial or business purposes.

XVII. OWNERSHIP FOR TAX PURPOSES, GRANT OF SECURITY INTEREST; USURY SAVINGS:
(a) For income tax purposes, the parties hereto agree that it is their mutual
intention that Lessee shall be considered the owner of the Equipment.
Accordingly, Lessor agrees (i) to treat Lessee as the owner of the Equipment
on its federal income tax return, (ii) not to take actions or positions
inconsistent with such treatment on or with respect to its federal income tax
return, and (iii) not to claim any tax benefits available to an owner of the
Equipment on or with respect to its federal income tax return. The foregoing
undertakings by Lessor shall not be violated by Lessor's taking a tax position
inconsistent with the forgoing sentence to the extent such a position is
required by law or is taken through inadvertence so long as such inadvertent
tax position is reversed by Lessor promptly upon its discovery. Lessor shall
in no event be liable to Lessee if Lessee fails to secure any of the tax
benefits available to the owner of the Equipment. (b) Lessee hereby grants to
Lessor a first security interest in the Equipment, together with all
additions, attachments, accessions, accessories and accessions thereto whether
or not furnished by the Supplier of the Equipment and any and all
substitutions, replacements or exchanges therefor, and any and all insurance
and/or other proceeds of the property in and against which a security interest
is granted hereunder. Notwithstanding anything to the contrary contained
elsewhere in this Agreement, to the extent that Lessor asserts a purchase
money security interest in any items of Equipment ("PMSI Equipment"): (i) the
PMSI Equipment shall secure only those sums which have been advanced by Lessor
for the purchase of the PMSI Equipment, or the acquisition of rights therein,
or the use thereof (the "PMSI Indebtedness"), and (ii) no other Equipment
shall secure the PMSI Indebtedness. (c) It is the intention of the parties
hereto to comply with any applicable usury laws to the extent that any
Schedule is determined to be subject to such laws, accordingly, it is agreed
that, notwithstanding any provision to the contrary in any Schedule or the
Lease, in no event shall any Schedule require the payment or permit the
collection of interest in excess of the maximum amount permitted by applicable
law. If any such excess interest is contracted for, charged or received under
any Schedule or the Lease, or in the event that all of the principal balance
shall be prepaid so that under any of such circumstances the amount of
interest contracted for, charged or received under any Schedule or the Lease
shall exceed the maximum amount of interest permitted by applicable law, then
in such event (a) the provisions of this paragraph shall govern and control,
(b) neither Lessee nor any other person or entity now or hereafter Liable for
the payment hereof shall be obligated to pay the amount of such interest to
the extent that it is in excess of the maximum amount of interest permitted by
applicable law, (c) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal balance or
refunded to Lessee, at the option of the Lessor, and (d) the effective rate of
interest shall be automatically reduced to the maximum lawful contract rate
allowed under applicable law as now or hereafter construed by the courts
having jurisdiction thereof. It is further agreed that without limitation of
the foregoing, all calculations of the rate of interest contracted for,
charged or received under any Schedule or the Lease which are made for the
purpose of determining whether such rate exceeds the maximum lawful contract
rate, shall be made, to the extent permitted by applicable law, by amortizing,
prorating, allocating and spreading in equal parts during the period of the
full stated term of the indebtedness evidenced hereby, all interest at any
time contracted for, charged or received from Lessee or otherwise by Lessor in
connection with such indebtedness; provided, however, that if any applicable
state law is amended or the law of the United States of America preempts any
applicable state law, so that it becomes lawful for Lessor to receive a
greater interest per annum rate than is presently allowed, the Lessee agrees
that, on the effective date of such amendment or preemption, as the case may
be, the lawful maximum hereunder shall be increased to the maximum interest
per annum rate allowed by the amended state law or the law of the United
States of America.

<PAGE>

XVIII. EARLY TERMINATION:
(a) On or after the First Termination Date (specified in the applicable
Schedule), Lessee may, so long as no default exists hereunder, terminate this
Agreement as to all (but not less than all) of the Equipment on such Schedule
as of a Rent Payment Date ("Termination Date") upon at least 90 days prior
written notice to Lessor. (b) Lessee shall, and Lessor may, solicit cash bids
for the Equipment on an AS IS, WHERE IS BASIS without recourse to or warranty
from Lessor, express or implied ("AS IS BASIS"). Prior to the Termination
Date, Lessee shall (i) certify to Lessor any bids received by Lessee and (ii)
pay to Lessor (A) the Termination Value (calculated as of the rental due on
the Termination Date) for the Equipment, and (B) all rent and other sums due
and unpaid as of the Termination Date. (c) Provided that all amounts due
hereunder have been paid on the Termination Date, Lessor shall (i) sell the
Equipment on an AS IS BASIS for cash to the highest bidder and (ii) refund the
proceeds of such sale (net of any related expenses) to Lessee up to the amount
of the Termination Value. If such sale is not consummated, no termination
shall occur and Lessor shall refund the Termination Value (less any expenses
incurred by Lessor) to Lessee. (d) Notwithstanding the foregoing, Lessor may
elect by written notice, at any time prior to the Termination Date, not to
sell the Equipment. In that event, on the Termination Date Lessee shall (i)
return the Equipment (in accordance with Section X) and (ii) pay to Lessor all
amounts required under Section XVIII(b) less the amount of the highest bid
certified by Lessee to Lessor.

XIX. EARLY PURCHASE OPTION:
(a) Provided that the Lease has not been earlier terminated and provided
further that Lessee is not in default under the Lease or any other agreement
between Lessor and Lessee. Lessee may, UPON AT LEAST 30 DAYS BUT NO MORE THAN
270 DAYS PRIOR WRITTEN NOTICE TO LESSOR OF LESSEE'S IRREVOCABLE ELECTION TO
EXERCISE SUCH OPTION, purchase all (but not less than all) of the Equipment
listed and described in this schedule on any Rent Payment Date following the
First Termination Date as set forth in this Schedule, and prior to the date
which is the scheduled expiration of this Lease, (the "Early Purchase Date")
for a price equal to (i) the Termination Value (calculated as of the Early
Purchase Date) for the Equipment, and (ii) all rent and other sums due and
unpaid as of the Purchase Date (the "Early Option Price"), plus all applicable
sales taxes on an AS IS BASIS. (The purchase option granted by this subsection
shall be referred to herein as the "Early Purchase Option"). (b) If Lessee
exercises its Early Purchase Option with respect to the Equipment leased
hereunder, then on the Early Purchase Date, Lessee shall pay to Lessor any
rent and other sums due and unpaid on the Early Purchase Date and Lessee shall
pay the Early Option Price, plus all applicable sales taxes, to Lessor in
cash.

XX. PURCHASE OPTION:
a. So long as no default exists hereunder and the lease has not been earlier
terminated, Lessee may at lease expiration purchase all (but not less than
all) of the Equipment in any Schedule on an AS IS, WHERE IS BASIS for cash
equal to the amount indicated in such Schedule (the "Option Payment"). The
Option Payment shall be due and payable in immediately available funds on the
Expiration Date. (b) Lessee shall be deemed to have waived this option unless
it provides Lessor with written notice of its irrevocable election to exercise
the same not less than 90 days prior to the Expiration Date.

XXI. MISCELLANEOUS:
(a) LESSEE HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY,
THIS LEASE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN LESSEE AND
LESSOR RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED
TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN LESSEE
AND LESSOR. The scope of this waiver is intended to be all encompassing of any
and all disputes that may be filed in any court (including, without
limitation, contract claims, tort claims, breach of duty claims, and all other
common law and statutory claims). THIS WAIVER IS IRREVOCABLE MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
LEASE, ANY RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING
TO THIS TRANSACTION OR ANY

<PAGE>

RELATED TRANSACTION. In the event of litigation. this Lease may be filed as a
written consent to a trial by the court (b) Unless and until Lessee exercises
its rights under Section XIX above, nothing herein contained shall give or
convey to Lessee any right, title or interest in and to any Equipment except
as a lessee. Any cancellation or termination by Lessor, pursuant to the
provision of this Agreement. Any Schedule, supplement or amendment hereto, or
the lease of any Equipment hereunder, shall not release Lessee from any then
outstanding obligations to Lessor hereunder. All Equipment shall as all times
remain personal property of Lessor regardless of the degree of its annexation
to any real property and shall not by reason of any installation in, or
affixation to, real or personal property become a part thereof. (c) Time is of
the essence of this Agreement, Lessor's failure at any time to require strict
performance by Lessee of any of the provisions hereof shall not waive or
diminish Lessor's right thereafter to demand strict compliance therewith.
Lessee agrees, upon Lessor's request, to execute any instrument necessary or
expedient for filing, recording or perfecting the interest of Lessor. All
notices required to be given hereunder shall be deemed adequately given if
sent by registered or certified mail to the addressee at its address stated
herein, or at such other place as such addressee may have designated in
writing. This Agreement and any Schedule and Annexes thereto constitute the
entire agreement of the parties with respect to the subject master hereof. NO
VARIATION OR MODIFICATION OF THIS AGREEMENT OR ANY WAIVER OF ANY OF ITS
PROVISIONS OR CONDITIONS, SHALL BE VALID UNLESS IN WRITING AND SIGNED BY AN
AUTHORIZED REPRESENTATIVE OF THE PARTIES HERETO.



                                                        /s/                 /s/
                                                        -----------------------
                                                          initials

(d) In case of a failure of Lessee to comply with any provision of this
Agreement, Lessor shall have the right, but shall not be obligated to, effect
such compliance, in whole or in part; and all moneys spent and expenses and
obligations incurred or assumed by Lessor in effecting such compliance shall
constitute additional rent due to Lessor within five days after the date
Lessor sends notice to Lessee requesting payment. Lessor's effecting such
compliance shall not be a waiver of Lessee's default. (e) Any rent or other
amount not paid to Lessor when due hereunder shall bear interest, both before
and after any judgment or termination hereof, at the lesser of eighteen
percent per annum or the maximum rate allowed by law. Any provisions in this
Agreement and any Schedule which are in conflict with any statute, law or
applicable rule shall be deemed omitted, modified or altered to conform
thereto.


IN WITNESS WHEREOF, Lessee and Lessor have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.

LESSOR:                                                       LESSEE:

General Electric Capital Corporation        Philip Brothers Chemicals, Inc.

By: /s/ James R. Giaquinto                  By: /s/ Joseph M Katzenstein
    --------------------------------            ------------------------------

Name: James R. Giaquinto                    Name:  J. Katzenstein
      -----------------------------                ---------------------------

Title: Risk Analyst                         Title:  Treas
                                                   ---------------------------


                                            LESSEE:

                                            Phibro-Tech, Inc.


                                            By: /s/ Joseph M. Katzenstein
                                                ------------------------------

                                           Name:  J. Katzenstein
                                                   ---------------------------

                                            Title:  Treas
                                                    --------------------------


<PAGE>


                               VEHICLE SCHEDULE
                                SCHEDULE NO. 1
                       DATED THIS 2/27/98
                       TO MASTER LEASE AGREEMENT
                       DATED AS OF 2/27/98

Lessor & Mailing Address:

General Electric Capital Corporation
Old Ridgebury Road
Danbury, CT 06810-5105

Lessee & Mailing Address:

Philip Brothers Chemicals, Inc.
One Parker Plaza
Fort Lee, NJ 07024

        &

Phibro-Tech,Inc.44
One Parker Plaza
Fort Lee, NJ07024


Capitalized terms not defined herein shall have the meanings assigned to them
in the Master Lease Agreement identified above ("Agreement"; said Agreement
and this Schedule being collectively referred to as "Lease").

A.      Equipment

        Pursuant to the terms of the Lease, Lessor agrees to acquire and lease
        to Lessee the Equipment listed on Annex A attached hereto and made a
        part hereof.


B.      Financial Terms

        1.   Advance Rent (if any): $ Not Applicable.

        2.   Capitalized Lessor's Cost: $339,039.18.

        3.   Basic Terms, Lease Rate Factor: 2.063844%.

        4.   Daily Lease Rate Factor: 068795%.

        5.   Basic Term (No. of Months): 60.

        6.   Basic Term Commencement Date: 2/27/98.

        7.   Equipment Location: Various locations.

        8.   Lessee Federal Tax ID No: 131840-497.

        9.   Supplier: Acro Trailer, Comptank Corp., Freuhauf
                       Trailer Service, Inc., Poly- Coat Systems, Inc.,
                       Sterling Fluid Systems, Inc.

        10.  Last Delivery Date: 2/27/98

        11.  First Termination Date: Thirty-six (36) months after the Basic
        Term Commencement Date.

        12.  Option Payment $1.00

        13.  Interest Rate: 8.77% per annum.

        14.  Lessee agrees and acknowledges that the Capitalized Lessor's Cost
        of the Equipment as stated on the Schedule is equal to the fair market
        value of the Equipment on the date hereof.


<PAGE>

C.      Term and Rent

        1 Interim Rent. For the period from and including the Lease
        Commencement Date to the Basic Term Commencement Date ("Interim
        Period"), Lessee shall pay as rent ("Interim Rent") for each unit of
        Equipment, the product of the Daily Lease Rate Factor times the
        Capitalized Lessor's Cost of such unit times the number of days in the
        Interim Period. Interim Rent shall be due on Not Applicable


        2 Basic Term Rent. Commencing on 4/1/98 and on the same day of each
        month thereafter (each, a "Rent Payment Date") during the Basic Term,
        Lessee shall pay as rent ("Basic Term Rent") the product of the Basic
        Term, Lease Rate Factor times the Capitalized Lessor's Cost of all
        Equipment on this Schedule.


        3 Adjustment to Capitalized Lessor's Cost. Lessee hereby irrevocably
        authorizes Lessor to adjust the Capitalized Lessor's Cost up or down
        by no more than 10% to account for equipment change orders, equipment
        returns, invoicing errors, and similar matters. Lessee acknowledges
        and agrees that the Rent shall be adjusted as a result of such change
        in the Capitalized Lessor's Cost (pursuant to paragraphs 1 and 2
        above). Lessor shall send Lessee a written notice stating the final
        Capitalized Lessor's Cost, if different from that disclosed on this
        Schedule.

D.      Insurance

        I.   Public Liability: $1,000,000 total liability per occurrence.

        2 Casualty and Property Damage: An amount equal to the higher of the
          Stipulated Loss Value or the full replacement cost of the Equipment.



E.      Modifications and Additions to Agreement

        For purposes of this Schedule only, the Agreement is amended as
follows:

        1.   The first sentence of Section IV(d) shall be deleted in its
             entirety and the following substituted in its stead:


        (d)  Lessee will promptly notify Lessor in writing of a change in the
             Equipment Location in the event that any unit of Equipment fails
             to return to such location for a period of ninety consecutive
             days.


        2. Section V(b) shall be amended to add the following sentence at the
end thereof:


             Lessee will allow only qualified, properly licensed personnel
             selected, employed and controlled by Lessee to operate the
             Equipment.


        3. Section X(a) shall be amended by adding the following at the end
thereof:


             Without limiting the foregoing, upon return, each unit of
             Equipment must meet (i) all of manufactures specifications for
             performance under full, rated loads and (ii) all of the following
             conditions:


<PAGE>

             (A)  Tires: All tires shall be of the same type (original size)
                  and manufacturer (i.e., matched) and have a minimum of fifty
                  percent (50%) remaining tread on original or recapped
                  casings (except that only original casings shall be allowed
                  on the front tires of any power unity.


             (B)  Mileage: In the case of GVW Class 1 through 5 vehicles,
                  average annual mileage shall not exceed 15,000 miles, and in
                  the ease of GVW Class 6 through 8 vehicles, average annual
                  mileage shall not exceed 100,000 miles. Should mileage
                  exceed these limits, the Lessee agrees to pay a mileage
                  surcharge of five cents ($.05) per mile on GVW class 1-5
                  vehicles and four cents ($.04) per mile on GVW class 6-8
                  vehicles, for additional mileage exceeding such limits. All
                  mileage determinations shall be based upon hubodometer
                  readings or, in the absence thereof, by odometer readings.
                  Lessee shall promptly notify Lessor of any malfunction of
                  the hubodometer or odometer.


             (C)  General Condition: With respect to each unit, the cost of
                  necessary repairs for damages to exterior and interior
                  material, may not exceed $250, provided any glass shall not
                  be broken, chipped or cracked. All mechanical and electrical
                  equipment, including radios, heaters, air conditioners and
                  refrigeration units must be in proper operating condition.


             (D)  Documents and Records: Upon return of a unit or units of
                  Equipment, all maintenance records, maintenance record
                  jackets, repair orders, license plates, registration
                  certificates and all other similar documents, in their
                  entirety, will be returned to Lessor.


F.      Interest Rate: interest shall accrue from the Lease Commencement Date
        through and including the date of termination of the Lease.


        Except as expressly modified hereby, all terms and provisions of the
Agreement shall remain in full force and effect. This Schedule is not binding
or effective with respect to the Agreement or Equipment until executed on
behalf of Lessor and Lessee by authorized representatives of Lessor and
Lessee, respectively.

       IN WITNESS WHEREOF, Lessee and Lessor have caused this Schedule to be
executed by their duly authorized representatives as of the date first above
written.

LESSOR:                                     LESSEE:

General Electric Capital Corporation        Philip Brothers Chemicals, Inc.

By: /s/ James R. Giaquinto                  By: /s/ Joseph M. Katzenstein
    --------------------------------            -----------------------------
Name: James R. Giaqiunto                    Name: J. Katzenstein

Title: Risk Analyst                         Title: Treasurer

                                            Attest:

                                            By: /s/ Janet Franco
                                                -----------------------------
                                            Name: Janet Franco

<PAGE>


                                             LESSEE:


                                             Phibro-Tech, Inc.

                                             By: Joseph M. Katzenstein
                                                 ---------------------
                                             Name: J. Katzenstein

                                             Title: Treas


<PAGE>

                                    ANNEX A
                                      TO
                                SCHEDULE NO. 1
                       TO MASTER LEASE AGREEMENT
                       DATED AS OF 2/27/98


                           DESCRIPTION OF EQUIPMENT

<TABLE>
<CAPTION>

                  Capitalized
Number              Cost
of Units           Per Unit            Manufacturer                Serial Numbers          Type and Model of
                                                                                               Equipment
<S>             <C>                    <C>                         <C>                     <C>
One (1)         $783 63.22             Acro Trailer Co.            1A91l422V1005036        1997 Semi-Tank
                                                                                           Trailer 1 Model Tanker

<CAPTION>

Above equipment location: 10 Industry Ave., Joliet, IL 60435

<S>             <C>                    <C>                         <C>                     <C>
One (1)         $73,290.82             Comptank Corp.              2C9LTA2B3VB075 115            1997 Vac Trailer
                                                                                           Model DOT-E-l 1903-NVRP
<CAPTION>

Above equipment location: 1000 N. First Street, Garland, TX 75040

<S>             <C>                    <C>                         <C>                     <C>
One (1)         $75,627.00             Comptank Corp.              2C9LTA2B2VB17S090             1997 Vac Trailer 1
                                                                                           Model DOT-S-I 1903-NVRP

One (1)         $27,229.00             Fruehauf                    1JJF281FXWS44I306       1998 Trailer
                                                                                           Model Platform Trailer

One (1)         $73,900.80             Polar                       1PMC44323W2019060             1998 Trailer
                                                                                                 Model Tank
<CAPTION>

Above equipment location: 8851 Dice Road, Santa Fe Springs, CA 90670

<S>             <C>                    <C>                         <C>                     <C>
One (1)         $l0,628.34             La Bour                     N/A                     Pump/Model LVAY.17

</TABLE>

Above equipment location: Industrial Park, Highway 15 South, Sumter, SC 29150


  INCLUDING ALL PROCEEDS, ATTACHMENTS, ACCESSORIES, ADDITIONS OR SUBSTITUTIONS
  NOW OWNED OR HEREAFTER ATTACHED THERETO OR MADE A PART HEREOF.


The above is a complete list of the equipment and all attachments related to
the equipment.


Initials  /s/                               /s/ J. Katzenstein
          Lessor                            ------------------
                                            Lessee

                                            /s/ J. Katzenstein
                                            ------------------
                                            Lessee

<PAGE>


                                    ANNEX C

                                      TO

                                SCHEDULE NO. 1

                           TO MASTER LEASE AGREEMENT

                           DATED AS OF            2/27/98
                           CERTIFICATE OF ACCEPTANCE



To:      General Electric Capital Corporation ("Lessor")


       Pursuant to the provisions of the above schedule and lease
(collectively, the "Lease"), Lessee hereby certifies and warrants that (a) all
Equipment listed in the related invoice is in good condition and appearance,
installed (if applicable), and in working order, and (b) Lessee accepts the
Equipment for all purposes of the Lease and all attendant documents.


       Lessee does further certify that as of the date hereof (i) Lessee is
not in default under the Lease; and (ii) the representations and warranties
made by Lessee pursuant to or under the Lease are true and correct on the date
hereof.

Philipp Brothers Chemicals, Inc.
By:  /s/ Joseph M. Katzenstein
     -------------------------
Title:  Treas
Dated:  2/27/98

Phibro-Tech, Inc.
By:  /s/ Joseph M. Katzenstein
     -------------------------
Title:  Treas
Dated:  2/27/98

<PAGE>

                                    ANNEX D
                                      TO
                                SCHEDULE NO. 1
                           TO MASTER LEASE AGREEMENT
                              DATED AS OF 2/27/98




                  STIPULATED LOSS AND TERMINATION VALUE TABLE

                                                 stipulated
                               termination          loss
                 payment         value              value
                  number       % of cost          % of cost
                    1            101.666          105.572
                    2            100.321          104.179
                    3             98.967          102.776
                    4             97.603          101.362
                    5             96.230           99.939
                    6             94.846           98.506
                    7             93.452           97.063
                    8             92.048           95.610
                    9             90.633           94.146
                   10             89.209           92.673
                   11             87.774           91.188
                   12             86.328           89.694
                   13             84.872           88.188
                   14             83.405           86.673
                   15             81.928           85.146
                   16             80.440           83.609
                   17             78.941           82.060
                   18             77.431           80.501
                   19             75.910           78.931
                   20             74.378           77.350
                   21             72.835           75.758
                   22             71.280           74.154
                   23             69.714           72.539
                   24             68.137           70.912
                   25             66.548           69.274
                   26             64.948           67.625
                   27             63.336           65.964
                   28             61.712           64.291
                   29             60.077           62.606
                   30             58.429           60.909

Initials:  /s/                      /s/ Joseph M. Katzenstein
           ---------                -------------------------
           Lessor                   Lessee

                                    /s/ Joseph M. Katzenstein
                                    -------------------------
                                    Lessee


       The Stipulated Loss Value or Termination Value for any unit of
      Equipment shall be equal to the Capitalized Lessor's Cost of such unit
      multiplied by the appropriate percentage derived from the above table.
      In the event that the Lease is for any reason extended, then the last
      percentage figure shown above shall control throughout any such extended
      term.




<PAGE>


                                    ANNEX D
                                      TO
                                SCHEDULE NO. 1
                           TO MASTER LEASE AGREEMENT
                              DATED AS OF 2/27/98


                  STIPULATED LOSS AND TERMINATION VALUE TABLE
                                                  stipulated
                                termination         loss
                payment           value             value
                number          % of cost        % of cost
                  31              56.769           59.201
                  32              55.098           57.480
                  33              53.414           55.747
                  34              51.718           54.001
                  35              50.009           52.244
                  36              48.288           50.474
                  37              46.555           48.691
                  38              44.809           46.895
                  39              43.050           45.087
                  40              41.278           43.266
                  41              39.493           41.433
                  42              37.696           39.586
                  43              35.885           37.726
                  44              34.061           35.853
                  45              32.224           33.966
                  46              30.373           32.066
                  47              28.509           30.153
                  48              26.631           28.226
                  49              24.739           26.285
                  50              22.834           24.331
                  51              20.915           22.362
                  52              18.982           20.380
                  53              17.034           18.384
                  54              15.073           16.373
                  55              13.097           14.348
                  56              11.107           12.309
                  57               9.102           10.255
                  58               7.083            8.186
                  59               5.049            6.103
                  60               3.000            4.005

Initials:  /s/                      /s/ Joseph M. Katzenstein
          ----------                -------------------------
          Lessor                    Lessee

                                    /s/ Joseph M. Katzenstein
                                    -------------------------
                                    Lessee

          The Stipulated Loss Value or Termination Value for any unit of
          Equipment shall be equal to the Capitalized Lessor's Cost or such
          unit multiplied by the appropriate percentage derived from the above
          table. In the event that the Lease is for any reason extended, then
          the last percentage figure shown above shall control throughout any
          such extended term.


<PAGE>

                                   ADDENDUM
                               TO SCHEDULE NO. I
                           TO MASTER LEASE AGREEMENT
                                     (GPO)
                        DATED AS OF             2/27/98


       THIS ADDENDUM ("Addendum") amends and supplements the above referenced
Schedule ("Schedule") between General Electric Capital Corporation ("Lessor"),
and Philip Brothers Chemicals, Inc. & Phibro-Tech, Inc. ("Lessee"), and is
hereby incorporated into the Schedule as though fully set forth therein.
Capitalized terms not otherwise defined herein shall have the meaning set
forth in the Lease.


       1. Lessee hereby irrevocably agrees to purchase the Equipment upon the
expiration of the Basic Term. Lessee shall pay the Lessor the purchase price
of $1.00 in cash for the Equipment, on or before 3/1/03.



       2. The Equipment shall be sold to Lessee and possession made available
to Lessee "As-Is" and Where-Is; Lessor will not make any representation or
warranty, express or implied, including, but not limited to any warranty as to
fitness for any particular or other purpose, merchantability or patent
infringement, except that Lessor shall have the right to sell the Equipment
and shall transfer to Lessee good title free and clear of any superior lien or
encumbrance created by Lessor. Lessee is liable for any taxes payable as a
result of this sale.


       Except as expressly modified hereby all terms and provisions of the
Lease shall remain in full force and effect. This Addendum is not binding nor
effective with respect to the Lease or the Equipment until executed on behalf
of Lessor and Lessee by authorized representatives of Lessor and Lessee,
respectively.

       IN WITNESS WHEREOF, Lessee and Lessor have caused this Addendum to be
executed by their duly authorized representatives as of the date first above
written.

LESSOR:                                     LESSEE:


General Electric Capital Corporation        Philip Brothers Chemicals, Inc.


By: /s/ James R. Giaqiunto                  By: /s/ Joseph M. Katzenstein
    ----------------------                      -------------------------

Name: James R. Giaquinto                    Name: J. Katzenstein

Title: Risk Analyst                         Title: Treas

                                            Attest:

                                            By: /s/ Janet Franco
                                                ---------------------------
                                            Name: Janet Franco

                                            LESSEE:
                                            By:  /s/ Joseph M. Katzenstein
                                                ---------------------------
                                            Name:  J. Katzenstein

                                            Title: Treasurer


<PAGE>




                                            Attest:

                                            By: /s/ Janet Franco
                                                ---------------------------
                                                Name: Janet Franco


<PAGE>


                 CROSS-COLLATERAL AND CROSS-DEFAULT AGREEMENT

General Electric Capital Corporation
44 Old Ridgebury Road
Danbury, CT 06810-5105

Gentlemen:


        You have entered into or purchased one or more conditional sale
contracts, lease agreements, chattel mortgages, security agreements, notes and
other chooses in action (herein designated "Accounts") arising from the bona
fide sale or lease to us, by various vendors or lessors, of equipment and
inventory (herein designated "Collateral") and/or you have made direct loans
to or otherwise extended credit to us evidenced by Accounts creating security
interests in Collateral.

        In order to induce you to extend our time of payment on one or more
Accounts and/or to make additional loans to us and/or to purchase additional
Accounts and/or to lease us additional equipment, and in consideration of you
so doing, and for other good and valuable consideration, the receipt of which
we hereby acknowledge, we agree as follows:


        All presently existing and hereafter acquired Collateral in which you
have or shall have a security interest shall secure the payment and
performance of all of our liabilities and obligations to you of every kind and
character, whether joint or several, direct or indirect, absolute or
contingent, due or to become due, and whether under presently existing or
hereafter created Accounts or agreements, or otherwise.

        We further agree that your security interest in the property covered
by any Account now held or hereafter acquired by you shall not be terminated
in whole or in part until and unless all indebtedness of every kind, due or to
become due, owed by us to you is fully paid and satisfied and the terms of
every Account have been fully performed by us. It is further agreed that you
are to retain your security interest in all property covered by all Accounts
held or acquired by you, as security for payment and performance under each
such Account, notwithstanding the fact that one or more of such Accounts may
become fully paid.


        This instrument is intended to create cross-default and cross-security
between and among all the within described Accounts now owned or hereafter
acquired by you.

        A default under any Account or agreement shall be deemed to be a
default under all other Accounts and agreements. A default shall result if we
fail to pay any sum when due on any Account or agreement, or if we breach any
of the other terms and conditions thereof, or if we become insolvent, cease to
do business as a going concern, make an assignment for the benefit of
creditors, or if a petition for a receiver or in bankruptcy is filed by or
against us, or if any of our property is seized, attached or levied upon. Upon
our default any or all Accounts and agreements shall, at your option, become
immediately due and payable without notice or demand to us or any other party
obligated thereon, and you shall have and may exercise any and all rights and
remedies of a secured party under the Uniform Commercial Code as enacted in
the applicable jurisdiction and as otherwise granted to you under any Account
or other agreement. We hereby waive, to the maximum extent permitted by law,
notices of default, notices of repossession and sale or other disposition of
collateral, and all other notices, and in the event any such notice cannot be
waived, we agree that if such notice is mailed to us postage prepaid at the
address shown below at least five (5) days prior to the exercise by you of any
of your rights or remedies, such notice shall be deemed to be reasonable and
shall fully satisfy any requirement for giving notice.

        All rights granted to you hereunder shall be cumulative and not
alternative, shall be in addition to and shall in no manner impair or affect
your rights and remedies under

<PAGE>


any existing Account, agreement, statute or rule of law.


        This agreement may not be varied or altered nor its provisions waived
except by your duly executed written agreement. This agreement shall inure to
the benefit of your successors and assigns and shall be binding upon our
heirs, administrators, executors, legal representatives, successors and
assigns.

        IN WITNESS WHEREOF, this agreement is executed this 27th day of
February, 1998.


LESSEE:                                                               LESSEE:



Philip Brothers Chemicals, Inc.                  Phibro-Tech, Inc.
(Name of Proprietorship,                         (Name of Proprietorship,
Partnership or Corporation, as applicable)       Partnership or Corporation, as
                                                 applicable)


By: /s/ Joseph M. Katzenstein                    By: /s/ Joseph M. Katzenstein
    -------------------------                        -------------------------
    (Signature)                                      (Signature)


Title: Treas                                     Title: Treas
(Owner, Partner, or                              (Owner, Partner, or
Officer, as applicable)                          Officer, as applicable)

Address: One Parker Plaza                        Address: One Parker Plaza
         Fort Lee, NJ 07024                               Fort Lee, NJ 07024

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.12
<SEQUENCE>15
<FILENAME>0015.txt
<DESCRIPTION>STOCKHOLDERS AGREEMENT, DATED DECEMBER 29, 1987
<TEXT>


<PAGE>

                            STOCKHOLDERS AGREEMENT

                  AGREEMENT made this 29th day of December, 1987, by and
between PHILIPP BROTHERS CHEMICALS, INC., a New York corporation (the
"Corporation") and the following stockholders of the Corporation:

                  CHARLES H. BENDHEIM ("CHB"), owner of 6,300 shares of Class A
capital stock of the Corporation;

                  JACK C. BENDHEIM ("JCB"), owner of 5,670 shares of Class B and
6,300 shares of Class C capital stock of the Corporation; and

                  MARVIN S. SUSSMAN ("MSS"), owner of 630 shares of Class B
capital stock of the Corporation.


                                  WITNESSETH:


                  WHEREAS, the parties desire to provide for certain rights
and obligations with respect to the shares of Class B capital stock of the
Corporation now owned, or hereafter acquired by MSS;

                  NOW, THEREFORE, in consideration of the mutual covenants
herein contained, IT IS AGREED AS FOLLOWS:

         1. A. Subject to paragraph "6" hereof, MSS agrees that he will not
sell, assign, transfer, pledge, hypothecate, encumber or otherwise dispose of
any shares of Class B capital stock of the Corporation now owned, or hereafter
acquired, without first offering (by written notice to the Corporation) to
sell to the Corporation all such shares of Class B capital stock then owned by
him.

            B.       If any such offer of sale shall be made, the Corporation
shall have the option to accept the same by written notice to the offeror
within thirty (30) days after receipt of such offer. The determination as to
whether the Corporation shall exercise the said option to accept any offer of
sale shall be made at the election of the holders of the Class A and Class C
capital stock, by written notice to the Corporation and the offeror.

            C.       If any such offer of sale shall be accepted by the
Corporation, the price of the shares to be sold shall be the agreed value
thereof as at the end of the month in which such offer of sale was made, as
determined under paragraph "8" hereof, and such price shall be paid as
provided in paragraph "9" hereof.

            D.       If the Corporation shall not accept any such offer of
sale, then the offeror shall have the right to dispose of such shares without
restriction.

         2. A. Subject to paragraph "6" hereof, MSS shall have the right, at
any time, by written notice to the Corporation, to sell to the Corporation and
the Corporation shall purchase from him all (but not less than all) shares of
Class B capital stock of the corporation now owned or hereafter acquired by
him.

            B.       In the event of such sale, the price shall be the agreed
value thereof as at the end of the month in which written notice of such sale
was received by the Corporation, as determined under paragraph "8" hereof and
such price shall be paid as provided in paragraph "9" hereof.

<PAGE>

         3. A. Subject to paragraph "6" hereof, in the event MSS shall become
permanently disabled (as hereinafter defined), then on the date thirty (30)
days following the first anniversary on the commencement of such disability,
MSS shall sell and the Corporation shall purchase from him all shares of Class
B capital stock of the corporation then owned by him.

            B.       Upon any such sale, the price of the shares to be sold
shall be the value thereof as at the end of the month in which such disability
shall have commenced, as determined under paragraph "8" hereof "valuation
date" and such price shall be paid as provided in paragraph "9" hereof.

            C.       For the purposes of this agreement, the term "permanently
disabled" shall mean any physical or mental condition (i) which renders MSS
incapable of performing the duties pertaining to his employment by the
Corporation, (ii) which shall have endured for a period of at least twelve
(12) consecutive months, and (iii) which may reasonably be expected to be
permanent. In determining the nature, extent and continuation of such
disability, the Corporation may select a physician to examine MSS, and render
to the Corporation a medical opinion. The final determination of whether or
not MSS is deemed to be permanently disabled hereunder shall be made by CHB
and JCB on the basis of all the evidence available.

         4. A. Subject to paragraph "6" hereof, upon the death of MSS his
personal representatives shall sell to the Corporation, and the Corporation
shall purchase from them, all of the shares of Class B capital stock owned by
MSS at the time of his death.

            B.       Upon any such sale, the price of the shares to be sold
shall be the value thereof as at the end of the month in which MSS's death
shall occur, as determined under paragraph "8" hereof, and such price shall be
paid as provided in paragraph "9" hereof.

         5. A. Subject to paragraph "6" hereof, in the event MSS's employment
by the Corporation and all of its subsidiary or affiliated corporations shall
be terminated, for any reason whatsoever, MSS shall forthwith sell to the
Corporation, and the Corporation shall purchase from him, all of the shares of
Class B capital stock owned by MSS at the time of such termination.

            B.       Upon any such sale, the price of the shares to be sold
shall be the value thereof as at the end of the month in which MSS's
employment shall terminate, as determined under paragraph "8" hereof, and such
price shall be paid as provided in paragraph "9" hereof. Provided, however,
that in the event that within a period of eighteen (18) months following the
termination of MSS's employment, the Corporation shall enter into an agreement
to be sold (whether by merger, sale of all or substantially all of its assets,
or otherwise), the price of the shares sold hereunder shall be adjusted to
equal the price which MSS would have received for such shares had he owned
them at the time the Corporation is sold pursuant to such agreement.

         6.    MSS has executed an Assumption Agreement of even date herewith
(a copy of which is annexed hereto) in which he has agreed to be bound by
certain of the terms and conditions of a Shareholders Agreement of the
Corporation dated December 7, 1984, which provides, inter alia, that after the
death of Charles H. Bendheim, all shares of Class B stock of the Corporation
will be deposited in escrow to secure certain payments to be made by the
Corporation to the holders of its preferred stock. Accordingly,
notwithstanding the rights granted to MSS pursuant to paragraphs "1", "2",
"3", "4" and "5" hereof, MSS agrees that after the death of Charles H.
Bendheim, he (or his personal representatives) will not sell, assign,
transfer, pledge, hypothecate, encumber or otherwise dispose of any shares of
Class B capital stock of the Corporation, except for depositing such shares in
escrow pursuant to subparagraph "8" of said Shareholders Agreement dated
December 7, 1984, until payment in full has been made by the Corporation of
all amounts payable to such preferred shareholders pursuant to paragraph "8"
of the said Shareholders Agreement dated December 7, 1984.

         7. A. In the event that JCB shall die before December 7, 1989 and CHB
shall then survive, then

<PAGE>

immediately following JCB's death, MSS shall exchange all shares of Class B
capital stock of the Corporation then owned by him for an equal number of
shares of Class D capital stock of the Corporation. Such exchange shall be
made by MSS delivering all his Class B shares to the Corporation, duly
endorsed in blank for transfer, within twenty (20) days after the death of
JCB, and pending such delivery, such Class B shares shall be deemed to have
been exchanged for Class D shares.

            B.       Following the exchange of MSS's Class B shares for Class
D shares as hereinabove provided, all of the provisions of this agreement that
refer to Class B shares owned by MSS shall thereafter apply to Class D shares
owned by MSS with like force and effect.

         8.    The price payable upon any sale pursuant to paragraphs "1", "2",
"3", "4" and "5" hereof, of any shares of Class B capital stock of the
Corporation shall be the agreed value thereof. The agreed value shall be such
amount as shall have been last fixed by the holders of all of the outstanding
shares of Class A and Class C capital stock prior to the valuation date
applicable to any such sale, pursuant to paragraph "5" of the Shareholders
Agreement dated December 7, 1984, a copy of which is annexed hereto. MSS
agrees that the determination of such value shall be made by the holders of
Class A and Class C capital stock without his participation. However, each
time such value is fixed, MSS shall be furnished with a copy thereof. The
Class A and Class C stockholders agree that in determining such value, (i) as
at the end of any fiscal year of the Corporation prior to December 7, 1989,
they shall not reduce the value last fixed by an amount greater than 20% of
the reduction (if any) in the book value of the Corporation from the end of
the Corporation's prior fiscal year to the end of its current fiscal year; and
(ii) as at the end of any fiscal year of the Corporation after December 7,
1989, such value shall be equal to the book value of the Corporation. For
purposes of this provision, the term "book value" shall have the same meaning
as set forth in paragraph "2.D" of the Shareholders Agreement dated December
7, 1984.

         9.    Upon any sale to the Corporation of any shares of its Class B
capital stock pursuant to this agreement, the purchase price shall be paid to
the Seller as follows:

               A. One-fourth (1/4) of the said purchase price shall be paid
in cash three (3) months after the valuation date applicable upon such sale,
except that any life insurance proceeds shall be applied as hereinafter
provided.

               B. The balance of the purchase price shall be paid nine (9)
months after the valuation date applicable upon such sale, without interest.

               C. The proceeds of any life insurance which shall be
received by the Corporation on the death of MSS shall be applied by the
Corporation in payment of the purchase price not later than ten (10) days
after such proceeds are received by the Corporation. Any balance of the
proceeds of insurance in excess of the purchase price shall be retained by the
Corporation for its corporate purposes.

         10.   A. The Corporation shall have the right to procure and maintain
insurance on the life of MSS in an amount equal to the agreed value of the
Class B shares owned by MSS as fixed from time to time by the Capital
Stockholders pursuant to paragraph "9" hereof, and to pay premiums therefor so
long as MSS shall live and continue to own any shares of the Corporation. So
long as the Corporation shall own and maintain the said insurance, the
Corporation shall be designated as the beneficiary thereof.

               B. Upon any sale by MSS of all of the shares of Class B
capital stock then owned by him, MSS shall have the option, provided that he
shall have given written notice to the Corporation of his intention to
exercise the same within fifteen (15) days prior to the consummation of such
sale, to acquire from the Corporation, and, in the event that he shall have
given such notice, the Corporation shall assign to him all of the policies of
insurance owned and maintained by the Corporation on his life. In the event
that such notice shall be given, the Corporation shall execute and deliver to
MSS, at the time of such sale, the said policies of insurance on his life,

<PAGE>

subject to any loans outstanding against such policies, and any and all
instruments required to effectuate the assignment thereof to him, and he shall
pay to the Corporation an amount equal to the then cash surrender value (net
of any loans outstanding) of the said policies against the delivery of the
said policies and instruments of assignment.

         11.   The parties agree to make, execute and deliver any and all
papers, instruments and documents, and to do any and all acts, deed and
things, which may be necessary or proper to carry out the provisions of this
Agreement, or to effectuate the purposes thereof.

         12.   All written notices provided for herein shall be deemed
sufficient if served personally or by registered mail, addressed to the
Corporation at its principal place of business, or to any other party, at his
address appearing on the stock book of the Corporation.

         13.   If the then surplus of the Corporation shall be insufficient to
permit the Corporation to pay out of surplus any amount which shall be
required to be paid by the Corporation, in cash, on any such sale, then the
undersigned Class A, B and C stockholders agree to cause the Corporation, and
the Corporation agrees, to reduce its capital and create sufficient surplus to
enable the Corporation to pay any such amount out of surplus.

         14.   All certificates representing any shares of Class B capital stock
of the Corporation now owned, or at any time hereafter acquired by MSS, shall
be endorsed with the following legend:

               This certificate, and the ownership thereof, shall be subject to
all of the terms and conditions of (i) a certain Agreement in writing, bearing
date the 29th day of December, 1987, made and entered into by and between the
Corporation, Charles H. Bendheim, Jack C. Bendheim and Marvin S. Sussman; and
(ii) a certain Agreement in writing, bearing date the 7th day of December,
1984, made and entered into by and between the Corporation and certain of its
then shareholders.

         15.   This Agreement contains all of the terms and conditions agreed
upon by the parties with respect to the matters herein provided for, and none
of the parties shall be bound by any representations, warranties, covenants or
conditions with respect thereto not expressly set forth herein. No
modification of this Agreement shall be binding, unless the same shall be in
writing, and signed by the parties.

         16.   This Agreement shall inure to the benefit of, and shall bind, the
respective personal representatives, successors and assigns of the parties.

         17.   The certain Shareholders Agreement in writing dated December 7,
1984 between the Corporation and certain of its shareholders shall remain in
full force and effect.

         18.   This Agreement shal1 be governed, construed and interpreted
according to the laws of the State of New York.

               IN WITNESS WHEREOF, the parties hereto have signed and sealed
these presents the day and year first above written.

PHILIPP BROTHERS CHEMICALS, INC.

By:  /s/ Charles H. Bendheim
     -----------------------
Charles H. Bendheim, President

/s/ Charles H. Bendheim
- -----------------------
Charles H. Bendheim

/s/ Jack C. Bendheim
- --------------------
Jack C. Bendheim

<PAGE>

/s/ Marvin S. Sussman
- ---------------------
Marvin S. Sussman

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.13
<SEQUENCE>16
<FILENAME>0016.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT BETWEEN PHILIPP BROTHERS
              CHEMICALS, INC. AND MARVIN S. SUSSMAN
<TEXT>


<PAGE>

                             EMPLOYMENT AGREEMENT

                   Agreement dated as of December 29, 1987, by and between
PHILIPP BROTHERS CHEMICALS, INC., a New York corporation with its principal
offices located at One Parker Plaza, Fort Lee, New Jersey (the "Company"), and
MARVIN S. SUSSMAN, residing at 101 Central Park West, New York, New York
(hereinafter referred to as "MSS").

                   MSS and the Company desire to provide for the employment of
MSS by the Company on the terms and conditions provided for herein, and the
parties agree as follows:

                   1.       Term of Employment.
                            The Company hereby employs MSS and he hereby accepts
such employment by the Company, for a term commencing on the date hereof and
continuing from year to year until terminated as provided in paragraph "9"
hereof (the "Employment Period").

                   2.       Duties and Responsibilities.
                            MSS shall devote his full time and best efforts to
the business and affairs of the Company and its subsidiaries and affiliates
during the Employment Period of the Company and of Prince Agriproducts, Inc.
Subject to the direction and control of the Board of Directors, MSS shall be
responsible for the day to day operation and management of the business of the
Company's subsidiary, Prince Agriproducts, Inc.

                   3.       Compensation.

                            (a)     During the first year of the Employment
Period, MSS's compensation shall continue at the rate in effect immediately
prior to the date of this Agreement, and shall be payable in equal monthly
installments. Each year thereafter, or at such time as the Board shall
determine his compensation shall be fixed by the Board in its sole discretion.

                            (b)     As additional compensation for his services
to the Company under this Agreement, the Company may (but it shall not be
obligated to) pay to MSS an annual bonus in such amount as the Board of
Directors shall determine in its sole discretion.

                   4.       Retirement Plan.

<PAGE>

                            During the Employment Period, MSS shall participate
in the Company's Retirement Plan, subject to the Company's right to modify or
amend the Plan in accordance with applicable rules and regulations of the
Internal Revenue Code or ERISA. Contributions for the MSS's benefit shall be
subject to the contribution formula, the vesting provisions and the other
terms and conditions of the Plan.

                   5.       Benefits.
                            During the Employment Period MSS shall participate
in such health and insurance benefit plans as are available to all other
executives of the Company.

                   6.       Vacations.
                            During the Employment Period, MSS shall be entitled
to paid vacations during each twelve (12) month period in accordance with
Company policy, to be taken at such times as are requested by him, subject tot
he reasonable control of the Board of Directors in light of the Company's
reasonable business requirements.

                   7.       Automobile.
                            The Company shall provide MSS with the use of an
automobile and shall pay all customary operating expenses therefor.

                   8.       Expenses.
                            The Company shall reimburse MSS for reasonable out-
of-pocket expenses incurred in the performance of his duties and
responsibilities hereunder.

                   9.       Termination.
                            (a)  The Employment Period shall terminate upon the
occurrence of any of the following events:

                                 (i)   Death of MSS;
                                 (ii)  Permanent disability of MSS;
                                 (iii) Notice of termination by the Company at
any time, in writing; or
                                 (iv)  Resignation by MSS at any time, in
writing.

                            (b)  If the MSS's employment shall terminate by
reason of any of the events specified in subparagraph "(a)" above, the Company
shall pay to him within ten (10) days following such event, a severance
payment which shall equal

                                      2
<PAGE>

the aggregate principal balance and all interest accrued thereon up to the
date of termination of his employment, then due and owing by MSS and his wife,
Aviva Sussman, to Jack C. Bendheim and to his wife, Gail Bendheim, pursuant to
certain promissory notes dated the date hereof. The Company shall make such
payment to MSS based upon certification furnished to it by Jack C. Bendheim as
to the aggregate principal balance and accrued interest due on such promissory
notes. MSS agrees that such severance payment shall be used to immediately
prepay such notes and interest thereon in full and that the Company is hereby
authorized and directed to make payment on his and his wife's behalf directly
to the payees of said notes.

                    10.     Notices.
                            Any and all notices required or permitted to be
given under this Agreement shall be in writing and shall be deemed to have
been given when personally delivered or on the third business day after the
mailing thereof by registered or certified mail, return receipt requested, to
the party entitled to receive the same, at the address which appears at the
beginning of this Agreement, or at such other address as such party may be
similar notice have designated.

                   11.     Miscellaneous.
                           (a)   This Agreement, constitutes the entire
understanding between the parties relating to the subject matter hereof. This
Agreement may be amended or modified only by a written instrument executed by
both parties. The failure of a party to insist upon strict adherence to any
provision of this Agreement on one occasion, shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence
to that or any other provision of this Agreement. If required, waivers of
performance must be in writing and signed by the party giving the waiver.

                   (b)     This Agreement is personal in its nature and, except
as otherwise provided herein, neither party, without the prior written consent
of the other, may assign or transfer this Agreement or any rights or
obligations hereunder; except that the Company, without being relieved of its
obligations

                                      3
<PAGE>

hereunder, may assign this agreement in connection with the acquisition of all
or substantially all of the Company's assets and business, whether by merger,
consolidation, purchase of assets or otherwise. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, executors, administrators, successors (whether, in the case of the
Company, by merger, consolidation, sale of assets or otherwise), and permitted
assigns.

                            (c)  If any provision of this Agreement is invalid
or unenforceable, the balance of the Agreement shall nevertheless remain in
full force and effect: and if any provision is inapplicable to any person or
circumstance, it shall nevertheless remain applicable to all other persons and
circumstances.

                            (d)  This Agreement shall be governed and construed
in accordance with the laws of the State of New York.

                   IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the day and year first written above.

                                       PHILIPP BROTHERS CHEMICALS, INC.

                                       BY: /s/ C. H. Bendheim
                                           ------------------

                                       /s/ Marvin S. Sussman
                                       ---------------------
                                       Marvin S. Sussman

                                      4
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.14
<SEQUENCE>17
<FILENAME>0017.txt
<DESCRIPTION>STOCKHOLDERS AGREEMENT BETWEEN I. DAVID PALEY,
              NATHAN Z. BISTRICER, JAMES O. HERLANDS AND
              PHIBRO-TECH, INC., AS AMENDED JUNE 11, 1998
<TEXT>


<PAGE>
                            STOCKHOLDERS AGREEMENT

                  Stockholders Agreement (the "Agreement"), dated as of
February 21, 1995, between Phibro-Tech, Inc., a Delaware corporation (the
"Company"), and the individuals listed on the signature page hereto (together
with any person who becomes a party to this Agreement pursuant to Section 8.4,
the "Management Stockholders" and, together with any other person who becomes
a party to this Agreement pursuant to Section 2.2 hereof, the "Stockholders").

                  WHEREAS, the Company and the Management Stockholders are
concurrently herewith entering into Subscription Agreements, dated the date
hereof (the "Subscription Agreements"), pursuant to which the Company shall,
among other things, sell to such Management Stockholders an aggregate of
383.42 shares of Class B Common Stock, par value $.Ol per share, of the
Company (the "Class B Common Stock"), which shares shall, under certain
circumstances, be convertible into shares of Class A Common Stock, par value
$.O1 per share, of the Company (the "Class A Common Stock"); and

                  WHEREAS, the Company and the Management Stockholders desire
to control the transfer of the Shares (as defined in Section 1), to provide
the Stockholders with registration rights in respect of the shares of Class B
Common Stock and to make certain provisions regarding the voting of the
Shares.

<PAGE>
                                                                              2

                  NOW, THEREFORE, in consideration of the covenants and
agreements contained herein, the parties hereto agree as follows:

                  1. Certain Definitions. Capitalized terms not otherwise
defined herein shall have the following meanings:

                  "Actual or Constructive Termination" means, with respect to
any Management Stockholder, the occurrence of any of the following events: (i)
a written communication from the President of the Company or any Affiliate
employing such Management Stockholder, or from the Chairman of the Board or
the Chairman of the Board of Directors of any Affiliate employing such
Management Stockholder, or from the Board or the Board of Directors of such
Affiliate, that the Management Stockholder's employment with the Company or
such Affiliate, as the case may be, has been, or will shortly be, terminated
by the Company or such Affiliate; (ii) a written communication from a
Management Stockholder to an officer of the Company or, as applicable, any
Affiliate, or to the Board or, as applicable, the Board of Directors of any
Affiliate, that the Management Stockholder's employment with the Company or
such Affiliate, as the case may be, has terminated, or will shortly terminate;
(iii) a change (objected to in writing by the Management Stockholder within 30
days after such change) in the Management Stockholder's title or office, or in
the nature or scope of the Management Stockholder's authority, duties,
responsibility or status,

<PAGE>
                                                                              3

or in his reporting responsibilities, location of work, compensation, employee
benefits or perquisites; or (iv) the Permanent Disability of the Management
Stockholder; provided, however, that no communication referred to in clauses
(i) or (ii) and no change referred to in clause (iii) shall be deemed an
Actual or Constructive Termination if the Management Stockholder agrees to
remain or become an employee of the Company or any Affiliate; provided
further, that no change in compensation referenced in clause (b) shall be
deemed an Actual or Constructive Termination if such change is part of a bona
fide plan approved by the Board or the Board of Directors of any Affiliate
employing such Management Stockholder to reduce the Company's or such
Affiliate's overall costs and such change in compensation is proportionate to
the changes in compensation experienced by other employees of the Company or
such Affiliate.

                  "Affiliate" means, with respect to the Company, a
corporation that, directly or indirectly, through one or more intermediaries,
controls or is under common control with the Company.

                  "Appraised Value" of any class of common stock of the
Company means, on any particular date, the fair market value per share of such
class of common stock as most recently determined by a Qualified Appraiser.
Appraised Value shall be calculated based upon all considerations that such
Qualified Appraiser determines to be relevant. In the

<PAGE>
                                                                               4

event that a stock split, stock dividend or other reorganization of the capital
structure of the Company occurs after the Appraised Value has been determined,
an appropriate adjustment to the Appraised Value shall be made by the Board.
The Company and the Stockholders acknowledge and agree that, based on the
determination of Management Planning, Inc., the Appraised Value of one share
of Class B Common Stock on the date hereof is $5,800.

                  "Average Market Price" of any class of common stock of the
Company means, on any particular date, the average of the daily Closing Prices
for such class of common stock for each of the immediately preceding and
succeeding ten (10) Trading Days (provided that after the Note Termination
Date, the Average Market Price of the Class B common Stock, if such stock has
not been converted into Class A Common Stock, shall be deemed to be equal to
the Average Market Price of the Class A Common Stock).

                  "Board" means the Board of Directors of the Company.

                  "Change of Control" means the occurrence of any of
the following events: (i) Jack C. Bendheim shall cease to be employed
by Philipp Brothers Chemicals, Inc. ("PBC") as the President and Chief
Operating Officer having substantially the same responsibilities as he
has on the date hereof, except as a result of his death or Permanent
Disability; (ii) Jack C. Bendheim shall die or become

<PAGE>
                                                                              5

Permanently Disabled; (iii) an event or transaction, after which Jack C.
Bendheim and his Immediate Family or trusts, all of the beneficial interests
in which shall be held by Jack C. Bendheim or his Immediate Family, shall be
entitled to elect less than 40% of the directors of PBC; (iv) Jack C. Bendheim
and his Immediate Family or trusts, all of the beneficial interests in which
shall be held by Jack C. Bendheim or his Immediate Family, shall be the
beneficial owners of less than 50% of the outstanding Class C common stock or
Class E common stock of PBC; (v) PBC, directly or indirectly, shall be the
beneficial owner of less than 50% of the outstanding common stock of the
Company and Jack C. Bendheim and his Immediate Family or trusts, all of the
beneficial interests in which shall be held by Jack C. Bendheim or his
Immediate Family, shall be the beneficial owners of less than 50% of the
outstanding common stock of the Company; or (vi) a reorganization, merger,
consolidation, acquisition or other similar transaction, after which all or
substantially all of the assets of the Company are controlled by an entity
that is not, as of the date hereof, an Affiliate.

                  "Closing Price" of the Shares means, on any date, the last
sale price, regular way, or, in case no such sale takes place on such date the
average of the closing bid and asked prices, in each case as reported in the
principal consolidated transaction reporting system with respect to

<PAGE>
                                                                              6

securities listed on the principal national securities exchange on which the
Class A Common Stock or other class of common stock of the Company, as the
case may be, is listed or admitted to trading; or, if the Class A Common Stock
or other class of Common Stock is not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market,
as reported by the National Association of Securities Dealers, Inc. (the
"NASD") or such other quotation source then in use.

                  "Date of Death" means the later of the date on which (i) a
Management Stockholder dies and (ii) the Company receives notice of such
death.

                  "Exchange Act" means the Securities Exchange Act of 1934,
as amended.

                  "Immediate Family" means, with respect to Jack C. Bendheim,
a spouse (except for a spouse with whom Jack C. Bendheim has entered into any
divorce or separation agreement) and any lineal descendant.

                  "Initial Public Offering" means the Company's initial
Public Offering.

                  "IPO Effectiveness Date" means the date upon which the
Company commences an Initial Public Offering.

                  "Loan Agreement" means the Loan and Security Agreement,
dated as of August 31, 1994, by and among National Westminster Bank
NJ,PBC,C.P. Chemicals, Inc., the

<PAGE>
                                                                              7

Company, Prince Agriproducts, Inc., Prince Manufacturing Company, an Illinois
corporation, and Prince Manufacturing Company, a Pennsylvania corporation, and
any extensions, modifications, renewals or refinancings thereof (provided that
no such extension, modification, renewal or refinancing shall increase the
restrictions or limitations imposed on the Stockholders or on the Company's
ability to make payments to the Stockholders by the Loan Agreement as in
effect on the date hereof).

                  "Market Price" means a purchase price based on the
Average Market Price.

                  "Note Agreement" means the Note Agreement, dated as of
August 15, 1994, between PBC and The Northwestern Mutual Life Insurance
Company pursuant to which PBC issued and sold its 11% Senior Notes due June
29, 2004 in the aggregate principal amount of $20,000,000 (the "PBC Notes"),
and any extensions, modifications, renewals or ref inancings thereof (provided
that no such extension, modification, renewal or refinancing shall increase
the restrictions or limitations imposed on the Stockholders or on the
Company's or PBC's ability to make payments to the Stockholders by the Note
Agreement as in effect on the date hereof).

                  "Note Termination Date" means the earlier of
(i) June 30, 2004 and (ii) the date the PBC Notes are pre-paid in full.

<PAGE>
                                                                              8

                  "Permanent Disability" means, (i) with respect to Jack C.
Bendheim, that he has received written notification from the board of
directors of PBC stating that in its view he has become mentally or physically
incapacitated or disabled, whether totally or partially, so that he is unable
substantially to perform (x) for a period of three consecutive months or (y)
for shorter periods aggregating three months during a six month period,
substantially the same services as he performed for PBC prior to incurring
such incapacity or disability and (ii) with respect to any Management
Stockholder, that the Management Stockholder has received written notification
from the Board or the board of directors of any Affiliate employing such
Management Stockholder stating that in its view he has become mentally or
physically incapacitated or disabled, whether totally or partially, so that he
is unable substantially to perform (x) for a period of three consecutive
months or (y) for shorter periods aggregating three months during a six month
period, substantially the same services as he performed for the Company and/or
such Affiliate prior to incurring such incapacity or disability.

                  "Permitted Transferee" means with respect to any
Stockholder, Ci) a member of such Stockholder's family, which shall include a
spouse (except for a spouse with whom such Stockholder has entered into any
divorce or separation agreement), any lineal ancestor or descendant or any
sibling

<PAGE>
                                                                              9

of such Stockholder (collectively, the "Family"), (ii) any personal
representative, estate or executor under any will of such Stockholder
(collectively, a "Personal Representative") or (iii) a trust (including a
voting trust at any time established by such Stockholder for the sole benefit
of such Stockholder and/or one or more of such Stockholders' Family), all of
the beneficial interests in which shall be held by such Stockholder or one or
more members of such Stockholder's Family (or, in the case of a voting trust,
all of the voting trust certificates of which are owned by such Stockholder
and/or one or more members of such Stockholder's Family).

                  "Pledge Agreements" means, collectively, the Pledge
Agreements, each dated as of the date hereof, between the Company and the
Management Stockholders, substantially in the form of Exhibit A attached
hereto.

                  "Prime Rate" means the rate of interest listed as the prime
rate and published in the Wall Street Journal.

                  "Promissory Note" means the Limited Recourse Promissory Note
executed by a Management Stockholder in favor of the Company.

                  "Public Offering" means any offer for sale of the common
stock of the Company pursuant to an effective Registration Statement.

                  "Qualified Appraiser" means an established banking firm or
valuation firm unaffiliated with the Company that is

<PAGE>
                                                                            10

knowledgeable in the field of the Company's business and operations.
"Registration Statement" means a registration statement filed under the
Securities Act.

                  "Rule 144" means Rule 144 promulgated under the Securities
Act or any similar rule then in effect.

                  "Securities Act" means the Securities Act of 1933, as
amended.

                  "Shares" means any of the shares of the common stock of the
Company, including the Class A Common Stock and Class B Common Stock.

                  "Subordinated Note" shall have the meaning set forth in
Section 3.3.3.

                  "Trading Day" means any day on which any class of common
stock of the Company is traded on a national securities exchange or a sale
price of such class of common stock is reported on the NASD Automated
Quotation System.

                  2.      Restrictions on Transfer of Shares.

                          2.1      General Restriction. No Stockholder shall
sell, give, assign, hypothecate, pledge, encumber, grant a security interest
in or otherwise dispose of (whether by operation of law or otherwise)
(collectively, "Transfer") any Shares or any right, title or interest therein
or thereto to any person, except in accordance with the provisions of this
Agreement. Any attempt to Transfer

<PAGE>
                                                                           11

any Shares or any rights hereunder in violation of the preceding sentence
shall be null and void ab initio.

                          2.2      All Transfers in Compliance with Law and
Subject to this Agreement. Notwithstanding anything to the contrary in this
Agreement, any Transfer of Shares otherwise permitted or required by this
Agreement (i) shall be in compliance with applicable federal and state
securities laws, including, without limitation, the Securities Act, and the
Company may require an opinion of counsel to the transferor reasonably
satisfactory to the Company as to such com pliance; and, (ii) other than a
sale of Shares (v) pursuant to an effective Registration Statement, (w)
pursuant to Rule 144, (x) pursuant to Section 3.3.4, (y) to the Company or its
Affiliates or (z) to another Stockholder, shall not be effective unless and
until the transferee shall execute and deliver to the Company an appropriate
instrument in the form of Exhibit B, pursuant to which the transferee shall
agree to take and hold such Shares subject to the terms of this Agreement, to
observe and comply with this Agreement and with all obligations and
restrictions imposed on the Stockholders hereby (including, without
limitation, the obligation of a Permitted Transferee to sell Shares to the
Company, other Stockholders or a third party, as the case may be, in
accordance with Sections 3.4 and 3.5) and that such transferee shall be a
Stockholder hereunder.

<PAGE>
                                                                            12

                  3.       Transfers of Shares.

                           3.1     Transfers Generally. Notwithstanding anything
to the contrary contained in this Agreement, a Stockholder (including a
Permitted Transferee, except as provided in the last sentence of Section 3.2)
may sell Shares pursuant to an effective Registration Statement or pursuant to
Rule 144 and may Transfer Shares in accordance with Sections 3.2, 3.3, 3.6 and
3.9. In addition, a Stock holder (including a Permitted Transferee) shall
Transfer his Shares in accordance with Sections 3.4 and 3.5.

                           3.2     Transfers of Shares to Permitted Transferees.
A Stockholder may, at any time, subject to this Section 3.2 and Section 3.10 of
this Agreement and the restrictions contained in the Pledge Agreements and the
Note Agreement transfer his Shares to a Permitted Transferee. No Permitted
Transferee of the Shares pursuant to this Section 3.2 shall retransfer such
Shares pursuant to this Section 3.2 other than to the transferor Stockholder or,
subject to Section 3.10 of this Agreement, to another of such transferor
Stockholder's Permitted Transferees or to such Permitted Transferee's Personal
Representative. In addition, no Permitted Transferee shall sell Shares pursuant
to an effective Registration Statement or Rule 144 or Transfer any Shares
pursuant to Section 3.3 for so long as any indebtedness remains outstanding
under any Promissory Note executed by the Management Stockholder who, in

<PAGE>
                                                                            13

accordance with this Section 3.2, either directly or indirectly Transferred
Shares to such Permitted Transferee, unless the proceeds of such sale or
Transfer are applied toward the payment of such outstanding indebtedness in
accordance with Section 8 of the Pledge Agreement and such Permitted
Transferee complies with the other provisions of Section 8 of the Pledge
Agreement.

                                   3.2.1   Proxies. The Permitted Transferee
shall (i) irrevocably appoint the transferor Stockholder the attorney and
proxy (which shall be coupled with an interest) of such Permitted Transferee
with full power of substitution to vote the Shares transferred (the
"Irrevocable Proxy"), and (ii) execute such proxies or other instruments as
may be necessary or desirable in the judgment of the Company to effectuate
such appointment. The voting power of the Shares transferred to a Permitted
Transferee shall remain with such transferor Stockholder until the earlier of
(i) the termination of this Agreement, (ii) the death of such Permitted
Transferee, in which case the Personal Representative of the deceased
Permitted Transferee shall grant an Irrevocable Proxy to the transferor Stock
holder, (iii) the IPO Effectiveness Date, in which case the voting power of
the Shares shall vest in the Permitted Transferee or (iv) the sale of such
Shares pursuant to Sections 3.4, 3.5, 3.6 or 3.9 prior to the IPO
Effectiveness

<PAGE>
                                         14

Date, in which case the voting power of the Shares shall vest in the purchaser
of such Shares.

                                   3.2.2    Permitted Transfer Procedures. A
Stockholder under this Section 3.2 shall give notice to the Company of its
intention to make any Transfer permitted under this Section 3.2 not less than
ten (10) days prior to effecting such Transfer, which notice shall state the
name and address of the Permitted Transferee to whom such Transfer is proposed
and the number of Shares to be transferred. Such notice shall include copies
of the instruments and proxies referred to in this Section 3.2.

                                   3.3     Transfer and Right of First Offer.
If, after the Market Price of such Shares can be determined, any Stockholder
desires to Transfer all, or any portion, of his Shares (other than to a
Permitted Transferee or pursuant to an effective Registration Statement or Rule
144 or pursuant to Section 3.9) such Stockholder (the "Offering Stockholder")
shall, prior to effecting such Transfer, first make an offer (the "First Offer")
to Transfer such Shares (the "Offered Shares") to the Company and the other
Stockholders in accordance with the procedures set forth in this Section 3.3.

                                   3.3.1    Notice. The Offering Stockholder
shall make the First Offer by delivering written notice of the First Offer
(the "Notice") to the Company and the other Stockholders, which Notice shall
state (i) that the Offering

<PAGE>
                                                                           15

Stockholder desires to effect a sale of the Offered Shares, (ii) the number
and class of Offered Shares and (iii) the name and address of the proposed
purchaser, if any, together with the terms and conditions of the proposed sale
to such purchaser relating to the Offered Shares, including the proposed
purchase price. Upon receipt of the Notice, (i) the Company and (ii) the other
Stockholders (if the Company does not exercise (or, pursuant to Section 3.8,
assign) its right to purchase all of the Offered Shares), on a pro rata basis
set forth below, shall be entitled to purchase all, but not less than all, of
the Offered Shares for a purchase price equal to, (x) if the Notice does not
describe any proposed sale to a third party purchaser, the Average Market
Price on the date upon which the Offering Stockholder delivers the Notice to
the Company and the other Stockholders or, (y) if the Notice describes a
proposed sale to a third party purchaser, the lesser of (A) the Average Market
Price on the date upon which the Offering Stockholder delivers the Notice to
the Company and the other Stockholders and (B) the proposed purchase price set
forth in the Notice.

                                   3.3.2       Exercise of Right of First Offer.

                                            (a)  Upon receipt of the Notice, the
Company (or its assignee) shall be entitled to exercise the Company's right to
purchase the Offered Shares pursuant to Section 3.3.1 by delivery of written
notice of exercise

<PAGE>
                                                                             16

to the Offering Stockholder (with a copy to the other Stockholders) within ten
(10) days following delivery of the Notice to the Company.

                                        (b)  If the Company (or its assignee)
elects not to purchase all of the Offered Shares as provided in paragraph (a)
above (or fails to deliver on a timely basis a notice of exercise as set forth
therein), the Offering Stockholder shall immediately notify and extend the
First Offer to the other Stockholders (such notice being referred to herein as
the "Second Round Notice"), who shall be entitled to purchase those Offered
Shares which the Company has elected not to purchase, by delivery of a notice
of exercise to the Offering Stockholder (with a copy to the Company) within
ten (10) days following delivery of the Second Round Notice. If the total
number of remaining Offered Shares which the other Stockholders elect to
purchase hereunder exceeds the total number of remaining Offered Shares, then
the number of Offered Shares purchased by each such other Stockholder shall be
reduced ratably (pro rata according to the number of Offered Shares which each
such other Stockholder elected to purchase), so that the number of Offered
Shares purchased by such other Stockholders equals the number of remaining
Offered Shares.

                                   3.3.3    Closing. The closing of any purchase
of Offered Shares by the Company (or its assignee) or the other Stockholders
under this Section 3.3 shall be

<PAGE>
                                                                        17

held at the principal office of the Company at 11:00 a.m. local time thirty
(30) days after the date on which all Offered Shares shall have been
subscribed for or at such other time and place as the parties mutually agree.
At such closing, the Offering Stockholder shall deliver certificates
representing the Offered Shares being purchased by the Company (or its
assignee) or the other Stockholders duly endorsed for transfer and accompanied
by all requisite stock transfer taxes, and such Offered Shares shall be free
and clear of any liens, claims, options, charges, encumbrances or rights of
others (collectively, "Liens") (other than those arising hereunder or under
the Pledge Agreement with such Offering Stockholder) and the Offering
Stockholder shall so represent and warrant, and further represent and warrant
that he is the beneficial owner of all such Offered Shares, with full
authority and power to transfer such Offered Shares. If the Offered Shares are
being purchased from a Management Stockholder, the Company shall deliver at
the closing payment in full, or the portion thereof allocable to the Company,
for such Offered Shares in accordance with Sections 4.1.1 and 4.1.2. If the
Offered Shares are not being purchased from a Management Stockholder, the
Company shall deliver at the closing, by a certified bank check, payment in
full, or the portion thereof allocable to the Company, for such Offered
Shares. Notwithstanding the foregoing sentence, if the Company's ability to
make cash

<PAGE>
                                                                          18

payments with respect to its obligations is restricted or limited under the
terms of the Note Agreement or the Loan Agreement, the Company shall (i) make
cash payments required by this Section 3.3.3 to the Offering Stockholder on an
equal and ratable basis with all the other obligations of the Company to the
extent permitted by the Note Agreement and the Loan Agreement, and (ii)
deliver to the Offering Stockholder a Subordinated Promissory Note, containing
the subordination provisions substantially in the form of Exhibit C attached
hereto and bearing interest at the Prime Rate (a "Subordinated Note"), in a
principal amount equal to (x) the excess of the purchase price of the Offered
Shares purchased by the Company over (y) the amount paid pursuant to clause
(i) above. If the Company is not permitted under the terms of the Note
Agreement or the Loan Agreement to pay any portion of the purchase price in
cash, the Company shall deliver to the Offering Stockholder a Subordinated
Note in a principal amount equal to such purchase price. The Company's
assignee or the other Stockholders shall deliver at the closing, by a
certified bank check, payment in full, or the portion thereof allocable to the
Company's assignee or the other Stockholders, as the case may be, for such
Offered Shares. At such closing, all of the parties to the transaction shall
execute such additional documents as are otherwise necessary or appropriate.

<PAGE>
                                                                             19

                                   3.3.4  Purchase by Third Party. If all
of the Offered Shares have not been purchased pursuant to Section 3.3.3, the
Offering Stockholder may Transfer all, but not less than all, of the Offered
Shares, subject to the provisions of clause (i) of Section 2.2, upon terms
that, in the aggregate, are not more favorable to the purchaser than those
stated in the Notice, provided that such sale is bona fide and made within 75
days after the date on which the Of fering Stockholder delivers the Second
Round Notice to the other Stockholders. If such sale is not consummated within
such 75-day period, the restrictions provided for in this Section 3.3 shall
again become effective, and no Transfer of Shares pursuant to this Section 3.3
may be made thereafter without again making a First Offer to the Company and
the other Stockholders in accordance with the terms and conditions of this
Agreement.

                           3.4     Termination of Employment. If, with respect
to any Management Stockholder, an Actual or Constructive Termination shall
occur, then the Company shall have the obligation to purchase all of the
Shares owned by such Management Stockholder and his Permitted Transferees
which have not been registered pursuant to an effective Registration
Statement, and such Management Stockholder and his Permitted Transferees shall
have the obligation to sell all of such Shares to the Company at a purchase
price per Share set forth below.

<PAGE>
                                                                            20

                                   3.4.1  Termination Before Market Price Can Be
Determined. (a) If such Actual or Constructive Termination occurs before the
Market Price of such Shares can be determined, then, subject to paragraph (b)
below, the purchase price per Share shall be (1) the Appraised Value or, (ii)
if on the date the Actual or Constructive Termination occurs more than
eighteen (18) months have elapsed since the Appraised Value of the applicable
class of common stock was last determined, either (x) the price upon which the
Company and such Management Stockholder mutually agree or, (y) if the Company
and such Management Stockholder are unable to agree in writing on a price
within thirty (30) days after the date the Actual or Constructive Termination
occurs, the Appraised Value as of the date of the Company's most recently
ended fiscal quarter, as determined by a Qualified Appraiser selected by the
Board and approved by the Management Stockholder, which approval shall not be
unreasonably withheld. If the Management Stockholder does not approve the
Qualified Appraiser selected by the Board within fifteen (15) days after the
Board's selection, the Qualified Appraiser shall be the banking or appraisal
firm that most recently appraised the Shares or, if such banking or appraisal
firm is unwilling or unable to appraise the Shares, a Qualified Appraiser
selected by such banking or appraisal firm. The Company, on the one hand, and
the Management Stockholder, on the other hand, shall each be

<PAGE>
                                                                            21

responsible for one-half of any fees and expenses of such Qualified Appraiser
incurred in connection with its determination of the Appraised Value as of the
date of the Company's most recently ended fiscal quarter. Promptly after
determining the Appraised Value of the Shares, the Qualified Appraiser shall
deliver to the Company and the Management Stockholder a copy of its written
determination of such Appraised Value.

                           (b)     If, notwithstanding paragraph (a) above, the
Market Price of the Shares can be determined prior to the closing referred to
in clauses (i) through (iii) of paragraph (C) below, the purchase price for
such Shares shall be the Average Market Price on the date that is ten (10)
Trading Days after a Closing Price is first available for the Shares (the
"Availability Date").

                           (c)     The closing of the purchase of the Shares
pursuant to this Section 3.4.1 shall be held at the principal office of the
Company at 11:00 a.m. local time on the date that is (i) thirty (30) days
after the occurrence of the Actual or Constructive Termination if the purchase
price is the Appraised Value, (ii) thirty (30) days after the date on which
the Company and the Management Stockholder agree in writing upon a price, if
the purchase price is such agreed upon price, (iii) thirty (30) days after the
later of the date on which the (x) Company and (y) the Management Stockholder
receive the Qualified Appraiser's written deter

<PAGE>
                                                                            22

mination of the Appraised Value, if the purchase price is the Appraised Value
as of the date of the Company's most recently ended fiscal quarter or (iv)
thirty (30) days after the Availability Date, if the purchase price is
determined in accordance with paragraph (b) above, or at such other time and
place as the parties mutually agree.

                                   3.4.2   Termination After Market Price Can Be
Determined. If such Actual or Constructive Termination occurs after the Market
Price of such shares can be determined, then the purchase price for such
Shares shall be the Average Market Price on the date the Actual or
Constructive Termination occurs. The closing of any purchase pursuant to this
Section 3.4.2 shall be held at the principal office of the Company at 11:00
a.m. local time on the date that is thirty (30) days after the occurrence of
the Actual or Constructive Termination, or at such other time and place as the
parties mutually agree.

                                   3.4.3    Company's Right to Deduct Loss. If
the Management Stockholder shall have committed an act of theft or intentional
fraud against the Company or any of its Affiliates, then the Company may
deduct from the purchase price required to be paid for such Shares in
accordance with this Section 3.4, an amount equal to the loss suffered by the
Company as a result of such Management Stockholder's theft or intentional
fraud determined by the Board in good faith.

<PAGE>
                                                                             23

                           3.5     Death of a Management Stockholder.

                                   3.5.1    Death Before Market Price Can Be
Determined. (a) If a Management Stockholder dies before the Market Price of
the Shares owned by such Management Stockholder and his Permitted Transferees
can be determined, then, subject to paragraph (b) below, the Company shall
have the obligation to purchase all of such Shares which have not been
registered pursuant to an effective Registration State ment, and the Personal
Representative of such Management Stockholder and such Management
Stockholder's Permitted Transferees shall have the obligation to sell all of
such Shares at the following purchase price: (i) the Appraised Value or, (ii)
if on the Date of Death more than eighteen (18) months have elapsed since the
Appraised Value of the applicable class of common stock was last determined,
either (x) the price upon which the Company and such Personal Representative
mutually agree or, (y) if the Company and such Personal Representative are
unable to agree in writing upon a price within thirty (30) days of the Date of
Death, the Appraised Value of the applicable class of common stock as of the e
date of the Company's most recently ended fiscal quarter, as determined by a
Qualified Appraiser selected by the Board and approved by such Personal
Representative, which approval shall not be unreasonably withheld. If the
Personal Representative does not approve the Qualified Appraiser selected by
the Board within fifteen (15) days

<PAGE>
                                                                            24

after the Board's selection, the Qualified Appraiser shall be the banking or
appraisal firm that most recently appraised the Shares or, if such banking or
appraisal firm is unwilling or unable to appraise the Shares, a Qualified
Appraiser selected by such banking or appraisal firm. The Company and the
Personal Representative shall each be responsible for one-half of any fees
and expenses of such Qualified Appraiser incurred in connection with the
determination of the Appraised Value of the applicable class of common stock
as of the date of the Company's most recently ended fiscal quarter. Promptly
after determining the Appraised Value of the Shares, the Qualified Appraiser
shall deliver to the Company and the Personal Representative a copy of its
written determination of such Appraised Value.

                           (b)     If, notwithstanding paragraph (a) above, the
Market Price of the Shares can be determined prior to the closing referred to
in clauses (i) through (iii) of paragraph (C) below, the purchase price for
such Shares shall be the Average Market Price on the date that is ten (10)
Trading Days after the Availability Date.

                           (c)     The closing of the purchase of the Shares
pursuant to this Section 3.5.1 shall be held at the principal office of the
Company at 11:00 a.m. local time on the date that is (i) thirty (30) days
after the Date of Death if the purchase price is the Appraised (ii)e, thirty
(30) days after the date on which the Company

<PAGE>
                                                                           25

and the Personal Representative agree in writing upon a price, if the purchase
price is such agreed upon price, (iii) thirty (30) days after the later of the
date on which (x) the Company and (y) the Personal Representative receive the
Qualified Appraisers written determination of the Appraised Value, if the
purchase price is the Appraised Value as of the date of the Company's most
recently ended fiscal quarter or (iv) thirty (30) days after the Availability
Date, if the purchase price is determined in accordance with paragraph (b)
above, or at such other time and place as the Company and the Personal
Representative mutually agree.

                                   3.5.2    Death After Market Price Can Be
Determined. If a Management Stockholder dies after the Market Price of the
Shares owned by such Management Stockholder and his Permitted Transferees can
be determined, then the Company shall have the obligation to purchase all of
such Shares which have not been registered pursuant to an effective
Registration Statement, and the Personal Representative of such Management
Stockholder and such Management Stockholder's Permitted Transferees shall have
the obligation to sell all of such unregistered Shares at a purchase price per
Share equal to the Average Market Price on the Date of Death. The closing of
any purchase pursuant to this Section 3.5.2 shall be held at the principal
office of the Company at 11:00 a.m. local time on the date that is

<PAGE>
                                                                            26

thirty (30) days after the Date of Death or at such other time and place as
the parties mutually agree.

                                   3.5.3     Key Man Life Insurance. Each of the
Management Stockholders shall, upon the request of the Company, assist the
Company in connection with the Company's obtaining "key man" life insurance on
behalf of such Management Stockholder.

                           3.6     Change of Control.

                                   (a) If a Change of Control occurs (other than
any event referred to in clause (ii) of the definition of Change of Control),
then each of the Management Stockholders by written notice (the "Change of
Control Notice") to the Company (with a copy to the other parties hereto)
within one hundred eighty (180) days after the occurrence of such Change of
Control, shall have the right, but not the obligation, to sell all, but not
less than all, of the Shares owned by such Management Stockholder and his
Permitted Transferees which have not been registered pursuant to an effective
Registration Statement, and, if such Management Stockholder exercises such
right, the Company shall have the obligation to buy all of such Shares at the
purchase price per Share set forth below. If the Change of Control event
referred to in clause (ii) of the definition of Change of Control occurs, then
each of the Management Stockholders by written notice (the "Delayed Change of
Control Notice") to the Company (with a copy to the other

<PAGE>
                                                                            27

parties hereto) within one hundred eighty (180) days after the date that is
three years after the occurrence of such Change of Control event, shall have
the right, but not the obligation, to sell all, but not less than all, of the
Shares owned by such Management Stockholder and his Permitted Transferees
which have not been registered pursuant to an effective Registration
Statement, and, if such Management Stockholder exercises such right, the
Company shall have the obligation to buy all of such Shares at the purchase
price per Share set forth below.

                                    (b) If the Change of Control Notice is given
before the Market Price of such Shares can be determined, then, subject to
paragraph (c) below, the purchase price per Share shall be (i) the Appraised
Value or, (ii) if on the date such Change of Control Notice is given, more
than eighteen (18) months have elapsed since the Appraised Value of the
applicable class of common stock was last determined, either (x) the price
upon which the Company and such Management Stockholder mutually agree or, (y)
if the Company and such Management Stockholder are unable to agree in writing
upon a price within thirty (30) days after the date the Change of Control
Notice is given, the Appraised Value as of the date of the Company's most
recently ended fiscal quarter, as determined by a Qualified Appraiser selected
by the Board and approved by the Management Stockholder, which approval shall
not be unreasonably

<PAGE>
                                                                            28

withheld. If the Delayed Change of Control Notice is given before the Market
Price of such Shares can be determined, then, subject to paragraph (c) below,
the purchase price per Share shall be (i) the Appraised Value or, (ii) if on
the date such Delayed Change of Control Notice is given, more than eighteen
(18) months have elapsed since the Appraised Value of the applicable class of
common stock was last determined, either (x) the price upon which the Company
and such Management Stockholder mutually agree or, (y) if the Company and such
Management Stockholder are unable to agree in writing upon a price within
thirty (30) days after the date the Delayed Change of Control Notice is given,
the Appraised Value as of the date of the Company's most recently ended fiscal
quarter, as determined by a Qualified Appraiser selected by the Board and
approved by the Management Stockholder, which approval shall not be
unreasonably withheld. If the Management Stockholder does not approve the
Qualified Appraiser selected by the Board within fifteen (15) days after the
Board's selection, the Qualified Appraiser shall be the banking or appraisal
firm that most recently appraised the Shares or, if such banking or appraisal
firm is unwilling or unable to appraise the Shares, a Qualified Appraiser
selected by such banking or appraisal firm. The Company and such Management
Stockholder shall each be responsible for one-half of any fees and expenses
of such Qualified Appraiser incurred in connection

<PAGE>
                                                                            29

with the determination of the Appraised Value as of the date of the Company's
most recently ended fiscal quarter. Promptly after determining the Appraised
Value of the Shares, the Qualified Appraiser shall deliver to the Management
Stockholder and the Company a copy of its written determination of such
Appraised Value.

                                    (C) If, notwithstanding paragraph (b) above,
the Market Price of the Shares can be determined prior to the closing referred
to in clauses (i) through (iii) of paragraph (d) below, the purchase price for
such Shares shall be the Average Market Price on the date that is ten (10)
Trading Days after the Availability Date.

                                    (d) The closing of the purchase of the
Shares pursuant to paragraphs (b) and (c) of this Section 3.6 shall be held at
the principal office of the Company at 11:00 a.m. local time on the date that
is (i) thirty (30) days after the Company receives the Change of Control
Notice or Delayed Change of Control Notice, as the case may be, if the
purchase price is the Appraised Value, (ii) thirty (30) days after the date in
which the Company and the Management Stockholder agree in writing upon a
price, if the purchase price is such agreed upon price, (iii) thirty (30) days
after the later of the date on which the (x) Management Stockholder and (y)
the Company receive the Qualified Appraiser's written determination of the
Appraised Value, if the purchase price is the Appraised Value as of the date
of

<PAGE>
                                                                            30

the Company's most recently ended fiscal quarter or (iv) thirty (30) days
after the Availability Date, if the purchase price is determined in accordance
with paragraph (b) above, or at such other time and place the Company and the
Management Stockholder mutually agree.

                                   (e) If the Change of Control Notice is given
after the Market Price of such Shares can be determined, the purchase price
per Share shall be the Average Market Price on the date that the Change of
Control Notice is given. If the Delayed Change of Control Notice is given
after the Market Price of such Shares can be determined, then the purchase
price per Share shall be the Average Market Price on the date the Delayed
Change of Control Notice is given. The closing of any purchase pursuant to
this paragraph (e) shall be held at the principal office of the Company at
11:00 A.M. local time on the date that is thirty (30) days after the delivery
of the Change of Control Notice or the Delayed Change of Control Notice, as
the case may be, or at such other time and place as the parties mutually
agree.

                          3.7     Pledge of Shares. Notwithstanding anything to
the contrary in this Agreement, each Management Stockholder may pledge, and
grant a security interest in, his Shares in accordance with the provisions of
the Pledge Agreement with such Management Stockholder.

<PAGE>
                                                                          31

                           3.8     Company's Right to Assign. Notwithstanding
anything to the contrary in this Agreement, the Company may assign to any
Stockholder or third party its right or obligation to purchase Shares pursuant
to this Section 3, provided that the Company may not assign its obligation to
purchase Shares pursuant to Sections 3.4, 3.5 and 3.6 to any assignee unless
such prospective assignee has (i) delivered a letter to the Management
Stockholder or Personal Representative having the right or obligation to sell
Shares under such Sections, signed by the prospective assignee, agreeing to
purchase such Shares in accordance with the terms and provisions of such
Sections and (ii) furnished evidence demonstrating (to the reasonable
satisfaction of such Management Stockholder or Personal Representative) such
prospective assignee's financial ability to consummate the purchase of such
Shares.

                           3.9    Company Purchase. Notwithstanding anything to
the contrary in this Agreement and subject to Section 3.10 below, the Company
or any Affiliate may purchase from a Management Stockholder, and a Management
Stockholder may sell and Transfer to the Company or any Affiliate, the Shares
owned by such Management Stockholder and his Permitted Transferees at a
purchase price to be agreed upon by the Company or such Affiliate and the
Management Stockholder; provided, however, that if any amount of indebtedness
remains outstanding under the Promissory Note

<PAGE>
                                                                            32

executed by such Management Stockholder the amount outstanding shall be
deducted from the purchase price payable by the Company or such Affiliate with
respect to the purchase of such Management Stockholder's Shares.

                         3.10       No Transfer in Violation of Note Agreement.
Notwithstanding anything to the contrary in this Agreement, no Stockholder
shall Transfer any Shares, and the Company shall not be required to register
the Transfer of any Shares, in violation of any term or provision of the Note
Agreement. Each Management Stockholder acknowledges that the Note Agreement
contains restrictions and limita tions relating to the Class B Common Stock
and the Promissory Notes, including, without limitation, relief from the
indebtedness evidenced by the Promissory Notes and payments of dividends on
and transfers of the Class B Common Stock.

                  4.     Closing.

                         4.1        Deliveries at Closing. At any closing
pursuant to Sections 3.4, 3.5 and 3.6, the Management Stockholder (or his
Personal Representative) and his Permitted Transferees shall deliver
certificates representing the Shares being purchased by the Company, the other
Stockholders or a third party, as the case may be, duly endorsed for transfer
and accompanied by all requisite stock transfer taxes, and such Shares shall
be free and clear of any Liens (other than those arising hereunder or under
the Pledge Agreement with such Management Stockholder) and the

<PAGE>
                                                                            33

Management Stockholder (or his Personal Representative) shall so represent and
warrant, and further represent and warrant that he (or his Permitted
Transferee) is the beneficial owner of such Shares. At such closing, all of
the parties to the transaction shall execute such additional documents as are
otherwise necessary or appropriate.

                                   4.1.1  Method of Payment by the Company. The
Company shall deliver at the closing payment in full for any Shares purchased
from a Management Stockholder pursuant to Section 3.3 or from a Management
Stockholder (or his Personal Representative) and such Management Stockholder's
Permitted Transferees pursuant to Sections 3.4, 3.5 and 3.6 as follows:

                              (i)   If any principal amount (or accrued but
         unpaid interest) shall remain outstanding on a Promissory Note executed
         by a Management Stockholder, the Company shall apply such outstanding
         principal amount (or such accrued but unpaid interest) toward payment
         for the Shares and, if all amounts owing on the Promissory Note are
         thereby satisfied, shall deliver such Promissory Note to the
         Management Stockholder (or his Personal Representative).

                              (ii)  To the extent that the purchase price of
         such Shares exceeds the principal amount (and accrued but unpaid
         interest) outstanding on

<PAGE>
                                                                             34

          such Promissory Note, the Company shall, subject to Section 4.1.2,
          promptly deliver to the Management Stockholder (or his Personal
          Representative) a certified bank check in the amount of such excess
          (the "Cash Purchase Price").

                                   4.1.2    Restrictions on Cash Payments. If
the Company's ability to make cash payments with respect to its obligations is
restricted or limited under the terms of the Note Agreement or the Loan
Agreement, (i) the Company shall make cash payments required by Section 4.1.1
to the Management Stockholder (or his Personal Representative) on an equal and
ratable basis with all the other obligations of the Company to the extent
permitted by the Note Agreement and the Loan Agreement, and (ii) deliver to
the Management Stockholder (or his Personal Representative) a Subordinated
Note in a principal amount equal to (x) the excess of the Cash Purchase Price
over (y) the amount paid pursuant to clause (i) above. If the Company is not
permitted under the terms of the Note Agreement or the Loan Agreement to pay
any portion of the Cash Purchase Price, the Company shall deliver to the
Management Stockholder (or his Personal Representative) a Subordinated Note in
a principal amount equal to the Cash Purchase Price.

                                   4.1.3    Method of Payment by the Other
Stockholders or Third Party. The other Stockholders or any third party
to whom the Company has assigned its right to

<PAGE>
                                                                            35

purchase Shares pursuant to Section 3.8 shall deliver to the Management
Stockholder (or his Personal Representative) at the closing, by a certified
bank check, payment in full for any Shares purchased from a Management
Stockholder (or his Personal Representative) and such Management Stockholder's
Permitted Transferees pursuant to Sections 3.4, 3.5 or 3.6.

                  5. Power of Attorney. Each Stockholder hereby appoints the
Company under Sections 3.3, 3.4, 3.5 and 3.6 as the attorney-in-fact for such
Stockholder with the power to execute such documents and take such other
action to provide for the transfer of the Shares owned by such Stockholder in
accordance with such Sections. In addition, the Company is hereby authorized
(i) to transfer such Shares on the books of the Company in accordance with
this Agreement and without regard to the surrender of certificates
representing Shares held by such Stockholder and (ii) to place on all
certificates representing Shares a legend reflecting this authority to
transfer such Shares. Any such certificates not surrendered as required by
this Agreement shall become upon such transfer null and void.

                  6.      Registration Rights.

                          6.1      Incidental Registration. Subject to Section
6.3, if the Company proposes to register any Shares under a Registration
Statement (other than pursuant to a Registration Statement on Form S-4, Form
S-8 or any equivalent form then in effect), whether or not for sale for its

<PAGE>
                                                                           36

own account or for the account of any Stockholder, the Company shall give each
Stockholder (each, an "Incidental Stockholder") notice of such proposed
registration at least thirty (30) days prior to the filing of a Registration
Statement with respect to such public sale. Upon the written request of any
Incidental Stockholder delivered to the Company within ten (10) days after the
receipt of the notice from the Company (which request shall state the number
of shares of Class A Common Stock (collectively, the "Incidental Shares") that
such Incidental Stockholder wishes to sell or distribute publicly under such
Registration Statement proposed to be filed by the Company), the Company shall
use its best efforts to register under the Securities Act such Incidental
Shares. The Company may withdraw a Registration Statement at any time before
it becomes effective or postpone or terminate the offering without obliga tion
to any Incidental Stockholder. If a registration of Shares involves an
underwritten offering, and the Company's managing underwriter shall advise the
Company in writing that, in its opinion, the total number of Shares (including
Incidental Shares) requested to be included in such registration exceeds the
number which can be sold in such offering, the Company will include in such
registration, to the extent of the number of Shares which the Company is so
advised can be sold in such offering, (i) first, the Shares the Company
proposes to issue and sell for its own account

<PAGE>
                                                                            37

and (ii) second, other Shares it proposes to sell, including Incidental
Shares, on a pro rata basis. In no event shall the Company be required to
include any Incidental Shares in its Initial Public Offering if the managing
underwriter of such offering shall advise the Company in writing, that in its
opinion, the inclusion of any such Shares would adversely affect the success
of the offering.

                           6.2     Registration Procedures. With respect to any
Registration Statement that includes any Incidental Shares pursuant to Section
6.1:

                                   (a)    Underwriters. The distribution for the
account of the Incidental Stockholders shall be underwritten by the same
underwriters, if any, who underwrite the distribution of the securities for
the account of the Company and/or any other persons whose securities are
covered by such Registration Statement.

                                   (b)    Legal Opinions. The Incidental
Stockholders shall retain counsel and shall cause such counsel to deliver to
the managing underwriter such opinions as the managing underwriter may
reasonably require.

                                   (c)    Execution. of Documents. The
Incidental Stockholders shall, upon request of the Company, execute power of
attorney, deposit and custodian agreements in form and substance satisfactory
to the managing underwriter. The Incidental Stockholders shall execute an
underwriting agreement in form and substance satisfactory to the

<PAGE>
                                                                           38

Company and managing underwriter, which underwriting agreement shall contain
provisions whereby the Company and the Incidental Stockholders indemnify each
other as provided in Section 6.4.

                                    (d)   Registration Statement. The Company
shall deliver to the Incidental Stockholders after the effectiveness of any
Registration Statement such reasonable number of copies of a definitive
prospectus included in such Registration Statement and of any revised or
supplemental prospectus as the Incidental Stockholders may from time to time
request.

                                    (e)   Expenses. In connection with the
registration of Incidental Shares, the Company shall pay all of the expenses
attributable to the sale of the Incidental Shares, including, without
limitation, the federal and state filing fees applicable to the Incidental
Shares and the underwriting fees applicable to the Incidental Shares; provided
that the Company shall not pay, and each Incidental Stockholder shall be
responsible for, the fees of counsel to such Incidental Stockholder.

                                    (f)   Hold-Back. Each Stockholder agrees not
to effect any sale or distribution, including a sale pursuant to Rule 144, of
any equity securities of the Company or any securities convertible into or
exchangeable or exercisable for equity securities of the Company during the
ten days prior to, and during the 180-day period following,

<PAGE>
                                                                           39

the effective date of any Registration Statement filed by the Company (except
as part of such registration), if and to the extent requested by the Company
or by the managing underwriter or underwriters of such registration.

                           6.3    Limitation on Incidental Registration Rights.
Notwithstanding anything to the contrary contained in Sections 6.1 and 6.2,
the Company shall not be obligated to give notice to any Stockholder of any
proposed registration or to register the Shares of any Stockholder after the
Company has effected five registrations in accordance with Section 6.1 and
such Registration Statements have been declared or ordered effective.

                           6.4    Indemnity. The Company will indemnify and hold
harmless each Incidental Stockholder and each underwriter (and any person who
controls such underwriter within the meaning of Section 15 of the Securities
Act) against all claims, losses, damages, liabilities and expenses
(collectively, "Losses") resulting from any untrue statement or allegedly
untrue statement of a material fact contained in any Registration Statement,
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or from any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein (in the case of a
prospectus or a preliminary prospectus, in light of the circumstances under

<PAGE>
                                                                           40

which they were made) not misleading, except insofar as the same may have been
based on (i) information furnished in writing to the Company by (x) such
Incidental Stockholder in accordance with the third sentence of this Section
6.4 or (y) such underwriter, in each case, expressly for use therein and used
in accordance with such writing or (ii), with respect to any underwriter, the
failure of such underwriter to send or give a copy of the final prospectus (as
the same may be supplemented or amended) to the person asserting the untrue
statement or allegedly untrue statement or omission or alleged omission at or
prior to the sale of the Shares to such person if such statement was corrected
in the final prospectus. Any expenses incurred by the Incidental Stockholders
that are subject to indemnification pursuant to this Section 6.4 shall be paid
by the Company as and when incurred by the Incidental Stockholders. Each
Incidental Stockholder agrees to furnish to the Company such information
concerning such Incidental Stockholder and the proposed sale or distribution
as shall, in the opinion of counsel for the Company, be necessary in
connection with any such registration or qualification of any Incidental
Shares. Each Incidental Stockholder also agrees to indemnify and hold harmless
the Company and its officers and directors (and any person who controls the
Company within the meaning of Section 15 of the Securities Act) against all
Losses resulting from any untrue statement or allegedly untrue

<PAGE>
                                                                           41

statement of a material fact furnished in writing by such Incidental
Stockholder to the Company in accordance with the third sentence of this
Section 6.4 expressly for use in connection with such registration or
qualification and used in accordance with such writing and from any omission
therefrom or alleged omission therefrom of a material fact needed to be
furnished or necessary to make the statements therein (in the case of a
prospectus or preliminary prospectus, in light of the circumstances under
which they were made) not misleading, except insofar as the same may have been
based on the failure of the underwriter to send or give a copy of the final
prospectus (as the case may be supplemented or amended) to the person
asserting the untrue statement or allegedly untrue statement or omission or
alleged omission at or prior to the sale of the Shares to such person if such
statement was corrected in the final prospectus; provided, however, that the
liability of such Incidental Stockholder under this Section 6.4 shall be
limited to the amount of proceeds received by such Incidental Stockholder in
the offering giving rise to such liability. Any expenses incurred by the
Company that are subject to indemnification pursuant to this Section 6.4 shall
be paid by the Incidental Stockholder as and when incurred by the Company.

                  7.      Voting. Each Stockholder shall, until the IPO
Effectiveness Date, vote his Shares and the Irrevocable Proxy of his
Permitted Transferee at any meeting of the

<PAGE>
                                                                           42

stockholders of the Company in the manner recommended by the Board.

                  8.       Miscellaneous.

                           8.1     Provisions to Apply to All Shares. The
provisions of this Agreement, subject to the terms hereof, shall apply to all
of the Shares now owned or which may be transferred hereafter to a Stockholder
pursuant to Section 3 of this Agreement or issued or transferred hereafter to
a Stockholder in consequence of any conversion, exchange or reclassification
of Shares, corporate reorganization, or any other form of recapitalization, or
consolidation or merger, or share split or share dividend.

                           8.2     Legend. In addition to any legend required by
federal or state securities laws or any other agreement, each Share now held
or hereafter acquired by any Stockholder shall, for as long as this Agreement
is effective, bear a legend as follows:

         The sale, assignment, transfer and pledge of any of the securities
         represented by this Certificate are restricted by the terms of the
         Stockholders Agreement, dated as of February 21, 1995, among the
         Company and certain of its stockholders, a copy of which may be
         inspected at the Company's principal office. Under such Stockholders
         Agreement, the Company is authorized to transfer the securities
         represented by this Certificate on the books of the Company in
         accordance with the terms of such Stockholders Agreement.

                           8.3     Binding on Transferees. The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and any transferee of Shares

<PAGE>
                                                                            43

who becomes a party to this Agreement in accordance with Section 2.2.

                          8.4      Additional Management Stockholders. If Jack
C. Bendheim or Marvin S. Sussman desire to purchase shares of Class B Common
Stock from the Company by March 2, 1995, each will, prior to and as a
condition to such purchase, execute and deliver to the Company an appropriate
instrument in the form of Exhibit D, pursuant to which each shall agree to
take and hold such shares of Class B Common Stock subject to the terms of this
Agreement and that thereafter each shall be a Management Stockholder
hereunder.

                          8.5      Notices. Notices hereunder shall be given
only by personal delivery, registered or certified mail, return receipt
requested, overnight courier service, telex or facsimile transmission and
shall be deemed transmitted on the fifth day following the date when deposited
in the mail, on the day following the date of delivery to a courier service
(postage or charges prepaid) or when personally delivered or transmitted by
facsimile machine, and addressed to the particular party to whom the notice is
to be sent as follows:

                  If to the Company:

                          Phibro-Tech, Inc.
                          One Parker Plaza
                          Fort Lee, New Jersey 07024
                          Attention:     Nathan Z. Bistricer
                          Telecopier:    (201) 944-6245

<PAGE>
                                                                           44

                  With a copy to:

                           Paul, Weiss, Rifkind, Wharton & Garrison
                           1285 Avenue of the Americas
                           New York, New York 10019-6064
                           Attention:           Matthew Nimetz, Esq.
                           Telecopier:          (212) 757-3990

                  If to the Stockholders:

                           As set forth on the books and records of the Company
or to such address as a party may instruct by notice hereunder (which address
will be provided promptly by the Company upon the request of any Stockholder).

                           8.6     Subdivision and Combination. If the Company
shall in any manner subdivide (by stock split, stock dividend or otherwise) or
combine (by reverse stock split or otherwise) the outstanding shares of one
class of common stock of the Company, the outstanding shares of the other
class of common stock shall be proportionately subdivided and combined.

                           8.7     Severability. In the event any provision
hereof is held void or unenforceable by any court, then such provisions shall
be severable and shall not affect the remaining provisions hereof.

                           8.8     Entire Agreement. This Agreement is the
entire Agreement among the parties with respect to the subject matter hereof,
and, when executed by the parties hereto, supersedes all prior agreements and
communications,

<PAGE>
                                                                            45

either oral or in writing, among the parties hereto with respect to the
subject matter contained herein.

                           8.9      Waiver. Any failure by a party hereto to
comply with any obligation, agreement or condition herein may be waived only
by a written instrument executed by each party adversely affected by such
failure to comply, but such waiver or failure to insist upon strict compliance
with such obligation, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any such subsequent or other failure.

                           8.10     Amendments. Amendments may be made to this
Agreement from time to time by a written instrument executed by the Company
and the Stockholders then holding 80% of the Shares subject to this Agreement.

                           8.11     Consent to Specific Performance. it is
specifically agreed and understood that monetary damages would not adequately
compensate the non-breaching party for the breach of this Agreement, and this
Agreement shall therefore be specifically enforceable, and any breach or
threatened breach of this Agreement shall be the proper subject of a temporary
or permanent injunction or restraining order. Therefore, if any party shall
institute any action or proceeding to enforce the provisions hereof, any party
against whom such action or proceeding is brought hereby waives any claim or
defense therein that the other party has an adequate remedy at law.

<PAGE>
                                                                            46

                           8.12      Variation in Pronouns. All pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine or
neuter, singular or plural, as the identity of the antecedent person or
persons or entity or entities may require.

                           8.13      Term. This Agreement shall terminate
twenty-five years after the date hereof unless terminated earlier by written
agreement of the Company and the Stockholders.

                           8.14      Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed entirely within such State.

                           8.15      Further Assurances. Each of the parties
shall execute such documents and other papers and take such further actions as
may be reasonably required or desirable to carry out the provisions hereof and
the transactions contemplated hereby.

                           8.16      Counterparts. This Agreement may be
executed simultaneously in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the
same instrument.

<PAGE>

              IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the date first above written.

Phibro-Tech, Inc.

By: /s/ Joseph M. Katzenstein
    -------------------------
Vice President

Stockholders

/s/ I. David Paley
- ------------------

/s/ Nathan Z. Bistricer
- -----------------------

/s/ James O. Herlands
- ---------------------

<PAGE>

                               Amendment Agreement

                  Reference is made to that certain Stockholders Agreement (the
"Stockholders Agreement"), dated as of February 21, 1995, between Phibro-Tech,
Inc., a Delaware corporation ("Phibro-Tech"), and I. David Paley, Nathan Z.
Bistricer and James O. Herlands, as the Management Stockholders thereunder. In
connection with the Stockholders Agreement, the Management Stockholders
purchased an aggregate of 383.42 shares of Phibro- Tech's Class B Common Stock,
par value $.01, which shares are convertible under certain circumstances into
shares of Phibro- Tech's Class A Common Stock, par value $.01 (collectively, the
"Phibro-Tech Stock").

                  Each of the Management Stockholders and Phibro-Tech hereby
agrees as follows:

                  1. The parties have determined that, in the future, it may be
mutually beneficial for such parties and Philipp Brothers Chemicals, Inc., a New
York corporation ("PBC"), which is the parent company of Phibro-Tech, to arrange
for an exchange of the shares of the Phibro-Tech stock held by the Management
Shareholders (or their permitted transferees) for shares of common stock which
may be non-voting common stock of PBC ("PBC Stock"), upon exchange rate terms
that are mutually acceptable to the party or parties and PBC so effecting such
exchange (the "Exchanging Parties").

                  2. In the event of such an exchange, references in the
Stockholders Agreement (to the extent applicable to the Exchanging Parties) to
Phibro-Tech Stock or any class thereof shall be deemed to refer to PBC Stock or
the applicable class thereof and applicable provisions of the Stockholders
Agreement, including without limitation provisions relating to the computation
of the purchase price for shares of Phibro-Tech stock in the event of a purchase
or sale thereof pursuant to the Stockholders Agreement, shall be equitably
amended and adjusted by Phibro-Tech and PBC to reflect the exchange of
Phibro-Tech Stock for PBC Stock contemplated hereby.

                  3. Notwithstanding the foregoing the provisions of Section 8.4
of the Stockholders Agreement shall, upon such an exchange of Phibro-Tech stock
for PBC Stock, cease to be of any force or effect and shall be deemed deleted
from the Stockholders Agreement.


<PAGE>


                  4. References in the Stockholders Agreement to the Note
Agreement or to the Loan Agreement shall be deemed to refer also to (i) that
certain Indenture, dated as of June 11, 1998, between PBC, the Guarantors named
therein and The Chase Manhattan Bank, as Trustee, and relating to the 97/8%
Senior Subordinated Notes due 2008 of PBC, as the same may be amended, restated,
modified or refinanced from time to time (the "Indenture") (provided that no
such amendment, restatement, modification or refinancing shall increase the
restrictions or limitations imposed on the Stockholders or on the Company's or
PBC's ability to make payment to the Stockholders as in effect on the date of
such Indenture), and (ii) such senior, secured institutional loan and/or credit
facility agreement(s) as may from time to time be entered into by PBC, and as to
any extensions, modifications, renewals or refinancings thereof (provided that
no such extension, modification, renewal or refinancing shall increase the
restrictions or limitations imposed on the Stockholders or on the Company's or
PBC's ability to make payments to the Stockholders by any of (A) the Loan
Agreement, as in effect on the original date of execution of the Stockholders
Agreement, (B) the Note Agreement, as in effect on the original date of
execution of the Stockholders Agreement, (C) the Indenture, as in effect on the
original date of execution thereof, or (D) the first such loan and/or credit
facility agreements entered into by PBC which effectively replaces or refinances
the Loan Agreement as in effect on the date hereof.

                  5. Except as contemplated hereby the Stockholders' Agreement
shall remain in full force and effect.

                  6. This Amendment Agreement may be executed in counterparts
and may not be amended orally.


<PAGE>


                  Agreed to as of June 11, 1998

                                       /s/ I. David Paley
                                       ------------------
                                       I. DAVID PALEY

                                       /s/ Nathan Z. Bistricer
                                       -----------------------
                                       NATHAN Z. BISTRICER

                                       /s/ James O. Herlands
                                       ---------------------
                                       JAMES O. HERLANDS

                                       PHIBRO-TECH, INC.

                                       By:  /s/ Jack Bendheim
                                          -------------------
                                          Title:  CEO

                                       PHILIPP BROTHERS CHEMICALS, INC.

                                       By:  /s/ Jack C. Bendheim
                                          ----------------------
                                          Title:  Pres


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.15
<SEQUENCE>18
<FILENAME>0018.txt
<DESCRIPTION>SEVERANCE AGREEMENT BETWEEN I. DAVID PALEY
              AND PHIBRO-TECH, INC.
<TEXT>


<PAGE>
                               SEVERANCE AGREEMENT

                    SEVERANCE AGREEMENT (the "Agreement"), dated as of February
21, 1995, between PHIBRO-TECH, INC., a Delaware corporation having its principal
office at One Parker Plaza, Fort Lee, New Jersey 07024 (the "Company"), and I.
DAVID PALEY residing at 1185 Park Avenue, New York, New York 10128(the
"Executive").

                    WHEREAS, the Executive has made and is expected to make
a major contribution to the profitability and growth of the Company; and

                    WHEREAS, the Company considers the continued services of the
Executive to be in the best interests of the Company and its stockholders and
wishes to assure the continued services of the Executive on behalf of the
Company.

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

                    1. Certain Definitions. Capitalized terms not otherwise
defined herein shall have the following meanings:

                    "Actual or Constructive Termination" means, with respect to
the Executive, the occurrence of any of the following events: (a) a written
communication from the Chairman of the Board or Chairman of the Board of

<PAGE>
                                                                               2

Directors of any Affiliate or from the Board or Board of Directors of any
Affiliate, that the Executive's employment with the Company or such Affiliate
has been, or will shortly be, terminated by the Company or such Affiliate, (b) a
change (objected to in writing by the Executive within 30 days after such
change) in the Executive's title or office, or in the nature or scope of the
Executive's authority, duties, responsibility or status, or in his reporting
responsibilities, location of work, compensation, employee benefits or
perquisites, or (c) the Permanent Disability of the Executive; provided,
however, no communication referenced in clause (a) and no change referenced in
clause (b) shall be deemed an Actual or Constructive Termination if the
Executive agrees to remain or become an employee of any Affiliate; provided
further, that no change in compensation referenced in clause (b) shall be deemed
an Actual or Constructive Termination if such change is part of a bona fide plan
approved by the Board or the Board of Directors of any Affiliate employing the
Executive to reduce the Company's or such Affiliate's overall costs and such
change in compensation is proportionate to the changes in compensation
experienced by other employees of the Company or such Affiliate.

                    "Adjusted Net Income" means, for any fiscal year of the
Company, or for any twelve--month period, as the case may be, Net Income for
such year or such period plus the sum

<PAGE>
                                                                               3

of all amounts deducted for Interest Expense and income taxes.

           "Affiliate" means any entity that, directly or indirectly, controls,
is controlled by or is under common control with the Company.

           "Board" means the Board of Directors of the Company.

           "Change of Control Event" means the cessation of employment of the
Executive by the Company or any Affiliate (whether at the election of the
Executive or as a result of the Executive's termination by the Company or such
Affiliate) (i) within six months after the date on which any of the following
events (other than the event described in clause (b)) occurs or (ii) within six
months after the date that is three years after the event described in clause
(b) occurs:

                  (a) Jack C. Bendheim shall cease to be employed by PBC as the
President and Chief Operating Officer having substantially the same
responsibilities as he has on the date hereof, except as a result of his death
or Permanent Disability;

                  (b) Jack C. Bendheim shall die or become Permanently Disabled;

                  (c) An event or transaction, after which Jack C. Bendheim and
his Immediate Family or trusts, all of the beneficial interests in which shall
be held by Jack C.

<PAGE>
                                                                               4

Bendheim or his Immediate Family, are entitled to elect less than 40% of the
directors of PBC;

(d) Jack C. Bendheim and his Immediate Family or trusts, all of the beneficial
interests in which shall be held by Jack C. Bendheim or his Immediate Family,
shall be the beneficial owners of less than 50% of the outstanding shares of
Class C common stock or Class E common stock of PBC;

(e) PBC shall, directly or indirectly, be the beneficial owner of less than 50%
of the outstanding shares of common stock of the Company and Jack C. Bendheim
and his Immediate Family or trusts, all of the beneficial interests in which
shall be held by Jack C. Bendheim and his Immediate Family, shall be the
beneficial owners of less than 50% of the outstanding shares of common stock of
the Company; or

(f) a reorganization, merger, consolidation, acquisition or other similar
transaction, after which all or substantially all of the assets of the Company
are controlled by an entity that is not, as of the date hereof, an Affiliate.

"Class A Common Stock" means the Class A Common Stock, par value $.0l per share,
of the Company.

"Class B Common Stock" means the Class B Common Stock, par value $.0l per share,
of the Company.

<PAGE>
                                                                               5

           "EBIT" means, as of any date, the higher of (i) an amount equal to
(x) the sum of Adjusted Net Income for each of the immediately preceding three
fiscal years of the Company divided by (y) three and (ii) Adjusted Net Income
for the rolling twelve month period ending on the last day of the immediately
preceding fiscal quarter of the Company.

           "EBIT Per Share" means, as of any date, an amount equal to (i) EBIT
divided by (ii) the total number of issued and outstanding shares of Class A
Common Stock and Class B Common Stock as set forth in the Company's most
recently prepared quarterly balance sheet.

           "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

           "Extraordinary Event" means (i) the initial public offering of the
Company's common stock pursuant to an effective registration statement filed
under the Securities Act (an "IPO"), (ii) the sale of at least 50% of the issued
and outstanding shares of the Company's common stock by the Company, C.P.
Chemicals, Inc., PBC or their respective successors to a third party (a "Private
Sale") or (iii) the sale of all or substantially all of the assets of the
Company to a third party (an "Asset Sale").

           "GAAP" means generally accepted accounting principles
consistently applied.

           "Immediate Family" means, with respect to Jack C. Bendheim, a spouse
(except for a spouse with whom Jack C.

<PAGE>
                                                                               6

Bendheim has entered into any divorce or separation agreement) and any lineal
descendant.

           "Interest Expense" means, for any fiscal year or twelve--month
period, the amount properly recorded or recordable as interest expense of the
Company for such year or period, determined in accordance with GAAP.

           "Loan Agreement" means the Loan and Security Agreement, dated as of
August 31, 1994, by and among National Westminster Bank NJ, PBC, C.P. Chemicals,
Inc., the Company, Prince Agriproducts, Inc., The Prince Manufacturing Company,
an Illinois corporation, and The Prince Manufacturing Company, a Pennsylvania
corporation, and any extensions, modifications, renewals or refinancings
thereof.

           "Net Income" means, for any fiscal year or twelve-- month period, the
net income of the Company for such year or period, determined in accordance with
GAAP, excluding unusual, non--recurring gains or losses requiring disclosure in
the Company's financial statements; provided that net income for any
twelve--month period shall at the Company's option, exercisable in its sole
discretion, be determined by reference to the company's audited income
statements for such period prepared by Edward Isaacs & Company or by another
firm of independent public accountants of recognized national standing selected
by the Company.

           "Note Agreement" means the Note Agreement, dated as of
August 15, 1994, between PBC and The Northwestern

<PAGE>
                                                                               7

Mutual Life Insurance Company pursuant to which PBC issued and sold its 11%
Senior Notes due June 29, 2004 in the aggregate principal amount of $20,000,000,
and any extensions, modifications, renewals or refinancings thereof.

           "PBC' means Philipp Brothers Chemicals, Inc., a New York
corporation.

           "Permanent Disability" means, (i) with respect to Jack C. Bendheim,
that he has received written notification from the board of directors of PBC
stating that in its view he has become mentally or physically incapacitated or
disabled, whether totally or partially, so that he is unable substantially to
perform (x) for a period of three consecutive months or (y) for shorter periods
aggregating three months during a six month period, substantially the same
services as he performed for PBC prior to incurring such incapacity or
disability and (ii) with respect to the Executive, that the Executive has
received written notification from the Board or the Board of Directors of any
Affiliate employing the Executive stating that in its view he has become
mentally or physically incapacitated or disabled, whether totally or partially,
so that he is unable substantially to perform (x) for a period of three
consecutive months or (y) for shorter periods aggregating three months during a
six month period, substantially the same services as he performed for the
Company or such Affiliate prior to incurring such incapacity or disability.

<PAGE>
                                                                               8

           "Permitted Transferee" means, with respect to the Executive, (i) a
member of such Executive's family, which shall include a spouse (except for a
spouse with whom such Executive has entered into any divorce or separation
agreement), any lineal ancestor or descendant or any sibling (collectively, the
"Family"), or (ii) a trust (including a voting trust at any time established by
Executive for the sole benefit of such Executive and/or one or more of such
Executive's Family), all of the beneficial interests in which shall be held by
such Executive or one or more members of such Executive's Family (or, in the
case of a voting trust, all of the voting trust certificates of which are owned
by such Executive and/or one or more members of such Executive's Family).

           "Prime Rate" means the rate of interest listed as the prime rate and
published in the Wall Street Journal.

           "Promissory Note" means the limited recourse promissory note executed
by the Executive in favor of the Company as of the date hereof.

           "Securities Act" means the Securities Act of 1933, as amended.

           "Shares" means, collectively, (i) the shares of Class B Common Stock
issued to the Executive as of the date hereof, (ii) any shares of common stock
issued in connection with such shares as a result of a stock split, stock
dividend, recapitalization or other capital reorganization,

<PAGE>
                                                                               9

(iii) any shares of Class A Common Stock issued upon conversion of any of the
foregoing shares ("Conversion Shares") and (iv) any shares of common stock
issued in connection with such Conversion Shares as a result of a stock split,
stock dividend, recapitalization or other capital reorganization. The term
"Shares" shall not include shares of common stock of the Company purchased by
the Executive on the open market or in a private transaction from any person
other than his Permitted Transferee.

           "Stockholders Agreement" means the Stockholders Agreement, dated
February 21, 1995, between the Company and the individuals listed on the
signature page thereto.

           2. Company's Obligation to Pay Severance and Catch--up Payment;
Computation of Severance Amount and Catch--up Payment. (a) Upon the occurrence
of (i) an Actual or Constructive Termination or (ii) a Change of Control Event,
the Executive shall be entitled to a cash payment from the Company in an amount
(the "Severance Amount") equal to the excess of (i) the product of (x) 7.84
multiplied by (y) EBIT Per Share multiplied by (z) the number of Shares owned by
the Executive and his Permitted Transferees which have not been registered
pursuant to an effective registration statement filed under the Securities Act
(the "Owned Shares") over (ii) (x) the consideration paid to the Executive under
the Stockholders Agreement with respect to the purchase of such Owned Shares (A)
in cash or (B) by issuance to the

<PAGE>
                                                                              10

           Executive of a subordinated promissory note of the Company bearing
interest at the Prime Rate (a "Subordinated Note") or (y) if the Company has
exercised its remedies under the Pledge Agreement, dated the date hereof,
between the Company and the Executive, following an Event of Default (as defined
in the Promissory Note), the greater of (A) the amount of indebtedness
outstanding under the Promissory Note or (B) the amount recovered by the Company
upon the sale or other disposition of the Owned Shares pursuant to the Pledge
Agreement. The Company shall pay the Severance Amount to the Executive on the
date (i) that payments with respect to the Owned Shares are made under the
Stockholders Agreement or (ii) that is five days after the date the Owned Shares
are sold or disposed of by the Company pursuant to the Pledge Agreement. The
Company's obligation under this Section 2(a) to pay the Severance Amount to the
Executive shall terminate upon payment of such amount and under no circumstances
shall the Company be required to pay any amount to the Executive under this
Section 2(a) upon the occurrence of any subsequent Actual or Constructive
Termination or Change of Control Event.

           (b) If an Extraordinary Event occurs within 12 months after the
occurrence of an Actual or Constructive Termination, the Management Stockholder
shall be entitled to the applicable additional payment described in Section 2(c)
below (a "Catch-up Payment"). The Catch-up Payment shall be

<PAGE>
                                                                              11

paid by the Company on the later of (i) the date the Severance Amount is
required to be paid in accordance with the second sentence of Section 2(a) and
(ii) thirty (30) days after the relevant Extraordinary Event.

           (c) In the case of an IPO, the Management Stockholder shall be
entitled to a Catch--up Payment equal to (i) the excess, if any, of (x) the
product of (A) the offering price per share of the class of common stock of the
Company sold in the Initial Public Offering (net of underwriting discounts and
commissions) and (B) the number of Owned Shares over (y) the Severance Amount.
In the case of a Private Sale, the Management Stockholder shall be entitled to a
Catch-up Payment equal to (i) the excess, if any, of (x) the product of (A) the
sale price per share of the class of common stock of the Company sold in the
Private Sale (provided that if any portion of the consideration is not cash or
other property having a readily ascertainable value, the value of such property
for purposes of determining the sale price per share shall be determined by the
Board reasonably and in good faith and, at the request of the Executive, the
Board shall provide adequate documentation of the basis for its determination)
and (B) the number of Owned Shares over (y) the Severance Amount. In the case of
an Asset Sale, the Management Stockholder shall be entitled to a Catch-up
Payment equal to (i) the excess, if any, of (x) the product of (A) an amount
equal to the quotient

<PAGE>
                                                                              12

obtained by dividing (I) the aggregate purchase price of the Asset Sale
(provided that if any portion of the consideration is not cash or other property
having a readily ascertainable value, the value of such property for purposes of
determining such aggregate purchase prices shall be determined by the Board
reasonably and in good faith and, at the request of the Executive, the Board
shall provide adequate documentation of the basis for its determination) by (II)
the total number of shares of the Company's common stock issued and outstanding
at the time of the Asset Sale and (B) the number of Owned Shares (y) the
Severance Amount.

           3. Restrictions on Cash Payments. If the Company's ability to make
cash payments with respect to its obligations under Sections 2(a) or 2(c) is
restricted or limited under the terms of the Note Agreement or the Loan
Agreement, the Company shall (i) make cash payments required by Sections 2(a) or
2(c) to the Executive on an equal and ratable basis with all the other
obligations of the Company to the extent permitted by the Note Agreement and the
Loan Agreement, and (ii) deliver to the Executive a Subordinated Note in a
principal amount equal to (x) the excess of the Severance Amount (or, if
applicable, the Catch-up Payment) over (y) the amount paid pursuant to clause
(i) above. If the Company is not permitted under the terms of the Note Agreement
or the Loan Agreement to pay any portion of the

<PAGE>
                                                                              13

Severance Amount or Catch--up Payment in cash, the Company shall deliver to the
Executive a Subordinated Note in a principal amount equal to the Severance
Amount (or, if applicable, the Catch-up Payment).

           4. Executive Misconduct. If the Executive shall have committed an act
of theft or intentional fraud against the Company or any Affiliate, then the
Company may deduct from any amounts payable under Section 2 (including, without
limitation, under Section 2(c)) an amount equal to the loss suffered by the
Company and such Affiliate as a result of the Executive's theft or intentional
fraud determined by the Board in good faith.

           5. Term. This Agreement shall terminate on the earlier of (i) the
date the Executive and his Permitted Transferees cease to own any Shares or (ii)
the date all Shares owned by the Executive and his Permitted Transferees have
been registered pursuant to an effective registration statement filed under the
Securities Act.

           6. Other Agreements. To the extent this Agreement may conflict with
any previous agreements or understandings between the Company and the Executive,
the terms and provisions of this Agreement shall govern.

           7. Notice. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and if sent by
personal delivery, registered or certified mail, return receipt requested,

<PAGE>
                                                                              14

overnight courier service, telex or facsimile transmission and shall be deemed
transmitted on the fifth day following the date when deposited in the mail, on
the day following the date of delivery to a courier service (postage or charges
prepaid) or when personally delivered or transmitted by facsimile machine to the
Executive at the address shown in this Agreement or any later address he has
filed in writing with the Company or, in the case of the Company, at the address
shown in this Agreement or at the principal executive offices, attention of the
Secretary.

           8. Governing Law. THE PROVISIONS OF THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN.

           9. Waiver: Amendment. Any provision of this Agreement may be waived
at any time by the party entitled to the benefits thereof, and this Agreement
may be amended or supplemented at any time. No such amendment or supplement
shall be effective unless in writing and signed by the parties or, in the case
of a waiver, by the party granting the waiver.

           10. Successors. This Agreement shall be binding upon and inure to the
benefit of the Executive, the Company and any successor organization which shall
succeed to substantially all of the business and assets of the Company, whether
by means of merger, consolidation, acquisition of

<PAGE>
                                                                              15

all or substantially all of the assets of the Company, or otherwise, including
by operation of law. The Company will require any successor organization, which
is a purchaser of all or substantially all of the business or assets of the
Company, by written agreement addressed to the Executive, to assume and agree to
perform this Agreement.

           11. Severability. The invalidity or unenforceability of any provision
of this Agreement in any respect shall not affect the validity or enforceability
of such provision in any other respect or of any other provision of this
Agreement, all of which shall remain in full force and effect; this Agreement
shall be deemed rewritten to the minimum extent necessary to cure such
invalidity or unenforceabi1ity.

<PAGE>
                                                                              16

           IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.

                                                     PHIBRO-TECH, INC.

                                                     By:  /s/ Jack C. Bendheim
                                                     ---------------------------
                                                     Jack C. Bendheim
                                                     Chief Executive Officer

                                                     EXECUTIVE

                                                     /s/ I. David Paley
                                                     --------------------------
                                                     Name: I. David Paley

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.16
<SEQUENCE>19
<FILENAME>0019.txt
<DESCRIPTION>FORM OF SEVERANCE AGREEMENT BETWEEN
              PHILIPP BROTHERS CHEMICALS, INC. AND EACH OF
              NATHAN Z. BISTRICER AND JAMES O. HERLANDS
<TEXT>


<PAGE>
                               SEVERANCE AGREEMENT

                    SEVERANCE AGREEMENT (the "Agreement"), dated as of February
21, 1995, between PHILIPP BROTHERS CHEMICALS, INC., a New York corporation
having its principal office at One Parker Plaza, Fort Lee, New Jersey 07024
("PBC"), and _______________________________________________________.

                    WHEREAS, the Executive has made and is expected to make a
major contribution to the profitability and growth of PBC and Phibro-Tech, Inc.,
a Delaware corporation ("Phibro-Tech"), and a subsidiary of PBC; and

                    WHEREAS, PBC considers the continued services of the
Executive to be in the best interests of PBC and its stockholders and wishes to
assure the continued services of the Executive on behalf of PBC.

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

                    1. Certain Definitions. Capitalized terms not otherwise
defined herein shall have the following meanings:

                    "Actual or Constructive Termination" means, with
respect to the Executive, the occurrence of any of the following
events: (a) a written communication from the President of PBC or
any Affiliate or from the Chairman of the Board or Chairman of the
Board of Directors of any

<PAGE>
                                                                               2

Affiliate or from the Board or the Board of Directors of any Affiliate or any
committee thereof, that the Executive's employment with PBC or such Affiliate
has been, or will shortly be, terminated, (b) a change (objected to in writing
by the Executive within 30 days after such change) in the Executive's title or
office, or in the nature or scope of the Executive's authority, duties,
responsibility or status, or in his reporting responsibilities, location of
work, compensation, employee benefits or perquisites, or (c) the Permanent
Disability of the Executive; provided, however, that no communication referenced
in clause (a) and no change referenced in clause (b) shall be deemed an Actual
or Constructive Termination if the Executive agrees to remain or become an
employee of any Affiliate; provided further, that no change in compensation
referenced in clause (b) shall be deemed an Actual or Constructive Termination
if such change is part of a bona fide plan approved by the Board or the Board of
Directors of any Affiliate employing the Executive to reduce PBC's or such
Affiliate's overall costs and such change in compensation is proportionate to
the changes in compensation experienced by other employees of PBC or such
Affiliate.

                    "Adjusted Net Income" means, for any fiscal year of
Phibro-Tech, or for any twelve-month period, as the case may be, Net Income for
such year or such period plus the sum of all amounts deducted for Interest
Expense and income taxes.

<PAGE>
                                                                               3

                    "Affiliate" means any entity that, directly or indirectly,
controls, is controlled by or is under common control with PBC.

                    "Board" means the Board of Directors of PBC.

                    "Change of Control Event" means the cessation of employment
of the Executive by PBC or any Affiliate (whether at the election of the
Executive or as a result of the Executive's termination by PBC or such
Affiliate) (i) within six months after the date on which any of the following
events (other than the event described in clause (b)) occurs or (ii) within six
months after the date that is three years after the event described in clause
(b) occurs:

                    (a) Jack C. Bendheim shall cease to be employed by PBC as
the President and Chief Operating Officer having substantially the same
responsibilities as he has on the date hereof, except as a result of his death
or Permanent Disability;

                    (b) Jack C. Bendheim shall die or become Permanently
Disabled;

                    (c) An event or transaction, after which Jack C. Bendheim
and his Immediate Family or trusts, all of the beneficial interests in which
shall be held by Jack C. Bendheim or his Immediate Family, are entitled to elect
less than 40% of the directors of PBC;

                    (d)    Jack C. Bendheim and his Immediate Family or
trusts, all of the beneficial interests in which shall be held by
Jack C. Bendheim or his Immediate Family,

<PAGE>
                                                                               4

shall be the beneficial owners of less than 50% of the outstanding shares of
Class C common stock or Class E common stock of PBC;

                    (e) PBC shall, directly or indirectly, be the beneficial
owner of less than 50% of the outstanding shares of common stock of Phibro-Tech
and Jack C. Bendheim and his Immediate Family or trusts, all of the beneficial
interests in which shall be held by Jack C. Bendheim and his Immediate Family,
shall be the beneficial owners of less than 50% of the outstanding shares of
common stock of Phibro-Tech; or

                    (f) a reorganization, merger, consolidation, acquisition or
other similar transaction, after which all or substantially all of the assets of
Phibro-Tech are controlled by an entity that is not, as of the date hereof, an
Affiliate.

                    "Class A Common Stock" means the Class A Common Stock, par
value $.0l per share, of Phibro-Tech.

                    "Class B Common Stock" means the Class B Common Stock, par
value S.0l per share, of Phibro-Tech.

                    "EBIT" means, as of any date, the higher of (i) an amount
equal to (x) the sum of Adjusted Net Income for each of the immediately
preceding three fiscal years of Phibro-Tech divided by (y) three and (ii)
Adjusted Net Income for the rolling twelve month period ending on the last day
of the immediately preceding fiscal quarter of Phibro-Tech.

<PAGE>
                                                                               5

                    "EBIT Per Share" means, as of any date, an amount
equal to (i) EBIT divided by (ii) the total number of issued and outstanding
shares of Class A Common Stock and Class B Common Stock as set forth in
Phibro-Tech's most recently prepared quarterly balance sheet.

                    "Exchange Act" means the Securities Exchange Act of
1934, as amended.

                    "Extraordinary Event" means (i) the initial public offering
of Phibro-Tech's common stock pursuant to an effective registration statement
filed under the Securities Act (an "IPO"), (ii) the sale of at least 50% of the
issued and outstanding shares of Phibro-Tech's common stock by PhibroTech, C.P.
Chemicals, Inc., PBC or their respective successors to a third party (a "Private
Sale") or (iii) the sale of all or substantially all of the assets of Phibro-
Tech to a third party (an "Asset Sale").

                    "GAAP" means generally .accepted accounting principles
consistently applied.

                    "Immediate Family" means, with respect to Jack C. Bendheim,
a spouse (except for a spouse with whom Jack C. Bendheim has entered into any
divorce or separation agreement) and any lineal descendant.

                    "Interest Expense" means, for any fiscal year or
twelve-month period, the amount properly recorded or recordable as interest
expense of Phibro-Tech for such year or period, determined in accordance with
GAAP.

<PAGE>
                                                                               6

                    "Loan Agreement" means the Loan and Security Agreement,
dated as of August 31, 1994, by and among National Westminster Bank NJ, PBC,
C.P. Chemicals, Inc., Phibro-Tech, Prince Agriproducts, Inc., The Prince
Manufacturing Company, an Illinois corporation, and The Prince Manufacturing
Company, a Pennsylvania corporation, and any extensions, modifications, renewals
or refinancings thereof.

                    "Net Income" means, for any fiscal year or twelve-month
period, the net income of Phibro-Tech for such year or period, determined in
accordance with GAAP, excluding unusual, non-recurring gains or losses
requiring disclosure in Phibro-Tech's financial statements; provided that net
income for any twelve-month period shall at PBC's option, exercisable in its
sole discretion, be determined by reference to Phibro-Tech's audited income
statements for such period prepared by Edward Isaacs & Company or by another
firm of independent public accountants of recognized national standing selected
by PBC.

                    "Note Agreement" means the Note Agreement, dated as of
August 15, 1994, between PBC and The Northwestern Mutual Life Insurance Company
pursuant to which PBC issued and sold its 11% Senior Notes due June 29, 2004 in
the aggregate principal amount of $20,000,000, and any extensions,
modifications, renewals or refinancings thereof.

                    "Permanent Disability" means, (i) with respect to Jack C.
Bendheim, that he has received written notification

<PAGE>
                                                                               7

from the board of directors of PBC stating that in its view he has become
mentally or physically incapacitated or disabled, whether totally or partially,
so that he is unable substantially to perform (x) for a period of three
consecutive months or (y) for shorter periods aggregating three months during a
six month period, substantially the same services as he performed for PBC prior
to incurring such incapacity or disability and (ii) with respect to the
Executive, that the Executive has received written notification from the Board
or the Board of Directors of any Affiliate employing the Executive stating that
in its view he has become mentally or physically incapacitated or disabled
whether totally or partially, so that he is unable substantially to perform (x)
for a period of three consecutive months or (y) for shorter periods aggregating
three months during a six month period, substantially the same services as he
performed for PBC or such Affiliate prior to incurring such incapacity or
disability.

                    "Permitted Transferee" means, with respect to the Executive,
(i) a member of such Executive's family, which shall include a spouse (except
for a spouse with whom such Executive has entered into any divorce or separation
agreement), any lineal ancestor or descendant or any sibling (collectively, the
"Family"), or (ii) a trust (including a voting trust at any time established by
Executive for the sole benefit of such Executive and/or one or more of such
Executive's Family), all of the beneficial interests

<PAGE>
                                                                               8

which shall be held by such Executive or one or more members of such Executive's
Family (or, in the case of a voting trust, all of the voting trust certificates
of which are owned by such Executive and/or one or more members of such
Executive's Family).

                    "Prime Rate" means the rate of interest listed as the prime
rate and published in the Wall Street Journal.

                    "Promissory Note" means the limited recourse promissory note
executed by the Executive in favor of Phibro-Tech as of the date hereof.

                    "Securities Act" means the Securities Act of 1933, as
amended.

                    "Shares" means, collectively, (i) the shares of Class B
Common Stock issued to the Executive as of the date hereof, (ii) any shares of
common stock issued in connection with such shares as a result of a stock split,
stock dividend, recapitalization or other capital reorganization, (iii) any
shares of Class A Common Stock issued upon conversion of any of the foregoing
shares ("Conversion Shares") and (iv) any shares of common stock issued in
connection with such Conversion Shares as a result of a stock split, stock
dividend, recapitalization or other capital reorganization. The term "Shares"
shall not include shares of common stock of Phibro-Tech purchased by the
Executive on the open market or in a private transaction from any person other
than his Permitted Transferee.

<PAGE>
                                                                               9

                    "Stockholders Agreement" means the Stockholders Agreement,
dated February 21, 1995, between Phibro-Tech and the individuals listed on the
signature page thereto.

                    2. Company's Obligation to Pay Severance and Catch-up
Payment: Computation of Severance Amount and Catchup Payment. (a) Upon the
occurrence of (i) an Actual or Constructive Termination or (ii) a Change of
Control Event, the Executive shall be entitled to a cash payment from PBC in an
amount (the "Severance Amount") equal to the excess of (i) the product of (x)
7.84 multiplied by (y) EBIT Per Share multiplied by (z) the number of Shares
owned by the Executive and his Permitted Transferees which have not been
registered pursuant to an effective registration statement filed under the
Securities Act (the "Owned Shares") over (ii) (x) the consideration paid to the
Executive under the Stockholders Agreement with respect to the purchase of such
Owned Shares (A) in cash or (B) by issuance to the Executive of a subordinated
promissory note of PBC bearing interest at the Prime Rate (a "Subordinated
Note") or (C) by cancellation of the existing indebtedness of the Executive to
Phibro-Tech under the Promissory Note, or (y) if Phibro-Tech has exercised its
remedies under the Pledge Agreement, dated the date hereof, between Phibro-Tech
and the Executive, following an Event of Default (as defined in the Promissory
Note), the greater of (A) the amount of indebtedness outstanding under the
Promissory Note or (B) the amount recovered by Phibro-Tech upon the sale or

<PAGE>
                                                                              10

other disposition of the Owned Shares pursuant to the Pledge Agreement. PBC
shall pay the Severance Amount to the Executive on the date (i) that payments
with respect to the Owned Shares are made under the Stockholders Agreement or
(ii) that is five days after the date the Owned Shares are sold or disposed of
by Phibro-Tech pursuant to the Pledge Agreement. PBC's obligation under this
Section 2(a) to pay the Severance Amount to the Executive shall terminate upon
payment of such amount and under no circumstances shall PBC be required to pay
any amount to the Executive under this Section 2(a) upon the occurrence of any
subsequent Actual or Constructive Termination or Change of Control Event.

                    (b) If an Extraordinary Event occurs within 12 months after
the occurrence of an Actual or Constructive Termination, the Management
Stockholder shall be entitled to the applicable additional payment described in
Section 2(c) below (a "Catch-up Payment"). The Catch-up Payment shall be paid
by PBC on the later of (i) the date the Severance Amount is required to be paid
in accordance with the second sentence of Section 2(a) and (ii) thirty (30) days
after the relevant Extraordinary Event.

                    (c) In the case of an IPO, the Management Stockholder shall
be entitled to a Catch-up Payment equal to (i) the excess, if any, of (x) the
product of (A) the offering price per share of the class of common stock of
PhibroTech sold in the Initial Public Offering (net of underwriting discounts
and commissions) and (B) the number of

<PAGE>
                                                                              11

Owned Shares over (y) the Severance Amount. In the case of a Private Sale, the
Management Stockholder shall be entitled to a Catch-up Payment equal to (i) the
excess, if any, of (x) the product of (A) the sale price per share of the class
of common stock of Phibro-Tech sold in the Private Sale (provided that if any
portion of the consideration is not cash or other property having a readily
ascertainable value, the value of such property for purposes of determining the
sale price per share shall be determined by the Board reasonably and in good
faith and, at the request of the Executive, the Board shall provide adequate
documentation of the basis for its determination) and (B) the number of Owned
Shares (y) the Severance Amount. In the case of an Asset Sale, the Management
Stockholder shall be entitled to a Catch-up Payment equal to (i) the excess, if
any, of (x) the product of (A) an amount equal to the quotient obtained by
dividing (I) the aggregate purchase price of the Asset Sale (provided that if
any portion of the consideration is not cash or other property having a readily
ascertainable value, the value of such property for purposes of determining such
aggregate purchase prices shall be determined by the Board reasonably and in
good faith and, at the request of the Executive, the Board shall provide
adequate documentation of the basis for its determination) by (II) the total
number of shares of Phibro-Tech's common stock issued and outstanding at the
time of the Asset Sale and (B) the number of Owned Shares (y) the Severance
Amount.

<PAGE>
                                                                              12

                    3. Restrictions on Cash Payments. If PBC's ability to make
cash payments with respect to its obligations under Sections 2(a) or 2(c) is
restricted or limited under the terms of the Note Agreement or the Loan
Agreement, PBC shall (i) make cash payments required by Sections 2(a) or 2(c) to
the Executive on an equal and ratable basis with all the other obligations of
PBC to the extent permitted by the Note Agreement and the Loan Agreement, and
(ii) deliver to the Executive a Subordinated Note in a principal amount equal to
(x) the excess of the Severance Amount (or, if applicable, the Catch-up Payment)
over (y) the amount paid pursuant to clause (i) above. If PBC is not permitted
under the terms of the Note Agreement or the Loan Agreement to pay any portion
of the Severance Amount or Catch-up Payment in cash, PBC shall deliver to the
Executive a Subordinated Note in a principal amount equal to the Severance
Amount (or, if applicable, the Catch-up Payment).

                    4. Executive Misconduct. If the Executive shall have
committed an act of theft or intentional fraud against PBC or any Affiliate,
then PBC may deduct from any amounts payable under Section 2 (including, without
limitation, under Section 2(c)), an amount equal to the loss suffered by PBC and
such Affiliate as a result of the Executive's theft or intentional fraud
determined by the Board in good faith.

                    5.     Salary Reallocation. PBC shall cause any Affiliate
that shall, after the date hereof, pay the base

<PAGE>
                                                                              13

salary of the Executive, or any portion thereof, to assume and agree to the
obligations of PBC hereunder and to notify the Executive in writing of the
assumption of such obligations. An Affiliate's obligation to pay the Severance
Amount shall be in proportion to the portion of the Executive's base salary paid
by such Affiliate.

                    6. Term. This Agreement shall terminate on the earlier of
(i) the date the Executive and his Permitted Transferees cease to own any Shares
or (ii) the date all Shares owned by the Executive and his Permitted Transferees
have been registered pursuant to an effective registration statement filed under
the Securities Act.

                    7. Other Agreements. To the extent this Agreement may
conflict with any previous agreements or understandings between PBC and the
Executive, the terms and provisions of this Agreement shall govern.

                    8. Notice. Any notices, requests, demands and other
communications provided for by this Agreement shall be sufficient if in writing
and if sent by personal delivery, registered or certified mail, return receipt
requested, overnight courier service, telex or facsimile transmission and shall
be deemed transmitted on the fifth day following the date when deposited in the
mail, on the day following the date of delivery to a courier service (postage or
charges prepaid) or when personally delivered or transmitted by facsimile
machine to the Executive at the address shown in this Agreement or any later
address he has filed in

<PAGE>
                                                                              14

writing with PBC or, in the case of PBC, at the address shown in this Agreement
or at the principal executive offices, attention of the Secretary.

                    9. Governing Law. THE PROVISIONS OF THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN.

                    10. Waiver: Amendment. Any provision of this Agreement may
be waived at any time by the party entitled to the benefits thereof, and this
Agreement may be amended or supplemented at any time. No such amendment or
supplement shall be effective unless in writing and signed by the parties or, in
the case of a waiver, by the party granting the waiver.

                    11. Successors. This Agreement shall be binding upon and
inure to the benefit of the Executive, PBC and any successor organization which
shall succeed to substantially all of the business and assets of PBC, whether by
means of merger, consolidation, acquisition of all or substantially all of the
assets of PBC, or otherwise, including by operation of law. PBC will require any
successor organization, which is a purchaser of all or substantially all of the
business or assets of PBC, by written agreement addressed to the Executive, to
assume and agree to perform this Agreement.

                    12.    Severability. The invalidity or
unenforceability of any provision of this Agreement in any respect

<PAGE>
                                                                              15

shall not affect the validity or enforceability of such provision in any other
respect or of any other provision of this Agreement, all of which shall remain
in full force and effect; this Agreement shall be deemed rewritten to the
minimum extent necessary to cure such invalidity or unenforceability.

<PAGE>

                    IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.

                                             PHILIPP BROTHERS CHEMICALS, INC.

                                             By:
                                                ------------------------------
                                                Jack C. Bendheim
                                                President

                                             EXECUTIVE


                                             ----------------------------------
                                             Name:


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.17
<SEQUENCE>20
<FILENAME>0020.txt
<DESCRIPTION>AGREEMENT OF LIMITED PARTNERSHIP
              OF FIRST DICE ROAD COMPANY
<TEXT>


<PAGE>
                       AGREEMENT OF LIMITED PARTNERSHIP

                                      OF

                           FIRST DICE ROAD COMPANY,

                       A CALIFORNIA LIMITED PARTNERSHIP

                  THIS AGREEMENT of Limited Partnership, made as of The 1st
day of June, 1985 by and among WESTERN MAGNESIUM CORP., a California
corporation, having an office at 8851 Dice Road, Santa Fe Springs, California,
90670-0118 (the "General Partner"); JACK BENDHEIM, residing at 697 West 247th
Street, Riverdale, New York 10471, and MARVIN S. SUSSMAN, residing at 101
Central Park West, New York, New York 10023, and JAMES 0. HERLANDS, residing
at 115 Central Park West, New York, N.Y. 10024 (as "Limited Partners").

                                  WITNESSETH

                  NOW, THEREFORE, it is mutually agreed that:

1.        Formation, Name and Office.

                  a. The parties hereto hereby agree to form a limited
partnership (the "Partnership") and to conduct the Partnership business, under
the name of First Dice Road Company, a California Limited Partnership, as a
limited partnership under and pursuant to the provisions of the California
Revised Limited Partnership Act (the "Act"). The principal office of the
Partnership shall be maintained

<PAGE>

at 8851 Dice Road, Santa Fe Springs, County of Los Angeles, State of
California, or at such other location as the General Partner may from time to
time select, upon 30 days prior written notice to the Limited Partners.

                   b. Certificate. The General Partner shall immediately
execute a Certificate of Limited Partnership and cause that Certificate to be
filed in the office of the Secretary of State of California. Thereafter, the
General Partner shall execute and cause to be filed certificates of amendment
of the Certificate of Limited Partnership whenever required by the Act or this
Agreement. The General Partners shall execute and cause to be filed original
amended certificates evidencing the formation and operation of the Partnership
whenever required under the laws of any other states in which the Partnership
determines to do business. The General Partner shall also record a certified
copy of the Certificate and any amendment thereto in the office of the county
recorder in every county in which the Partnership owns real property.

2.        Definitions.

                   a. Partners. The term "Partners" as used in this Agreement
shall refer collectively to the General Partner and Limited Partners and any
additional or substitute Limited Partner or General Partner of the
Partnership. The term "Partner" shall refer to any one of the Partners.

                   b. Limited Partners. The term "Limited Partners"

<PAGE>

shall refer to Jack Bendheim, Marvin S. Sussman, and James O. Herlands so long
as they or any of them are Limited Partners, and any additional or substitute
Limited Partner who is admitted to the Partnership and has executed this
agreement and been named in an amendment to the Certificate. The term "Limited
Partner" shall refer to any of the Limited Partners.

                   c. General Partner. The term "General Partner" shall refer
to Western Magnesium Corp. and any successor to such General Partner and any
additional or substitute General Partner named in any amendment to the
Certificate.

                   d. Partnership Interest. The term "Partnership Interest"
shall refer to the entire ownership interest (which may be expressed as a
percentage) of a Partner in the Partnership at any particular time, including,
without limitation, the right of such Partner to participate in the
Partnership's "Profits and Losses", "Distributable Cash" and any and all
benefits to which a Partner may be entitled as provided in this Agreement or
in the Act, together with the obligations of such Partner to comply with all
the terms and provisions of this Agreement and the Act.

                   Until changed pursuant to the provisions hereof the
Partnership Interest of the Partners shall be as follows:

<PAGE>

          Western Magnesium Corp.         (General Partner)                1%
          Jack Bendheim                   (Limited Partner)               39%
          Marvin Sussman                  (Limited Partner)               40%
          James 0. Herlands               (Limited Partner)               20%
                                                Total                    100%

                   e. Profits and Losses. The term "Profits and Losses" shall
refer to the ordinary income or loss of the Partnership for Federal income tax
purposes determined as of the close of the Partnership's fiscal year.

                   f. Code. The term "Code" shall refer to the Internal
Revenue Code of 1954, as amended.

                   g. Property. "Property" means those certain parcels and
buildings and improvements now or hereafter erected thereon located in the
city of Santa Fe Springs, State of California consisting of approximately 4.43
acres located on Dice Road and being acquired from Southern Pacific
Transportation Company pursuant letter agreement dated July 25, 1984, together
with all incidents and interest of ownership attendant with or appurtenant
thereto. The term "Property" shall also include: the interest of the
Partnership; in the event of a sale, conveyance or other disposition of the
Property, in any (i) leasehold interest, (ii) mortgage, (iii) partnership or
corporate interest, or (iv) any other real or personal property, that is held
by the Partnership in exchange therefor.

<PAGE>

                   h. Certificate. "Certificate" means the Certificate of
Limited Partnership filed pursuant to the Act, as such certificate may be
amended from time to time.

                   i. Agreement. The term "Agreement" shall mean this Limited
Partnership Agreement as amended from time to time.

3.        Partnership Purposes and Powers.

                   a. Purposes. The purposes of the Partnership shall be to
own, maintain, operate and otherwise deal with respect to the Property
including the right to develop and construct buildings thereon.

                   b. No Other Business. The Partnership shall participate in
no other business unless authorized in this Agreement or in a separate writing
executed by all of the Partners.

                   c. Powers. In furtherance of the purposes contained in
Paragraph a. of this article, the Partnership shall be empowered:

                            (i)  To purchase, sell, lease, exchange, pledge or
otherwise encumber any property, real or personal, upon such terms and
conditions as may be deemed desirable.

                            (ii) To finance all or any of its activities
authorized under the provisions of this Agreement by secured or unsecured
indebtedness and, in connection therewith, issue evidences of indebtedness and
execute and deliver

<PAGE>

mortgages and other security instruments of every nature and kind as security
therefor and prepay, refinance and recast any or other lien on partnership
property; and

                             (iii) To enter into, perform and carry out
contracts, leases and agreements of every kind necessary or incidental to the
accomplishments of its purposes, including, without limitation, contracts,
leases and agreements with the General Partner, and persons or entities
affiliated with, or related to it in any manner, which persons or entities may
be controlled by it, and agreements to arbitrate disputes with other parties,
and take or omit such other or further action in connection with the Property
as may be necessary or desirable to further the purposes of the Partnership;
and

                            (iv)  To continue to hold its interest in the
Property or to convert its interest in the Property by way of an interest in
another entity such as a Partnership or Corporation; and

                            (v)   To carry on any other activities necessary to,
in connection with or incidental to any of the foregoing.

                   d.       The General Partner.

                            (i)   The business and affairs of the Partnership
shall be managed by the General Partner acting through any one of its officers
who shall have all necessary powers to carry out the business of the
Partnership.

<PAGE>

                            (ii)  In the event the income and/or cash flow of
the Partnership is not sufficient to pay the interest and/or amortization of
any Partnership obligation, the General Partner shall not be obligated to
advance sufficient funds to the Partnership. In such event, the General
Partner shall have the right in its sole discretion to permit the Partnership
to default in the payment of any such Partnership obligation and to permit the
property to be forfeited or lost by foreclosure or any other voluntary or
involuntary proceeding or transaction. The General Partner shall not be liable
to any Limited Partner by reason of any such decision or by reason of the loss
or forfeiture of the partnership property.

                            (iii) As provided herein, the General Partner shall
devote such time to the management of the Partnership's business as shall be
reasonably required for its welfare and success.

                            (iv)  File all certificates, notices, statements or
other instruments required by the Act and by law for the formation, operation
and dissolution of the Partnership, its business and its property in all
appropriate jurisdictions.

                            (v)   Cause the Partnership to carry public
liability, property damage and other insurance, all of which shall name the
Partnership and the General Partner as insureds.

                            (vi)  Maintain records of all Partners'

<PAGE>

capital accounts, pursuant to the provisions of this Agreement, on the books
and records of the Partnership in respect of each Partnership Interest.

4.        Term.

                  The term of the Partnership shall commence upon the date the
Partnership's Certificate of Limited Partnership is filed by the Secretary of
Acts of the State of California in the manner required by the Act and shall
continue until May 31, 2020, unless sooner dissolved as hereinafter provided.

5.        Capital.

                   a. The initial capital of the Partnership shall be
$1,000.00 and each of the Partners shall contribute to the capital of the
Partnership the amount set forth hereinbelow:

                   Western Magnesium Corp. (General Partner)              -0-
                   Jack Bendheim             -                            394
                   Marvin S. Sussman                    -                 404
                   James O. Herlands                    -                 202
                                                                   $ 1,000

                   b. Capital Accounts. Capital accounts shall be maintained
for each Partner on the books and records of the Partnership. Such account
shall be credited with the amounts of any capital contributions which may (but
are not required) be made from time to time to the Partnership and properly
adjusted, by allocation in proportion to the various Partnership

<PAGE>

                   Interests, to reflect distributive shares of income, gain,
deduction, loss, and cash distributions made by the Partnership. Any Partner
whose Partnership Interest shall be increased or decreased by means of the
transfer of all or part thereof shall have a capital account which has been
appropriately adjusted to reflect such transfer.

                   c. Limitation of Liability of Limited Partners. The
liability of any Limited Partner to provide funds or any other property to the
Partnership shall be limited to the capital which the Limited Partner is
required to contribute pursuant to subparagraph "a." of this Article "5".
Nothing contained in this Agreement shall be construed to require any Limited
Partner to restore any deficit in his capital account by making any capital
contributions to the Partnership. The Limited Partners shall have no further
personal liability to contribute money to the Partnership for, or in respect
of, the liabilities or obligations of the Partnership and shall not be
personally liable for any obligations of the Partnership. The liability of the
Limited Partners is restricted and limited to the amount of the actual capital
contributions that each limited partner makes or agrees to make to the
Partnership.

                   d.  No Interest on Capital Contributions. No interest
shall be paid by the Partnership to any Partner with respect to any
capital of the Partnership.

<PAGE>

                   e.  No Priority Among Limited Partners; No Withdrawal of
Capital. No Partner shall have priority over any other Partner either as to
the return of his capital of the Partnership or as to distributions made by
the Partnership. Except as otherwise specifically set forth in this Agreement,
no Partner shall 'have the right to demand or receive property other than cash
in return for -capital in the Partnership or as any other distributions from
the Partnership. No Partner shall have the right to withdraw any part of his
capital from the Partnership.

                   f.  Liability of General Partners. Except as otherwise
provided in this Agreement, the liability of a General Partner arising from
the conduct of the business affairs or operations of the Partnership or for
the debts of the Partnership is unrestricted.

6.        Allocations and Distributions.

                   a.  Allocations Among Partners. Except as otherwise set
forth in this Agreement, any income, gain, loss, deduction, or credit of the
Partnership with respect to any Partnership fiscal period shall be allocated
to all Partners according to their Partnership Interests during such fiscal
period.

                   b.  Benefits of Agreement. None of the provisions of this
Agreement shall be construed as existing for the benefit of any creditor of
the Partnership or creditor of any of the Partners, or shall be enforceable by
any third

<PAGE>

party not a successor in interest to a signatory to this Agreement.

                   c.  Distributable Cash.

                       (i)  For the purposes of this Agreement, the term
"Distributable Cash" shall mean the net cash received by the Partnership
during any fiscal year from all sources after the payment of all expenses, and
amounts expended or reserved for reasonable working capital needs, replacement
of equipment, fixtures and personality, replacement reserves, and sinking
funds, all as determined by the General Partner, shall be deducted.

                       (ii) As soon as practicable after the end of each
fiscal period the Distributable Cash derived during such fiscal period, if
any, shall be distributed to the Partners in the same percentages as their
Partnership Interests. All distributions to the Partners shall be made pro
rata at the same time so that no Partner shall be entitled to or shall receive
a distribution in advance of any other Partner.

7.        Books and Records.

                   a.  Maintenance and Accounting Method. The General Partner
shall keep or cause to be kept full and accurate accounts of the transactions
of the Partnership in proper books of account. Such books shall be maintained
at the principal place of business of the Partnership and be available

<PAGE>

for reasonable inspection and examination by the Partners or their duly
authorized agents or representatives. The Limited Partners may, at their own
expense and not at the expense of the General Partner or the Partnership,
cause the books and records of the Partnership to be examined by accountants
other than the Partnership's accountants.

                   b.  Fiscal Year. The fiscal year of the Partnership shall be
the calendar year.

                   c.  Required Records. The General Partners shall maintain
at the principal executive office of the Partnership within California
all of the following records:

                       (i)   A current list of the full name and last known
business or residence address of each Partner, set forth in alphabetical
order, together with the contribution and the share in profits and losses of
each Partner.

                       (ii)  A copy of the certificate of limited partnership
and all certificates of amendment thereto, together with executed copies of
any powers of attorney pursuant to which any certificate has been executed.

                       (iii) Copies of the limited partnership's federal, state
and local income tax or information returns and reports, if any, for the six
most recent taxable years.

                       (iv) Copies of this Agreement and all amendments thereto.

                       (v)  Financial statements of the Partnership

<PAGE>

for the six most recent fiscal years.

                          (vi) The Partnership's books and records for at least
the current and past three fiscal years.

                   d. Delivery of Records to Limited Partners. Upon the
request of any Limited Partner, the General Partners shall promptly deliver to
that Partner, at the expense of the Partnership, a copy of:

                            (i)      The current list of each partner's name,
address, contribution, and share in profits and losses.

                            (ii)     The certificate of limited partnership, as
amended, and any powers of attorney pursuant to which any certificate was
executed.

                          (iii)      This Agreement, as amended.

8. Powers and Authority of the General Partner. The Partners hereby
acknowledge and agree that the General Partner (without the necessity of any
further consent or authorization of any Partner) shall have complete and
exclusive control over the management of the Partnership's business and
affairs, and the Limited Partners shall have no right to participate in the
management or conduct of such business or affairs nor any power or authority
to act for or on behalf of the Partnership in any respect whatsoever. Except
as otherwise expressly provided in this Agreement, the General Partner shall
have the right, power and authority, on behalf of the Partnership and in its
name, to exercise

<PAGE>

all of the rights, powers and authority permitted to general partners under
the Act, including, without limitation, the power and authority to do all of
the following, at such times and on such terms and conditions as it deems to
be in the best interests of the Partnership:

                   a.  To acquire, hold, sell, lease, or otherwise dispose of
all or less than all the Property, interests therein or appurtenances thereto,
as well as personal or mixed property connected therewith, including the
purchase, lease, development, improvement, maintenance, repair, exchange,
trade or sale of the Property, as well as causing to be prepared and filed
with respect to the Property such plans, declarations and other documents with
appropriate federal, state or municipal-agencies as may be required.

                   b.  To borrow money required for the conduct of the business
and affairs of the Partnership and secure the repayment of such borrowing by
executing mortgages, pledging or otherwise encumbering or subjecting to
security interests all or any part of the assets of the Partnership, and to
repay, refinance, increase, modify, consolidate or extend the maturity of any
indebtedness created by such borrowing, or any such mortgage, pledge,
encumbrance or other security device;

                   c.  To place record title to, or the right to use,
Partnership assets in the name or names of a nominee or

<PAGE>

nominees for any purposes convenient or beneficial to the Partnership;

                   d.  To open, maintain and close bank accounts and draw checks
or otherwise for the payment of monies;

                   e.  To receive, receipt for and otherwise dispose of and
deal in all checks, monies, securities and other property of the Partnership;

                   f.  To do any act or execute any document or enter into any
contract or agreement of any nature necessary or desirable, in the opinion of
the General Partner, in pursuance of the purposes of the Partnership
including, without limitation, to enter into, modify and perform agreements
(including joint venture agreements) relating to the acquisition, operation
and development of the Property;

                   g.  To operate, manage and develop the Property, to enter
into a lease or leases and agreements with others with respect to such
management, operation and development, and to employ persons, at the expense
of the Partnership, in the operation, management and development of the
Property.

                   h.  To purchase, at the expense of the Partnership,
contracts of liability, casualty and other insurance for the protection of the
assets or affairs of the Partnership or for any purpose convenient or
beneficial to the Partnership;

                   t.  To employ from time to time any persons, firms or
corporations for the operation of the Partnership's

<PAGE>

business including, without limitation, accountants and attorneys, on such
terms and for such compensation as the General Partner shall determine.

                   j.  To enter into such agreements, contracts, documents and
instruments with such parties, and to give such receipts, releases and
discharges with respect to all of the foregoing and any matters incident
thereto, a~ the General Partner may deem advisable, appropriate and
convenient;

                   k.  When required for the proper conduct of the business and
affairs of the Partnership, to exercise all rights, powers and privileges of
ownership with respect to any and all rights of property held by the
Partnership, including, without limitation, the right to sell, grant options
affecting exchange, transfer, finance, lease (for any term whether or not
extending beyond the term of this Agreement), mortgage, pledge, hypothecate or
otherwise dispose of or encumber such rights or property, all upon such terms
as the General Partner deems proper;

                   1.  To adjust, compromise, settle or refer to arbitration,
any claim against or in favor of the Partnership or any nominee, and to
institute, prosecute or defend any legal proceedings relating to the business
and property of the Partnership.

                   All powers of the General Partner shall be limited to matters
relating to the Property and the Partnership

<PAGE>

shall not make any loans to, or engage in, any venture not relating to the
Property.

                   In the exercise of his power and authority, the General
Partner shall have fiduciary responsibility for the safekeeping and use of all
funds and other assets of the Partnership, whether or not the same are in the
immediate possession or control of the General Partner.

                   9. Duties of the General Partner. In addition to any other
obligations imposed upon him by this Agreement, the General Partner shall have
the specific duties described below.

                   a.  Maintenance of Limited Partnership Status. The General
Partner shall now and hereafter take all actions necessary and reasonably
practicable to maintain the Partnership's valid existence and, after formation
thereof, its status as a limited partnership in the State of California.

                   b.  Management of the Property, The General Partner shall at
all times use reasonable efforts to provide to the Partnership, either through
its own employees or other agents with qualified supervisory management
services.

                   c.  Insurance. The General Partner shall be responsible
either through his own employees or other agents for obtaining and keeping in
force policies of fire and extended coverage in limits sufficient to avoid
effect of co-insurance and otherwise satisfactory to all mortgagees,

<PAGE>

worker's compensation and public liability insurance covering the Partnership
and the Property, with such carriers and in such amounts as the General
Partner deems appropriate, but no less (and in deductible amounts no greater)
than customarily maintained for properties similar to the Property. Any such
policies of insurance may, at the election of the General Partner, name the
General Partner, and such other Persons as the General Partner deems
appropriate as additional insureds thereunder.

                   d.  Reports. The General Partner shall cause to be prepared
and distributed to each of the Limited Partners within ninety (90) days after
the end of each fiscal year of the Partnership, a copy of the Partnership's
Federal income tax return for such year together with a financial statement
for such year.

10.     Restrictions on Authority of Partners.

                   a.  Without the prior written consent of all the Limited
Partners, the General Partner shall not have the authority to:

                       (i)    Do any act in contravention of this Agreement;

                       (ii)   Do any act which would make it impossible to carry
on the ordinary business of the Partnership, except the liquidation of the
Partnership's assets by sale of the Property authorized under this Agreement;

<PAGE>

                       (iii)  Admit any additional General or Limited Partners
into the Partnership or establish any additional classes of Partners; (iv)
Possess Partnership property or assign rights in Partnership property for
other than Partnership purposes; (v) Amend this Agreement;

                       (vi)   Change or reorganize the Partnership into any
other legal form;

                       (vii)  Confess a judgment against the Partnership;

                       (viii) Knowingly perform any act which would subject the
Limited Partners to liability as general partners in any jurisdiction;

                       (ix)   File or consent to the filing of a Petition under
any federal or state bankruptcy or insolvency act with respect to the
Partnership; or

                       (x)    Enter into any transaction not relating to the
Property.

                   b.  Voting Rights of Limited Partners. In addition to any
other rights granted the Limited Partners under this Agreement, none of the
following actions shall be taken without the prior written consent or vote of
a majority in interest of the Limited Partners:

                       (i)    The sale, exchange, lease, mortgage, pledge, or
transfer of all or a substantial part of Property

<PAGE>

other than in the ordinary course of business;

                       (ii)  The incurrence of indebtedness by the Partnership
other than in the ordinary course of business;

                       (iii) A change in the nature of the Partnership's
business;

                       (iv)  The removal of the General Partner; and

                       (v)   The dissolution and winding up of the Partnership.

                   c.  No Limited Partner shall take part in, or interfere in
any manner with, the conduct or control of the Partnership business, nor shall
any Limited Partner have any right or authority to act for or bind the
Partnership. The provisions of this paragraph c. of Article 10 shall have no
effect upon the specific rights granted to the Limited Partners herein or
under the Act.

11.       Compensation to Partners.

                   No partner shall be entitled to compensation for services
rendered to the Partnership other than to the rights with respect to his
Partnership Interest.

12.       Transfers of Interests; Substitute Limited Partners.

                   a.  Requirements for Substitution. No assignee of the whole
or any portion of a Partnership Interest shall have the right to become a
Substitute Limited Partner in place of his assignor unless:

                       (i)    The assignor has designated such

<PAGE>

intention in a written instrument of assignment delivered to the General
Partner; and

                       (ii)  Except as provided in subparagraph "b" of this
Article 12, the written consent of the General Partner has been obtained, the
granting or denial of which shall be within the sole discretion of the General
Partner; and

                       (iii) The assignee has adopted and agreed in writing to
be bound by all of the provisions hereof, as the same may have been amended;
and

                       (iv)  All documents reasonably required by the General
Partner to effect the substitution of the assignee as a Limited Partner shall
have been executed and filed at the sole cost and expense of the assignor; and

                       (v)   The provisions of Paragraph b. of this Article 12
have been satisfied.

                   When all of the provisions of law and of this Article have
been complied with, the assignee forthwith, shall become a Limited Partner.

                   b.  Limitations on Transfers.

                       Except as provided in Article 14 hereof, there shall be
no sale, exchange or other transfer, or assignment of the whole or any portion
of a Partnership Interest without the prior written consent of the General
Partner, which consent the General Partner may grant or

<PAGE>

refuse in its discretion.

                   c.  Tax Elections. In the event of the sale, exchange or
transfer of a Partnership Interest, or any portion thereof, or upon the death
of an individual Limited Partner, or in the event of the distribution of
Partnership property to any Limited Partner, the Partnership may file an
election, the filing of which election shall be in the sole discretion of the
General Partner, in accordance with applicable Treasury Regulations, to cause
the basis of the Partnership property to be adjusted for Federal income tax
purposes as provided by Section 735, 743 and 754 of the Code.

13.      Distributions and Allocations Subsequent to Assignment or Substitution.

                   An assignee or a substitute (but not additional), Limited
Partner who purchases or otherwise acquires a Limited Partner's Partnership
Interest, or any portion thereof, shall be entitled to receive distributions
of cash and allocations of income and loss from the Partnership attributable
to such Partnership Interest subsequent to the effective date of such
assignment, sale, exchange or other transfer with proration. The "effective
date" of an assignment for the purposes of this Article, shall be the date
fixed by the Code or if none then the date on which a written instrument of
assignment that conforms to the requirements hereof has been received by the
Partnership.

<PAGE>

14.      Death of a Limited Partner.

                   The death of any Limited Partner shall neither dissolve nor
terminate the Partnership. If a Limited Partner shall die or shall be
adjudicated incompetent, his legal representative shall have the right to be a
Substitute Limited Partner taking such Limited Partner's interest in the
Partnership. In she event of the death of a Limited Partner, the remaining,
surviving Limited Partners shall have the option to purchase, in proportion to
their interest in the Partnership, the interest of the deceased Limited
Partner at a purchase price equal to the total capital investment made by the
deceased Limited Partner in the Partnership. Said option shall be exercised by
the surviving Limited Partners within six months after the appointment of a
legal representative for the deceased Limited Partner and in the event that
they fail to exercise such option, then the Partnership shall have a like
option to acquire the deceased Limited Partner's interest for the same price
which option shall be exercisable within nine (9) months after the appointment
of a legal representative for the deceased Limited Partner. Either of said
options shall be exercised by notice given to the legal representative of the
deceased Limited Partner within the time period provided. If neither the
surviving Limited Partners nor the Partnership shall exercise said option of
purchase then the legal representative who acquires such Limited Partner's
interest in the Partnership

<PAGE>

shall have the right to transfer same to the person or persons designated in
the Last Will and Testament of the deceased Limited Partner or those persons
entitled to take same pursuant to the intestacy laws of the jurisdiction
applicable. No consent of the General Partner shall be required for any
transfer pursuant to the conditions of this Article 14 provided, however, that
the transferee shall comply with the provisions of subparagraph (a)(iii) and
(iv) of Article 12. Death or other events relating to the General Partner.

     The death, resignation, removal, adjudication of incompetency or insanity,
or an assignment for benefit of creditors by the General Partner, a filing of
a petition for bankruptcy or any other insolvency proceeding by the General
Partner or the filing of a petition for bankruptcy or any other insolvency
proceeding against the General Partner, not dismissed within 90 days shall not
automatically dissolve or terminate the Partnership but in the event of any
such events (such events sometimes hereunder being referred to as "Involuntary
Withdrawal") the General Partner's interest shall automatically be terminated
and the amount in the capital account of said terminated General Partner shall
be paid to it within a reasonable time.

                   a.  In the event of the Involuntary Withdrawal of the
General Partner the Limited Partners acting unanimously shall within sixty
(60) days designate some other person or

<PAGE>

entity as the General Partner; or elect to terminate and dissolve the
Partnership and designate a General Partner to carry out such termination and
dissolution. A failure to properly designate a successor General Partner
within sixty (60) days shall be deemed and election to terminate and dissolve
the Partnership.

                   b.  No voluntary resignation of a General Partner shall
be effective until thirty (30) days after he has given written notice of same
to the Limited Partners.

                   c.  A General Partner can be removed involuntarily by an
action brought by a majority of the Limited Partners in a court of competent
jurisdiction after a determination by such court that the General Partner has
committed fraud, gross negligence or willful misconduct in office.

16.       Dissolution of the Partnership.

                   a. Dissolution. The Partnership shall be dissolved and its
affairs wound up upon the expiration of the term providing for the existence
of the Partnership or upon the occurrence of any of the following events,
whichever is first to occur:

                       (i)   The Partnership shall be dissolved upon any
date specified in a Consent to Dissolution signed by the General Partner and
by a majority in interest of the Limited Partners.

                       (ii)  The Partnership shall be dissolved and its
affairs shall be wound up when its assets are sold or otherwise disposed of and
the only property of the Partnership

<PAGE>

consists of cash available for distribution to the Partners.

                       (iii) The Partnership shall be dissolved and its
affairs shall be wound up when required by a decree of judicial dissolution
entered under Section 15682 of the California Corporations Code.

                   b.  Distribution Upon Dissolution. Upon the dissolution of
the Partnership, the General Partner or his successor(s) shall proceed to
liquidate the Partnership, and the proceeds of liquidation shall be applied
and distributed in the following order of priority:

                       (i)   First, to the payment of debts and liabilities of
the Partnership (other than any loans or advances that may have been made by
any of the Partners to the Partnership) and the expenses of liquidation.

                       (ii)  Second, to the establishment of any reserve which
the General Partner may deem reasonably necessary for any contingent or
unforeseen liabilities or obligations of the Partnership. Such reserve may be
paid over to any attorney at law, or bank as escrow agent to be held for
disbursement in payment of any of the aforementioned liabilities and, at the
expiration of such period as shall be deemed advisable by the General Partner,
any balance shall be distributed in the manner hereinafter provided in this
Paragraph.

                       (iii) Third, to the repayment of loans or advances that
may have been made by any of the Partners to the Partnership.

<PAGE>

                       (iv) Finally, the balance of any funds then remaining
shall be distributed to the Partners in the following order of priority:

                            (a) First, to the Partners in proportion to their
capital accounts an amount necessary to reduce the capital accounts to zero or
if any Partner's capital account has a negative balance then an amount to the
Partners to bring all capital accounts into a negative balance in proportion
to their Partnership Interest.

                            (b) The balance then remaining shall be distributed
to the Partners, in the same proportion as the Partnership Interest held by
each Partner bears to the total Partnership Interests held by all of the
Partners.

                   c.  Distribution in Kind. In the event of the termination
and dissolution of the Partnership, to the extent that the Partnership's
assets have not been sold or otherwise disposed of, the Partnership's non-cash
assets, if any, may be distributed in kind in the proportions set forth in
Paragraph b. (iv) of this Article, each Partner accepting a pro rata undivided
interest therein subject to the Partnership 1iabi1ities.

                   d.  Time for Liquidation. A reasonable amount of time shall
be allowed for the orderly liquidation of the assets of the Partnership and
the discharge of liabilities to creditors so as to enable the General Partner
to minimize the normal losses attendant upon such liquidation.

<PAGE>

                   e.  Filing. Upon dissolution of the Partnership, the General
Partner shall execute and file in the office of the Secretary of State of the
State of California a certificate of dissolution. Upon completion of the
winding up of the Partnership's affairs the Partners conducting the winding up
of the Partnership's affairs shall execute and file in the office of the
Secretary of State of the State of California a certificate of cancellation of
the Certificate of Limited Partnership. Upon compliance with the foregoing
distribution plan (including payment over to an escrow agent, if deemed
appropriate by the General Partner and if there be sufficient funds therefor),
the Partnership shall cease to be such, and the General Partner shall take
such action as shall be required by law to terminate such Partnership's
existence.

                   f.  General Partner Not Personally Liable for Return of
Capital Contributions. The General Partner shall not be personally liable for
any distribution required pursuant to this Article 16, and such distribution
shall be made solely from available Partnership assets, if any.

                   g.  Operations During Dissolution. Upon dissolution of the
Partnership, the affairs of the Partnership shall be wound up by a General
Partner who has not wrongfully caused the dissolution or if there is no
General Partner remaining, the Partnership's affairs shall be wound up by the
Limited Partners. If the Limited Partners wind up the Partnership's affairs,
they shall be entitled to reasonable compensation.

<PAGE>

17.       Withdrawals; Retirement of Partners.

                   Each Limited Partner shall have the right to withdraw from
the Partnership at any time by written notice to the General Partner. The
withdrawing Limited Partner shall be paid by the Partnership within sixty (60)
days of said notice of withdrawal a sum equal to the capital account of said
withdrawing Limited Partner on the books of the partnership as of the date of
notice of withdrawal, plus the principal outstanding, together with any
accrued interest, of any loans by said withdrawing Limited Partner to the
Partnership as of the date of payment. Notwithstanding the foregoing, in the
event a Limited Partner gives notice of withdrawal, the General Partner shall
have the right to elect by written notice to all Limited Partners, to dissolve
and terminate the Partnership instead of permitting a Limited Partner to
withdraw.

18.       Power of Attorney to Execute Documents.

                   a.  Grant of Power of Attorney. Each Limited Partner hereby
irrevocably constitutes and appoints the General Partner acting through any
officer thereof as his true and lawful attorney in his name, place and stead
to make, execute, acknowledge and, if necessary file:

                       (i)   Any certificates or other instruments which the
Partnership may be required to file under the laws of the State of California,
or any other governmental authority having jurisdiction, or which the General
Partner shall deem it advisable to file.

<PAGE>

                       (ii)  Any certificates or other instruments amending
or modifying the certificate or the certificates and instruments referred to
in subparagraph (i) of this Paragraph.

                       (iii) Any certificates or other instruments which may be
required to admit one or more Limited Partners to the Partnership or to
effectuate the dissolution and termination of the Partnership.

                   b. Irrevocable and Coupled With an Interest; Copies to be
Transmitted. The powers of attorney granted under Paragraph a. of this Article
shall be deemed irrevocable and to be coupled with an interest. A copy of each
document executed by the General Partner pursuant to the powers of attorney
granted in Paragraph a. of this Article shall be transmitted to each Limited
Partner promptly after the execution of any such document.

                   c. Survival of Power of Attorney. The powers of attorney
granted in Paragraph a. of this Article shall survive delivery of an
assignment by any Limited Partner of the whole or any portion of his
Partnership Interest, except that if such assignment was of all of his
Partnership Interest and the substitution of the assignee as a Limited Partner
has been consented to by the General Partner, the foregoing powers of attorney
shall survive the delivery of such assignment for the sole purpose of enabling
the General Partner to execute, acknowledge and file any and all certificates
and

<PAGE>

other instruments necessary to effectuate the substitution of the assignee
as a Limited Partner.

                   d.  Limitation on Power of Attorney. The powers of attorney
granted under Paragraph a. of this Article cannot be utilized by the General
Partner to increase or extend any financial obligation or liability of the
Limited Partners. The General Partner may not modify the terms of this
Agreement without the written consent of all of the Limited Partners.

19.       Non-Waiver.

                   No provision of this Agreement shall be' deemed to have
been waived except if such waiver is in writing and signed by the party making
such waiver and no such waiver shall be deemed to be a waiver of any other or
further similar or dissimilar obligation or liability.

20.       Additional Documents and Instruments.

                   The parties shall execute and deliver to each other such
other and further documents and instruments as may be necessary to carry out
the purposes of this Agreement and which are required by the General Partner,
or any other federal, state or local governmental agency having jurisdiction
over the Partnership.

21.       Illegality.

                   If any provision or provisions of this Agreement (or any
part thereof) or the application thereof to any particular facts or
circumstances shall be illegal and

<PAGE>

unenforceable by reason of any statute or rule of law, the remaining
provisions (or parts thereof) of this Agreement or the application of the
particular provision or provisions (or parts thereof) to other facts or
circumstances shall not be affected thereby and shall remain in full force and
effect. It is the intention of the provisions of this Article to make clear
that the agreement of the parties to this Agreement is that this Agreement
shall be enforced insofar as it may be enforced consistent with applicable
statutes and rules of law.

22.       Notices.

                   All notices, demands, requests, consents or approvals
given, required or permitted to be given hereunder, shall be contained in
writing and shall be deemed sufficiently given if sent by registered or
certified mail, postage prepaid and return receipt requested, addressed to the
parties at the addresses set forth above or below, or on any addendum to or
counterpart of this Agreement, or to such other address as the recipient shall
have previously notified the sender of in writing, and shall be deemed
received three (3) days after the date of mailing.

23.       Merger and Amendments.

                   This Agreement contains the entire understanding and
agreement between parties upon the subject matter of this Agreement and,
except as otherwise provided herein, may be changed only by written amendment
signed by all of the Partners at such time. Any prior understandings and
agreements

<PAGE>

between the parties are merged herein, except only as herein otherwise
expressly stated.

24.       Provisions Binding.

                   This Agreement shall inure to the benefit of and be binding
upon the parties and their respective heirs, executors, administrators,
successors and assigns and any additional or substitute Limited Partners or
General Partners (except as may otherwise be specifically provided herein).

25.       Captions.

                   The captions set forth herein are for convenience and
reference only and are not intended to modify, limit, describe or affect in
any way the contents, scope or intent of this Agreement.

26.       Definitions.

                   All terms used herein which are defined in this Agreement
shall have the meaning set forth in this Agreement, unless the context clearly
indicates otherwise.

27.       Counterparts.

                   This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one (1) and the same instrument.

28.       Gender and Plural.

                   Whenever the sense of this Agreement so requires, the
masculine or feminine gender shall be substituted for or deemed to include the
neuter and the plural, the singular, and vice-versa.

<PAGE>

29.       Applicable Law.

                   This Agreement and the rights of the parties hereto shall
be interpreted in accordance with the laws of the State of California.

30.       Execution by Spouses.

                   This agreement is signed by the spouses of the Limited
Partners, who are not themselves Partners. Such signature shall not be
construed as making any spouse a Partner or as imposing on any spouse any
responsibility for any Partnership obligation but merely recording the consent
of such spouse to the execution by her spouse of this agreement and to all of
the terms and conditions to the extent that any community property interest,
if any, may be involved.

                   IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement of Limited Partnership of First Dice Road Company.

General Partner
Western Magnesium Corp.

By  /s/ Jack C. Bendheim
    --------------------

Limited Partners                    Spouses

/s/ Jack Bendheim                   /s/ Gail Bendheim
- -----------------                   -----------------

/s/ Marvin S. Sussman               /s/ Aviva Sussman
- ---------------------               -----------------

/s/ James O. Herlands               /s/ Joyce C. Herlands
- ---------------------               ---------------------

<PAGE>

                  The undersigned, desiring to enter into the Agreement of
Limited Partnership of First Dice Road Company, a California Limited
Partnership (the "Partnership") in the form attached, hereby agree to all of
the terms and provisions thereof. Each of the undersigned hereby constitutes
and appoints Western Magnesium Corp., the General Partner of the Partnership,
his true and lawful attorney-in-fact, with all the powers and authorities as
set forth in said Agreement of Limited Partnership, including, without
limitation, in his name, place and stead to make, execute, sign, acknowledge,
swear to, deliver and file a Certificate of Limited Partnership and any
amendment thereof. The power of attorney hereby granted shall be deemed to be
coupled with an interest and shall be irrevocable. This power of attorney
shall not be affected by subsequent disability or incapacity of the principal,
or lapse of time.

                  WITNESS, the execution hereof by the undersigned, as Limited
Partners of First Dice Road Company, and individually.

Dated:             , 1985

/s/ Jack C. Bendheim
- --------------------
Jack C. Bendheim
697 West 247th Street
Riverdale, New York 10471

/s/ Marvin S. Sussman
- ---------------------
Marvin S. Sussman
101 Central Park West
New York, New York 10023

/s/ James 0. Herlands
- ---------------------
James 0. Herlands
115 Central Park West
New York, New York 10023

<PAGE>

STATE OF NEW YORK  )
      SS.:
COUNTY OF NEW YORK )

                  On the 19th day of June, 1985, before me personally came
JACK C. BENDHEIM, to me known, who, being by me duly sworn did depose and say
that he resides at 697 West 247th Street, Riverdale, New York 10471; that he
is the Executive Vice President of WESTERN MAGNESIUM CORP., the corporation
described in and which executed the foregoing instrument; and that he signed
his name thereto by order of the board of directors of said corporation.

/s/ Wermer Adler
- ----------------
    Notary Public

<PAGE>

STATE OF NEW YORK )
      ss.:
COUNTY OF NEW YORK )

                   On the 19th day of June, 1985, before me came JACK C.
BENDREIM, to me known and known to me to be the individual described in and
who executed the foregoing instrument, and who acknowledged to me that he
executed the same.

/s/ Wermer Adler
- ----------------
    Notary Public

STATE OF NEW YORK )
      ss.:
COUNTY OF NEW YORK )

                   On the 19th day of June, 1985, before me came MARVIN S.
SUSSMAN, to me known and known to me to be the individual described in and who
executed the foregoing instrument, and who acknowledged to me that he executed
the same

/s/ Wermer Adler
- ----------------
    Notary Public

STATE OF NEW YORK )
      ss.:
COUNTY OF NEW YORK )

                   On the 19th day of June, 1985, before me came JAMES 0.
HERLANDS, to me known and known to me to be the individual described in and
who executed the foregoing instrument, and who acknowledged to me that he
executed the same.

/s/ Wermer Adler
- ----------------
Notary Public

<PAGE>

STATE OF NEW YORK )
      ss.:
COUNTY OF NEW YORK )

                  On the 19th day of June, 1985, before me came GAIL BENDHEIM,
to me known and known to me to be the individual described in and who executed
the foregoing instrument, and who acknowledged to me that she executed the
same.

/s/ Wermer Adler
- ----------------
    Notary Public

STATE OF NEW YORK )
      ss.:
COUNTY OF NEW YORK )

                  On the 19th day of June, 1985, before me came AVIVA SUSSMAN,
to me known and known to me to be the individual described in and who executed
the foregoing instrument, and who acknowledged to me that she executed the
same

/s/ Wermer Adler
- ----------------
    Notary Public

STATE OF NEW YORK )
      ss.:
COUNTY OF NEW YORK )

                  On the 19th day of June, 1985, before me came JOYCE C.
HERLANDS, to me known and known to me to be the individual described in and
who executed the foregoing instrument, and who acknowledged to me that she
executed the same.

/s/ Wermer Adler
- ----------------
    Notary Public

<PAGE>

                 AMENDMENT TO AGREEMENT OF LIMITED PARTNERSHIP

                                      OF

                            FIRST DICE ROAD COMPANY

                       A California Limited Partnership

                  AGREEMENT made this day of November, 1985 by and between
WESTERN MAGNESIUM CORP., as general partner and JACK BENDHEIM, MARVIN S.
SUSSMAN and JAMES 0. HERLANDS, as limited partners.

                  WHEREAS, an Agreement of Limited Partnership was entered into
on June 1, 1985; and

                  WHEREAS, the parties thereto desire to amend the said
Agreement.

                  NOW, THEREFORE, it is agreed as follows:

                  1. Article 3, Paragraph a., is hereby amended by adding the
following: "In addition and to the foregoing, the partnership shall engage in
such other business ventures as the general partner shall from time to time
determine whether or not related to the Property".

                  2. In all other respects the Agreement of Limited

<PAGE>

Partnership dated June 1, 1985 is hereby ratified and confirmed.

   WESTERN MAGNESIUM CORP.

By:  /s/ Nathan Bistricer
     --------------------

/s/ Jack C. Bendheim
- --------------------
JACK C. BENDHEIM

/s/ Marvin S. Sussman
- ---------------------
MARVIN S. SUSSMAN

/s/ James O. Herlands
- ---------------------
JAMES O. HERLANDS

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.18
<SEQUENCE>21
<FILENAME>0021.txt
<DESCRIPTION>PHILIPP BROTHERS CHEMICALS, INC. RETIREMENT INCOME
              AND DEFERRED COMPENSATION PLAN TRUST
<TEXT>


<PAGE>
                        PHILIPP BROTHERS CHEMICALS, INC.
                              RETIREMENT INCOME AND
                        DEFERRED COMPENSATION PLAN TRUST

            (a) This Agreement made as of this 1st day of January, 1994 by and
between PHILIPP BROTHERS CHEMICALS, INC. ("Company") on its own behalf and on
behalf of its wholly owned subsidiaries CP CHEMICALS, INC. and PHIBRO-TECH,
INC., and DONALD A. HAMBURG ("Trustee);

            (b) WHEREAS, Company has adopted the non-qualified deferred
compensation Plan as listed in Appendix A;

            (c) WHEREAS, Company has incurred or expects to incur liability
under the terms of such Plan with respect to the individuals participating in
such Plan;

            (d) WHEREAS, Company wishes to establish a trust (hereinafter called
"Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of Company's creditors in the event of Company's
Insolvency, as herein defined, until paid to Plan participants and their
beneficiaries in such manner and at such times as specified in the Plan;

            (e) WHEREAS, it is the intention of the parties that this Trust
shall constitute an unfunded arrangement and shall not affect the status of the
Plan as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974;

            (f) WHEREAS, it is the intention of Company to make contributions to
the Trust to provide itself with a source of funds to assist it in the meeting
of its liabilities under the Plan;

            NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows: Section 1.
Establishment of Trust.

Section 1.  Establishment of Trust.

            (a) Company hereby deposits with Trustee in trust the sum of One
Hundred ($100) Dollars, which shall become the principal of the Trust to be
held, administered and disposed of by Trustee as provided in this Trust
Agreement.

            (b) The Trust hereby established shall be irrevocable.


<PAGE>


            (c) The Trust is intended to be a grantor trust, of which Company is
the grantor, within the meaning of subpart E, part


<PAGE>

I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as
amended, and shall be construed accordingly.

            (d) The principal of the Trust, and any earnings thereon shall be
held separate and apart from other funds of Company and shall be used
exclusively for the uses and purposes of Plan participants and general creditors
as herein set forth. Plan participants and their beneficiaries shall have no
preferred claim on, or any beneficial ownership interest in, any assets of the
Trust. Any rights created under the Plan and this Trust Agreement shall be mere
unsecured contractual rights of Plan participants and their beneficiaries
against Company. Any assets held by the Trust will be subject to the claims of
Company's general creditors under federal and state law in the event of
Insolvency, as defined in Section 3(a) herein.

            (e) Company shall make such deposits of cash in trust with the
Trustee as are appropriate or required under the terms of and, in conformity
with the Plan, and Company, in its sole discretion, may at any time, or from
time to time, make "additional" deposits of cash or other property in trust with
Trustee to augment the principal to be held, administered and disposed of by
Trustee as provided in this Trust Agreement. Neither Trustee nor any Plan
participant or beneficiary shall have any right to compel such "additional"
deposits.

Section 2.  Payments to Plan Participants and Their
            Beneficiaries.

            (a) Company shall deliver to Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable in respect of each Plan
participant (and his or her beneficiaries), that provides a formula or other
instructions reasonably acceptable to Trustee for determining the amounts so
payable, the form in which such amount is to be paid as provided for (or
available) under the Plan, and the time of commencement for payment of such
amounts. Except as otherwise provided herein, Trustee shall make payments to the
Plan participants and their beneficiaries in accordance with such Payment
Schedule. The Trustee shall make provision for the reporting and withholding of
any federal, state or local taxes that may be required to be withheld with
respect to the payment of benefits pursuant to the terms of the Plan and shall
pay amounts withheld to the appropriate taxing authorities or determine that
such amounts have been reported, withheld and paid by Company.

            (b) The entitlement of a Plan participant or his or her
beneficiaries to benefits under the Plan shall be determined by Company or such
party as it shall designate under the Plan, and any claim for such benefits
shall be considered and reviewed under the procedures set out in the Plan.


<PAGE>


            (c) Company may make payment of benefits directly to Plan
participants or their beneficiaries as they become due under the terms of the
Plan. Company shall notify Trustee of its decision to make payment of benefits
directly prior to the time amounts are payable to participants or their
beneficiaries. In addition, if the principal of the Trust, and any earnings
thereon, are not sufficient to make payments of benefits in accordance with the
terms of the Plan, Company shall make the balance of each such payment as it
falls due. Trustee shall notify Company where principal and earnings are not
sufficient.

Section 3.  Trustee Responsibility Regarding Payments to
            Trust Beneficiary When Company Is Insolvent.

            (a) Trustee shall cease payment of benefits to Plan participants and
their beneficiaries if the Company is Insolvent. Company shall be considered
"Insolvent" for purposes of this Trust Agreement if (i) Company is unable to pay
its debts as they become due, or (ii) Company is subject to a pending proceeding
as a debtor under the United States Bankruptcy Code.

            (b) At all times during the continuance of this Trust, as provided
in Section 1(d) hereof, the principal and income of the Trust shall be subject
to claims of general creditors of Company under federal and state law as set
forth below.

               (1) The Board of Directors and the Chief Executive Officer of
Company shall have the duty to inform Trustee in writing of Company's
Insolvency. If a person claiming to be a creditor of Company alleges in writing
to Trustee that Company has become Insolvent, Trustee shall determine whether
Company is Insolvent and, pending such determination, Trustee shall discontinue
payment of benefits to Plan participants or their beneficiaries.

               (2) Unless Trustee has actual knowledge of Company's Insolvency,
or has received notice from Company or a person claiming to be a creditor
alleging that Company is Insolvent, Trustee shall have no duty to inquire
whether Company is Insolvent. Trustee may in all events rely on such evidence
concerning Company's solvency as may be furnished to Trustee and that provides
Trustee with a reasonable basis for making a determination concerning Company's
solvency.

               (3) If at any time Trustee has determined that Company is
Insolvent, Trustee shall discontinue payments to Plan participants or their
beneficiaries and shall hold the assets of the Trust for the benefit of
Company's general creditors. Nothing in this Trust Agreement shall in any way
diminish any rights of Plan participants or their beneficiaries to pursue their
rights as general creditors of Company with respect to benefits due under the
Plan or otherwise.


<PAGE>


               (4) Trustee shall resume the payment of benefits to Plan
participants or their beneficiaries in accordance with Section 2 of this Trust
Agreement only after Trustee has determined that Company is not Insolvent (or is
no longer Insolvent).

            (c) Provided that there are sufficient assets, if Trustee
discontinues the payment of benefits from the Trust pursuant to Section 3(b)
hereof and subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the Plan for the period
of such discontinuance, less the aggregate amount of any payments made to Plan
participants or their beneficiaries by Company in lieu of the payments provided
for hereunder during any such period of discontinuance.

Section 4.  Payments to Company.

            Except as provided in Section 3 hereof, Company shall have no right
or power to direct Trustee to return to Company or to divert to others any of
the Trust assets before all payment of benefits have been made to Plan
participants and their beneficiaries pursuant to the terms of the Plan.

Section 5.  Investment Authority.

            In no event may Trustee invest in securities or obligations issued
by Company, other than a de minimis amount held in common investment vehicles in
which Trustee invests. All rights associated with assets of the Trust shall be
exercised by Trustee or the person designated by Trustee, and shall in no event
be exercisable by or rest with Plan participants.

Section 6.  Disposition of Income.

            During the term of this Trust, all income received by the Trust, net
of expenses and taxes, shall be accumulated and reinvested.

Section 7.  Accounting by Trustee.

            (a) Trustee shall establish and maintain a separate Deferred
Compensation Account in the name of each Plan participant who elects an Annual
Deferral Amount in accordance with Section 2.01 of the Plan. There shall be
credited to said Account(s) all of such Amounts, together with all Company
Matching Contribution Amount (s) (if any), contributed on behalf of each such
Plan participant in accordance with Section 2.03 of the Plan. Within thirty (30)
days after the end of each Plan Year, Trustee shall prepare, and deliver to
Company for distribution to all Plan participants, a statement of benefits in
the name of each Plan


<PAGE>


participant, reflecting the value of said participant's Deferred Compensation
Account (if any), as well as the participant's Retirement Income Benefit (if
any) earned for the previous Plan Year, and the total of said participant's
accrued benefit, to date.

            (b) Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions required to be
made, including such specific records as shall be agreed upon in writing between
Company and Trustee. Within sixty (60) days following the close of each calendar
year and within thirty (30) days after the removal or resignation of Trustee,
Trustee shall deliver to Company a written account of its administration of the
Trust during such year or during the period from the close of the last preceding
year to the date of such removal or resignation, setting forth all investments,
receipts, disbursements and other transactions effected by it, including a
description of all securities and investments purchased and sold with the cost
or net proceeds of such purchases or sales (accrued interest paid or receivable
being shown separately), and showing all cash, securities and other property
held in the Trust at the end of such year or as of the date of such removal or
resignation, as the case may be.

Section 8.  Responsibility of Trustee.

            (a) Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by Company which is contemplated by, and
in conformity with, the terms of the Plan or this Trust and is given in writing
by Company. In the event of a dispute between Company and a party, Trustee may
apply to a court of competent jurisdiction to resolve the dispute.

            (b) If Trustee undertakes or defends any litigation arising in
connection with this Trust, Company agrees to indemnify Trustee against
Trustee's costs, expenses and liabilities (including, without limitation,
reasonable attorneys' fees and expenses) relating thereto and to be primarily
liable for such payments. If Company does not pay such costs, expenses and
liabilities in a reasonably timely manner, Trustee may obtain payment from the
Trust.

            (c) Trustee may consult with legal counsel (who may also be counsel
for Company generally) with respect to any of its duties or obligations
hereunder.

            (d) Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals


<PAGE>


as reasonably required to assist it in performing any of its duties or
obligations hereunder.

            (e) Trustee shall have, without exclusion, all powers conferred on
Trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the Trust,
Trustee shall have no power to name a beneficiary of the policy other than the
Trust, to assign the policy (as distinct from conversion of the policy to a
different form) other than to a successor Trustee, or to loan to any person the
proceeds of any borrowing against such policy.

            (f) Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.

Section 9.  No Compensation to Trustee.

            Trustee shall serve without compensation; however, Company shall pay
all administrative and Trustee's expenses. If not so paid, the expenses shall be
paid from the Trust.

Section 10. Resignation and Removal of Trustee.

            (a) Trustee may resign at any time by written notice to Company,
which shall be effective sixty (60) days after receipt of such notice unless
Company and Trustee agree otherwise.

            (b) Trustee may be removed by Company on fifteen (15) days notice or
upon shorter notice accepted by Trustee.

            (c) Upon resignation or removal of Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within ten (10) days after receipt of
notice of resignation, removal or transfer, unless Company extends the time
limit.

            (d) If Trustee dies resigns or is removed, his successor shall be
STEVEN G. CHILL, and if STEVEN G. CHILL dies, resigns or is removed, a successor
may be appointed, in accordance with Section 11 hereof, within fifteen (15) days
after death, or by the effective date of resignation or removal under
paragraph(s) (a) [or (b)] of this section, as the case may be. If no such
appointment has been made, Trustee (or a representative of Plan participants in
the event of Trustee's death) may apply to a court of competent jurisdiction for
appointment of a successor or for instructions.


<PAGE>


All expenses of Trustee in connection with the proceeding shall be allowed as
administrative expenses of the Trust.

Section 11. Appointment of Successor.

            If Trustee resigns [or is removed] in accordance with Section 10(a)
[or b] hereof; (a) either Company may appoint a successor; or

            (b) In the event Company fails to do so within a reasonable time
Trustee may appoint a successor.

            (c) Upon a Change of Control as defined herein, Trustee may not be
removed for five (5) years.

            (d) In either event the appointment of a successor Trustee shall be
effective when accepted in writing by the new Trustee. The new Trustee shall
have all the rights and powers of the former Trustee, including ownership rights
in Trust assets. The former Trustee shall execute any instrument necessary or
reasonably requested by the successor Trustee to evidence the transfer.

            (e) The successor Trustee need not examine the records and acts of
any prior Trustee and may retain or dispose of existing Trust assets, subject to
Sections 7 and 8 hereof. The successor Trustee shall not be responsible for and
Company shall indemnify and defend the successor Trustee from any claim or
liability resulting from any action or inaction of any prior Trustee or from any
other past event, or any condition existing at the time it becomes successor
Trustee.

Section 12. Amendment or Termination.

            (a) This Trust Agreement may be amended by a written instrument
executed by Trustee and Company. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Plan.

            (b) The Trust shall not terminate until the date on which Plan
participants and their beneficiaries are no longer entitled to benefits pursuant
to the terms of the Plan. Upon termination of the Trust any assets remaining in
the Trust shall be returned to Company.

            (c) Sections 6, 7, 8 and 10 of this Trust Agreement may not be
amended by Company for five (5) years following a Change of Control, as defined
herein.

Section 13. Miscellaneous.


<PAGE>


            (a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.

            (b) Benefits payable to Plan participants and their beneficiaries
under this Trust Agreement may not be anticipated, assigned (either at law or in
equity), alienated, pledged, encumbered or subjected to attachment, garnishment,
levy, execution or other legal or equitable process.

            (c) This Trust Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

            (d) For purposes of this Trust, Change of Control shall mean: the
purchase or other acquisition by any person, entity or group of persons, within
the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934
("Act"), or any comparable successor provisions, of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Act) of fifty (50%) percent or
more of either the outstanding shares of common stock or the combined voting
securities entitled to vote generally, or the approval by the stockholders of
Company of a reorganization, merger, or consolidation, in each case, with
respect to which persons who were stockholders of Company immediately prior to
such reorganization, merger or consolidation do not, immediately thereafter, own
more than fifty (50%) percent of the combined voting power entitled to vote
generally in the election of directors of the reorganized, merged or
consolidated Company's then outstanding securities, or a liquidation or
dissolution of Company or the sale of all or substantially all of Company's
assets").

Section 14. Effective Date.

            The effective date of this Trust Agreement shall be January 1, 1994.

            IN WITNESS WHEREOF, this Agreement has been executed by the Trustee
and on behalf of Company by a duly authorized officer as of the date first above
written.

                                            PHILIPP BROTHERS CHEMICALS, INC.

                                                 ------------------------------
                                            By:      /s/ Jack C. Bendheim


                                                     /s/ Donald A. Hamburg
                                                 ------------------------------
                                                 Trustee

<PAGE>

                        PHILIPP BROTHERS CHEMICALS, INC.
                              RETIREMENT INCOME AND
                           DEFERRED COMPENSATION PLAN

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


                                    PREAMBLE

This Plan is an unfunded deferred compensation arrangement for a select group of
management or highly compensated personnel.

                             ARTICLE 1. DEFINITIONS

                                  Section 1.01

"Company" means PHILIPP BROTHERS CHEMICALS, INC., a New York Corporation, CP
CHEMICALS, INC., a New Jersey Corporation, and PHIBRO-TECH, INC., a Delaware
Corporation and their corporate successors.

                                  Section 1.02

"Board" means the Board of Directors of Company. Such terms may be
used interchangeably.

                                  Section 1.03

"Committee" means the Deferred Compensation Plan Committee.

                                  Section 1.04

"Plan" means the Deferred Compensation Plan as it may be amended from time to
time. The calendar year shall be the Plan Year.

                                  Section 1.05

"Effective Date of Plan" means March 18, 1994.

                                  Section 1.06

"Employee" means an employee of the Company.

                                  Section 1.07

"Annual Compensation" shall mean the regular compensation paid to an employee in
a calendar year, exclusive of any bonus or other incentive compensation.

                                  Section 1.08

"Base Salary Amount" shall be a minimum amount of Annual
Compensation, determined by the Committee at the beginning of each
Plan Year, which must be earned by an employee in order for said employee to be
eligible to participate in the Plan during said Plan Year. The Base Salary
Amount for the calendar years 1993 and 1994


<PAGE>


shall be $150,000. In no event shall said amount be less than $150,000 in any
subsequent calendar year.

                                  Section 1.09

"Eligible Compensation" shall mean the maximum amount of a Participant's Annual
Compensation that may be taken into account in determining his Retirement Income
Benefits hereunder. For the calendar year 1993, Eligible Compensation shall be
$235,840; that amount shall be increased 6% each calendar year thereafter that
the Plan is in force and effect.

                                  Section 1.10

"Eligible Employee" means an employee who has not attained the age of fifty-five
(55), and whose Annual Compensation in a Plan Year is at least equal to the Base
Salary Amount in effect for such year.

                                  Section 1.11

"Participants" means all Eligible Employees who participate in the Plan, or
persons who were such at the time of their retirement, death, disability or
resignation and who retain, or whose beneficiaries obtain, benefits under the
Plan in accordance with its terms. An employee shall be deemed to have been a
Participant in the Plan during each year of his employment on or after the
Effective Date in which he was eligible to earn a Retirement Income Benefit
hereunder. A Participant will remain in the Plan during any period in which he
is on an approved leave of absence, or is on disability leave provided he is
then receiving disability payments paid for by Company.

                                  Section 1.12

"Normal Retirement Date" means the date on which a Participant attains the age
of sixty-five (65) years and has completed at least ten (10) years of service
with the Company. "Early Retirement Date" means the date on which the employment
of a Participant terminates, provided he has completed at least ten (10) years
of service with the Company and has attained the age of fifty-five (55) years.

                                  Section 1.13

"Benefit Percentage" means that percentage (if any) declared by the Committee
with respect to a Plan Year, which when multiplied by a Participant's Eligible
Compensation shall determine the Annual Percentage Accrual.

                                  Section 1.14

"Annual Percentage Accrual" shall mean the amount, if any, of the Eligible
Compensation earned by a Participant in a Plan Year, with respect to which the
Committee shall determine to award a


<PAGE>


Retirement Income Benefit for said year. Said determination shall be made during
the first quarter of the immediately following year with respect to Participants
who are employed by the Company at the time said determination is made. Thus,
for example, the Committee will determine the 1993 Annual Percentage Accrual, if
any, during the first quarter of 1994.

                                  Section 1.15

"Retirement Income Benefit". A Participant's Retirement Income Benefit shall be
equal to the sum of the Annual Percentage Accrual(s), if any, declared by the
Committee during the years that said Participant participated in the Plan.
Within thirty (30) days after the end of each Plan Year, each Participant shall
receive a statement of benefits reflecting the Participant's Retirement Income
Benefit (if any) earned for the previous Plan Year, as well as the total of said
Participant's accrued benefit, to date.

                                  Section 1.16

"Survivor's Income Benefit" is the benefit payable to the Beneficiary of a
Participant who dies before having retired from the Company.

                                  Section 1.17

"Deferred Compensation Benefit" is an optional benefit which a Participant may
elect, prior to the start of each Plan Year, (except the first Plan Year, in
which such election must be made within thirty (30) days of the Effective Date
with respect to Compensation payable to said Participant for that period in 1994
subsequent to the date of such election) and which the Company may (partially)
match each year.

                                  Section 1.18

"Deferred Compensation Account" means the account maintained by the Trustee in
the name of each Participant.

                                  Section 1.19

"Beneficiary" means the person or persons a Participant shall have designated to
succeed to his right to receive payments hereunder in the event of his death. In
case of a failure to designate a beneficiary, or the death of a designated
beneficiary without a designated successor, such payments shall be made to the
Participant's estate. No designation of beneficiaries shall be valid unless in
writing signed by the Participant, dated, and filed with both the Committee and
the Trustee. Beneficiaries may be changed without the consent of any prior
beneficiaries.

                                  Section 1.20


<PAGE>


"Trust" means the PHILIPP BROTHERS CHEMICALS, INC. RETIREMENT INCOME AND
DEFERRED COMPENSATION PLAN TRUST created as of January 1, 1994. Such Trust and
any other trust which may be created by Company to assist it in meeting its
obligations hereunder, shall conform to the terms of the model trust as
described in Revenue Procedure 92-64.


                                  Section 1.21

"Trustee" means the Trustee of the Trust.

                                  Section 1.22

The terms hereof shall be read in the plural or singular, or masculine or
feminine, as the case may be, whenever appropriate.


<PAGE>


                          ARTICLE II. ANNUAL DEFERRALS

                                  Section 2.01.

During the first Plan Year, each Participant shall notify Company within thirty
(30) days of the Effective Date, on a form provided by company, of the portion,
if any, of said Participants' Base Salary Amount in excess of $150,000 payable
to said Participant for the period in 1994 subsequent to the date of such
election, that said Participant elects to defer (the "1994 Deferral Amount").
Thereafter, on or before the fifteenth (15th) day of the month preceding the
first month of each twelve (12) month period commencing January 1, 1995 during
his employment, each Participant shall notify Company, on a form provided by
Company, of the portion, if any, of said Participant's Base Salary Amount in
excess of $150,000 payable to said Participant in the next calendar year that
said Participant elects to defer (hereinafter "Annual Deferral"). The election,
once made, shall be irrevocable. However, a Participant who has received a
Hardship Distribution as provided for in Section 8.01, shall not be eligible to
elect an Annual Deferral until after the close of the calendar year following
the date of such Hardship Distribution.

                                  Section 2.02

The amount of the Annual Deferral elected by a Participant in any calendar year
may not be less than $3,000.00 and may not exceed $20,000.00.

                                  Section 2.03

            If a Participant who has elected a 1994 Deferral Amount or in any
Plan Year after 1994 has elected an Annual Deferral is a member of the Company's
Qualified Section 401(k) Plan and has elected to contribute the maximum
deductible amount to said Plan in 1994 or any subsequent calendar year, Company
will match the first $3,000 which said Participant has elected to defer
hereunder during said calendar year (hereinafter "Company Matching Contribution
Amount"). The Company shall withhold, each quarter, or such other period
determined by Company, from the compensation payable to said Participant,
one-quarter (1/4), or such other proportionate amount of said Participant's
Annual Deferral.

                                  Section 2.04

The Annual Deferral Amount and the Company Matching Contribution Amount, if any,
shall be credited to a Participant's Deferred
Compensation Account at the time said amounts are withheld from the
Participant's salary and/or paid by Company, as the case may be.

                                  Section 2.05


<PAGE>


Notwithstanding the provisions of Section 2.01, on or before the first (1st) day
of the month preceding the first month of each twelve (12) month period
commencing January 1, 1995, Company may determine, in it's sole discretion, to
advise each Participant that no Annual Deferral will be permitted in the next
calendar year.


<PAGE>


                        ARTICLE III. RETIREMENT BENEFITS

                                  Section 3.01

"Normal Retirement Benefit". A Participant who retires on or after his Normal
Retirement Date shall be paid a monthly retirement benefit in an amount
determined by dividing his Retirement Income Benefit by twelve (12).

                                  Section 3.02

"Early Retirement Benefit". Upon the retirement of a Participant who shall have
attained his Early Retirement Date, he shall be paid a monthly retirement
benefit in an amount determined by dividing his Retirement Income Benefit, by
twelve (12), reduced as follows:

                           REDUCTION FOR EACH                 REDUCTION FOR EACH
AGE AT RETIREMENT          MONTH LESS THAN AGE 65             YEAR LESS THAN 65
Greater than 55
but less than 60           .1667%                                     2%
60 to 62                   .0833%                                     1%
Greater than 62              0%                                       0%

                                  Section 3.03

"Survivor's Income Benefit". If a Participant shall die during his employment
prior to having begun to receive any Retirement Income Benefits hereunder, his
Beneficiary shall be entitled to receive, in said Beneficiary's discretion, a
monthly death benefit in an amount equal to the greater of (i) the than value of
said Participant's Retirement Income Benefit, (hereinafter "Survivor's
Retirement Benefit") or (ii) an amount determined as follows:

            Section 3.03.1. If said Participant died prior to attaining the age
of forty (40) years, an amount equal to three (3)times the Participant's Annual
Compensation at the time of death (annualized).

            Section 3.03.2. If said Participant died after having attained the
age of forty (40) years but prior to having attained the age of fifty (50)
years, an amount equal to two (2) times the Participant's Annual Compensation at
the time of death (annualized).

            Section 3.03.3. If said Participant died after having attained at
least the age of fifty (50) years, an amount equal to the Participant's Annual
Compensation at the time of death (annualized).


<PAGE>


            Section 3.03.4. The benefit determinable under Section 3.03.1,
3.03.2 or 3.03.3, as the case may be, is hereinafter referred to as the
"Annualized Benefit".

                                  Section 3.05

"Forfeiture For Cause". Notwithstanding anything contained in the Plan to the
contrary, if, in the Committee's discretion, it is determined that a
Participant's employment be terminated for Cause, such Participant shall forfeit
all rights to any Retirement Income Benefit payable under the Plan. For purposes
of the foregoing, "Cause" shall mean any one or more of the following: (a) theft
or misappropriation of Company funds or assets, or intentionally damaging the
Company's assets; (b) falsification of Company records; (c) willful failure or
refusal to perform duties reasonably assigned; (d) conviction (including a
guilty plea) of a felony or misdemeanor which creates apprehension or insecurity
on the part of the Committee, other officers of the Company, customers or the
public in dealing with the Participant; or (e) acting either willfully or with
gross negligence in a disloyal manner or to the detriment of the Company's best
interest.


<PAGE>


                         ARTICLE IV. PAYMENT OF BENEFITS

                                  Section 4.01

"Retirement Income Benefit". The payment of a Participant's Retirement Income
Benefit shall commence on or about the first day of the month next following
thirty (30) days after his employment with the Company terminates, and shall be
payable on or about the first day of each subsequent month until a total of 180
such payments have been made. If said Participant shall die after having
received any of said payments and before having received the entire benefit to
which he is entitled, said payments shall continue to be made to his
Beneficiary.

                                  Section 4.02

"Survivor's Income Benefit". The payment of a Participant's Survivor's Income
Benefit shall be made as follows:

            Section 4.02.1. If his Beneficiary shall have elected to receive the
"Survivor's Retirement Benefit", payment of same shall commence, at the election
of said beneficiary, on or about the first day of the month next following
thirty (30) days after (a) the Participant's date of death, if the Participant
died after having attained his Early Retirement Date, on his Normal Retirement
Date, as the case may be, (b) the date on which the Participant would have
attained his Early Retirement Date if he died prior to his Early Retirement
Date, or (c) the date on which the Participant would have attained his Normal
Retirement Date if he died prior to his Normal Retirement Date, and shall
continue to be payable on or about the first day of each subsequent month until
a total of 180 such payments have been made.

            Section 4.02.2. If his Beneficiary shall have elected to receive the
"Annualized Benefit", payment of same shall be made in that number of equal
monthly installments commencing on or about the first day of the month next
following thirty (30) days after the death of the Participant, determined as
follows:

               (i) If Section 3.03.1 applies, thirty-six (36) months;

               (ii) If Section 3.03.2 applies, twenty-four (24) months; and

               (iii)If Section 3.03.3 applies, twelve (12) months.


                               ARTICLE V. FUNDING


<PAGE>


                                  Section 5.01

"Unfunded Character". Notwithstanding the fact that the Company has established
the Trust for the purpose of providing the benefits payable under the Plan, such
Trust, or the Company's assets, as the case may be, shall be subject to the
claims of the Company's general unsecured creditors. Any liability of the
Company to any person with respect to benefits payable under the Plan shall be
based solely upon such contractual obligations, if any, as shall be created by
the Plan, and shall give rise only to a claim against the general assets of the
Company. No such liability shall be deemed to be secured by any pledge or any
other encumbrance on any specific property of the Company. The Plan is not
intended to comply with the requirements of Section 401(a) of the Internal
Revenue Code of 1986, as amended, and is intended to be unfunded for tax
purposes and for purposes of Title I of ERISA.

                                  Section 5.02

"Life Insurance". The Trust may apply for and become the owner and beneficiary
of a life insurance policy on the life of each Participant, so as to provide
some or all of the benefits hereunder. Accordingly, each Participant, as a
condition of participation in the Plan, may be required to submit to a physical
examination by the carrier issuing said policy, said examination to be paid for
by the Company. Any such policy which the Company may utilize to assure itself
of the funds to provide the benefits hereunder, shall not serve in any way as
security to a Participant for the Company's performance hereunder and shall
remain the sole property of the Trust. The rights accruing to a Participant or
any Beneficiary hereunder shall be solely those of an unsecured creditor of the
Company. Notwithstanding anything herein contained to the contrary, if a
Participant is not insurable at standard rates, the Committee shall have the
option to reduce (or eliminate, if said Participant is uninsurable) the Survivor
Benefit payable hereunder with respect to such Participant. Notice of any such
determination shall be delivered by the Committee to said Participant, in
writing, within thirty (30) days after said determination has been made, and
shall be final, conclusive, and binding on the Participant, and his heirs,
successors, assigns and beneficiary.


                                  Section 5.03

Title to and beneficial ownership of any assets, whether cash or investments,
which the Trust may hold to pay any Plan benefits, shall at all times remain in
the Trustee and neither the Participants nor their designated Beneficiaries
shall have any property interest whatsoever therein.

                                  Section 5.04


<PAGE>


Payment of the Retirement Income Benefit payable under the Plan shall be
conditioned upon the Participant remaining in the employ of company at least
until he attains his Early Retirement Date. If a Participant's employment
terminates prior to his having attained his Early Retirement Date, (other than
on account of his death or permanent disability) he shall forfeit the Retirement
Income Benefit otherwise payable to him hereunder.


<PAGE>


                        VI. DEFERRED COMPENSATION ACCOUNT

                                  Section 6.01

Company shall establish a Deferred Compensation Account in the name of each
Participant. Notwithstanding the establishment of each said Account, no
Participant shall be deemed to have any present interest therein and the amounts
credited thereto shall be subject to the claims of Company's general creditors.

                                  Section 6.02

At the end of any Plan Year in which a Participant makes a deferral election
hereunder, his Deferred Compensation Account shall be credited with (i) the
amount of said deferrals, (ii) all Company Matching Contribution Amount(s) (if
any), and (iii) interest, from the date of actual deferral, compounded annually
in arrears at the Moody's Corporate Bond Index rate as published by Moody's
Investors Services, Inc. Within thirty (30) days after the end of each Plan
Year, each such Participant shall receive a statement reflecting the value of
said Participant's Deferred Compensation Account (if any).

                                  Section 6.03

If a Participant shall have completed the number of years of Plan participation
from and after December 31, 1993 indicated in the table below, his Deferred
Compensation Account shall retroactively be credited with an additional rate of
interest as set forth in the table below:

                  YEARS OF PARTICIPATION                      ADDITIONAL RATE
                  SINCE JANUARY 1, 1994                         OF INTEREST
                  ---------------------                       ----------------

                     Five (5) Years                         One (1%) Percent
                     Ten (10) Years                         Two (2%) Percent

Notwithstanding the above, the interest rate credited to the Deferred
Compensation Account of a Participant who shall have made a hardship withdrawal
in accordance with the terms of Section 8.01 hereof prior to having attained the
age of sixty-two (62) years, shall be retroactively reduced to seventy-five
(75%) percent of the rates indicated above.


                      ARTICLE VII. DISTRIBUTION OF DEFERRED
                              COMPENSATION ACCOUNT


<PAGE>


                                  Section 7.01

At any time prior to the date of his separation from service, a Participant may
elect to have the value of his Deferred Compensation Account paid to him, upon
his termination of service with the Company, or to his designated Beneficiary in
the event of his death prior to his termination of service with the Company, as
follows:

            Section 7.01.1. Upon termination of service for any reason other
than death, by one of the following methods:

               (i) In a lump sum, on a date selected by the Participant but no
later than the April 1st. of the year following said termination of service, or

               (ii) In monthly installments, for any period (selected by
Participant) from two (2) to fifteen (15) years certain, commencing on a date
selected by the Participant but no later than the April 1st. following the year
of termination (hereinafter "Installment Payment Inception Date"), in an amount
determined as follows:

            Commencing on the Installment Payment Inception Date, and continuing
thereafter in substantially equal amounts (but not less than $100 per month), an
amount equal to the average of payments for a period certain annuity, as quoted
by two (2) insurance companies at the time of said Installment Inception Payment
Date, for the selected number of installments.

A Participant's election may be changed at any time prior to his termination of
employment.

Section 7.01.2. Upon the death of a Participant, in a lump sum no later than
sixty (60) days following his date of death.


                       ARTICLE VIII. HARDSHIP DISTRIBUTION

                                  Section 8.01

In the event a Participant has an unexpected need for cash arising from an
illness, casualty loss, sudden financial reversal or other


<PAGE>


unforeseen occurrence which constitutes an unforeseeable emergency in the
affairs of the Participant creating a hardship upon him, he may apply to the
Committee for permission to withdraw the entire amount in his Deferred
Compensation Account. The Committee will promptly act upon such request, and if
it is approved, the entire value (but no lesser amount) of said Participant's
Deferred Compensation Account will be distributed to said Participant within
thirty (30) days of said approval.

                            ARTICLE IX. MISCELLANEOUS

                                  Section 9.01

The Plan shall be binding upon and inure to the benefit of the heirs, legal
representatives, successors and assigns of Company and the Participants.
Notwithstanding the foregoing, a Participant's right to receive payment
hereunder shall not be subject to attachment or garnishment by creditors of the
Participant or the Participant's beneficiary, and is hereby expressly declared
to be personal, and not subject in any manner to alienation, sale, transfer,
assignment, pledge or incumbrance, and in the event of any attempted assignment
or transfer of such rights contrary to the provisions hereof, Company shall have
no further liability for payments hereunder.

                                  Section 9.02

Any payments under the Plan shall be independent of, and in addition to, those
under any other plan, program or agreement which may have been adopted by
Company or any other compensation payable to a Participant or a Participant's
designated Beneficiary by the Company.

                                  Section 9.03

Notwithstanding anything contained herein to the contrary, Company reserves the
right to terminate the Plan if there is an adverse change in the Federal Income
Tax laws governing the taxation of deferred compensation plans similar to the
Plan; provided, however, that any such termination shall be prospective in
effect and shall not diminish in any way the then current Deferred Compensation
Obligation to Participants in the Plan.

                                  Section 9.04


<PAGE>


It is intended and understood by the Company, the Trustee and the Participants,
that this Plan is designed to comply with the provisions of the Internal Revenue
Code and Regulations relating to Non Qualified Deferred Compensation Plans in
effect at the time of its adoption and that the benefits payable to Participants
shall not be deemed current compensation and shall not be included in taxable
income under Federal or State law until actually distributed. If, at a later
date, the laws of the United States of America or the State of New York are
construed in such a way as to make such understanding and intent invalid or not
in compliance with the Internal Revenue Code and Regulations thereunder, then
this Plan will be given effect in such matter as will best carry out the
purposes and intentions of the parties.

                                  Section 9.05

The Plan, and any amendment thereto, shall be interpreted and administered so as
to be consistent with, the terms of the Trust.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.19
<SEQUENCE>22
<FILENAME>0022.txt
<DESCRIPTION>FORM OF EXECUTIVE INCOME DEFERRED COMPENSATION
              AGREEMENT BETWEEN PHILIPP BROTHERS CHEMICALS, INC.
              AND EACH OF JACK BENDHEIM, JAMES HERLANDS AND
              MARVIN SUSSMAN
<TEXT>


<PAGE>

                                Executive Income
                         Deferred Compensation Agreement

         AGREEMENT, made and entered into this First day of March, 1990, by and
between Philipp Brothers Chemicals, Inc., a Corporation duly organized and
existing under the laws of the State of New Jersey, and having its usual place
of business at 1 Parker Plaza, Fort Lee, NJ, (hereinafter sometimes called the
"Corporation"), and _____________, currently residing at _________________,
_____________ (hereinafter call "Executive"),

         WITNESSETH THAT:

         WHEREAS, the Executive is presently employed by the Corporation in the
position of ________________, in which capacity his services have contributed to
the successful operation of the Corporation, and the Corporation and its
Directors believe it is in the best interest of the Corporation to retain the
services of the Executive; and

         WHEREAS, the Executive desires to enter into this Agreement with the
Corporation under which, in consideration of services rendered and to be
rendered by him to the Corporation, it will agree to make certain payments to
him in the event of his retirement while in the employment of the Corporation or
as otherwise provided for herein, all subject to the terms and conditions
hereof; and

         WHEREAS, the Directors of the Corporation have concluded and agreed
that it is in the best interests of the Corporation to enter into this Agreement
with the Executive;

         NOW, THEREFORE, in consideration of the premises, and the services
rendered and to be rendered to the Corporation by the Executive, and for other
good and valuable consideration, receipt of which is hereby acknowledged, the
Corporation and the Executive hereby mutually convenant and agree as follows:

                                    ARTICLE I

                    Retirement of Executive Following Age 65

         1.01 The Corporation agrees that the Executive may retire from the
active and daily service of the Corporation on the day which is one day prior to
the first day of the month in which the Executive has his sixty-fifth (65th)
birthday. It is understood and agreed that the word "retirement" as used in this
Agreement shall refer to the actual retirement of the Executive, and that no
benefits shall be paid the Executive under this Agreement until his actual
retirement from regular full--time employment in the Corporation, unless the
Executive and the Corporation shall otherwise mutually agree in writing.

         1.02 The Corporation agrees that commencing on the first payment date
(as defined in Section 5.02) after the date of the Executive's retirement, and
on each payment date thereafter for the term of this Agreement, it will make
monthly retirement payments in the amount provided in Article IV hereof. The
Corporation agrees to continue to make such monthly payments to the Executive
during his life for Ten (10) years and until the Executive shall have received
One Hundred Twenty (120) monthly payments; subject, however, to the conditions
and limitations provided for and set forth hereinbelow.

                                   ARTICLE II

                             Death During Retirement

         2.01 The Corporation agrees that if the Executive shall retire but
shall die before receiving any or all of the said monthly payments as provided
in Section 1.02, it will continue to make such monthly retirement payments to
the designated beneficiary of the Executive who shall be living and entitled to
receive such payment on


<PAGE>


the then current monthly payment date. If the Executive retires and dies after
the expiration of said One Hundred Twenty month period, no further payments
shall be due or payable by the Corporation under this Agreement.

         2.02 As long as this Agreement is in force, the Executive shall be
entitled to specify, in accordance with the procedures set forth in Section
11.01, the beneficiary or beneficiaries of any payments remaining to be paid at
the time of his death under the provisions of Section 2.01 above.

                                   ARTICLE III

                            Termination of Employment

         3.01 In the event that the Executive terminates his employment with the
Corporation voluntarily, or if he is discharged for any reason prior to his
retirement date as set out in Section 1.01, no payments shall be due or payable
by the Corporation under this Agreement.

                                   ARTICLE IV

                           Amount of Monthly Payments

         4.01 The amount of each monthly retirement payment to be made by the
Corporation from its own funds and by its own check to the Executive or the
Executive's beneficiary, as provided for in this Section 1.02, shall be Two
Thousand Five Hundred dollars ($2,500).

         4.02 Monthly retirement benefits shall commence on the first business
day following the Executive's retirement, and thereafter shall be made on the
first business day of each succeeding calendar month.

                                    ARTICLE V

             Employee Retirement Income Security Act of 1974 (ERISA)

         5.01 For the purposes of ERISA, the Corporation will be the "Named
Fiduciary" and "Plan Administrator" of the plan for which this Agreement is
hereby designated the written plan instrument.

         5.02 The Corporation's Board of Directors may authorize a person or
group of persons to fulfill the responsibilities of the Corporation as Plan
Administrator. The Named Fiduciary or the Plan Administrator may employ others
to render advice with regard to its responsibilities under the plan. The Named
Fiduciary may also allocate fiduciary responsibilities to others and may
exercise any other powers necessary for the discharge of its duties to the
extent not in conflict with ERISA.

                                   ARTICLE VI

                                Claims Procedure

         6.01 The following Claims Procedure shall control the determination of
benefit payments under this Plan:

         (a)  Filing of a Claim for Benefits

              If the Executive, the Executive's beneficiary or other individual
              ("Claimant") believes he or she is entitled to receive benefits
              under the plan he or she must submit a written claim for benefits
              to the Plan Administrator. The Corporation's independent decision
              on the beneficiary's Claim for


<PAGE>


              Benefits shall be determinative of whether or not the beneficiary
              shall be entitled to receive benefits under this Plan. A
              beneficiary's Claim for Benefits shall be submitted in writing to
              the Plan Administrator on a form to be supplied by said
              Administrator.

         (b)  Denial of Claim

              A Claim for Benefits under the Plan will be denied if the
              Corporation determines that the Claimant is not entitled to
              receive benefits under the Plan. Notice of a denial shall be
              furnished to the Claimant within a reasonable period of time after
              receipt of the Claim for Benefits by the Plan Administrator.

         (c)  Content of Notice

              The Plan Administrator shall provide within ninety (90) days to
              every Claimant who is denied a Claim for Benefits written notice
              setting forth, in a manner calculated to be understood by the
              Claimant, the following:


<PAGE>


         1.   The specific reason or reasons for the denial;

         2.   Specific reference to pertinent Plan provisions on which the
              denial is based;

         3.   A description of any additional material or information necessary
              for the Claimant to perfect the claim, and any explanation of why
              such material or information is necessary; and

         4.   An explanation of the Plan's Claim Review Procedure as set forth
              below.

         (d)  Review Procedure

         The purpose of the Review Procedure is to provide a method by which a
         Claimant may have a reasonable opportunity to appeal a denial of a
         Claim to the Named Fiduciary for a full and fair review. To accomplish
         that purpose, the Claimant or his duly authorized representative:

         1.   May require a review upon written application to the Named
              Fiduciary;

         2.   May review pertinent Plan documents; and

         3.   May submit issues and comments in writing.

         A Claimant (or his duly authorized representative) shall request a
         review by filing a written application for review with the Named
         Fiduciary at any time within sixty (60) days after receipt by the
         Claimant of written notice of the denial of his claim.

         (e)  Decision on Review

         A decision on review of a denied claim shall be made in the following
         manner:

         1.   The decision on review shall be made by the Named Fiduciary, who
              may in his discretion hold a hearing on the denied claim. Such
              decision shall be made promptly, and not later than sixty (60)
              days after receipt of the request for review, unless special
              circumstances (such as the need to hold a hearing) require an
              extension of time for processing, in which case a decision shall
              be rendered as soon as possible, but not later than one hundred
              and twenty (120) days after receipt of the request for review.


<PAGE>


         2.   The decision on review shall be in writing and shall include
              specific reasons for the decisions, written in a manner calculated
              to be understood by the Claimant, and specific references to the
              pertinent Plan provisions upon which the decision is based.

                                   ARTICLE VII

                              Financing of Benefits

         7.01 All benefits under the plan shall be provided out of the general
assets of the Corporation at the time such benefits are to be paid. The parties
agree that the Corporation is under no obligation to set aside funds in advance
of the time for payment, or to otherwise provide security for its obligations
under this Agreement.

         7.02 Payments from the Plan shall be made out of the general assets of
the Corporation upon submission and approval of a Claim for Benefits made
pursuant to the Claims Procedure established as required by ERISA, and set forth
above.

                                  ARTICLE VIII

                                 Governing Laws

         8.01 This Agreement shall be governed by and construed in accordance
with the laws of New Jersey, where it is made and to be performed. It sets forth
the entire agreement between the parties concerning the subject matter thereof,
and any amendment or discharge will be made only in writing. This Agreement will
bind and benefit the parties and their legal representatives and successors.

                                   ARTICLE IX

                          Not a Contract of Employment

         9.01 This Agreement shall not be deemed to constitute a contract of
employment between the parties, nor shall any provision restrict the right of
the Corporation to discharge the Executive.

                                    ARTICLE X

                            Amendment or Termination

         10.01 No beneficiary under this Agreement shall obtain any vested right
to have this Agreement continued in force and it may be amended or modified, in
whole or in part, by the Executive and the Corporation in writing at any time
without the consent of said beneficiary.

                                   ARTICLE XI

                               Further Provisions

         11.01 The term "beneficiary" as used herein shall mean any person or
trust, or combination thereof, last designated by the Executive in writing and
filed with the Corporation by the Executive during his lifetime upon a
Nomination of Beneficiary form provided by the Corporation. Any such designation
or designations of beneficiary shall be revocable at any time or times without
the consent of any beneficiary, whether now living or born hereafter, by written
designation of beneficiary made by the Executive and similarly filed by him with
the Corporation during his lifetime. In the absence of or failure of designated
beneficiaries, the executor(s) or administrator(s) of the Executive shall be his
beneficiary.


<PAGE>


         11.02 It is agreed that neither the Executive nor any beneficiary
hereunder shall have any right to commute, sell, assign, transfer or otherwise
convey the right to receive any payments hereunder, which payments and the right
thereto are expressly declared to be nonassignable and nontransferable, and in
the event of any attempted assignment or transfer, this Agreement shall
terminate and the Corporation shall have no further liability hereunder.

          11.03 The Corporation agrees that it will not merge or consolidate
with another Corporation or organization, or permit its business activities to
be taken over by any other organization unless and until the succeeding or
continuing corporation or other organization shall expressly assume the rights
and obligations of the Corporation herein set forth.

          11.04 This Agreement shall be executed in duplicate, each copy of
which when so executed and delivered shall be an original, but both copies
shall, together, constitute one and the same instrument.

         IN WITNESS WHEREOF, the parties hereto have set their hands and seals
this First day of March 1990.


- -----------------
Jack Bendheim

Phi1ipp Brothers Chemicals, Inc.

By:
     ----------------------------


- -------------------
Chairman

President


<PAGE>


                            NOMINATION OF BENEFICIARY

TO: Philipp Brothers Chemicals, Inc. (hereinafter called the "Corporation")

I Jack Bendheim, in accordance with the right granted to me in Section 2.01 of
the Executive Income Deferred Compensation Agreement between me and the
Corporation dated March 1, 1990, do hereby nominate as Beneficiary thereunder in
the event of my death:

                   Giti Bendheim, Spouse, if living, otherwise
                                  to my Estate

still reserving the privilege of changing the Beneficiary herein named at any
time or times without the consent of any such Beneficiary.

This nomination is made upon the following terms and conditions:

1.   The word Beneficiary as used herein shall include the plural wherever the
     contract so permits.

2.   If any sole Beneficiary who is then receiving monthly payments hereunder
     and under said agreement shall not be living on any monthly payment date
     provided for in said agreement, any and all remaining monthly payments
     shall be payable to the next Beneficiary in the order named above unless
     the executors or administrators of such sole Beneficiary are named as
     Beneficiaries hereinabove.

3.   If more than one Beneficiary is named either individually or as a class,
     monthly payments shall be made equally to such Beneficiaries unless
     otherwise provided hereinabove. If any such Beneficiaries die while
     receiving monthly payments under said agreement, any and all remaining
     payments shall be made equally to the surviving Beneficiaries of such
     designation or class or all to the sole survivor of them unless otherwise
     provided hereinabove. If all of such Beneficiaries shall die, any and all
     remaining payments shall be made to the next Beneficiary in the order named
     hereinabove.

4.   If none of the Beneficiaries named hereinabove is living on any said
     monthly payment date, any and all remaining payments shall be made to my
     executors or administrators.

5.   If any such monthly payments shall be payable upon any trust, the
     Corporation shall not be liable to see to the application by the Trustee of
     any payment hereunder at any time, and may rely upon the sole signature of
     the Trustee to any receipt, release or waiver, or to any transfer or other
     instrument to whomsoever made purporting to affect this nomination or any
     right hereunder.

This nomination shall be executed in duplicate, but it shall not be valid unless
one copy thereof is filed with and receipt thereof is acknowledged thereon by
the Corporation during my lifetime. Any revocation or change of this Nomination
of Beneficiary shall not be valid unless it is filed with and receipt thereof is
acknowledged thereon by the Corporation during my lifetime, and loss or
destruction of any copy retained by me shall NOT constitute a revocation or
change of this nomination.

This nomination cancels and supersedes any Nomination of Beneficiary heretofore
made by me with respect to said agreement and the right to receive payments
thereunder.

Date:    March 1, 1990


- -----------------
Jack Bendheim

The Corporation hereby acknowledges receipt of the above Nomination of
Beneficiary this First day of March, 1990.


<PAGE>

Philipp Brothers Chemicals, Inc.

By:
    -----------------------------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.20
<SEQUENCE>23
<FILENAME>0023.txt
<DESCRIPTION>FORM OF EXECUTIVE INCOME SPLIT DOLLAR AGREEMENT
              BETWEEN PHILIPP BROTHERS CHEMICALS, INC. AND
              EACH OF JACK BENDHEIM, JAMES HERLANDS AND
              MARVIN SUSSMAN
<TEXT>


<PAGE>

                               Executive Income
                            Split Dollar Agreement

         AGREEMENT, made and entered into this First day of March, 1990, by
and between Philipp Brothers Chemicals, Inc., a corporation duly organized and
existing under the laws of the State of New Jersey, and having its usual place
of business at 1 Parker Plaza, Fort Lee, NJ (hereinafter sometimes called the
"Corporation"), and ____ ________, currently residing at _________________,
_________, __, (hereinafter called "Executive"),

         WITNESSETH THAT:

         WHEREAS, the Executive is presently employed by the Corporation in
the position of _________, in which capacity his services have contributed to
the successful operation of the Corporation, and the Corporation and its
Directors believe it is in the best interest of the Corporation to retain the
services of the Executive; and

         WHEREAS, the Corporation is desirous of assisting the Executive in
paying for a pre--retirement life insurance benefit; and

         WHEREAS, the Corporation has determined that this insurance can best
be provided under a "split dollar" arrangement and the Corporation has applied
for Insurance Policy No. 32000924 (the "policy") issued by Guardian Life
Insurance Company of America (the "Insurer") in the face amount of $1,000,000
on the Executive's life; and

         WHEREAS, the Corporation and the Executive agree to make said
insurance policy subject to this split dollar agreement.

         NOW, THEREFORE, in consideration of the premises, and the services to
be rendered to the Corporation by the Executive, and for other good and
valuable consideration, receipt of which is hereby acknowledged, the
Corporation and the Executive hereby mutually covenant and agree as follows:


<PAGE>


                                   ARTICLE I
                   Policy Ownership and Dividend Application

         1.01 The policy has been issued to the Corporation as the owner
thereof. The Corporation will have and may exercise all ownership rights in
the policy, including, without limitation, the following:

                  (a)  The Corporation will have the right to designate the
beneficiary, as provided in Article III hereof.

                  (b)  The Corporation will have the right to borrow from the
Insurer and to secure that loan by the policy for any purpose including, but
not limited to, borrowing for the purpose of paying premiums without giving
notice to the Executive.

         1.02 Except as provided in paragraph 1.01 above, the Corporation
agrees with the Executive that so long as this agreement is in force, it will
not exercise any rights under the policy which will compromise or reduce the
death benefit payable to the beneficiary.

         1.03 Dividends payable under the policy, if any, will be applied as
the Corporation shall determine.

         1.04 As between the Executive and the Corporation, this agreement
shall take precedence over any provisions of the policy (including any riders,
amendments and attachments thereto) in case of a conflict between the terms of
the policy and this agreement.

                                  ARTICLE II
                              Payment of Premiums

         2.01 As long as this agreement is in force, the Executive and the
Corporation agree to share in the payment of premiums on said policy of
insurance in such amounts and in the manner set forth below:

                  The Executive's share of the annual premium shall be that
portion of the annual premium due on the policy that is equal to the amount of
the economic benefit that would be taxable to the Executive but for the
payment by the Executive of such amount based upon an amount of insurance
protection equal to the Executive's death benefit specified in Article I.

         2.02 The amount of economic benefit that would be taxable to the
Executive shall be computed in accordance with the Insurer's current published
rate per $1,000 of insurance protection for Individual 1--year term life
insurance available to all standard risks as provided in Revenue Ruling
66--110, 1966--1 C.B.12.

         2.03 In order to facilitate the payment of premiums on the policy, it
is agreed that the Corporation in the first policy year, and in each year
thereafter and as long as this agreement is in force, shall forward the total
amount of the premium then currently due and payable on the policy directly to
the Insurer and, immediately thereafter, it shall indicate in the appropriate
Corporate records that the annual sum payable by the Executive as provided for
above in Section 2.01, shall be added to his annual salary or compensation.


<PAGE>

                                  ARTICLE III
                            Beneficiary Provisions

         3.01 If the Executive dies while this agreement is in force, the
policy death benefit shall be paid, in a lump sum, as follows:

                    (a) The first $1,000,000 of death benefit proceeds shall
be paid to the wife of the Executive, if she shall survive the Executive, or
if she shall then be deceased, then to the Executive's lawful issue then
surviving, in equal shares, per stirpes.

                    (b) If the death benefit proceeds shall exceed $1,000,000,
then the first $1,000,000 shall be paid as provided in "(a)" above and any
excess shall be paid, as follows:

                           (i)  There shall be paid to Philipp Brothers
Chemicals, Inc. an amount equal to the aggregate premiums which it shall have
paid on the policy from the inception thereof up to the date of the Executive's
death; and

                           (ii) The entire remaining balance of death benefit
proceeds shall be paid as provided in "(a)" above.

         3.02 If the Executive shall die while this agreement is in force, the
Corporation agrees to take such action as may be necessary to obtain payment
from the insurer of the amounts payable to the beneficiaries as herein
provided.

                                  ARTICLE IV
                           Termination of Agreement

         4.01 This agreement shall automatically terminate upon the happening
of any of the following events:

                    (a) The Executive's termination of employment voluntarily,
or his discharge for any reason prior to death. The Executive's total
disability shall not be considered a termination of employment.

                    (b) Express termination of this agreement by either the
Corporation or the Executive at any time upon 30 days written notice to the
other.

                    (c) On the day prior to the date of the Executive's
retirement, which retirement date shall be the day prior to the first day of
the month in which the insured has his sixty-fifth (65th) birthday, unless
with the consent of the Directors of the Corporation, the Executive remains in
the active and full-time employment after the above stated retirement date.
The retirement date as used in this Agreement shall refer to the actual
retirement date of the Executive. The retirement date shall be specified on a
Policy Contract Change Form provided by the Insurer.

                    (d) Death of the Executive subject, however, to the
provisions of Article III.

                    (e) Lapse or termination of the policy.

                                   ARTICLE V
                                Reorganization

         5.01 The Corporation agrees that it will not merge or consolidate
with another corporation or organization, or permit its business activities to
be taken over by any other organization unless and until the

<PAGE>

succeeding or continuing corporation or other organization shall expressly
assume the rights and obligations of the Corporation herein set forth.


                                  ARTICLE VI
                                Governing Laws

         6.01 This Agreement shall be governed by and construed in accordance
with the laws of New Jersey, where it is made and to be performed. It sets
forth the entire agreement between the parties concerning the subject matter
thereof, and any amendment shall be made only in writing. This Agreement shall
bind and benefit the parties and their legal representatives and successors.

                                  ARTICLE VII
                         Not a Contract of Employment

         7.01 This Agreement shall not be deemed to constitute a contract of
employment between the parties, nor shall any provision restrict the right of
the Corporation to discharge the Executive.

                                 ARTICLE VIII
            Employee Retirement Income Security Act of 1974 (ERISA)

         8.01 For the purposes of ERISA, the Corporation shall be the "Named
Fiduciary" and "Plan Administrator" of the split dollar life insurance plan
for which this Agreement is hereby designated the written plan instrument.

         8.02 The Corporation's Board of Directors may authorize a person or
group of persons to fulfill the responsibilities of the Corporation as Plan
Administrator. The Named Fiduciary or the Plan Administrator may employ others
to render advice with regard to its responsibilities under the plan. The Named
Fiduciary may also allocate fiduciary responsibilities to others and may
exercise any other powers necessary for the discharge of its duties to the
extent not in conflict with ERISA.

                                  ARTICLE IX
                               Claims Procedure

         9.01 The following Claims Procedures shall control the determination
of benefit payments under this Plan:

                    (a) Any insured, beneficiary or other individual
("claimant") entitled to benefits under the plan or under the policy shall
file a claim request with the Plan Administrator with respect to benefits
under the Plan and with the Insurer with respect to benefits under the policy.
The Plan Administrator shall, upon written request of a claimant, make
available copies of any claim forms or instructions provided by the Insurer or
advise the Claimant where copies of such forms or instructions may be
obtained.

                    (b) Denial of Claim. A Claim for Benefits under the Plan
shall be denied if the Corporation determines that the claimant is not
entitled to receive benefits under the Plan. Notice of a denial shall be
furnished to the Claimant within a reasonable period of time after receipt of
the Claim for Benefits by the Plan Administrator. In the case of benefits
which are provided under the policy, the initial decision on the claims shall
be made by the Insurer.

                    (c) Content of Notice. The Plan Administrator shall
provide within ninety (90) days to every Claimant who is denied a Claim for
Benefits written notice setting forth, in a manner calculated to be understood
by the Claimant, the following:

<PAGE>

                           1.  The specific reason or reasons for the denial;

                           2.  specific reference to pertinent Plan
provisions on which the denial is based;

                           3.  A description of any additional material or
information necessary for the Claimant to perfect the claim, and an
explanation of why such material or information is necessary; and

                    4. An explanation of the Plan's Claim Review Procedure as
set forth below.

                    (d) Review Procedure. The purpose of the Review Procedure
is to provide a method by which a Claimant may have a reasonable opportunity
to appeal a denial of a Claim to the Named Fiduciary for a full and fair
review. To accomplish that purpose, the Claimant or his duly authorized
representative:

                           1.  May require a review upon written application
to the Named Fiduciary;

                           2.  May review pertinent Plan documents; and

                           3.  May submit issues and comments in writing. A
Claimant (or his duly authorized representative) shall request a review by
filing a written application for review with the Named Fiduciary at any
time within sixty (60) days after receipt by the Claimant of written notice of
the denial of his claim.

                    (e) Decision on Review. A decision on review of a denied
claim shall be made in the following manner:

                           1.  The decision on review shall be made by the
Named Fiduciary, who may in his discretion hold a hearing on the denied claim.
Such decision shall be made promptly, and not later than sixty (60) days after
receipt of the request for review, unless special circumstances (such as the
need to hold a hearing) require an extension of time for processing, in which
case a decision shall be rendered as soon as possible, but not later than one
hundred and twenty (120) days after receipt of the request for review.

                           2.  The decision on review shall be in writing and
shall include specific reasons for the decision, written in a manner
calculated to be understood by the Claimant, and specific references to the
pertinent Plan provisions upon which the decision is based.

                                   ARTICLE X
                                   Amendment

          10.01 No beneficiary under the policy shall obtain any vested right
to have this Agreement continued in force and it may be amended or modified in
whole or in part by the Executive and the Corporation in writing at any time
without the consent of said beneficiary.

          IN WITNESS WHEREOF, the parties hereto have set their hands and
seals this First day of March, 1990.



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


Philipp Brothers Chemicals, Inc.
By:
     ------------------


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.23
<SEQUENCE>24
<FILENAME>0024.txt
<DESCRIPTION>ADMINISTRATIVE CONSENT ORDER ISSUED BY THE
              NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION
<TEXT>


<PAGE>

                               State of New Jersey
                     DEPARTMENT OF ENVIRONMENTAL PROTECTION
                     DIVISION OF HAZARDOUS WASTE MANAGEMENT

                            LANCE R. MILLER, DIRECTOR
                                     CN O28
                            Trenton. N.J. 08625-0028
                                 (609) 633-1408
                              Fax # (609) 633-1454


IN THE MATTER OF                          :                 ADMINISTRATIVE
C. P. CHEMICALS INCORPORATED              :                     CONSENT
Respondent                                :                      ORDER


This Administrative Consent Order ("ACO") is issued to C.P. Chemicals pursuant
to the authority and the statutory and regulatory enforcement responsibilities
vested in the Commissioner of the New Jersey Department of Environmental
Protection (hereinafter "NJDEP" or the "Department") by N.J.S.A. 13:1D-1 et
seq., the Water Pollution Control Act, N.J.S.A. 58:10A-1 et seq., the Solid
Waste Management Act N.J.S.A. 13:1.E-1 et seq., and the Spill Compensation and
Control Act, N.JS.A. 58:10-23.11 et seq. (hereinafter the "Spill Act"), and duly
delegated to the Assistant Director of the Responsible Party Cleanup Element of
the Division of Hazardous Waste Management, and the Assistant Director of the
Enforcement Element of the Division of Water Resources, pursuant to N.J.S.A.
13:1B-4.

                                    FINDINGS

                                   I. The Site

1.       C.P. Chemicals Incorporated (hereinafter "CP. Chemicals") operates a
         specialty chemical manufacturing facility and a separate hazardous
         waste treatment, storage and disposal (TSD) facility (EPA ID#
         NJD002141950) located on Arbor Street in Sewaren, Woodbridge Township,
         Middlesex County, New Jersey. The facilities are located on a tract of
         land consisting of fourteen acres and occupy property listed as Block
         729 Lot 3, Block 729A Lot 1, Block 730 Lot 1, Block 730 Lot 1B and
         Block 731 Lot 1B on the tax map of Woodbridge Township (hereinafter
         "the Site"). The property is bounded by industrial areas to the north,
         south and east and by Woodbridge Creek to the west.

2.       a.   The property has been utilized by C.P. Chemicals since 1964. Prior
              to that time, the, site was used by other

<PAGE>

              companies for heavy industrial operations since approximately
              1860. C.P. Chemicals purchased the Site in 1964 from the Vulcan
              Detinning Company. Prior to the sale of the facility, the Vulcan
              Detinning Company was established at the site since 1907. Maps
              detailing the manufacturing facility date back to the 1920's and
              some of the original buildings are currently in use by C.P.
              Chemicals. It is believed that the Vulcan Detinning Company was
              the first major manufacturing company at the Site.

         2.   C.P. Chemicals has been engaged since 1964 in the manufacture at
              the Site of various metal cyanides, sulfates, carbonates and
              salts. The types of metals involved in the manufacturing process
              include, but are not limited to, copper, zinc, cobalt, nickel, and
              manganese. C.P. Chemicals obtains metals for its manufacturing
              processes through the use of relatively pure chemical compounds
              and relatively impure chemical wastes from various sources.

         3.   The impure chemical wastes are metal-containing liquids, sludges
              and filter cakes which C.P. Chemicals receives from other
              manufacturers and from its own manufacturing processes. Chemical
              wastes are stored in various storage tanks, particularly in the
              southern and western sections of the Site. C.P. Chemicals subjects
              the wastes to chemical processes to extract the metals and/or to
              increase the concentration of the metals to a useful level. The
              chemical wastes which remain after the extraction or concentration
              process, and/or the impure chemical wastes which are not suitable
              for extraction or concentration were treated and disposed of on
              site, by C.P. Chemicals, through the use of two
              infiltration/percolation lagoons. In 1977, a waste water treatment
              plant was constructed; however, C.P. Chemicals continued to use
              the two infiltration/percolation lagoons for waste disposal until
              approximately 1981. The liquid effluent from the waste water
              treatment plant is discharged to Woodbridge Creek via a permitted
              discharge pipe designated Discharge Serial Number (DSN) 002 in the
              NJPDES permit No. NJ0003867. Originally, noncontact cooling water
              was discharged through a permitted discharge pipe designated
              DSN001. Said discharge was voluntarily discontinued in 1987 after
              the installation of a cooling tower. The sludges which result from
              the

<PAGE>

              treatment plant process are disposed of at off-site facilities.

         4.   C.P. Chemicals utilizes various processes to extract and
              concentrate the metals in the impure chemical wastes. The basic
              process involves reacting virgin metals and metal bearing waste
              with an acid solution followed by precipitation to remove
              impurities. This is followed by a crystallization process,
              recovery, drying and packaging. The waste water which is left over
              from this process is subject to further processing in order to
              further extract and concentrate the dilute metals still remaining.

         5.   The impure chemical wastes, remnant chemical wastes and unsuitable
              chemical wastes are hazardous wastes within the meaning of the
              Solid Waste Management Act, N.J.S.A. 13:1E-1 et seq. Accordingly,
              C.P. Chemicals stores and treats hazardous wastes at the Site.

         6.   The chemical products, raw materials, impure chemical wastes,
              remnant chemical wastes, and unsuitable chemical wastes are all
              pollutants within the meaning of the Water Pollution Control Act,
              N.J.S.A. 58:10A-l et seq., and such materials have been discharged
              to the land, ground waters and surface waters of the State.

         7.   The chemical products, raw materials, impure chemical wastes,
              remnant chemical wastes and unsuitable chemical wastes discharged
              by C. P. Chemicals at the Site contain hazardous substances within
              the meaning of the Spill Act, N.J.S.A. 58:10- 23.11a et seq. The
              discharge of the hazardous substances to the land, ground water,
              or surface water is prohibited by the Spill Act.

         8.   Soil, ground water and surface water pollution exists at the Site
              due to the discharge of hazardous wastes, hazardous substances and
              pollutants by C.P. Chemicals during the handling, transfer,
              storage, processing and disposal of raw materials, chemical
              products, impure chemical wastes, remnant chemical wastes and
              unsuitable chemical wastes.

         9.   An analysis of ground water sampling results shows that

                                       3
<PAGE>

              various metals have been detected in the ground water collected at
              the Site from the outset of sample collection. Various organic
              chemicals have also been detected in the ground water. The
              Department alleges that although some of these organic chemicals
              have also been detected in the upgradient wells on the Shell Oil
              property, the concentrations were not as high as those observed on
              the C.P. Chemicals property.

                                II. Site history

3.       Based upon the Department's review of its files and inspections
         conducted at the Site, the Department has determined that the following
         environmental statutes have been violated, by C.P. Chemicals, at the
         Site:

              The Water Pollution Control Act, N.J.S.A. 58:10A-l et seq.; the
              Solid Waste Management Act N.J.S.A. 13:1E-l et seq.; and the Spill
              Compensation and Control Act, N.J.S.A. 58:10-23.11 et seq.


4.       The Department initiated numerous enforcement actions relating to such
         violations, including, but not limited to: Administrative Order, dated
         February 21, 1980; Administrative Consent Order, dated February 9,
         1981; June 7, 1982 Court Order; Administrative Order, dated May 4,
         1983; Administrative Consent Order, dated on or about May 19, 1983;
         Notice of Violation/Penalty Assessment/Penalty Settlement Offer, dated
         August 9, 1983; Amended Administrative Consent Order, dated August 13,
         1983; Notice of Violation/Penalty Settlement Offer, dated October 24,
         1983; Administrative Consent Order, dated on or about September 19,
         1986; Amended Notice of Civil Administrative Penalty Assessment, dated
         September 22, 1986; Administrative Order and Notice of Civil
         Administrative Penalty Assessment, dated October 16, 1986; Notice of
         Civil Administrative Penalty Assessment, dated April 3, 1987; Notice of
         Civil Administrative Penalty Assessment, dated June 3,1987;
         Administrative Order and Notice of Civil Administrative Penalty
         Assessment, dated June 30, 1987; Administrative Order and Notice of
         Civil Administrative Penalty Assessment, dated May 24,1988;
         Administrative Order and Notice of Civil Administrative Penalty
         Assessment, dated November 30, 1988; Notice of Civil Administrative
         Penalty Assessment, dated February 22, 1990;

                                       4

<PAGE>

         Administrative Order and Notice of Civil Administrative Penalty
         Assessment, dated April 1, 1990; Administrative Order and Notice of
         Civil Administrative Penalty Assessment, dated April 10, 1989; July 28,
         1989 Final Notice; Directive and Notice to Insurer, dated October 16,
         1990 (Attachment VIII); the Department's Summons Nos. 05816, 05817,
         05818, dated August 13, 1990; Woodbridge Municipal Court Docket Nos.
         H2495, H2496, H2497; Municipal Summons dated December 18, 1959. In
         response to these documents C.P. Chemicals submitted various hearing
         requests, stay requests and other correspondence. In response to those
         items that the Department recognizes as being in violation of various
         state regulations, C.P. Chemicals alleges that it has done extensive
         work in the areas of ground water cleanup, storm water runoff and an
         upgrade to the on-site treatment plant. The above documents are herein
         incorporated by reference.

5.       The Department issued a New Jersey Pollutant Discharge Elimination
         System ("NJPDES") discharge to surface water Permit No. NJ0003867
         (hereinafter the "Permit") which is attached herein and made a part
         hereof as Attachment I, to C.P. Chemicals on June 11, 1984. In December
         1987, a public hearing was held regarding a draft NJPDES/DSW Permit
         that was publicly noticed by the Department. At that hearing, testimony
         was heard and written comments received from various sources, including
         C.P. Chemicals, NJPIRG and members of the public. On April 10, 1989,
         the Department issued a Notice of Intent to Terminate and Not Renew the
         NJPDES/DSW Permit. An additional public comment period was held and on
         July 28, 1989, a Final Notice was issued. Both the Notice of Intent and
         the Final Notice are incorporated herein by reference. Pursuant to the
         New Jersey Water Pollution Control Act, N.J.S.A. 58:10A-1 et seq., no
         person shall discharge any pollutant except in conformity with a valid
         NJPDES permit.

6.       C.P. Chemicals has submitted Discharge Monitoring Reports (DMRs) to the
         Department as required by Part IV, Sections A. 1, 2, and 3 of the
         Permit for the monitoring period through January 31, 1991. The
         Department alleges that these DMRs demonstrate that C.P. Chemicals
         violated the effluent limitations of the Permit during such period.
         Listed in Attachment II, which is incorporated herein by reference, are
         certain of the effluent limitations which the Department finds were
         allegedly violated by C.P. Chemicals during the specified monitoring
         period (January 1, 1989 - September 30, 1990) for outfall DSN002.
         Although no AONOCAPA has yet been issued, the Department has determined
         that a penalty for these violations should be assessed against C.P.
         Chemicals in the amount of $3,742,500.00, pursuant to the provisions of
         N.J.S.A. 58:10A-10d and N.J.A.C. 7:14-8.1 et seq. The Department
         finds that there are additional violations of the Permit during the
         period from January 1, 1989 through January 31, 1991, that have not
         been the subject of a formal enforcement action and are not listed in
         Attachment II, and this ACO resolves the penalties for such violations.

                                        5
<PAGE>

7.       In December 1989, March 1990, and November 1990 the Department
         conducted a review of C.P. Chemicals' hazardous waste activities. Based
         on a review of C.P. Chemicals' original Part A, subsequent revisions to
         the Part A, site inspections, manifests listed in Attachment IV hereto
         (which is incorporated herein by reference) and the following
         manifests, #NJA0570301, #NJA0570302, #NJA0765111, the Department
         alleges that C.P. Chemicals has violated the Solid Waste Management
         Act, N.J.S.A. 13:1E-l et seq. ("SWMA"), and the hazardous waste
         regulations promulgated pursuant thereto, N.J.A.C. 7:26-I et seq. C.P.
         Chemicals, without admitting said allegations, represents that
         to the best of its knowledge no additional major violations or
         substantial numbers of violations of SWMA and the hazardous waste
         regulations occurred up to the effective date of this ACO.

         Pursuant to N.J.S.A. 13:1E-9e and N.J.A.C. 7:26-5.4 and 5.5 and based
         upon this FINDING the Department has determined, although a NOCAPA has
         not yet been issued, that another civil administrative penalty should
         be assessed against C.P. Chemicals in the amount of $1,407,750.00, and
         this ACO resolves the penalty for such alleged violations.

8.       In addition to the above, the Department has determined from
         inspections at the Site that C.P. Chemicals has had periodic leaks from
         its hazardous waste equipment. The Department has determined that it is
         necessary for C.P. Chemicals to submit a plan to correct and prevent
         these equipment leaks.

9.       In August 1988, C.P. Chemicals submitted to the Department a Part B
         permit application pursuant to the provisions of the Solid Waste
         Management Act and the Resource Conservation and Recovery Act, 42
         U.S.C. 6901 et seq. (hereinafter "RCRA"). By -- --- correspondence
         dated 6/30/89, the Department notified C.P. Chemicals that the permit
         application was deficient. By correspondence dated 9/1/89 and 10/31/89,
         C.P. Chemicals responded to the Notice of Deficiency. In March 1990,
         C.P. Chemicals modified the application for the Part B permit. By a
         Technical Notice of Deficiency, dated December 14, 1990, the Department
         notified C.P. Chemicals that its Part B permit application was still
         deficient. This Notice of Deficiency is attached hereto as Attachment V
         and is incorporated herein by reference. Responses to that Notice of
         Deficiency were submitted on January 30, 1991, and on February 12, 1991
         and are incorporated herein. The Department has not yet completed its
         review of these responses. The Department has provided C.P. Chemicals
         with a letter status report, dated February 22, 1991, regarding the
         issuance of the draft Part B permit decision. This ACO and the alleged
         violations referenced in the FINDINGS shall not constitute the grounds
         for disapproval of the Part B permit.

                                       6
<PAGE>

10.      On December 20, 1990 and January 3, 1991, the Department and C.P.
         Chemicals met to discuss, among other things, the hazardous waste
         activities which C.P. Chemicals was authorized to conduct by virtue of
         the various Part A applications and modifications it has submitted. By
         letter dated January 4, 1991, the Department set forth the hazardous
         waste activities which C.P. Chemicals is authorized to conduct. A copy
         of this letter is attached hereto as Attachment VI, and is incorporated
         herein by reference. Clarification of this letter has been requested by
         C.P. Chemicals. That request and any response by the Department are
         incorporated by reference.

11.      a.   The C.P. Chemicals facility is regulated pursuant to the New
              Jersey Solid Waste Management Act N.J.S.A. 13:lE-1 et seq.,
              specifically the Hazardous Waste --- Regulations, N.J.A.C. 7:26-l
              et seq. The C.P. Chemicals facility is also regulated -- ---
              pursuant to RCRA, and the Hazardous and Solid Waste Amendments of
              1984 (hereinafter "HSWA") and is subject to the corrective action
              requirements contained in Section 3004(a) and 3008 (h) of HSWA.
              The State of New Jersey currently has similar corrective action
              authorities and therefore acts as the U.S. Environmental
              Protection Agency's contractor (through the FY 89 Subtitle C RCRA
              Grant Agreement) to oversee corrective action activities at the
              C.P. Chemicals facility. In this capacity, all documents submitted
              pursuant to this ACO may be reviewed by the USEPA to determine
              compliance with RCRA guidance documents for RCRA Facility
              Investigation, Corrective Measures Study, and Corrective Measures
              Implementation to comply with HSWA requirements. Such comments
              will be transmitted to the C.P. Chemicals facility by the
              Department as the lead agency for these activities.

         b.   C.P. Chemicals has received Part A interim authorization and has
              applied for a final Part B permit pursuant to said laws, and is
              therefore subject to the corrective action requirements noted
              above.

12.      In order to more fully determine the nature and extent of the problem
         presented by the discharge of hazardous substances and pollutants at
         and emanating from the Site and to develop environmentally sound
         remedial actions, the Department has determined that it is necessary to
         conduct a remedial investigation and feasibility study of remedial
         action alternatives (hereinafter "RI/FS") for the Site. The Department
         has further determined that to correct the problems presented by the
         discharges, it may be necessary to design and implement a remedial
         action alternative to remedy all pollution at the Site, emanating from
         the Site, or which has emanated from the Site.

13.      At the present time, C.P. Chemicals alleges that there are a

                                       7
<PAGE>

         total of 20 ground water monitoring wells located on the Site (1-5,
         7-21). Installation of these wells began in 1981 and were completed
         over the next several years. A ground water recovery system was
         installed in 1983 in order to pump ground water to the on-site waste
         water treatment plant and then to Woodbridge Creek through the DSN002
         outfall line. This system included the installation of a French drain
         trench for the collection of ground water which extends throughout the
         southwest portion of the Site and pumps ground water to the treatment
         plant. A slurry wall was also installed in 1983 by C.P. Chemicals. This
         slurry wall extends along the same horizontal line as the French drain
         collection system.

14.      At the present time, C.P. Chemicals alleges that roof runoff from the
         main manufacturing building is collected in a 36,000 gallon holding
         tank, and that this water is sent to the on-site waste water treatment
         plant prior to discharge. Additionally, sump pump pits are allegedly
         located in low areas near buildings 15, 32, 44 and 54 as well as near
         the railroad tracks and the waste water treatment plant. C.P. Chemicals
         alleges that water collected in these sumps is sent to the treatment
         plant for processing prior to discharge. A NJPDES application for a
         proposed storm water management plan was submitted to the Department in
         April 1989. The Department reviewed the application and determined not
         to act on the application at that time.

15.      A berm has also been constructed at the southwest portion of the site
         adjacent to Woodbridge Creek. This was designed to contain contaminated
         rain water runoff that flows towards this low area. However, during
         periods of successive days of intense rain, C.P. Chemicals has breached
         the berm on at least two occasions in order to prevent water from
         backing up into buildings in the area, allowing this rain water to
         enter Woodbridge Creek. The berm is also breached occasionally by storm
         water when there is natural erosion due to storm water. Pursuant to
         this ACO, a new interim storm water management plan will be submitted.

16.      At the present time, it is C.P. Chemicals' position that: all sampling
         required by the Middlesex County Utilities Authority ("MCUA") as found
         in the "Application for Non- Domestic Waste Water Discharge Permit" has
         been completed; this sampling of treated production waste water and
         treated ground water was performed by a Department certified laboratory
         for those parameters found on Tables 1 and 2 of the permit;
         additionally, a full priority pollutant + 40 analysis was performed on
         the composited samples; the sampling methods, analysis and QA/QC
         requirements were agreed upon by the MCUA prior to the sample
         collection; and the permit application has been completed and is
         awaiting submission to the MCUA.

17.      The permit for construction of the original waste water treatment plant
         was issued by the Department on 7/22/77. The

                                       8

<PAGE>

         plant went into operation later that year. In December 1987, a
         construction and discharge permit was sent to the Department for an
         $880,000 upgrade of the plant. This upgrade work was completed in early
         1989 and the plant went on-line shortly after completion. The treatment
         plant processing of the waste waters removes metals by neutralization
         with caustic soda in order to precipitate metal hydroxides, this is
         followed by a gravity settler, which is a Lamella slanted plate unit. A
         coagulated polymer is added to the settler feed to increase
         precipitation. The water then goes through a gravity settler and sand
         filter to lower the solids content and remove solids. The pH is then
         adjusted through the addition of sulfuric acid and the water then
         enters a carbon filter and is then discharged through the DSN002 line
         to Woodbridge Creek. The separate cyanide destruct system handles waste
         from the cyanide salts manufacturing line. Waste water treated in the
         cyanide destruction system is routed to the waste water treatment
         plant. At the present time, C.P. Chemicals alleges that all waste water
         streams from the manufacturing units, ground water pumped from the
         French drain collection systems, as well as rein runoff from both the
         sump pumps and the roof collection system is also treated at the plant.

18.      C.P. Chemicals Inc., by its agreement to this ACO, does not make any
         admission as to any fact, liability or fault as to any and/or all of
         the FINDINGS. Notwithstanding that there are no admissions made in this
         ACO, C.P. Chemicals does agree to enter into this ACO and comply with
         the terms of the ORDER listed in the remaining paragraphs of this ACO.
         No FINDING shall be admissible in any civil, administrative or other
         court proceeding as proof of the information it purports to find as a
         fact. The ACO can be admitted in an action for enforcement of this ACO
         or in any proceeding between the parties to establish the fact that the
         ACO was entered into.

19.      Based on all of the above and to resolve this matter without the
         necessity for litigation, C.P.. Chemicals has agreed to undertake the
         activities set forth in the ORDER section of this ACO, including, but
         not limited to:

         a.   Cease the effluent discharge to the Woodbridge Creek, except in
              compliance with a storm water management plan and effective NJPDES
              permit approved by the Department and to discharge production
              waste water and treated ground water directly to the MCUA in
              accordance with the schedule provided in this ACO;

         b.   Conduct interim remedial measures, to conduct an RI/FS and to
              design and implement a remedial action alternative based upon the
              results of the RI/FS, to remedy all pollution at the Site,
              emanating from the Site, or which

                                       9
<PAGE>

              has emanated from the Site;

         c.   Hire a Compliance Officer ("CO");

         d.   Submit a treatability analysis;

         e.   Design, prepare and implement its interim or final storm water
              discharge management plan, as the case may be, in the event of a
              waste water treatment plant "cease operations" order from the
              Department.

                                      ORDER


NOW THEREFORE IT IS HEREBY ORDERED AND AGREED THAT:

              I. Penalty and Reimbursement of Damages

A. Penalty

20.      C.P. Chemicals shall pay a penalty of $ 2,200,000.00 to the Department,
         by cashier's or certified checks payable to the "Treasurer, State of
         New Jersey", submitted with a white copy of form DEP-062A (copy
         attached) for the violations referenced in the FINDINGS hereinabove in
         paragraphs 3, 4, 6, 7, and 8. This penalty, with interest calculated at
         8.57% per annum, shall be payable in ten (10) yearly installments as
         set forth in Attachment IX. The initial payment shall be due on May 15,
         1991, and each annual installment shall be due on March 15 of each
         successive year. $2,000,000.00 of this penalty shall constitute
         settlement for the violations of the Water Pollution Control Act
         referenced in this ACO. $200,000.00 of this penalty shall constitute
         settlement of all other violations referenced in this ACO.

B.  Reimbursement of Prior Costs and Damages

21.      Within sixty (60) calendar days after receipt from the Department of a
         written summary of all costs incurred by the Department to date, in
         connection with the investigation of, and response to, the matters
         described in the FINDINGS hereinabove, including the costs associated
         with the preparation of this ACO, C.P. Chemicals shall submit to the
         Department a cashier's or certified check payable to the "Treasurer,
         State of New Jersey" for the Department' s

                                      10
<PAGE>

         oversight costs. Payment shall be submitted to the Department's contact
         listed in paragraph 60 below. The Department agrees that with respect
         to this initial billing for costs, that initial costs are currently
         estimated at $40,279.74 through December 15, 1990 and will not exceed
         $75,000.00 in such initial billing. Any additional costs that the
         Department incurs prior to entry of this ACO, will be billed
         subsequently pursuant to paragraph 68.

                              II. Immediate Actions

A.  Interim Remedial Measures

22.      C.P. Chemicals shall continue implementation of those Interim Remedial
         Measures (hereinafter "IRM") undertaken pursuant to the 1981
         Administrative Consent Order, specifically: development and
         implementation of a plan for lagoon sediment removal; elimination of
         surface runoff and discharges to ground water; installation of eight
         (8) monitoring wells and borings as well as excavation of eight (8)
         test pits to determine the extent of soil and ground water
         contamination; submission of sample results from the monitoring wells
         and test pits to the Department; development and implementation of a
         ground water decontamination plan; and a determination of the direction
         of ground water flow. The Department acknowledges that the development
         and implementation of a plan for the removal of sediments in both the
         large unlined and small unlined lagoons; installation of eight (8)
         monitoring wells as well as eight (8) test pits to determine the extent
         of soil and ground water contamination; and development and
         implementation of a ground water decontamination plan have been
         completed and that the remaining remedial measures, namely the
         elimination of surface runoff and discharges to the ground water;
         submission of sample results from the monitoring wells and test pits to
         the Department; and determination of the direction of ground water flow
         have been undertaken and will be re-evaluated by C.P. Chemicals in the
         RI/FS, except as required by paragraph 23. C.P. Chemicals will continue
         to maintain its surface water control systems and ground water
         decontamination system in conjunction with paragraph 23.

23.      Within the time limits specified below, C.P. Chemicals shall implement
         additional interim remedial measures, including but not limited to the
         implementation of the following measures:

         a.   Immediately secure any spilled or damaged drums/containers that
              have discharged or threaten to discharge hazardous substances.

         b.   Manage drums in accordance with solid and hazardous waste
              regulations.

                                       11

<PAGE>

         c.   Within thirty (30) calendar days after the effective date of this
              ACO, C.P. Chemicals shalt submit all ground water quality
              monitoring data which it or its consultants possess. C.P.
              Chemicals shall submit additional data, within sixty (60) calendar
              days after the effective date of this ACO, including, but not
              limited to, water level elevations, ground water contour maps,
              sampling methodologies, and laboratory certification.

         d.   Within thirty (30) calendar days after the effective date of this
              ACO, C.P. Chemicals shall submit an engineering plan for revising
              the current pumping system for the interceptor drain system from
              the current manual operation to an automatic system so as to
              minimize the risk of overflow at the trench and/or sumps. Within
              ten (10) calendar days after the receipt of the Department's
              comments, C.P. Chemicals shall submit to the Department an
              engineering plan which conforms to the Department's comments. The
              determination as to whether or not the modified engineering plan,
              as resubmitted, conforms to the Department's comments and is
              otherwise acceptable by the Department shall be made solely by the
              Department in writing. The system is to be installed and
              operational within fifteen (15) calendar days of C.P. Chemicals'
              receipt of the approval of plans by the Department.

         e.   Within sixty (60) calendar days after the effective date of this
              ACO C.P. Chemicals shall submit to the Department a copy of those
              documents in its files regarding the construction, integrity and
              effectiveness of the ground water decontamination system. Within
              thirty (30) calendar days after the receipt of the Department's
              comments regarding such documents and decontamination system, C.P.
              Chemicals shall respond to such comments. The determination as to
              whether or not the response conforms to such comments and is
              otherwise acceptable by the Department shall be made solely by the
              Department in writing.

B.  Interim Hazardous Waste Activities

24.      C.P. Chemicals shall fully comply with the requirements of the December
         14, 1990 Technical Notice of Deficiency (Attachment V). C.P. Chemicals
         believes it has fully complied with this NOD at this time.


                                       12

<PAGE>

25.      C.P. Chemicals shall immediately cease all hazardous waste activities
         not authorized in, and shall fully comply with the terms of, the
         January 4, 1991 "Authorized Hazardous Waste Activities" letter from the
         Department (Attachment VI) and any modification thereto.

26.      Within fifteen (15) calendar days of the effective date of this ACO,
         C.P. Chemicals shall submit to the Department a plan for inspection and
         schedule for maintenance ("Plan"), of all equipment used in conjunction
         with C.P. Chemicals' hazardous waste activities at the Site, for all
         areas where such Plan will not require Department approval pursuant to
         the Part B permit process. Construction activities relating to
         treatment, storage and disposal activities shall be considered part of
         the Part B process and shall not be included in the Plan. C.P.
         Chemicals shall modify this Plan to conform to the Department's
         comments and shall submit the modified Plan to the Department. The
         determination as to whether or not the modified Plan, as resubmitted,
         conforms to the Department's comments and is otherwise acceptable to
         the Department shall be made solely by the Department in writing.

C.  Interim Storm Water Management

27.      On or before April 15, 1991, C.P. Chemicals shall submit an interim
         storm water management plan. Said plan shall consider the current Site
         conditions and shall remain in effect until such time as a long term
         storm water management plan is approved and implemented. The plan shall
         address measures that will eliminate the breaking of the berm at the
         Site and the associated discharge of storm water to the Woodbridge
         Creek. Within thirty (30) calendar days after the receipt of the
         Department's comments, C.P. Chemicals shall modify the interim storm
         water management plan to conform to the Department's comments and shall
         submit the modified interim storm water management plan to the
         Department. The determination as to whether or not the modified interim
         storm water management plan, as resubmitted, conforms to the
         Department's comments and is otherwise acceptable to the Department
         shall be made solely by the Department in writing. Upon receipt of the
         Department's written approval, C.P. Chemicals shall implement this
         interim storm water management plan pursuant to the deadlines included
         therein.

                                       13
<PAGE>

D.  Interim Enforcement Effluent Limits

28.      On the effective date of this ACO and until the final compliance date
         specified in paragraph 33(d), unless the final date is modified
         pursuant to the provisions of paragraph 72, C.P. Chemicals shall meet
         the interim enforcement effluent limits specified in Attachment VII,
         which is incorporated herein by reference. The Department shall use the
         interim effluent enforcement limits in determining C.P. Chemicals'
         compliance with the terms and conditions of the 1984 Permit. The
         Department's enforcement of violations of these interim effluent
         enforcement limits shall be based upon the stipulated penalties and the
         enforcement mechanisms set forth in this ACO.


                    III. Waste Water Treatment Plant Actions

A.  Middlesex County Utilities Authority ("MCUA")

29.      Pursuant to 33 USC 1314(1), and the Individual Control Strategy
         submitted by the Department and approved by the USEPA, C.P. Chemicals
         is required to discontinue Its discharge of treated ground water and
         process waste water to Woodbridge Creek no later than 6/4/92, and may
         discharge directly to MCUA's treatment plant subject to MCUA's
         approval. Should the June 4, 1992 date be changed legislatively,
         administratively, or judicially, the date in this paragraph shall be
         adjusted accordingly. In the event MCUA does not approve C.P.
         Chemical's discharge: (1) C.P. Chemicals shall immediately develop
         alternative strategies regarding such discharge; and (2) this ACO shall
         not preclude an application by C.P. Chemicals, as a new source, to
         discharge to the Woodbridge Creek. The execution of this ACO shall not
         constitute an approval or disapproval of such an application, and the
         parties reserve all rights regarding such application. These
         alternative strategies shall be subject to the Department's approval.
         Failure of MCUA to approve the discharge shall not constitute a Force
         Majeure event pursuant to paragraphs 75 and 76.

B.  Independent Waste Water Consultant

30.      Within thirty (30) calendar days of the completion of the Department's
         review of a list of consultants submitted by C.P.

                                       14
<PAGE>

         Chemicals, CA'. Chemicals shall obtain the services of an independent
         consultant who shall be responsible to perform an independent
         evaluation of C.?. Chemicals" waste water treatment plant. The
         evaluation shall include, but not be limited to. an assessment of the
         performance of each of the treatment units in relation to their design'
         specifications and the adequacy of the current staffing levels and
         operation and maintenance procedures. The evaluation shall include a
         review of any treatability studies performed in conjunction with the
         projected sewer hookup to MCUA. A report, to include recommendations
         for improved operation at the facility, shall be submitted by the
         independent consultant directly to the Department within sixty (60)
         calendar days after C.P. Chemicals obtains the services of the
         consultant.

31.      C.P. Chemicals shall make all reasonable good faith efforts, to obtain,
         within sixty (60) calendar days after the effective date of this ACO,
         the services of a Compliance Officer ("CO") who shall be responsible
         for determining C.!'. Chemicals' compliance with the Water Pollution
         Control Act, N.J.S.A. 58:10A-1 et seq. The CO shall observe all
         sampling, subject to reasonable exception for sick leave, vacation,
         etc., and shall be employed for a period of not less than two (2)
         years. In order to allow the CO to determine compliance, the CO shall
         be given access to all documentation which relates to the operation of
         the waste water treatment plant, including, but not limited to,
         invoices, manifests, laboratory reports, chains of custody and sampling
         data. C.P.. Chemicals shall give the Department at least two (2) weeks
         notice of any of the CO's planned sick leave, vacation, etc. The
         individual to be employed as CO shall be subject to the approval by the
         Department. Upon the hiring of the CO, C.P. Chemicals shall place into
         escrow an amount equivalent to that individual's salary and maintain
         said escrow for a period of two years. The escrow shall serve as a
         guarantee of that individual's salary for the two-year period. The CO's
         function shall include all aspects of the Site's environmental
         compliance program. The CO shall not report to the plant manager but
         shall report to the Corporate Vice President for environmental affairs.
         The CO's employment shall not be terminated except upon the written
         approval by the Department, unless for cause, or resignation by the
         employee. Cause shall not include reporting of information or results
         unfavorable to C.P. Chemicals. In the event that the CO's employment is
         terminated, C.P. Chemicals shall, no

                                       15
<PAGE>

         later than thirty (30) calendar days thereafter, present to the
         Department a proposed CO candidate subject to the same conditions
         referenced above. If extensions are granted pursuant to paragraphs 75
         and 76, or if the final compliance date is modified pursuant to the
         revisions of paragraph 72, this shall automatically extend, for an
         equivalent time period, the term of employment of the CO. The CO shall,
         no later than the twenty-fifth (25) calendar day of each month,
         together with the DMR provide a written report which must include the
         CO's determination regarding C.P. Chemicals' compliance with all
         sampling, analysis, reporting, and waste water treatment plant
         operations. The Department shall have the authority to confer with the
         CO at any time.

C.       Significant Industrial User ("SIU") Application

32.      On or before May 1, 1991, C.P. Chemicals shall submit an application to
         the Department for a NJPDES Significant Industrial User (SIU) Permit to
         allow its present surface water discharge to be conveyed to the MCUA
         for subsequent treatment and discharge. The SIU application shall
         include the information generated during the treatability analysis
         performed by C.P. Chemicals to determine the effect of its treated
         waste water on MCUA's facility and operation. The treatability analysis
         shall have considered the following items:

a.       pass-through of pollutants, both chemical specific and whole effluent
         toxicity;

b.       interference with any of MCUA's unit operations;

c.       effect on MCUA's sludge quality; and

d.       any treatability resting required by MCUA;

C.P. Chemicals alleges that it is currently not discharging process waste water
to its waste water treatment plant. Therefore, in addition, the following
assessments may be required at such time that C.P. Chemicals begins discharging
process waste water to its waste water treatment plant:

e.       Inhibition tests using the Continuously Fed Batch Reactor (FBR)
         Procedure and Glucose Inhibition Test [see Larson, R.J. and Schaeffer,
         S.L., 1982, A Rapid Method for Determining the Toxicity of Chemicals to
         Activated Sludge. Water Research, 16 (675)];

f.       A Tier II Refractory Toxicity Assessment (RTA) as described in the U.S.
         Environmental Protection Agency document, "Toxicity Reduction
         Evaluation Protocol for Municipal Waste Water Treatment Plants."
         (EPA/600/2-88/062).

D.       Construction Compliance Schedule

13.      C.P. Chemicals shall provide for waste water treatment which is fully
         capable of complying

                                       16
<PAGE>

         with its final NJPDES SIU permit and sewer connection to MCUA, in
         accordance with the following schedule:

a.       On or before November 20, 1991, C.P. Chemicals shall submit to the
         Department a Stage 2 TWA application prepared in accordance with
         N.J.A.C. 7:14A-12.l et seq., including a detailed construction schedule
         consistent with this ACO.

b        On or before April 5, 1992, C.P. Chemicals shall award contracts and
         initiate construction as required in the approved Stage 2 TWA for the
         connection to MCUA, and any other separate Stage 2 TWA that may be
         necessary for the waste water treatment plant.

c.       On or before April 16, 1993, C.P. Chemicals shall complete all
         construction and apply for a Stage 3 TWA in accordance with N.J.A.C.
         7:14A-12.l et seq.

d.       On or before April 17, 1993, C.P. Chemicals shall cease its discharge
         to Woodbridge Creek, and shall discharge waste water only in compliance
         with the final effluent limitations set forth in the SIU permit and
         shall discharge only in compliance with said SIU permit.

The Department recognizes C.P. Chemicals' estimation of the Department's review
time for Stage 2 TWAs of 90 days and 180 days for the SIU application. The
Department shall extend the time for performance as necessary in accordance with
paragraphs 75 and 76 of this ACO. The Department has considered the proposed
construction schedule dated 2/8/91, referenced as Attachment X, in evaluating
C.P. Chemicals' commitment to cease its discharge to Woodbridge Creek.


                     IV. Remedial Investigation and Cleanup

34.      C.P. Chemicals shall select a consultant from the Department's approved
         Term Feasibility Study or Term Design Contract List, and such
         consultant shall conduct the Remedial Investigation, Feasibility Study
         and cleanup of the Site, as set forth in paragraphs 35 through 50
         below.

A.       Remedial Investigation

35.      On or before May 1, 1991, C.P. Chemicals shall submit to the Department
         a detailed draft Remedial Investigation Work Plan (hereinafter the "RI
         Work Plan") in accordance with the scope of work set forth in
         Appendices B, C and D, which are attached hereto and made a part
         hereof.

36.      Within thirty (30) calendar days after receipt of the Department's
         written comments on the draft RI Work Plan, C.P. Chemicals shall modify
         the draft RI Work Plan to conform to the Department's comments and
         shall submit the modified RI Work Plan to the Department. The
         determination as to whether or not the modified RI Work Plan, as
         resubmitted, conforms to

                                       17
<PAGE>

         the Department's comments and is otherwise acceptable to the Department
         shall be made solely by the Department in writing.

37.      Upon receipt of the Department's written final approval of the RI Work
         Plan, C.P. Chemicals shall conduct the remedial investigation in
         accordance with the approved RI Work Plan and the schedule therein.

38.      C.P. Chemicals shall submit to the Department a draft Remedial
         Investigation Report (hereinafter "RI Report") in accordance with
         Appendix B and the RI Work Plan and the schedule therein.

39.      If upon review of the draft RI Report the Department determines that
         additional remedial investigation is required, C.P. Chemicals shall
         conduct additional remedial investigation as directed by the Department
         and submit a second draft RI Report.

40.      Within thirty (30) calendar days after receipt of the Department's
         written comments on the draft RI Report, C.P. Chemicals shall modify
         the draft RI Report to conform to the Department's comments and shall
         submit the modified RI Report to the Department. The determination as
         to whether or not the modified RI Report, as resubmitted, conforms with
         the Department's comments and is otherwise acceptable to the Department
         shall be made solely by the Department in writing.

B.       Feasibility Study

41.      Within thirty (30) calendar days after receipt of the Department's
         written final approval of the RI Report, or as otherwise directed by
         the Department, C.P. Chemicals shall submit to the Department a
         detailed draft Feasibility Study Work Plan (hereinafter, "FS Work
         Plan") in accordance with the scope of work set forth in Appendix E,
         which is attached hereto and made a part hereof, and which shall also
         address the final storm water management plan for the Site.

42.      Within thirty (30) calendar days after receipt of the Department's
         written comments on the draft FS Work Plan, C.P. Chemicals shall modify
         the draft FS Work Plan to conform to the Department's comments and
         shall submit the modified FS Work Plan to the Department. The
         determination as to whether or not the modified FS Work Plan, as
         resubmitted, conforms to the Department's comments and is otherwise
         acceptable to the Department shall be made solely by the Department in
         writing.

43.      Upon receipt of the Department's written final approval of the FS Work
         Plan, C.P. Chemicals shall conduct the feasibility study in accordance
         with the approved FS Work Plan and the schedule therein.

44.      C.P. Chemicals shall submit to the Department a draft Feasibility Study
         Report (hereinafter

                                       18
<PAGE>

         "FS Report") in accordance with Appendix E and the approved FS Work
         Plan and the schedule therein.

45.      Within thirty (30) calendar days after receipt of the Department's
         written comments on the draft FS Report, C.P. Chemicals shall modify
         the draft FS Report to conform to the Department's comments and shall
         submit the modified FS Report to the Department. The determination as
         to whether or not the modified FS Report, as resubmitted, conforms the
         Department's comments and is otherwise acceptable to the Department
         shall be made solely by the Department in writing.

C.       Remedial Action

46.      The Department will make the selection of the remedial action
         alternative based on the criteria set forth in Appendix E, Section I.D.

47.      Within sixty (60) calendar days after receipt of the Department's
         written notification of selection of a remedial action alternative,
         C.P. Chemicals shall submit to the Department a detailed draft Remedial
         Action Plan, which shall include the final Storm water management plan,
         in accordance with the scope of work set forth in Appendix V, which is
         attached hereto and made a part hereof.

48.      Within thirty (30) calendar days after receipt of. the Department's
         written comments on the draft Remedial Action Plan, C.P. Chemicals
         shall modify the draft Remedial Action Plan to conform to the
         Department's comments and shall submit the modified Remedial Action
         Plan to the Department. The determination as to whether or not the
         modified Remedial Action Plan, as resubmitted, conforms to the
         Department's comments and is otherwise acceptable to the Department
         shall be made solely by the Department in writing.

49.      Upon receipt of the Department's written final approval of the Remedial
         Action Plan, C.P. Chemicals shall implement the approved Remedial
         Action Plan in accordance with the schedule therein.

D.       Additional Remedial Investigation and Remedial Action

50.      If at any time prior to C.P. Chemicals' receipt of written notice from
         the Department pursuant to paragraph 109, the Department determines
         that the criteria set forth in Appendix E (Section I.D.) are not being
         achieved or that additional remedial investigation and/or remedial
         action is required to protect human health or the environment, C.P.
         Chemicals shall conduct such additional activities as directed by the
         Department and in accordance with this ACO.

E.       Progress Reports

                                       19
<PAGE>

51.      C.P. Chemicals shall submit to the Department quarterly progress
         reports; the first progress report shall be submitted on or before the
         30th calendar day of the month following the first full quarter after
         the effective date of this ACO. Each progress report thereafter shall
         be submitted on or before the 30th calendar day of the month following
         the quarter being reported. Each progress report shall detail the
         status of C.P. Chemicals' compliance with this ACO and shall include
         the following:

a.       Identification of the Site and reference to this ACO;

b.       Identify specific requirements of this ACO (including the corresponding
         paragraph number or schedule) which were initiated during the reporting
         period;

c.       Identify specific requirements of this ACO (including the corresponding
         paragraph number or schedule) which were initiated in a previous
         reporting period, which are still in progress and which will continue
         to be carried out during the next reporting period;

d.       Identify specific requirements of this ACO (including the corresponding
         paragraph number or schedule) which were completed during this
         reporting period;

e.       Identify specific requirements of this ACO (including the corresponding
         paragraph numbers or schedule) which should have been completed during
         the reporting period and were not;

f.       An explanation of any non-compliance with any approved work plan(s),
         schedule(s) or Remedial Action Plan, and actions taken or to be taken
         to rectify non-compliance;

g.       Identify the specific requirements of this ACO (including the
         corresponding paragraph number or schedule) that will be initiated
         during the upcoming reporting period;

h.       C.P. Chemicals and the Department agree to meet quarterly, if
         necessary, in order to review the progress reports, as well as any
         other issues the parties deem to be appropriate.


                             V. Operational Records

52.      Immediately upon the execution of this ACO by C.P. Chemicals, C.P.
         Chemicals shall, upon reasonable notice, make available, for inspection
         and copying, all operational records associated with the Site,
         including, but not limited to, documents relating to the waste water
         treatment plant operations, effluent discharges, hazardous waste
         documents relating to the shipments and receipts of hazardous waste,
         documents relating to the treatment, storage and/or disposal of
         hazardous wastes, hazardous substances, hazardous pollutants and
         pollutants, as well as any other documents deemed necessary by the
         Department. Production information not directly related to state
         environmental law (for example, quantity of virgin raw materials,
         commercial products, cost information and the like) is confidential and
         may

                                       20
<PAGE>

         be reviewed by the Department on a confidential basis. No copies of
         such information will be retained by the Department, the Department
         shall not treat such copies as public records, and all such copies will
         be returned to C.P. Chemicals, unless these copies provide a basis for
         any subsequent enforcement action. The determination as to whether or
         not this information could possibly provide a basis for a subsequent
         enforcement action shall be made solely by the Department.

                                   VI. Permits

53.      This ACO shall not be construed to be a permit or in lieu of a permit
         for existing or former activities which require permits and it shall
         not relieve C.P. Chemicals from obtaining and complying with all
         applicable Federal, State and local permits necessary for any future
         activities which C.P. Chemicals must perform in order to carry out the
         obligations of this ACO. The interim enforcement effluent limitations
         set forth in Attachment VII will be deemed to be the effluent
         limitations for determining compliance with the Water Pollution Control
         Act, N.J.S.A. 58:10A-l et seq., as amended by P.L. 1990, c.28, and any
         regulations -- --- promulgated pursuant thereto, including but not
         limited to: whether there is a serious violation; whether and by how
         much an effluent limitation has been exceeded; and whether C.P.
         Chemicals is a significant non-complier. This ACO precludes the use of
         a more stringent frequency or factor of exceedance than those set forth
         in the Water Pollution Control Act, as amended, to determine if a
         serious violation has occurred or if C.P. Chemicals is a significant
         non-complier.

54.      No provisions of the 1984 NJPDES Permit are modified by this ACO. The
         enforcement construction compliance schedule set forth above in
         paragraph 33 and the interim enforcement effluent limits set forth in
         Attachment VII are enforcement compliance requirements that C.P.
         Chemicals shall meet until C.P. Chemicals begins discharging to the
         MCUA, or until implementation of the approved alternative strategy
         referenced in paragraph 29.

55.      C.P. Chemicals shall submit applications for all Federal, State and
         local permits required to carry out the obligations of this ACO in
         accordance with the approved time schedules.

56.      Within thirty (30) calendar days after receipt of written comments
         concerning any permit application to a Federal, State or local agency,
         or sooner if required by the permitting agency, C.P. Chemicals shall
         modify the permit application to conform to the agency's comments
         and resubmit the permit application to the agency. The determinations
         as to whether or not the permit application, as resubmitted, conforms
         with the Department's comments or is otherwise acceptable to the
         Department shall be made

                                       21

<PAGE>

         solely by the Department in writing. To the extent that the terms and
         conditions of any such permit or permit modifications are substantially
         equivalent with the terms and conditions agreed to under this ACO, C.P.
         Chemicals waives any rights it may have to a hearing on such terms and
         conditions during any such permit process. To the extent that such
         terms and conditions are not substantially equivalent, C.P. Chemicals
         reserves any rights it may have.

57.      This ACO shall not preclude the Department from requiring that C.P.
         Chemicals apply for any permit or permit modification issued by the
         Department under the authority of the Water Pollution Control Act,
         N.J.S.A. 58:10A-l et seq., the Solid Waste Management Act, N.J.S.A.
         13:1E-l et seq. and/or any other statutory authority for the matters
         covered herein. The terms and conditions of any such permit or permit
         modification shall not be preempted by the terms and conditions of this
         ACO even if the terms and conditions of any such permit or permit
         modification are more stringent than the terms and conditions to this
         ACO.

                            VII. Project Coordination

58.      C.P. Chemicals shall submit to the Department all documents required by
         this ACO, including correspondence relating to Force Majeure issues, by
         certified mail, return receipt requested, or by Federal Express, or by
         hand delivery with an acknowledgment of receipt form for the
         Department's signature. The date that the Department executes the
         receipt or acknowledgment will be the date the Department uses to
         determine C.P. Chemicals' compliance with the requirements of this ACO
         and the applicability of stipulated penalties and any other remedies
         available to the Department.

59.      The individual identified in this paragraph shall be the Department's
         contact for C.P. Chemicals for all matters concerning this ACO. C.P.
         Chemicals' contact for the Department for all matters concerning this
         ACO shall be Mr. Thomas L. Moran, C.P. Chemicals, Inc., One Parker
         Plaza, Fort Lee, New Jersey 07024, and the Department will copy George
         J. Tyler, Esq., Giordano, Halleran & Ciesla, 270 State Highway #35 P.O.
         Box 190, Middletown, NJ 07048, on all correspondence submitted to C.P.
         Chemicals pursuant to this ACO.

60.      C.P. Chemicals shall submit four (4) or more copies, as advised, of all
         documents required by this ACO, unless otherwise directed in writing by
         the Department, to:

                  Ian R. Curtis, Case Manager
                  New Jersey Department of Environmental Protection
                  Division of Hazardous Waste Management
                  Bureau of Federal Case Management
                  401 East State Street, CN 028
                  Trenton, NJ 08625

Also, C.P. Chemicals, unless otherwise directed by the Department in writing,
shall submit three (3) copies of all documents required by this ACO to:

                                       22

<PAGE>

                  Ellen Doering, Chief
                  New Jersey Facility Section
                  USEPA  - Region II
                  Room 1138
                  26 Federal Plaza
                  New York, NY 10278

61.      C.P. Chemicals shall notify, in writing, and shall attempt to contact
         telephonically the contact persons listed in paragraph 60, above, at
         least two weeks prior to the initiation of any field activities.


                          VIII. Financial Requirements

A.       Financial Assurance

62.      Within ninety (90) calendar days after the effective date of this ACO,
         C.P. Chemicals shall obtain and provide to the Department financial
         assurance in the form of either an irrevocable letter of credit or a
         performance bond or other form of acceptable financial assurance, for
         example an insurance policy, in the amount of $500,000.00. C.P.
         Chemicals hereby agrees to adjust such financial assurance at the end
         of the RI/FS to reflect the estimated cost of an engineering design.
         C.P. Chemicals further agrees to adjust said financial assurance at the
         end of the engineering design to reflect the estimated cost of the
         remedial program. However, at no time shall the financial assurance be
         allowed to drop below $500,000.00. C.P. Chemicals shall also establish
         an irrevocable standby trust fund, with an initial deposit of One
         Thousand dollars ($1,000.00). The irrevocable letter of credit, the
         performance bond and the irrevocable trust fund agreement shall meet
         the following requirements:

i.       Letter of Credit

         a.   Is identical to the wording specified in Appendix G for the letter
              of credit, which is attached hereto and made a part hereof;

         b.   Is issued by a New Jersey State or Federally chartered bank,
              savings bank, or savings and loan association which has its
              principal office in New Jersey or New York City, unless otherwise
              approved by the Department; and

         c.   Is accompanied by a letter from C.P. Chemicals referring to the
              Letter of Credit by number, issuing institution and date and
              providing the following information: the name and address of the
              facility and/or Site which is the subject of the ACO and the
              amount of funds securing the C.P. Chemicals' performance of all
              its obligations under the ACO.

                                       23

<PAGE>


ii.      Performance Bond

         a.   Is identical to the wording specified in Appendix I for
              performance bonds, which is attached hereto and made a part
              hereof;

         b.   The surety company issuing the performance bond shall, at a
              minimum, be among those listed as acceptable sureties on Federal
              bonds in the most recent version of Circular 570 issued by the
              U.S. Department of the Treasury, which is published annually on
              July 1 in the Federal Register; and

         c.   Is accompanied by a letter from C.P. Chemicals referring to the
              Performance Bond by number, issuing institution and date and
              providing the following information: the name and address of the
              facility and/or site which is the subject of the ACO and the
              amount of fund securing the company's performance of all its
              obligations under the ACO.

iii.     Standby Trust.

         a.   Is identical to the wording specified in Appendix H, which is
              attached hereto and made a part hereof;

         b.   The irrevocable standby trust fund shall be the depository for all
              funds paid pursuant to a draft by the Department against the
              letter of credit or payments made under the performance bond as
              directed by the Department;

         c.   The trustee shall be an entity which has the authority to act as a
              trustee and whose trust operations are regulated and examined by a
              Federal or New Jersey agency;

         d.   Is accompanied by an executed certification of acknowledgment that
              is identical to the wording specified in Appendix H.

63.      C.P. Chemicals shall establish and maintain the standby trust fund
         until terminated by the written agreement of the Department, the
         trustee and C.P. Chemicals, or of the trustee and the Department if
         C.P. Chemicals ceases to exist. C.P. Chemicals shall maintain the
         letter of credit, performance bond, or other form of acceptable
         financial assurance until the Department provides written notification
         to C.P. Chemicals that the financial assurance is no longer required
         for compliance with this ACO. In the event that the Department
         determines that C.P. Chemicals has failed to perform any of its
         obligations under this ACO, the Department may proceed to have the
         financial assurance deposited into the standby trust; provided,
         however, that before the Department draws on the letter of credit or
         makes a claim against the performance bond or other financial
         assurance, the Department shall notify C.P. Chemicals in writing of the
         obligation(s) which it has not performed, and C.P. Chemicals

                                       24
<PAGE>

         shall have a reasonable time, not to exceed thirty (30) calendar days,
         unless approved in writing by the Department, to perform such
         obligation(s).

64.      At any time, C.P. Chemicals may apply to the Department to substitute
         other financial assurances in a form, manner and amount acceptable to
         the Department.

B.       Project Cost Review

65.      Beginning three hundred sixty-five (365) calendar days after the
         effective date of this ACO and annually thereafter on that same
         calendar day, C.P. Chemicals shall submit to the Department a detailed
         review of all costs required for C.P. Chemicals' compliance with this
         ACO. This cost review shall include a detailed summary of all monies
         spent pursuant to this ACO up to thirty (30) days prior to the
         submission, the estimated cost of all known future expenditures
         required to comply with this ACO (including any operation and
         maintenance costs), and the reason for any changes from the previous
         cost review submitted by C.P. Chemicals. These cost reviews are in
         addition to the adjustments in the financial assurance called for in
         paragraph 67.

66.      At any time after C.P. Chemicals submits the first cost review pursuant
         to the preceding paragraph, C.P. Chemicals may request the Department's
         approval to reduce the amount of the financial assurance to reflect the
         remaining costs of performing its obligations under this ACO. If the
         Department grants written approval of the request, C.P. Chemicals may
         amend the amount of the then existing letter of credit, performance
         bond, or other form of acceptable financial assurance.

67.      If the estimated cost of meeting C.P. Chemicals' obligations in this
         ACO at any time increases to an amount greater than the financial
         assurance, C.P. Chemicals shall, within forty-five (45) calendar days
         after receipt of written notice of the Department's determination,
         increase the amount of the then existing letter of credit, performance
         bond, or other form of financial assurance, so that it is equal to the
         estimated cost as determined by the Department. C.P. Chemicals shall
         provide the amended financial assurance to the Department within seven
         (7) calendar days after it has been obtained.

C.       Oversight Cost Reimbursement

68.      Within thirty (30) calendar days after receipt from the Department of a
         written summary of all costs incurred in connection with its oversight
         functions of this ACO for a fiscal year, or any part thereof, C.P.
         Chemicals shall submit to the Department a cashier's or certified check
         payable to the "Treasurer, State of New Jersey" for the full amount of
         the Department's oversight costs.

D.       Stipulated Penalties and Cessation of Operations

                                       25
<PAGE>

69.      Except as provided in paragraphs 75 and 76 below, upon a demand made
         the Department, C.P. Chemicals shall pay stipulated penalties to the
         Department for its failure to comply with any of the deadlines,
         schedules, or limits contained in, or any other requirements of, this
         ACO, including those established and approved hy the Department in
         writing pursuant to this ACO. Each deadline, schedule, limit or other
         requirement not complied with shall be considered a separate violation.
         The Department agrees to use its best efforts to respond, within ten
         (10) calendar days, to any request by C.P. Chemicals regarding
         clarification of any such deadline, schedule, limit or other
         requirements. Failure by the Department to respond within such time
         period shall not preclude the assessment of stipulated penalties for
         any violations. Payment of stipulated penalties shall be made according
         to the following schedule, unless the Department has modified the
         compliance date pursuant to the Force Majeure provisions
         hereinbelow:

         Calendar Days After Due Date             Stipulated Penalties
         or for construction or operation         --------------------
         without a TWA
         --------------------------------
                1 - 7                             $ 500 per calendar day
                8 - 14                            $ 1,000 per calendar day
                15 - 21                           $ 1,500 per calendar day
                22 - 28                           $ 2,500 per calendar day
                29 - over                         $ 5,000 per calendar day


         For violations of any interim enforcement effluent limits contained in
         this ACO or for any reporting, monitoring or sampling violations, C.P.
         Chemicals shall pay a stipulated penalty of $5,000 per violation which
         shall be included in any penalty mandated under the Water Pollution
         Control Act, N.J.S.A. 58:10A-1 et seq., as amended by P.L. 1990, c.28.
         These stipulated penalties do not apply to the construction and
         compliance schedule, or the completion date, with respect to the tie-in
         to the MCUA.

70.      Any such penalty shall be due and payable no later than fourteen (14)
         calendar days following receipt of a written demand by the Department.
         Payment of stipulated penalties shall be made by a cashier's or
         certified check payable to the "Treasurer, State of New Jersey".

71.      C.P. Chemicals shall pay a stipulated penalty of $10,000.00 per month
         for its failure to meet the deadline set forth in paragraph 29, above.
         C.P. Chemicals agrees to cease its discharge of treated ground water
         and process waste water to Woodbridge Creek no later than April 17,
         1993, unless such date is extended pursuant to the provisions of
         paragraph 72, or pursuant to the provisions of paragraphs 75 and 76
         (Force Majeure). In the event that C.P. Chemicals continues to
         discharge storm water to the Woodbridge Creek, such storm water shall
         be treated prior to discharge. The $10,000.00 per month stipulated
         penalty shall not apply to the extent compliance dates are extended
         beyond the April 17, 1993 deadline pursuant to

                                       26
<PAGE>

         paragraphs 75 and 76.

72.      C.P. Chemicals agrees that if the date for connection to the MCUA
         (April 17, 1993) is not met, it will pay an additional penalty with a
         principal amount of $1,000,000.00. Alternatively, C.P. Chemicals may
         cease, on April 17, 1993, discharge of treated process and ground water
         effluent to the Woodbridge Creek and pay a penalty with a principal
         amount of $500,000.00. The Department reserves the right to seek
         enforcement of the April 17, 1993 date in Superior Court,
         notwithstanding payment of the higher penalty, unless the Department
         determines that C.P. Chemicals is diligently continuing to pursue its
         connection to the MCUA. However, if the Department determines that the
         continuation of C.P. Chemicals' discharge poses an immediate risk to
         public health or an immediate risk to the environment, the Department
         reserves the right to seek injunctive relief against C.P. Chemicals to
         cease its discharge. C.P. Chemicals further agrees to cease the process
         and ground water discharged to Woodbridge Creek no later than 12/31/93.
         In the event C.P. Chemicals elects to continue the process and ground
         water discharge beyond 4/17/93, C.P. Chemicals shall, on 4/17/93, file
         an amended interim storm water management plan including an appropriate
         NJPDES-DSW permit application. C.P. Chemicals also agrees not to
         discharge storm water to Woodbridge Creek after 12/31/93 except in
         conformity with a final NJPDES-DSW permit, which permit shall take into
         account, if appropriate, the remedial action plan and the final storm
         water management plan. Nothing in this ACO shall be construed to set a
         specific date for completion of the remedial action plan and the final
         storm water management plan, as such a specific date will be
         established as part of the implementation of paragraphs 35 through 50
         above. The Department anticipates that a final NJPDES-DSW permit may be
         issued within 8 months from its date of receipt of a completed permit
         application. The execution of this ACO shall not constitute approval or
         disapproval of such application, and the parties reserve all rights
         regarding such application. The Department may extend the time for
         performance as necessary in accordance with paragraphs 75 and 76 of
         this ACO. All payments pursuant to this paragraph shall be made in
         accordance with the attached schedule (Attachment XI), with no penalty
         for prepayment, and with interest calculated at 8.57% per annum. The
         first payment shall be due with the next annual payment pursuant to
         paragraph 20. In the event C.P. Chemicals elects to pay the
         $1,000,000.00 penalty pursuant to this paragraph, the final installment
         shall be due on the same date as the last scheduled payment pursuant to
         paragraph 20.

73.      All penalties paid pursuant to this ACO shall be considered civil
         and/or civil administrative penalties.

74.      Payment of stipulated penalties does not alter C.P. Chemicals'
         responsibility to complete any requirements of this ACO.


                                IX. Force Majeure

75.      If any event as specified in the following paragraph occurs which C.P.
         Chemicals believes

                                       27

<PAGE>

         will or may cause delay in the compliance or non-compliance with any
         provision of this ACO, C.P. Chemicals shall notify the Department in
         writing within ten (10) calendar days of becoming aware of the delay,
         or anticipated delay, as appropriate, referencing this paragraph and
         describing, to the extent practicable, the anticipated length of the
         delay, the precise cause or causes of the delay, any measures taken or
         to be taken to minimize the delay, and the time required to take any
         such measures to minimize the delay. C.P. Chemicals shall take all
         reasonably necessary actions within its control to prevent or minimize
         any such delay.

         76. If the Department finds that: (a) C.P. Chemicals has complied with
         the notice requirements of the preceding paragraph; (b) that any delay
         or anticipated delay has been or will be caused by fire, flood, riot,
         strike or other circumstances beyond the reasonable control of C.P.
         Chemicals, including delay by the Department or other governmental
         agency; and (c) C.P. Chemicals has taken all reasonably necessary
         action within its control, to prevent or minimize any such delay, the
         Department shall extend the time for performance hereunder for a period
         no longer than the delay resulting from such circumstances. If the
         Department determines that: (i) C.P. Chemicals has not complied with
         the notice requirements of the preceding paragraph, or (ii) the event
         causing the delay is not beyond the control of C.P. Chemicals, or (iii)
         C.P. Chemicals has not taken all necessary action to prevent or
         minimize the delay, this paragraph shall not be applicable and failu re
         to comply with the provisions of this ACO shall constitute a breach of
         the requirements of this ACO. The burden of proving that the existence
         of any delay is caused by circumstances beyond the control of C.P.
         Chemicals and the length of any such delay attributable to those
         circumstances shall rest with C.P. Chemicals. Increases in the costs or
         expenses incurred by C.P. Chemicals which do not create an inability to
         fulfill the requirements of this ACO shall not constitute inability the
         Department shall have the right to draw upon the financial assurance as
         provided in paragraph 62. Delay in the attainment of an interim
         requirement shall not automatically justify or excuse delay in the
         attainment of subsequent requirements. Force Majeures hall not include
         non-attainment of the goals, standards, guidelines and requirements set
         forth in the appendices attached hereto. Force Majeure shall not
         include contractor's breach unless such breach falls under (a), (b) and
         (c) of this paragraph.


                            X. Reservation of Rights

77.      The Department reserves the right, in appropriate circumstances, to
         unilaterally terminate this ACO in the event C.P. Chemicals violates
         the terms of this ACO.

78.      a.   With respect to the Solid Waste Management Act ("SWMA") nothing in
              this ACO shall preclude the Department from seeking civil or civil
              administrative penalties or any other legal or equitable relief
              against C.P. Chemicals for matters not set forth in the FINDINGS
              of this ACO. However, for matters which could have been
              encompassed in the Department's investigation described in this
              ACO, the

                                       28
<PAGE>

              Department agrees not to take such action unless the Department
              finds that C.P. Chemicals' representation set forth in paragraph 7
              of this ACO is incorrect. If the Department's investigation
              conducted pursuant to paragraph 52 reveals violations which could
              not have been encompassed in the Department's investigation
              described in this ACO, the Department reserves the right to take
              enforcement action regarding any of such violations. This
              paragraph relates to all SWMA matters arising up to the effective
              date of this ACO.

         b.   Except as otherwise provided in paragraphs 69 and 72, with respect
              to the Water Pollution Control Act, as amended, nothing in this
              ACO shall preclude the Department from seeking civil or civil
              administrative penalties or any other legal or equitable relief
              against C.P. Chemicals for matters not encompassed in the DMRs
              filed by C.P. Chemicals through the date of final compliance with
              this ACO. Further, this ACO governs any and all matters that have
              arisen or may arise under said Act with respect to the discharge
              to Woodbridge Creek and the compliance schedule, up to the date of
              final compliance.

         c.   With respect to the Spill Compensation and Control Act nothing in
              this ACO shall preclude the Department from seeking civil or civil
              administrative penalties or any other legal or equitable relief
              against C.P. Chemicals for matters not covered by the FINDINGS of
              this ACO. This ACO relates to any and all matters covered by the
              FINDINGS that have arisen or the underlying facts known to the
              Department which may arise up to the date of execution of this
              ACO.

79.      In the event of a termination or cessation of operations, or any other
         event which triggers the applicability of the Environmental Cleanup
         Responsibility Act, N.J.S.A. 13:lK-6 et seq. (ECRA), C.P. Chemicals
         agrees to comply with all the requirements of ECRA. Prior to the
         completion of the Remedial Action Plan, the Department agrees that the
         approved sampling, cleanup, and other technical activities required by
         the terms of this ACO shall satisfy the ECRA technical requirements for
         these areas of environmental concern which have been addressed under
         this ACO.

80.      This ACO shall not be construed to affect or waive the claims of
         Federal or State natural resource trustees against any party for
         damages for injury to, destruction of, or loss of natural resources.

81.      The Department reserves the right to require C.P. Chemicals to take or
         arrange for the taking of, any and all additional measures should the
         Department determine that such actions are necessary to protect human
         health or the environment. Nothing in this ACO shall constitute a
         waiver of any statutory right of the Department to require C.P.
         Chemicals to undertake such additional measures should the Department
         determine that such measures are necessary.

82.      Nothing in this ACO, including the Department's assessment of
         stipulated penalties, shall

                                       29
<PAGE>

         preclude the Department from seeking maximum civil or civil
         administrative penalties or any other legal or equitable relief against
         C.P. Chemicals, for violations of this ACO. In any such action brought
         by the Department under this ACO for injunctive relief, or civil, civil
         administrative or stipulated penalties, C.P. Chemicals may raise, among
         other defenses, a defense that C.P. Chemicals failed to comply with a
         decision of the Department, made pursuant to this ACO, on the basis
         that the Department's decision was arbitrary, capricious or
         unreasonable. If C.P. Chemicals is successful in establishing such a
         defense, C.P. Chemicals shall not be liable for stipulated penalties
         for failure to comply with that particular requirement of the ACO.
         Although C.P. Chemicals may raise such defenses in any action initiated
         by the Department for injunctive relief, termination of this ACO, or
         stipulated penalties, C.P. Chemicals shall not otherwise seek review of
         any decision made or to be made by the Department pursuant to this ACO
         and under no circumstances shall C.P. Chemicals initiate any action or
         proceeding challenging any decision made or to be made by the
         Department pursuant to this ACO.

83.      Paragraphs 77, 78, 79, 80, 81 and 82 notwithstanding, C.P. Chemicals
         reserves whatever rights it has to contest, after implementation of the
         remediation for which the financial assurance was used by the
         Department, that the Department's use of the financial assurance
         provided pursuant to this ACO was arbitrary, capricious or
         unreasonable. The Department reserves its rights to contest any such
         action.

                             XI. General Provisions

84.      By its execution of this ACO, C.P. Chemicals hereby withdraws all
         requests for administrative hearings regarding the Administrative
         Orders and Notices of Civil Administrative Penalty Assessment
         referenced in the FINDINGS above. All such AO and NOCAPA actions are
         retained within the jurisdiction of the Department, and the stay issued
         by the Department on August 28, 1989 and revised on September 22, 1989,
         remains in effect while this ACO remains in effect. Additionally, upon
         execution of this ACO, C.P. Chemicals shall immediately, voluntarily,
         dismiss, with prejudice, the action captioned: "C.P. Chemicals, Inc. v.
         N.J. Department of Environmental Protection", Docket No. AM-280- 90T3,
         Motion No. M-1323-90. The Department and C.P. Chemicals agree that this
         ACO shall be the basis for the settlement of the State of New Jersey v.
         C.P. Chemicals, Inc., Docket No. C-3916-89E pending before the
         Honorable Erminie L. Conley, J.S.C. (the "Chancery Action") and that
         this ACO shall be incorporated by reference in the Settlement and
         Dismissal with Prejudice in that matter. Settlement of that matter is
         predicated on the comprehensive nature of this ACO. The Department and
         C.P. Chemicals further agree that the Department has the primary, but
         not exclusive, jurisdiction to enforce the environmental laws of the
         State of New Jersey at their discretion, and that the Chancery Action
         sought to, and did, enforce the NJPDES Permit issued to C.P. Chemicals.

85.      This ACO shall be binding on C.P. Chemicals, its agents, successors,
         assignees and any trustee in bankruptcy or receiver appointed pursuant
         to a proceeding in law or equity.

                                       30
<PAGE>

86.      C.P. Chemicals shall perform all work conducted pursuant to this ACO in
         accordance with prevailing professional standards.

87.      C.P. Chemicals shall require that the independent waste water
         consultant referred to in this ACO submit simultaneously to the
         Department all data, information, or any other materials, that it
         submits to C.P. Chemicals or its agents. Failure of the consultant to
         submit simultaneously shall be considered a violation of this ACO by
         C.P. Chemicals. Regarding all other deliverables under this ACO, C.P.
         Chemicals shall require that all independent consultants submit such
         deliverables to the Department simultaneously with the submission of
         such deliverables to C.P. Chemicals.

88.      C.P. Chemicals shall conduct all Site operations in accordance with
         the Health and Safety plan developed for this Site (as set forth in
         Appendix B). All Site activities shall be conducted in accordance with
         all general industry (29 CFR 1910) and construction (29 CFR 1926)
         standards of the federal Occupational Safety and Health Administration
         (OSHA), U.S. Department of Labor, as well as any other State or
         municipal codes or ordinances that may apply. Special attention shall
         be given to compliance with those requirements set forth in OSHA's
         final rule entitled "Hazardous Waste Operations and Emergency
         Response", Section 1910.120 of Subpart H of 29 CFR (published March 6,
         1989, Volume 54, Number 42, Federal Register).

89.      In accordance with N.J.S.A. 45:8-45, all plans or specifications
         involving professional engineering, submitted pursuant to this ACO,
         shall be submitted affixed with the seal of a professional engineer
         licensed pursuant to the provisions of N.J.S.A. 45:8-1 et seq.

90.      C.P. Chemicals shall conform all actions pursuant to this ACO with all
         applicable Federal, State, and local laws and regulations.

91.      All appendices referenced in this ACO, as well as all reports, work
         plans and documents required under the terms of this ACO are, upon
         approval by the Department, incorporated into this ACO by reference and
         made a part hereof.

92.      Each field activity to be conducted pursuant to this ACO shall be
         coordinated by an on-site professional(s) with experience relative to
         the particular activity being conducted at the Site each day, such as
         experience in the area of hydrogeology, geology, environmental
         controls, risk analysis, health and safety or soils.

93.      Upon the receipt of a written request from the Department, C.P.
         Chemicals shall submit to the Department all data and information,
         including technical records and contractual documents, concerning
         pollution at and/or emanating from the Site, or which has emanated
         from the Site, including raw sampling and monitor data, whether or not
         such data and information, including technical records and contractual
         documents, was developed pursuant to this ACO. By signing this ACO,
         C.P. Chemicals does not waive the right to assert any

                                       31
<PAGE>

         attorney-client privilege regarding the information requested pursuant
         to this paragraph, but agrees not to assert any attorney-client
         privilege regarding data, technical records and contractual documents
         requested pursuant to this paragraph.

94.      C.P. Chemicals shall preserve, during the pendency of this ACO and for
         a minimum of six (6) years after its termination, all data, records and
         documents in its possession or in the possession of its divisions,
         employees, or agents (except for data, records and documents also in
         the possession of C.P. Chemicals), which relate in any way to the
         implementation of work under this ACO, despite any document retention
         policy to the contrary. After this six year period, C.P. Chemicals
         shall notify the Department no later than thirty (30) calendar days
         prior to the destruction of any such documents. If the Department
         requests in writing that some or all of the documents be preserved for
         a longer time period, C.P. Chemicals shall comply with that request.
         Upon receipt of a written request by the Department, C.P. Chemicals
         shall submit to the Department all non-privileged records or copies of
         any such records.

95.      Obligations and penalties of the Order are imposed pursuant to the
         police powers of the State of New Jersey for the enforcement of the law
         and the protection of the public health, safety and welfare and are not
         intended to constitute debt or debts which may be limited or discharged
         in a bankruptcy proceeding.

96.      In addition to the Department's statutory and regulatory rights to
         enter and inspect, C.P. Chemicals shall allow the Department and its
         authorized representatives access to the Site during reasonable
         business hours, unless cause exists justifying access at other times
         for the purpose of monitoring, without unreasonable interference with
         business operations, C.P. Chemicals' compliance with this ACO and/or to
         perform any remedial activities C.P. Chemicals fails to perform as
         required by this ACO.

97.      C.P. Chemicals shall not construe any informal advice, guidance,
         suggestions, or comments by the Department, or by persons acting on
         behalf of the Department, as relieving C.P. Chemicals of its obligation
         to obtain written approvals as required herein, unless the Department
         specifically relieves C.P. Chemicals of such obligations, in writing in
         accordance with the following paragraph.

98.      No modification or waiver of this ACO shall be valid except by written
         amendment to this ACO duly executed by C.P. Chemicals and the
         Department.

99.      C.P. Chemicals hereby consents to and agrees to comply with this ACO
         which shall be fully enforceable as an Order in the New Jersey Superior
         Court upon the filing of a summary action for compliance pursuant to
         N.J.S.A. 13:ID-1 et seq., the Water Pollution Control Act, N.J.S.A.
         58:10A-1 et seq ., the Solid Waste Management Act, N.J.S.A. 13:1E-1
         et seq., and/or the Spill Compensation and Control Act, N.J.S.A.
         58:10-23.11 et seq.

                                       32

<PAGE>

100.     In the event that the Department determines that a public meeting
         concerning the cleanup of the Site is necessary at any rime, C.P.
         Chemicals shall ensure that the C.P. Chemicals' appropriate
         representative is prepared, available, and participates in such a
         meeting upon notification from the Department of the date, time and
         place of such meeting.

101.     C.P. Chemicals waives its rights to an administrative hearing
         concerning the entry of this ACO pursuant to N.J.S.A. 52:14B-1 et seq.
         and N.J.S.A. 58:10A-l et seq., N.J.S.A. 58:10- 23.11 et seq., and
         N.J.S.A. 13:lE-l et seq.

102.     C.P. Chemicals agrees not to contest the authority or jurisdiction of
         the Department to issue this ACO; C.P. Chemicals further agrees not to
         contest the terms or conditions of this ACO, except as to
         interpretation or application of such terms and conditions in any
         action brought by the Department to enforce the provisions of this ACO.

103.     C.P. Chemicals shall provide a copy of this ACO to each contractor and
         subcontractor retained to perform the work required by this ACO and
         shall condition all contracts and subcontracts entered for the
         performance of such work upon compliance with the terms and conditions
         of this ACO. C.P. Chemicals shall be responsible to the Department for
         ensuring that their contractors and subcontractors perform the work
         herein in accordance with this ACO.

104.     C.P. Chemicals shall give written notice of this ACO to any successor
         in interest no later than 90 calendar days prior to transfer of
         ownership of C.P. Chemicals' facilities which are the subject of this
         ACO, and shall simultaneously verify to the Department that such notice
         has been given. This requirement shall be in addition to any other
         statutory or regulatory requirements arising from the transfer of
         ownership of C.P. Chemicals' facilities.

105.     C.P. Chemicals agrees not to bring an action or maintain any existing
         or future claim or demand upon any State funds, including the New
         Jersey Spill Compensation Fund, N.J.S.A. 58:10-23.11i and the Sanitary
         Landfill Closure Fund, for the cost of investigation and remediation or
         any other actions required by this ACO and for damages sustained by
         C.P. Chemicals or its successors and assignees as a result at
         contamination attributable to C.P. Chemicals or its predecessor's
         ownership and/or operations at the Site. This provision shall be
         construed as a covenant not to sue or make any claim or demand;
         provided, however, C.P. Chemicals does not release or waive any right
         it may have to seek damages from a third party for such costs or
         damages.

106.     No later than sixty (60) calendar days after the effective date of this
         ACO, C.P. Chemicals shall record a copy of this ACO with the County
         Clerk, Middlesex County, State of New Jersey and submit a letter to the
         Department which shall include the deed book and page number on which
         the ACO was recorded.

107.     The Site that is the subject of this ACO may be freely alienated
         provided that:

                                       33

<PAGE>

         a.   No later than ninety (90) calendar days prior to the date of such
              alienation, C.P. Chemicals shall notify the Department in writing
              of the proposed alienation, the name of the grantee, and a
              description of the grantor's obligations, if any, proposed to be
              performed by such grantee.

         b.   Any contract to alienate the Site shall require the grantee to
              allow and provide access for the implementation, continuation and
              oversight of all activities and obligations pursuant to this ACO.
              C.P. Chemicals' obligations under this ACO shall continue unless
              the grantee agrees to assume C.P. Chemicals' obligations and
              unless the Department in its sole discretion agrees to permit the
              grantee to assume the obligations of C.P. Chemicals.

         c.   Any deed, title or other instrument of conveyance regarding the
              Site shall contain a notice that the Site is the subject of this
              ACO. Any such deed, title or other instrument of conveyance shall
              be subject to the requirements set forth in paragraph 108 below
              regarding the use of the Site and deed restrictions.

         d.   Nothing herein shall relieve C.P. Chemicals of the obligation to
              comply with all applicable statutes and rules relating to the
              alienation of the Site.

108.     C.P. Chemicals agrees not to make any use of the Site or take any
         actions inconsistent with this ACO. C.P. Chemicals agrees to impose
         such reasonable use and/or access restrictions regarding the Site as
         may be deemed necessary. The use and access restrictions shall run with
         the land, shall be for the benefit of and enforceable by the Department
         and the citizens of the State of New Jersey and shall provide actual
         and constructive notice of such restrictions to any subsequent grantee.
         C.P. Chemicals shall record the restrictions with the Middlesex County
         Clerk immediately upon request of the Department that C.F. Chemicals do
         so.

109.     The requirements of this ACO shall be deemed satisfied upon the receipt
         by C.P. Chemicals of written notice from the Department that C.P.
         Chemicals has demonstrated, to the satisfaction of the Department, that
         the obligations imposed by this ACO have been completed by C.P.
         Chemicals. Upon satisfaction of the terms of this ACO, all obligations
         and provisions contained therein shall cease and shall not survive the
         receipt by C.P. Chemicals of written notice from the Department, unless
         otherwise expressly indicated.

110.     C.P. Chemicals shall submit to the Department, along with the executed
         original ACO, the appropriate documentary evidence (such as a corporate
         resolution) that the signatory for C.P. Chemicals has the authority to
         bind C.P. Chemicals to the terms of this ACO.

111.     In the event that the day on which a submission is due falls on a
         weekend or holiday, the due date will be on the next business day.

                                       34

<PAGE>

112.     This Administrative Consent Order shall become effective upon the
         execution by all parties.


                                DEPARTMENT OF ENVIRONMENTAL PROTECTION

Date: 3/8/96                    By: /s/ Dennis Hart
     ----------------------         ------------------------------------------
                                    Dennis Hart, Acting Assistant Director
                                    Responsible Party Cleanup Element
                                    Division of Hazardous Waste Management

Date: 3/7/91                    By: /s/ James K. Hamilton
     ----------------------         ------------------------------------------
                                    James K. Hamilton, Assistant Director
                                    Enforcement Element
                                    Division of Water Resources

                                    Robert J. Del Tufo
                                    Attorney General of New Jersey
                                    Attorney for the State of New Jersey
                                    Department of Environmental Protection

Date: 3/11/91                   By: /s/ Craig S. Provorny
     ----------------------         ------------------------------------------
                                    Craig S. Provorny
                                    Deputy Attorney General


                                C.P. Chemicals Incorporated

Date: 3/7/91                    By: /s/ Jack C. Bendheim
     ----------------------         ------------------------------------------
                                    Name: Jack C. Bendheim
                                    Title:   Chairman


                                       35

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12.1
<SEQUENCE>25
<FILENAME>0025.txt
<DESCRIPTION>RATIO OF EARNINGS TO FIXED CHARGES
<TEXT>


<PAGE>
                                                                    EXHIBIT 12.1

                        PHILIPP BROTHERS CHEMICALS INC.
                       RATIO OF EARNINGS TO FIXED CHARGES
                    (IN THOUSANDS OF DOLLARS, EXCEPT RATIO)

<TABLE>
<CAPTION>
                                                PRO
                                               FORMA                    YEARS ENDING JUNE 30,
                                              --------    --------------------------------------------------
                                                1998        1998       1997       1996      1995       1994
                                              --------    --------    -------    ------    -------    ------
<S>                                           <C>         <C>         <C>        <C>       <C>        <C>
Earnings:
  Income (loss) before income taxes and
     extraordinary items...................   $(15,151)   $(11,754)   $ 9,104    $2,651    $ 5,285    $5,110

Add:
  Interest expense.........................     11,672       6,865      6,253     5,546      5,409     4,205
  Interest component of rent expense.......        786         709        741       648        506       561
                                              --------    --------    -------    ------    -------    ------
                                              $ (2,693)   $ (4,180)   $16,098    $8,845    $11,200    $9,876
                                              --------    --------    -------    ------    -------    ------
                                              --------    --------    -------    ------    -------    ------

Fixed charges:
  Interest expense.........................   $ 11,672    $  6,865    $ 6,253    $5,546    $ 5,409    $4,205
  Interest component of rent expense.......        786         709        741       648        506       561
                                              --------    --------    -------    ------    -------    ------
                                              $ 12,458    $  7,574    $ 6,994    $6,194    $ 5,915    $4,766
                                              --------    --------    -------    ------    -------    ------
                                              --------    --------    -------    ------    -------    ------
Ratio......................................          *           *       2.3x      1.4x       1.9x      2.1x
</TABLE>

- ------------------
* Ratio is less than 1:1. For the year ended June 30, 1998, historical and pro
forma, earnings are less than fixed charges by $11,754 and $15,151,
respectively.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21.1
<SEQUENCE>26
<FILENAME>0026.txt
<DESCRIPTION>PHILLIP BROTHERS CHEMICALS, INC.
<TEXT>



<PAGE>
                                                                    EXHIBIT 21.1

<TABLE>
<CAPTION>
SUBSIDIARIES OF                                           JURISDICTION OF
PHILLIP BROTHERS CHEMICALS, INC.                          ORGANIZATION
- --------------------------------------------------------  --------------------------------------------------------
<S>                                                       <C>
C.P. Chemicals, Inc.                                      New Jersey
Ferro Metal and Chemical Corporation Limited              U.K.
Koffolk, Inc.                                             Delaware
Koffolk Ltd.                                              Israel
Mineral Resource Technologies, L.L.C.                     Delaware
MRT Management Corp.                                      Delaware
Prince Agriproducts, Inc.                                 Delaware
Phibrochem, Inc.                                          New Jersey
Phibro Chemicals, Inc.                                    New York
The Prince Manufacturing Company                          Pennsylvania
The Prince Manufacturing Company                          Illinois
Western Magnesium Corp.                                   California
</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21.2
<SEQUENCE>27
<FILENAME>0027.txt
<DESCRIPTION>C.P. CHEMICALS, INC.
<TEXT>


<PAGE>
                                                                    EXHIBIT 21.2

<TABLE>
<CAPTION>
SUBSIDIARIES OF                                           JURISDICTION OF
C.P. CHEMICALS, INC.                                      ORGANIZATION
- --------------------------------------------------------  --------------------------------------------------------
<S>                                                       <C>
Phibro-Tech, Inc.                                         Delaware










</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21.3
<SEQUENCE>28
<FILENAME>0028.txt
<DESCRIPTION>PHIBRO-TECH, INC.
<TEXT>


<PAGE>
                                                                    EXHIBIT 21.3

<TABLE>
<CAPTION>
SUBSIDIARIES OF                                           JURISDICTION OF
PHIBRO-TECH, INC.                                         ORGANIZATION
- --------------------------------------------------------  --------------------------------------------------------
<S>                                                       <C>
MRT Management Corp.                                      Delaware
Mineral Resource Technologies, Inc.                       Delaware
L.C. Holding S.A.                                         France








</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>29
<FILENAME>0029.txt
<DESCRIPTION>CONSENT OF INDEPENDENT ACCOUNTANTS
<TEXT>


<PAGE>
                                                                    EXHIBIT 23.1

                       CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-4 of our
report dated September 11, 1998, which report is based, in part, on the report
of other auditors for fiscal 1997, on our audits of the consolidated financial
statements of Philipp Brothers Chemicals, Inc and Subsidiaries as of June 30,
1998 and 1997 and for the years then ended. We also consent to the references to
our firm under the caption "Experts."

                                          PRICEWATERHOUSECOOPERS LLP

Florham Park, New Jersey
September 29, 1998

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.2
<SEQUENCE>30
<FILENAME>0030.txt
<DESCRIPTION>CONSENT OF INDEPENDENT ACCOUNTANTS
<TEXT>


<PAGE>
                                                                    EXHIBIT 23.2

                       CONSENT OF INDEPENDENT ACCOUNTANTS

     We consent to the use in this Registration Statement of Philipp Brothers
Chemicals, Inc. on Form S-4 of our report dated September 6, 1996 relating to
the financial statements of Philipp Brothers Chemicals, Inc. and Subsidiaries
for the year ended June 30, 1996, and to all reference to our firm included in
or made a part of the Registration Statement of Philipp Brothers Chemicals, Inc.

                                          EDWARD ISAACS & COMPANY LLP

New York, New York
September 25, 1998

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.3
<SEQUENCE>31
<FILENAME>0031.txt
<DESCRIPTION>CONSENT OF INDEPENDENT ACCOUNTANTS
<TEXT>


<PAGE>
                                                                    EXHIBIT 23.3

                       CONSENT OF INDEPENDENT ACCOUNTANTS

     We consent to the inclusion in this registration statement on form S-4 of
our report dated May 13, 1998 on our audits of the consolidated financial
statements of Koffolk (1949) Ltd.

                                          DOV KAHANA & CO.
                                          Certified Public Accountants (Isr.)

Tel-Aviv, Israel
September 28, 1998

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.4
<SEQUENCE>32
<FILENAME>0032.txt
<DESCRIPTION>CONSENT OF INDEPENDENT ACCOUNTANTS
<TEXT>


<PAGE>
                                                                    EXHIBIT 23.4

                       CONSENT OF INDEPENDENT ACCOUNTANTS

     We consent to the inclusion in this registration statement on Form S-4
(File No. 333-      ) of our report dated August 24th, 1998 on our audits of the
consolidated financial statements of L.C. Holding Company.

                                          CONSTANTIN ASSOCIES

Paris, France
September 25th, 1998

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.5
<SEQUENCE>33
<FILENAME>0033.txt
<DESCRIPTION>CONSENT OF INDEPENDENT ACCOUNTANTS
<TEXT>


<PAGE>
                                                                    EXHIBIT 23.5

                       CONSENT OF INDEPENDENT ACCOUNTANTS

     We consent to the inclusion in this registration statement on Form S-4 of
our report dated 28th August 1998 on our audit of the consolidated financial
statements of Ferro Metal and Chemical Corporation Limited for the year ended
30th June 1996.

WILSON WRIGHT & CO.,
Chartered Accountants
and Registered Auditors,
71 Kingsway,
London WC2B  6 ST.
                                                       Date: 25th September 1998

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.6
<SEQUENCE>34
<FILENAME>0034.txt
<DESCRIPTION>CONSENT OF INDEPENDENT ACCOUNTANTS
<TEXT>



<PAGE>
                                                                    EXHIBIT 23.6

                       CONSENT OF INDEPENDENT ACCOUNTANTS

     We consent to the inclusion in this registration statement on Form S-4 of
our report dated 29th August 1998 on our audit of the consolidated financial
statements of Wychem Limited for the year ended 30th June 1996.

WILSON WRIGHT & CO.,
Chartered Accountants
and Registered Auditors,
71 Kingsway,
London WC2B  6 ST.
                                                       Date: 29th September 1998
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-25.1
<SEQUENCE>35
<FILENAME>0035.txt
<DESCRIPTION>FORM T-1
<TEXT>


<PAGE>


                                                                    EXHIBIT 25.1

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

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                   ----------

                                    FORM T-1

                            STATEMENT OF ELIGIBILITY
                    UNDER THE TRUST INDENTURE ACT OF 1939 OF
                   A CORPORATION DESIGNATED TO ACT AS TRUSTEE

                                   ----------

               CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
                A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________

                                   ----------

                            THE CHASE MANHATTAN BANK
               (Exact name of trustee as specified in its charter)

New York                                                              13-4994650
(State of incorporation                                         (I.R.S. employer
if not a national bank)                                      identification No.)

270 Park Avenue
New York, New York                                                         10017
(Address of principal executive offices)                              (Zip Code)

                               William H. McDavid
                                 General Counsel
                                 270 Park Avenue
                            New York, New York 10017
                               Tel: (212) 270-2611
            (Name, address and telephone number of agent for service)

                                   ----------

                        Philipp Brothers Chemicals, Inc.
               (Exact name of obligor as specified in its charter)

New York                                                              13-1840487
(State or other jurisdiction of                                 (I.R.S. employer
incorporation or organization)                               identification No.)

One Parker Plaza
Fort Lee, New Jersey                                                       07024
(Address of principal executive offices)                              (Zip Code)

                                   ----------

               9 7/8% Senior Subordinated Note Due 2008, Series A

                                   ----------

<PAGE>


                                     GENERAL

Item 1. General Information.

     Furnish the following information as to the trustee:

     (a) Name and address of each examining or supervising authority to which it
is subject.

          New York State Banking Department, State House, Albany, New York
          12110.

          Board of Governors of the Federal Reserve System, Washington, D.C.,
          20551

          Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
          New York, N.Y.

          Federal Deposit Insurance Corporation, Washington, D.C., 20429.

     (b) Whether it is authorized to exercise corporate trust powers.

                  Yes.

Item 2. Affiliations with the Obligor.

     If the obligor is an affiliate of the trustee, describe each such
affiliation.

     None.

                                      - 2 -

<PAGE>


Item 16. List of Exhibits

     List below all exhibits filed as a part of this Statement of Eligibility.

     1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).

     2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).

     3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.

     4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).

     5. Not applicable.

     6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).

     7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.

     8. Not applicable.

     9. Not applicable.


                                    SIGNATURE

     Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 16th day of September, 1998.

                                        THE CHASE MANHATTAN BANK


                                        By   /s/  Sheik Wiltshire
                                             -----------------------------
                                             Sheik Wiltshire,
                                             Second Vice President

                                      - 3 -

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27
<SEQUENCE>36
<FILENAME>0036.txt
<DESCRIPTION>FINANCIAL DATA SCHEDULE
<TEXT>

<TABLE> <S> <C>


<ARTICLE> 5
<MULTIPLIER> 1000

<S>                           <C>
<PERIOD-TYPE>                 YEAR
<FISCAL-YEAR-END>             JUN-30-1998
<PERIOD-START>                JUL-01-1997
<PERIOD-END>                  JUN-30-1998
<CASH>                             24,221
<SECURITIES>                            0
<RECEIVABLES>                      58,311
<ALLOWANCES>                          751
<INVENTORY>                        37,567
<CURRENT-ASSETS>                  130,839
<PP&E>                             96,436
<DEPRECIATION>                     55,926
<TOTAL-ASSETS>                    192,195
<CURRENT-LIABILITIES>              51,172
<BONDS>                           100,000
<PREFERRED-MANDATORY>                   0
<PREFERRED>                           521
<COMMON>                                3
<OTHER-SE>                         23,053
<TOTAL-LIABILITY-AND-EQUITY>      192,196
<SALES>                           274,056
<TOTAL-REVENUES>                  277,983
<CGS>                             208,913
<TOTAL-COSTS>                     208,913
<OTHER-EXPENSES>                   73,153
<LOSS-PROVISION>                      144
<INTEREST-EXPENSE>                  6,865
<INCOME-PRETAX>                   (11,754)
<INCOME-TAX>                       (4,689)
<INCOME-CONTINUING>                (7,065)
<DISCONTINUED>                          0
<EXTRAORDINARY>                    (1,962)
<CHANGES>                               0
<NET-INCOME>                       (9,027)
<EPS-BASIC>                         0.000
<EPS-DILUTED>                       0.000


</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>37
<FILENAME>0037.txt
<DESCRIPTION>LETTER OF TRANSMITTAL
<TEXT>

<PAGE>
                             LETTER OF TRANSMITTAL
                        PHILIPP BROTHERS CHEMICALS, INC.
                           Offer for all Outstanding
                   9 7/8% Senior Subordinated Notes due 2008
                                in Exchange for
                   9 7/8% Senior Subordinated Notes due 2008
                        which Have Been Registered Under
                    the Securities Act of 1933, As Amended,
               Pursuant to the Prospectus, dated __________, 1998

 ------------------------------------------------------------------------------
  THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON _______,
     _______, 1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE
   WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
 ------------------------------------------------------------------------------


             Delivery To: The Chase Manhattan Bank, Exchange Agent
                           By Mail or Hand Delivery:
                            The Chase Manhattan Bank
                             Global Trust Services
                        450 West 33rd Street, 15th Floor
                         New York, New York 10001-2697
                         Attention: Mr. Sheik Wiltshire
                           By Facsimile Transmission:
                        (for Eligible Institutions Only)
                                 (212) 946-8161
                         Attention: Mr. Sheik Wiltshire
                             Confirm by Telephone:
                                 (212) 946-3082


       Delivery of this instrument to an address other than as set forth above,
or transmission of instructions via facsimile other than as set forth above,
will not constitute a valid delivery.

       The undersigned acknowledges that he or she has received and reviewed
the Prospectus, dated __________, 1998 (the "Prospectus"), of Philipp Brothers
Chemicals, Inc., a New York corporation (the "Company"), and this Letter of
Transmittal (the "Letter"), which together constitute the Company's offer (the
"Exchange Offer") to exchange an aggregate principal amount of $100,000,000 of
the Company's 9 7/8% Senior Subordinated Notes due 2008 which have been
registered under the Securities Act of 1933, as amended (the "New Notes"), for
a like principal amount of the Company's issued and outstanding 9 7/8% Senior
Subordinated Notes due 2008 (the "Old Notes") from the registered holders
thereof (the "Holders").

       For each Old Note accepted for exchange, the Holder of such Old Note
will receive a New Note having a principal amount equal to that of the
surrendered Old Note. The New Notes will bear interest from the most recent
date to which interest has been paid on the Old Notes or, if no interest has
been paid on the Old Notes, from June 11, 1998. Accordingly, registered Holders
of New Notes on the relevant record date for the first interest payment date
following the consummation of the Exchange Offer will receive interest accruing
from the most recent date to which interest has been paid or, if no interest
has been paid, from June 11, 1998. Old Notes accepted for exchange will cease
to accrue interest from and after the date of consummation of the Exchange
Offer. Holders of Old Notes whose Old Notes are accepted for exchange will not
receive any payment in respect of accrued interest on such Old Notes otherwise
payable on any interest payment date the record date for which occurs on or
after consummation of the Exchange Offer.

       This Letter is to be completed by a holder of Old Notes either if
certificates are to be forwarded herewith or if a tender of certificates for
Old Notes, if available, is to be made by book-entry transfer to the account
maintained by the Exchange Agent at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in "The
Exchange Offer -- Book-Entry Transfer" section of the Prospectus. Holders


<PAGE>



of Old Notes whose certificates are not immediately available, or who are
unable to deliver their certificates or confirmation of the book-entry tender
of their Old Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility (a "Book-Entry Confirmation") and all other documents required by this
Letter to the Exchange Agent on or prior to the Expiration Date, must tender
their Old Notes according to the guaranteed delivery procedures set forth in
"The Exchange Offer -- Guaranteed Delivery Procedures" section of the
Prospectus. See Instruction 1. Delivery of documents to the Book-Entry Transfer
Facility does not constitute delivery to the Exchange Agent.

       The Exchange Agent and the Depository have confirmed that any financial
institution that is a participant in the Depository's system may utilize the
Depository's Automated Tender Offer Program ("ATOP") to tender private
securities. To effect a tender pursuant to the ATOP system, Holders should
transmit their acceptance to DTC through ATOP by causing DTC to transfer
securities to the Exchange Agent in accordance with ATOP's procedures for
transfer. DTC will then send an Agent's Message to the Exchange Agent. The term
"Agent's Message" means a message transmitted by DTC to, and received by, the
Exchange Agent and forming a part of the Book-Entry Confirmation, which states
that DTC has received an express acknowledgment from the participant in DTC
tendering the securities referred to in such Agent's Message, that such
participant has received the Letter of Transmittal and agrees to be bound by the
terms of the Letter of Transmittal and that the Company may enforce such
agreement against such participant.

       The undersigned has completed the appropriate boxes below and signed
this Letter to indicate the action the undersigned desires to take with respect
to the Exchange Offer.

List below the Old Notes to which this Letter relates. If the space provided
below is inadequate, the certificate numbers and principal amount of Old Notes
should be listed on a separate signed schedule affixed hereto.


<TABLE>
<CAPTION>

- -------------------------------------------------------------------------------------------------------------------------
                                                     DESCRIPTION OF OLD NOTES
- -------------------------------------------------------------------------------------------------------------------------
                                                                                            Aggregate
                                                                                            Principal           Principal
       Name(s) and Address(es) of Registered Holder(s)              Certificate             Amount of             Amount
                 (Please fill in, if blank)                         Number(s)*             Old Note(s)          Tendered**
- -------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                         <C>                 <C>



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



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



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

                                                              Totals:
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>


*  Need not be completed if Old Notes are being tendered by book-entry
   transfer.
** Unless otherwise indicated in this column, a holder will be deemed to have
   tendered ALL of the Old Noted represented by the Old Notes indicated in
   column 1. See Instruction 2. Old Notes tendered hereby must be in
   denominations of principal amount of $1,000 and any integral multiple
   thereof. See Instruction 1.
- -------------------------------------------------------------------------------


<PAGE>



               PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY


Ladies and Gentlemen:

         Upon the terms and subject to the conditions of the Exchange Offer,
the undersigned hereby tenders to the Company the aggregate principal amount of
Old Notes indicated above. Subject to, and effective upon, the acceptance for
exchange of the Old Notes tendered hereby, the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Company all right, title
and interest in and to such Old Notes as are being tendered hereby.

     The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the undersigned's true and lawful agent and attorney-in-fact with
respect to such tendered Old Notes, with full power of substitution, among
other things, to cause the Old Notes to be assigned, transferred and exchanged.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Old Notes, and to
acquire Exchange Notes issuable upon the exchange of such tendered Old Notes,
and that, when the same are accepted for exchange, the Company will acquire
good and unencumbered title thereto, free and clear of all liens, restrictions,
charges and encumbrances and not subject to any adverse claim when the same are
accepted by the Company. The undersigned hereby further represents that any New
Notes acquired in exchange for Old Notes tendered hereby will have been
acquired in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the undersigned, that neither the Holder
of such Old Notes nor any such other person is participating in, intends to
participate in or has an arrangement or understanding with any person to
participate in the distribution of such New Notes and that neither the Holder
of such Old Notes nor any such other person is an "affiliate," as defined in
Rule 405 under the Securities Act of 1933, as amended (the "Securities Act"),
of the Company.

     The undersigned acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the New Notes issued pursuant to the Exchange Offer in exchange
for the Old Notes may be offered for resale, resold and otherwise transferred
by Holders thereof (other than any such Holder that is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act), without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary
course of such Holders' business and such Holders have no arrangement with any
person to participate in the distribution of such New Notes. However, the SEC
has not considered the Exchange Offer in the context of a no-action letter and
there can be no assurance that the staff of the SEC would make a similar
determination with respect to the Exchange Offer as in other circumstances. If
the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of New Notes
and has no arrangement or understanding to participate in a distribution of New
Notes. If any Holder is an affiliate of the Company, is engaged in or intends
to engage in or has any arrangement or understanding with respect to the
distribution of the New Notes to be acquired pursuant to the Exchange Offer,
such Holder (i) could not rely on the applicable interpretations of the staff
of the SEC and (ii) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
If the undersigned is a broker-dealer that will receive New Notes for its own
account in exchange for Old Notes, it represents that the Old Notes to be
exchanged for the New Notes were acquired by it as a result of market-making
activities or other trading activities and acknowledges that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with
any resale of such New Notes; however, by so acknowledging and by delivering a
prospectus meeting the requirements of the Securities Act, the undersigned will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.

     The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in

<PAGE>

bankruptcy and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
This tender may be withdrawn only in accordance with the procedures set forth
in "The Exchange Offer--Withdrawal Rights" section of the Prospectus.

     Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the New Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not exchanged)
in the name of the undersigned or, in the case of a book-entry delivery of Old
Notes, please credit the account indicated above maintained at the Book-Entry
Transfer Facility. Similarly, unless otherwise indicated under the box entitled
"Special Delivery Instructions" below, please send the New Notes (and, if
applicable, substitute certificates representing Old Notes for any Old Notes
not exchanged) to the undersigned at the address shown above in the box
entitled "Description of Old Notes."

[  ]  CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
      TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
      BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:

Name of Tendering Institution:
                              -------------------------------------------------

Account Number:
               ----------------------------------------------------------------

Transaction Code Number:
                        -------------------------------------------------------

[  ]  CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
      OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE
      THE FOLLOWING:

Name(s) of Registered Holder(s):
                                -----------------------------------------------

Window Ticket Number (if any):
                             --------------------------------------------------

Date of Execution of Notice of Guaranteed Delivery:
                                                   ----------------------------

Name of Institution Which Guaranteed Delivery:
                                              ---------------------------------


If Delivered by Book-Entry Transfer, Complete the Following:

Account Number:
                ---------------------------------------------------------------

Transaction Code Number:
                        -------------------------------------------------------

[  ]  CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
      COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
      THERETO.

Name:
      -------------------------------------------------------------------------

Address:
          ---------------------------------------------------------------------

     If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of New
Notes. If the undersigned is a broker-dealer that will receive New Notes for
its own account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus meeting the requirements of the Securities Act of
1993, as amended, in connection with any resale of such New Notes; however, by
so acknowledging and by delivering such a prospectus, the undersigned will not
be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act of 1933, as amended. If the undersigned is a broker-dealer that
will receive New Notes, it represents that the Old Notes to be exchanged for
the New Notes were acquired as a result of market making activities or other
trading activities.

<PAGE>

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

                                PLEASE SIGN HERE
                   (TO BE COMPLETED BY ALL TENDERING HOLDERS)
           (Complete Accompanying Substitute Form W-9 on reverse side)

Dated:                                                                 , 199
      ----------------------------------------------------------------       --
  x                                                                    , 199
      --------------------------------------  ------------------------       --
  x                                                                    , 199
      --------------------------------------  ------------------------       --
           Signature(s) of Owner                       Date

     Area Code and Telephone Number
                                    ----------------------------------

   If a holder is tendering any Old Notes, this Letter must be signed by the
registered holder(s) as the name(s) appear(s) on the certificate(s) for the Old
Notes or by any person(s) authorized to become registered holder(s) by
endorsements and documents transmitted herewith. If signature is by a trustee,
executor, administrator, guardian, officer or other person acting in a
fiduciary or representative capacity, please set forth full title. See
Instruction 3.

     Name(s):
             ------------------------------------------------------------------

     --------------------------------------------------------------------------
                             (Please Type or Print)
     Capacity:
             ------------------------------------------------------------------
     Address:
             ------------------------------------------------------------------

     --------------------------------------------------------------------------
                              (Including Zip Code)

                               SIGNATURE GUARANTEE
                        (If required by Instruction 3)

     Signature(s) Guaranteed by
     an Eligible Institution:
                             --------------------------------------------------
                                      (Authorized Signature)

     --------------------------------------------------------------------------
                                      (Title)

     --------------------------------------------------------------------------
                                     (Name of Firm)

     Dated:                                                             , 199
           ------------------------------------------------------------      --

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

<PAGE>

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

                    TO BE COMPLETED BY ALL TENDERING HOLDERS
                               (See Instruction 5)

                       PAYOR'S NAME: THE CHASE MANHATTAN BANK



- -------------------------------------------------------------------------------
SUBSTITUTE     Part 1--PLEASE PROVIDE YOUR TIN    ______________________________
Form W-9       IN THE BOX AT RIGHT AND CERTIFY        Social Security Number or
               BY SIGNING AND DATING BELOW.       Employer Identification Number


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

Department of   Part 2--CHECK IF AWAITING TIN [  ]
the Treasury
Internal
Revenue
Service
               -----------------------------------------------------------------
               CERTIFICATION:  UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:

               (1) the number shown on this form is my correct Taxpayer
Payor's            Identification Number (or I am waiting for a number to
Request for        be issued to me).
Taxpayer       (2) I am not subject to backup withholding either because: (a) I
Identification     am exempt from backup withholding, or (b) I have not been
Number             notified by the Internal Revenue (the "IRS") that I am
Service            subject to backup withholding as a result of a failure
("TIN") and        to report all interest or dividends, or (c) the IRS has
Certification      notified me that I am no longer subject to backup
                   withholding, and
               (3) any other information provided on this form is true and
                   correct.

               SIGNATURE _________________________________   DATE _____________
- -------------------------------------------------------------------------------

You must cross out item (2) of the above certification if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting of interest or dividends on your tax return and you have not
been notified by the IRS that you are no longer subject to backup withholding.

<PAGE>



THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES"
ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES AS
SET FORTH IN SUCH BOX ABOVE.

- -------------------------------------------------------------------------------
                        SPECIAL ISSUANCE INSTRUCTIONS
                          (See Instructions 3 and 4)
- -------------------------------------------------------------------------------

      To be completed ONLY if certificates for Old Notes not exchanged and/or
New Notes are to be issued in the name of and sent to someone other than the
person or persons whose signature(s) appear(s) on this Letter above, or if Old
Notes delivered by book-entry transfer which are not accepted for exchange are
to be returned by credit to an account maintained at the Book-Entry Transfer
Facility other than the account indicated above.

Issue:  New Notes and/or Old Notes to:

Name(s)
        -----------------------------------------------------------------------
                             (Please Type or Print)

- -------------------------------------------------------------------------------
                             (Please Type or Print)

Address
        -----------------------------------------------------------------------

- -------------------------------------------------------------------------------
                                   (Zip Code)

Complete Substitute Form W-9

[   ] Credit unexchanged Old Notes delivered by book-entry transfer to the
      Book-Entry Transfer Facility account set forth below.

- -------------------------------------------------------------------------------
                          (Book-Entry Transfer Facility
                         Account Number, if applicable)
- -------------------------------------------------------------------------------



- -------------------------------------------------------------------------------
                        SPECIAL DELIVERY INSTRUCTIONS
                          (See Instructions 3 and 4)
- -------------------------------------------------------------------------------

      To be completed ONLY if certificates for Old Notes not exchanged and/or
New Notes are to be sent to someone other than the person or persons whose
signature(s) appear(s) on this Letter above or to such person or persons at an
address other than shown in the box entitled "Description of Old Notes" on this
Letter above.

Mail:  New Notes and/or Old Notes to:


Name(s)
       ------------------------------------------------------------------------
                             (Please Type or Print)

- -------------------------------------------------------------------------------
                             (Please Type or Print)

Address
       ------------------------------------------------------------------------

- -------------------------------------------------------------------------------
                                   (Zip Code)

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


<PAGE>



IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATES
FOR OLD NOTES OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR
THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR
TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.




<PAGE>



                                  INSTRUCTIONS

                Forming Part of the Terms and Conditions of the
          Exchange Offer for the 9 7/8% Senior Subordinated Notes due
                       2008 of Philipp Brothers Chemicals
                                in Exchange for
                 the 9 7/8% Senior Subordinated Notes due 2008
                      of Philipp Brothers Chemicals, Inc.,
                        which Have Been Registered Under
                     the Securities Act of 1933, As Amended


1.       Delivery of this Letter and Notes; Guaranteed Delivery Procedures.

         This letter is to be completed by holders of Old Notes either if
certificates are to be forwarded herewith or if tenders are to be made pursuant
to the procedures for delivery by book-entry transfer set forth in "The
Exchange Offer -- Book-Entry Transfer" section of the Prospectus. Certificates
for all physically tendered Old Notes, or Book- Entry Confirmation, as the case
may be, as well as a properly completed and duly executed Letter (or manually
signed facsimile hereof) and any other documents required by this Letter, must
be received by the Exchange Agent at the address set forth herein on or prior
to the Expiration Date, or the tendering holder must comply with the guaranteed
delivery procedures set forth below. Old Notes tendered hereby must be in
denominations of principal amount of $1,000 and any integral multiple thereof.

         Holders whose certificates for Old Notes are not immediately available
or who cannot deliver their certificates and all other required documents to
the Exchange Agent on or prior to the Expiration Date, or who cannot complete
the procedure for book-entry transfer on a timely basis, may tender their Old
Notes pursuant to the guaranteed delivery procedures set forth in "The Exchange
Offer -- Guaranteed Delivery Procedures" section of the Prospectus. Pursuant to
such procedures, (i) such tender must be made through an Eligible Institution,
(ii) prior to 5:00 P.M., New York City time, on the Expiration Date, the
Exchange Agent must receive from such Eligible Institution a properly completed
and duly executed Letter (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by facsimile
transmission, mail or hand delivery), setting forth the name and address of the
holder of Old Notes and the amount of Old Notes tendered, stating that the
tender is being made thereby and guaranteeing that within three New York Stock
Exchange ("NYSE") trading days after the Expiration Date, the certificates for
all physically tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and any other documents required by this
Letter will be deposited by the Eligible Institution with the Exchange Agent,
and (iii) the certificates for all physically tendered Old Notes, in proper
form for transfer, or a Book-Entry Confirmation, as the case may be, and all
other documents required by this Letter, are received by the Exchange Agent
within three NYSE trading days after the Expiration Date.

         The method of delivery of this Letter, the Old Notes and all other
required documents is at the election and risk of the tendering holders, but
the delivery will be deemed made only when actually received or confirmed by
the Exchange Agent. If Old Notes are sent by mail, it is suggested that the
mailing be registered mail, properly insured, with return receipt requested,
made sufficiently in advance of the Expiration Date to permit delivery to the
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date.

         See "The Exchange Offer" section of the Prospectus.

2.       Partial Tenders (not applicable to noteholders who tender by
         book-entry transfer).

         If less than all of the Old Notes evidenced by a submitted certificate
are to be tendered, the tendering holder(s) should fill in the aggregate
principal amount of Old Notes to be tendered in the box above entitled
"Description of Old Notes--Principal Amount Tendered." A reissued certificate
representing the balance of nontendered Old Notes will be sent to such
tendering holder, unless otherwise provided in the appropriate box on this


<PAGE>


Letter, promptly after the Expiration Date. All of the Old Notes delivered to
the Exchange Agent will be deemed to have been tendered unless otherwise
indicated.

3.       Signatures on this Letter; Bond Powers and Endorsements; Guarantee of
         Signatures.

         If this Letter is signed by the registered holder of the Old Notes
tendered hereby, the signature must correspond exactly with the name as written
on the face of the certificates without any change whatsoever.

         If any tendered Old Notes are owned of record by two or more joint
owners, all of such owners must sign this Letter.

         If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate copies of this Letter as there are different registrations of
certificates.

         When this Letter is signed by the registered holder or holders of the
Old Notes specified herein and tendered hereby, no endorsements of certificates
or separate bond powers are required. If, however, the New Notes are to be
issued, or any untendered Old Notes are to be reissued, to a person other than
the registered holder, then endorsements of any certificates transmitted hereby
or separate bond powers are required. Signatures on such certificate(s) must be
guaranteed by an Eligible Institution.

         If this Letter is signed by a person other than the registered holder
or holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the certificate(s) and signatures on such certificate(s) must be guaranteed by
an Eligible Institution.

         If this Letter or any certificates or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must
be submitted.

         Endorsements on certificates for Old Notes or signatures on bond
powers required by this Instruction 3 must be guaranteed by a firm which is a
financial institution (including most banks, savings and loan associations and
brokerage houses) that is a participant in the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Program or
the Stock Exchanges Medallion Program (each an "Eligible Institution").

         Signatures on this Letter need not be guaranteed by an Eligible
Institution, provided the Old Notes are tendered: (i) by a registered holder of
Old Notes (which term, for purposes of the Exchange Offer, includes any
participant in the Book-Entry Transfer Facility system whose name appears on a
security position listing as the holder of such Old Notes) who has not
completed the box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on this Letter, or (ii) for the account of an Eligible
Institution.

4.       Special Issuance and Delivery Instructions

         Tendering holders of Old Notes should indicate in the applicable box
the name and address to which New Notes issued pursuant to the Exchange Offer
and or substitute certificates evidencing Old Notes not exchanged are to be
issued or sent, if different from the name or address of the person signing
this Letter. In the case of issuance in a different name, the employer
identification or social security number of the person named must also be
indicated. Noteholders tendering Old Notes by book-entry transfer may request
that Old Notes not exchanged be credited to such account maintained at the
Book- Entry Transfer Facility as such noteholder may designate hereon. If no
such instructions are given, such Old Notes not exchanged will be returned to
the name and address of the person signing this Letter.


<PAGE>

5.       Taxpayer Identification Number.

         Federal income tax law generally requires that a tendering holder
whose Old Notes are accepted for exchange must provide the Company (as payor)
with such holder's correct Taxpayer Identification Number ("TIN") on Substitute
Form W-9 below, which in the case of a tendering holder who is an individual,
is his or her social security number. If the Company is not provided with the
current TIN or an adequate basis for an exemption, such tendering holder may be
subject to a $50 penalty imposed by the Internal Revenue Service. In addition,
delivery to such tendering holder of New Notes may be subject to backup
withholding in an amount equal to 31% of all reportable payments made after the
exchange. If withholding results in an overpayment of taxes, a refund may be
obtained.

         Exempt holders of Old Notes (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding
and reporting requirements. See the enclosed Guidelines of Certification of
Taxpayer Identification Number on Substitute Form W-9 (the "W-9 Guidelines")
for additional instructions.

         To prevent backup withholding, each tendering holder of Old Notes must
provide its correct TIN by completing the Substitute Form W-9 set forth below,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN) and that (i) the holder is exempt from backup withholding, or (ii) the
holder has not been notified by the Internal Revenue Service that such holder
is subject to backup withholding as a result of a failure to report all
interest or dividends or (iii) the Internal Revenue Service has notified the
holder that such holder is no longer subject to backup withholding. If the
tendering holder of Old Notes is a nonresident alien or foreign entity not
subject to backup withholding, such holder must give the Company a completed
Form W-8, Certificate of Foreign Status. These forms may be obtained from the
Exchange Agent. If the Old Notes are in more than one name or are not in the
name of the actual owner, such holder should consult the W-9 Guidelines for
information on which TIN to report. If such holder does not have a TIN, such
holder should consult the W-9 Guidelines for instructions on applying for a
TIN, check the box in Part 2 of the Substitute Form W-9. Note: Checking this
box on the form means that such holder has already applied for a TIN or that
such holder intends to apply for one in the near future. If such holder does not
provide its TIN to the Company within 60 days, backup withholding will begin and
continue until such holder furnishes its TIN to the Company.

6.       Transfer Taxes.

         The Company will pay all transfer taxes, if any, applicable to the
transfer of Old Notes to it or its order pursuant to the Exchange Offer. If,
however, New Notes and/or substitute Old Notes not exchanged are to be
delivered to, or are to be registered or issued in the name of, any person
other than the registered holder of the Old Notes tendered hereby, or if
tendered Old Notes are registered in the name of any person other than the
person signing this Letter, or if a transfer tax is imposed for any reason
other than the transfer of Old Notes to the Company or its order pursuant to
the Exchange Offer, the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted herewith, the amount of such transfer taxes will be
billed directly to such tendering holder.

         Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes specified in this Letter.

7.       Waiver of Conditions.

         The Company reserves the absolute right to waive satisfaction of any
or all conditions enumerated in the Prospectus.

8.       No Conditional Tenders.

         No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Old Notes, by execution of this Letter,
shall waive any right to receive notice of the acceptance of their Old Notes
for exchange.

<PAGE>



         Neither the Company, the Exchange Agent nor any other person is
obligated to give notice of any defect or irregularity with respect to any
tender of Old Notes nor shall any of them incur any liability for failure to
give any such notice.

9.       Mutilated, Lost, Stolen or Destroyed Old Notes.

         Any holder whose Old Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.

10.      Withdrawal Rights

         Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m.,
New York City time, on the Expiration Date.

         For a withdrawal of a tender of Old Notes to be effective, a written
notice of withdrawal must be received by the Exchange Agent at the address set
forth above prior to 5:00 p.m., New York City time, on the Expiration Date. Any
such notice of withdrawal must (i) specify the name of the person having
tendered the Old Notes to be withdrawn (the "Depositor"), (ii) identify the Old
Notes to be withdrawn (including certificate number or numbers and the
principal amount of such Old Notes), (iii) contain a statement that such holder
is withdrawing his election to have such Old Notes exchanged, (iv) be signed by
the holder in the same manner as the original signature on the Letter by which
such Old Notes were tendered (including any required signature guarantees) or
be accompanied by documents of transfer to have the Trustee with respect to the
Old Notes register the transfer of such Old Notes in the name of the person
withdrawing the tender and (v) specify the name in which such Old Notes are
registered, if different from that of the Depositor. If Old Notes have been
tendered pursuant to the procedure for book-entry transfer set forth in "The
Exchange Offer -- Book-Entry Transfer" section of the Prospectus, any notice of
withdrawal must specify the name and number of the account at the Book-Entry
Transfer Facility to be credited with the withdrawn Old Notes and otherwise
comply with the procedures of such facility. All questions as to the validity,
form and eligibility (including time of receipt) of such notices will be
determined by the Company, whose determination shall be final and binding on
all parties. Any Old Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer and no New Notes will
be issued with respect thereto unless the Old Notes so withdrawn are validly
retendered. Any Old Notes that have been tendered for exchange but which are
not exchanged for any reason will be returned to the Holder thereof without
cost to such Holder (or, in the case of Old Notes tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the book-entry transfer procedures set forth in "The Exchange Offer
- -- Book-Entry Transfer" section of the Prospectus, such Old Notes will be
credited to an account maintained with the Book Entry Transfer Facility for the
Old Notes) as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Old Notes may be
retendered by following the procedures described above at any time on or prior
to 5:00 p.m., New York City time, on the Expiration Date.

11.      Requests for Assistance or Additional Copies.

         Questions relating to the procedure for tendering, as well as requests
for additional copies of the Prospectus and this Letter, and requests for
Notices of Guaranteed Delivery and other related documents may be directed to
the Exchange Agent, at the address and telephone number indicated above.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>38
<FILENAME>0038.txt
<DESCRIPTION>NOTICE OF GUARANTEED DELIVERY FOR
              PHILIPP BROTHERS CHEMICALS, INC.
<TEXT>

<PAGE>



                       NOTICE OF GUARANTEED DELIVERY FOR
                        PHILIPP BROTHERS CHEMICALS, INC.


         This form or one substantially equivalent hereto must be used to
accept the Exchange Offer of Philipp Brothers Chemicals, Inc. (the "Company")
made pursuant to the Prospectus, dated _______ __, 1998 (the "Prospectus"), if
certificates for the outstanding 9 7/8% Senior Subordinated Notes due 2008 of
the Company (the "Old Notes") are not immediately available or if the procedure
for book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach The Chase Manhattan Bank, as exchange
agent (the "Exchange Agent") prior to 5:00 p.m., New York City time, on the
Expiration Date of the Exchange Offer. Such form may be delivered or
transmitted by facsimile transmission, mail or hand delivery to the Exchange
Agent as set forth below. In addition, in order to utilize the guaranteed
delivery procedure to tender Old Notes pursuant to the Exchange Offer, a
completed, signed and dated Letter of Transmittal (or facsimile thereof) must
also be received by the Exchange Agent prior to 5:00 p.m., New York City time,
on the Expiration Date. Capitalized terms not defined herein are defined in the
Prospectus.

             Delivery To: The Chase Manhattan Bank, Exchange Agent
                           By Mail or Hand Delivery:
                            The Chase Manhattan Bank
                             Global Trust Services
                        450 West 33rd Street, 15th Floor
                         New York, New York 10001-2697
                         Attention: Mr. Sheik Wiltshire

                           By Facsimile Transmission:
                        (for Eligible Institutions only)
                                 (212) 946-8161
                         Attention: Mr. Sheik Wiltshire

                             Confirm by Telephone:
                                 (212) 946-3082

         Delivery of this instrument to an address other than as set forth
above, or transmission of instructions via facsimile other than as set forth
above, will not constitute a valid delivery.

<PAGE>

Ladies and Gentlemen:

         Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of Old Notes set forth below pursuant to the
guaranteed delivery procedure described in "The Exchange Offer--Guaranteed
Delivery Procedures" section of the Prospectus.

      All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned.

- ------------------------------------------------------
                    SIGNATURES

- ------------------------------------------------------
                 Signature of Owner

- ------------------------------------------------------
        Signature of Owner (if more than one)

Dated:                                   , 199
      -----------------------------------     --------

Name(s):
        ----------------------------------------------

        ----------------------------------------------
                       (Please Print)

Address:
        ----------------------------------------------

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

        ----------------------------------------------
                     (Include Zip Code)


Area Code and
Telephone No.:
              ----------------------------------------

Capacity (full title), if signing in a representative
capacity:

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

   Taxpayer Identification or Social Security No.:

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


Principal Amount of Old Notes

Exchanged: $
            -------------------------------------


Certificate Nos. of Old Notes (if available)

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

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

Total $
        -----------------------------------------

IF OLD NOTES WILL BE DELIVERED BY BOOK-
ENTRY TRANSFER, PROVIDE THE DEPOSITORY
TRUST COMPANY ("DTC") ACCOUNT NO.:

Account No.
           --------------------------------------


<PAGE>


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

                            GUARANTEE OF DELIVERY

                    (Not to be used for signature guarantee)

      The undersigned, a financial institution (including most banks, savings
and loan associations and brokerage houses) that is a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchanges Medallion Program, hereby
guarantees that the certificates representing the principal amount of Old Notes
tendered hereby in proper form for transfer, or timely confirmation of the
book-entry transfer of such Old Notes into the Exchange Agent's account at The
Depository Trust Company pursuant to the procedures set forth in "The Exchange
Offer -- Guaranteed Delivery Procedures" section of the Prospectus, together
with any required signature guarantee and any other documents required by the
Letter of Transmittal, will be received by the Exchange Agent at the address
set forth above, no later than three New York Stock Exchange trading days after
the Expiration Date.
- -------------------------------------------------------------------------------

- -------------------------------------   ---------------------------------------
            Name of Firm                           Authorized Signature

- -------------------------------------   ---------------------------------------
    Number and Street or P.O. Box                         Title

                                       Name:
- ------------------------------------         ----------------------------------
City          State         Zip Code                 (Please Type or Print)

Tel. No.                               Date:
- ------------------------------------         ----------------------------------

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

NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM. CERTIFICATES FOR
OLD NOTES SHOULD BE SENT ONLY WITH A COPY OF YOUR PREVIOUSLY EXECUTED LETTER OF
TRANSMITTAL.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.3
<SEQUENCE>39
<FILENAME>0039.txt
<DESCRIPTION>CLIENT LETTER
<TEXT>

<PAGE>



                        PHILIPP BROTHERS CHEMICALS, INC.

                           Offer for all Outstanding
                   9 7/8% Senior Subordinated Notes due 2008
                                in Exchange for
                   9 7/8% Senior Subordinated Notes due 2008,
                        which Have Been Registered Under
                     the Securities Act of 1933, As Amended



To Our Clients:

         Enclosed for your consideration is a Prospectus, dated __________,
1998 (the "Prospectus"), and the related Letter of Transmittal (the "Letter of
Transmittal"), relating to the offer (the "Exchange Offer") of Philipp Brothers
Chemicals, Inc. (the "Company") to exchange its 9 7/8% Senior Subordinated
Notes due 2008, which have been registered under the Securities Act of 1933, as
amended (the "New Notes"), for its outstanding 9 7/8% Senior Subordinated Notes
due 2008 (the "Old Notes"), upon the terms and subject to the conditions
described in the Prospectus and the Letter of Transmittal. The Exchange Offer
is being made in order to satisfy certain obligations of the Company contained
in the Registration Rights Agreement dated June 11, 1996, by and among the
Company and the Initial Purchaser referred to therein.

        This material is being forwarded to you as the beneficial owner of the
Old Notes carried by us in your account but not registered in your name. A
tender of such Old Notes may only be made by us as the holder of record and
pursuant to your instructions.

         Accordingly, we request instructions as to whether you wish us to
tender on your behalf the Old Notes held by us for your account, pursuant to
the terms and conditions set forth in the enclosed Prospectus and Letter of
Transmittal.

         Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender the Old Notes on your behalf in accordance with
the provisions of the Exchange Offer. The Exchange Offer will expire at 5:00
p.m., New York City time, on __________, __________, 1998, unless extended by
the Company. Any Old Notes tendered pursuant to the Exchange Offer may be
withdrawn at any time before the Expiration Date.

         Your attention is directed to the following:

         1. The Exchange Offer is for any and all Old Notes.

         2. The Exchange Offer is subject to certain conditions set forth in
the Prospectus in the section captioned "The Exchange Offer -- Certain
Conditions to the Exchange Offer."

         3. Any transfer taxes incident to the transfer of Old Notes from the
holder to the Company will be paid by the Company, except as otherwise provided
in the Instructions in the Letter of Transmittal.

         4. The Exchange Offer expires at 5:00 p.m., New York City time, on
__________, __________, 1998, unless extended by the Company.



<PAGE>



         If you wish to have us tender your Old Notes, please so instruct us by
completing, executing and returning to us the instruction form on the back of
this letter. The Letter of Transmittal is furnished to you for information only
and may not be used directly by you to tender Old Notes.


                                 INSTRUCTIONS


         The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by Philipp
Brothers Chemicals, Inc. with respect to its Old Notes.

         This will instruct you to tender the Old Notes held by you for the
account of the undersigned, upon and subject to the terms and conditions set
forth in the Prospectus and the related Letter of Transmittal.

         Please tender the Old Notes held by you for my account as indicated
below:

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

           Aggregate Principal Amount of Old Notes to be exchanged

                  $_________________________________________*
- --------------------------------------------------------------------------------

*I (we) understand that if I (we) sign these instruction forms without
 indicating an aggregate principal amount of Old Notes in the space above, all
 Old Notes held by you for my (our) account will be exchanged.



Dated:               , 1998
       -------------                  -----------------------------------------

                                      -----------------------------------------
                                                     Signature(s)

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

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

                                      -----------------------------------------
                                              Please print name(s) here

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

                                      -----------------------------------------
                                                      Address(es)

                                      -----------------------------------------
                                            Area Code and Telephone Number

                                      -----------------------------------------
                                   Tax Identification or Social Security No(s).


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.4
<SEQUENCE>40
<FILENAME>0040.txt
<DESCRIPTION>LETTER TO BROKER DEALERS
<TEXT>

<PAGE>



                        PHILIPP BROTHERS CHEMICALS, INC.

                           Offer for all Outstanding
                   9 7/8% Senior Subordinated Notes due 2008
                                in Exchange for
                   9 7/8% Senior Subordinated Notes due 2008,
                        which Have Been Registered Under
                     the Securities Act of 1933, As Amended


To:      Brokers, Dealers, Commercial Banks,
         Trust Companies and Other Nominees:


                  Philipp Brothers Chemicals, Inc. (the "Company") is offering,
upon and subject to the terms and conditions set forth in the Prospectus, dated
__________, 1998 (the "Prospectus"), and the enclosed Letter of Transmittal
(the "Letter of Transmittal"), to exchange (the "Exchange Offer") its 9 7/8%
Senior Subordinated Notes due 2008, which have been registered under the
Securities Act of 1933, as amended, for its outstanding 9 7/8% Senior
Subordinated Notes due 2008 (the "Old Notes"). The Exchange Offer is being made
in order to satisfy certain obligations of the Company contained in the
Registration Rights Agreement dated June 11, 1998, by and among the Company and
the subsidiary guarantors referred to therein and the Initial Purchaser
referred to therein.

                  We are requesting that you contact your clients for whom you
hold Old Notes regarding the Exchange Offer. For your information and for
forwarding to your clients for whom you hold Old Notes registered in your name
or in the name of your nominee, or who hold Old Notes registered in their own
names, we are enclosing the following documents:

                  1.  Prospectus dated __________, 1998;

                  2. The Letter of Transmittal for your use and for the
information of your clients;

                  3. A Notice of Guaranteed Delivery to be used to accept the
Exchange Offer if certificates for Old Notes are not immediately available or
time will not permit all required documents to reach the Exchange Agent prior
to the Expiration Date (as defined below) or if the procedure for book-entry
transfer cannot be completed on a timely basis;

                  4. A form of letter which may be sent to your clients for
whose account you hold Old Notes registered in your name or the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Exchange Offer;

                  5. Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9; and

                  6. Return envelopes addressed to The Chase Manhattan Bank,
the Exchange Agent for the Exchange Offer.

                  Your prompt action is requested. The Exchange Offer will
expire at 5:00 p.m., New York City time, on __________, 1998, unless extended
by the Company (the "Expiration Date"). Old Notes tendered pursuant to the
Exchange Offer may be withdrawn at any time before the Expiration Date.

                  To participate in the Exchange Offer, a duly executed and
properly completed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees and

<PAGE>



any other required documents, should be sent to the Exchange Agent and
certificates representing the Old Notes should be delivered to the Exchange
Agent, all in accordance with the instructions set forth in the Letter of
Transmittal and the Prospectus.

                  If a registered holder of Old Notes desires to tender, but
such Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected by following the
guaranteed delivery procedures described in the Prospectus under "The Exchange
Offer -- Guaranteed Delivery Procedures."

                  The Company will, upon request, reimburse brokers, dealers,
commercial banks and trust companies for reasonable and necessary costs and
expenses incurred by them in forwarding the Prospectus and the related
documents to the beneficial owners of Old Notes held by them as nominee or in a
fiduciary capacity. The Company will pay or cause to be paid all stock transfer
taxes applicable to the exchange of Old Notes pursuant to the Exchange Offer,
except as set forth in Instruction 6 of the Letter of Transmittal.

                  Any inquiries you may have with respect to the Exchange
Offer, or requests for additional copies of the enclosed materials, should be
directed to The Chase Manhattan Bank, the Exchange Agent for the Exchange
Offer, at its address and telephone number set forth on the front of the Letter
of Transmittal.

                               Very truly yours,


                               PHILIPP BROTHERS CHEMICALS, INC.


                  NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE
YOU OR ANY PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON
BEHALF OF EITHER OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR
STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.

Enclosures

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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