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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0000950123-05-000375.txt : 20060310
<SEC-HEADER>0000950123-05-000375.hdr.sgml : 20060310

<ACCEPTANCE-DATETIME>20050114161214

<PRIVATE-TO-PUBLIC>

ACCESSION NUMBER:		0000950123-05-000375

CONFORMED SUBMISSION TYPE:	S-4

PUBLIC DOCUMENT COUNT:		15

FILED AS OF DATE:		20050114

DATE AS OF CHANGE:		20050204


FILER:


	COMPANY DATA:	

		COMPANY CONFORMED NAME:			PHIBRO ANIMAL HEALTH CORP

		CENTRAL INDEX KEY:			0001069899

		STANDARD INDUSTRIAL CLASSIFICATION:	INDUSTRIAL INORGANIC CHEMICALS [2810]

		IRS NUMBER:				131840497

		FISCAL YEAR END:			0630



	FILING VALUES:

		FORM TYPE:		S-4

		SEC ACT:		1933 Act

		SEC FILE NUMBER:	333-122063

		FILM NUMBER:		05530884



	BUSINESS ADDRESS:	

		STREET 1:		65 CHALLENGER ROAD

		CITY:			RIDGEFIELD PARK

		STATE:			NJ

		ZIP:			07660

		BUSINESS PHONE:		201-329-7300



	MAIL ADDRESS:	

		STREET 1:		65 CHALLENGER ROAD

		CITY:			RIDGEFIELD PARK

		STATE:			NJ

		ZIP:			07660



	FORMER COMPANY:	

		FORMER CONFORMED NAME:	PHILIPP BROTHERS CHEMICALS INC

		DATE OF NAME CHANGE:	19980908




FILER:


	COMPANY DATA:	

		COMPANY CONFORMED NAME:			PHIBRO ANIMAL HEALTH SA

		CENTRAL INDEX KEY:			0001280638

		IRS NUMBER:				000000000



	FILING VALUES:

		FORM TYPE:		S-4

		SEC ACT:		1933 Act

		SEC FILE NUMBER:	333-122063-01

		FILM NUMBER:		05530879



	BUSINESS ADDRESS:	

		STREET 1:		ROKIN 55

		STREET 2:		1012 KK

		CITY:			AMSTERDAM

		STATE:			X0

		ZIP:			00000

		BUSINESS PHONE:		201-944-6020




FILER:


	COMPANY DATA:	

		COMPANY CONFORMED NAME:			PHIBRO CHEMICALS INC

		CENTRAL INDEX KEY:			0001069994

		IRS NUMBER:				222871784

		FISCAL YEAR END:			1231



	FILING VALUES:

		FORM TYPE:		S-4

		SEC ACT:		1933 Act

		SEC FILE NUMBER:	333-122063-03

		FILM NUMBER:		05530881



	BUSINESS ADDRESS:	

		STREET 1:		ONE PARKER PLZ

		CITY:			FORT LEE

		STATE:			NJ

		ZIP:			07024

		BUSINESS PHONE:		2019446020



	MAIL ADDRESS:	

		STREET 1:		ONE PARKER PLZ

		CITY:			FORT LEE

		STATE:			NJ

		ZIP:			07024




FILER:


	COMPANY DATA:	

		COMPANY CONFORMED NAME:			C P CHEMICALS INC

		CENTRAL INDEX KEY:			0001069900

		IRS NUMBER:				221548721

		FISCAL YEAR END:			1231



	FILING VALUES:

		FORM TYPE:		S-4

		SEC ACT:		1933 Act

		SEC FILE NUMBER:	333-122063-04

		FILM NUMBER:		05530882



	BUSINESS ADDRESS:	

		STREET 1:		ONE PARKER PLZ

		CITY:			FORT LEE

		STATE:			NJ

		ZIP:			07024

		BUSINESS PHONE:		2019446020



	MAIL ADDRESS:	

		STREET 1:		ONE PARKET PLZ

		CITY:			FORT LEE

		STATE:			NJ

		ZIP:			07024




FILER:


	COMPANY DATA:	

		COMPANY CONFORMED NAME:			PHIBROCHEM INC

		CENTRAL INDEX KEY:			0001069993

		IRS NUMBER:				222758614

		FISCAL YEAR END:			1231



	FILING VALUES:

		FORM TYPE:		S-4

		SEC ACT:		1933 Act

		SEC FILE NUMBER:	333-122063-05

		FILM NUMBER:		05530883



	BUSINESS ADDRESS:	

		STREET 1:		ONE PARKER PLZ

		CITY:			FORT LEE

		STATE:			NJ

		ZIP:			07024

		BUSINESS PHONE:		2019446020



	MAIL ADDRESS:	

		STREET 1:		ONE PARKER PLZ

		CITY:			FORT LEE

		STATE:			NJ

		ZIP:			07024




FILER:


	COMPANY DATA:	

		COMPANY CONFORMED NAME:			PHIBRO ANIMAL HEALTH HOLDINGS INC

		CENTRAL INDEX KEY:			0001280647

		IRS NUMBER:				000000000



	FILING VALUES:

		FORM TYPE:		S-4

		SEC ACT:		1933 Act

		SEC FILE NUMBER:	333-122063-06

		FILM NUMBER:		05530885



	BUSINESS ADDRESS:	

		STREET 1:		710 46 EAST

		CITY:			FAIRFIELD

		STATE:			NJ

		ZIP:			07004

		BUSINESS PHONE:		201-944-6020




FILER:


	COMPANY DATA:	

		COMPANY CONFORMED NAME:			PHIBRO ANIMAL HEALTH US INC

		CENTRAL INDEX KEY:			0001280648

		IRS NUMBER:				000000000



	FILING VALUES:

		FORM TYPE:		S-4

		SEC ACT:		1933 Act

		SEC FILE NUMBER:	333-122063-07

		FILM NUMBER:		05530886



	BUSINESS ADDRESS:	

		STREET 1:		710 46 EAST

		CITY:			FAIRFIELD

		STATE:			NJ

		ZIP:			07004

		BUSINESS PHONE:		201-944-6020




FILER:


	COMPANY DATA:	

		COMPANY CONFORMED NAME:			PHILIPP BROTHERS NETHERLANDS III B V

		CENTRAL INDEX KEY:			0001280631

		IRS NUMBER:				000000000



	FILING VALUES:

		FORM TYPE:		S-4

		SEC ACT:		1933 Act

		SEC FILE NUMBER:	333-122063-10

		FILM NUMBER:		05530889



	BUSINESS ADDRESS:	

		STREET 1:		ROKIN 55

		STREET 2:		1012 KK

		CITY:			AMSTERDAM

		STATE:			X0

		ZIP:			00000

		BUSINESS PHONE:		201-944-6020




FILER:


	COMPANY DATA:	

		COMPANY CONFORMED NAME:			WESTERN MAGNESIUM CORP

		CENTRAL INDEX KEY:			0001069995

		IRS NUMBER:				132849569

		FISCAL YEAR END:			1231



	FILING VALUES:

		FORM TYPE:		S-4

		SEC ACT:		1933 Act

		SEC FILE NUMBER:	333-122063-02

		FILM NUMBER:		05530880



	BUSINESS ADDRESS:	

		STREET 1:		ONE PARKER PLZ

		CITY:			FORT LEE

		STATE:			NJ

		ZIP:			07024

		BUSINESS PHONE:		2019446020



	MAIL ADDRESS:	

		STREET 1:		ONE PARKER PLZ

		CITY:			FORT LEE

		STATE:			NJ

		ZIP:			07024




FILER:


	COMPANY DATA:	

		COMPANY CONFORMED NAME:			PRINCE AGRIPRODUCTS INC

		CENTRAL INDEX KEY:			0001069990

		IRS NUMBER:				231653576

		FISCAL YEAR END:			1231



	FILING VALUES:

		FORM TYPE:		S-4

		SEC ACT:		1933 Act

		SEC FILE NUMBER:	333-122063-09

		FILM NUMBER:		05530888



	BUSINESS ADDRESS:	

		STREET 1:		ONE PARKER PLZ

		CITY:			FORT LEE

		STATE:			NJ

		ZIP:			07024

		BUSINESS PHONE:		2019446020



	MAIL ADDRESS:	

		STREET 1:		ONE PARKER PLZ

		CITY:			FORT LEE

		STATE:			NJ

		ZIP:			07024




FILER:


	COMPANY DATA:	

		COMPANY CONFORMED NAME:			PHIBRO TECH INC

		CENTRAL INDEX KEY:			0001069987

		IRS NUMBER:				223060339

		FISCAL YEAR END:			1231



	FILING VALUES:

		FORM TYPE:		S-4

		SEC ACT:		1933 Act

		SEC FILE NUMBER:	333-122063-08

		FILM NUMBER:		05530887



	BUSINESS ADDRESS:	

		STREET 1:		ONE PARKER PLZ

		CITY:			FORT LEE

		STATE:			NJ

		ZIP:			07024

		BUSINESS PHONE:		2019446020



	MAIL ADDRESS:	

		STREET 1:		ONE PARKER PLZ

		CITY:			FORT LEE

		STATE:			NJ

		ZIP:			07024



</SEC-HEADER>

<DOCUMENT>
<TYPE>S-4
<SEQUENCE>1
<FILENAME>y04700sv4.txt
<DESCRIPTION>FORM S-4
<TEXT>
<PAGE>

    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 14, 2005

                                                     REGISTRATION NO. 333-
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM S-4
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                        PHIBRO ANIMAL HEALTH CORPORATION
                     PHILIPP BROTHERS NETHERLANDS III B.V.
           (Exact name of Registrants as specified in their charters)
                        PHIBRO ANIMAL HEALTH CORPORATION

<Table>
<S>                                      <C>                                      <C>
                NEW YORK                                   2819                                  13-1840497
    (State or Other Jurisdiction of            (Primary Standard Industrial                   (I.R.S. employer
     Incorporation or Organization)            Classification Code Number)                 identification number)
                                                    65 CHALLENGER ROAD
                                            RIDGEFIELD PARK, NEW JERSEY 07660
                                                      (201) 329-7300
</Table>

   (Address, including zip code, and telephone number, including area code of
                    registrant's principal executive office)
                     PHILIPP BROTHERS NETHERLANDS III B.V.

<Table>
<S>                                      <C>                                      <C>
            THE NETHERLANDS                                2819                                NOT APPLICABLE
    (State or Other Jurisdiction of            (Primary Standard Industrial                   (I.R.S. employer
     Incorporation or Organization)            Classification Code Number)                 identification number)
                                                         ROKIN 55
                                                    1012 KK AMSTERDAM
                                                     THE NETHERLANDS
                                                      (201) 329-7300
</Table>

   (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 CHAIRMAN OF THE BOARD
                        PHIBRO ANIMAL HEALTH CORPORATION
                               65 CHALLENGER ROAD
                       RIDGEFIELD PARK, NEW JERSEY 07660
                                 (201) 329-7300
 (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 & PESKOE LLP
                               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.  [ ]
                        CALCULATION OF REGISTRATION FEE

<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
                                                     AMOUNT              PROPOSED         PROPOSED MAXIMUM        AMOUNT OF
           TITLE OF EACH CLASS OF                    TO BE           MAXIMUM OFFERING        AGGREGATE           REGISTRATION
         SECURITIES TO BE REGISTERED               REGISTERED         PRICE PER UNIT     OFFERING PRICE(2)          FEE(3)
- ---------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>                  <C>                  <C>                  <C>
13% Senior Secured Units due 2007(1).........       127,491               $1,000            $127,491,000          $15,006(4)
- ---------------------------------------------------------------------------------------------------------------------------------
13% Senior Secured Notes due 2007 of Phibro
  Animal Health Corporation(3)...............         N/A                   --                   --                   --
- ---------------------------------------------------------------------------------------------------------------------------------
13% Senior Secured Notes due 2007 of Philipp
  Brothers Netherlands III B.V.(3)                    N/A                   --                   --                   --
- ---------------------------------------------------------------------------------------------------------------------------------
Guarantees(3)                                         N/A                   --                   --                   --
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>

(1) Each unit consists of $809.5238 principal amount of 13% senior secured notes
    due 2007 of Phibro Animal Health Corporation and $190.4762 principal amount
    of 13% senior secured notes due 2007 of Philipp Brothers Netherlands III
    B.V.

(2) Estimated pursuant to Rule 457(f) under the Securities Act of 1933, as
    amended, solely for purposes of calculating the registration fee.

(3) The domestic companies listed in the Table of Additional Registrants below
    have guaranteed, jointly and severally, the 13% Senior Secured Notes Due
    2007 of Phibro Animal Health Corporation and the 13% Senior Secured Notes
    Due 2007 of Philipp Brothers Netherlands III B.V. being registered hereby.
    Phibro Animal Health Corporation and Phibro Animal Health SA have also
    guaranteed, jointly and severally, the 13% Senior Secured Notes Due 2007 of
    Philipp Brothers Netherlands III B.V. The Guarantors are registering the
    Guarantees. Pursuant to Rule 457(n) under the Securities Act of 1933, as
    amended, no registration fee is required with respect to the Guarantees or
    the notes.

(4) Of the aggregate registration fee of $15,006, $13,303.50 was previously paid
    in connection with a prior registration statement on Form S-4, SEC File No.
    333-112942, with respect to 105,000 units of senior secured notes due 2007
    filed on February 18, 2004 and subsequently withdrawn.

    THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>

                        TABLE OF ADDITIONAL REGISTRANTS

<Table>
<Caption>
                                      STATE OR OTHER JURISDICTION       PRIMARY STANDARD
EXACT NAME OF REGISTRANT                  OF INCORPORATION OR       INDUSTRIAL CLASSIFICATION      I.R.S. EMPLOYER
AS SPECIFIED IN ITS CHARTER                  ORGANIZATION                  CODE NUMBER          IDENTIFICATION NUMBER
- ---------------------------           ---------------------------   -------------------------   ---------------------
<S>                                   <C>                           <C>                         <C>
Prince Agriproducts, Inc. ..........       Delaware                           2819                 23-1653576
  One Prince Plaza
  Quincy, Illinois 62305
  (217) 222-8854
Phibro-Tech, Inc. ..................       Delaware                           2819                 22-3060339
  65 Challenger Road
  Ridgefield Park, New Jersey 07660
  (201) 329-7300
Phibro Animal Health U.S., Inc. ....       Delaware                           2819                 22-3743224
  65 Challenger Road
  Ridgefield Park, New Jersey 07660
  (201) 329-7300
Phibro Animal Health Holdings,             Delaware                           2819                 22-3743221
  Inc. .............................
  65 Challenger Road
  Ridgefield Park, New Jersey 07660
  (201) 329-7300
Phibrochem, Inc. ...................      New Jersey                          2819                 22-2758614
  65 Challenger Road
  Ridgefield Park, New Jersey 07660
  (201) 329-7300
C P Chemicals, Inc. ................      New Jersey                          2819                 22-1548721
  65 Challenger Road
  Ridgefield Park, New Jersey 0766
  (201) 329-7300
Phibro Chemicals, Inc. .............       New York                           2819                 22-2871784
  65 Challenger Road
  Ridgefield Park, New Jersey 07660
  (201) 329-7300
Western Magnesium Corp. ............      California                          2819                 13-2849569
  65 Challenger Road
  Ridgefield Park, New Jersey 07660
  (201) 329-7300
Phibro Animal Health SA.............       Belgium                            2819               Not Applicable
  Rue de L'Institut, 87A
  B-1330 Rixensart, Belgium
  (201) 329-7300
</Table>
<PAGE>

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

                 SUBJECT TO COMPLETION, DATED           , 2005

PROSPECTUS

                        PHIBRO ANIMAL HEALTH CORPORATION
                     PHILIPP BROTHERS NETHERLANDS III B.V.
                               OFFER TO EXCHANGE
                                 127,491 UNITS
                                 CONSISTING OF
     $103,207,000 13% SENIOR SECURED NOTES DUE 2007 OF PHIBRO ANIMAL HEALTH
                                CORPORATION AND
 $24,284,000 13% SENIOR SECURED NOTES DUE 2007 OF PHILIPP BROTHERS NETHERLANDS
                                   III B.V.,
          WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
                           FOR ALL OUTSTANDING UNITS
                                 CONSISTING OF
     $103,207,000 13% SENIOR SECURED NOTES DUE 2007 OF PHIBRO ANIMAL HEALTH
                                CORPORATION AND
 $24,284,000 13% SENIOR SECURED NOTES DUE 2007 OF PHILIPP BROTHERS NETHERLANDS
                                    III B.V.

                  THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
            NEW YORK CITY TIME ON           , 2005, UNLESS EXTENDED.

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

Terms of the exchange offer:

     We will exchange all old units that are validly tendered and not withdrawn
prior to the expiration of the exchange offer.

     You may withdraw tenders of old units at any time prior to the expiration
of the exchange offer.

     We believe that the exchange of old units will not be a taxable event for
U.S. federal income tax purposes, but you should see "Certain United States
Federal Income Tax Considerations" on page 142 for more information. See also
"Certain Dutch Tax Consequences."

     We will not receive any proceeds from the exchange offer.

     The terms of the new units are substantially identical to the old units,
except that the new units are registered under the Securities Act of 1933 and
the transfer restrictions and registration rights applicable to the old units do
not apply to the new units.

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

     SEE "RISK FACTORS" BEGINNING ON PAGE 15 FOR A DISCUSSION OF RISKS THAT
SHOULD BE CONSIDERED BY HOLDERS PRIOR TO TENDERING THEIR OLD UNITS.

     Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.

                The date of this prospectus is           , 2005.
<PAGE>

                               TABLE OF CONTENTS

<Table>
<S>                                                           <C>
Prospectus Summary..........................................    1
Risk Factors................................................   15
Use of Proceeds.............................................   29
Capitalization..............................................   30
Selected Consolidated Financial Data........................   31
Management's Discussion and Analysis of Financial Condition
  and Results of Operations.................................   33
Business....................................................   55
Conditions in Israel........................................   73
Management..................................................   75
Principal Stockholders......................................   82
Description of Capital Stock................................   83
Certain Relationships and Related Party Transactions........   85
Description of Certain Indebtedness.........................   88
The Exchange Offer..........................................   90
Description of the New Units................................   99
Description of the New Notes................................   99
Certain United States Federal Income Tax Consequences.......  154
Certain Dutch Tax Consequences..............................  158
Plan of Distribution........................................  161
Legal Matters...............................................  162
Experts.....................................................  162
Where You Can Find More Information.........................  162
Service of Process and Enforcement of Liabilities...........  163
Philipp Brothers Netherlands III B.V........................  163
Index to Consolidated Financial Statements..................  F-1
</Table>

     YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS.
PHIBRO ANIMAL HEALTH CORPORATION AND PHILIPP BROTHERS NETHERLANDS III B.V. HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. IF
ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT INFORMATION, YOU SHOULD NOT
RELY ON IT. PHIBRO ANIMAL HEALTH CORPORATION AND PHILIPP BROTHERS NETHERLANDS
III B.V. ARE NOT MAKING AN OFFER TO SELL THESE SECURITIES IN ANY JURISDICTION
WHERE THE OFFER OR SALE IS NOT PERMITTED, WHERE THE PERSON MAKING THE OFFER IS
NOT QUALIFIED TO DO SO, OR TO ANY PERSON WHO CANNOT LEGALLY BE OFFERED THE
SECURITIES. YOU SHOULD ASSUME THAT THE INFORMATION APPEARING IN THIS PROSPECTUS
IS ACCURATE ONLY AS OF THE DATE ON THE FRONT COVER OF THIS PROSPECTUS OR ANY
SUPPLEMENT.

     Each broker-dealer that receives new units for its own account pursuant to
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of new units. The letter of transmittal states that
by so acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act of 1933, as amended, which we refer to as the Securities Act. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of new units received in exchange
for old units where the old units were acquired by the broker-dealer as a result
of market-making activities or other trading activities. Phibro Animal Health
Corporation and Philipp Brothers Netherlands III B.V. each has agreed that, for
a period of 90 days after the effective date of the registration statement of
which this prospectus is a part, it will make this prospectus available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution."

                                        i
<PAGE>

                          FOR NEW HAMPSHIRE RESIDENTS

     Neither the fact that a registration statement or an application for a
license has been filed under Chapter 421-B of the New Hampshire Uniform
Securities Act of 1933 with the state of New Hampshire nor the fact that a
security is effectively registered or a person is licensed in the state of New
Hampshire constitutes a finding by the secretary of state that any document
filed under RSA 421-B is true, complete and not misleading. Neither any such
fact nor the fact that an exemption or exception is available for a security or
a transaction means that the secretary of state has passed in any way upon the
merits or qualifications of, or recommended or given approval to, any person,
security or transaction. It is unlawful to make, or cause to be made, to any
prospective purchaser, customer or client any representation inconsistent with
the provisions of this paragraph.

                        NETHERLANDS SELLING RESTRICTIONS

     Neither the new units nor any of the new notes (or any rights representing
an interest in the global new unit or any of the global new notes) may be
offered, sold, transferred, or delivered as part of their initial distribution
or at any time thereafter, directly or indirectly, to any individual or legal
entity established, resident or domiciled in The Netherlands. Offers and sales
of new units and new notes to any persons or legal entities established,
resident or domiciled outside The Netherlands must be made in compliance with
any applicable rule in the relevant jurisdictions.

                          BELGIUM SELLING RESTRICTIONS

     This prospectus and related documents are not intended to constitute a
public offering in Belgium. The Belgian Banking and Finance Commission has
neither reviewed nor approved these documents or commented on their accuracy or
adequacy, or recommended or endorsed the new units and new notes.

     The new units and new notes may not be offered for sale, sold or marketed
in Belgium by means of a public offering under Belgian law. In addition, the new
units and new notes may not be offered or sold to any person qualifying as a
consumer within the meaning of Article 1.7(o) of the Belgian Law of 14th July
1991 on consumer protection and trade practices, unless such offer or sale is
made in compliance with the Belgian Law of 14th July 1991 on consumer protection
and trade practices and its implementing legislation.

                 MARKET SHARE, RANKING AND OTHER INDUSTRY DATA

     The market share, ranking and other industry data contained in this
prospectus, including our position and the position of our competitors within
these markets, are based either on our management's knowledge of, and experience
in, the markets in which we operate, or derived from industry data or
third-party sources and, in each case, we believe these estimates are reasonable
as of the date of this prospectus or, if an earlier date is specified, as of
such earlier date. However, this information may prove to be inaccurate because
of the method by which we obtained some of the data for our estimates or because
this information is subject to change and cannot always be verified due to
limits on the availability and reliability of independent sources, the voluntary
nature of the data gathering process and other limitations and uncertainties
inherent in any statistical survey of market shares. In addition, purchasing
patterns and consumer preferences can and do change. As a result, you should be
aware that market share, ranking and other similar data set forth herein, and
estimates and beliefs based on such data, may not be reliable.

                                   TRADEMARKS

     The following trademarks and service marks used throughout this prospectus
belong to, are licensed to, or are otherwise used by us in our medicated feed
additives business: Stafac(R); Eskalin(R); V-Max(R); Terramycin(R);
Neo-Terramycin(R); CLTC(R); Mecadox(R); Nicarb(R); Amprol(R); Bloatguard(R);
Aviax(R); Coxistac(R); Posistac(R); Banminth(R); Cerditac(R); Cerdimix (R);
Rumatel(R).

                                        ii
<PAGE>

                           FORWARD-LOOKING STATEMENTS

     This prospectus contains forward-looking statements within the meaning of
the federal securities laws. Statements that are not historical facts, including
statements about our beliefs and expectations, are forward-looking statements.
Forward-looking statements include statements preceded by, followed by or that
include the words "may," "could," "would," "should," "believe," "expect,"
"anticipate," "plan," "estimate," "target," "project," "intend," or similar
expressions. These statements include, among others, statements regarding our
expected business outlook, anticipated financial and operating results, our
business strategy and means to implement the strategy, our objectives, the
amount and timing of capital expenditures, the likelihood of our success in
expanding our business, financing plans, budgets, working capital needs and
sources of liquidity.

     Forward-looking statements are only predictions and are not guarantees of
performance. These statements are based on our management's beliefs and
assumptions, which in turn are based on currently available information.
Important assumptions relating to the forward-looking statements include, among
others, assumptions regarding demand for our products, the expansion of product
offerings geographically or through new applications, the timing and cost of
planned capital expenditures, competitive conditions and general economic
conditions. These assumptions could prove inaccurate. Forward-looking statements
also involve risks and uncertainties, which could cause actual results that
differ materially from those contained in any forward-looking statement. Many of
these factors are beyond our ability to control or predict. Such factors
include, but are not limited to, the following:

     - our substantial leverage and potential inability to service our debt

     - our dependence on distributions from our subsidiaries

     - risks associated with our international operations and significant
       foreign assets

     - our dependence on our Israeli operations

     - competition in each of our markets

     - potential environmental liability

     - potential legislation affecting the use of medicated feed additives

     - extensive regulation by numerous government authorities in the United
       States and other countries

     - our reliance on the continued operation and sufficiency of our
       manufacturing facilities

     - our reliance upon unpatented trade secrets

     - the risks of legal proceedings and general litigation expenses

     - potential operating hazards and uninsured risks

     - the risk of work stoppages

     - our dependence on key personnel

     We believe the forward-looking statements in this prospectus are
reasonable; however, you should not place undue reliance on any forward-looking
statements, which are based on current expectations. You should read this
prospectus completely and with the understanding that future results may be
materially different from what we expect. Further, forward-looking statements
speak only as of the date they are made, and we undertake no obligation to
update publicly any of them in light of new information or future events.

                                       iii
<PAGE>

                               PROSPECTUS SUMMARY

     The following summary highlights information that we believe is especially
important concerning our business and this exchange offer. The following summary
is qualified in its entirety by the more detailed information and the financial
statements and notes thereto appearing elsewhere in this prospectus. You should
carefully read this entire prospectus and should consider, among other things,
the matters set forth under "Risk Factors" before deciding to participate in the
exchange offer. Unless otherwise indicated or the context requires otherwise,
references in this prospectus to (1) "PAH," "our company," "we," "our," "us" and
similar expressions refer to Phibro Animal Health Corporation, a New York
corporation, and its consolidated subsidiaries, (2) "PB Netherlands" refers to
Philipp Brothers Netherlands III B.V., a company organized under the laws of the
Netherlands, and its consolidated subsidiaries, (3) the "US issuer" refers to
Phibro Animal Health Corporation and not its subsidiaries, and (4) the "Dutch
issuer" refers to Philipp Brothers Netherlands III B.V. and not its
subsidiaries. We formerly conducted business under the name, "Philipp Brothers
Chemicals, Inc." As used herein, references to any "fiscal" year of our company
refer to our fiscal year ended or ending on the June 30 of such year.

                               THE EXCHANGE OFFER

     On October 21, 2003, the US issuer and Dutch issuer issued and sold 105,000
units, consisting of $85.0 million principal amount of 13% Senior Secured Notes
due 2007 of the US issuer and $20.0 million principal amount of 13% Senior
Secured Notes due 2007 of the Dutch issuer, and on December 21, 2004 the US
issuer and Dutch issuer issued and sold, under the same indenture as such
105,000 units, 22,491 additional units, consisting of $18.207 million principal
amount of 13% Senior Secured Notes due 2007 of the US issuer and $4.284 million
principal amount of 13% Senior Secured Notes due 2007 of the Dutch issuer. The
units and notes issued and sold on October 21, 2003 and on December 21, 2004 are
collectively referred to as the old units and the old notes. The units and notes
issued and sold on December 21, 2004 are referred to separately as the
additional old units and additional old notes. In connection with each of those
sales, we entered into a registration rights agreement, the terms of each of
which are substantially similar, with the initial purchaser of the old units in
which we agreed to deliver this prospectus to you and to complete an exchange
offer for the old units. As contemplated by the registration rights agreements,
we are offering to exchange an aggregate of 127,491 new units, consisting of
$103.207 million principal amount of new 13% Senior Secured Notes due 2007 of
the US issuer and $24.284 million principal amount of new 13% Senior Secured
Notes due 2007 of the Dutch issuer, referred to collectively as the new units
and the new notes, the issuance of which new units have been registered under
the Securities Act, for a like aggregate principal amount of our old units. We
urge you to read the discussions in this Prospectus Summary under the headings
"Summary of Exchange Offer" and "The New Units" and in this Prospectus under the
headings "The Exchange Offer" and "The New Units" for further information
regarding the exchange offer and the new units.

                                  THE COMPANY

OVERVIEW

     We are a leading diversified global manufacturer and marketer of a broad
range of animal health and nutrition products, specifically medicated feed
additives (MFAs) and nutritional feed additives (NFAs), which we sell throughout
the world predominantly to the poultry, swine and cattle markets. MFAs are used
preventively and therapeutically in animal feed to produce healthy livestock. We
believe we are the third largest manufacturer and marketer of MFAs in the world,
and we believe that certain of our MFA products have leading positions in the
marketplace. We are also a specialty chemicals manufacturer and marketer,
serving primarily the United States pressure-treated wood and chemical
industries. We have several proprietary products, and many of our products
provide critical performance attributes to our customers' products, while
representing a relatively small percentage of total end-product cost. We operate
in over 16 countries around the world and sell our animal health and nutrition
products and specialty chemicals products into over 40 countries. Approximately
76% of our fiscal 2004 net sales were from our Animal Health and Nutrition
business, and approximately 24% of our fiscal 2004 net sales were from our
Specialty Chemicals business.
                                        1
<PAGE>

     Our Animal Health and Nutrition segment manufactures and markets more than
500 formulations and concentrations of medicated and nutritional feed additives,
including antibiotics, antibacterials, anticoccidials, anthelmintics, trace
minerals, vitamins, vitamin premixes and other animal health and nutrition
products, to the livestock and pet food industries. Our MFA products are
internationally recognized for quality and efficacy in the prevention and
treatment of diseases in livestock, such as coccidiosis in poultry, dysentery in
swine and acidosis in cattle. We market our Animal Health and Nutrition products
under approximately 450 governmental product registrations, approving our MFA
products with respect to animal drug safety and effectiveness.

     Our Specialty Chemicals business manufactures and markets a number of
specialty chemicals for use in the pressure-treated wood, chemical catalyst,
semiconductor, automotive, aerospace and agricultural industries. We anticipate
that our proprietary manufacturing process to produce a copper-based solution
for one of the leading new products for manufacturing pressure-treated wood will
represent our largest growth opportunity in our Specialty Chemicals business.
Over 39% of our fiscal 2004 net sales in our Specialty Chemicals business was
derived from copper-based compounds, solutions or mixes.

     We have in recent years focused our business on animal health and nutrition
products. As a result of the rapid decline of the printed circuit board industry
in the United States, we have substantially exited that business, including our
etchant recycling operations, and re-directed our productive capacity in niche
markets. We have also sold other non-strategic businesses, such as our Agtrol
copper fungicide business and our subsidiaries, Mineral Resource Technologies,
Inc. ("MRT") and The Prince Manufacturing Company ("PMC"). In addition, we
closed our operations in Odda, Norway ("Odda") and Bordeaux, France ("La
Cornubia").

BUSINESS STRENGTHS

     Top Three MFA Provider in the World.  We believe we are the world's third
largest manufacturer and marketer of medicated feed additives in the poultry and
swine markets. We manufacture and market over 200 MFA formulations and
concentrations. We believe our MFAs rank first in sales in Brazil, and third in
the United States. Our Animal Health and Nutrition business serves our customers
in over 40 countries from 21 facilities. Many of our MFA products have been
marketed for over 20 years.

     Significant Barriers to Entry.  Medicated feed additives cannot be
manufactured or marketed without governmental product registrations that are
specific to each country -- the Food and Drug Administration ("FDA") for
example, in the United States, Health Canada in Canada, and EFSA/EMEA
authorities in Europe. Before a product registration is granted, the applicant
must show the regulatory authority that the product and its proposed use are
both effective and safe for the specified species and application. Obtaining an
MFA product registration is comparable in cost and difficulty with obtaining
approval for drugs used to treat humans. In addition to approval of formulation
and labeling, regulatory authorities typically require approval and periodic
inspection of the manufacturing facilities. Because of the costs and
difficulties associated with obtaining MFA product registrations, there have
been few new medicated feed additives developed and marketed over the last
decade. The only two new MFA compounds approved for use in the last 10 years
were semduramicin, one of our products, and ractopamine. Because of the inherent
difficulties and high costs of obtaining major product registrations and their
absolute necessity to operate in this business, our existing broad portfolio of
product registrations provides us strength in the marketplace.

     Strong Brand Name Recognition of Our Medicated Feed Additives.  We enjoy
strong brand name recognition with our medicated feed additives for the
prevention and control of diseases in poultry, swine and cattle. In particular,
virginiamycin, an antibiotic marketed under the Stafac(R), Eskalin(R) and
V-Max(R) brand names, is a popular and efficacious choice of medicated feed
additive in the poultry, swine and cattle industry. Semduramicin, sold under the
brand name Aviax(R), and salinomycin, sold under the brand name Coxistac(R), are
also leading poultry anticoccidials. In fiscal 2004, branded MFAs accounted for
approximately 50% of our total Animal Health and Nutrition sales.

     Established Global Network and Customer Base.  From our 23 facilities in 16
countries, we manufacture and market our products, which are sold through
multiple distribution channels to over 2,800 customers in a wide variety of end
use markets. We sell our products through an established global sales, marketing
and
                                        2
<PAGE>

distribution network to customers in over 40 countries. In fiscal 2004, no
single customer accounted for more than 5% of total revenues and our top 10
customers accounted for less than 22% of total revenues.

     Extensive Technical Support for Customers.  We employ over 60 chemists,
technicians, PhDs and veterinarians (DVMs) at our various facilities involved in
providing technical services to customers. Our technical service group and sales
personnel are able to work directly with commercial feed manufacturers and
integrated poultry, swine and cattle producers to promote animal health. We are
able to offer our customers products targeted to local markets, allowing us to
serve those local markets more effectively. Our MFA field personnel are skilled
in the area of product differentiation and have extensive applications knowledge
so as to be able to work closely with customers in determining optimum benefits
from usage of our products. As agricultural food production will continue to
intensify and will adopt evolving technologies, our MFA personnel are constantly
working with customers to better understand their needs in order to best utilize
the products existing within our MFA portfolio. This commercial knowledge also
plays a pivotal role within the R&D function to ensure that research results are
applicable to customer needs and concerns.

     Manufacturing Expertise.  Our manufacturing expertise and know-how in
antibiotic manufacturing process and organic synthesis has given us unique
positions in the marketplace. We believe that we are the only manufacturer of
virginiamycin and semduramicin in the world. Our blending, compounding and
formulation expertise is recognized by our customers in the animal health and
nutrition market. In addition, in our Specialty Chemicals business, based on our
more than 50 years of expertise in the metal chemical area, we have become a
leading supplier of the new copper-containing compound to the pressure-treated
wood industry. We also believe we hold leading positions in agricultural and
other industrial applications for copper-containing compounds.

     Proven Management Team.  We have assembled a strong and experienced
management team at both the corporate and operating levels. Our top operating
managers have an average of over 30 years of experience in the animal health and
nutrition and specialty chemicals industries. With our expanded management team,
we have added significant operational and international experience to our
businesses. Our founding family owns 100% of our common stock.

BUSINESS STRATEGY

     Expand Applications for Animal Health and Nutrition Product Offerings to
Our Primary Markets.  We seek to increase our product lines through expanding
the scope of our animal health and nutrition product registrations, through both
extending the use claims and formulations and the geographic areas of such
registrations. We are actively working with the FDA and other regulators to
obtain additional registrations and cross-clearances so that our MFA products
can continue to be used in situations where another MFA is also in use. In the
United States, we obtained from the FDA a zero-day withdrawal registration for
the use of our oxytetracycline product in cattle and recently obtained a cross
clearance for Mecadox(R) and Terramycin(R) in swine. We have obtained approval
for Aviax(R) in the EU, and are pursuing a modification of our Aviax(R)
registration in the United States allowing for site change of the active
ingredient. We believe that our receipt of FDA approval of Aviax(R), together
with our EU approval of Aviax(R) and our other registration efforts, has the
potential to increase our sales over the next two to three years. By leveraging
our global reach and our position as the only leading animal health company
dedicated to MFAs and NFAs, we are natural partners for small players in the
industry, who approach us to help them license or distribute new products they
have developed, because we do not compete with their other products.

     Expand Our Customer Base.  We intend to expand and strengthen our customer
base by (i) focusing on relationships with key accounts, (ii) continuing to
incent our sales force to concentrate on fast-growing, high-margin areas within
existing product groups, and (iii) pursuing growth opportunities for our
existing products in new markets. As certain of our MFA products are used in
rotation by our customers, we seek to supply all or substantially all of the
various MFA products which our customers may want to use. Our MFA business has
historically been strongest in the poultry market, and we are seeking to develop
it further in the swine and cattle markets. We expect to continue to enhance our
sales force in the swine market, and believe that there are further growth
opportunities from doing so. In addition, we believe the under-penetrated
Chinese and

                                        3
<PAGE>

Latin American markets offer growth opportunities. In China, we are seeking to
partner with local distributors, to leverage our existing local sales force.

RECENT DEVELOPMENTS

     The Offering.  On December 21, 2004, we completed a private placement (the
"2004 Offering") under Rule 144A and Regulation S of the Securities Act,
pursuant to which the US issuer and the Dutch issuer issued and sold $22.491
million of additional old units, from which we received gross proceeds of
approximately $23.4 million. We used the proceeds from the 2004 Offering to
refinance indebtedness outstanding under our domestic senior credit facility.
Such additional old units were issued under the same indenture as the 105,000
old units issued on October 21, 2003. See "Description of Certain
Indebtedness -- Domestic Senior Credit Facility" for more information.

     Consent Solicitation.  In connection with the completion of the 2004
Offering, we solicited consents with regard to our outstanding old notes to
amendments to the indenture governing such old notes to permit the sale of
substantially all of the facilities owned by Phibro Animal Health SA (formerly
Phibro Animal Health (Belgium) SPRL) ("PAH Belgium"), a wholly owned subsidiary
of the Dutch issuer, in Rixensart, Belgium (the "Belgium Plant"), to reduce
excess manufacturing capacity and to reduce operating expenses and, in
furtherance thereof, to permit the maximum amount of indebtedness under our
domestic senior credit facility permitted under the indenture governing the
notes to be increased from $15.0 million to $37.5 and to permit the related
transactions described herein. The requisite consents were obtained and the
indenture was amended pursuant to the Second Supplemental Indenture, dated as of
December 8, 2004. The amendments became effective on December 21, 2004 in
connection with the 2004 Offering.

     Sale of Belgium Plant.  On December 16, 2004, we entered into an agreement
to sell the Belgium Plant to Glaxosmithkline Biologicals S.A. ("GSK") and to
transfer to GSK a majority of the employees of PAH Belgium. GSK was a previous
owner of the Rixensart plant, and sold it to Pfizer SA in 1995, which sold it to
PAH Belgium in 2000. Such sale, when completed, would include the following
elements: (i) the transfer of substantially all of the land and buildings and
certain equipment of PAH Belgium at the Belgium Plant, as well as the industrial
activities and intellectual property relating to certain solvent technology of
Phibro Belgium, for a purchase price of EUR 6.2 million, payable at closing;
(ii) the transfer to GSK of a majority of the employees of PAH Belgium and the
corresponding responsibility for statutory severance obligations; (iii) GSK
agreeing to be responsible for costs of cleaning-up, by demolition or otherwise,
certain buildings not to be used by it, but for PAH Belgium to reimburse GSK up
to a maximum of EUR 0.7 million for such clean-up costs; (iv) in recognition of
the benefits to us from the proposed transaction, PAH Belgium agreeing to pay to
GSK EUR 1.5 million within six months from the closing date, EUR 1.5 million
within eighteen months from the closing date, EUR 1.5 million within thirty
months from the closing date, and EUR 0.5 million within forty-two months from
the closing date; (v) PAH Belgium retaining certain excess land (valued at
approximately EUR 0.4 million) and being able to sell such land for its own
account; (vi) PAH Belgium being responsible for certain plant closure costs and
legally required severance indemnities in connection with workforce reductions,
estimated in total to be EUR 7.7 million of which an amount estimated to be
approximately EUR 4.1 million would be payable at or around the closing and an
aggregate amount so estimated to be approximately EUR 3.6 million would be
payable over periods up to thirteen years; and (vii) PAH Belgium retaining
certain equipment at the Belgium Plant, and being able to sell such equipment
for the account of PAH Belgium or transfer such equipment, together with other
assets and rights related to the production of virginiamycin, to our subsidiary
in Brazil that owns the facility in Guarulhos or in connection with alternative
production arrangements.

     The foregoing transactions and agreements are subject to a closing that is
expected to occur no earlier than July 1, 2005 nor later than June 30, 2006.

     The carrying value of the Belgium Plant and related assets at September 30,
2004 is EUR 13.9 million. The Company is in the process of evaluating the
accounting for this transaction and will record an impairment loss, if required,
in the second quarter ended December 31, 2004. In addition, the Company will
expense severance, plant closure and other related costs in the period in which
such liabilities are incurred in

                                        4
<PAGE>

accordance with Statement of Financial Accounting Standards No. 146, "Accounting
for Costs Associated with Exit or Disposal Activities". As of the date of this
filing, estimates of such costs are in process of being determined.

     The Dutch notes and related guaranties are secured by a mortgage on the
Belgium Plant which is to be released in connection with the closing of the sale
of the Belgium Plant to GSK.

     Refinancing of Domestic Senior Credit Facility with Proceeds of the
Additional Units.  To provide the necessary funds to build inventory of
virginiamycin until the Brazil plant or alternative supplier is able to produce
production quantities of virginiamycin and to finance the purchase of capital
equipment to fit out the Brazilian plant with equipment to produce
virginiamycin, other than equipment transferred from the Belgium Plant, the
maximum amount of indebtedness under our domestic senior credit facility
permitted under the indenture governing the old notes was increased from $15.0
million to $37.5 million, pursuant to the Second Supplemental Indenture, and we
increased our borrowing to $22.5 million. The proceeds of the 2004 Offering were
used to refinance $22.5 million of borrowing under the domestic senior credit
facility. The issuance of the additional old units had the effect of reducing
the maximum amount of indebtedness under our domestic senior credit facility
permitted under the indenture governing the notes by the principal amount of the
additional old units issued. Borrowings under the domestic senior credit
facility continue to be subject to a borrowing base formula based on percentages
of eligible domestic receivables and domestic inventory.

PHILIPP BROTHERS NETHERLANDS III B.V.

     Philipp Brothers Netherlands III B.V., the Dutch issuer, is an indirect
wholly-owned subsidiary of the US issuer and is incorporated under the laws of
the Netherlands as a private company with limited liability. The Dutch issuer is
a holding company formed to finance the operations of PAH Belgium, which owns
and operates our Rixensart, Belgium plant. Such plant uses fermentation
processes to produce the active ingredients semduramicin and virginiamycin and
conducts all of our fermentation development activities. For the fiscal year
ended June 30, 2004, the Dutch issuer and its consolidated subsidiaries,
including PAH Belgium, had revenue of $34.7 million and operating income of $6.7
million. As of September 30, 2004, the Dutch issuer and its consolidated
subsidiaries, including PAH Belgium, had cash and cash equivalents of $0.2
million, net trade accounts receivable of $2.0 million, inventory of $29.1
million, net property, plant and equipment of $17.3 million, total assets of
$51.1 million, total accounts payable and other current liabilities of $17.2
million, total debt of $31.7 million and total liabilities of $49.8 million.
                             ---------------------

     We are a New York corporation and our principal executive offices are
located at 65 Challenger Road, Ridgefield Park, New Jersey 07660 and our phone
number is (201) 329-7300.

                                        5
<PAGE>

                         SUMMARY OF THE EXCHANGE OFFER

     On October 21, 2003, we completed a private offering of 105,000 old units
consisting of:

     - $85.0 million principal amount of 13% Senior Secured Notes due 2007 of
       the US issuer, referred to as old US notes; and

     - $20.0 million principal amount of 13% Senior Secured Notes due 2007 of
       the Dutch issuer, referred to as old Dutch notes.

     On December 21, 2004, we completed a private offering of 22,491 additional
old units consisting of:

     - $18.207 million principal amount of 13% Senior Secured Notes due 2007 of
       the US issuer, also referred to as old US notes; and

     - $4.284 million principal amount of 13% Senior Secured Notes due 2007 of
       the Dutch issuer, also referred to as old Dutch notes.

     In connection with each of those sales, we entered into a registration
rights agreement, the terms of each of which are substantially similar, with the
initial purchaser of the old units in which we agreed to deliver this prospectus
to you and to complete an exchange offer for the old units.

NEW UNITS OFFERED.............   127,491 new units consisting of:

                                 $103.207 million principal amount of 13% Senior
                                 Secured Notes due 2007 of the US issuer,
                                 referred to as the new US notes; and

                                 $24.284 million principal amount of 13% Senior
                                 Secured Notes due 2007 of the Dutch issuer,
                                 referred to as the new Dutch notes.

                                 The issuance of the new units has been
                                 registered under the Securities Act. The terms
                                 of the new units and old units are identical in
                                 all material respects, except for transfer
                                 restrictions, registration rights relating to
                                 the old units and certain provisions relating
                                 to increased interest rates in connection with
                                 the old units under circumstances relating to
                                 the timing of the exchange offer. You are urged
                                 to read the discussions under the heading "The
                                 New Units" in this summary for further
                                 information regarding the new units.

THE EXCHANGE OFFER............   We are offering the new units to you in
                                 exchange for a like number of old units. The
                                 old units may be exchanged only in integral
                                 multiples of $1,000. We intend by the issuance
                                 of the new units to satisfy our obligations
                                 contained in the registration rights agreement.
                                 After the exchange offer is complete, you will
                                 no longer be entitled to any exchange or
                                 registration with respect to your old units. In
                                 this prospectus, the term "exchange offer"
                                 means this offer to exchange new units for old
                                 units in accordance with the terms set forth in
                                 this prospectus and the accompanying letter of
                                 transmittal.

CONSEQUENCES OF FAILURE TO
EXCHANGE UNITS................   If you do not exchange your old units for new
                                 units, subject to some limited exceptions, you
                                 will no longer be able to require us to
                                 register the old units under the Securities
                                 Act. In addition, you will not be able to offer
                                 or sell the old units unless:

                                 - they are registered under the Securities Act
                                   and applicable state securities laws (and we
                                   will have no obligation to register them,
                                   except for some limited exceptions), or
                                        6
<PAGE>

                                 - you offer or sell them under an exemption
                                   from the requirements of, or in a transaction
                                   not subject to, the Securities Act and
                                   applicable state securities laws.

                                 We do not currently intend to register the old
                                 units under the Securities Act. Under some
                                 circumstances, however, holders of the old
                                 units, including holders who are not permitted
                                 to participate in the exchange offer or who may
                                 not freely resell new units received in the
                                 exchange offer, may require us to file, and to
                                 cause to become effective, a shelf registration
                                 statement covering resales of new units by
                                 these holders. For more information regarding
                                 the consequences of not tendering your old
                                 units, see "The Exchange Offer -- Consequences
                                 of Failure to Exchange Units."

EXPIRATION DATE; WITHDRAWAL
OF TENDER.....................   The exchange offer will expire at 5:00 p.m.,
                                 New York City time, on           , 2005, or
                                 such later date and time to which it may be
                                 extended by us. The tender of old units
                                 pursuant to the exchange offer may be withdrawn
                                 at any time prior to the expiration date of the
                                 exchange offer. Any old units not accepted for
                                 exchange for any reason will be returned
                                 without expense to the tendering holder thereof
                                 promptly after the expiration or termination of
                                 the exchange offer.

CONDITIONS TO THE EXCHANGE
OFFER.........................   Our obligation to accept for exchange, or to
                                 issue new units in exchange for, any old units
                                 is subject to customary conditions relating to
                                 compliance with any applicable law or any
                                 applicable interpretation by the staff of the
                                 Securities and Exchange Commission, the receipt
                                 of any applicable governmental approvals and
                                 the absence of any actions or proceedings of
                                 any governmental agency or court which could
                                 materially impair PAH's or PB Netherlands'
                                 ability to consummate the exchange offer. See
                                 "The Exchange Offer -- Conditions to the
                                 Exchange Offer."

PROCEDURE FOR TENDERING OLD
UNITS.........................   If you wish to accept the exchange offer and
                                 tender your old units, you must either:

                                 complete, sign and date the letter of
                                 transmittal, or a facsimile of the letter of
                                 transmittal, in accordance with its
                                 instructions and the instructions in this
                                 prospectus, and mail or otherwise deliver such
                                 letter of transmittal, or the facsimile,
                                 together with the old units and any other
                                 required documentation, to the exchange agent
                                 at the address set forth herein; or

                                 if old units are tendered pursuant to
                                 book-entry procedures, the tendering holder
                                 must deliver a completed and duly executed
                                 letter of transmittal or arrange with The
                                 Depository Trust Company, or DTC, to cause an
                                 agent's message to be transmitted through DTC's
                                 Automated Tender Offer Program System with the
                                 required information (including a book-entry
                                 confirmation) to the exchange agent.

                                 See "The Exchange Offer -- Procedures for
                                 Tendering Old Units."

BROKER-DEALERS................   Each broker-dealer that receives new units for
                                 its own account in exchange for old units,
                                 where such old units were acquired by such
                                 broker-dealer as a result of market-making
                                 activities or other
                                        7
<PAGE>

                                 trading activities, must acknowledge that it
                                 will deliver a prospectus in connection with
                                 any resale of such new units. See "Plan of
                                 Distribution."

USE OF PROCEEDS...............   We will not receive any proceeds from the
                                 exchange offer. See "Use of Proceeds."

EXCHANGE AGENT................   HSBC Bank USA, National Association is serving
                                 as the exchange agent in connection with the
                                 exchange offer. The address, telephone number
                                 and facsimile number of the exchange agent are
                                 provided in the section "The Exchange Offer,"
                                 as well as in the letter of transmittal.

FEDERAL INCOME TAX
CONSEQUENCES..................   We believe that the exchange of old units for
                                 new units pursuant to the exchange offer will
                                 not be a taxable event for United States
                                 federal income tax purposes. You are referred
                                 to the discussion of the tax consequences of
                                 the exchange offer under "Certain United States
                                 Federal Income Tax Consequences" and "Certain
                                 Dutch Tax Consequences." You should consult
                                 your tax advisor about the tax consequences as
                                 they apply to your individual circumstances.

      CONSEQUENCES OF EXCHANGING OLD UNITS PURSUANT TO THE EXCHANGE OFFER

     Based on certain interpretive letters issued by the Staff of the Securities
and Exchange Commission to third parties in unrelated transactions, we are of
the view that holders of old units (other than any holder who is an "affiliate"
of PAH or PB Netherlands within the meaning of Rule 405 under the Securities
Act) who exchange their old units for new units pursuant to the exchange offer
generally may offer the new units for resale, resell such new units and
otherwise transfer the new units without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that:

     - the new units are acquired in the ordinary course of the holders'
       business;

     - the holders have no arrangement or understanding with any person to
       participate in a distribution of the new units; and

     - neither the holder nor any other person is engaging in or intends to
       engage in a distribution of the new units.

     Each broker-dealer that receives new units for its own account in exchange
for old units must acknowledge that it will deliver a prospectus in connection
with any resale of the new units. See "Plan of Distribution." In addition, to
comply with the securities laws of applicable jurisdictions, the new units may
not be offered or sold unless they have been registered or qualified for sale in
the applicable jurisdiction or in compliance with an available exemption from
registration or qualification. PAH and PB Netherlands have agreed, under the
registration rights agreement and subject to limitations specified in the
registration rights agreement, to register or qualify the new units for offer or
sale under the securities or blue sky laws of the applicable jurisdictions as
any holder of the units reasonably requests in writing. If a holder of old units
does not exchange the old units for new units according to the terms of the
exchange offer, the old units will continue to be subject to the restrictions on
transfer contained in the indenture governing the units and in the legend
printed on the old units. In general, the old units may not be offered or sold,
unless registered under the Securities Act, except under an exemption from, or
in a transaction not subject to, the Securities Act and applicable state
securities laws. Holders of old units do not have any appraisal or dissenters'
rights in connection with the exchange offer. See "The Exchange Offer -- Resales
of New Units."

     The old units are currently eligible for trading in the Private Offerings,
Resales and Trading through Automated Linkages (PORTAL) market. Following
commencement of the exchange offer but prior to its completion, the old units
may continue to be traded in the PORTAL market. Following completion of the
exchange offer, however, the new units will not be eligible for trading in the
PORTAL market.
                                        8
<PAGE>

                                 THE NEW UNITS

     The terms of the new units and the old units are identical in all material
respects, except for transfer restrictions, registration rights relating to the
old units and certain provisions relating to increased interest rates in
connection with the old units under circumstances relating to the timing of the
exchange offer, which rights will terminate upon completion of the exchange
offer. The new units will evidence the same debt as the old units and will be
governed by the same indenture. This summary is not intended to be complete. For
a more complete description of the terms of the new units and new notes, see
"Description of the New Units" and "Description of the New Notes," respectively,
in this prospectus.

ISSUERS.......................   Phibro Animal Health Corporation, the US
                                 issuer, and Philipp Brothers Netherlands III
                                 B.V., the Dutch issuer.

SECURITIES OFFERED............   127,491 new units consisting of $103.207
                                 million principal amount of 13% senior secured
                                 notes due 2007 of Phibro Animal Health
                                 Corporation, the new US notes, and $24.284
                                 million principal amount of 13% senior secured
                                 notes due 2007 of Philipp Brothers Netherlands
                                 III B.V., the new Dutch notes. The new US notes
                                 and new Dutch notes are collectively referred
                                 to as the new notes.

MATURITY......................   December 1, 2007.

INTEREST RATE AND PAYMENT
DATES.........................   Each issuer will pay interest on its new notes
                                 at a rate equal to 13% per year. Interest on
                                 the new notes will be payable semi-annually in
                                 cash in arrears on June 1 and December 1 of
                                 each year, beginning on June 1, 2005.

USE OF PROCEEDS...............   The new units issued in connection with the
                                 exchange offer are only being issued in
                                 exchange for your old units. We will not
                                 receive any cash proceeds from the issuance of
                                 the new units pursuant to the exchange offer.
                                 All old units accepted by us in this exchange
                                 offer will be cancelled.

SEPARATION EVENTS.............   The new notes of each issuer will not trade
                                 separately unless an event of default on the
                                 new notes has occurred, a tax redemption of the
                                 new Dutch notes related to certain changes
                                 affecting withholding taxes has occurred or a
                                 change in control of the Dutch issuer has
                                 occurred.

GUARANTEES....................   All of the US issuer's existing and future
                                 domestic restricted subsidiaries will guarantee
                                 the new notes of each issuer on a senior
                                 secured basis. The new Dutch notes will also be
                                 guaranteed by the US issuer and by the Dutch
                                 issuer's current and future restricted
                                 subsidiaries, including PAH Belgium.

                                 The guarantees of the new US notes by its
                                 domestic restricted subsidiaries and the
                                 guarantees of the new Dutch notes by the US
                                 issuer, its domestic restricted subsidiaries
                                 and each of the restricted subsidiaries of the
                                 Dutch issuer will be senior secured obligations
                                 of the US guarantors and such restricted
                                 subsidiaries and will rank equal in right of
                                 payment with all of their respective existing
                                 and future senior indebtedness.

SECURITY INTEREST.............   The new US notes and related guarantees will be
                                 secured by substantially all of the US issuer's
                                 assets and the assets of the US issuer's
                                 domestic restricted subsidiaries, other than
                                 real property and interests therein. In
                                 addition, the new US notes and related
                                 guarantees will be secured by 65% of the voting
                                 stock and 100% of
                                        9
<PAGE>

                                 the non-voting stock of foreign subsidiaries
                                 owned by the US issuer's domestic restricted
                                 subsidiaries or the US issuer. Pursuant to the
                                 terms of an intercreditor agreement, as amended
                                 in connection with the 2004 Offering, the
                                 security interest securing the new US notes and
                                 the related guarantees made by the US issuer's
                                 domestic restricted subsidiaries will be
                                 subordinated to a lien securing the US issuer's
                                 domestic senior credit facility. Such security
                                 interest will also be subordinated to certain
                                 other secured indebtedness permitted to be
                                 incurred by the US issuer under the indenture
                                 and will be structurally subordinated to all
                                 liabilities of the US issuer's foreign
                                 subsidiaries and unrestricted subsidiaries.

                                 The new Dutch notes and related guarantees will
                                 be secured by a pledge of all of the accounts
                                 receivable, a security interest or floating
                                 charge on the inventory to the extent permitted
                                 by applicable law, a mortgage on substantially
                                 all of the real property of the Dutch issuer
                                 and each of its restricted subsidiaries, a
                                 pledge of 100% of the stock of each direct
                                 subsidiary of the Dutch issuer and its
                                 restricted subsidiaries, a pledge of the
                                 intercompany loans made by the Dutch issuer to
                                 its restricted subsidiaries and substantially
                                 all of the assets of the US guarantors, other
                                 than real property and interests therein.

RANKING.......................   The new notes of each issuer will be senior
                                 secured obligations of that issuer and will
                                 rank equal in right of payment with any of the
                                 other senior indebtedness of that issuer,
                                 including in the case of the US issuer,
                                 indebtedness under the US issuer's domestic
                                 senior credit facility.

OPTIONAL MAKE-WHOLE
REDEMPTION....................   The issuers may, at their option, redeem some
                                 or all of their new notes at any time prior to
                                 June 1, 2005 by paying the greater of (i) 100%
                                 of the aggregate principal amount of their
                                 notes and (ii) the sum of the present values of
                                 114% of the aggregate principal amount of their
                                 notes plus scheduled interest payments on the
                                 new notes through and including June 1, 2005,
                                 discounted to the redemption date on a
                                 semi-annual basis at the adjusted treasury rate
                                 plus 50 basis points, together with, in each
                                 case, accrued and unpaid interest to the
                                 redemption date. The foregoing optional
                                 redemption of the notes shall include both new
                                 US notes and new Dutch notes on a pro rata
                                 basis based upon the aggregate principal amount
                                 of notes outstanding at the time of redemption,
                                 unless a change of control of the Dutch issuer
                                 has occurred.

OPTIONAL REDEMPTION...........   On or after June 1, 2005, the issuers may
                                 redeem all or a portion of the new notes at
                                 their option at the redemption prices
                                 (expressed as a percentage of the principal
                                 amount), plus accrued and unpaid interest, if
                                 redeemed during the six-month period commencing
                                 on the dates indicated below:

<Table>
<Caption>
                                          PERIOD                                           PERCENTAGE
                                          ------                                           ----------
                                          <S>                                              <C>
                                          June 1, 2005...................................    114.0%
                                          December 1, 2005...............................    109.0%
                                          June 1, 2006...................................    105.0%
                                          December 1, 2006, and thereafter...............    101.0%
</Table>

                                        10
<PAGE>

                                 Prior to June 1, 2005, the issuers may redeem
                                 on one or more occasions up to 35% of the
                                 aggregate principal amount of the new notes at
                                 a redemption price equal to 113% plus accrued
                                 and unpaid interest with the net proceeds of
                                 any public equity offering.

                                 The foregoing optional redemption of the new
                                 notes shall include both new US notes and new
                                 Dutch notes on a pro rata basis based upon the
                                 aggregate principal amount of the notes
                                 outstanding at the time of redemption, unless a
                                 change of control of the Dutch issuer has
                                 occurred.

                                 The Dutch issuer may redeem the new Dutch notes
                                 in whole, and not in part, at 100% of their
                                 principal amount plus accrued and unpaid
                                 interest in the event of certain changes
                                 affecting withholding taxes described below in
                                 "Description of the New Notes."

CHANGE OF CONTROL OFFER.......   If the US issuer experiences a change of
                                 control, each holder of new units will have the
                                 right to sell the issuers all or a portion of
                                 the new notes held by it at 101% of the
                                 aggregate principal amount of such new notes,
                                 plus accrued and unpaid interest, if any, and
                                 additional interest, if any, to the date of
                                 purchase. If the Dutch issuer experiences a
                                 change of control, it may, at its option at any
                                 time, redeem its new notes in whole, and not in
                                 part, at the optional redemption prices
                                 otherwise applicable on the redemption date. If
                                 the Dutch issuer has not delivered a notice of
                                 redemption to the holders within 30 days
                                 following a change of control, it shall be
                                 required to commence an offer to purchase its
                                 new notes on the same terms and conditions that
                                 apply to it in the event of a change in control
                                 of the US issuer; provided, that at any time
                                 prior to the consummation of the offer to
                                 purchase its new notes, the Dutch issuer may
                                 deliver an optional redemption notice to redeem
                                 all of its notes in lieu of completing the
                                 offer to purchase.

ASSET SALE OFFERS.............   If either issuer or any of its restricted
                                 subsidiaries sells assets and does not reinvest
                                 the proceeds from the sale of its assets in its
                                 respective business, the issuers may have to
                                 offer to use the proceeds to repurchase new
                                 notes at 100% of their aggregate principal
                                 amount plus accrued and unpaid interest to the
                                 date of purchase. Any such repurchase of the
                                 new notes shall include both new US notes and
                                 new Dutch notes on a pro rata basis based upon
                                 the aggregate principal amount of the notes
                                 outstanding at the time of such repurchase,
                                 unless a change of control of the Dutch issuer
                                 has occurred.

EXCESS CASH FLOW OFFERS.......   If we have excess cash flow, the issuers may
                                 have to offer to use 50% of the excess cash
                                 flow to repurchase a portion of the new notes
                                 at 102.5% of their aggregate principal amount,
                                 plus accrued and unpaid interest. Any such
                                 repurchase of the new notes shall include both
                                 new US notes and new Dutch notes on a pro rata
                                 basis based upon the aggregate principal amount
                                 of the notes outstanding at the time of such
                                 repurchase, unless a change of control of the
                                 Dutch issuer has occurred.

RESTRICTIVE COVENANTS.........   The indenture governing the new notes will
                                 contain covenants that, among other things,
                                 limit our ability to:

                                 - incur additional indebtedness or issue
                                   disqualified capital stock;

                                 - make investments;

                                 - pay dividends or make other restricted
                                   payments;

                                        11
<PAGE>

                                 - issue capital stock of certain subsidiaries;

                                 - enter into transactions with affiliates;

                                 - create or incur liens;

                                 - transfer or sell assets;

                                 - incur dividend or other payment restrictions
                                   affecting certain subsidiaries; and

                                 - consummate a merger, consolidation or sale of
                                   all or substantially all of our assets.

                                 These covenants are subject to a number of
                                 important exceptions described below in
                                 "Description of the New Notes -- Certain\
                                 Covenants."

BOARD REPRESENTATION..........   A Noteholder Representative has been designated
                                 to serve on the board of directors of the
                                 Company. See "Description of the New
                                 Notes -- Certain Covenants -- Noteholder
                                 Representative."

REGISTRATION..................   We filed a registration statement with the SEC
                                 on Form S-4 with respect to an exchange offer
                                 for the 105,000 old units issued in October
                                 2003, but due to pending confidential
                                 acquisition negotiations, such registration
                                 statement did not become effective, and the
                                 Company caused a notice of withdrawal to be
                                 submitted to the SEC on November 15, 2004. As a
                                 result, a Registration Default exists with
                                 respect to the old notes issued in October
                                 2003, and such notes have borne additional
                                 interest. However, the consummation of the
                                 exchange offer of new units for old units is
                                 expected to cure such Registration Default. In
                                 such event, from and after such date, such old
                                 notes will bear interest at the rate set forth
                                 on the cover page of this prospectus and cease
                                 to accrue such additional interest. See "The
                                 Exchange Offer -- Registration Rights and
                                 Additional Interest on Certain Old Units."

                                  RISK FACTORS

     An investment in the new units and the new notes involves risks. You should
carefully consider the information in this prospectus. In particular, you should
evaluate the specific risk factors set forth under the caption "Risk Factors",
as well as all other information set forth in this prospectus.

                                        12
<PAGE>

          SUMMARY HISTORICAL AND UNAUDITED CONSOLIDATED FINANCIAL DATA

     The summary historical and unaudited consolidated financial data set forth
below reflect continuing operations. Our Odda, Carbide, MRT and La Cornubia
businesses have been classified as discontinued operations and are not included
below. Odda operations were terminated in February 2003. Carbide was sold in
April 2003. MRT was sold in August 2003. La Cornubia operations were terminated
in June 2004.

     The summary consolidated financial data included in this prospectus have
been prepared by, and are the responsibility of, our management.
PricewaterhouseCoopers LLP, an independent registered public accounting firm,
has neither examined nor reviewed the accompanying summary consolidated
financial data and, accordingly, PricewaterhouseCoopers LLP does not express an
opinion or any other form of assurance with respect thereto. The
PricewaterhouseCoopers LLP report included in this prospectus relates only to
our historical financial statements for the fiscal years ended June 30, 2004,
2003 and 2002. It does not extend to any other financial data and should not be
read to do so.

     The following summary consolidated financial data set forth below should be
read in conjunction with, and are qualified in their entirety by reference to,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our financial statements and the notes thereto appearing
elsewhere in this prospectus.

<Table>
<Caption>
                                                                         3 MONTHS ENDED
                                      FISCAL YEAR ENDED JUNE 30,          SEPTEMBER 30,
                                 ------------------------------------   -----------------
                                   2002       2003          2004         2003      2004
                                 --------   --------   --------------   -------   -------
                                                                           (UNAUDITED)
                                                       (IN THOUSANDS)
<S>                              <C>        <C>        <C>              <C>       <C>
RESULTS OF OPERATIONS:
Net sales......................  $328,676   $341,746      $358,274      $84,950   $88,275
Gross profit...................    81,265     90,546        90,403       21,160    22,622
Selling, general and
  administrative expenses......    70,636     65,050        71,389       15,785    16,594
Operating income...............    10,629     25,496        19,014        5,375     6,028
</Table>

<Table>
<Caption>
                                                                               AS OF SEPTEMBER 30,
                                AS OF JUNE 30,      AS OF SEPTEMBER 30,                2004
                                --------------   -------------------------   ------------------------
                                     2004           2003          2004             AS ADJUSTED
                                --------------   -----------   -----------   ------------------------
                                                 (UNAUDITED)   (UNAUDITED)         (UNAUDITED)
                                                      (IN THOUSANDS)
<S>                             <C>              <C>           <C>           <C>
BALANCE SHEET DATA:*
Cash and cash equivalents.....     $  5,568       $ 26,917      $  5,778             $ 15,626
Fixed assets..................       58,786         62,795        59,818               59,818
Total assets..................      241,369        276,216       243,551              255,674
Total debt....................      170,365        164,182       170,213              181,436
Series B and C redeemable
  preferred stock.............       24,678         69,868        25,359               25,359
Total stockholders' deficit...      (63,833)       (84,784)      (61,574)             (61,574)
</Table>

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

* Adjusted balance sheet data give effect to the 2004 Offering and the
  application of the proceeds as provided in "Recent Developments -- The
  Offering."

                                        13
<PAGE>

RATIO OF EARNINGS TO FIXED CHARGES

     The following table sets forth our historical consolidated ratio of
earnings to fixed charges for the periods indicated.

<Table>
<Caption>
                                                                                3 MONTHS
                                                                                  ENDED
                                              FISCAL YEAR ENDED JUNE 30,      SEPTEMBER 30,
                                           --------------------------------   -------------
                                           2000   2001   2002   2003   2004   2003    2004
                                           ----   ----   ----   ----   ----   -----   -----
<S>                                        <C>    <C>    <C>    <C>    <C>    <C>     <C>
Ratio of earnings to fixed charges(a)....  1.1     (b)    (b)   1.4    2.2     1.5     1.1
</Table>

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

(a)  For purposes of computing the consolidated ratio of earnings to fixed
     charges, earnings represent earnings (loss) from continuing operations
     before income taxes, loss on equity investments and fixed charges. Fixed
     charges include interest expense (whether expensed or capitalized) and a
     portion of rentals determined to be representative of the interest
     component of such rental expense. Management believes that one-third is
     representative of the interest component of such rental expense.

(b)  The amounts by which earnings were inadequate to cover fixed charges were
     $9,563 and $10,384 for the fiscal years ended June 30, 2001 and 2002
     respectively.

     The following table sets forth our consolidated ratio of earnings to fixed
charges for the periods indicated, adjusted to give effect to the 2004 Offering
and application of the proceeds as provided in "Recent Developments -- The
Offering.".

<Table>
<Caption>
                                                           FISCAL YEAR         3 MONTHS
                                                              ENDED             ENDED
                                                          JUNE 30, 2004   SEPTEMBER 30, 2004
                                                          -------------   ------------------
<S>                                                       <C>             <C>
Ratio of earnings to fixed charges(a)...................       1.9               1.0
</Table>

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

(a)  For purposes of computing the consolidated ratio of earnings to fixed
     charges, earnings represent earnings (loss) from continuing operations
     before income taxes, loss on equity investments and fixed charges. Fixed
     charges include interest expense (whether expensed or capitalized) and a
     portion of rentals determined to be representative of the interest
     component of such rental expense. Management believes that one-third is
     representative of the interest component of such rental expense.

                                        14
<PAGE>

                                  RISK FACTORS

     An investment in the new units involves a significant degree of risk,
including the risks described below. You should carefully consider the following
risk factors and the other information in this prospectus before deciding to
exchange old units for new units. The risks described below are not the only
ones facing us. This prospectus contains forward-looking statements that involve
risks and uncertainties, including, in particular, the statements about our
plans, strategies and prospects under the headings "Prospectus Summary,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and "Business." Although we believe that our plans, intentions and
expenditures reflected in or suggested by such forward-looking statements are
reasonable, we can give no assurance that such plans, intentions or expectations
will be achieved. Important factors that could cause actual results to differ
materially from the forward-looking statements we make in this prospectus are
set forth below and elsewhere in this prospectus. All forward-looking statements
attributable to us or persons acting on our behalf are expressly qualified in
their entirety by the following cautionary statements.

RISK FACTORS RELATED TO THE EXCHANGE OFFER

  IF YOU FAIL TO EXCHANGE YOUR OLD UNITS FOR NEW UNITS, YOUR OLD UNITS WILL
  CONTINUE TO BE SUBJECT TO RESTRICTIONS ON TRANSFER.

     The old units were not registered under the Securities Act or under the
securities laws of any state and may not be resold, offered for resale or
otherwise transferred unless they are subsequently registered or resold under an
exemption from the registration requirements of the Securities Act and
applicable state securities laws. If you do not exchange your old units for new
units under the exchange offer, you will not be able to resell, offer to resell
or otherwise transfer the old units unless they are registered under the
Securities Act or unless you resell them, offer to resell or otherwise transfer
them under an exemption from the registration requirements of, or in a
transaction not subject to, the Securities Act. In addition, we will no longer
be under an obligation to register the old units under the Securities Act except
in the limited circumstances provided under the registration rights agreement.
In addition, if you want to exchange your old units in the exchange offer for
the purpose of participating in a distribution of the new units, you may be
deemed to have received restricted securities, and, if so, will be required to
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction.

  IF AN ACTIVE TRADING MARKET FOR THE NEW UNITS DOES NOT DEVELOP, THE LIQUIDITY
  AND VALUE OF THE NEW UNITS COULD BE HARMED.

     While the old units are currently eligible for trading on the PORTAL
market, even if the registration statement becomes effective, which will
generally allow resale of the new units, there is no established trading market
for the new units. Neither issuer intends to list the new units on any U.S.
national securities exchange or automated quotation system. We cannot assure you
that an active trading market will develop for the new units. If no active
trading market develops, you may not be able to resell your new units at their
fair market value or at all. Future trading prices of the new units will depend
on many factors, including, among other things, prevailing interest rates, our
operating results, our ability to complete the exchange offer and the market for
similar securities. The initial purchaser has advised us that it currently
intends to make a market in the new units, but it is not obligated to do so and
may discontinue any market making in the new units at any time.

  THE ISSUANCE OF THE NEW UNITS MAY ADVERSELY AFFECT THE MARKET FOR THE OLD
  UNITS.

     To the extent that the old units are tendered for exchange and accepted in
the exchange offer, the trading market for the untendered and tendered but
unaccepted old units could be adversely affected.

  YOU MUST COMPLY WITH THE EXCHANGE OFFER PROCEDURES IN ORDER TO RECEIVE THE NEW
  UNITS.

     The new units will be issued in exchange for the old units only after
timely receipt by the exchange agent of the old units or a book-entry
confirmation or a confirmation of blocking instructions related thereto, a
                                        15
<PAGE>

properly completed and executed letter of transmittal, or an agent's message and
all other required documentation. If you want to tender your old units in
exchange for new units, you should allow sufficient time to ensure timely
delivery. None of PAH, PB Netherlands nor the exchange agent are under any duty
to give you notification of defects or irregularities with respect to tenders of
old units for exchange. Old units that are not tendered or are tendered but not
accepted will, following the exchange offer, continue to be subject to the
existing transfer restrictions. In addition, if you tender the old units in the
exchange offer to participate in a distribution of the new units, you will be
required to comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction. For additional
information, please refer to the sections entitled "The Exchange Offer" and
"Plan of Distribution" later in this prospectus.

RISK FACTORS RELATING TO THE NEW UNITS AND THE NEW NOTES

  OUR SUBSTANTIAL LEVEL OF INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL
  CONDITION AND PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER THE NEW UNITS
  AND THE NEW NOTES.

     We have a substantial amount of debt. As of September 30, 2004, we had
approximately $170.2 million of total indebtedness outstanding and our ratio of
earnings to fixed charges was 1.1x. We had the ability to borrow, as of
September 30, 2004, an additional $6.2 million under the revolving portion of
our domestic senior credit facility, subject to the restrictions in the
indenture and in our domestic senior credit facility. As of such date, after
giving effect to the 2004 Offering and application of proceeds, we had $181.4
million of total indebtedness outstanding and our ratio of earnings to fixed
charges was 1.0x. We had the ability to borrow an additional $17.5 million under
the revolving portion of our domestic senior credit facility, subject to such
aforementioned restrictions. Additionally, subject to restrictions in the
indenture and our domestic senior credit facility, we may incur additional
indebtedness.

     Our high level of indebtedness could have important consequences to you,
including the following:

     - it may make it difficult for us to satisfy our obligations under the
       notes and our other indebtedness and contractual and commercial
       commitments;

     - we must use a substantial portion of our cash flow from operations to pay
       interest on the notes and our other indebtedness, which will reduce the
       funds available to us for other purposes;

     - all of the indebtedness outstanding under our domestic senior credit
       facility will have a prior ranking claim on our assets and will mature
       prior to the notes;

     - our domestic senior credit facility has a variable rate of interest,
       which exposes us to the risk of increased interest rates;

     - our ability to obtain additional debt financing in the future for working
       capital, capital expenditures, acquisitions or general corporate purposes
       may be limited;

     - our high level of indebtedness could limit our flexibility in reacting to
       changes in the industry and make us more vulnerable to adverse changes in
       our business or economic conditions in general;

     - our high level of indebtedness could place us at a competitive
       disadvantage to those of our competitors who operate on a less leveraged
       basis; and

     - if we fail to comply with the covenants in the indenture relating to the
       notes, our domestic senior credit facility or in the instruments
       governing our other indebtedness (including the indenture for our
       outstanding senior subordinated notes due 2008), such failure could have
       a material adverse effect on our business and our ability to repay the
       notes.

     Our ability to make payments with respect to the notes and to satisfy our
other debt obligations will depend on our future operating performance and our
ability to refinance our indebtedness, which will be affected by prevailing
economic conditions and financial, business and other factors, certain of which
are beyond our control.

                                        16
<PAGE>

  WE MAY NOT BE ABLE TO GENERATE SUFFICIENT CASH FLOW TO MEET OUR DEBT SERVICE
  AND OTHER OBLIGATIONS DUE TO EVENTS BEYOND OUR CONTROL.

     Upon the issuance of the old notes, our interest expense increased compared
to prior years. Our ability to generate cash flows from operations and to make
scheduled payments on our indebtedness, including equipment and other leases,
will depend on our future financial performance. Our future performance will be
affected by a range of economic, competitive and business factors that we cannot
control, such as general economic and financial conditions in our industry or
the economy at large. A significant reduction in operating cash flows resulting
from changes in economic conditions, increased competition, or other events
beyond our control could increase the need for additional or alternative sources
of liquidity and could have a material adverse effect on our business, financial
condition, results of operations, prospects and our ability to service our debt
and other obligations. If we are unable to service our indebtedness, we will be
forced to adopt an alternative strategy that may include actions such as
reducing or delaying acquisitions and capital expenditures, selling assets,
restructuring or refinancing our indebtedness, or seeking additional equity
capital. We cannot assure you that any of these alternative strategies could be
effected on satisfactory terms, if at all, or that they would yield sufficient
funds to make required payments on the notes and our other indebtedness. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

     We urge you to consider the information under "Capitalization," "Prospectus
Summary -- Summary Historical and Unaudited Consolidated Financial Data,"
"Description of the Notes," and "Description of Certain Indebtedness" for more
information on these matters.

  WE WILL DEPEND ON DISTRIBUTIONS FROM OUR SUBSIDIARIES TO MEET OUR OBLIGATIONS
  UNDER THE NEW NOTES.

     Substantially all of our operating income comes from our subsidiaries.
Therefore, we will depend on dividends and other distributions from our
restricted subsidiaries to generate the funds necessary to meet our obligations,
including the payment of principal and interest on the notes. The ability of our
subsidiaries to pay such dividends will be subject to, among other things, the
terms of any debt instruments of our subsidiaries then in effect and applicable
law. In addition, in the case of our foreign subsidiaries, dividends and
interest may be subject to foreign withholding taxes, which would reduce the
amount of funds we receive from such foreign subsidiaries. Distributions from
our foreign subsidiaries may also be subject to fluctuations in currency
exchange rates, which could reduce the amount of funds we receive from such
foreign subsidiaries.

  THE DUTCH ISSUER IS A FINANCE SUBSIDIARY WITH LIMITED ASSETS.

     The capital stock of PAH Belgium, the intercompany loan to PAH Belgium that
was previously funded with proceeds of the Dutch notes issued in October 2003
and the new intercompany loan to PAH Belgium, are and will be the only
significant assets of the Dutch issuer. Therefore the Dutch issuer will be
entirely dependent on payments on the intercompany loans to PAH Belgium to make
payments on the Dutch notes. In return, PAH Belgium will depend on the income it
receives from its business operations to service its indebtedness in respect of
the intercompany loans granted to it by the Dutch issuer. Your right to receive
payments on the Dutch notes could be adversely affected if PAH Belgium is
declared bankrupt, liquidates or reorganizes. The dependence of the Dutch issuer
on payments from the US issuer and its domestic guarantors is likely to increase
after the sale of the Belgium Plant and the sale of the virginiamycin inventory
to be built up prior to a supply from a new source.

  THE COLLATERAL SECURING THE NEW NOTES MAY BE INSUFFICIENT OR UNAVAILABLE IN
  THE EVENT OF A DEFAULT.

     No appraisal of the value of the collateral has been made in connection
with this offering and the value of the collateral in the event of liquidation
will depend on market and economic conditions, the availability of buyers and
other factors. Consequently, we cannot assure you that liquidating the
collateral securing the notes would produce proceeds in an amount sufficient to
pay any amounts due under the notes after also satisfying the obligations to pay
any other senior secured creditors. Nor can we assure you that the fair market
value of the collateral securing the notes would be sufficient to pay any
amounts due under the notes following their acceleration.

                                        17
<PAGE>

     The notes and guarantees related thereto will be effectively subordinated,
to the extent of the value of assets securing the notes and such guarantees, to
indebtedness that may be incurred under our domestic senior credit facility and
our performance bonds. In the event of a default under the notes, the proceeds
from the sale of the collateral may not be sufficient to satisfy in full our
obligations under our domestic senior credit facility, our performance bonds and
the notes. The amount to be received upon such a sale would depend upon numerous
factors, including the timing and manner of the sale. The book value of the
collateral will be less than the principal amount of the notes offered hereby.
By its nature, the collateral will be illiquid and may have no readily
ascertainable market value. Accordingly, there can be no assurance that the
collateral can be sold in a short period of time or that the proceeds obtained
therefrom will be sufficient to pay all amounts owing to the lenders under our
domestic senior credit facility and the holders of the notes. In addition, our
failure or inability to pay rent under real property leases could cause the loss
of certain collateral. To the extent that third parties (including the lenders
under our domestic senior credit facility) enjoy permitted liens, such third
parties may have rights and remedies with respect to the property subject to
such liens that, if exercised, could adversely affect the value of the
collateral. Additionally, the terms of the indenture allow us to issue
additional notes provided that we meet a specified coverage ratio. The indenture
does not require that we maintain the current level of collateral or maintain a
specific ratio of indebtedness to asset values. Any additional notes issued
pursuant to the indenture will rank pari passu to the notes issued in the
exchange offer and be entitled to the same rights and priority with respect to
the collateral. Thus, the issuance of additional notes pursuant to the indenture
may have the effect of significantly diluting your ability to recover payment in
full from the then existing pool of collateral. See "Description of the New
Notes -- Security."

  THE LIEN-RANKING PROVISIONS SET FORTH IN THE INDENTURE GOVERNING THE NOTES
  LIMIT THE RIGHTS OF THE HOLDERS OF THE NEW NOTES WITH RESPECT TO THE
  COLLATERAL SECURING THE NEW NOTES AND THE GUARANTEES RELATED THERETO.

     The rights of the holders of the notes with respect to the collateral of
the US issuer and its domestic restricted subsidiaries that secure the notes are
substantially limited pursuant to the terms of the lien-ranking provisions set
forth in the intercreditor agreement relating to the indenture governing the
notes. Under those lien-ranking provisions, at any time that obligations that
have the benefit of liens that are senior to the liens securing the notes and
such guarantees pursuant to the terms thereof are outstanding, any actions that
may be taken in respect of that collateral, including the ability to cause the
commencement of enforcement proceedings against that collateral and to control
the conduct of such proceedings, and releases of that collateral from the lien
of the collateral documents of the US issuer and its domestic restricted
subsidiaries, will be at the direction of the holders of the obligations secured
by such senior liens, and the collateral agent, on behalf of itself, the trustee
and the holders of the notes, will not have the ability to control or direct
such actions, even if the rights of the holders of the notes are adversely
affected. Additional releases of that collateral from the liens securing the
notes are permitted under some circumstances.

  THE ABILITY OF THE COLLATERAL AGENT TO FORECLOSE ON THE COLLATERAL MAY BE
  LIMITED PURSUANT TO BANKRUPTCY LAWS.

     The right of the collateral agent, as a secured party under the collateral
documents for the benefit of itself, the trustee and the holders of the US
notes, to foreclose upon and sell the collateral upon the occurrence of a
payment default is likely to be significantly impaired by applicable bankruptcy
laws, including the automatic stay provision contained in Section 362 of the
Bankruptcy Code. Under applicable federal bankruptcy laws, a secured creditor is
prohibited from repossessing its security from a debtor in a bankruptcy case, or
from disposing of security repossessed from such a debtor, without bankruptcy
court approval. Moreover, applicable federal bankruptcy laws generally permit
the debtor to continue to retain and use collateral even though the debtor is in
default under the applicable debt instruments. In view of the broad
discretionary powers of a bankruptcy court, we cannot predict whether payments
under the US notes would be made following commencement of, and during the
pendency of, a bankruptcy case, whether or when the collateral agent could
foreclose upon or sell the collateral or whether or to what extent holders of
notes would be compensated for any delay in payment or loss of value of the
collateral. Furthermore, if a bankruptcy court determines that the value of the
collateral is not sufficient to repay all amounts due on the notes, holders of
US notes would hold

                                        18
<PAGE>

"under-secured claims." Applicable federal bankruptcy laws do not permit the
payment or accrual of interest, costs and attorney's fees for "under-secured
claims" during a debtor's bankruptcy case.

     There are two primary insolvency regimes under Dutch law: the first,
moratorium of payment (surseance van betaling) is intended to facilitate the
reorganization of a debtor's debts and enable the debtor to continue as a going
concern. The second, bankruptcy (faillissement), is designed to liquidate and
distribute the assets of a debtor to its creditors. Under Netherlands law the
holders of the Dutch notes can in the event of bankruptcy or moratorium of
payment exercise the rights afforded to pledgees as if there were no bankruptcy
or moratorium of payment. However, bankruptcy or moratorium of payment involving
the Dutch issuer would affect the position of the holders of the Dutch notes as
pledgees in some respects, the most important of which are: (i) the right of
pledge will not extend to accounts receivable that arise under an agreement
creating continuing obligations of the Dutch issuer and become due and payable
on or after the date on which the Dutch issuer is declared bankrupt or granted a
moratorium of payments, (ii) the right of pledge will not extend to inventory
that is acquired by the Dutch issuer on or after the date on which the Dutch
issuer is declared bankrupt or granted a moratorium of payments, (iii) payments
received by the Dutch issuer from the debtors of pledged accounts receivable
after bankruptcy or moratorium of payments involving the Dutch issuer having
been declared, will be part of the bankrupt estate, although the holders of the
Dutch notes have the right to receive such amounts by preference after deduction
of certain costs, (iv) a mandatory "cooling-off" period of up to two months may
apply in case of bankruptcy or moratorium of payments involving the Dutch
issuer, which, if applicable, would delay the exercise of the rights of pledge
on the shares of PAH Belgium and the accounts receivable and (v) the holders of
the Dutch notes may be obliged to enforce their rights of pledge within a
reasonable period as determined by the judge-commissioner (rechter-commissaris)
appointed by the court in case of bankruptcy of the Dutch issuer.

  THE INDENTURE GOVERNING THE NEW NOTES AND THE INSTRUMENTS GOVERNING OUR OTHER
  INDEBTEDNESS IMPOSE SIGNIFICANT OPERATING AND FINANCIAL RESTRICTIONS ON US
  THAT MAY PREVENT US FROM PURSUING CERTAIN BUSINESS OPPORTUNITIES AND RESTRICT
  OUR ABILITY TO OPERATE OUR BUSINESS.

     The indenture governing the notes and our domestic senior credit facility
contain covenants that restrict our ability to take various actions, such as:

     - incur additional indebtedness or issue disqualified capital stock;

     - make investments

     - pay dividends or make other restricted payments;

     - issue capital stock of certain subsidiaries;

     - enter into transactions with affiliates;

     - create or incur liens;

     - transfer or sell assets;

     - incur dividend or other payment restrictions affecting certain
       subsidiaries; and

     - consummate a merger, consolidation or sale of all or substantially all of
       our assets.

     Our ability to comply with these covenants can be affected by events beyond
our control and we cannot assure you that we will satisfy those requirements. A
breach of any of these provisions could result in a default under these
instruments, which could allow all amounts outstanding thereunder to be declared
immediately due and payable. We cannot assure you that our assets would be
sufficient to repay such amounts (including amounts due under the notes) in
full. We may also be prevented from taking advantage of business opportunities
that arise if we fail to meet certain financial ratios or because of the
limitations imposed on us by the restrictive covenants under these instruments.
We urge you to read the information under "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources," "Description of Certain Indebtedness" and "Description of the New
Notes -- Certain Covenants" for a more detailed discussion of the substantive
requirements of these covenants.
                                        19
<PAGE>

  WE MAY BE UNABLE TO PURCHASE THE NEW NOTES UPON A CHANGE OF CONTROL.

     Upon the occurrence of a change of control, we will be required to offer to
purchase all outstanding notes at a price equal to 101% of the principal amount
of the notes, together with accrued and unpaid interest, if any, and additional
interest or liquidated damages, if any, to the date of repurchase.

     However, it is possible that we will not have sufficient funds at the time
of the change of control to make the required repurchase of the notes or that
restrictions in our domestic senior credit facility will not allow such
repurchases. If we are required to repurchase the notes, we would probably
require third party financing. We cannot be sure that we would be able to obtain
third party financing on acceptable terms, or at all. Our failure to purchase
the notes would be a default under the indenture, which would result in a
default under our domestic senior credit facility. See "Description of the New
Notes -- Change of Control" and "Description of Certain Indebtedness -- Domestic
Senior Credit Facility."

     One of the circumstances under which a change of control may occur is upon
the sale or disposition of all or substantially all of our capital stock or
assets. However, the phrase "all or substantially all" will likely be
interpreted under applicable state law and will be dependent upon particular
facts and circumstances. As a result, there may be a degree of uncertainty in
ascertaining whether a sale or disposition of "all or substantially all" of our
capital stock or assets has occurred, in which case, the ability of a holder of
the notes to obtain the benefit of an offer to repurchase all of a portion of
the notes held by such holder may be impaired.

  A COURT COULD CANCEL THE GUARANTEES AND SECURITY INTERESTS UNDER FRAUDULENT
  CONVEYANCE LAWS OR CERTAIN OTHER CIRCUMSTANCES.

     All of our present and future domestic restricted subsidiaries will
guarantee the notes and provide assets as security for such guarantees. If,
however, such a subsidiary becomes a debtor in a case under the Bankruptcy Code
or encounters other financial difficulty, under federal or state fraudulent
conveyance laws, renewable transactions or preferential payments, a court in the
relevant jurisdiction might avoid or cancel its guarantee and/or the liens
created by the security interest. The court might do so if it found that, when
the subsidiary entered into its guarantee and security arrangement or, in some
states, when payments become due thereunder, it received less than reasonably
equivalent value or fair consideration for such guarantee and/or security
arrangement and either was or was rendered insolvent, was left with inadequate
capital to conduct its business, or believed or should have believed that it
would incur debts beyond its ability to pay. The court might also avoid such
guarantee and/or security arrangement, without regard to the above factors, if
it found that the subsidiary entered into its guarantee and/or security
arrangement with actual or deemed intent to hinder, delay, or defraud its
creditors.

     A court could find that a subsidiary did not receive reasonably equivalent
value or fair consideration for its guarantee and/or security arrangement unless
it benefited directly or indirectly from the issuance of the notes. If a court
avoided such guarantee and/or security arrangement, you would no longer have a
claim against such subsidiary. In addition, the court might direct you to repay
any amounts already received from such subsidiary. If the court were to avoid
any guarantee and/or security arrangement, we cannot assure you that funds would
be available to pay the notes from another subsidiary or from any other source.
In addition to the grounds set out above and other grounds for invalidating
guarantees and security in insolvency, PAH Belgium's guarantee of the Dutch
notes and/or the security interests securing such guarantee could be invalidated
by a Belgian court if it is held to be ultra vires or contrary to PAH Belgium's
corporate interest. This could be the case if the court were to find that PAH
Belgium did not receive a benefit proportionate to the risk it incurred under
the guarantee, or if such risk is disproportionate to PAH Belgium's financial
means.

     The indenture will state that the liability of each subsidiary on its
guarantee and security arrangement is limited to the maximum amount that the
subsidiary can incur without risk that the guarantee or security arrangement
will be subject to avoidance as a fraudulent conveyance. This limitation may not
protect the guarantees and/or security arrangements from a fraudulent conveyance
attack or, if it does, that the guarantees and/or security arrangements will be
in amounts sufficient, if necessary, to pay obligations under the notes when
due.

                                        20
<PAGE>

  THE NEW NOTES WILL BE EFFECTIVELY SUBORDINATED TO ALL EXISTING AND FUTURE
  LIABILITIES, INCLUDING ALL INDEBTEDNESS, OF OUR FOREIGN AND UNRESTRICTED
  SUBSIDIARIES.

     Our operations are predominantly conducted through subsidiaries. Although
our domestic restricted subsidiaries have guaranteed the notes and entered into
security arrangements with respect to certain of their assets to secure
repayment of the notes, our foreign and unrestricted subsidiaries (other than
the Dutch issuer and its restricted subsidiaries with respect to the Dutch notes
and the related guarantees) have not guaranteed, granted liens or otherwise
become obligated with respect to the notes. Claims of creditors of such
subsidiaries, including trade creditors, will generally have priority as to the
assets of such subsidiaries over the claims of us and the holders of our
indebtedness, including the notes. The notes will therefore be effectively
subordinated to all existing and future liabilities, including indebtedness, of
our foreign subsidiaries (other than the Dutch issuer and its restricted
subsidiaries with respect to the Dutch notes and the related guarantees). As of
September 30, 2004, our foreign subsidiaries had indebtedness for borrowed money
and had other liabilities of approximately $28 million reflected on our
consolidated balance sheet. For fiscal 2004, our foreign subsidiaries
contributed approximately 29% of our consolidated net sales.

     In addition, distributions and intercompany transfers to us from our
subsidiaries will depend on:

     - their earnings;

     - covenants contained in our and their debt agreements, including our
       domestic senior credit facility and the notes;

     - covenants contained in other agreements to which we or our subsidiaries
       are or may become subject;

     - business and tax considerations; and

     - applicable law, including laws regarding the payment of dividends and
       distributions.

     We cannot assure you that the operating results of our subsidiaries at any
given time will be sufficient to make distributions or other payments to us or
that any distributions and/or payments will be adequate to pay any amounts due
under the notes or our other indebtedness.

  THERE IS NO ESTABLISHED TRADING MARKET FOR THE NEW UNITS, AND YOU MAY NOT BE
  ABLE TO SELL THEM QUICKLY OR AT THE PRICE YOU PAID.

     The units are a new issue of securities and there is no established trading
market for the units. Although, upon being declared effective, the registration
statement will generally allow resales of the exchange units, the exchange units
will constitute a new issue of securities with no established trading market. We
do not intend to apply for the units or any exchange units to be listed on any
security exchange or to arrange for quotation on any automated dealer quotation
systems. The initial purchaser has advised us that it intends to make a market
in the units and the exchange units, but it is not obligated to do so and may
discontinue any market making in the units or exchange units at any time, in its
sole discretion. You may not be able to sell your units or exchange units at a
particular time or at favorable prices. As a result, we cannot assure you as to
the liquidity of any trading market for the units or the exchange units or, in
the case of any holders or the units that do not exchange them, the trading
market for the units following the offer to exchange the units for exchange
units. As a result, you may be required to bear the financial risk of your
investment in the units indefinitely. Future trading prices of the units and
exchange units may be volatile and will depend on many factors, including:

     - our operating performance and financial condition;

     - our ability to complete the offer to exchange the units for the exchange
       units;

     - the interest of securities dealers in making a market for them; and

     - the market for similar securities.

                                        21
<PAGE>

  AS A RESULT OF THE DUTCH NOTES BEING ISSUED IN U.S. DOLLARS, WE MAY BE SUBJECT
  TO ADDITIONAL CURRENCY RISKS.

     The Dutch notes will be issued and paid for, and the interest paid on these
notes will be paid in, U.S. dollars. The Dutch issuer will lend the proceeds of
the Dutch notes to PAH Belgium, and will pay interest and principal on the Dutch
notes primarily from interest and principal repayments on such loan to PAH
Belgium or through dividends from PAH Belgium. PAH Belgium, however, receives
its revenues primarily in Euros. As a result, in the event that the U.S. dollar
appreciates against the Euro, PAH Belgium may have difficulty in generating the
U.S. dollars necessary to repay the U.S. dollar loan from its parent, the Dutch
issuer. From time to time, if we determine it is appropriate and advisable to do
so, we may seek to lessen the effect of exchange rate fluctuations through the
use of derivative financial instruments. We cannot assure you, however, that we
will be successful in these efforts.

  BELGIAN LAW MAY LIMIT THE GUARANTEE AND THE RELATED SECURITY OF PAH BELGIUM
  WITH RESPECT TO THE DUTCH NOTES.

     Under Belgian law, the following factors may limit the proceeds which could
ultimately be obtained in respect of the security provided by PAH Belgium:

     - The floating charge over the assets of PAH Belgium is restricted by
       statute to 50% of all of the inventory (work-in-progress and finished
       goods) of PAH Belgium. The remaining one-half of the inventory would thus
       fall outside the scope of the charge, and would be available for payment
       to unsecured creditors.

     - Enforcement of the floating charge may trigger the bankruptcy of PAH
       Belgium, as it could significantly impair the use of the business assets
       for the ongoing conduct of PAH Belgium's business.

     - Enforcement of the share pledge over the shares of PAH Belgium, the
       floating charge and the real property mortgage of PAH Belgium is subject
       to mandatory court intervention and approval. In insolvency, the
       insolvency official (under supervision of the court) will handle the
       sale. At certain stages of the process, PAH Belgium itself or other
       creditors could intervene. This could lead to significant delays in
       enforcement, which in turn could adversely affect the value of the
       assets, the timing of realization and therefore the amount of proceeds
       ultimately obtained for the benefit of the noteholders.

     - In any Belgian insolvency proceedings involving PAH Belgium, stays on
       enforcement of security are likely to be imposed. These stays could be
       significant, which could adversely affect the ultimate value of the
       collateral. In addition, under Belgian bankruptcy law, the trustee in
       bankruptcy may seek to set aside certain pre-bankruptcy transactions,
       including transactions at an undervalue, new security for pre-existing
       debts, and transactions entered into with the knowledge that the bankrupt
       debtor was in a state of insolvency.

RISK FACTORS RELATING TO OUR BUSINESS

  WE HAVE SIGNIFICANT ASSETS LOCATED OUTSIDE THE UNITED STATES AND A SIGNIFICANT
  PORTION OF OUR SALES AND EARNINGS ARE ATTRIBUTABLE TO OPERATIONS CONDUCTED
  ABROAD.

     During fiscal 2004, we operated manufacturing and other facilities in over
16 countries and sold our products in over 40 countries. At September 30, 2004,
approximately 55% of our assets were located outside the United States,
representing manufacturing facilities in Belgium, Brazil, Israel and the United
Kingdom, and, for fiscal 2004, approximately 28% of our net sales consisted of
sales made by us outside the United States. Changes in the relative values of
currencies take place from time to time and could in the future adversely affect
our results of operations as well as our ability to meet interest and principal
obligations on the notes. To the extent that the U.S. dollar weakens or
strengthens versus the applicable foreign currency, our results are favorably or
unfavorably affected. We may from time to time manage this exposure by entering
into foreign currency forward exchange contracts. Such contracts generally are
entered into with respect to anticipated revenues denominated in foreign
currencies for which timing of the receipt of payment can be
                                        22
<PAGE>

reasonably estimated. No assurances can be given that such hedging activities
will not result in losses which will have an adverse effect on our financial
condition or results of operations. In addition, there are times when we do not
hedge against foreign currency fluctuations and are therefore subject to the
risks associated with fluctuations in currency exchange rates. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
Note 17 to our Consolidated Financial Statements included elsewhere herein.

     In addition, international manufacturing, sales and raw materials sourcing
are subject to other inherent risks, including possible nationalization or
expropriation, labor unrest, political instability, price and exchange controls,
limitation on foreign participation in local enterprises, health-care
regulation, export duties and quotas, domestic and international customs and
tariffs, unexpected changes in regulatory environments, difficulty in obtaining
distribution and support, and potentially adverse tax consequences. Although
such risks have not had a material adverse effect on us in the past, there can
be no assurance that these factors will not have a material adverse impact on
our ability to increase or maintain our international sales or on our results of
operations in the future.

  WE HAVE ASSETS LOCATED IN ISRAEL AND A PORTION OF OURS SALES AND EARNINGS ARE
  ATTRIBUTABLE TO OPERATIONS CONDUCTED IN ISRAEL.

     Israeli operations are conducted through Koffolk (1949) Ltd., a wholly
owned subsidiary, and accounted for approximately 14% of our consolidated assets
as of September 30, 2004 and approximately 12% of our fiscal 2004 consolidated
net sales. We maintain two manufacturing facilities in Israel, one located near
Tel Aviv in Petach Tikva, which manufacturers and markets nutritional feed
additives for the livestock feed industry, and the second located south of
Beersheba in Ramat Hovav, which synthesizes anticoccidials (nicarbazin and
amprolium) and vitamins, the bulk of which are exported from Israel to the major
world markets. Accordingly, Koffolk is dependent on foreign markets and its
ability to reach those markets. Consequently, we are affected by social,
political and economic conditions affecting Israel, and any major hostilities
involving Israel as well as the Middle East or curtailment of trade between
Israel and its current trading partners, either as a result of hostilities or
otherwise, could have a material adverse effect on us. See "Conditions in
Israel."

  WE FACE COMPETITION IN EACH OF OUR MARKETS FROM A NUMBER OF LARGE AND SMALL
  COMPANIES, SOME OF WHICH HAVE GREATER FINANCIAL, RESEARCH AND DEVELOPMENT,
  PRODUCTION AND OTHER RESOURCES THAN WE HAVE.

     Many of our products, including our Animal Health and Nutrition and
Specialty Chemicals products, face competition from products which may be used
as an alternative or substitute therefore. In addition, we compete with several
large companies in the animal health and nutrition and specialty chemicals
businesses. To the extent these companies, or new entrants into the market,
offer comparable animal health and nutrition or specialty chemical products at
lower prices, our business could be adversely affected.

     Our competitive position is based principally on our product registrations,
customer service and support, breadth of product line, product quality,
manufacturing technology, facility location, and the selling prices of our
products. Our competitors can be expected to continue to improve the design and
performance of their products and to introduce new products with competitive
price and performance characteristics. There can be no assurance that we will
have sufficient resources to maintain our current competitive position or market
share. We typically do not enter into long-term agreements with our customers.
See "Business -- Competition" and "Business -- Sales, Marketing and
Distribution."

  OUR OPERATIONS, PROPERTIES AND SUBSIDIARIES ARE SUBJECT TO A WIDE VARIETY OF
  COMPLEX AND STRINGENT FEDERAL, STATE, LOCAL AND FOREIGN ENVIRONMENTAL LAWS AND
  REGULATIONS, INCLUDING THOSE GOVERNING THE USE, STORAGE, HANDLING, GENERATION,
  TREATMENT, EMISSION, RELEASE, DISCHARGE AND DISPOSAL OF CERTAIN MATERIALS AND
  WASTES, THE REMEDIATION OF CONTAMINATED SOIL AND GROUNDWATER, THE MANUFACTURE,
  SALE AND USE OF PESTICIDES AND THE HEALTH AND SAFETY OF EMPLOYEES
  (COLLECTIVELY, "ENVIRONMENTAL LAWS").

     Pursuant to these Environmental Laws, certain of our subsidiaries are
required to obtain and retain numerous governmental permits and approvals,
including RCRA Part B permits, to conduct various aspects of

                                        23
<PAGE>

their operations, any of which may be subject to revocation, modification or
denial under certain circumstances. U.S. manufacturers of specialty chemicals,
including certain of our subsidiaries, have expended, and may be required to
expend in the future, substantial funds for compliance with such Environmental
Laws.

     As recyclers of hazardous metal-containing chemical waste, certain of our
subsidiaries have been, and are likely to be, the focus of extensive compliance
reviews by federal, state and local environmental regulatory authorities. In the
past, certain of our subsidiaries have paid certain fines and agreed to certain
consent orders. While procedures have been implemented at each facility which
are intended to achieve compliance in all material respects with Environmental
Laws, there can be no assurance that our operations or activities or those of
certain of our subsidiaries will not result in civil or criminal enforcement
actions or private actions, resulting in mandatory clean-up requirements,
revocation of required permits or licenses or significant fines, penalties or
damages which could have a material adverse effect on us. In addition, we cannot
predict the extent to which any further legislation or regulation may affect the
market for our services or our cost of doing business. For instance, if
governmental enforcement efforts should lessen, the market for the recycling
services by certain of our subsidiaries could decline. Alternatively, changes in
Environmental Laws (some of which are set forth below) might increase the cost
of such services by imposing additional requirements. States that have received
authorization to administer their own hazardous waste management programs may
also amend their applicable Environmental Laws, and may impose requirements
which are stricter than those imposed by the U.S. Environmental Protection
Agency ("EPA"). No assurance can be provided that such changes will not
adversely affect the ability of our subsidiaries to provide services at a
competitive price and thereby reduce the market for their services.

     As such, the nature of our current and former operations and those of our
subsidiaries exposes us and our subsidiaries to the risk of claims with respect
to such matters and there can be no assurance that material costs and
liabilities will not be incurred in connection with such claims. Based upon our
experience to date, we believe that the future cost of compliance with existing
Environmental Laws, and liability for known environmental claims pursuant to
such Environmental Laws, will not have a material adverse effect on us. However,
future events, such as new information, changes in existing Environmental Laws
or their interpretation, and more vigorous enforcement policies of regulatory
agencies, may give rise to additional expenditures or liabilities that could be
material. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business -- Environmental Matters," "Business -- Legal
Proceedings," and our Consolidated Financial Statements included herein.

  THE USE OF ANTIBIOTICS IN MEDICATED FEED ADDITIVES IS A SUBJECT OF LEGISLATIVE
  AND REGULATORY INTEREST.

     The issue of potential for increased bacterial resistance to certain
antibiotics used in certain food-producing animals is the subject of discussions
on a worldwide basis and, in certain instances, has led to government
restrictions on the use of antibiotic MFAs in these food-producing animals. The
sale of medicated feed additives containing antibiotics is a material portion of
our business. Legislative bills are introduced in the U.S. Congress from time to
time, some of which, if adopted, could have an adverse effect on our business.
However, in the past, such bills that could have had a material adverse effect,
have not had sufficient support to become law. The animal pharmaceutical
industry is actively engaged in the legislative process. One of these
initiatives is a proposed bill (S.1460) referred to the Committee on Health,
Education, Labor, and Pensions of the Senate, called the Preservation of
Antibiotics for Medical Treatment Act of 2003, sponsored by Senator Edward
Kennedy. Should legislative, regulatory or other developments, including
increased influence of consumer groups and other special interest lobbyists on
the legislative and/or regulatory process, result in further restrictions on the
sale of such products, it could have a material adverse impact on our financial
position, results of operations and cash flows.

     On November 23, 2004, the FDA's Center for Veterinary Medicine released a
draft for comment of its long awaited risk assessment of streptogramin
resistance for treatment of certain infections in humans attributable to the use
of streptogramins in animals (the "virginiamycin risk assessment"). The risk
assessment was initiated over three years ago after the 1999 approval of
Synercid for treating E. faecium infection in humans, which approval led to
increased attention to the use of streptogramins in animals. Synercid and
virginiamycin are both members of the streptogramin class of antimicrobial
drugs. The draft risk
                                        24
<PAGE>

assessment specifically addresses the risk of humans failing Synercid therapy
for E. faecium infections due to the acquisition of resistance as a result of
the ingestion of resistant strains of E. faecium present in food. The draft risk
assessment found that it is difficult to assess the extent of transfer of
streptogramin resistance from virginiamycin-exposed E. faecium infection to E.
faecium infection found in human infections based on the available data, and
that there are certain differences in the characteristics of E. faecium isolated
from animal and human sources. The risk assessment concluded that these two
findings, along with the current incomplete knowledge of the genetic basis of
streptogramin resistance, prevents the risk assessment from making firm
conclusions as to whether, and, if so, how much, the use of virginiamycin in
food animals contributes to the occurrence of virginiamycin-resistant infections
in humans via a foodborne pathway.

     In August 2002, Japan's Ministry of Agriculture, Forests and Fisheries
(MAFF) launched a review of 29 U.S., European, and Japanese animal feed
additives to determine whether the preventive use of certain medicated animal
feed additives should be restricted because of the potential transfer of
antimicrobial resistance to similar drugs used in treating humans. In January
2003, MAFF announced that it would conduct a transparent science-based risk
assessment of certain feed additives, consistent with the World Trade
Organization's ("WTO") Agreement on the Application of Sanitary and
Phyto-Sanitary Measures (SPS Agreement), and thus was no longer considering an
immediate ban on such products. The SPS Agreement requires the 165 countries
that are WTO Members to base food safety and animal health measures on
scientific principles and evidence. Accordingly, such a risk assessment involves
a detailed study of potential risks and appropriate methods of managing such
risks, and must be based on valid scientific principles and evidence.

     The Australian Pesticides and Veterinary Medicines Authority (APPVMA) is
conducting a review of virginiamycin, which is likely to result in additional
restrictions on the labeling of virginiamycin.

     In February 2003, the Sixtieth Joint FAO/WHO Expert Committee on Food
Additives (JECFA) was held in Geneva, Switzerland to evaluate certain residues
of veterinary drugs in food. Based on an earlier opinion from the thirty-sixth
JECFA meeting in 1990, the Committee determined that an "acceptable daily
intake" (ADI) of carbadox and another animal drug, flumequine, could not be
established, because of the lack of an internationally agreed methodology for
evaluating the scientific risks posed by such products. Accordingly, the JECFA
recommended that the international Maximum Residue Levels (MRLs) for such
products be withdrawn.

     The JECFA consists of experts from various countries acting in their
individual capacities. Its recommendations are not binding on the full Codex
Alimentarius Commission ("Codex"), which is the recognized international
standard-setting body for animal drugs. The Codex and its member countries are
responsible for any final decision regarding the MRL, and must review JECFA's
recommendations before any decision could be made. At present, the MRL for
carbadox, which was established by JECFA in 1990, remains the international
standard. Nevertheless, foreign governments could decide to restrict the uses of
carbadox in the interim, as has occurred in the European Union. Japan has banned
the use of carbadox in Japan, while allowing the import of pork from swine fed a
carbadox containing MFA so long as no residues are detectable in the imported
pork.

     Codex Committee on Residues of Veterinary Drugs in Food (CCRVDF) has
recently endorsed the JECFA recommendation to withdraw the Codex MRL for
carbadox.

     In 1998, the FDA conducted an evaluation of carbadox and found that it was
safe based on the U.S. "sensitivity of the method" policy. Accordingly, the FDA
continues to permit the approved use of carbadox in the United States.

     In the European Union, the Commission withdrew marketing authorization of a
number of anticoccidials, including nicarbazin, as the Commission did not
consider the submissions to be in full compliance with its new regulations. We
have since completed the necessary data and resubmitted our nicarbazin dossier.
Feasibility and timetable for new registration will depend on the nature of
demands and remarks from the Commission.

     There can be no assurance that the United States, Japan or other countries
may not decide to ban or curtail the uses of certain medicated feed additives.
Such a ban, depending upon the product involved and its
                                        25
<PAGE>

importance to our MFA business, in one or more countries could have a material
adverse effect on our business.

  THE TESTING, MANUFACTURING, AND MARKETING OF CERTAIN OF OUR PRODUCTS ARE
  SUBJECT TO EXTENSIVE REGULATION BY NUMEROUS GOVERNMENT AUTHORITIES IN THE
  UNITED STATES AND OTHER COUNTRIES, INCLUDING, BUT NOT LIMITED TO, THE UNITED
  STATES FOOD AND DRUG ADMINISTRATION (FDA).

     Among other requirements, FDA approval of our MFA and NFA products,
including a review of the manufacturing processes and facilities used to produce
such products, is required before such products may be marketed in the United
States. Similarly, marketing approval by a foreign governmental authority is
typically required before such MFA and NFA products may be marketed in a
particular foreign country. In order to obtain FDA approval of a new animal
health and nutrition product, we must, among other things, demonstrate to the
satisfaction of the FDA that the product is safe and effective for its intended
uses and that we are capable of manufacturing the product with procedures that
conform to the FDA's current good manufacturing practice ("cGMP") regulations,
which must be followed at all times. The process of seeking FDA approvals can be
costly, time consuming, and subject to unanticipated and significant delays.
There can be no assurance that such approvals will be granted to us on a timely
basis, or at all. Any delay in obtaining or any failure to obtain such approvals
would adversely affect our ability to introduce and market MFA and NFA products
and to generate product revenue. See "Business -- Government Regulation."

     FIFRA, a health and safety statute, requires that all pesticides sold or
distributed in the U.S. must first be registered with the EPA. In order to
obtain a registration, an applicant typically must demonstrate through test data
that its product will not cause unreasonable adverse effects on the environment.
Depending on the specific requirements at issue, these tests can be very
expensive, running to millions of dollars. However, if the product in question
is generic in nature (i.e., chemically identical or substantially similar to a
previously-registered product), the applicant has the option of citing and
relying on the test data supporting the original registrant's product, in lieu
of submitting data. Should the generic applicant choose the citation option, it
must offer to pay compensation to the original submitter and must agree to enter
into binding arbitration with the original submitter if the parties are unable
to agree on the terms and amount of compensation.

     We have elected the citation option in the past and may use the citation
option in the future should we conclude that it is economically desirable to do
so. While there are cost savings associated with the opportunity to avoid one's
own testing and demonstration to the EPA of test data, there is, in each
instance, a risk that the level of compensation ultimately required to be paid
by us to the original registrant will be substantial. There is also the risk
that a third party will elect the citation option with respect to one of our
products, and that the level of compensation ultimately required to be paid to
us as the original registrant will not be substantial.

  MR. JACK BENDHEIM OWNS A SUBSTANTIAL AMOUNT OF OUTSTANDING SHARES OF OUR
  VOTING CAPITAL STOCK.

     Pursuant to corporate law and certain shareholder agreements, Mr. Bendheim
controls the election of all but four of seven of the directors of the Company
and Marvin Sussman, Mr. Bendheim's brother-in-law, controls the election of one
of the directors of the Company. Mr. Bendheim's capital stock in the Company and
board seats give him substantial influence on the outcome of corporate
transactions or other matters submitted to the board of directors or
stockholders for approval, including mergers, consolidations and the sale of all
or substantially all of our assets, and also the power to prevent or cause a
change in control. Mr. Bendheim is also the Chairman of the Board and President.

     The interests of Mr. Bendheim could conflict with your interests. For
example, if we encounter financial difficulties or are unable to pay our debts
as they mature, the interests of Mr. Bendheim as a significant holder of our
equity might conflict with your interests as a holder of the notes. Mr. Bendheim
also may have an interest in pursuing acquisitions, divestitures, financings or
other transactions that, in his judgment, could enhance his equity investment,
even though such transactions might involve risks to you, as holders of the
notes. See "Management -- Directors and Executive Officers" and "Principal
Stockholders."

                                        26
<PAGE>

  THE PRINCIPAL RAW MATERIALS USED BY US IN THE MANUFACTURE OF OUR PRODUCTS CAN
  BE SUBJECT TO CYCLICAL PRICE FLUCTUATIONS.

     No single raw material accounted for more than 5% of our fiscal 2004 cost
of goods sold. While the selling prices of our products tend to increase or
decrease over time with the cost of raw materials, such changes may not occur
simultaneously or to the same degree. There can be no assurance that we will be
able to pass any increases in raw material costs through to our customers in the
form of price increases. Significant increases in the price of raw materials, if
not offset by product price increases, would have an adverse impact upon our
profitability.

  OUR REVENUES ARE DEPENDENT ON THE CONTINUED OPERATION OF OUR VARIOUS
  MANUFACTURING FACILITIES AND INTELLECTUAL PROPERTY.

     Although presently all our operating plants are considered to be in good
condition, the operation of animal health and nutrition and specialty chemical
manufacturing plants involves many risks, including the breakdown, failure or
substandard performance of equipment, power outages, the improper installation
or operation of equipment, natural disasters and the need to comply with
environmental and other directives of governmental agencies. Certain of our
product lines are manufactured at a single facility and production would not be
transferable to another site. The occurrence of material operational problems,
including but not limited to the above events, may adversely affect our
profitability during the period of such operational difficulties.

     Our competitive position is also dependent upon unpatented trade secrets,
which generally are difficult to protect. There can be no assurance that others
will not independently develop substantially equivalent proprietary information
and techniques or otherwise gain access to our trade secrets, that such trade
secrets will not be disclosed or that we can effectively protect our rights to
unpatented trade secrets.

  WE HAVE BEEN AND MAY CONTINUE TO BE SUBJECT TO CLAIMS OF INJURY FROM DIRECT
  EXPOSURE TO CERTAIN OF OUR SUBSIDIARIES' PRODUCTS, WHICH CONSTITUTE OR CONTAIN
  HAZARDOUS MATERIALS AND FROM INDIRECT EXPOSURE WHEN SUCH MATERIALS ARE
  INCORPORATED INTO OTHER COMPANIES' PRODUCTS.

     Because certain of our subsidiaries' products constitute or contain
hazardous materials, and because the production of certain chemicals involves
the use, handling, processing, storage and transportation of hazardous
materials, we and our subsidiaries have been subject to claims of injury from
direct exposure to such materials and from indirect exposure when such materials
are incorporated into other companies' products. There can be no assurance that
as a result of past or future operations, there will not be additional claims of
injury by employees or members of the public due to exposure, or alleged
exposure, to such materials. In most cases, such claims are covered by insurance
and, where applicable, worker's compensation insurance, subject to policy limits
and exclusions.

     Furthermore, we and our subsidiaries are parties to a number of claims and
lawsuits arising out of the normal course of business including product
liabilities and governmental regulation. Certain of these actions seek damages
in various amounts. In most cases, such claims are covered by insurance. We also
have exposure to present and future claims with respect to workplace exposure,
workers' compensation and other matters. There can be no assurance as to the
actual amount of these liabilities or the timing thereof.

  WE ARE SUBJECT TO RISKS THAT MAY NOT BE COVERED BY OUR INSURANCE POLICIES.

     In addition to pollution and other environmental risks, we are subject to
risks inherent in the animal health and nutrition and specialty chemicals
industries, such as explosions, fires and spills or releases. Any significant
interruption of operations at our principal facilities could have a material
adverse effect on us. We maintain general liability insurance and property and
business interruption insurance with coverage limits that we believe are
adequate. Because of the nature of industry hazards, it is possible that
liabilities for pollution and other damages arising from a major occurrence may
not be covered by our insurance policies or could exceed insurance coverages or
policy limits or that such insurance may not be available at reasonable rates in
the future. Any such liabilities, which could arise due to injury or loss of
life, severe damage to and destruction of property and equipment, pollution or
other environmental damage or suspension of operations, could have a
                                        27
<PAGE>

material adverse effect on us. See "-- Our operations, properties and
subsidiaries are subject to a wide variety of complex and stringent federal,
state, local and foreign environmental laws and regulations, including those
governing the use, storage, handling, generation, treatment, emission, release,
discharge and disposal of certain materials and wastes, the remediation of
contaminated soil and groundwater, the manufacture, sale and use of pesticides
and the health and safety of employees (collectively, 'Environmental Laws')."

  CERTAIN OF OUR EMPLOYEES ARE COVERED BY COLLECTIVE BARGAINING AGREEMENTS.

     As of September 30, 2004, approximately 16 of our domestic employees were
covered by a collective bargaining agreement which expires in 2006. Most of our
employees in Israel are covered by collective bargaining agreements. We believe
that we have satisfactory relations with our unions and, therefore, anticipate
reaching new agreements on satisfactory terms as the existing agreements expire
or shortly thereafter. There can be no assurance, however, that new agreements
will be reached without a work stoppage or strike or will be reached on terms
satisfactory to us. A prolonged work stoppage or strike at any of our
manufacturing facilities could have a material adverse effect on our results of
operations.

  WE ARE DEPENDENT ON KEY PERSONNEL.

     Our operations are dependent on the continued efforts of our senior
executive officers, Jack Bendheim, Gerald Carlson and Richard Johnson. The loss
of the services of any of Messrs. Bendheim, Carlson or Johnson could have a
material adverse effect on us. We do not carry key-man life insurance other than
to fund stock repurchase or compensation obligations and other than pursuant to
our arrangements with the Palladium Investors. See "Management -- Directors and
Executive Officers."

                                        28
<PAGE>

                                USE OF PROCEEDS

     We will not receive any proceeds from this exchange offer. In consideration
for issuing the new units, we will receive in exchange a like amount of the old
units. The old units surrendered in exchange for the new units will be retired
and cancelled and cannot be reissued. Accordingly, issuance of the new notes
will not result in any increase in our indebtedness. We have agreed to bear the
expenses of this exchange offer. No underwriter is being used in connection with
the exchange offer.

     The net proceeds from the sale of the old units issued in October 2003 were
approximately $97.3 million, after deducting fees and expenses from the
offering. See "Description of Certain Indebtedness" for more information. These
net proceeds were used to repay approximately $34.9 million of indebtedness
outstanding under our previous credit facility, purchase $52.0 million of our
senior subordinated notes at a price of 60% plus accrued and unpaid interest
through the purchase date and pay certain of our obligations to Pfizer Inc. The
proceeds of the 2004 Offering were used to refinance $22.5 million of
indebtedness outstanding under our domestic senior credit facility.

                                        29
<PAGE>

                                 CAPITALIZATION

     The following table sets forth our capitalization at September 30, 2004,
and as adjusted to give effect to the 2004 Offering and the application of the
proceeds therefrom as described under "Prospectus Summary -- The
Company -- Recent Developments -- The Offering." This presentation should be
read in conjunction with our historical financial statements and the related
notes thereto included elsewhere in this prospectus.

<Table>
<Caption>
                                                                AT SEPTEMBER 30, 2004
                                                              -------------------------
                                                               ACTUAL    AS ADJUSTED(2)
                                                              --------   --------------
                                                                   (IN THOUSANDS)
<S>                                                           <C>        <C>
Cash and cash equivalents...................................  $  5,778      $ 15,626
                                                              ========      ========
Debt:
  Domestic senior credit facility(1)........................    11,268      $     --
  Foreign bank loans........................................     5,912         5,912
  Senior secured notes due 2007.............................   105,000       127,491
  Senior subordinated notes due 2008........................    48,029        48,029
  Other.....................................................         4             4
                                                              --------      --------
       Total debt...........................................   170,213       181,436
Series C redeemable preferred stock.........................    25,359        25,359
Shareholders' deficit.......................................   (61,574)      (61,574)
                                                              --------      --------
     Total capitalization...................................  $133,998      $145,221
                                                              ========      ========
</Table>

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

(1) Borrowings under our domestic senior credit facility were approximately
    $22.5 million at the closing of the 2004 Offering. See "Prospectus
    Summary -- The Company -- Recent Developments -- Refinancing of Domestic
    Senior Credit Facility with Proceeds of Additional Units."

(2) Adjusted financial data give effect to the outstanding senior secured notes,
    including the 2004 Offering, and the application of the proceeds as provided
    in the "Prospectus Summary -- The Company -- Recent Developments -- The
    Offering."

                                        30
<PAGE>

                      SELECTED CONSOLIDATED FINANCIAL DATA

     The following selected consolidated financial data as of and for fiscal
years ended June 30, 2000, 2001, 2002, 2003 and 2004 have been derived from our
audited annual consolidated financial statements. The following selected
consolidated financial data as of and for the three months ended September 30,
2004 and 2003 have been derived from our unaudited interim consolidated
financial statements. The selected consolidated financial data reflect our Odda,
Carbide, MRT and La Cornubia businesses as discontinued operations for all
periods presented. You should read the information set forth below in
conjunction with our "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and our consolidated financial statements
and related notes included elsewhere in this prospectus.

<Table>
<Caption>
                                                                                                  3 MONTHS ENDED
                                                     FISCAL YEARS ENDED JUNE 30,                   SEPTEMBER 30,
                                         ----------------------------------------------------   -------------------
                                           2000       2001       2002       2003       2004       2003       2004
                                         --------   --------   --------   --------   --------   --------   --------
                                                     (2)(3)                            (7)          (UNAUDITED)
                                                           (DOLLARS IN THOUSANDS, EXCEPT RATIOS)
<S>                                      <C>        <C>        <C>        <C>        <C>        <C>        <C>
RESULTS OF OPERATIONS:
Net sales..............................  $261,769   $302,328   $328,676   $341,746   $358,274   $ 84,950   $ 88,275
Cost of goods sold.....................   201,320    234,784    247,411    251,200    267,871     63,790     65,653
                                         --------   --------   --------   --------   --------   --------   --------
Gross profit...........................    60,449     67,544     81,265     90,546     90,403     21,160     22,622
Selling, general and administrative
  expenses(5)..........................    47,528     61,624     70,636     65,050     66,128     15,785     16,594
Curtailment of operations at
  manufacturing facility...............    (1,481)
Costs of non-completed transaction.....                                                 5,261
                                         --------   --------   --------   --------   --------   --------   --------
Operating income.......................    14,402      5,920     10,629     25,496     19,014      5,375      6,028
Interest expense.......................    14,520     17,919     18,070     16,281     18,618      3,933      5,246
Interest (income)......................      (600)      (566)      (346)       (85)      (130)      (242)       (25)
Other expense (income), net............      (506)       327      3,354      1,666        (89)      (585)        25
(Gain) from property damage claim......      (946)
(Gain) from sale of assets.............               (1,790)        (5)      (127)      (692)                   (1)
Net (gain) on extinguishment of
  debt(6)..............................                                               (23,226)
                                         --------   --------   --------   --------   --------   --------   --------
Income (loss) from continuing
  operations before income taxes.......     1,934     (9,970)   (10,444)     7,761     24,533      2,269        783
Provision (benefit) for income
  taxes(4).............................     1,143        (24)    14,767     10,060      7,969        783        924
                                         --------   --------   --------   --------   --------   --------   --------
Income (loss) from continuing
  operations...........................       791     (9,946)   (25,211)    (2,299)    16,564      1,486       (141)
Income (loss) from discontinued
  operations(1)........................     9,262     (4,949)   (26,559)   (14,577)    (1,625)      (462)
Income (loss) on disposal of
  discontinued operations(1)...........                                       (683)    (2,089)       231
                                         --------   --------   --------   --------   --------   --------   --------
Net income (loss)......................    10,053    (14,895)   (51,770)   (17,559)    12,850      1,255       (141)
Change in derivative instruments.......                           1,062       (981)       (72)       317         75
Change in foreign currency translation
  adjustment...........................        55     (5,146)    (6,125)     7,377       (776)      (859)     3,007
                                         --------   --------   --------   --------   --------   --------   --------
Comprehensive income (loss)............  $ 10,108   $(20,041)  $(56,833)  $(11,163)  $ 12,002   $    713   $  2,941
                                         ========   ========   ========   ========   ========   ========   ========
Net income (loss)......................  $ 10,053   $(14,895)  $(51,770)  $(17,559)  $ 12,850   $  1,255   $   (141)
Excess of the reduction of redeemable
  preferred stock over total assets
  divested and costs and liabilities
  incurred on the Prince Transaction...        --         --         --         --     20,138         --         --
Dividends and equity value accreted on
  series B and C redeemable preferred
  stock................................        --     (8,172)    (7,623)   (12,278)   (11,463)      (987)      (682)
                                         --------   --------   --------   --------   --------   --------   --------
Net income (loss) available to common
  shareholders.........................  $ 10,053   $(23,067)  $(59,393)  $(29,837)  $ 21,525   $    268   $   (823)
                                         ========   ========   ========   ========   ========   ========   ========
</Table>

                                        31
<PAGE>

<Table>
<Caption>
                                                                                                  3 MONTHS ENDED
                                                     FISCAL YEARS ENDED JUNE 30,                   SEPTEMBER 30,
                                         ----------------------------------------------------   -------------------
                                           2000       2001       2002       2003       2004       2003       2004
                                         --------   --------   --------   --------   --------   --------   --------
                                                     (2)(3)                            (7)          (UNAUDITED)
                                                           (DOLLARS IN THOUSANDS, EXCEPT RATIOS)
<S>                                      <C>        <C>        <C>        <C>        <C>        <C>        <C>
OTHER FINANCIAL DATA:
Depreciation and amortization..........  $  7,931   $ 10,063   $ 12,355   $ 12,524   $ 13,183   $  3,168   $  3,355
Capital expenditures...................    11,033      6,437      8,518      8,636      6,244        852      1,748
Ratio of earnings to fixed
  charges(8)...........................       1.1         --         --        1.4        2.2        1.6        1.1
(Deficiency) in earnings necessary to
  cover fixed charges(9)...............        --     (9,156)   (10,061)        --         --         --         --
BALANCE SHEET DATA:
Cash and cash equivalents..............  $  2,403   $ 14,845   $  6,419   $ 11,179   $  5,568   $ 26,917   $  5,778
Total assets...........................   258,450    330,019    296,444    274,347    241,369    276,216    243,551
Long-term debt.........................   139,685    139,455    136,641    102,263    158,018    102,756    157,992
Series B and C redeemable preferred
  stock................................        --     48,980     56,602     68,881     24,678     69,868     25,359
Total stockholders' equity (deficit)...    31,618      3,405    (61,189)   (84,510)   (63,833)   (84,784)   (61,574)
</Table>

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

(1) The Company's Odda Smelteverk (Norway) ("Odda"), Carbide Industries (U.K.)
    ("Carbide"), Mineral Resource Technologies, Inc. ("MRT"), and La Cornubia
    S.A. (France) ("La Cornubia") businesses have been classified as
    discontinued operations as discussed in the notes to consolidated financial
    statements contained in this prospectus. The Company's selected consolidated
    financial data have been reclassified to report separately the operating
    results, financial position and cash flows of the discontinued operations.

(2) On November 30, 2000, the Company purchased the Medicated Feed Additives
    ("MFA") business of Pfizer, Inc. The operating results, financial position
    and cash flows of this business are included in the Company's selected
    consolidated financial data from the date of acquisition. The acquisition
    was financed through the issuance of a note payable to Pfizer, Inc. and the
    issuance of the Series B and C redeemable preferred stock.

(3) During May and June 2001, the Company sold its Agtrol crop protection
    business to Nufarm, Inc. The sale included inventory and intangible assets,
    but did not include manufacturing facilities. The results of operations,
    financial position and cash flows of the Agtrol business are included in the
    Company's selected consolidated financial data through the dates of
    divestiture.

(4) The Company's fiscal 2002 provision for income taxes includes a charge of
    $12,200 for an increased valuation allowance for deferred tax assets
    recorded in previous years and a charge of $13,600 for a full valuation
    allowance for deferred tax assets relating to fiscal 2002 operating losses.
    The Company' fiscal 2003 provision for income taxes includes a charge of
    $5,600 for increased valuation allowances for deferred tax assets in foreign
    jurisdictions.

(5) The Company's selling, general and administrative expenses include
    litigation income of $742 in fiscal 2002 and $3,040 in fiscal 2003 relating
    to a class action suit brought against various vitamin manufacturers.

(6) The Company recorded a net gain on extinguishment of debt relating to its
    refinancing activities in fiscal 2004 as discussed in the notes to
    consolidated financial statements contained in this prospectus.

(7) Effective December 26, 2003, the Company completed the divestiture of
    substantially all of the business and assets of its subsidiary, The Prince
    Manufacturing Company ("PMC") as discussed in the notes to consolidated
    financial statements contained in this prospectus. The results of
    operations, financial position and cash flows of PMC are included in the
    Company's selected consolidated financial data through the date of
    divestiture.

(8) For purposes of computing the consolidated ratio of earnings to fixed
    charges, earnings represents earnings from continuing operations before
    income taxes and fixed charges. Fixed charges include interest expense and a
    portion of rentals determined to be representative of the interest component
    of such rental expense. Management believes that one-third is representative
    of the interest component of such rental expense.

(9) For periods in which earnings before fixed charges were insufficient to
    cover fixed charges, the dollar amount of coverage deficiency, instead of
    the ratio, is disclosed.

                                        32
<PAGE>

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS

     This information should be read in conjunction with the consolidated
financial statements and related notes contained in this prospectus. The
Company's Odda, Carbide, MRT and La Cornubia businesses have been classified as
discontinued operations. This discussion presents information only for
continuing operations, unless otherwise indicated. The Company presents its
annual consolidated financial statements on the basis of its fiscal year ending
June 30.

GENERAL

     The Company is a leading diversified global manufacturer and marketer of a
broad range of animal health and nutrition products, specifically medicated feed
additives (MFAs) and nutritional feed additives (NFAs), which are sold
throughout the world predominantly to the poultry, swine and cattle markets.
MFAs are used preventatively and therapeutically in animal feeds to produce
healthy livestock. The Company believes it is the third largest manufacturer and
marketer of MFAs in the world, and that certain of its MFA products have leading
positions in the marketplace. The Company is also a specialty chemicals
manufacturer and marketer, serving primarily the United States pressure-treated
wood and chemical industries. The Company has several proprietary products, and
many of the Company's products provide critical performance attributes to
customers' products, while representing a relatively small percentage of total
end-product cost.

     In August 2003, the Company completed the sale of MRT for net proceeds
after transaction costs of approximately $13.8 million. In December 2003, the
Company completed the divestiture of substantially all of the assets of The
Prince Manufacturing Company (see discussion below under "Prince Transactions").

     On June 30, 2004, one of the Company's French subsidiaries, La Cornubia SA
("La Cornubia"), filed for bankruptcy under the insolvency laws of France. The
Company believes that, as a result of the bankruptcy filing by La Cornubia, it
is possible that LC Holding S.A. ("LC Holding"), La Cornubia's parent, a holding
company with no assets except for its investment in La Cornubia, may also file
for bankruptcy in France. The Company does not believe that La Cornubia's
bankruptcy filing, nor the possible bankruptcy filing by LC Holding, will have a
material adverse effect on its financial condition or results of operations.

     During 2004, the Company incurred $5.3 million of costs in connection with
a potential acquisition transaction that was not completed. The Company has
charged the costs to expense in its 2004 results. The costs primarily consisted
of professional fees for services in connection with the transaction.

     The Company's ability to fund its operating plan depends upon the continued
availability of borrowing under its domestic senior credit facility. The Company
believes that it will be able to comply with the terms of its covenants under
its domestic senior credit facility based on its forecasted operating plan. In
the event of adverse operating results and/or violation of covenants under this
facility, there can be no assurance that the Company would be able to obtain
waivers or amendments on favorable terms, if at all. The Company's fiscal 2005
operating plan projects adequate liquidity throughout the year, with periods of
reduced availability around the dates of the semi-annual interest payments due
December 1, 2004 and June 1, 2005 related to its senior secured and senior
subordinated notes. The Company is pursuing additional cost reduction
activities, working capital improvement plans, and sales of non-strategic assets
to ensure additional liquidity. The Company also has availability under foreign
credit lines that likely would be available. The Company also has undertaken a
strategic review of its manufacturing capabilities, and is currently increasing
inventory levels of certain products to enhance future supply flexibility and
reduce cost. The Company intends to sell its manufacturing facility in
Rixensart, Belgium and will continue to increase inventory levels of
virginiamycin to ensure an adequate supply until a new production source is
operational (see discussion below under "Sale of Belgium Plant and Related
Consent Solicitation." There can be no assurance the Company will be successful
in any of the above-noted actions.

                                        33
<PAGE>

THE OFFERING

     On December 21, 2004, we completed a private placement (the "2004
Offering") under Rule 144A and Regulation S of the Securities Act, pursuant to
which the US issuer and the Dutch issuer issued and sold $22.491 million of
additional old units, from which we received net proceeds of $21.1 million. We
used the proceeds from the 2004 Offering to refinance $22.5 million of
indebtedness outstanding under our domestic senior credit facility. See
"Description of Certain Indebtedness -- Domestic Senior Credit Facility" for
more information.

SALE OF BELGIUM PLANT AND RELATED CONSENT SOLICITATION

     Consent Solicitation.  In connection with the completion of the 2004
Offering, we solicited consents with regard to our outstanding senior secured
notes to amendments to the indenture governing such notes to permit the sale of
substantially all of the facilities owned by Phibro Animal Health SA (formerly
Phibro Animal Health (Belgium) SPRL) ("PAH Belgium"), a wholly owned subsidiary
of the Dutch issuer, in Rixensart, Belgium (the "Belgium Plant"), to reduce
excess manufacturing capacity and to reduce operating expenses and, in
furtherance thereof, to permit the maximum amount of indebtedness under our
domestic senior credit facility permitted under the indenture governing the
notes to be increased from $15.0 million to $37.5 and to permit the related
transactions described herein. The requisite consents were obtained and the
indenture was amended pursuant to the Second Supplemental Indenture dated as of
December 8, 2004. The amendments became effective on December 21, 2004 in
connection with the 2004 Offering.

     Sale of Belgium Plant.  On December 16, 2004 we entered into an agreement
to sell the Belgium Plant to Glaxosmithkline Biologicals S.A. ("GSK") and to
transfer to GSK a majority of the employees of PAH Belgium. GSK was a previous
owner of the Rixensart plant, and sold it to Pfizer SA in 1995, which sold it to
PAH Belgium in 2000. Such sale, when completed, would include the following
elements: (i) the transfer of substantially all of the land and buildings and
certain equipment of PAH Belgium at the Belgium Plant, as well as the industrial
activities and intellectual property relating to certain solvent technology of
Phibro Belgium, for a purchase price of EUR 6.2 million, payable at closing;
(ii) the transfer to GSK of a majority of the employees of PAH Belgium and the
corresponding responsibility for statutory severance obligations; (iii) GSK
agreeing to be responsible for costs of cleaning-up, by demolition or otherwise,
certain buildings not to be used by it, but for PAH Belgium to reimburse GSK up
to a maximum of EUR 0.7 million for such clean-up costs; (iv) in recognition of
the benefits to us from the proposed transaction, PAH Belgium agreeing to pay to
GSK EUR 1.5 million within six months from the closing date, EUR 1.5 million
within eighteen months from the closing date, EUR 1.5 million within thirty
months from the closing date, and EUR 0.5 million within forty-two months from
the closing date; (v) PAH Belgium retaining certain excess land (valued at
approximately EUR 0.4 million) and being able to sell such land for its own
account; (vi) PAH Belgium being responsible for certain plant closure costs and
legally required severance indemnities in connection with workforce reductions,
estimated in total to be EUR 7.7 million of which an amount estimated to be
approximately EUR 4.1 million would be payable at or around the closing and an
aggregate amount so estimated to be approximately EUR 3.6 million would be
payable over periods up to thirteen years; and (vii) PAH Belgium retaining
certain equipment at the Belgium Plant, and being able to sell such equipment
for the account of PAH Belgium or transfer such equipment, together with other
assets and rights related to the production of virginiamycin, to our subsidiary
in Brazil that owns the facility in Guarulhos or in connection with alternative
production arrangements.

     The foregoing transactions and agreements are subject to a closing that is
expected to occur no earlier than July 1, 2005 nor later than June 30, 2006.

     The carrying value of the Belgium Plant and related assets at September 30,
2004 is EUR 13.9 million. The Company is in the process of evaluating the
accounting for this transaction and will record an impairment loss, if required,
in the second quarter ended December 31, 2004. In addition, the Company will
expense severance, plant closure and other related costs in the period in which
such liabilities are incurred in accordance with Statement of Financial
Accounting Standards No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities". As of the date of this filing, estimates of such costs are
in process of being determined.

                                        34
<PAGE>

     The Dutch notes and related guaranties are secured by a mortgage on the
Belgium Plant which will be released in connection with the closing of the sale
of the Belgium Plant to GSK.

     Refinancing of Domestic Senior Credit Facility with Proceeds of the
Additional Units.  To provide the necessary funds to build inventory of
virginiamycin until the Brazil plant or alternative supplier is able to produce
production quantities of virginiamycin and to finance the purchase of capital
equipment to fit out the Brazilian plant with equipment to produce
virginiamycin, other than equipment transferred from the Belgium Plant, the
maximum amount of indebtedness under our domestic senior credit facility
permitted under the indenture governing the notes was increased from $15.0
million to $37.5 million, pursuant to the Second Supplemental Indenture, and we
increased our borrowing to $22.5 million. The proceeds of the 2004 Offering were
used to refinance $22.5 million under the domestic senior credit facility. The
issuance of the additional units had the effect of reducing the maximum amount
of indebtedness under our domestic senior credit facility permitted under the
indenture governing the notes by the principal amount of the additional units
issued. Borrowings under the domestic senior credit facility continue to be
subject to a borrowing base formula based on percentages of eligible domestic
receivables and domestic inventory.

REFINANCING

     On October 21, 2003, the Company issued 105,000 units consisting of $85.0
million of its 13% Senior Secured Notes due 2007 (the "US Senior Secured Notes")
and $20.0 million 13% of Senior Secured Notes due 2007 of Philipp Brothers
Netherlands III B.V. (the "Dutch Senior Secured Notes" and, together with the US
Senior Secured Notes, the "Senior Secured Notes"), an indirect wholly-owned
subsidiary of the Company (the "Dutch issuer"). The Company used the proceeds
from the issuance to: (i) repurchase $52.0 million of its 9 7/8% Senior
Subordinated Notes due 2008 at a price equal to 60% of the principal amount
thereof, plus accrued and unpaid interest; (ii) repay $34.9 million under our
then outstanding domestic senior credit facility; (iii) satisfy, for a payment
of approximately $29.3 million certain of its outstanding obligations to Pfizer
Inc., including: (a) $20.1 million aggregate principal amount of its promissory
note plus accrued and unpaid interest, (b) $9.7 million of accounts payable, (c)
$9.0 million of accrued expenses, and (d) future contingent purchase price
obligations under its agreements with Pfizer Inc. by which the Company acquired
Pfizer's medicated feed additive business; and (iv) pay fees and expenses
relating to the above transactions.

     A net gain on extinguishment of debt is included in the Company's condensed
consolidated statement of operations, calculated as follows (amounts in
thousands):

<Table>
<S>                                                           <C>
NET GAIN ON REPURCHASE OF 9 7/8% SENIOR SUBORDINATED NOTES
  DUE 2008:
  Principal amount of repurchased notes.....................  $ 51,971
  Repurchased at 60% of principal amount....................   (31,183)
  Transaction costs.........................................    (4,107)
                                                              --------
NET GAIN ON REPURCHASE OF NOTES.............................    16,681
                                                              --------
LOSS ON REPAYMENT OF DOMESTIC SENIOR CREDIT FACILITY........    (1,018)
                                                              --------
NET GAIN ON PAYMENT OF PFIZER OBLIGATIONS:
  Obligations paid:
  -- promissory note........................................    20,075
  -- accrued interest on promissory note....................     1,015
  -- accounts payable and accrued expenses..................    18,788
                                                              --------
  Total obligations paid....................................    39,878
  Cash payment to Pfizer....................................   (29,315)
  Transaction costs.........................................    (3,000)
                                                              --------
NET GAIN ON PAYMENT OF PFIZER OBLIGATIONS...................     7,563
                                                              --------
NET GAIN ON EXTINGUISHMENT OF DEBT..........................  $ 23,226
                                                              ========
</Table>

     The Company filed a registration statement with the SEC on Form S-4 with
respect to an exchange offer for the Senior Secured Notes, but due to pending
confidential acquisition negotiations, such registration statement did not
become effective and the Company caused a notice of withdrawal to be submitted
to the SEC on November 15, 2004.

                                        35
<PAGE>

     On December 21, 2004, the US issuer and Dutch issuer issued and sold 22,491
additional units, consisting of an additional $18.207 principal amount of US
Senior Secured Notes and $4.284 million principal amount of Dutch Senior Secured
Notes.

     The US Senior Secured Notes and the Dutch Senior Secured Notes are senior
secured obligations of each of the Company (the "US Issuer") and the Dutch
issuer, respectively. The US Senior Secured Notes and the Dutch Senior Secured
Notes are guaranteed on a senior secured basis by all the US Issuer's domestic
restricted subsidiaries, and the Dutch Senior Secured Notes are guaranteed on a
senior secured basis by the US Issuer and by the restricted subsidiaries of the
Dutch issuer, presently consisting of Phibro Animal Health SA. The US Senior
Secured Notes and related guarantees are collateralized by substantially all of
the US Issuer's assets and the assets of its domestic restricted subsidiaries,
other than real property and interests therein, including a pledge of all the
capital stock of such domestic restricted subsidiaries. The Dutch Senior Secured
Notes and related guarantees are collateralized by a pledge of all the accounts
receivable, a security interest or floating charge on the inventory to the
extent permitted by applicable law, and a mortgage on substantially all of the
real property of the Dutch issuer and each of its restricted subsidiaries, a
pledge of 100% of the capital stock of each subsidiary of the Dutch issuer, a
pledge of the intercompany loans made by the Dutch issuer to its restricted
subsidiaries and substantially all of the assets of the U.S. guarantors, other
than real property and interests therein. The indenture governing the Senior
Secured Notes provides for optional make-whole redemptions at any time prior to
June 1, 2005, optional redemption on or after June 1, 2005, and requires the
Company to make certain offers to purchase Senior Secured Notes upon a change of
control, upon certain asset sales and from fifty percent (50%) of excess cash
flow (as such terms are defined in the indenture).

     Also, on October 21, 2003, the Company entered into a new replacement
domestic senior credit facility with Wells Fargo Foothill, Inc., providing for a
working capital facility plus a letter of credit facility. The aggregate amount
of borrowings under such working capital and letter of credit facilities
initially could not exceed $25.0 million including aggregate borrowings under
the working capital facility up to $15.0 million. On April 29, 2004, the Company
amended the domestic senior credit facility to increase the aggregate amount of
borrowings available under such working capital and letter of credit facilities
from $25.0 million to $27.5 million and to increase the amount of aggregate
borrowings available under the working capital facility from $15.0 million to
$17.5 million. As of September 24, 2004, the Company amended the domestic senior
credit facility to: (i) increase the aggregate amount of borrowings available
under such working capital and letter of credit facilities from $27.5 million to
$32.5 million; the amount of aggregate borrowings available under the working
capital facility remained unchanged at $17.5 million; (ii) amend the EBITDA
definition to exclude charges and expenses related to unsuccessful acquisitions
and related financings in an aggregate amount not to exceed $5.3 million for the
period beginning January 1, 2004 and ending June 30, 2004; (iii) amend the
definition of Additional Indebtedness to exclude advances under the working
capital facility; (iv) amend the definition of Permitted Investments to allow
other investments made during the period from January 1, 2004 through June 30,
2004 in an aggregate amount not to exceed $336,000; and (v) establish covenant
EBITDA levels for the periods ending after June 30, 2004. The amendment was
effective June 30, 2004 for items (i), (ii) and (iii); effective January 1, 2004
for item (iv); and effective September 24, 2004 for all other items.

     Concurrent with the completion of the 2004 Offering, on December 21, 2004,
we amended the domestic senior credit facility to (i) amend the EBITDA
definition to exclude charges and expenses related to the sale of the Belgium
Plant in an aggregate amount not to exceed $26.8 million for purposes of
calculating a certain financial covenant, (ii) amend the Indenture Reserve
definition to include scheduled payments of interest due on the additional
notes, (iii) amend the maximum aggregate amount of borrowings available under
the working capital facility to permit a temporary increase to $22.5 million and
for its reduction to $17.5 million on such borrowings being refinanced by the
proceeds of the 2004 Offering, (iv) amend the Permitted Investments definition
to include investments in connection with the sale of the Belgium Plant and
transfer of certain equipment, together with other assets and rights related to
the production of virginiamycin, to our subsidiary in Brazil or in connection
with alternative production arrangements, and (v) provide for the issuance of
the additional notes and the sale of the Belgium Plant and related transactions.

                                        36
<PAGE>

     Borrowings under the domestic senior credit facility are subject to a
borrowing base formula based on percentages of eligible domestic receivables and
domestic inventory. Under the domestic senior credit facility, the Company may
choose between two interest rate options: (i) the applicable base rate as
defined plus 0.50% and (ii) the LIBOR rate as defined plus 2.75%. Indebtedness
under the domestic senior credit facility is secured by a first priority lien on
substantially all of the Company's assets and assets of substantially all of the
Company's domestic subsidiaries. The Company is required to pay an unused line
fee of 0.375% on the unused portion of the domestic senior credit facility, a
monthly servicing fee and standard letter of credit fees to issuing banks.
Borrowings under the domestic senior credit facility are available until, and
are repayable no later than, October 31, 2007, although borrowings must be
repaid by June 30, 2007 if the maturity of the Senior Secured Notes has not been
extended, as required by the domestic senior credit facility, by that date.

     Pursuant to the terms of an intercreditor agreement, as amended in
connection with the 2004 Offering, the security interest securing the Senior
Secured Notes and the guarantees made by the Company's domestic restricted
subsidiaries is subordinated to a lien securing the domestic senior credit
facility.

PRINCE TRANSACTIONS

     Effective December 26, 2003 (the "Closing Date"), the Company completed the
divestiture of substantially all of the business and assets of The Prince
Manufacturing Company ("PMC") to a company ("Buyer") formed by Palladium Equity
Partners II, LP and certain of its affiliates (the "Palladium Investors"), and
the related reduction of the Company's preferred stock held by the Palladium
Investors (collectively the "Prince Transactions").

     Pursuant to definitive purchase and other agreements executed on and
effective as of the Closing Date, the Prince Transactions included the following
elements: (i) the transfer of substantially all of the business and assets of
PMC to Buyer; (ii) the reduction of the value of the Company's Preferred Stock
owned by the Palladium Investors from $72.2 million to $16.5 million (accreted
through the Closing Date) by means of the redemption of all of its shares of
Series B Preferred Stock and a portion of its Series C Preferred Stock; (iii)
the termination of $2.2 million in annual management advisory fees payable by
the Company to Palladium; (iv) a cash payment of $10.0 million to the Palladium
Investors in respect of the portion of the Company's Preferred Stock not
exchanged in consideration of the business and assets of PMC; (v) the agreement
of the Buyer to pay the Company for advisory fees for the next three years of
$1.0 million, $0.5 million, and $0.2 million, respectively (which were pre-paid
at closing by the Buyer and satisfied for $1.3 million, the net present value of
such payments); and (vi) the Buyer agreed to supply manganous oxide and red iron
oxide products and to provide certain mineral blending services to the Company's
Prince Agriproducts subsidiary ("Prince Agri"). Prince Agri agreed to continue
to provide the Buyer with certain laboratory, MIS and telephone services, all on
terms substantially consistent with the historic relationship between Prince
Agri and PMC, and to lease to Buyer office space used by PMC in Quincy,
Illinois. The Company has an agreement to receive certain treasury services from
Palladium for $0.1 million per year. Pursuant to definitive agreements, the
Company made customary representations, warranties and environmental and other
indemnities, agreed to a post-closing working capital adjustment, paid $4.0
million in full satisfaction of all intercompany debt owed to PMC, paid a
closing fee to Palladium of $0.5 million, made certain capital expenditure
adjustments included as part of the intercompany settlement amount, and agreed
to pay for certain out-of-pocket transaction expenses. PMC retained $0.4 million
of its accounts receivable. The Company established a $1.0 million letter of
credit escrow for two years to secure its working capital adjustment and certain
indemnification obligations. The Company agreed to indemnify the Palladium
Investors for a portion, at the rate of $0.65 for every dollar, of the amount
they receive in respect of the disposition of Buyer for less than $21.0 million
up to a maximum payment by the Company of $4.0 million (the "Backstop
Indemnification Amount"). The Backstop Indemnification Amount would be payable
on the earlier to occur of July 1, 2008 or six months after the redemption date
of all of the Company's Senior Secured Notes due 2007 if such a disposition
closes prior to such redemption and six months after the closing of any such
disposition if the disposition closes after any such redemption. The Company's
obligations with respect to the Backstop Indemnification Amount will cease if
the Palladium Investors do not close the disposition of Buyer by January 1,
2009. The definition of "Equity Value" in the Company's Certificate of
Incorporation was

                                        37
<PAGE>

amended to reduce the multiple of trailing EBITDA payable in connection with any
future redemption of Series C Preferred to 6.0 from 7.5. The amount of
consideration paid and payable in connection with the Prince Transactions and
all matters in connection therewith were determined pursuant to arm's length
negotiations.

     The excess of the reduction in redeemable preferred stock over total assets
divested and costs and liabilities incurred on the Prince Transactions was
recorded as a decrease to accumulated deficit on the Company's condensed
consolidated balance sheet at December 31, 2003, and was calculated as follows
(amounts in thousands):

<Table>
<S>                                                           <C>
SERIES B & C REDEEMABLE PREFERRED STOCK:
Accreted value pre-transaction..............................  $72,184
Accreted value post-transaction.............................   16,517
                                                              -------
REDUCTION IN REDEEMABLE PREFERRED STOCK.....................   55,667
                                                              -------
ASSETS DIVESTED AND COSTS INCURRED:
PMC net assets divested.....................................    7,430
Cash paid to Palladium Investors for:
- -- reduction of redeemable preferred stock..................   10,000
- -- settlement of PMC intercompany debt......................    3,958
- -- working capital adjustment...............................    1,331
- -- closing fee..............................................      500
Transaction costs...........................................    8,310
Contingent Backstop Indemnification Amount accrued..........    4,000
                                                              -------
TOTAL ASSETS DIVESTED AND COSTS AND LIABILITIES INCURRED....   35,529
                                                              -------
EXCESS AMOUNT RECORDED AS A DECREASE TO ACCUMULATED
  DEFICIT...................................................  $20,138
                                                              =======
</Table>

     PMC is included in the Company's Industrial Chemicals segment. The
divestiture of PMC has not been reflected as a discontinued operation due to the
existence of the Backstop Indemnification and continuing supply and service
agreements.

OTHER RISKS AND UNCERTAINTIES

     The use of antibiotics in medicated feed additives is a subject of
legislative and regulatory interest. The issue of potential for increased
bacterial resistance to certain antibiotics used in certain food-producing
animals is the subject of discussions on a worldwide basis and, in certain
instances, has led to government restrictions on the use of antibiotics in
food-producing animals. The sale of feed additives containing antibiotics is a
material portion of the Company's business. Should regulatory or other
developments result in further restrictions on the sale of such products, it
could have a material adverse impact on the Company's financial position,
results of operations and cash flows.

     The testing, manufacturing, and marketing of certain products are subject
to extensive regulation by numerous government authorities in the United States
and other countries.

     The Company has significant assets located outside of the United States,
and a significant portion of the Company's sales and earnings are attributable
to operations conducted abroad.

     The Company has assets located in Israel and a portion of its sales and
earnings are attributable to operations conducted in Israel. The Company is
affected by social, political and economic conditions affecting Israel, and any
major hostilities involving Israel as well as the Middle East or curtailment of
trade between Israel and its current trading partners, either as a result of
hostilities or otherwise, could have a material adverse effect on the Company.

                                        38
<PAGE>

     The Company's operations, properties and subsidiaries are subject to a wide
variety of complex and stringent federal, state, local and foreign environmental
laws and regulations, including those governing the use, storage, handling,
generation, treatment, emission, release, discharge and disposal of certain
materials and wastes, the remediation of contaminated soil and groundwater, the
manufacture, sale and use of pesticides and the health and safety of employees.
As such, the nature of the Company's current and former operations and those of
its subsidiaries exposes the Company and its subsidiaries to the risk of claims
with respect to such matters.

             SUMMARY CONSOLIDATED RESULTS OF CONTINUING OPERATIONS

<Table>
<Caption>
                                                                     THREE MONTHS ENDED
                                         YEAR ENDED JUNE 30,            SEPTEMBER 30,
                                    ------------------------------   -------------------
                                      2004       2003       2002       2004       2003
                                    --------   --------   --------   --------   --------
<S>                                 <C>        <C>        <C>        <C>        <C>
Net Sales.........................  $358,274   $341,746   $328,676   $88,275    $84,950
Gross Margin......................    90,403     90,546     81,265    22,622     21,160
Selling, general and
  administrative expenses.........    66,128     65,050     70,636    16,594     15,785
Costs of non-completed
  transaction.....................     5,261         --         --        --         --
Operating income..................    19,014     25,496     10,629     6,028      5,375
Interest expense, net.............    18,488     16,196     17,724     5,221      3,691
Other expense (income), net.......      (781)     1,539      3,349        24       (585)
Net (gain) on extinguishment of
  debt............................   (23,226)        --         --        --         --
Provision for income taxes........     7,969     10,060     14,767       924        783
Income (loss) from continuing
  operations......................  $ 16,564   $ (2,299)  $(25,211)  $  (141)   $ 1,486
</Table>

  COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

     Net Sales of $88.3 million increased $3.3 million, or 4%. Animal Health and
Nutrition sales of $65.8 million grew $6.0 million, or 10%, due to volume
increases offset in part by lower average selling prices. Specialty Chemical
Group (comprised of the Industrial Chemicals, Distribution and All Other
segments) sales of $22.5 million decreased $2.6 million. Excluding PMC,
Specialty Chemical group sales increased by $3.1 million due to volume increases
in Industrial Chemicals and All Other segments. The Specialty Chemical Group
included PMC sales of $5.7 million for the 2003 quarter.

     Gross Profit of $22.6 million increased $1.5 million to 25.6% of net sales,
compared with 24.9% in 2003. Animal Health and Nutrition gross profit increased
due to higher sales unit volumes and lower unit costs offset in part by lower
average selling prices. The Specialty Chemical Group also contributed to the
improvement due to expanded sales of the Company's new copper-based wood
treatment products. The Specialty Chemical Group included PMC gross profit of
$1.9 million for the 2003 quarter.

     Selling, General and Administrative Expenses of $16.6 million increased
$0.8 million. Expenses in the operating segments, excluding PMC, increased over
the prior year due to severance accruals, higher research and development costs
associated with registration trials, unfavorable foreign exchange rates and
overall higher operating costs. Corporate expenses increased due to higher
depreciation and amortization charges, compensation and severance costs offset
partially by income of $0.2 million from the PMC advisory fee and the
elimination of the Palladium management fee of $0.6 million in 2003. PMC
expenses were $0.7 million for the 2003 quarter.

     Operating Income of $6.0 million increased $0.7 million to 6.8% of sales.
Operating income, excluding PMC, improved in both the Animal Health and
Nutrition and Specialty Chemical Group with increased gross profit offset in
part by higher selling, general and administrative expenses. PMC contributed
$1.2 million for the 2003 quarter offset in part by the elimination of the
Palladium management fee.

                                        39
<PAGE>

     Interest Expense, Net of $5.2 million increased $1.5 million from the 2003
quarter, primarily due to higher average interest rates and also higher
borrowing levels associated with the issuance of the Company's Senior Secured
Notes.

     Other (Income) Expense, Net principally reflects foreign currency
transaction net (gains) losses related to short-term inter-company balances and
foreign currency translation (gains) losses.

     Income Taxes of $0.9 million were recorded on consolidated pre-tax income
of $0.8 million. The tax rate reflects income tax provisions in profitable
foreign jurisdictions and for state income taxes. A provision for U.S. federal
income taxes has not been recorded due to the utilization of net operating loss
carryforwards. The Company has recorded valuation allowances related to
substantially all deferred tax assets. The Company will continue to evaluate the
likelihood of recoverability of these deferred tax assets based upon actual and
expected operating performance.

  COMPARISON OF YEARS ENDED JUNE 30, 2004 AND 2003

     Net Sales of $358.3 million increased $16.5 million, or 5%. Animal Health
and Nutrition sales of $265.4 million grew $14.7 million, or 6%, due to volume
increases. Specialty Chemical Group sales (comprised of the Industrial
Chemicals, Distribution and All Other segments) of $92.9 million increased $1.8
million, or 2%, primarily due to volume increases in all segments, offset by a
decrease in PMC sales. The Specialty Chemical Group included PMC sales of $11.1
million and $22.3 million for 2004 and 2003, respectively.

     Gross Profit of $90.4 million decreased $0.1 million to 25.2% of net sales,
compared with 26.5% in 2003. Animal Health and Nutrition gross profit decreased
due to lower average selling prices and unfavorable currency related to the
effect of the Euro on Belgium manufacturing costs. Improvements in the Specialty
Chemical Group partially offset the Animal Health and Nutrition decline. The
Specialty Chemical Group included PMC gross profit of $3.6 million and $6.2
million, respectively, for the fiscal 2004 and 2003 periods.

     Gross profit increased $2.0 million in the fourth quarter of 2004 due to an
agreement related to the production and sale of amprolium, an anticoccidial MFA.
The Company acquired the rights to sell amprolium in most international markets.
In payment for the acquired rights, the Company relinquished its claims against
the seller for certain purchase order commitments, and will make $2.1 million of
cash payments to the seller over the next five years. The present value of these
payments is $1.9 million and was recorded as a liability. The $2.4 million value
of the purchase order commitments was recorded as a reduction in cost of goods
sold and inventory, and an intangible asset of $4.3 million was recorded
representing the fair value of the acquired rights and is included on the
Company's balance sheet at June 30, 2004. The Company will amortize this
intangible over a 10 year period. No amortization was recorded in 2004.
Amortization expense for each of the next five years from 2005 to 2009 is
expected to be $0.4 million per year.

     Selling, General and Administrative Expenses of $66.1 million increased
$1.1 million. Expenses in the operating segments, excluding PMC, approximated
the prior year primarily due to lower environmental and severance accruals
offset in part by unfavorable foreign exchange rates. Corporate expenses in the
current fiscal year reflect the elimination of the Palladium annual management
fee of $2.25 million as of December 31, 2003 and income of $0.5 million from the
PMC Advisory fee. Corporate expenses increased in fiscal 2004 due to higher
depreciation and amortization charges and insurance costs offset by lower
benefit charges. Corporate expenses in fiscal 2003 included vitamin settlement
income of $3.0 million. PMC expenses were $1.3 million and $2.6 million for 2004
and 2003, respectively.

     Costs of non-completed transaction.  During 2004, the Company incurred $5.3
million of costs in connection with a potential acquisition transaction that was
not completed. The Company has charged the costs to expense in its 2004 results.
The costs primarily consisted of professional fees for services in connection
with the transaction.

     Net gain on extinguishment of debt.  The Company recorded a net gain on the
extinguishment of debt of $23.2 million due to the repurchase of senior
subordinated notes ($16.7 million), and the repayment of Pfizer

                                        40
<PAGE>

obligations ($7.6 million) offset in part by a loss on repayment of the domestic
senior credit facility ($1.0 million).

     Operating Income of $19.0 million decreased $6.5 million to 5.3% of sales.
The decrease was primarily due to the non-completed transaction costs described
above. In addition, gross profit declined in the Animal Health and Nutrition
segment but was offset in part by improved operating performance of the
Specialty Chemical Group. PMC contributed $2.3 million and $3.6 million for 2004
and 2003, respectively.

     Interest Expense, Net of $18.5 million increased $2.3 million from the
prior year, primarily due to higher borrowing levels and also higher average
interest rates associated with the issuance of the Company's Senior Secured
Notes.

     Other (Income) Expense, Net of ($0.8) million improved in comparison with
$1.5 million of expense last year. During 2004, the Company's Phibro-Tech
subsidiary received $1.0 million in exchange for the sale of certain assets
related to the manufacture and sale of ferric chloride from its plant in Joliet,
Illinois and recognized a net gain of $0.7 million. The balance of other
(income) expense principally reflects foreign currency transaction net (gains)
losses related to short-term inter-company balances and foreign currency
translation (gains) losses.

     Income Taxes of $8.0 million were 32% of consolidated pre-tax income of
$24.5 million. The tax rate reflects income tax provisions in profitable foreign
jurisdictions and for state income taxes. A provision for U.S. federal income
taxes has not been recorded due to the utilization of net operating loss
carryforwards. The Company has recorded valuation allowances related to
substantially all deferred tax assets. The Company will continue to evaluate the
likelihood of recoverability of these deferred tax assets based upon actual and
expected operating performance.

  COMPARISON OF YEARS ENDED JUNE 30, 2003 AND 2002

     Net Sales of $341.7 million increased $13.1 million, or 4%. Animal Health
and Nutrition sales of $250.7 million grew $11.1 million, or 5%, due to volume
increases. Specialty Chemical Group sales of $91.0 million increased $2.0
million, or 2%, primarily due to volume increases in the Distribution and All
Other businesses.

     Gross Profit of $90.5 million improved $9.3 million to 26.5% of net sales,
compared with 24.7% in 2002. Animal Health and Nutrition gross profit
improvements were responsible for the overall increase. Purchase accounting
adjustments related to the MFA acquisition resulted in a $3.3 million increase
to cost of goods sold in 2002. Excluding the purchase accounting adjustment, the
gross profit ratio would have been 25.7% in 2002.

     Selling, General and Administrative Expenses of $65.1 million decreased
$5.6 million, or 8%. Expenses declined $6.5 million in the Specialty Chemicals
Group due to downsizing and restructuring of the Industrial Chemicals segment,
reflecting the decline in the printed circuit board market. Industrial Chemicals
included expense for additional environmental reserves and write-offs of
unamortized permit fees at closed facilities of $1.0 million and $1.6 million
for 2003 and 2002, respectively. Animal Health and Nutrition expenses decreased
by approximately $0.4 million. Corporate expenses increased $1.3 million,
primarily due to increased staff levels. Corporate expenses included a vitamin
settlement income of $3.0 million and $0.7 million in 2003 and 2002,
respectively, from the settlement of class action litigation against European
vitamin manufacturers. Debt restructuring costs of $0.8 million, severance of
$0.4 million, and expense related to a divested business of $0.2 million were
also recorded in 2003. Included in 2002 was $0.4 million non-cash income to
reflect the decrease in value of redeemable common stock; no amount was recorded
in 2003.

     Operating Income of $25.5 million increased $14.9 million to 7.5% of sales.
The improvement was due to sales growth, gross margin improvements in Animal
Health and Nutrition, and operating expense reductions.

     Interest Expense, Net of $16.2 million decreased $1.5 million, compared
with $17.7 million in 2002, primarily due to lower average interest rates and
reduced average borrowing levels.

                                        41
<PAGE>

     Other Expense, Net of $1.5 million in fiscal 2003 improved in comparison
with $3.4 million in the prior year. The expense principally reflects foreign
currency transaction and translation net losses related to short-term
inter-company balances.

     Income Taxes of $10.1 million were primarily due to a $5.6 million increase
in valuation allowances for deferred tax assets in foreign jurisdictions where
future profitability is not currently considered more likely than not, and
income tax provisions in profitable foreign jurisdictions. The Company has
recorded valuation allowances related to substantially all deferred tax assets.
The Company will continue to evaluate the likelihood of recoverability of these
deferred tax assets based upon actual and expected operating performance.

  Operating Segments

     The Animal Health and Nutrition segment manufactures and markets MFAs and
NFAs to the poultry, swine and cattle markets, and includes the operations of
the Phibro Animal Health business unit, Prince AgriProducts, Koffolk (1949) Ltd.
and Planalquimica. The Industrial Chemicals segment manufacturers and markets
specialty chemicals for use in the pressure treated wood, brick, glass, and
chemical industries, and includes Phibro-Tech and PMC. The Distribution segment
markets a variety of specialty chemicals, and includes PhibroChem and Ferro
operations. The All Other segment includes contract manufacturing of crop
protection chemicals, Wychem and all other operations. Due to the divestiture of
PMC in December 2003, PMC's results are shown separately for comparability.

<Table>
<Caption>
                                                                     THREE MONTHS ENDED
                                         YEAR ENDED JUNE 30,              SEPT. 30,
                                    ------------------------------   -------------------
                                      2004       2003       2002       2004       2003
                                    --------   --------   --------   --------   --------
                                                   (DOLLARS IN THOUSANDS)
<S>                                 <C>        <C>        <C>        <C>        <C>
NET SALES:
  Animal Health & Nutrition.......  $265,421   $250,706   $239,602   $65,806    $59,841
  Industrial Chemicals -- ex
     PMC..........................    31,135     26,465     29,403     8,393      6,299
  Industrial Chemicals -- PMC.....    11,118     22,332     21,451        --      5,683
  Distribution....................    30,861     30,072     27,852     7,661      7,939
  All other.......................    19,739     12,171     10,368     6,415      5,188
                                    --------   --------   --------   -------    -------
                                    $358,274   $341,746   $328,676   $88,275    $84,950
                                    ========   ========   ========   =======    =======
OPERATING INCOME:
  Animal Health & Nutrition.......  $ 33,307   $ 38,472   $ 28,298   $ 7,815    $ 6,900
  Industrial Chemicals -- ex
     PMC..........................       621     (5,434)   (10,964)      773       (391)
  Industrial Chemicals -- PMC.....     2,278      3,579      3,640        --      1,213
  Distribution....................     2,900      3,207      2,345       864        841
  All other.......................     2,301        620      1,164       705        669
  Corporate expenses and
     adjustments..................   (22,393)   (14,948)   (13,854)   (4,129)    (3,857)
                                    --------   --------   --------   -------    -------
                                    $ 19,014   $ 25,496   $ 10,629   $ 6,028    $ 5,375
                                    ========   ========   ========   =======    =======
</Table>

  OPERATING SEGMENTS COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 2004 AND
  2003

  Animal Health and Nutrition

     Net Sales of $65.8 million increased $6.0 million, or 10%. MFA net sales
increased by $2.4 million. Revenues were higher primarily for antibacterials and
antibiotics but were offset in part by lower sales of anticoccidials. The
increase in MFA revenues was due to higher unit volumes and favorable currency
effect on international sales offset in part by lower average selling prices.
NFA net sales increased by $3.6 million principally due to volume increases in
trace mineral premixes and other feed ingredients.

                                        42
<PAGE>

     Operating Income of $7.8 million increased $0.9 million, or 13%. Operating
income improved due to higher sales unit volumes and lower unit costs offset in
part by lower average selling prices and increased selling, general and
administrative expenses.

  Specialty Chemicals

     Industrial Chemicals net sales of $8.4 million, excluding PMC, increased
$2.1 million, or 33%. Sales of copper-related products to the wood treatment
markets increased due to the introduction of new copper based wood treatment
products. PMC, divested in December 2003, generated revenues of $5.7 million for
the 2003 quarter. Operating income, excluding PMC, of $0.8 million improved by
$1.2 million from the 2003 quarter. This improvement was due to new product
introductions and savings from previously implemented headcount reductions and
facility restructurings in Phibro-Tech operations. PMC provided operating income
of $1.2 million for the 2003 quarter.

     Distribution net sales of $7.7 million decreased $0.3 million, or 4%. Lower
sales volumes in Europe were offset in part by higher domestic unit volumes and
slightly higher average selling prices. Distribution operating income of $0.9
million approximated the prior period. As a percentage of sales, operating
income was 11% in both 2004 and 2003 quarters.

     All Other net sales of $6.4 million increased $1.2 million, or 24%.
Revenues for contract manufacturing increased $0.7 million due to increased
volumes and average selling prices. Revenues from specialized lab projects and
formulations increased $0.5 million over the prior period. Operating income of
$0.7 million improved slightly from the prior period due to higher margins on
specialized lab projects and formulations.

  OPERATING SEGMENTS COMPARISON OF YEARS ENDED JUNE 30, 2004 AND 2003

  Animal Health and Nutrition

     Net Sales of $265.4 million increased $14.7 million, or 6%. Medicated Feed
Additives net sales decreased by $7.8 million. Revenues were lower primarily for
anticoccidials but were offset in part by higher sales of other medicated feed
additives. Sales of anticoccidial products were $7.1 million lower due to
contract negotiations with a major customer that were completed in the fourth
quarter of 2004. The decrease in MFA revenues also was due to lower average
selling prices offset in part by favorable currency effect on international
sales. Nutritional Feed Additives net sales increased by $22.5 million,
principally due to volume increases in core inorganic minerals, trace mineral
premixes and other ingredients.

     Operating Income of $33.3 million decreased $5.2 million, or 13%. Operating
income declined due to product mix, higher cost of goods reflecting the stronger
Euro's effect on Belgian manufacturing cost and unfavorable currency effects on
international selling, general and administrative expense. Lower average selling
prices also contributed to the decrease. Operating income increased $2.0 million
in the fourth quarter of 2004 due to an agreement related to the production and
sale of amprolium, an anticoccidial MFA.

  Specialty Chemicals

     Industrial Chemicals net sales of $31.1 million, excluding PMC, increased
$4.7 million, or 18%. Sales of copper related products to the wood treatment
markets increased due to the introduction of new copper based wood treatment
chemicals which offset the divestiture of the Company's Eastern United States
etchant business in mid 2003. The Company continues its existing etchant
business at one remaining facility. PMC, divested in December 2003, generated
revenues of $11.1 million and $22.3 million for 2004 and 2003, respectively.
Operating income of $0.6 million improved by $6.1 million from the prior year.
This improvement was due to new product introductions and savings from headcount
reductions and facility restructurings in Phibro-Tech operations. PMC provided
operating income of $2.3 million and $3.6 million for 2004 and 2003,
respectively.

     Distribution net sales of $30.9 million increased $0.8 million, or 3%.
Higher sales volumes in Europe were offset in part by lower domestic unit
volumes and lower average selling prices. Distribution operating income

                                        43
<PAGE>

of $2.9 million decreased $0.3 million from the prior year. As a percentage of
sales, operating income was 9% and 11% in 2004 and 2003, respectively.

     All Other net sales of $19.7 million increased $7.6 million, or 62%.
Revenues for contract manufacturing increased $7.6 million due to increased
volumes and average selling prices. Specialized lab projects and formulations
approximated the prior year. Operating income of $2.3 million improved by $1.7
million from the prior year due to higher revenues and increased margins on
contract manufacturing.

  OPERATING SEGMENTS COMPARISON OF YEARS ENDED JUNE 30, 2003 AND 2002

  Animal Health and Nutrition

     Net Sales of $250.7 million increased $11.1 million, or 5%. Medicated Feed
Additives net sales increased by $6.7 million. Revenues were higher for
antibacterials, antibiotics and anticoccidials but were offset in part by lower
sales of anthelmintics and other medicated feed additives. The increased
revenues were due to volume increases offset in part by lower average selling
prices, including the effect of currency devaluations in Latin America.
Nutritional Feed Additives net sales increased by $4.4 million, principally due
to volume increases in core inorganic minerals, trace mineral premixes and other
ingredients.

     Operating Income of $38.5 million increased $10.2 million, or 36%. Purchase
accounting adjustments relating to inventory in the MFA acquisition resulted in
a $3.3 million increase to 2002 cost of goods sold. The operating income ratio
increased to 15% in 2003 from 13% in 2002 (excluding the purchase accounting
adjustments). The improvement in operating income resulted from increased sales
of higher margin products and close control of operating expenses.

  Specialty Chemicals

     Industrial Chemicals net sales of $26.5 million, excluding PMC, decreased
$2.9 million, or 10%. Industrial Chemicals net sales decreased due to the
divestiture of the Company's Eastern United States etchant business in
mid-fiscal 2003 and reduced sales of etchants to the printed circuit board
market. PMC, divested in December 2003, generated revenues of $22.3 million and
$21.5 million for fiscal periods 2003 and 2002, respectively. Industrial
Chemicals operating loss of $5.4 million improved by $5.5 million from the year
earlier loss. The improvement principally was due to the partial disposal during
2003 of the ammoniacal etchant business and savings from headcount reductions
and facility restructurings. The gain on the transaction was not material. PMC
provided operating income of $3.6 million in each of the 2003 and 2002 fiscal
periods.

     Distribution net sales of $30.1 million increased $2.2 million, or 8%.
Higher sales volumes in Europe and improved product mix in domestic operations
accounted for the increase. Distribution operating income of $3.2 million
increased $0.9 million, or 37%. As a percentage of sales, operating income
increased to 11% in 2003 from 8% in 2002. The improvement in operating income
margins resulted principally from increased sales of higher margin products.

     All Other net sales of $12.2 million increased $1.8 million, or 17%.
Revenues for contract manufacturing increased $2.4 million due to increased
volumes. Revenues from specialized lab projects and formulations declined $0.6
million. Operating income of $0.6 million decreased primarily due to specialized
lab projects and formulations.

DISCONTINUED OPERATIONS

     In August 2003, the Company divested Mineral Resource Technologies, Inc and
shutdown its operations at La Cornubia. These businesses have been classified as
discontinued operations. The Company's consoli-

                                        44
<PAGE>

dated financial statements have been reclassified to report separately the
operating results and cash flows of the discontinued operations.

<Table>
<Caption>
                                                                  THREE MONTHS
                                                            ENDED SEPTEMBER 30, 2003
                                                          -----------------------------
                                                           MRT     LA CORNUBIA   TOTAL
                                                          ------   -----------   ------
<S>                                                       <C>      <C>           <C>
Net Sales...............................................  $3,327     $2,220      $5,577
                                                          ======     ======      ======
Operating Loss..........................................  $ (124)    $ (372)     $ (496)
Interest Expense, net...................................      --         16          16
Other Expense (Income), net.............................      --        (50)        (50)
Provision (benefit) for income tax......................      --         --          --
                                                          ------     ------      ------
Net Income (Loss) from discontinued operations..........  $ (124)    $ (338)     $ (462)
                                                          ======     ======      ======
Depreciation & Amortization.............................  $   --     $  100      $  100
                                                          ======     ======      ======
</Table>

     Mineral Resource Technologies, Inc. ("MRT").  In August 2003, the Company
divested MRT for net proceeds, after transaction costs, of approximately $13.8
million. MRT was included in the Company's All Other segment.

     La Cornubia.  On June 30, 2004, one of the Company's French subsidiaries,
La Cornubia SA ("La Cornubia"), filed for bankruptcy under the insolvency laws
of France. The Company believes that, as a result of the bankruptcy filing by La
Cornubia, it is possible that LC Holding S.A. ("LC Holding"), La Cornubia's
parent, a holding company with no assets except for its investment in La
Cornubia, may also file for bankruptcy in France. The Company does not believe
that La Cornubia's bankruptcy filing, nor the possible bankruptcy filing by LC
Holding, will have a material adverse effect on its financial condition or
results of operations.

     During fiscal 2004, the Company shutdown its operations at La Cornubia.
During fiscal 2003, the Company shutdown or divested Odda Smelteverk (Norway),
Carbide Industries (U.K.), and Mineral Resource Technologies, Inc. These
businesses have been classified as discontinued operations. The Company's
consolidated financial statements have been reclassified to report separately
the operating results, financial position, and cash flows of the discontinued
operations. Prior year financial statements have been reclassified to conform to
the 2004 presentation.

<Table>
<Caption>
                                                      YEAR ENDED JUNE 30, 2004
                                            ---------------------------------------------
                                            LA CORNUBIA   ODDA/CARBIDE    MRT      TOTAL
                                            -----------   ------------   ------   -------
<S>                                         <C>           <C>            <C>      <C>
Net Sales.................................    $13,918        $  --       $3,327   $17,245
                                              =======        =====       ======   =======
Operating Loss............................    $(1,491)       $  --       $ (124)  $(1,615)
Interest Expense, net.....................         94                                  94
Other Expense (Income), net...............       (102)          --           --      (102)
Provision (benefit) for income tax........         18           --           --        18
                                              -------        -----       ------   -------
Net Income (Loss) from discontinued
  operations..............................    $(1,501)       $  --       $ (124)  $(1,625)
                                              =======        =====       ======   =======
Depreciation & Amortization...............    $   400        $  --       $   --   $   400
                                              =======        =====       ======   =======
</Table>

                                        45
<PAGE>

<Table>
<Caption>
                                                     YEAR ENDED JUNE 30, 2003
                                          -----------------------------------------------
                                          LA CORNUBIA   ODDA/CARBIDE     MRT      TOTAL
                                          -----------   ------------   -------   --------
<S>                                       <C>           <C>            <C>       <C>
Net Sales...............................    $13,479       $ 11,217     $18,671   $ 43,367
                                            =======       ========     =======   ========
Operating Loss..........................    $  (359)      $(13,462)    $(3,454)  $(17,275)
Interest Expense, net...................         60                                    60
Other Expense (Income), net.............       (389)        (2,327)         --     (2,716)
Provision (benefit) for income tax......         16             58          --        (42)
                                            -------       --------     -------   --------
Net Income (Loss) from discontinued
  operations............................    $   (46)      $(11,077)    $(3,454)  $(14,577)
                                            =======       ========     =======   ========
Depreciation & Amortization.............    $   359       $    894     $ 1,309   $  2,562
                                            =======       ========     =======   ========
</Table>

<Table>
<Caption>
                                                     YEAR ENDED JUNE 30, 2002
                                          -----------------------------------------------
                                          LA CORNUBIA   ODDA/CARBIDE     MRT      TOTAL
                                          -----------   ------------   -------   --------
<S>                                       <C>           <C>            <C>       <C>
Net Sales...............................    $11,873       $ 31,219     $17,045   $ 60,137
                                            =======       ========     =======   ========
Operating Loss..........................    $  (912)      $(27,709)    $(2,930)  $(31,551)
Interest Expense, net...................         78                                    78
Other Expense (Income), net.............       (263)        (3,699)                (3,962)
Provision (benefit) for income tax......         62         (1,170)         --     (1,108)
                                            -------       --------     -------   --------
Net Income (Loss) from discounted
  operations............................    $  (789)      $(22,840)    $(2,930)  $(26,559)
                                            =======       ========     =======   ========
Depreciation & Amortization.............    $   325       $ 17,676     $ 1,192   $ 19,193
                                            =======       ========     =======   ========
</Table>

     Odda and Carbide.  During fiscal 2003, the Company determined that it would
permanently shutdown and no longer fund the operations of Odda. On February 28,
2003, Odda filed for bankruptcy in Norway. The bankruptcy is proceeding in
accordance with Norwegian law. The Company removed all assets, liabilities
(except as noted below), and cumulative translation adjustments related to Odda
from the Company's consolidated balance sheet as of June 30, 2003, and recorded
the net result as a loss on disposal of discontinued operations. The Company has
been advised that, as a result of the bankruptcy, the creditors of Odda have
recourse only to the assets of Odda, except in the case of certain debt
guaranteed by the Company. During fiscal 2004, the Company paid the remaining
guaranteed debt of $5.7 million. The Company has been advised by Norwegian
counsel that it has obtained the benefit of the banks' position as a secured
creditor upon payment pursuant to the guarantees. During fiscal 2003, the
Company sold Carbide, previously a distributor for one of Odda's product lines.
Proceeds from the divestiture were not material. Odda was included in the
Company's Industrial Chemicals segment and Carbide was included in the Company's
Distribution segment.

     The Company recorded a $0.7 million loss on disposal of Odda and Carbide
during fiscal 2003. The loss primarily related to the write-off of Odda's
remaining net assets, including the related cumulative currency translation
adjustment.

LIQUIDITY AND CAPITAL RESOURCES

     Net Cash Provided by Operating Activities.  Cash provided by operations for
the three months ended September 30, 2004 and 2003 was $2.4 million and $1.3
million, respectively. Cash provided was due to income from continuing
operations offset in part by working capital requirements. The Company is
currently increasing inventory levels of certain products to enhance future
supply flexibility and reduce cost as part of a strategic review of its
manufacturing capabilities. Cash provided by operations for fiscal 2004 and 2003
was $2.9 million and $34.7 million, respectively. Cash provided in fiscal 2004
was due to income from continuing operations offset in part by working capital
requirements. In addition, payment of the Pfizer obligations (shown in financing
activities) eliminated additional working capital requirements that otherwise
would have

                                        46
<PAGE>

been necessary. Cash provided in fiscal 2003 was due to improved income from
continuing operations and aggressive working capital management. The Company
incurred $5.3 million of costs for a non-completed acquisition transaction and
paid approximately $1.4 million of these charges in fiscal 2004.

     Net Cash Provided (Used) by Investing Activities.  Net cash provided (used)
by investing activities for the three months ended September 30, 2004 and 2003
was ($1.7) million and $13.2 million, respectively. Capital expenditures of $1.7
million and $0.9 million for the three months ended September 30, in 2004 and
2003, respectively, were for new product capacity, for maintaining the Company's
existing asset base and for environmental, health and safety projects.
Discontinued operations, primarily from the sale of MRT, provided funds of $14.0
million in the three months ended September 30, 2003. Net cash provided (used)
by investing activities for fiscal 2004 and 2003 was $9.1 million and ($4.0)
million, respectively. Discontinued operations, primarily from the sale of MRT,
provided funds of $14.9 million in fiscal 2004. Discontinued operations provided
$1.4 million in fiscal 2003. Capital expenditures of $6.2 million and $8.6
million for fiscal 2004 and 2003, respectively, were for new product capacity,
for maintaining the Company's existing asset base and for environmental, health
and safety projects. Proceeds from sales of fixed assets and other investing
activities accounted for the remainder of cash provided by investing activities
in fiscal 2004.

     Net Cash Provided (Used) by Financing Activities.  Net cash provided (used)
by financing activities for the three months ended September 30, 2004 and 2003
was ($0.4) million and $1.1 million, respectively. Short-term debt increased due
to a $0.3 million increase in the domestic senior credit facility. Proceeds from
long-term debt and payments of long-term debt, net used $0.4 million of funds
and primarily reflect the borrowing activity of Koffolk Israel. Net cash (used)
by financing activities for fiscal 2004 and 2003 was ($17.8) million and ($26.4)
million, respectively. Short-term debt decreased due to the reduction of the
domestic senior credit facility of $21.2 million, debt payments related to Odda
of $5.7 million and by other increases of $0.1 million in fiscal 2004. Proceeds
from long-term debt reflect the issuance of $105.0 million Senior Secured Notes
and an increase of $4.6 million in foreign bank loans in fiscal 2004. Payments
of long-term debt primarily reflect the retirement of Senior Subordinated Notes
in fiscal 2004. Payments of the Pfizer obligations, the Prince transactions and
costs related to the refinancing account for the remainder of funds used by
financing activities in fiscal 2004.

     Working Capital and Capital Expenditures.  Working capital as of September
30, 2004 was $57.7 million compared to $54.4 million at fiscal year end June 30,
2004, an increase of $3.0 million. The Company is currently increasing inventory
levels of certain products to enhance future supply flexibility and reduce cost
as part of a strategic review of its manufacturing capabilities. The fiscal 2005
increase in working capital primarily was due to higher inventory levels.

     The Company anticipates spending approximately $8.0 million for capital
expenditures in fiscal 2005, primarily to cover the Company's asset replacement
needs, to improve processes, and for environmental and regulatory compliance,
subject to the availability of funds.

     Liquidity.  At September 30, 2004, the amount of credit extended under the
Company's domestic senior credit facility totaled $11.3 million under the
working capital facility and $8.7 million under the letter of credit facility,
and the Company had $6.2 million available under the working capital facility.
In addition, certain of the Company's foreign subsidiaries also had availability
totaling $5.1 million under their respective loan agreements. As of September
24, 2004, the Company amended its domestic senior credit facility to: (i)
increase the aggregate amount of borrowings available under such working capital
and letter of credit facilities to $32.5 million; the amount of aggregate
borrowings available under the working capital facility remained unchanged at
$17.5 million; (ii) amend the EBITDA definition to exclude charges and expenses
related to unsuccessful acquisitions and related financings in an aggregate
amount not to exceed $5.3 million for the period beginning January 1, 2004 and
ending June 30, 2004; (iii) amend the definition of Additional Indebtedness to
exclude advances under the working capital facility; (iv) amend the definition
of Permitted Investments to allow other investments made during the period from
January 1, 2004 through June 30, 2004 in an aggregate amount not to exceed
$336,000; and (v) establish covenant EBITDA levels for the periods ending after
June 30, 2004. The amendment was effective June 30, 2004 for items (i), (ii) and
(iii); effective January 1, 2004 for item (iv); and effective September 24, 2004
for item (v).

                                        47
<PAGE>

     The domestic senior credit facility contains a lock-box requirement and a
material adverse change clause should an event of default (as defined in the
agreement) occur. Accordingly, the amounts outstanding have been classified as
short-term and are included in loans payable to banks in the condensed
consolidated balance sheet.

     The Company's ability to fund its operating plan depends upon the continued
availability of borrowing under its domestic senior credit facility. The Company
believes that it will be able to comply with the terms of its covenants under
the domestic senior credit facility based on its forecasted operating plan. In
the event of adverse operating results and/or violation of covenants under this
facility, there can be no assurance that the Company would be able to obtain
waivers or amendments on favorable terms, if at all. The Company's fiscal 2005
operating plan projects adequate liquidity throughout the year, with periods of
reduced availability around the dates of the semi-annual interest payments due
December 1, 2004 and June 1, 2005 related to its senior secured and senior
subordinated notes. The Company is pursuing additional cost reduction
activities, working capital improvement plans, and sales of non-strategic assets
to ensure additional liquidity. The Company also has availability under foreign
credit lines that likely would be available. The Company also has undertaken a
strategic review of its manufacturing capabilities, and is currently increasing
inventory levels of certain products to enhance future flexibility and reduce
cost. There can be no assurance the Company will be successful in any of the
above-noted actions.

     The Company's contractual obligations (in millions) at September 30, 2004
mature as follows:

<Table>
<Caption>
                                                                YEARS
                                        ------------------------------------------------------
                                        WITHIN 1   OVER 1 TO 3   OVER 3 TO 5   OVER 5   TOTAL
                                        --------   -----------   -----------   ------   ------
<S>                                     <C>        <C>           <C>           <C>      <C>
Loans payable to banks................   $11.3        $  --        $   --       $ --    $ 11.3
Long-term debt (including current
  portion)............................     1.0          4.1         153.9         --     159.0
Interest payments.....................    19.3         38.4          12.7         --      70.4
Lease commitments.....................     1.4          2.6           2.0        2.2       8.2
Acquisition of rights.................     0.6          0.8           0.4         --       1.8
                                         -----        -----        ------       ----    ------
  Total contractual obligations.......   $33.6        $45.9        $169.0       $2.2    $250.7
                                         =====        =====        ======       ====    ======
</Table>

     The Company's contractual obligations (in millions) at September 30, 2004,
as adjusted to give effect to the additional notes issued in December 2004,
mature as follows:

<Table>
<Caption>
                                                                YEARS
                                        ------------------------------------------------------
                                        WITHIN 1   OVER 1 TO 3   OVER 3 TO 5   OVER 5   TOTAL
                                        --------   -----------   -----------   ------   ------
<S>                                     <C>        <C>           <C>           <C>      <C>
Loans payable to banks................   $  --        $  --        $   --       $ --    $   --
Long-term debt (including current
  portion)............................     1.0          4.1         176.3         --     181.4
Interest payments.....................    22.2         44.2          13.2         --      79.6
Lease commitments.....................     1.4          2.6           2.0        2.2       8.2
Acquisition of rights.................     0.6          0.8           0.4         --       1.8
                                         -----        -----        ------       ----    ------
  Total contractual obligations.......   $25.2        $51.7        $191.9       $2.2    $271.0
                                         =====        =====        ======       ====    ======
</Table>

SUPPLEMENTAL INFORMATION (UNAUDITED)

     The Company shutdown Odda and divested Carbide during fiscal 2003, sold MRT
in August 2003, and shutdown La Cornubia in June 2004. These businesses have
been classified as discontinued operations. The Company's consolidated financial
statements have been reclassified to report separately the operating results,
financial position, and cash flows of the discontinued operations. In addition,
the Company completed the Prince Transactions in December 2003, including the
divestiture of PMC and the termination of management fees to the Palladium
Investors.

                                        48
<PAGE>

     To facilitate quarterly comparisons, the following unaudited statements
present the quarterly operating results of continuing operations, for the years
ended June 30, 2004, 2003 and 2002. Amounts are in thousands.

<Table>
<Caption>
                                                               QUARTERS ENDED                   YEAR
                                                  -----------------------------------------    ENDED
                                                  SEP. 30,   DEC. 31,   MAR. 31,   JUN. 30,   JUN. 30,
                                                    2003       2003       2004       2004       2004
                                                  --------   --------   --------   --------   --------
<S>                                               <C>        <C>        <C>        <C>        <C>
NET SALES:
  Animal Health & Nutrition.....................  $59,841    $ 68,687   $64,819    $72,074    $265,421
  Industrial Chemicals -- ex PMC................    6,299       6,244    10,000      8,592      31,135
  Industrial Chemicals -- PMC...................    5,683       5,435        --         --      11,118
  Distribution..................................    7,939       7,656     7,916      7,350      30,861
  All Other.....................................    5,188       4,518     4,302      5,731      19,739
                                                  -------    --------   -------    -------    --------
     Total net sales............................   84,950      92,540    87,037     93,747     358,274
Cost of goods sold..............................   63,790      69,991    63,843     70,247     267,871
                                                  -------    --------   -------    -------    --------
     Gross profit...............................   21,160      22,549    23,194     23,500      90,403
Selling, general and administrative expenses....   15,785      16,824    16,165     17,354      66,128
Costs of non-completed transaction..............       --          --        --      5,261       5,261
                                                  -------    --------   -------    -------    --------
OPERATING INCOME (LOSS):
  Animal Health & Nutrition.....................    6,900       7,655     8,370     10,382      33,307
  Industrial Chemicals -- ex PMC................     (391)       (287)    1,136        163         621
  Industrial Chemicals -- PMC...................    1,213       1,065        --         --       2,278
  Distribution..................................      841         692       789        578       2,900
  All Other.....................................      669         657       557        418       2,301
  Corporate Expenses............................   (3,377)     (4,132)   (4,116)    (9,729)    (21,354)
  Eliminations..................................       82         638       293       (927)         86
  Palladium management fee......................     (562)       (563)       --         --      (1,125)
                                                  -------    --------   -------    -------    --------
     Total operating income (loss)..............    5,375       5,725     7,029        885      19,014
OTHER:
  Interest expense..............................    3,933       4,549     4,918      5,218      18,618
  Interest (income).............................     (242)        168       (43)       (13)       (130)
  Other expense, net............................     (585)        127      (131)      (192)       (781)
  Net (gain) on extinguishment of debt..........       --     (23,226)       --         --     (23,226)
                                                  -------    --------   -------    -------    --------
     Income (loss) from continuing operations
       before income taxes......................    2,269      24,107     2,285     (4,128)     24,533
Provision for income taxes......................      783       2,880     2,209      2,097       7,969
                                                  -------    --------   -------    -------    --------
     Income/(loss) from continuing operations...    1,486      21,227        76     (6,225)     16,564
DISCONTINUED OPERATIONS:
  Income (loss) from operations.................     (462)         59      (471)      (751)     (1,625)
  Gain (loss) on disposal.......................      231          --        --     (2,320)     (2,089)
                                                  -------    --------   -------    -------    --------
     Net income/(loss)..........................  $ 1,255    $ 21,286   $  (395)   $(9,296)   $ 12,850
                                                  =======    ========   =======    =======    ========
DEPRECIATION AND AMORTIZATION FROM CONTINUING
  OPERATIONS:
  Animal Health & Nutrition.....................  $ 2,029    $  2,059   $ 2,086    $ 2,089    $  8,263
  Industrial Chemicals -- ex PMC................      406         395       403        432       1,636
  Industrial Chemicals -- PMC...................      243         244        --         --         487
  Distribution..................................        3           4         3          1          11
  All Other.....................................      115          98       105        101         419
  Corporate Expenses............................      372         576       660        759       2,367
                                                  -------    --------   -------    -------    --------
     Total depreciation and amortization........  $ 3,168    $  3,376   $ 3,257    $ 3,382    $ 13,183
                                                  =======    ========   =======    =======    ========
</Table>

                                        49
<PAGE>

<Table>
<Caption>
                                                          QUARTERS ENDED                   YEAR
                                             -----------------------------------------    ENDED
                                             SEP. 30,   DEC. 31,   MAR. 31,   JUN. 30,   JUN. 30,
                                               2002       2002       2003       2003       2003
                                             --------   --------   --------   --------   --------
<S>                                          <C>        <C>        <C>        <C>        <C>
NET SALES:
  Animal Health & Nutrition................  $59,976    $ 66,650   $62,675    $61,405    $250,706
  Industrial Chemicals -- ex PMC...........    8,138       5,946     6,449      5,932      26,465
  Industrial Chemicals -- PMC..............    5,756       5,285     5,743      5,548      22,332
  Distribution.............................    8,096       7,197     7,612      7,167      30,072
  All Other................................    1,711       2,190     3,793      4,477      12,171
                                             -------    --------   -------    -------    --------
     Total net sales.......................   83,667      87,268    86,272     84,529     341,746
Cost of goods sold.........................   61,638      63,366    63,306     62,890     251,200
                                             -------    --------   -------    -------    --------
     Gross profit..........................   22,039      23,902    22,966     21,639      90,546
Selling, general and administrative
  expenses.................................   15,544      15,874    17,496     16,136      65,050
OPERATING INCOME (LOSS):
  Animal Health & Nutrition................    9,420      11,593     8,902      8,557      38,472
  Industrial Chemicals -- ex PMC...........   (1,035)     (1,815)   (1,555)    (1,029)     (5,434)
  Industrial Chemicals -- PMC..............    1,127         901       839        712       3,579
  Distribution.............................      750         802       900        755       3,207
  All Other................................       13         245       356          6         620
  Corporate Expenses.......................   (3,051)     (3,440)   (3,324)    (2,905)    (12,720)
  Eliminations.............................     (167)        305       (86)       (30)         22
  Palladium management fee.................     (562)       (563)     (562)      (563)     (2,250)
                                             -------    --------   -------    -------    --------
     Total operating income (loss).........    6,495       8,028     5,470      5,503      25,496
OTHER:
  Interest expense.........................    4,489       3,641     3,958      4,193      16,281
  Interest (income)........................     (126)         31       (39)        49         (85)
  Other expense, net.......................    1,155         235       201        (52)      1,539
                                             -------    --------   -------    -------    --------
     Income (loss) from continuing
       operations before income taxes......      977       4,121     1,350      1,313       7,761
Provision for income taxes.................      432       1,409       599      7,620      10,060
                                             -------    --------   -------    -------    --------
     Income/(loss) from continuing
       operations..........................      545       2,712       751     (6,307)     (2,299)
DISCONTINUED OPERATIONS:
  Income (loss) from operations............     (702)    (10,547)   (1,681)    (1,647)    (14,577)
  Gain (loss) on disposal..................       --          --    (1,342)       659        (683)
                                             -------    --------   -------    -------    --------
     Net income/(loss).....................  $  (157)   $ (7,835)  $(2,272)   $(7,295)   $(17,559)
                                             =======    ========   =======    =======    ========
DEPRECIATION AND AMORTIZATION FROM
  CONTINUING OPERATIONS:
  Animal Health & Nutrition................  $ 1,892    $  1,920   $ 1,890    $ 1,988    $  7,690
  Industrial Chemicals -- ex PMC...........      587         699       498        164       1,948
  Industrial Chemicals -- PMC..............      232         239       240        245         956
  Distribution.............................        3           3         2          4          12
  All Other................................       87          90        94         93         364
  Corporate Expenses.......................      355         395       405        399       1,554
                                             -------    --------   -------    -------    --------
     Total depreciation and amortization...  $ 3,156    $  3,346   $ 3,129    $ 2,893    $ 12,524
                                             =======    ========   =======    =======    ========
</Table>

                                        50
<PAGE>

<Table>
<Caption>
                                                          QUARTERS ENDED                   YEAR
                                             -----------------------------------------    ENDED
                                             SEP. 30,   DEC. 31,   MAR. 31,   JUN. 30,   JUN. 30,
                                               2001       2001       2002       2002       2002
                                             --------   --------   --------   --------   --------
<S>                                          <C>        <C>        <C>        <C>        <C>
NET SALES:
  Animal Health & Nutrition................  $57,943    $63,156    $59,378    $ 59,125   $239,602
  Industrial Chemicals -- ex PMC...........    6,591      6,253      7,258       9,301     29,403
  Industrial Chemicals -- PMC..............    5,062      5,218      5,418       5,753     21,451
  Distribution.............................    7,590      6,640      6,753       6,869     27,852
  All Other................................    2,377      2,448      2,595       2,948     10,368
                                             -------    -------    -------    --------   --------
     Total net sales.......................   79,563     83,715     81,402      83,996    328,676
Cost of goods sold.........................   59,592     60,128     60,885      66,806    247,411
                                             -------    -------    -------    --------   --------
     Gross profit..........................   19,971     23,587     20,517      17,190     81,265
Selling, general and administrative
  expenses.................................   16,431     17,614     17,577      19,014     70,636
OPERATING INCOME (LOSS):
  Animal Health & Nutrition................    7,365     10,259      6,246       4,428     28,298
  Industrial Chemicals -- ex PMC...........   (2,759)    (2,160)    (1,175)     (4,870)   (10,964)
  Industrial Chemicals -- PMC..............      821        588      1,058       1,173      3,640
  Distribution.............................      612        544        496         693      2,345
  All Other................................      214        367        108         475      1,164
  Corporate Expenses.......................   (2,204)    (2,708)    (2,733)     (3,746)   (11,391)
  Eliminations.............................       53       (354)      (498)        586       (213)
  Palladium management fee.................     (562)      (563)      (562)       (563)    (2,250)
                                             -------    -------    -------    --------   --------
     Total operating income (loss).........    3,540      5,973      2,940      (1,824)    10,629
OTHER:
  Interest expense.........................    4,596      4,660      4,590       4,224     18,070
  Interest (income)........................      (65)      (231)        (6)        (44)      (346)
  Other expense, net.......................    1,263        753        368         965      3,349
                                             -------    -------    -------    --------   --------
     Income (loss) from continuing
       operations before income taxes......   (2,254)       791     (2,012)     (6,969)   (10,444)
Provision for income taxes.................     (197)     1,203      1,264      12,497     14,767
                                             -------    -------    -------    --------   --------
     Income/(loss) from continuing
       operations..........................   (2,057)      (412)    (3,276)    (19,466)   (25,211)
DISCONTINUED OPERATIONS:
  Income (loss) from operations............     (308)    (1,287)    (5,796)    (19,168)   (26,559)
  Gain (loss) on disposal..................       --         --         --          --         --
                                             -------    -------    -------    --------   --------
     Net income/(loss).....................  $(2,365)   $(1,699)   $(9,072)   $(38,634)  $(51,770)
                                             =======    =======    =======    ========   ========
DEPRECIATION AND AMORTIZATION FROM
  CONTINUING OPERATIONS:
  Animal Health & Nutrition................  $ 1,810    $ 1,589    $ 1,996    $  2,043   $  7,438
  Industrial Chemicals -- ex PMC...........      633        579        609         748      2,569
  Industrial Chemicals -- PMC..............      242        240        242         242        966
  Distribution.............................        7         (1)         3           3         12
  All Other................................       81         78         80          82        321
  Corporate Expenses.......................      264        268        263         254      1,049
                                             -------    -------    -------    --------   --------
     Total depreciation and amortization...  $ 3,037    $ 2,753    $ 3,193    $  3,372   $ 12,355
                                             =======    =======    =======    ========   ========
</Table>

                                        51
<PAGE>

CRITICAL ACCOUNTING POLICIES

     Critical accounting policies are those that require application of
management's most difficult, subjective or complex judgments, often as a result
of the need to make estimates about the effect of matters that are inherently
uncertain and may change in subsequent periods.

     The Company's significant accounting policies are described in Note 2 to
the Consolidated Financial Statements. Not all of these significant accounting
policies require management to make difficult, subjective or complex judgments
or estimates. However, management of the Company is required to make certain
estimates and assumptions during the preparation of consolidated financial
statements in accordance with accounting principles generally accepted in the
United States of America. These estimates and assumptions impact the reported
amount of assets and liabilities and disclosures of contingent assets and
liabilities as of the date of the consolidated financial statements. Estimates
and assumptions are reviewed periodically and the effects of revisions are
reflected in the period they are determined to be necessary. Actual results
could differ from those estimates. Following are some of the Company's critical
accounting policies impacted by judgments, assumptions and estimates.

  REVENUE RECOGNITION

     Revenues are recognized when title to products and risk of loss are
transferred to customers. Additional conditions for recognition of revenue are
that collection of sales proceeds is reasonably assured and the Company has no
further performance obligations. Net sales are comprised of total sales billed,
less reductions for returned goods, trade discounts and customer allowances.

  LITIGATION

     The Company is subject to legal proceedings and claims arising out of the
normal course of business. The Company routinely assesses the likelihood of any
adverse judgments or outcomes to these matters as well as ranges of probable
losses. A determination of the amount of the reserves required for these
contingencies is based on an analysis of the various issues, historical
experience, other third party judgments and outside specialists, where required.
The required reserves may change in the future due to new developments in each
matter. For further discussion, see Note 15 to the Consolidated Financial
Statements.

  ENVIRONMENTAL MATTERS

     The Company determines the costs of environmental remediation of its
facilities and formerly owned properties on the basis of current law and
existing technologies. Uncertainties exist in these evaluations primarily due to
unknown conditions, changing governmental regulations and legal standards
regarding liability, and evolving technologies. The liabilities are adjusted
periodically as remediation efforts progress or as additional information
becomes available. The Company has recorded liabilities of $2.9 million at
September 30, 2004 for such activities.

  LONG LIVED ASSETS

     Long-lived assets, including plant and equipment, and other intangible
assets are reviewed for impairment when events or circumstances indicate that a
diminution in value may have occurred, based on a comparison of undiscounted
future cash flows to the carrying amount of the long-lived asset. If the
carrying amount exceeds undiscounted future cash flows, an impairment charge is
recorded based on the difference between the carrying amount of the asset and
its fair value.

     The assessment of potential impairment for a particular asset or set of
assets requires certain judgments and estimates by the Company, including the
determination of an event indicating impairment; the future cash flows to be
generated by the asset, including the estimated life of the asset and likelihood
of alternative courses of action; the risk associated with those cash flows; and
the Company's cost of capital or discount rate to be utilized.

                                        52
<PAGE>

  USEFUL LIVES OF LONG-LIVED ASSETS

     Useful lives of long-lived assets, including plant and equipment and other
intangible assets are based on management's estimates of the periods that the
assets will be productively utilized in the revenue-generation process. Factors
that affect the determination of lives include prior experience with similar
assets and product life expectations and management's estimate of the period
that the assets will generate revenue.

  INVENTORIES

     Inventories are valued at the lower of cost or market. Cost is determined
on a first-in, first-out (FIFO) and average methods for most inventories. The
determination of market value to compare to cost involves assessment of numerous
factors, including costs to dispose of inventory and estimated selling prices.
Reserves are recorded for inventory determined to be damaged, obsolete, or
otherwise unsaleable.

  INCOME TAXES

     Deferred tax assets and liabilities are determined using enacted tax rates
for the effects of net operating losses and temporary differences between the
book and tax bases of assets and liabilities. The Company records a valuation
allowance on deferred tax assets when appropriate to reflect the expected future
tax benefits to be realized. In determining the appropriate valuation allowance,
certain judgments are made relating to recoverability of deferred tax assets,
use of tax loss carryforwards, level of expected future taxable income and
available tax planning strategies. These judgments are routinely reviewed by
management. For further discussion, see Note 14 to the Consolidated Financial
Statements.

NEW ACCOUNTING PRONOUNCEMENTS

     There were no new accounting policies issued during the quarter ended
September 30, 2004 which would result in a material impact on the Company's
financial statements.

EFFECT OF INFLATION; FOREIGN CURRENCY EXCHANGE RATES

     Inflation generally affects the Company by increasing the cost of labor,
equipment and raw materials. The Company does not believe that inflation has had
any material effect on the Company's business over the last two years.

     The Company's substantial foreign operations expose it to risk of exchange
rate fluctuations. Financial position and results of operations of the Company's
international subsidiaries generally are measured using local currencies as the
functional currency. Assets and liabilities of these operations are translated
at the exchange rates in effect at each fiscal year end. The translation
adjustments related to assets and liabilities that arise from the use of
differing exchange rates from period to period are included in accumulated other
comprehensive loss in shareholders' equity. Income statement accounts are
translated at the average rates of exchange prevailing during the year.

     A business unit of Koffolk and all of Planalquimica operate primarily in
U.S. dollars. The U.S. dollar is designated as the functional currency for these
businesses and translation gains and losses are included in determining net
income or loss.

     Foreign currency transaction gains and losses primarily arise from
short-term intercompany balances. Net foreign currency transaction and
translation (gains) losses were ($116), $789 and $3,385 for fiscal 2004, 2003
and 2002, respectively, and were included in other expense, net in the
consolidated statements of operations.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     In the normal course of operations, the Company is exposed to market risks
arising from adverse changes in interest rates, foreign currency exchange rates,
inflation and commodity prices. As a result, future earnings, cash flows and
fair values of assets and liabilities are subject to uncertainty. The Company
uses, from time to time, foreign currency forward contracts as a means of
hedging exposure to foreign currency risks. The Company also utilizes, on a
limited basis, certain commodity derivatives, primarily on copper used in its

                                        53
<PAGE>

manufacturing processes, to hedge the cost of its anticipated purchase
requirements. The Company does not utilize derivative instruments for trading
purposes. The Company does not hedge its exposure to market risks in a manner
that completely eliminates the effects of changing market conditions on
earnings, cash flows and fair values. The Company monitors the financial
stability and credit standing of its major counterparties.

  INTEREST RATE RISK

     The Company uses sensitivity analysis to assess the market risk of its
debt-related financial instruments and derivatives. Market risk is defined for
these purposes as the potential change in the fair value resulting from an
adverse movement in interest rates.

     The Company's debt portfolio is comprised of fixed rate and variable rate
debt of approximately $170.2 million as of September 30, 2004. Approximately 10%
of the debt is variable and would be interest rate sensitive. For further
details, see Note 9, to the Consolidated Financial Statements of the Company
appearing elsewhere herein.

     For the purposes of the sensitivity analysis, an immediate 10% change in
interest rates would not have a material impact on the Company's cash flows and
earnings over a one year period.

     As of June 30, 2004, the fair value of the Company's senior secured and
subordinated notes are estimated based on quoted market rates at $158 million
and the related carrying amount is $153 million.

  FOREIGN CURRENCY EXCHANGE RATE RISK

     A significant portion of the financial results of the Company is derived
from activities conducted outside the U.S. and denominated in currencies other
than the U.S. dollar. Because the financial results of the Company are reported
in U.S. dollars, they are affected by changes in the value of the various
foreign currencies in relation to the U.S. dollar. Exchange rate risks are
reduced, however, by the diversity of the Company's foreign operations and the
fact that international activities are not concentrated in any single non-U.S.
currency. Short-term exposures to changing foreign currency exchange rates are
primarily due to operating cash flows denominated in foreign currencies. From
time to time, the Company may cover known and anticipated operating exposures by
using purchased foreign currency exchange option and forward contracts. The
primary currencies for which the Company has foreign currency exchange rate
exposure are the Euro, the Brazilian Real, and Japanese yen.

     The Company uses sensitivity analysis to assess the market risk associated
with its foreign currency transactions. Market risk is defined for these
purposes as the potential change in fair value resulting from an adverse
movement in foreign currency exchange rates. The fair value associated with the
foreign currency contracts has been estimated by valuing the net position of the
contracts using the applicable spot rates and forward rates as of the reporting
date. Based on the limited amount of foreign currency contracts at September 30,
2004, the Company does not believe that an instantaneous 10% adverse movement in
foreign currency rates from their levels at September 30, 2004, with all other
variables held constant, would have a material effect on the Company's results
of operations, financial position or cash flows.

  COMMODITY PRICE RISK

     The Company purchases certain raw materials, such as copper, under
short-term supply contracts. The purchase prices thereunder are generally
determined based on prevailing market conditions. The Company uses commodity
derivative instruments to modify some of the commodity price risks. Assuming a
10% change in the underlying commodity price, the potential change in the fair
value of commodity derivative contracts held at September 30, 2004 would not be
material when compared to the Company's operating results and financial
position.

     The foregoing market risk discussion and the estimated amounts presented
are Forward-Looking Statements that assume certain market conditions. Actual
results in the future may differ materially from these projected results due to
developments in relevant financial markets and commodity markets. The methods
used above to assess risk should not be considered projections of expected
future events or results.
                                        54
<PAGE>

                                    BUSINESS

OVERVIEW

     We are a leading diversified global manufacturer and marketer of a broad
range of animal health and nutrition products, specifically medicated feed
additives (MFAs) and nutritional feed additives (NFAs), which we sell throughout
the world predominantly to the poultry, swine and cattle markets. MFAs are used
preventively and therapeutically in animal feed to produce healthy livestock. We
believe we are the third largest manufacturer and marketer of MFAs in the world,
and we believe that certain of our MFA products have leading positions in the
marketplace. We are also a specialty chemicals manufacturer and marketer,
serving primarily the United States pressure-treated wood and chemical
industries. We have several proprietary products, and many of our products
provide critical performance attributes to our customers' products, while
representing a relatively small percentage of total end-product cost. We operate
in over 16 countries around the world and sell our animal health and nutrition
products and specialty chemicals products into over 40 countries. Approximately
76% of our fiscal 2004 net sales were from our Animal Health and Nutrition
business, and approximately 24% of our fiscal 2004 net sales were from our
Specialty Chemicals business.

     Our Animal Health and Nutrition segment manufactures and markets more than
500 formulations and concentrations of medicated and nutritional feed additives,
including antibiotics, antibacterials, anticoccidials, anthelmintics, trace
minerals, vitamins, vitamin premixes and other animal health and nutrition
products, to the livestock and pet food industries. Our MFA products are
internationally recognized for quality and efficacy in the prevention and
treatment of diseases in livestock, such as coccidiosis in poultry, dysentery in
swine and acidosis in cattle. We market our Animal Health and Nutrition products
under approximately 450 governmental product registrations, approving our MFA
products with respect to animal drug safety and effectiveness.

     Our Specialty Chemicals business manufactures and markets a number of
specialty chemicals for use in the pressure-treated wood, chemical catalyst,
semiconductor, automotive, aerospace and agricultural industries. We anticipate
that our proprietary manufacturing process to produce a copper-based solution
for one of the leading new products for manufacturing pressure-treated wood will
represent our largest growth opportunity in our Specialty Chemicals business.
Over 39% of our fiscal 2004 net sales in our Specialty Chemicals business was
derived from copper-based compounds, solutions or mixes.

     We have in recent years focused our business on animal health and nutrition
products. As a result of the rapid decline of the printed circuit board industry
in the United States, we have substantially exited that business, including our
etchant recycling operations, and re-directed our productive capacity in niche
markets. We have also sold other non-strategic businesses, such as our Agtrol
copper fungicide business and our subsidiaries, Mineral Resource Technologies,
Inc. ("MRT") and The Prince Manufacturing Company ("PMC"). In addition, we
closed our operations in Odda, Norway ("Odda") and Bordeaux, France ("La
Cornubia").

     In August 2003, the Company completed the sale of MRT for net proceeds
after transaction costs of approximately $13.8 million. MRT managed and sold
coal combustion by-products, including fly ash.

     Effective December 26, 2003, the Company completed the divestiture of
substantially all of the business and assets of PMC to a company formed by
Palladium Equity Partners II, LP and certain of its affiliates (the "Palladium
Investors"), and the related reduction of the Company's preferred stock held by
the Palladium Investors. PMC manufactured and marketed various mineral oxides,
including iron compounds and manganese compounds (see Note 4 to Consolidated
Financial Statements) (the "Prince Transactions"). Unless otherwise indicated,
the information in this prospectus does not include PMC.

     On June 30, 2004, one of the Company's French subsidiaries, La Cornubia SA,
filed for bankruptcy under the insolvency laws of France. The Company believes
that as a result of the bankruptcy filing by La Cornubia, it is possible that LC
Holding S.A. ("LC Holding"), La Cornubia's parent, a holding company with no
assets except for its investment in La Cornubia, may also file for bankruptcy in
France.

                                        55
<PAGE>

     On December 16, 2004, the Company entered into an agreement to sell the
Belgium Plant to Glaxosmithkline Biologicals S.A. ("GSK") and to transfer to GSK
a majority of the employees of PAH Belgium. GSK was a previous owner of the
Rixensart plant, and sold it to Pfizer SA in 1995, which sold it to PAH Belgium
in 2000. Such sale, when completed, would include the following elements: (i)
the transfer of substantially all of the land and buildings and certain
equipment of PAH Belgium at the Belgium Plant, as well as the industrial
activities and intellectual property relating to certain solvent technology of
Phibro Belgium, for a purchase price of EUR 6.2 million, payable at closing;
(ii) the transfer to GSK of a majority of the employees of PAH Belgium and the
corresponding responsibility for statutory severance obligations; (iii) GSK
agreeing to be responsible for costs of cleaning-up, by demolition or otherwise,
certain buildings not to be used by it, but for PAH Belgium to reimburse GSK up
to a maximum of EUR 0.7 million for such clean-up costs; (iv) in recognition of
the benefits to us from the proposed transaction, PAH Belgium agreeing to pay to
GSK EUR 1.5 million within six months from the closing date, EUR 1.5 million
within eighteen months from the closing date, EUR 1.5 million within thirty
months from the closing date, and EUR 0.5 million within forty-two months from
the closing date; (v) PAH Belgium retaining certain excess land (valued at
approximately EUR 0.4 million) and being able to sell such land for its own
account; (vi) PAH Belgium being responsible for certain plant closure costs and
legally required severance indemnities in connection with workforce reductions,
estimated in total to be EUR 7.7 million of which an amount estimated to be
approximately EUR 4.1 million would be payable at or around the closing and an
aggregate amount so estimated to be approximately EUR 3.6 million would be
payable over periods up to thirteen years; and (vii) PAH Belgium retaining
certain equipment at the Belgium Plant, and being able to sell such equipment
for the account of PAH Belgium or transfer such equipment, together with other
assets and rights related to the production of virginiamycin, to our subsidiary
in Brazil that owns the facility in Guarulhos or in connection with alternative
production arrangements. The foregoing transactions and agreements are subject
to a closing that is expected to occur no earlier than July 1, 2005 nor later
than June 30, 2006.

     On December 21, 2004, we completed a private placement of $22.491 million
of additional old units to refinance borrowings under our domestic senior credit
facility incurred to fund alternative virginiamycin production arrangements and
the increase of virginiamycin inventory pending supply under such alternative
production arrangements.

BUSINESS STRENGTHS

     Top Three MFA Provider in the World.  We believe we are the world's third
largest manufacturer and marketer of medicated feed additives in the poultry and
swine markets. We manufacture and market over 200 MFA formulations and
concentrations. We believe our MFAs rank first in sales in Brazil, and third in
the United States. Our Animal Health and Nutrition business serves our customers
in over 40 countries from 21 facilities. Many of our MFA products have been
marketed for over 20 years.

     Significant Barriers to Entry.  Medicated feed additives cannot be
manufactured or marketed without governmental product registrations that are
specific to each country -- the Food and Drug Administration ("FDA") for
example, in the United States, Health Canada in Canada, and EFSA/EMEA
authorities in Europe. Before a product registration is granted, the applicant
must show the regulatory authority that the product and its proposed use are
both effective and safe for the specified species and application. Obtaining an
MFA product registration is comparable in cost and difficulty with obtaining
approval for drugs used to treat humans. In addition to approval of formulation
and labeling, regulatory authorities typically require approval and periodic
inspection of the manufacturing facilities. Because of the costs and
difficulties associated with obtaining MFA product registrations, there have
been few new medicated feed additives developed and marketed over the last
decade. The only two new MFA compounds approved for use in the last 10 years
were semduramicin, one of our products, and ractopamine. Because of the inherent
difficulties and high costs of obtaining major product registrations and their
absolute necessity to operate in this business, our existing broad portfolio of
product registrations provides us strength in the marketplace.

     Strong Brand Name Recognition of Our Medicated Feed Additives.  We enjoy
strong brand name recognition with our medicated feed additives for the
prevention and control of diseases in poultry, swine and cattle. In particular,
virginiamycin, an antibiotic marketed under the Stafac(R), Eskalin(R) and
V-Max(R) brand
                                        56
<PAGE>

names, is a popular and efficacious choice of medicated feed additive in the
poultry, swine and cattle industry. Semduramicin, sold under the brand name
Aviax(R), and salinomycin, sold under the brand name Coxistac(R), are also
leading poultry anticoccidials. In fiscal 2004, branded MFAs accounted for
approximately 50% of our total Animal Health and Nutrition sales.

     Established Global Network and Customer Base.  From our 23 facilities in 16
countries, we manufacture and market our products, which are sold through
multiple distribution channels to over 2,800 customers in a wide variety of end
use markets. We sell our products through an established global sales, marketing
and distribution network to customers in over 40 countries. In fiscal 2004, no
single customer accounted for more than 5% of total revenues and our top 10
customers accounted for less than 22% of total revenues.

     Extensive Technical Support for Customers.  We employ over 60 chemists,
technicians, PhDs and veterinarians (DVMs) at our various facilities involved in
providing technical services to customers. Our technical service group and sales
personnel are able to work directly with commercial feed manufacturers and
integrated poultry, swine and cattle producers to promote animal health. We are
able to offer our customers products targeted to local markets, allowing us to
serve those local markets more effectively. Our MFA field personnel are skilled
in the area of product differentiation and have extensive applications knowledge
so as to be able to work closely with customers in determining optimum benefits
from usage of our products. As agricultural food production will continue to
intensify and will adopt evolving technologies, our MFA personnel are constantly
working with customers to better understand their needs in order to best utilize
the products existing within our MFA portfolio. This commercial knowledge also
plays a pivotal role within the R&D function to ensure that research results are
applicable to customer needs and concerns.

     Manufacturing Expertise.  Our manufacturing expertise and know-how in
antibiotic manufacturing process and organic synthesis has given us unique
positions in the marketplace. We believe that we are the only manufacturer of
virginiamycin and semduramicin in the world. Our blending, compounding and
formulation expertise is recognized by our customers in the animal health and
nutrition market. In addition, in our Specialty Chemicals business, based on our
more than 50 years of expertise in the metal chemical area, we have become a
leading supplier of the new copper-containing compound to the pressure-treated
wood industry. We also believe we hold leading positions in agricultural and
other industrial applications for copper-containing compounds.

     Proven Management Team.  We have assembled a strong and experienced
management team at both the corporate and operating levels. Our top operating
managers have an average of over 30 years of experience in the animal health and
nutrition and specialty chemicals industries. With our expanded management team,
we have added significant operational and international experience to our
businesses. Our founding family owns 100% of our common stock.

BUSINESS STRATEGY

     Expand Applications for Animal Health and Nutrition Product Offerings to
Our Primary Markets.  We seek to increase our product lines through expanding
the scope of our animal health and nutrition product registrations, through both
extending the use claims and formulations and the geographic areas of such
registrations. We are actively working with the FDA and other regulators to
obtain additional registrations and cross-clearances so that our MFA products
can continue to be used in situations where another MFA is also in use. In the
United States, we obtained from the FDA a zero-day withdrawal registration for
the use of our oxytetracycline product in cattle and recently obtained a cross
clearance for Mecadox(R) and Terramycin(R) in swine. We have obtained approval
for Aviax(R) in the EU, and are pursuing a modification of our Aviax(R)
registration in the United States allowing for site change of the active
ingredient. We believe that our receipt of FDA approval of Aviax(R), together
with our EU approval of Aviax(R) and our other registration efforts, has the
potential to increase our sales over the next two to three years. By leveraging
our global reach and our position as the only leading animal health company
dedicated to MFAs and NFAs, we are natural partners for small players in the
industry, who approach us to help them license or distribute new products they
have developed, because we do not compete with their other products.

                                        57
<PAGE>

     Expand Our Customer Base.  We intend to expand and strengthen our customer
base by (i) focusing on relationships with key accounts, (ii) continuing to
incentive our sales force to concentrate on fast-growing, high-margin areas
within existing product groups, and (iii) incent growth opportunities for our
existing products in new markets. As certain of our MFA products are used in
rotation by our customers, we seek to supply all or substantially all of the
various MFA products which our customers may want to use. Our MFA business has
historically been strongest in the poultry market, and we are seeking to develop
it further in the swine and cattle markets. We expect to continue to enhance our
sales force in the swine market, and believe that there are further growth
opportunities from doing so. In addition, we believe the under-penetrated
Chinese and Latin American markets offer growth opportunities. In China, we are
seeking to partner with local distributors, to leverage our existing local sales
force.

OUR ANIMAL HEALTH AND NUTRITION BUSINESS -- MEDICATED FEED ADDITIVES

     We manufacture and market a broad range of medicated feed additive products
to the global livestock industry, either directly to large integrated producers
or through a network of independent distributors. Feed additives provide both
therapeutic benefits and increased conversion efficiency -- key drivers of
profitability for livestock producers.

     Our MFA products can be grouped into five principal categories:
antibiotics, antibacterials, anticoccidials, anthelmintics and other medicated
feed additives. In fiscal 2004, antibiotics and antibacterials generated sales
for us of approximately $79 million, anticoccidials generated sales for us of
approximately $44 million, and anthelmintics and other medicated feed additives
generated sales for us of approximately $9 million.

     Our core MFA products are listed in the table below:

<Table>
<Caption>
         BRAND             ACTIVE/ANTIGEN     MARKET ENTRY                  COMMENT
         -----             --------------     ------------                  -------
<S>                       <C>                 <C>            <C>
Terramycin(R)/Neo-        oxytetracycline,      1951         Antibiotic with multiple applications
  Terramycin(R)/Neo-      neomycin/OTC                       for a wide number of species
  TM(R)
CLTC(R)                   chlortetracycline     1954         Antibiotic with multiple applications
                                                             for a wide number of species
Nicarb(R)                 nicarbazin            1955         Anticoccidial for poultry
Amprol(R)                 amprolium             1960         Anticoccidial for poultry and cattle
Bloatguard(R)             poloxalene            1966         Anti-bloat treatment for cattle
Banminth(R)               pyrantel tartrate     1969         Anthelmintic for livestock
Mecadox(R)                carbadox              1971         Antibacterial used in swine feeds to
                                                             control salmonellosis and dysentery
Stafac(R)/Eskalin(R)/V-   virginiamycin         1972         Antibiotic used to prevent and control
  Max(R)                                                     diseases in poultry, swine and cattle
Coxistac(R)/Posistac(R)   salinomycin           1979         Anticoccidial for poultry; disease
                                                             preventative in swine
Rumatel(R)                morantel tartrate     1981         Anthelmintic for livestock
Cerditac(R)/Cerdimix(R)   oxibendazole          1982         Anthelmintic for livestock
Aviax(R)                  semduramicin          1995         Anticoccidial for poultry
</Table>

  ANTIBIOTICS

     Antibiotics are natural products produced by fermentation and are used to
treat or to prevent diseases, thereby promoting more efficient growth. Several
factors contribute to limit the efficiency, the weight gain and feed conversions
of livestock production, including poor nutrition, environmental and management
problems, heat stress and subclinical disease.

                                        58
<PAGE>

     Virginiamycin.  Virginiamycin is an antibiotic marketed under our brand
names Stafac(R) for treating swine, cattle, broilers and turkeys, Eskalin(R) for
dairy cows and V-Max(R) for feed lot cattle. We formulate virginiamycin to
improve health in poultry, swine and cattle and prevent necrotic enteritis in
poultry, dysentery in swine and liver abscesses in cattle. The product is sold
to large poultry and swine producers and feed companies in North America, Latin
America and Asia.

     First discovered in Belgium in 1954, virginiamycin is an antibiotic
produced from the streptomyces virginiae fungus. Virginiamycin has been
successful due to a number of strong product features. For example, no
withdrawal period is required since it is virtually unabsorbed from the
digestive tract. It is excreted in very low concentrations and rapidly degraded.
It alleviates some of the production limiting effects of certain diseases of
livestock and poultry. To date, no generic competition has been introduced due
to our proprietary virginiamycin manufacturing technology.

     Terramycin and Neo-Terramycin.  Terramycin(R) and Neo-Terramycin(R), which
are derived from the active ingredient oxytetracycline, are effective against a
range of diseases including:

     - fowl cholera in chickens,

     - airsacculitis in turkeys,

     - pneumonia and enteritis in swine, and

     - pneumonia, enteritis and liver abscesses in cattle.

     We sell Terramycin(R) and Neo-Terramycin(R) feed additive products in
various concentrations. Terramycin(R) is approved for use for poultry, swine,
cattle and sheep. Neo-Terramycin(R) combines the active ingredients
oxytetracycline and neomycin to prevent and treat a wide range of diseases
caused by Gram-positive and Gram-negative organisms, including bacterial
enteritis in chickens and turkeys, baby pig diarrhea in swine and calf diarrhea.
These terramycin products are sold mostly in the United States to livestock
producers, feed companies and distributors. Limited quantities are sold in
selected countries in Latin America and Asia.

  ANTIBACTERIALS

     Antibacterials are produced through chemistry and are used to treat and
prevent diseases.

     Carbadox.  We market carbadox under the brand name Mecadox(R). Carbadox is
an antibacterial compound recommended for use in swine feeds to promote and to
control swine salmonellosis and swine dysentery. In swine production, the
primary objective of producers is the rapid and efficient development of swine
at minimal cost. Since 1970, Mecadox(R) has been a leader in reducing livestock
production costs through meaningful performance enhancement. Mecadox(R) is a
leading product for starter/grower swine in the United States. In addition to
its antimicrobial properties, it also improves nitrogen retention and increases
the efficiency of amino acid metabolism, two critical factors in the development
of young swine. Mecadox(R) is chemically unrelated to any other antibacterial
that is used in animals or humans. Mecadox(R) is sold primarily in North America
to feed companies and large integrated swine producers.

  ANTICOCCIDIALS

     Anticoccidials are produced through fermentation and chemistry, and are
primarily used to prevent and control the disease coccidiosis in poultry and in
cattle. Coccidiosis is a disease of the digestive tract that is of great concern
to animal producers. Caused by the protozoan parasite Eimeria spp., coccidiosis
is one of the most destructive diseases facing the world's poultry producers.
Common effects of this disease (such as weight loss, wet droppings, poor feed
utilization and higher mortality rates) rapidly affect an entire flock of
poultry, resulting in annual losses of hundreds of millions of dollars for the
poultry industry.

     Modern, large scale poultry production is based on intensive animal
management practices. This type of animal production requires routine preventive
medications in order to prevent health problems. Coccidiosis is one of the
critical disease challenges which poultry producers face globally. We sell our
anticoccidials globally,

                                        59
<PAGE>

primarily to integrated poultry producers and feed companies in North America,
the Middle East, Latin America and Asia, and to international animal health
companies.

     Nicarbazin and Amprolium.  We produce nicarbazin and amprolium for
distribution to the world-wide poultry industry through major multinational life
science and veterinary companies. Nicarbazin is a broad-spectrum anticoccidial
which works by interfering with mitochondrial metabolism. It is classified as an
oxidative phosphorylation uncoupler and is used for coccidiosis prevention in
broiler chickens.

     We believe that we are the largest volume world-wide producer of amprolium,
and the largest volume world-wide producer of nicarbazin. We are also the sole
Latin American producer of nicarbazin. Nicarbazin and amprolium, along with
salinomycin and semduramicin, are among the most effective medications for the
prevention of coccidiosis in chickens when used in rotation with other
anticoccidials. In the United States, we market nicarbazin under the trademark
Nicarb(R).

     Other Anticoccidials.  From a class of compounds known as ionophores, we
developed Aviax(R) and Coxistac(R) to combat coccidiosis. These two products
have demonstrated increased feed efficiency and the ability to suppress
coccidial lesions, with minimal side-effects. Through a third product,
Posistac(R), we have extended the application of the active ingredient in
Coxistac(R) to swine.

     Aviax(R) contains the ionophore semduramicin which provides protection for
poultry against all major coccidial parasites. The product can be incorporated
into virtually any type of feed, and provided to broilers of any production
stage. We have received regulatory approval to sell Aviax(R) in the EU and have
applied in the United States for the sale of Aviax(R) in mycelial dosage form.
This dosage form is significantly more cost-effective and may improve
profitability.

     Coxistac(R) contains the ionophore salinomycin. The product acts early in
the coccidial life cycle by killing sporozoites, trophozoites and early
developing schizonts before poultry can be severely damaged. Coxistac(R) has
proven to be effective and safe with minimal resistance development evident in
commercial studies. The recommended dosage provides a high level of protection
against coccidiosis even through temporary periods of low feed intake caused by
disease or adverse climatic conditions. No withdrawal period is required for
poultry before slaughter. Coxistac(R) is a leading anticoccidial in Asia, Latin
America, the Middle East and Canada.

     Posistac(R) contains salinomycin which acts as a productivity enhancer for
grower/finisher swine. The compound increases the utilization and digestion of
feed ingredients by mature swine thereby allowing swine to reach market weight
earlier and at less cost than swine fed conventional feed additives. Posistac(R)
can be used up to the slaughter phase without the need for withdrawal.

  ANTHELMINTICS

     Anthelmintics protect against internal parasites. Our anthelmintic products
are marketed under the Rumatel(R) and Banminth(R) brand names.

     Rumatel(R).  Rumatel(R) is a potent broad-spectrum anthelmintic that
effectively eliminates the major internal nematode parasites in cattle. Unlike
other single-dose dewormers, Rumatel(R) may be administered to lactating dairy
cattle with no milk withdrawal. Dairy cattle may be treated with Rumatel(R) at
any time during their production cycle, whether dry, pregnant or lactating.

     Banminth(R).  Banminth(R) is an anthelmintic compound, a member of the
class of synthetic compounds called tetra-hydropyrimidines. Banminth(R) has a
mode of action that works effectively in protecting swine against the two major
internal parasites, large roundworms (Ascaris suum) and nodular worms
(Oesophagostomum spp.). Banminth(R) kills adult parasites and prevents roundworm
larval migration, preventing damage to the liver and lungs of swine. When used
continuously in feeds, Banminth(R) prevents re-infection of swine raised on
dirt.

                                        60
<PAGE>

  OTHER MEDICATED FEED ADDITIVES

     Our other medicated feed additives include a range of products sold under
the Bloat Guard(R) brand name. Bloat Guard(R) controls legume or wheat pasture
bloat in cattle. The products control bloat for at least 12 hours after a single
dose with no adverse effect on reproduction, rumen function or milk production.

     We manufacture bulk active ingredients for our MFA products primarily in
four modern facilities located in:

     - Guarulhos, Brazil (salinomycin and semduramicin),

     - Rixensart, Belgium (virginiamycin and semduramicin), which facility is to
       be sold (see "Prospectus Summary -- The Company -- Recent
       Developments -- Sale of Belgium Plant"),

     - Ramat Hovav, Israel (nicarbazin and amprolium), and

     - Braganca Paulista, Brazil (nicarbazin).

     Active ingredients are further processed in our facilities and in contract
premix facilities located in each major region of the world.

     We have established sales and technical offices for our MFA products in 14
countries including: the United States, Canada, Mexico, Venezuela, Brazil,
Argentina, Costa Rica, Australia, China, Thailand, Malaysia, South Africa,
Belgium and Israel. The business is not dependent on any one customer.

     The use of MFAs is controlled by regulatory authorities that are specific
to each country (e.g., the Food and Drug Administration ("FDA") in the United
States, Health Canada in Canada, EFSA/EMEA authorities in Europe, etc.),
responsible for the safety and wholesomeness of the human food supply, including
feed additives for animals from which human foods are derived. Each product is
registered separately in each country where it is sold. The appropriate
registration files pertaining to such regulations and approvals are continuously
monitored, maintained and updated by us. In certain countries where we are
working with a third party distributor, local regulatory requirements may
require registration in the name of such distributor.

ANIMAL HEALTH AND NUTRITION -- NUTRITIONAL FEED ADDITIVES

     We manufacture and market trace minerals, trace mineral premixes, vitamins
and other nutritional ingredients to the livestock feed and pet food industries,
predominantly in the United States and Israel. These products generally fortify,
enhance or make more nutritious or palatable the livestock feeds and pet foods
with which they are mixed. The majority of the other ingredients that we sell
are nutrients that are used as supplements for animal feed. We serve customers
in major feed segments, including swine, dairy, poultry and beef. We customize
trace mineral premixes at our blending facilities in Marion, Iowa, Bremen,
Indiana and Petach Tikva, Israel, and market a diverse line of other trace
minerals and macro-minerals. Our major customers for these products are
medium-to-large feed companies, co-ops, blenders, integrated poultry operations
and pet food companies. We sell other ingredients, such as buffers, yeast,
palatants, vitamin K and amino acids, including lysine, tryptophan and
threonine. We also market copper sulfate as an animal feed supplement.

OUR SPECIALTY CHEMICALS BUSINESS

     We manufacture and market a number of specialty chemicals for use in the
wood treatment, chemical catalyst, semiconductor, automotive, aerospace and
agricultural industries. Our manufacturing customers incorporate our specialty
chemicals products into their finished products in various industrial markets.
We seek to take advantage of opportunistic niche markets where we believe that
our expertise and capabilities can be leveraged.

  COPPER WOOD TREATMENT PRODUCTS

     For many years, we were a major supplier of an important ingredient (copper
oxide) used in the manufacture of CCA (chromated-copper-arsenic) wood treating
solutions for the pressure-treated wood
                                        61
<PAGE>

industry. Pursuant to a United States Environmental Protection Agency ("EPA")
ruling, since December 31, 2003, all pressure-treated wood for the residential
and recreational markets can no longer be treated using the standard
chromated-copper-arsenic (CCA) solution. A leading replacement solution for CCA
pressure-treated wood is a copper carbonate compound. We currently estimate that
the total potential size of this copper solution to the pressure-treated wood
market is approximately $120 million annually. We have already signed a
multi-year, take-or-pay contract with a major chemicals supplier to the
pressure-treated wood industry to provide it with this new product, which we
estimate will increase our sales by approximately $30 million over the life of
the contract, based on existing forecasts. A patent with respect to the
manufacturing process of our solution, and the claims in our patent application
was granted and issued on November 11, 2003. We believe that our manufacturing
process allows us to operate in this market with a lower cost of capital and
higher factory through-put than our competition. To take advantage of this
potential new market, we have constructed and are operating commercial
production facilities in Sumter, South Carolina and in Joliet, Illinois. In
addition, we have filed a provisional patent for a new, large molecule
pressure-treated wood copper compound product. We believe that this new product
may be the next generation in copper-based wood treatment products, with the
potential to substantially increase the duration of protection for treated wood.

  OTHER COPPER PRODUCTS

     We manufacture on a contract basis copper compounds for use primarily in
agricultural fungicides from our Sumter, South Carolina facility. This contract
was part of the sale by us of our Agtrol business to Nufarm, Inc. in the fourth
quarter of fiscal 2001. Utilizing our over fifty-year history in producing
copper chemicals, we supply various metal-based chemicals to the catalyst and
electronics industries. We also manufacture copper compounds for a broad variety
of industrial customers.

  OTHER SPECIALTY CHEMICALS PRODUCTS

     We market and distribute fine and specialty chemicals to manufacturers of
health and personal care products and chemical coating products to customers in
the automotive, metal finishing and chemical intermediate markets. Among our
products for such applications are sodium fluoride and stannous fluoride, DL
Panthenol and selenium disulfide. Sodium fluoride is the active anti-cavity
ingredient in fluoride toothpaste, powders and mouthwashes. Selenium disulfide
is used as a dandricide in shampoo and hair care preparations.

  SALES, MARKETING AND DISTRIBUTION

     We have approximately 2,800 customers. Sales to our top ten customers
represented approximately 22% of our fiscal 2004 net sales and no single
customer represented more than 5% of our fiscal 2004 net sales.

     Our world-wide sales and marketing network consists of approximately 118
employees, 5 independent agents and 125 distributors who specialize in
particular markets.

     Our products are often critical to the performance of our customers'
products, while representing a relatively small percentage of the total
end-product cost. We believe the three key factors to marketing our products
successfully are high quality products, a highly trained and technical sales
force, and customer service.

     Most of our plants have chemists and technicians on staff involved in
product development, quality assurance, quality control and also providing
technical services to customers. Technical assurance is an important aspect of
our overall sales effort. We field Animal Health and Nutrition technical service
people throughout the world, with capabilities to interface with all key
customers on a marketing, sales training and technical (product) basis, and who
work directly with commercial feed manufacturers and integrated poultry, swine
and cattle producers to promote animal health. Our MFA and NFA field personnel
are skilled in the area of product differentiation and have extensive
application knowledge so as to work closely with customers in determining
optimum benefits from product usage. As agricultural food production will
continue to intensify

                                        62
<PAGE>

and will adopt evolving technologies, our MFA and NFA personnel are constantly
working with customers to better understand their needs in order to best utilize
the
products existing within our portfolio. This commercial knowledge also plays a
pivotal role within the research and development function to ensure that
research results are applicable to customer needs and concerns.

PRODUCT REGISTRATIONS, PATENTS AND TRADEMARKS

     We own certain product registrations, patents, tradenames and trademarks,
and use know-how, trade secrets, formulae and manufacturing techniques which
assist in maintaining the competitive positions of certain of our products.
Product registrations are required to manufacture and sell medicated feed
additives. Formulae and know-how are of particular importance in the manufacture
of a number of the products sold in our specialty chemicals business. We believe
that no single patent or trademark is of material importance to our business
and, accordingly, that the expiration or termination thereof would not
materially affect our business. See "Government Regulation."

PROPERTIES

     In December 2004, we relocated our principal executive offices and sales
offices to 34,000 square feet of leased space in Ridgefield Park, New Jersey. We
operate company-owned manufacturing facilities and utilize third party toll
manufacturers. The chart below sets forth the locations and sizes of the
principal manufacturing and other facilities operated by us and uses of such
facilities, all of which are owned, except as noted.

<Table>
<Caption>
                                         APPROXIMATE
LOCATION                                SQUARE FOOTAGE                    USES
- --------                                --------------                    ----
<S>                                     <C>              <C>
ANIMAL HEALTH AND NUTRITION
Bangkok, Thailand(a)..................          500      Sales
Braganca Paulista, Brazil.............       35,000      Sales, Manufacturing and
                                                         Administrative
Bremen, Indiana.......................       50,000      Sales, Premixing and Warehouse
Buenos Aires, Argentina(a)............          900      Sales and Administrative
San Jose, Costa Rica..................          800      Sales and Administrative
Guarulhos, Brazil(b)..................    1,234,000      Sales, Premixing, Manufacturing and
                                                         Administrative
Hong Kong, China(a)...................          750      Sales and Administrative
Kuala Lumpur, Malaysia(a).............        7,300      Sales, Premixing and Warehouse
Ladora, Iowa..........................        9,500      Warehouse
Lee's Summit, Missouri(a).............        1,500      Sales
Marion, Iowa..........................       32,500      Premixing and Warehouse
Petach Tikva, Israel..................       60,000      Sales, Premixing, Warehouse and
                                                         Administrative
Pretoria, South Africa(a).............        3,200      Sales and Administrative
Quincy, Illinois(c)...................       50,000      Sales, Warehouse, Research and
                                                         Administrative
Rixensart, Belgium(d).................      865,000      Sales, Manufacturing, Research and
                                                         Administrative
Ramat Hovav, Israel...................      140,000      Manufacturing and Research
Regina, Canada(a).....................        1,000      Sales and Administrative
Queretaro, Mexico(a)..................        3,500      Sales and Administrative
Sydney, Australia(a)..................        3,500      Sales and Administrative
Valencia, Venezuela(a)................        1,100      Sales and Administrative

SPECIALTY CHEMICALS
Garland, Texas........................       20,000      Manufacturing
Joliet, Illinois......................       34,500      Manufacturing
Reading, United Kingdom(a)............        3,100      Sales and Administrative
Santa Fe Springs, California(e).......       90,000      Manufacturing
Stradishall, United Kingdom...........       20,000      Sales, Manufacturing and
                                                         Administrative
Sumter, South Carolina................      123,000      Manufacturing and Research
</Table>

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

(a)  This facility is leased. Our leases expire through 2027. For information
     concerning our rental obligations, see Note 15 to our Consolidated
     Financial Statements included herein.

(b)  Our Guarulhos, Brazil plant utilizes fermentation processes to produce the
     active ingredients semduramicin-mycelial and salinomycin. The plant also
     produces Aviax(R), Terramycin(R), Stafac(R) and Coxistac(R) Granular
     formulations. The plant is cGMP compliant and is FDA approved.

(c)  Comprises three facilities, including a warehouse, laboratory and office.

(d)  Our Rixensart, Belgium plant utilizes fermentation processes to produce the
     active ingredients semduramicin-crystalline and virginiamycin. The plant
     also produces Stafac(R) formulations and is responsible for all of our
     fermentation development activities. The plant has been approved by the FDA
     and is cGMP compliant. We have entered into an agreement to sell the
     Rixensart facility (see "Prospectus Summary -- The Company -- Recent
     Developments -- Sale of Belgium Plant").

(e)  We lease the land under this facility from a partnership owned by Jack
     Bendheim, Marvin Sussman and James Herlands. See "Certain Relationships and
     Related Party Transactions."

     Our subsidiary, CP Chemicals, Inc., leases portions of a previously owned
inactive, former manufacturing facility in Sewaren, New Jersey, and another of
our subsidiaries owns inactive, former manufacturing facilities in Powder
Springs, Georgia, Union, Illinois, Union City, California and Wilmington,
Illinois.

     We believe that our existing and planned facilities are and will be
adequate for the conduct of our business as currently conducted and as currently
contemplated to be conducted.

     We and our subsidiaries are subject to extensive regulation by numerous
governmental authorities, including the FDA and corresponding state and foreign
agencies, and to various domestic and foreign safety standards. Our
manufacturing facilities in Ramat Hovav, Israel, Rixensart, Belgium (to be sold;
see "Prospectus Summary -- The Company -- Recent Developments -- Sale of Belgium
Plant"), and Guarulhos, Brazil manufacture products that conform to the FDA's
cGMP regulations. Three domestic facilities involved with recycling have final
RCRA Part B hazardous waste storage and treatment permits. Our regulatory
compliance programs include plans to achieve compliance with international
quality standards known as ISO 9000 standards, which became mandatory in Europe
in 1999 and environmental standards known as ISO 14000. The FDA is in the
process of adopting the ISO 9000 standards as regulatory standards for the
United States, and it is anticipated that these standards will be phased in for
U.S. manufacturers over a period of time. Our plant in Petach Tikva, Israel has
achieved ISO 9000 certification. We do not believe that adoption of the ISO 9000
standards by the FDA will have a material effect on our financial condition,
results of operations or cash flows.

RAW MATERIALS

     The raw materials used in our business include certain active drug
ingredients, a wide variety of chemicals, mineral ores and copper metal that are
purchased from manufacturers and suppliers in the United States, Europe and
Asia. In fiscal 2004, no single raw material accounted for more than 5% of our
cost of goods sold. Total raw materials cost was approximately $133 million or
38% of net sales in fiscal 2004. We believe that for most of our raw materials,
alternate sources of supply are available to us at competitive prices.

RESEARCH AND DEVELOPMENT

     Research, development and technical service efforts are conducted at our
various facilities. We operate research and development facilities in Rixensart,
Belgium (which is to be sold; see "Prospectus Summary -- The Company -- Recent
Developments -- Sale of Belgium Plant"), Sumter, South Carolina, Ramat Hovav,
Israel and Stradishall, England. These facilities provide research and
development services relating to fermentation development in the areas of
micro-biological strain improvement as well as: process scale-up; wood treatment
products; and organic chemical intermediates.

     Technology is an important component of our competitive position, providing
us unique and low cost positions enabling us to produce high quality products.
Patents protect some of our technology, but a great

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<PAGE>

deal of our competitive advantage revolves around know-how built up over many
years of commercial operation.

CUSTOMERS

     We do not consider our business to be dependent on a single customer or a
few customers, and the loss of any of our customers would not have a material
adverse effect on our results. No single customer accounted for more than 5% of
our fiscal 2004 net sales. We typically do not enter into long-term contracts
with our customers.

COMPETITION

     We are engaged in highly competitive industries and, with respect to all of
our major products, we face competition from a substantial number of global and
regional competitors. Some of our competitors have greater financial, research
and development, production and other resources than we do. Our competitive
position is based principally on customer service and support, product quality,
manufacturing technology, facility location and price. We have competitors in
every market in which we participate. Many of our products face competition from
products that may be used as an alternative or substitute.

EMPLOYEES

     As of June 30, 2004, we had 1,051 employees worldwide. Of these, 210
employees were in management and administration, 118 were in sales and
marketing, 132 were chemists, technicians or quality control personnel, and 591
were in production. Certain employees are covered by individual employment
agreements. Our Israeli operations continue to operate under the terms of
Israel's national collective bargaining agreement, portions of which expired in
1994. We consider our relations with both our union and non-union employees to
be good.

ENVIRONMENTAL MATTERS

     We and our subsidiaries are subject to a wide variety of complex and
stringent federal, state, local and foreign environmental laws and regulations,
including those governing the use, storage, handling, generation, treatment,
emission, release, discharge and disposal of certain materials and wastes, the
manufacture, sale and use of pesticides and the health and safety of employees.
Pursuant to environmental laws, our subsidiaries are required to obtain and
retain numerous governmental permits and approvals to conduct various aspects of
their operations, any of which may be subject to revocation, modification or
denial under certain circumstances. Under certain circumstances, we or any of
our subsidiaries might be required to curtail operations until a particular
problem is remedied. Known costs and expenses under environmental laws
incidental to ongoing operations are generally included within operating
budgets. Potential costs and expenses may also be incurred in connection with
the repair or upgrade of facilities to meet existing or new requirements under
environmental laws or to investigate or remediate potential or actual
contamination and from time to time we establish reserves for such contemplated
investigation and remediation costs. In many instances, the ultimate costs under
environmental laws and the time period during which such costs are likely to be
incurred are difficult to predict.

     Our subsidiaries have, from time to time, implemented procedures at their
facilities designed to respond to obligations to comply with environmental laws.
We believe that our operations are currently in material compliance with such
environmental laws, although at various sites our subsidiaries are engaged in
continuing investigation, remediation and/or monitoring efforts to address
contamination associated with their historic operations. As many environmental
laws impose a strict liability standard, however, we can provide no assurance
that future environmental liability will not arise.

     In addition, we cannot predict the extent to which any future environmental
laws may affect any market for our products or services or our costs of doing
business. Alternatively, changes in environmental laws might increase the cost
of our products and services by imposing additional requirements on us. States
that have received authorization to administer their own hazardous waste
management programs may also amend their
                                        65
<PAGE>

applicable statutes or regulations, and may impose requirements which are
stricter than those imposed by the EPA. We can provide no assurance that such
changes will not adversely affect our ability to provide products and services
at competitive prices and thereby reduce the market for our products and
services.

     The nature of our and our subsidiaries' current and former operations
exposes us and our subsidiaries to the risk of claims with respect to
environmental matters and we can provide no assurance that we will not incur
material costs and liabilities in connection with such claims. Based upon our
experience to date, we believe that the future cost of compliance with existing
environmental laws, and liability for known environmental claims pursuant to
such environmental laws, will not have a material adverse effect on us. Based
upon information available, we estimate the cost of further investigation and
remediation of identified soil and groundwater problems at operating sites,
closed sites and third-party sites, (including the litigation referred to under
"Legal Proceedings") to be approximately $2.9 million, which is included in
current and long-term liabilities in our June 30, 2004 consolidated balance
sheet. However, future events, such as new information, changes in existing
environmental laws or their interpretation, and more vigorous enforcement
policies of regulatory agencies, may give rise to additional expenditures or
liabilities that could be material. For all purposes of the discussion under
this caption, under "Legal Proceedings" and elsewhere in this prospectus, it
should be noted that we take and have taken the position that neither Phibro
Animal Health Corporation, nor any of our subsidiaries is liable for
environmental or other claims made against one or more of our other subsidiaries
or for which any of such other subsidiaries may ultimately be responsible.

  FEDERAL REGULATION

     The following summarizes the principal federal environmental laws affecting
our business:

     Resource Conservation and Recovery Act of 1976, as amended
("RCRA").  Congress enacted RCRA to regulate, among other things, the
generation, transportation, treatment, storage and disposal of solid and
hazardous wastes. RCRA required the EPA to promulgate regulations governing the
management of hazardous wastes, and to allow individual states to administer and
enforce their own hazardous waste management programs as long as such programs
were equivalent to and no less stringent than the federal program. Such
facilities are also subject to closure and post-closure requirements.

     The EPA's regulations, and most state regulations in authorized states,
establish categories of regulated entities and set standards and procedures
those entities must follow in their handling of hazardous wastes. The three
general categories of waste handlers governed by the regulations are hazardous
waste generators, hazardous waste transporters, and owners and operators of
hazardous waste treatment, storage and/or disposal facilities. Generators are
required, among other things, to obtain identification numbers and to arrange
for the proper treatment and/or disposal of their wastes by licensed or
permitted operators and all three categories of waste handlers are required to
utilize a document tracking system to maintain records of their activities.
Transporters must obtain permits, transport hazardous waste only to properly
permitted treatment, storage or disposal facilities, and maintain required
records of their activities. Treatment, storage and disposal facilities are
subject to extensive regulations concerning their location, design and
construction, as well as the operating methods, techniques and practices they
may use. Such facilities are also required to demonstrate their financial
responsibility with respect to compliance with RCRA, including closure and
post-closure requirements.

     The Federal Water Pollution Control Act, as amended (the "Clean Water
Act").  The Clean Water Act prohibits the discharge of pollutants to the waters
of the United States without governmental authorization. Like RCRA, the Clean
Water Act provides that states with programs approved by the EPA may administer
and enforce their own water pollution control programs. Pursuant to the mandate
of the Clean Water Act, the EPA has promulgated "pre-treatment" regulations,
which establish standards and limitations for the introduction of pollutants
into publicly-owned treatment works.

     Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended ("CERCLA" or "Superfund").  Under CERCLA and similar state
laws, we and our subsidiaries may have strict and, under certain circumstances,
joint and several liability for the investigation and remediation of
environmental pollution and natural resource damages associated with real
property currently and formerly-
                                        66
<PAGE>

owned or operated by us or a subsidiary and at third-party sites at which our
subsidiaries disposed of or treated, or arranged for the disposal of or
treatment of, hazardous substances.

     Federal Insecticide, Fungicide and Rodenticide Act, as amended
("FIFRA").  FIFRA governs the manufacture, sale and use of pesticides, including
the copper-based fungicides sold by us. FIFRA requires such products and the
facilities at which they are formulated to be registered with the EPA before
they may be sold. If the product in question is generic in nature (i.e.,
chemically identical or substantially similar to a previously registered
product), the new applicant for registration is entitled to cite and rely on the
test data supporting the original registrant's product in lieu of submitting
data of its own. Should the generic applicant choose this citation option, it
must offer monetary compensation to the original registrant and must agree to
binding arbitration if the parties are unable to agree on the terms and amount
of compensation. We have elected this citation option in the past and may use
the citation option in the future should we conclude it is, in some instances,
economically desirable to do so. While there are cost savings associated with
the opportunity to avoid one's own testing and demonstration to the EPA of test
data, there is, in each instance, a risk that the level of compensation
ultimately required to be paid to the original registrant will be substantial.

     Under FIFRA, the EPA also has the right to "call in" additional data from
existing registrants of a pesticide, should the EPA determine, for example, that
the data already in the file need to be updated or that a specific issue or
concern needs to be addressed. The existing registrants have the option of
submitting data separately or by joint agreement. Alternatively, if one
registrant agrees to generate and submit the data, the other(s) may meet their
obligations under the statute by making a statutory offer to jointly develop or
share in the costs of developing the data. In that event, the offering party
must, again, agree to binding arbitration to resolve any dispute as to the terms
of the data development arrangement.

     The Clean Air Act.  The Federal Clean Air Act of 1970 ("Clean Air Act") and
amendments to the Clean Air Act, and corresponding state laws regulate the
emissions of materials into the air. Such laws affect the coal industry both
directly and indirectly and, therefore, the operations of MRT, which was
divested in August 2003. Phibro-Tech is also impacted by the Clean Air Act and
has various air quality permits, including a Title V operating air permit at its
Sumter, South Carolina facility.

  STATE AND LOCAL REGULATION

     In addition to those federal programs described above, a number of states
and some local governments have also enacted laws and regulations similar to the
federal laws described above governing hazardous waste generation, handling and
disposal, emissions to the water and air and the design, operation and
maintenance of recycling facilities.

  FOREIGN REGULATION

     Our foreign subsidiaries are subject to a variety of foreign environmental
laws relating to pollution and protection of the environment, including the
generation, handling, storage, management, transportation, treatment and
disposal of solid and hazardous materials and wastes, the manufacture and
processing of pesticides and animal feed additives, emissions to the air,
discharges to land, surface water and subsurface water, human exposure to
hazardous and toxic materials and the remediation of environmental pollution
relating to their past and present properties and operations.

  REGULATION OF RECYCLING ACTIVITIES

     We have substantially reduced our recycling activities at our Joliet,
Illinois; Garland, Texas; Sumter, South Carolina; and Sewaren, New Jersey sites.
Our recycling activities may be broken down into the following segments for
purposes of regulation under RCRA or equivalent state programs: (i) transport of
wastes to our facilities; (ii) storage of wastes prior to processing; (iii)
treatment and/or recycling of wastes; (iv) corrective action at our RCRA
facilities; and (v) management of wastes and residues from the recycling
process. Although all aspects of the treatment and recycling of waste at our
recycling facilities are not currently the subject of federal RCRA regulation,
our subsidiaries decided to permit our recycling facilities as RCRA regulated
facilities. Final RCRA "Part B" permits to operate as hazardous waste treatment
and
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<PAGE>

storage facilities have been issued at our facilities in Santa Fe Springs,
California; Garland, Texas; Joliet, Illinois; Sumter, South Carolina; and
Sewaren, New Jersey (expired August 2003, see "Particular Facilities -- Sewaren,
NJ" below). Part B renewal applications have been submitted for the Santa Fe
Springs, Garland and Joliet sites. The applications are being reviewed.

     In connection with RCRA Part B permits for the waste storage and treatment
units of various facilities, our subsidiaries have been required to perform
extensive site investigations at such facilities to identify possible
contamination and to provide regulatory authorities with plans and schedules for
remediation. Soil and groundwater contamination has been identified at several
plant sites and has required and will continue to require corrective action and
monitoring over future years. In order to maintain compliance with RCRA Part B
permits, which are subject to suspension, revocation, modification or denial
under certain circumstances, we have been, and in the future may be, required to
undertake additional capital improvements or corrective action.

     Our subsidiaries involved in recycling activities are required by the RCRA
and their Part B permits to develop and incorporate in their Part B permits
estimates of the cost of closure and post-closure monitoring for their operating
facilities. In general, in order to close a facility which has been the subject
of a RCRA Part B permit, a RCRA Part B closure permit is required which approves
the investigation, remediation and monitoring closure plan, and requires
post-closure monitoring and maintenance for up to 30 years. Accordingly, we
incur additional costs in connection with any such closure. These cost estimates
are updated annually for inflation, developments in available technology and
corrective actions already undertaken. We have, in most instances, chosen to
provide the regulatory guarantees required in connection with these matters by
means of our coverage under an environmental impairment liability insurance
policy. We can provide no assurance that such policy will continue to be
available in the future at economically acceptable rates, in which event other
methods of financial assurance will be necessary.

     In addition to certain operating facilities, we or our subsidiaries have
been and will be required to investigate and remediate certain environmental
contamination at shutdown plant sites. We or our subsidiaries are also required
to monitor such sites and continue to develop controls to manage these sites
within the requirements of RCRA corrective action programs.

  WASTE BYPRODUCTS

     In connection with our subsidiaries' production of finished chemical
products, limited quantities of waste by-products are generated. Depending on
the composition of the by-product, our subsidiaries either sell it, send it to
smelters for metal recovery or send it for treatment or disposal to regulated
facilities.

  PARTICULAR FACILITIES

     The following is a description of certain environmental matters relating to
certain facilities of certain of our subsidiaries. References to "we" or "us"
throughout this section is intended to refer only to the applicable subsidiary
unless the context otherwise requires. These matters should be read in
conjunction with the description of Legal Proceedings below, certain of which
involve such facilities, and Note 15 to our Consolidated Financial Statements.

     In 1984, Congress enacted certain amendments to RCRA under which facilities
with RCRA permits were required to have RCRA facility assessments ("RFA") by the
EPA or the authorized state agency. Following an RFA, a RCRA facility
investigation, a corrective measures study, and corrective measure
implementation must, if warranted, be developed and implemented. As indicated
below, certain of our subsidiaries are in the process of developing or
completing various actions associated with these regulatory phases at certain of
their facilities.

     Sumter, SC.  In 2003, the South Carolina Department of Health and
Environmental Control ("DHEC") ordered Phibro-Tech, Inc., a subsidiary
("Phibro-Tech"), to prepare a RCRA Facility Investigation ("RFI") and to prepare
and propose Corrective Action Plans. Phibro-Tech has done so, and such proposed
investigatory activities and Corrective Action Plans are being reviewed by the
State. Additional

                                        68
<PAGE>

Corrective Action is also being undertaken by Phibro-Tech pursuant to prior
agreements with DHEC to remedy certain deficiencies in the plant's hazardous
waste closure, storage and management system.

     Santa Fe Springs, CA.  Phibro-Tech submitted an application for renewal of
the Part B Permit for the Santa Fe Springs, California facility. Such
application is presently under review by the State of California and may require
certain corrective actions including, but not limited to, a pump and treat
system utilizing existing water treatment facilities. Phibro-Tech has submitted
a report to the State recommending that soil be remediated instead of
groundwater. This recommendation is also under review by the State.

     Joliet, IL.  Phibro-Tech has submitted an application for renewal of the
Part B Permit for the Joliet, Illinois facility. In connection with this
application, Phibro-Tech completed an initial investigation and determined that
certain minor corrective action was required. Phase I and Phase II corrective
action work has been completed. The application for renewal is presently pending
and is expected to be issued in the first quarter of 2005.

     Garland, TX.  The renewal application for the Part B Permit at the Garland,
Texas facility has been granted effective September 12, 2003. As part of an
earlier site investigation, certain corrective action was required including
upgrading of pollution control equipment and additional site characterization.
Both of these are presently underway.

     Powder Springs, GA.  Phibro-Tech's facility in Powder Springs, Georgia has
been operationally closed since 1985. Phibro-Tech retains environmental
compliance responsibility for this facility and has effected a RCRA closure of
the regulated portion of the facility, a surface impoundment. Post-closure
monitoring and corrective action are required pursuant to a state-issued permit.
As required by the permit, corrective action for groundwater has begun, and
Phibro-Tech has submitted and received approval from the state for a remedial
investigation plan.

     Sewaren, NJ.  Operations at the Sewaren facility were curtailed on or about
September 30, 1999. In June, 2000, CP Chemicals, Inc., a subsidiary ("CP"),
transferred title to the Sewaren property to Woodbridge Township while, at the
same time, entering into a 10-year lease with the Township providing for lease
payments aggregating $2 million, and covering certain areas of the property,
including those areas of the property relating to the existing hazardous waste
storage, treatment and transfer permit, loading docks and pads, and a building,
as well as access, parking, scale use and office space.

     The property is the subject of an Administrative Consent Order executed in
March 1991 between the New Jersey Department of Environmental Protection (or
"DEP") and CP. CP has ongoing obligations under that Administrative Consent
Order. CP is required to complete the implementation of the Remedial Action Work
Plan approved by the Department of Environmental Protection and the United
States Environmental Protection Agency. Remediation of soils at the Sewaren
facility is complete, with the exception of long term maintenance, and
groundwater remediation is underway. Although some of the obligations of the
Administrative Consent Order, specifically with respect to groundwater, have
been assumed by the Township under the Lease, CP remains responsible to the
Department of Environmental Protection and the United States Environmental
Protection Agency. CP is currently engaged in discussions with the Department of
Environmental Protection, the United States Environmental Protection Agency and
the Township concerning the ongoing groundwater remediation. CP has posted
financial assurance, based on the estimated costs of implementation, under the
Administrative Consent Order.

     The property is also regulated under the Corrective Action Program
administered by the United States Environmental Protection Agency pursuant to
the Resource Conservation and Recovery Act. The property has been designated as
a RCRA facility for which achieving the Environmental Indicators is a priority.
Currently, CP is interfacing with the Department of Environmental Protection and
the Environmental Protection Agency to coordinate its efforts under this program
and the Administrative Consent Order discussed above. Much of the effort
required by CP in this program is already being conducted as part of the
requirements of the Administrative Consent Order discussed above.

     The hazardous waste facility permit issued to CP for this facility expired
in August 2003. CP has completed the implementation of its approved closure plan
and is awaiting DEP approval. Based on a formula
                                        69
<PAGE>

established by the Department of Environmental Protection, those closure costs
were estimated at $292,823 and submitted to the Department in April 2003. CP has
also advised the New Jersey Division of Law of its intent to withdraw from the
licensing program governing facilities.

     Union City, CA.  Closure of the Union City, California facility has been
completed.

     Union, IL.  The facility in Union, Illinois, has been closed since 1986. A
revised remedial action plan ("RAP") has been submitted to the Illinois
Environmental Protection Agency (the "IEPA"). Negotiations between the IEPA and
Phibro-Tech have resulted in an agreed closure plan consistent with the proposed
RAP. The agreed closure plan is expected to resolve Phibro-Tech's appeal of the
IEPA's initial closure requirements. That appeal is currently pending before the
Illinois Pollution Control Board but is expected to be voluntarily dismissed
upon receipt of IEPA's written approval of the negotiated closure plan.

     Ramat Hovav, Israel.  Koffolk (1949) Ltd's ("Koffolk Israel") Ramat Hovav
plant produces a wide range of organic chemical intermediates for the animal
health, chemical, pharmaceutical and veterinary industries. Israeli legislation
enacted in 1997 amended certain environmental laws by authorizing the relevant
administrative and regulatory agencies to impose certain sanctions, including
issuing an order against any person that violates such environmental laws to
remove the environmental hazard. In addition, this legislation imposes criminal
liability on the officers and directors of a corporation that violates such
environmental laws, and increases the monetary sanctions that such officers,
directors and corporations may be ordered to pay as a result of such violations.
The Ramat Hovav plant operates under the regulation of the Ministry of
Environment of the State of Israel. The sewage system of the plant is connected
to the Ramat Hovav Local Industrial Council's central installation, where
Koffolk Israel's sewage is treated together with sewage of other local plants.
Owners of the plants in the area, including Koffolk Israel, have been required
by the Israeli Ministry of Environment to build facilities for pre-treatment of
their sewage.

GOVERNMENT REGULATION

     Most of our Animal Health and Nutrition Group products require licensing by
a governmental agency before marketing. In the United States, governmental
oversight of animal nutrition and health products is shared primarily by the
United States Department of Agriculture ("USDA") and the Food and Drug
Administration. A third agency, the Environmental Protection Agency, has
jurisdiction over certain products applied topically to animals or to premises
to control external parasites.

     The issue of the potential for increased bacterial resistance to certain
antibiotics used in certain food producing animals is the subject of discussions
on a worldwide basis and, in certain instances, has led to government
restrictions on the use of antibiotics in these food producing animals. The sale
of feed additives containing antibiotics is a material portion of our business.
Should regulatory or other developments result in restrictions on the sale of
such products, it could have a material adverse impact on our financial
position, results of operations and cash flows.

     The FDA is responsible for the safety and wholesomeness of the human food
supply. It regulates foods intended for human consumption and, through The
Center for Veterinary Medicine, regulates the manufacture and distribution of
animal drugs, including feed additives and drugs that will be given to animals
from which human foods are derived, as well as feed additives and drugs for pet
(or companion) animals.

     To protect the food and drug supply for animals, the FDA develops technical
standards for animal drug safety and effectiveness and evaluates data bases
necessary to support approvals of veterinary drugs. The USDA monitors the food
supply for animal drug residues.

     FDA approval is based on satisfactory demonstration of safety and efficacy.
Efficacy requirements are based on the desired label claim and encompass all
species for which label indication is desired. Safety requirements include
target animal safety and, in the case of food animals, drug residues and the
safety of those residues must be considered. In addition to the safety and
efficacy requirements for animal drugs used in food producing animals, the
environmental impact must be determined. Depending on the compound, the
environmental studies may be quite extensive and expensive. In many instances
the regulatory hurdles for a drug which will be used in food producing animals
are at least as stringent if not more so than those required
                                        70
<PAGE>

for a drug used in humans. For FDA approval of a new animal drug it is estimated
the cost is $100 million to $150 million and time for approval could be 8 to 10
years.

     The Office of New Animal Drug Evaluation ("NADE") is responsible for
reviewing information submitted by drug sponsors who wish to obtain approval to
manufacture and sell animal drugs. A new animal drug is deemed unsafe unless
there is an approved New Animal Drug Application ("NADA"). Virtually all animal
drugs are "new animal drugs" within the meaning of the term in the Federal Food,
Drug, and Cosmetic Act. Although the procedures for licensing products by the
FDA are formalized, the acceptance standards of performance for any product are
agreed upon between the manufacturer and the NADE. A NADA in animal health is
analogous to a New Drug Application ("NDA") in human pharmaceuticals. Both are
administered by the FDA. The drug development process for human therapeutics can
be more involved than that for animal drugs. However, for food-producing
animals, food safety residue levels are an issue, making the approval process
longer than for animal drugs for non-food producing animals, such as pets.

     The FDA may deny a NADA if applicable regulatory criteria are not
satisfied, require additional testing or information, or require postmarketing
testing and surveillance to monitor the safety or efficacy of a product. There
can be no assurances that FDA approval of any NADA will be granted on a timely
basis or at all. Moreover, if regulatory approval of a product is granted, such
approval may entail limitations on the indicated uses for which it may be
marketed. Finally, product approvals may be withdrawn if compliance with
regulatory standards is not maintained or if problems occur following initial
marketing. Among the conditions for NADA approval is the requirement that the
prospective manufacturer's quality control and manufacturing procedures conform
to Current Good Manufacturing Practice ("cGMP"). The plant must be inspected
biannually by the FDA for determination of compliance with cGMP after an initial
preapproval inspection. After FDA approval, any manufacturing changes that may
have an impact on the safety and/or efficacy must be approved by the FDA prior
to implementation. In complying with standards set forth in these regulations,
manufacturers must continue to expend time, monies and effort in the area of
production and quality control to ensure compliance.

     For clinical investigation and marketing outside the United States, we are
also subject to foreign regulatory requirements governing investigation,
clinical trials and marketing approval for animal drugs. The foreign regulatory
approval process includes all of the risks associated with FDA approval set
forth above. Currently, in the EU, feed additives which are successfully
sponsored by a manufacturer are assigned to an Annex. Initially, they are
assigned to Annex II. During this period, member states may approve the feed
additive for local use. After five years or earlier, the product passes to Annex
I if no adverse reactions or trends develop over the probationary period.

     The EU is in the process of centralizing the regulatory process for animal
drugs for member states. In 1997, the EU drafted new regulations requiring the
re-registration of feed additives, including coccidiostats. Part of these
regulations include a provision for manufacturers to submit quality data for
their own formulation, in effect adopting a Product License procedure similar to
that of the FDA. The provision is known as Brand Specific Approval ("BSA"), and
provides manufacturers with the opportunity to register their own unique brands,
instead of simply the generic compound. The BSA process is being implemented
over time. The new system is more like the U.S. system, where regulatory
approval is for the formulated product or "brand." A number of manufacturers,
including us, have submitted dossiers in order to re-register various
anticoccidials for the purpose of obtaining regulatory approval from the
European Commission. As a result of its review of said dossiers, the Commission
withdrew marketing authorization of a number of anticoccidials, including
nicarbazin, as the Commission did not consider the submissions to be in full
compliance with its new regulations. We have subsequently resubmitted our
nicarbazin dossier. Feasibility and timetable for new registration will depend
on the nature of demands and remarks from the Commission. Notwithstanding the
Commission's actions with respect to our nicarbazin dossier, we are able to
sell, and do sell, nicarbazin as an active ingredient for another MFA marketer's
product which has obtained a BSA and is sold in the EU.

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<PAGE>

LEGAL PROCEEDINGS

     Reference is made to the discussion above under "Environmental Matters" for
information as to various environmental investigation and remediation
obligations of our subsidiaries associated principally with their recycling and
production facilities and to certain legal proceedings associated with such
facilities.

     In addition to such matters, we or certain of our subsidiaries are subject
to certain litigation described below.

     On or about April 17, 1997, CP and we were served with a complaint filed by
Chevron U.S.A. Inc. ("Chevron") in the United States District Court for the
District of New Jersey, alleging that the operations of CP at its Sewaren plant
affected adjoining property owned by Chevron and alleging that we, as the parent
of CP, are also responsible to Chevron. In July 2002, a phased settlement
agreement was reached and a Consent Order entered by the Court. That settlement
is in the process of being implemented. Our portion of the settlement for past
costs and expenses through the entry of the Consent Order was $495,000 and is
included in selling, general and administrative expenses in the June 30, 2002
statement of operations and comprehensive income. Such amount was paid in July
2002. The Consent Order then provides for a period of due diligence
investigation of the property owned by Chevron. The investigation has been
conducted and the results are under review. The investigation costs are being
split with one other defendant, Vulcan Materials Company. Upon completion of the
review of the results of the investigation, a decision will be made whether to
opt out of the settlement or proceed. If no party opts out of the settlement,
Phibro Animal Health Corporation and CP will take title to the adjoining Chevron
property, probably through the use of a three-member New Jersey limited
liability company. In preparation to move forward, a limited liability company
has been formed, with Vulcan Materials Company as the third member. We also have
commenced negotiations with Chevron regarding its allocation of responsibility
and associated costs under the Consent Order. While the costs cannot be
estimated with any degree of certainty at this time, we believe that insurance
recoveries will be available to offset some of those costs.

     Our Phibro-Tech subsidiary was named in 1993 as a potentially responsible
party ("PRP") in connection with an action commenced under CERCLA by the EPA,
involving a former third-party fertilizer manufacturing site in Jericho, South
Carolina. An agreement has been reached under which we have agreed to contribute
up to $900,000 of which $634,596 has been paid as of June 30, 2004. Some
recovery from insurance and other sources is expected. We have also accrued our
best estimate of any future costs.

     Phibro-Tech, Inc. has resolved certain alleged technical permit violations
with the California Department of Toxic Substance Control ("DTSC") and has
reached an agreement to pay $425,000 over six (6) years as a result. The annual
payments required under this agreement are not expected to have any material
adverse impact on us.

     Phibro-Tech, Inc. and DTSC are currently negotiating the settlement of
certain alleged technical permit violations from 2003. Phibro-Tech, Inc.
believes most if not all of the alleged violations will be withdrawn. In the
event penalties are assessed, they are not expected to exceed $50,000.

     In February 2000, the EPA notified numerous parties of potential liability
for waste disposed of at a licensed Casmalia, California disposal site,
including a business, assets of which were originally acquired by a subsidiary
of ours in 1984. A settlement has been reached in this matter and we have paid
$171,103 in full settlement.

     On or about April 5, 2002, the Company was served, as a potentially
responsible party, with an information request from the EPA relating to a
third-party superfund site in Rhode Island. The Company is investigating the
matter, which relates to events in the 1950's and 1960's, but management does
not believe that the Company has any liability in this matter.

     On or about August 13, 2004 the Company was served with a Request for
Information pursuant to Section 104 of CERCLA and Section 3007 of RCRA relating
to possible discharges into Turkey Creek in Sumter, South Carolina. The Company
is preparing its response to the Request for Information and believes

                                        72
<PAGE>

that, because its Sumter, South Carolina facility is distant from Turkey Creek
and does not discharge into Turkey Creek, there is a low probability of
liability associated with this matter.

     We and our subsidiaries are party to a number of claims and lawsuits
arising out of the normal course of business including product liabilities and
governmental regulation. Certain of these actions seek damages in various
amounts. In most cases, such claims are covered by insurance. We believe that
none of the claims or pending lawsuits, either individually or in the aggregate,
will have a material adverse effect on our financial position or results of
operations.

                              CONDITIONS IN ISRAEL

     The following information discusses certain conditions in Israel that could
affect our Israeli subsidiary, Koffolk Israel. Israeli operations (excluding
Koffolk Israel's non-Israeli subsidiaries) accounted for approximately 14% of
our consolidated assets as of September 30, 2004 and approximately 12% of our
consolidated net sales for fiscal 2004. We are, therefore, directly affected by
the political, military and economic conditions in Israel.

POLITICAL AND MILITARY CONDITIONS

     Since the establishment of the State of Israel in 1948, a number of armed
conflicts have taken place between Israel and its Arab neighbors and a state of
hostility, varying from time to time in intensity and degree, has led to
security and economic problems for Israel. Although Israel has entered into
various agreements with certain Arab countries and the Palestinian Authority,
since October 2000 there has been a significant increase in violence and
terrorist activity in Israel. In April 2002, and from time to time thereafter,
Israel undertook military operations in several Palestinian cities and towns. We
cannot predict whether the current violence and unrest will continue and to what
extent it will have an adverse impact on Israel's economic development or on
Koffolk Israel's or our results of operations. We also cannot predict whether or
not any further hostilities will erupt in Israel and the Middle East and to what
extent such hostilities, if they do occur, will have an adverse impact on
Israel's economic development or on Koffolk Israel's or our results of
operations.

     Certain countries, companies and organizations continue to participate in a
boycott of Israeli firms and other companies doing business in Israel or with
Israel companies. We do not believe that the boycott has had a material adverse
effect on us, but we can not provide assurance that restrictive laws, policies
or practices directed toward Israel or Israeli businesses will not have an
adverse impact on our operations or expansion of the our business.

     Generally, male adult citizens who are permanent residents of Israel under
the age of 40 are, unless exempt, obligated to perform certain military duty
annually. Additionally, all such residents are subject to being called to active
duty at any time under emergency circumstances. Some of the employees of Koffolk
Israel currently are obligated to perform annual reserve duty. While Koffolk
Israel has operated effectively under these and similar requirements in the
past, we cannot assess the full impact of such requirements on Koffolk Israel
and us in the future, particularly if emergency circumstances occur and
employees of Koffolk Israel are called to active duty.

ECONOMIC CONDITIONS

     Israel is currently experiencing the longest recession since the
establishment of Israel in 1948. Factors affecting Israel's economy include the
Intifada, which began in September 2000, the slowdown in world trade and the
global slump in the high-tech industry. In addition, Israel's economy has been
subject to numerous destabilizing factors, including a period of rampant
inflation in the early to mid-1980's, low foreign exchange reserves,
fluctuations in world commodity prices, military conflicts and security
incidents. Further disruptions to the Israeli economy as a result of these or
other factors could have a material adverse affect on Koffolk Israel's and our
results of operations.

                                        73
<PAGE>

     Koffolk Israel receives a portion of its revenues in U.S. dollars while its
expenses are principally payable in New Israeli Shekels. Dramatic changes in the
currency rates could have an adverse effect on Koffolk Israel's results of
operations.

INVESTMENT INCENTIVES

     Certain of our Israeli production facilities have been granted Approved
Enterprise status pursuant to the Law for the Encouragement of Capital
Investments, 1959, and consequently may enjoy certain tax benefits and
investment grants. Taxable income of Koffolk Israel derived from these
production facilities is subject to a lower rate of company tax than the normal
rate applicable in Israel. Dividends distributed by Koffolk Israel out of the
same income are subject to lower rates of withholding tax than the rate normally
applicable to dividends distributed by an Israeli company to a non-resident
corporate shareholder. The grant available to newly Approved Enterprises was
decreased throughout recent years. Certain of our Israeli production facilities
further enjoyed accelerated depreciation under regulation extended from time to
time and other deductions. We cannot provide assurance that we will, in the
future, be eligible for or receive such or similar grants.

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<PAGE>

                                   MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

     Set forth below is certain information with respect to our directors and
executive officers.

<Table>
<Caption>
NAME                                        AGE                    POSITION
- ----                                        ---                    --------
<S>                                         <C>   <C>
Jack C. Bendheim..........................  58    Chairman of the Board of Directors and
                                                  President
Gerald K. Carlson.........................  61    Chief Executive Officer
Marvin S. Sussman.........................  57    Vice Chairman of the Board of Directors and
                                                  President, Prince Agri
James O. Herlands.........................  62    Director and Executive Vice President
Richard G. Johnson........................  55    Chief Financial Officer
Daniel M. Bendheim........................  33    President, Specialty Chemicals Group*
Steven L. Cohen...........................  60    Vice President, General Counsel and
                                                  Assistant Secretary
Keith Collins.............................  50    President, Phibro Animal Health Division**
Daniel A. Welch...........................  54    Senior Vice President, Human Resources
Sam Gejdenson.............................  56    Director, Noteholder Representative
Peter A. Joseph...........................  52    Director
Mary Lou Malanoski........................  48    Director
Marcos Rodriguez..........................  43    Director
</Table>

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

 * William A. Mathison, the former President, Specialty Chemicals Group, retired
   in August 2004.

** David G. McBeath, the former President, Animal Health Group, returned, as
   planned, to his private consulting business in December 2004.

     Jack C. Bendheim Chairman of the Board of Directors and President. Mr.
Bendheim has been President since 1988. He was Chief Operating Officer from 1988
to 1998, and was Chief Executive Officer from 1998 to May 2002. He has been a
director since 1984. Mr. Bendheim joined us in 1969 and served as Executive Vice
President and Treasurer from 1983 to 1988 and as Vice President and Treasurer
from 1975 to 1983. Mr. Bendheim is also a director of The Berkshire Bank in New
York, New York, and Empire Resources, Inc., a metals trading company in Fort
Lee, New Jersey.

     Gerald K. Carlson Chief Executive Officer. Mr. Carlson joined us in May
2002 and has served as our Chief Executive Officer since then. Prior to joining
us, Mr. Carlson served as the Commissioner of Trade and Development for the
State of Minnesota from January 1999 to March 2001. Mr. Carlson served as Senior
Vice President -- Corporate Planning and Development from June 1996 to his
retirement in October 1998 from Ecolab, Inc. During his thirty-two year career
at Ecolab, Mr. Carlson also served as Senior Vice President of International as
well as Senior Vice President and General Manager -- Institutional North
America.

     Marvin S. Sussman Vice Chairman of the Board of Directors and President of
our Prince Agri subsidiary. He has been a director since 1988 and was Chief
Operating Officer from 1998 to 2002. Mr. Sussman joined us in 1971. Since then,
he has served in various executive positions with us. Mr. Sussman was President
of our Prince Group from 1988 to 2002. Mr. Sussman is the brother-in-law of Jack
Bendheim.

     James O. Herlands Director; Executive Vice President. Mr. Herlands joined
us in 1964. Since then, he has served in various capacities in sales/marketing
and purchasing. He has been a director since 1988 and served as President of our
CP/PhibroChem division since 1992. In addition, Mr. Herlands has served as our
Executive Vice President since 1988. Mr. Herlands is the first cousin of Jack
Bendheim.

     Richard G. Johnson Chief Financial Officer. Mr. Johnson joined us in
September 2002 and has served as our Chief Financial Officer since then. Prior
to joining us, Mr. Johnson served as Director of Financial
                                        75
<PAGE>

Management for Laserdyne Prima, Inc. from 2001 to 2002 and as Vice
President -- Planning and Control, Latin America for Ecolab, Inc. from 1992 to
1999. In addition, Mr. Johnson served in various senior financial positions at
Ecolab over a fifteen year period.

     Daniel M. Bendheim President, Specialty Chemicals Group. Mr. Bendheim
joined the Company in 1998. In 2001 he was appointed Vice President of Business
Development, and was appointed to his current position of President, Specialty
Chemicals Group in September, 2004. Prior to joining the Company Mr. Bendheim
worked as an analyst at SouthCoast Capital. Mr. Bendheim received a JD from
Harvard Law School in 1996 and a BA from Yeshiva University in 1993. Mr.
Bendheim is a son of Jack Bendheim.

     Steven L. Cohen Vice President and General Counsel. Mr. Cohen joined us in
October 2000 and has served as our Vice President -- Regulatory and General
Counsel since then. Prior to joining us, Mr. Cohen was, from 1997 to 2000,
General Counsel of Troy Corporation, a multi-national chemical company. From
1994 to 1997, Mr. Cohen was in the private practice of law.

     Keith R. Collins President, Phibro Animal Health Division. Mr Collins
joined us in August 2004. Prior to joining us, Mr. Collins was, from 2000 to
2004, Director, Global Strategic Marketing for Cattle and Swine with Merial
Ltd., the world's largest animal health company. From 1995 to 2000, he was
Director of European Operations with Hoechst Roussel Vet and Intervet based in
Germany and Holland respectively. Mr Collins is a Fellow of the New Zealand
Institute of Management.

     Daniel A. Welch Senior Vice President Human Resources. Mr. Welch joined us
on August 9, 2004. Prior to joining us, he was Director of Human Resources of
Pfizer Inc. since 2001. From 1998 to 2001, Mr. Welch was the President of Value
Growth Dynamics, LLC, a consulting firm focused on strategic change.

     Sam Gejdenson Director. From 1981 to 2000, Congressman Sam Gejdenson served
eastern Connecticut in the U.S. House of Representatives. Mr. Gejdenson was the
senior Democrat on the House International Relations Committee. He received an
A.S. degree from Mitchell College in New London, Connecticut in 1968 and a B.A.
from the University of Connecticut in Storrs, Connecticut in 1970. In 1974, he
was elected to the Connecticut House of Representatives, serving two terms
before accepting a post in the administration of Connecticut Governor Ella T.
Grasso. Mr. Gejdenson is now involved in international trade in his own company
Sam Gejdenson International.

     Peter A. Joseph Director. Mr. Joseph has served as one of our Directors
since February 2001. From 1998 to present, he has been a member of Palladium
Equity Partners, LLC. From 1986 to 1997, Mr. Joseph was a general partner of
Joseph Littlejohn & Levy, a buyout firm.

     Mary Lou Malanoski Director. Ms. Malanoski currently serves as a Managing
Director at Morgan Joseph & Co. Inc. From 1994 until June 2001, Ms. Malanoski
served as Managing Director and Chief Financial Officer of New Street Advisors
LP, a private equity firm that she co-founded. Ms. Malanoski began her career at
Drexel Burnham Lambert in 1980 in the Corporate Finance Department. She
subsequently served in various positions, finally serving as Managing Director
in the Mergers and Acquisitions Department and Chair of the Corporate Finance
Underwriting Commitment Committee. Following Drexel's bankruptcy filing in 1990,
Ms. Malanoski was responsible for formulating the firm's plan of reorganization,
which was successfully consummated in 1992. She remained at the reorganized
firm, which was renamed New Street Capital Corp., as a Managing Director
responsible for many of the firm's merchant banking investments. Following New
Street Capital's sale in 1994, Ms. Malanoski co-founded New Street Advisors. She
is a Trustee of Rosemont College, from which she received a B.A. degree in
Mathematics, and she also received an MBA from the Johnson School of Cornell
University.

     Marcos A. Rodriguez Director. Mr. Rodriguez founded Palladium Equity
Partners in 1997 and serves as Managing Member. Prior to forming Palladium, Mr.
Rodriguez was a partner of Joseph Littlejohn & Levy (JLL), a buyout firm which
he joined in 1989. He was responsible for spearheading a number of JLL's major
investments. Before launching his private equity career 14 years ago, Mr.
Rodriguez worked in operations for General Electric Company in the U.S., Mexico
and France and graduated from GE's Manufacturing Management Program. Mr.
Rodriguez serves on the Board of Directors of portfolio companies Haden
International, The Hilsinger Company and Wise Foods. In addition, Mr. Rodriguez
serves as
                                        76
<PAGE>

Chairman of the Development Committee and Treasurer of the Board of Directors of
The Robert Toigo Foundation, a not-for-profit organization that supports the
advancement of exceptional minority business degree students and alumni within
the finance industry through scholarships, mentoring, internships and job
placement. He is also a member of the New America Alliance. Mr. Rodriguez earned
a B.S. in Mechanical Engineering from Columbia University, an M.B.A from the
Wharton School and an M.A. in International Studies from the Lauder Institute of
the University of Pennsylvania.

BOARD COMPOSITION

     Our entire Board of Directors consists of 7 members, all of whom are
currently designated and serving as directors. Our board of directors is elected
annually, and our directors hold office until the next annual meeting of
shareholders or until their successors are elected and qualified. Each officer
serves at the discretion of the Board of Directors.

COMPENSATION OF DIRECTORS

     Except for the payment of $50,000 annually to Mr. Sam Gejdenson, the
director designated by the holders of the Senior Secured Notes, our directors do
not receive any cash compensation for service on our Board of Directors.
Directors may be reimbursed for certain expenses in connection with attendance
at board meetings, however. We have entered into certain transactions with
certain of the directors. See "Certain Relationships and Related Party
Transactions."

CODE OF ETHICS

     Our Board of Directors has not adopted a code of ethics applicable to our
principal executive, financial or accounting officers. The Board of Directors
believes that our current internal control procedures and business practices are
adequate to promote honest and ethical conduct and to deter wrongdoing by these
executives.

COMMITTEES OF THE BOARD OF DIRECTORS

     We are not a "listed issuer" as defined under Section 10A-3 of the Exchange
Act and are therefore not required to have an audit committee comprised of
independent directors. We currently do not have an audit committee and our Board
of Directors has determined that we do not have an audit committee financial
expert. The Board of Directors believes that each of its members has the
requisite financial background, experience, and knowledge to fulfill the duties
and obligations that an audit committee would have, and therefore does not
believe that it is necessary at this time to search for a person who would
qualify as an audit committee financial expert.

     Our Board of Directors has not created any committees other than the
compensation committee.

     The duties of the Compensation Committee are to recommend to the Board of
Directors a compensation program, including incentives, for the Chief Executive
Officer and other senior officers of the Company, for approval by the full Board
of Directors.

     The current members of the Compensation Committee are Mr. Jack C. Bendheim,
Mr. Joseph and Mr. Gejdenson.

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<PAGE>

EXECUTIVE COMPENSATION

     The following table sets forth the cash compensation paid by us and our
subsidiaries for services during fiscal 2004, 2003, and 2002 to each of our five
most highly compensated executive officers:

<Table>
<Caption>
                                                    ANNUAL COMPENSATION
                                            ------------------------------------
                                                                    OTHER ANNUAL      ALL OTHER
NAME AND PRINCIPAL POSITION          YEAR     SALARY      BONUS     COMPENSATION   COMPENSATION(1)
- ---------------------------          ----   ----------   --------   ------------   ---------------
<S>                                  <C>    <C>          <C>        <C>            <C>
Jack C. Bendheim...................  2004   $1,650,000   $     --     $     --         $ 2,050
  Chairman of the Board; President   2003    1,650,000         --      150,000(2)        6,500
                                     2002    1,500,000    265,000           --           6,000
Gerald K. Carlson(3)...............  2004      500,000    575,000       24,000           1,458
  Chief Executive Officer            2003      500,000         --       24,000              --
                                     2002       49,350         --           --              --
Marvin S. Sussman(4)...............  2004    1,000,000    101,372           --          24,581(6)
  Vice Chairman of the Board;        2003    1,000,000         --           --          24,500(6)
  President of Prince Agri           2002    1,000,000         --           --           6,000
James O. Herlands..................  2004      400,000     95,519           --           6,581
  Executive Vice President           2003      400,000    150,000           --           6,500
                                     2002      400,000    150,000           --           6,000
Richard G. Johnson(5)..............  2004      268,750    200,000       13,500           6,703
  Chief Financial Officer            2003      192,308         --       39,000              --
</Table>

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

(1) Represents contributions by us under our 401(k) Retirement and Savings Plan.
    See "Compensation Pursuant to Plans."

(2) In fiscal 2003, Mr. Bendheim was paid $150,000 for temporary deferral of
    fiscal 2002 compensation.

(3) 2002 salary is for a partial year commencing May 2002. In fiscal 2004 and
    2003, Mr. Carlson received $24,000 for relocation and housing assistance.

(4) Pursuant to a Stockholders Agreement between us and Mr. Sussman, we are
    required to purchase, at book value, all shares of our Class B Common Stock
    owned by Mr. Sussman in the event of his retirement, death, disability or
    the termination of his employment by us. Should Mr. Sussman elect to sell
    his shares, we have a right of first offer and an option to purchase the
    shares. See "Certain Relationships and Related Party Transactions." As a
    result, each year, we are required to record as compensation expense
    (income) in our results of operations the change in our book value
    attributable to Mr. Sussman's shares. For 2004, 2003 and 2002, the expense
    (income) attributable to Mr. Sussman's shares was $0, $0 and ($378,000),
    respectively. No distributions have been made to Mr. Sussman under this
    agreement.

(5) Salary is since date of employment for 2003. In fiscal 2004 and 2003, Mr.
    Johnson received $13,500 and $39,000, respectively, for relocation and
    housing assistance.

(6) Of such amount, $18,000 represents the cost of the term portion of a life
    insurance policy purchased by the Company in the face amount of $10 million
    on the life of Mr. Sussman, with a required premium of $252,000 per year.
    The policy commenced in April 2002.

     In fiscal 2004, no options were granted to the named executive officers and
no options were held or exercised by any of the named executive officers.

EMPLOYMENT AND SEVERANCE AGREEMENTS

     We entered into an employment agreement with Gerald K. Carlson in May 2002,
whereby Mr. Carlson will serve as our Chief Executive Officer. The agreement
provides for a base salary of $500,000 during the first year of its term. Mr.
Carlson is eligible to receive an annual bonus of up to 150% of his base salary
based on our achievement of certain specified EBITDA growth targets. If Mr.
Carlson is terminated without Cause (as defined) or he voluntarily terminates
the agreement with Good Reason (as defined), he is entitled to receive the
accrued portion of the target annual bonus, as well as an amount ranging from
two to eight months of base

                                        78
<PAGE>

salary depending on when such termination occurs. If, within six months after a
Change of Control (as defined), Mr. Carlson is terminated without cause or he
voluntarily terminates the agreement with Good Reason, he will be entitled to
receive a lump sum payment equal to the amount of annual target bonus accrued to
the date of termination, plus 100% of base salary and 50% of annual target
bonus. We are obligated under the agreement to provide separate indemnification
insurance to Mr. Carlson in the amount of the current coverage provided to our
current board of directors.

     We entered into an employment agreement with Marvin S. Sussman in December
1987. The term of employment is from year-to-year, unless terminated by us at
any time or by his death or permanent disability.

     In December 2004, David McBeath resigned as President, Animal Health Group.
We entered into a consulting agreement with Mr. McBeath in November 2004,
pursuant to which Mr. McBeath agreed to provide to us consulting services
through December 2005. The consulting agreement provides that Mr. McBeath shall
work ten days per month at a rate of GBP1,000 per day from January through June
2005 and five days per month at a rate of GBP1,100 per day through December
2005.

     In 1995, James O. Herlands purchased stock in Phibro-Tech. In connection
therewith, we entered into a severance agreement with him. The agreement
provides that, upon his Actual or Constructive Termination or a Change in
Control Event (as such terms are defined), he is entitled to receive a cash
Severance Amount (as defined therein), based upon a multiple of Phibro-Tech's
pre-tax earnings (as defined therein). In addition, if an Extraordinary Event
(as defined) occurs within 12 months after the occurrence of an Actual or
Constructive Termination, the executive is entitled to receive an additional
Catch-up Payment (as defined). At June 30, 2004, no severance payments would
have been due to Mr. Herlands if he were terminated. See "Certain Relationships
and Related Party Transactions."

COMPENSATION PURSUANT TO PLANS

     401(k) Plan.  We maintain for the benefit of our employees a 401(k)
Retirement and Savings Plan (the "Plan"), which is a defined contribution,
profit sharing plan qualified under Section 401(k) of the Internal Revenue Code
of 1986, as amended (the "Code"). Our employees are eligible for participation
in the Plan once they have attained age 21 and completed a year of service (in
which the employee completed 1,000 hours of service). Up to $200,000 (indexed
for inflation) of an employee's base salary may be taken into account for Plan
purposes. Under the Plan, employees may make pre-tax contributions of up to
60.0% of such employee's base salary, and we will make non-matching
contributions equal to 1% of an employee's base salary and matching contribution
equal to 50.0% of an employee's pre-tax contribution up to 3.0% of such
employee's base salary and 25.0% of such employee's pre-tax contribution from
3.0% to 6.0% of base salary. Participants are vested in employer contributions
in 20% increments beginning after completion of the second year of service and
become fully vested after five years of service. Distributions are generally
payable in a lump sum after termination of employment, retirement, death,
disability, plan termination, attainment of age 59 1/2, disposition of
substantially all of our assets or upon financial hardship. The Plan also
provides for Plan loans to participants.

     The accounts of Messrs. Bendheim, Carlson, Sussman, Herlands, and Johnson
were credited with employer contributions of $2,050, $1,458, $6,581, $6,581, and
$6,703, respectively, for fiscal 2004.

     Retirement Plan.  We have adopted The Retirement Plan of Phibro Animal
Health Corporation and Subsidiaries and Affiliates, which is a defined benefit
pension plan (the "Retirement Plan"). Our employees are eligible for
participation in the Retirement Plan once they have attained age 21 and
completed a year of service (which is a Plan Year in which the employee
completes 1,000 hours of service). The Retirement Plan provides benefits equal
to the sum of (a) 1.0% of an employee's "average salary" plus 0.5% of the
employee's "average salary" in excess of the average of the employee's social
security taxable wage base, times years of service after July 1, 1989, plus (b)
the employee's frozen accrued benefit, if any, as of June 30, 1989 calculated
under the Retirement Plan formula in effect at that time. For purposes of
calculating the portion of the benefit based on "average salary" in excess of
the average wage base, years of service shall not exceed 35. "Average salary"
for these purposes means the employee's salary over the consecutive five year
period in the last ten years preceding retirement or other termination of
employment which produces the highest average;
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<PAGE>

or, if an employee has fewer than five years of service, all such years of
service. An employee becomes vested in his plan benefit once he completes five
years of service with us. In general, benefits are payable after retirement or
disability in the form of a 50%, 75% or 100% joint or survivor annuity, life
annuity or life annuity with a five or ten year term. In some cases benefits may
also be payable under the Retirement Plan in the event of an employee's death.

     The following table shows estimated annual benefits payable upon retirement
in specified compensation and years of service classifications, assuming a life
annuity with a ten year term.

<Table>
<Caption>
                                                      YEARS OF SERVICE
                                       -----------------------------------------------
AVERAGE COMPENSATION                     15        20        25        30        35
- --------------------                   -------   -------   -------   -------   -------
<S>                                    <C>       <C>       <C>       <C>       <C>
$25,000..............................  $ 3,750   $ 5,000   $ 6,250   $ 7,500   $ 8,750
$50,000..............................  $ 7,500   $10,000   $12,500   $15,000   $17,500
$75,000..............................  $11,420   $15,000   $18,750   $22,500   $26,250
$100,000.............................  $17,040   $22,000   $26,980   $31,990   $37,280
$150,000.............................  $28,290   $37,000   $45,730   $54,490   $63,530
$200,000.............................  $39,540   $52,000   $64,480   $76,990   $89,780
</Table>

     As of June 30, 2004, Messrs. Bendheim, Carlson, Sussman, Herlands, and
Johnson had 35, 2, 33, 40 and 2 estimated credited years of service,
respectively, under the Retirement Plan. The compensation covered by the
Retirement Plan for each of these officers as of June 30, 2004 is $205,000. Such
individuals, at normal retirement age 65, will have 43, 6, 41, 43 and 12
credited years of service, respectively. The annual expected benefit after
normal retirement at age 65 for each of these individuals, based on the
compensation taken into account as of June 30, 2004, is $118,200, $16,580,
$134,110, $129,240, and $32,000, respectively.

     Most of our foreign subsidiaries have retirement plans covering
substantially all employees. Contributions to these plans are generally
deposited under fiduciary-type arrangements. Benefits under these plans are
primarily based on levels of compensation. Funding policies are based on
applicable legal requirements and local practices.

     Deferred Compensation Plan.  In 1994, we adopted a non-qualified Deferred
Compensation Plan and Trust, as an incentive for certain executives. The plan
provides for (i) a Retirement Income Benefit (as defined), (ii) a Survivor's
Income Benefit (as defined), and (iii) Deferred Compensation Benefit (as
defined). Three employees currently participate in this plan. A trust has been
established to provide the benefits described above.

     The following table shows the estimated benefits from this plan as of June
30, 2004.

<Table>
<Caption>
                                                     ANNUAL       SURVIVOR'S     DEFERRED
                                                   RETIREMENT       INCOME     COMPENSATION
                                                 INCOME BENEFIT    BENEFIT       BENEFIT
                                                 --------------   ----------   ------------
<S>                                              <C>              <C>          <C>
Jack C. Bendheim...............................     $35,309       $1,500,000     $386,368
Marvin S. Sussman..............................     $35,309       $1,000,000     $128,451
James O. Herlands..............................     $35,085       $  400,000     $347,104
</Table>

     We determine the Retirement Income Benefit based upon the employee's
salary, years of service and age at retirement. At present, it is contemplated
that a benefit of 1% of each participant's eligible compensation will be accrued
each year. The benefit is payable upon retirement (after age 65 with at least 10
years of service) in monthly installments over a 15 year period to the
participant or his named beneficiary. The Survivor's Income Benefit for the
current participants is one times annualized compensation at the time of death,
capped at $1,500,000, payable in 24 equal monthly installments. The Deferred
Compensation Benefit is substantially funded by compensation deferred by the
participants. Such benefit is based upon a participant making an election to
defer no less than $3,000 and no more than $20,000 of his compensation in excess
of $150,000, payable in a lump sum or in monthly installments for up to 15
years. We make a matching contribution of $3,000. Participants have no claim
against us other than as unsecured creditors. We intend to fund the payments
using the cash value or the death benefit from the life insurance policies
insuring each Executive's life.
                                        80
<PAGE>

     Executive Income Program.  On March 1, 1990, we entered into an Executive
Income Program to provide a pre-retirement death benefit and a retirement
benefit to certain of our executives. The Program consists of a Split-Dollar
Agreement and a Deferred Compensation Agreement with Jack Bendheim, Marvin S.
Sussman and James O. Herlands (the "Executives"). The Split Dollar Agreement
provides for us to own a whole life insurance policy in the amount of $1,000,000
(plus additions) on the life of each Executive.

     Each policy also contains additional paid-up insurance and extended term
insurance. On the death of the Executive prior to his 60th birthday or his
actual retirement date, whichever is later: (i) the first $1,000,000 of the
death benefit is payable to the Executive's spouse, or issue; (ii) the excess is
payable to us up to the aggregate amount of premiums paid by us; and (iii) any
balance is payable to the Executive's spouse or issue. The Split-Dollar
Agreement terminates and no benefit is payable if the Executive dies after his
retirement. The Deferred Compensation Agreement provides that upon the
Executive's retirement, at or after attaining age 65, we will make retirement
payments to the Executive during his life for 10 years or until he or his
beneficiaries have received a total of 120 monthly payments. Participants have
no claim against us other than as unsecured creditors. We intend to fund the
payments using the cash value or the death benefit from the life insurance
policies insuring each Executive's life. The retirement benefits are as follows:
Jack Bendheim $30,000; Marvin S. Sussman $30,000; and James O. Herlands $20,000.

     1993 Split Dollar Agreement.  On August 12, 1993, we entered into a Split
Dollar Agreement with David Butler and Gail Bendheim, as trustees under an
Indenture of Trust dated August 12, 1993 (the "Trust"). This Agreement provides
for the Trust to purchase and own life insurance policies on the life of Jack C.
Bendheim in the aggregate face amount of $5,000,000 (plus additions). The
premiums for such insurance are paid in part by the Trust (to the extent of the
lesser of the P.S. 58 rates, or the insurers' current published premium rate for
annually renewable term insurance for standard risks) and in part by us (we pay
the balance of the premiums not paid by the Trust). Upon the death of Jack C.
Bendheim or upon the cancellation of the policies or the termination of the
Agreement, we have the right to be repaid the total amount we advanced toward
payment of premiums. To secure our right to be repaid, the Trust has assigned
each policy to us as collateral. After repayment of the amount due to us, the
remaining cash surrender value or the remaining death benefit is payable to the
Trust, the beneficiaries of which are the wife and issue of Jack C. Bendheim.

MEETINGS OF DIRECTORS

     During fiscal 2004, the Board of Directors took certain actions by both
written consent and at regular meetings. Directors are elected annually and
serve until the next annual meeting of Shareholders or until their successors
are elected and qualified.

REPORT OF THE COMPENSATION COMMITTEE

     The compensation committee was established during fiscal 2004. The
responsibility of the compensation committee is to recommend to the Board of
Directors a compensation program, including incentives, for the Chief Executive
Officer and other senior officers, for approval by the full Board of Directors.
The compensation committee will prepare recommendations to the Board of
Directors for the 2005 fiscal year. Executive compensation for the 2004 fiscal
year was determined by the Board as a whole. During fiscal 2004 the directors
participated in deliberations regarding compensation of our officers.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     Jack Bendheim, Marvin S. Sussman and James O. Herlands are members of our
Board of Directors and are executive officers. Jack Bendheim, Peter Joseph and
Sam Gejdenson are members of the compensation committee. None of our executive
officers serve as a member of the Board of Directors of any other non-Company
entity which has one or more members serving as a member of our Board of
Directors, except that Jack Bendheim and Peter Joseph serve as directors of
Penick Holding Company. Messrs. Bendheim, Sussman, Herlands, Joseph and
Rodriguez have participated in certain transactions with us and our subsidiaries
and affiliates. See "Certain Relationships and Related Transaction."

                                        81
<PAGE>

                             PRINCIPAL STOCKHOLDERS

     The table sets forth certain information as of September 30, 2004 regarding
beneficial ownership of our capital stock by each of our directors and named
executive officers, each beneficial owner of 5% or more of the outstanding
shares of capital stock and all directors and officers as a group.

<Table>
<Caption>
                                                            NUMBER OF COMMON SHARES
                                                             (PERCENTAGE OF CLASS)
                                                   -----------------------------------------
NAME                                               CLASS A VOTING(1)   CLASS B NON-VOTING(2)
- ----                                               -----------------   ---------------------
<S>                                                <C>                 <C>
Jack Bendheim(3)(4)..............................    12,600(100)%         10,699.65(90)%
Marvin S. Sussman................................              --          1,188.85(10)%
All other officers and directors(5)..............              --                      --
All officers and directors as a group............    12,600(100)%         11,888.50(100)%
</Table>

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

(1) The entire voting power is exercised by the holders of Class A Common Stock,
    except that the holders of Class A Common Stock currently are entitled to
    elect all but four of the directors. The holders of Class B Common Stock are
    entitled to elect one and the holders of Series C Preferred Stock are
    entitled to elect two directors but do not vote on any other matters. In
    addition, the holders of the units of senior secured notes have the right to
    designate one member of the Board of Directors.

(2) Class B Common shareholders will receive the entire equity upon our
    liquidation, after payment of preferences to holders of all classes of
    preferred stock and Class A Common Stock.

(3) Jack Bendheim also owns 5,207 (100%) shares of Series A Preferred Stock.

(4) Includes 6,308.527 shares of Class B Common Stock owned by trusts for the
    benefit of Jack Bendheim, his spouse, his children and their spouses and his
    grandchildren.

(5) Peter A. Joseph and Marcos Rodriguez have been designated as directors of
    the Company by Palladium Equity Partners II, LP ("Palladium") which
    beneficially owns 10,591 shares of our Series C Preferred Stock. Palladium
    has the right to designate two directors to the Board of Directors. See
    "Certain Relationships and Related Party Transactions."

                                        82
<PAGE>

                          DESCRIPTION OF CAPITAL STOCK

     Our authorized capital stock consists of 30,300 shares of Common Stock,
allocated as follows: 16,200 shares of Class A Common Stock, par value $0.10 per
share, and 14,100 shares of Class B Common Stock, par value $0.10 per share, and
155,750 shares of Preferred Stock, par value $100 per share, of which the
following series have been established: 5,207 shares of Series A Preferred Stock
and 20,000 shares of Series C Redeemable Participating Preferred Stock ("Series
C Preferred Stock").

     At the date of this prospectus, there are issued and outstanding 12,600
shares of Class A Common Stock, 11,888.50 shares of Class B Common Stock, 5,207
shares of Series A Preferred Stock and 10,591 shares of Series C Preferred
Stock.

     The following description of the terms of all classes and series of our
common and preferred stock is not complete and is subject to and qualified in
its entirety by reference to our amended certificate of incorporation (the
"Certificate of Incorporation").

     The entire voting power is vested in the holders of Class A Common Stock,
except that the holders of shares of Class A Common Stock are entitled to elect
all but four of the directors. The holders of Class B Common Stock are entitled
to elect one director and holders of the Series C Preferred Stock are entitled
by contract to elect two directors and are not entitled to vote on any other
corporate action except as required by applicable law. In addition, under the
indenture one member of the Board of Directors is designated on behalf of the
holders of the units of senior secured notes. Holders of units are not entitled
to vote on any other corporate action. The holders of shares of Class A Common
Stock are entitled to one vote per share upon all matters submitted for a vote
of the shareholders. The Certificate of Incorporation does not provide for
cumulative voting. The holders of Common Stock are entitled to preemptive
rights.

     No dividends may be paid to holders of Common Stock until all dividends
have been paid to holders of Preferred Stock. The holders of Series C Preferred
Stock are entitled to cumulative cash dividends, payable semi-annually, at 15%
per annum of the liquidation value. The liquidation value of the Series C
Preferred Stock is an amount equal to $1,000 per share plus all accrued and
unpaid dividends (the "Liquidation Value"), plus a percentage of our equity
value, as defined in the Certificate of Incorporation. The equity value is
calculated as a multiple of the earnings before interest, tax, depreciation and
amortization of our business, and with deductions for, among other things,
outstanding indebtedness ("Equity Value"). In connection with the PMC
transaction, the definition of Equity Value in the Company's Certificate of
Incorporation was amended to reduce the multiple of trailing EBITDA payable in
connection with any future redemption of Series C Preferred to 6.0 from 7.5. In
connection with the 2004 Offering, we agreed with the holders of the Series C
Preferred Stock that, for purposes of calculating the Equity Value, the total
net debt of Phibro Animal Health Corporation would not exceed $170 million.
Directors elected by the holders of Class A Common Stock have the exclusive
right and power to cause us to declare and pay other dividends. Non-cumulative
dividends are payable on the outstanding Series A Preferred Stock and Common
Stock, in the following order only when and as declared by the Board: each share
of Series A Preferred Stock -- $1.00 per year; each share of Class A Common
Stock -- $0.0055 per year; and each share of Class B Common Stock, as determined
by the Board.

     Beginning November 30, 2003, and on each anniversary thereafter, we may
redeem, for cash only, in whole the Series C Preferred Stock, at the Liquidation
Value plus the Equity Value payment. At any time after the redemption of the
Senior Subordinated Notes due 2008, Palladium has the right to require us to
redeem, for cash, the Series C Preferred Stock at the Liquidation Value plus the
Equity Value payment. In connection with the Palladium repurchase and
divestiture of PMC, all of the shares of Series B Preferred Stock were
repurchased and all of the shares of Series C Preferred Stock other than shares
having a value as of December 26, 2003, the date of repurchase, of $16.5 million
were repurchased. See "Certain Relationships and Related Party Transactions."

     The shares of Series A Preferred Stock are redeemable at our option, in
whole or part, at any time or from time to time, for a redemption price equal to
the par value thereof plus any declared but unpaid dividends.

                                        83
<PAGE>

     In the event of any complete liquidation, dissolution or winding up of the
business, or sale of all of our assets, after redemption of the Series C
Preferred Stock, each share of Series A Preferred Stock is entitled to a
distribution equal to the par value thereof and any declared but unpaid
dividends. Thereafter, our remaining assets shall be distributed, first to the
holders of Class A Common Stock in an amount equal to $0.10 per share, and then
to the holders of Class B Common Stock. In the event that no shares of Class B
Common Stock are then outstanding, all remaining assets will be paid to the
holders of Class A Common Stock. The Board of Directors is authorized to issue
shares of Preferred Stock in one or more series and to fix the rights,
preferences, privileges and restrictions thereof, including dividend rights,
dividend rates, conversion rights, voting rights, terms of redemption,
redemption prices, liquidation preferences and the number of shares constituting
any series or the designation of such series, without further vote or action by
the stockholders. The issuance of Preferred Stock may have the effect of
delaying, deferring or preventing a change in control of us without further
action by the stockholders. The issuance of Preferred Stock with voting and
conversion rights may adversely affect the voting power of the holders of Common
Stock, including the loss of voting control to others. At present, we have no
plans to issue any shares of Preferred Stock.

     The authorized share capital of the Dutch issuer is Euro 90,000, divided
into 900 ordinary shares with a nominal value of Euro 100 each, of which 180
fully paid shares have been issued.

                                        84
<PAGE>

              CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     Our Phibro-Tech subsidiary leases the property underlying its Santa Fe
Springs, California facility from First Dice Road Company, a California limited
partnership ("First Dice"), in which Jack Bendheim, our President and principal
stockholder, Marvin S. Sussman and James O. Herlands, directors, own 39.0%,
40.0% and 20.0% limited partnership interests, respectively. The general
partner, having a 1% interest in the partnership, is Western Magnesium Corp., a
wholly-owned subsidiary of ours, of which Jack Bendheim is the president. The
lease expires on June 30, 2008. The annual rent is $250,000. Phibro-Tech is also
required to pay all real property taxes, personal property taxes and liability
and property insurance premiums. In June 2001, Jack Bendheim entered into a
secured $1.4 million revolving credit arrangement with First Union National
Bank, which replaced a prior loan from Fleet Bank. Mr. Bendheim reloans
borrowings under the First Union credit line to First Dice on the same terms as
his borrowing from First Union. We believe that the terms of such lease and loan
are on terms no less favorable to Phibro-Tech than those that reasonably could
be obtained at such time in a comparable arm's-length transaction from an
unrelated third-party.

     Pursuant to a Shareholders Agreement dated December 29, 1987 between Marvin
S. Sussman and us, we are required to purchase, at book value, all shares of our
Class B Common Stock owned by Mr. Sussman, in the event of his retirement,
death, permanent disability or the termination of his employment by us. Should
Mr. Sussman elect to sell his shares, we have a right of first offer and an
option to purchase the shares.

     A Shareholders Agreement initially entered into by Phibro-Tech and three
executives of Phibro-Tech, including James O. Herlands (the "Executives")
provides, among other things, for restrictions on their shares as to voting,
dividends, liquidation and transfer rights. The Shareholders Agreement also
provides that upon the death of an Executive or termination of an Executive's
employment, Phibro-Tech must purchase the Executive's shares at their fair
market value, as determined by a qualified appraiser. In the event of a Change
of Control (as defined), the Executive has the option to sell his shares to
Phibro-Tech at such value. The Shareholders Agreement provides, that, upon the
consent of Phibro-Tech, the Executives and us, the Executives' shares of
Phibro-Tech Common Stock may be exchanged for a number of shares of our Common
Stock, which may be non-voting Common Stock, having an equivalent value, and
upon any such exchange such shares of our Common Stock will become subject to
the Shareholders Agreement. We and Phibro-Tech also entered into Severance
Agreements with the Executives which provide, among other things, for certain
severance payments. See "Management -- Executive Compensation -- Employment and
Severance Agreements."

     We advanced $200,000 to Marvin Sussman and his wife in 1987, pursuant to a
secured promissory note that is payable on demand and bears interest at the
annual rate of 9%.

     Certain relatives of Jack Bendheim, other than Mr. Sussman and Mr. Herlands
named above, provide services to us, in one case through a consulting firm
controlled by a relative, and in other cases as employees, and received directly
or through such consulting firm annual aggregate payments of approximately
$650,000 for the fiscal year ended June 30, 2004.

     On January 5, 2000, the United States Bankruptcy Court for the Eastern
District of New York confirmed a Plan of Reorganization for Penick Corporation
and Penick Pharmaceutical, Inc. (collectively, "Penick") which prior to such
confirmation were debtors in proceedings in such Court for reorganization under
Chapter 11 of the Bankruptcy Code, and awarded Penick to Penick Holding Company
("PHC"). PHC is a corporation formed to effect such acquisition by the Company,
PBCI LLC, a limited liability company controlled by Mr. Jack Bendheim, and
several other investors, including Peter A. Joseph, a director of the Company.
Pursuant to a Shareholders' Agreement among the shareholders of PHC, Messrs.
Bendheim and Joseph have been designated as two of three directors of PHC, and
Mr. Katzenstein, our Secretary, has been designated as Secretary and Treasurer
of PHC. The Company has invested approximately $2,300,000 for shares of Series A
Preferred Stock of PHC bearing an 8.5 percent annual cumulative dividend, and
PBCI LLC invested approximately $500,000 for approximately 15 percent of the
Common Stock of PHC. Mr. Joseph owns or controls approximately 12 percent of the
Common Stock of PHC.

                                        85
<PAGE>

     In connection with the sale of our Series B and Series C Preferred Stock to
the Palladium Investors, we and Jack Bendheim entered into a Stockholders
Agreement (the "Palladium Stockholders Agreement") dated November 30, 2000 with
the Palladium Investors. The Palladium Stockholders Agreement provides for our
Board to include two directors to be designated by the Palladium Investors.
Peter A. Joseph and Marcos Rodriguez are currently the two designees of the
Palladium Investors serving as directors. If and for so long as we fail to
redeem any share of Series B or Series C Preferred Stock requested for
redemption by a Palladium Investor after the earliest to occur of June 1, 2008
(the maturity date of our 9 7/8% Senior Subordinated Notes due 2008), the
redemption of such Notes in full prior thereto or a change in control of us,
then (x) the Palladium Investors may take control of our Board of Directors, and
(y) Jack C. Bendheim has agreed to cause all equity securities owned by him to
be voted in the manner directed by the Palladium Investors; provided, that, we
must pay Jack Bendheim and Marvin Sussman, whether or not employed by us, an
amount not less than their respective annual base salaries in effect immediately
prior to such assumption of control, until the earlier to occur of the
expiration of control by the Palladium Investors and the fifth anniversary of
their assumption of control.

     The Palladium Stockholders Agreement contains covenants which restrict,
without the consent of at least one director designated by the Palladium
Investors (or, if no such director is then serving on the Board, at least one
Palladium Investor), among other things, certain (a) issuances of any equity
securities, unless the purchaser agrees to be bound by the Palladium
Stockholders Agreement, (b) sales of assets in excess of $10 million, (c)
purchases of businesses and other investments in excess of $10 million, (d) the
incurrence of indebtedness for borrowed money, including guarantees, in excess
of $12.5 million, (e) redemptions, acquisitions or other purchases of equity
securities, (f) transactions with officers, directors, stockholders or employees
or any family member or affiliate thereof in excess of $500,000, (g)
compensation and benefits of certain officers, and (h) transactions involving a
change of control. The Palladium Stockholders Agreement also provides that we
shall furnish the Palladium Investors certain financial reporting and
environmental information each year and grant to the Palladium Investors
registration rights comparable to any such rights granted to any third party,
and requires us to maintain certain key man life insurance on Jack C. Bendheim
for the benefit of the Palladium Investors. The Palladium Stockholders Agreement
provides certain limitations on the ability of Jack C. Bendheim to transfer
voting shares, and certain limitations on the ability of the Palladium Investors
to transfer their shares, including a right of first refusal in favor of us and
Mr. Bendheim.

     Pursuant to the Management and Advisory Services Agreement dated November
30, 2000 between us and the Palladium Investors, we agreed to pay, on a
quarterly basis, the Palladium Investors an annual management advisory fee of
$2.25 million until such time as all shares of Series B and Series C Preferred
Stock are redeemed. Pursuant to the sale of PMC described below, our obligations
for this fee have been terminated.

     Our policy with respect to the sale, lease or purchase of assets or
property of any related party is that such transaction should be on terms that
are no less favorable to us or our subsidiary, as the case may be, than those
that could reasonably be obtainable at such time in a comparable arm's length
transaction from an unrelated third party. The indenture and the domestic senior
credit facility both include a similar restriction on us and our domestic
subsidiaries with respect to the sale, purchase, exchange or lease of assets,
property or services, subject to certain limitations as to the applicability
thereof.

     Effective December 26, 2003 (the "Closing Date"), the Company completed the
divestiture of substantially all of the business and assets of The Prince
Manufacturing Company ("PMC") to a company ("Buyer") formed by Palladium Equity
Partners II, LP and certain of its affiliates (the "Palladium Investors"), and
the related reduction of the Company's preferred stock held by the Palladium
Investors (collectively the "Prince Transactions").

     Pursuant to definitive purchase and other agreements executed on and
effective as of the Closing Date, the Prince Transactions included the following
elements: (i) the transfer of substantially all of the business and assets of
PMC to Buyer; (ii) the reduction of the value of the Company's Preferred Stock
owned by the Palladium Investors from $72.2 million to $16.5 million (accreted
through the Closing Date) by means of the redemption of all of its shares of
Series B Preferred Stock and a portion of its Series C Preferred Stock;

                                        86
<PAGE>

(iii) the termination of $2.2 million in annual management advisory fees payable
by the Company to Palladium; (iv) a cash payment of $10.0 million to the
Palladium Investors in respect of the portion of the Company's Preferred Stock
not exchanged in consideration of the business and assets of PMC; (v) the
agreement of the Buyer to pay the Company for advisory fees for the next three
years of $1.0 million, $0.5 million, and $0.2 million, respectively (which were
pre-paid at closing by the Buyer and satisfied for $1.3 million, the net present
value of such payments); and (vi) the Buyer agreed to supply manganous oxide and
red iron oxide products and to provide certain mineral blending services to the
Company's Prince Agriproducts subsidiary ("Prince Agri"). Prince Agri agreed to
continue to provide the Buyer with certain laboratory, MIS and telephone
services, all on terms substantially consistent with the historic relationship
between Prince Agri and PMC, and to lease to Buyer office space used by PMC in
Quincy, Illinois. The Company has an agreement to receive certain treasury
services from Palladium for $0.1 million per year. Pursuant to definitive
agreements, the Company made customary representations, warranties and
environmental and other indemnities, agreed to a post-closing working capital
adjustment, paid $4.0 million in full satisfaction of all intercompany debt owed
to PMC, paid a closing fee to Palladium of $0.5 million, made certain capital
expenditure adjustments included as part of the intercompany settlement amount,
and agreed to pay for certain out-of-pocket transaction expenses. PMC retained
$0.4 million of its accounts receivable. The Company established a $1.0 million
letter of credit escrow for two years to secure its working capital adjustment
and certain indemnification obligations. The Company agreed to indemnify the
Palladium Investors for a portion, at the rate of $0.65 for every dollar, of the
amount they receive in respect of the disposition of Buyer for less than $21.0
million up to a maximum payment by the Company of $4.0 million (the "Backstop
Indemnification Amount"). The Backstop Indemnification Amount would be payable
on the earlier to occur of July 1, 2008 or six months after the redemption date
of all of the Company's Senior Secured Notes due 2007 if such a disposition
closes prior to such redemption and six months after the closing of any such
disposition if the disposition closes after any such redemption. The Company's
obligations with respect to the Backstop Indemnification Amount will cease if
the Palladium Investors do not close the disposition of Buyer by January 1,
2009. The definition of "Equity Value" in the Company's Certificate of
Incorporation was amended to reduce the multiple of trailing EBITDA payable in
connection with any future redemption of Series C Preferred to 6.0 from 7.5. The
amount of consideration paid and payable in connection with the Prince
Transactions and all matters in connection therewith were determined pursuant to
arm's length negotiations.

     In connection with the 2004 Offering, we agreed with the holders of the
Series C Preferred Stock that, for purposes of calculating the Equity Value,
which is calculated as part of the calculation of the Liquidation Value of the
Series C Preferred Stock, the total net debt of Phibro Animal Health Corporation
would not exceed $170 million. See "Description of Capital Stock."

                                        87
<PAGE>

                      DESCRIPTION OF CERTAIN INDEBTEDNESS

     The following is a summary of certain of our indebtedness. To the extent
such summary contains descriptions of the credit agreements and other loan
documents, such descriptions do not purport to be complete and are qualified in
their entirety by reference to such documents, which are available at or through
the SEC or upon request from us.

DOMESTIC SENIOR CREDIT FACILITY

     Substantially simultaneously with the completion of the offering of the old
units, on October 21, 2003, we entered into a new replacement domestic senior
credit facility with Wells Fargo Foothill, Inc., providing for a working capital
facility plus a letter of credit facility. The aggregate amount of borrowings
under such working capital and letter of credit facilities originally were not
permitted to exceed $25.0 million, including aggregate borrowings under the
working capital facility of up to $15.0 million. On April 29, 2004, we amended
the domestic senior credit facility to increase the aggregate amount of
borrowings available under such working capital and letter of credit facilities
from $25.0 million to $27.5 million and to increase the amount of aggregate
borrowings available under the working capital facility from $15.0 million to
$17.5 million. As of September 24, 2004, we amended the domestic senior credit
facility to: (i) increase the aggregate amount of borrowings available under
such working capital and letter of credit facilities from $27.5 million to $32.5
million; the amount of aggregate borrowings available under the working capital
facility remained unchanged at $17.5 million; (ii) amend the EBITDA definition
to exclude charges and expenses related to unsuccessful acquisitions and related
financings in an aggregate amount not to exceed $5.3 million for the period
beginning January 1, 2004 and ending June 30, 2004; (iii) amend the definition
of Additional Indebtedness to exclude advances under the working capital
facility; (iv) amend the definition of Permitted Investments to allow other
investments made during the period from January 1, 2004 through June 30, 2004 in
an aggregate amount not to exceed $336,000; and (v) establish covenant EBITDA
levels for the periods after June 30, 2004. The amendment was effective June 30,
2004 for items (i), (ii) and (iii); effective January 1, 2004 for item (iv); and
effective September 24, 2004 for all other items.

     Concurrent with the completion of the 2004 Offering, on December 21, 2004,
we amended the domestic senior credit facility to (i) amend the EBITDA
definition to exclude charges and expenses related to the sale of the Belgium
Plant in an aggregate amount not to exceed $26.8 million for purposes of
calculating a certain financial covenant, (ii) amend the Indenture Reserve
definition to include scheduled payments of interest due on the additional
notes, (iii) amend the maximum aggregate amount of borrowings available under
the working capital facility to permit a temporary increase to $22.5 million and
for its reduction to $17.5 million on such borrowings being refinanced by the
proceeds of the additional old notes issues in the 2004 Offering, (iv) amend the
Permitted Investments definition to include investments in connection with the
sale of the Belgium Plant and transfer of certain equipment, together with other
assets and rights related to the production of virginiamycin, to our subsidiary
in Brazil or in connection with alternative production arrangements, and (v)
provide for the issuance of the additional notes and the sale of the Belgium
Plant and related transactions.

     Borrowings under the domestic senior credit facility are subject to a
borrowing base formula based on percentages of eligible domestic receivables and
domestic inventory. Under the domestic senior credit facility, we may choose
between two interest rate options: (i) the applicable base rate as defined plus
0.50% and (ii) the LIBOR rate as defined plus 2.75%. Indebtedness under the
domestic senior credit facility is secured by a first priority lien on
substantially all of our assets and assets of substantially all of our domestic
subsidiaries. We are required to pay an unused line fee of 0.375% on the unused
portion of the domestic senior credit facility, a monthly servicing fee and
standard letter of credit fees to issuing banks. Borrowings under the domestic
senior credit facility are available until, and are repayable no later than,
October 31, 2007, although borrowings must be repaid by June 30, 2007 if the
maturity of the Senior Secured Notes has not been extended, as required by the
domestic senior credit facility, by that date. Pursuant to the terms of an
intercreditor agreement, as amended in connection with the 2004 Offering, the
security interest securing the Senior Secured Notes and the guarantees made by
our domestic restricted subsidiaries is subordinated to a lien securing the
domestic senior credit facility.
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<PAGE>

     The domestic senior credit facility also contains various covenants which
restrict us and our subsidiaries with respect to, among other things, incurring
indebtedness, entering into merger or consolidation transactions, disposing of
assets (other than in the ordinary course of business), acquiring assets (with
permitted exceptions), making certain restricted payments, making optional
redemptions of, or excess cash flow offers for the notes, repaying our Senior
Subordinated Notes not purchased by us with the proceeds of the offering of old
notes, creating any liens on our assets, making investments, creating guarantee
obligations and entering into sale and leaseback transactions and transactions
with affiliates. In the event our total availability under our domestic senior
credit facility falls below specified levels, the facility will require that we
comply with various financial covenants, including meeting a minimum EBITDA
requirement and limitations on capital expenditures. The domestic senior credit
facility agreement provides for certain events of default, including default
upon the nonpayment of principal, interest, fees or other amounts, a cross
default with respect to other obligations of ours and our subsidiaries, failure
to comply with certain covenants, conditions or provisions under the domestic
senior credit facility, the existence of certain unstayed or undischarged
judgments, the invalidity or unenforceability of the relevant security
documents, the making of materially false or misleading representations or
warranties, commencement of reorganization, bankruptcy, insolvency or similar
proceedings and the occurrence of certain ERISA events. Upon the occurrence of
an event of default under the domestic senior credit facility, the lenders may
declare all obligations thereunder to be immediately due and payable.

     We may from time to time, prior to the maturity date of the notes,
refinance, replace, restructure, substitute for, amend or supplement the
domestic senior credit facility. The actual terms of any new or modified credit
facility which replaces the domestic senior credit facility could differ
substantially from the facility summarized above.

OTHER INDEBTEDNESS AND CREDIT FACILITIES

     In June 1998, we issued $100 million aggregate principal amount of 9 7/8%
Senior Subordinated Notes due 2008. Proceeds of the offering of the old units
issued on October 21, 2003 were used to complete the repurchase of $51,971,000
of our 9 7/8% Senior Subordinated Notes at a price equal to 60% of the principal
amount thereof plus accrued and unpaid interest. The Senior Subordinated Notes
are general unsecured obligations and are subordinated in right of payment to
all existing and future senior debt (as defined in the indenture), and rank pari
passu in right of payment with all other existing and future senior subordinated
indebtedness. The Senior Subordinated Notes are unconditionally guaranteed on a
senior subordinated basis by our domestic subsidiaries. The restrictive
covenants in the indenture for the Senior Subordinated Notes were amended in
certain respects.

     Certain of our foreign subsidiaries have existing local credit arrangements
which will continue in effect after the offering. Our subsidiary in Israel,
Koffolk Israel, has a $10.5 million working capital facility with Israeli banks
for loans in various currencies, including dollars, euros and shekels.
Borrowings under such facility bear interest at the LIBOR rate as defined plus
2.25%. Such facility matures every twelve months, subject to renewal, and is
secured by a general floating lien over the accounts receivables and inventories
of Koffolk Israel and its Israeli subsidiaries.

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                               THE EXCHANGE OFFER

     Simultaneously with the sale of the old units in October 2003 and December
2004, the US issuer, the Dutch issuer and the guarantors entered into
substantially similar registration rights agreements with Jefferies & Company,
Inc., the initial purchaser of the old units. We are conducting the exchange
offer to satisfy our obligations under the registration rights agreements.

     The form and terms of the new units are identical in all material respects
to the form and terms of the old units, except that the new units will be
registered under the Securities Act; will not bear restrictive legends
restricting their transfer under the Securities Act; will not be entitled to the
registration rights that apply to the old units; and will not contain provisions
relating to increased interest rates in connection with the old units under
circumstances related to the timing of the exchange offer.

     The new units will evidence the same debt as the old units. The new units
will be issued under and entitled to the benefits of the same indenture that
authorized the issuance of the old units. Consequently, both the old units and
the new units will be treated as a single series of debt securities under the
indenture. For a description of the indenture, see "Description of the New
Notes."

     The exchange offer is not extended to, nor will we accept tenders for
exchange from, old unit holders in any jurisdiction where the exchange offer
does not comply with the securities or blue sky laws of that jurisdiction.

TERMS OF THE EXCHANGE OFFER

     We are offering to exchange an aggregate number of up to 127,491 units,
each unit consisting of:

     - $809.5238 principal amount of 13% Senior Secured Notes due 2007 of the US
       issuer; and

     - $190.4762 principal amount of 13% Senior Secured Notes due 2007 of the
       Dutch issuer.

     Holders may only exchange old units for new units. The old units must be
tendered properly in accordance with the conditions set forth in this prospectus
and the accompanying letter of transmittal on or prior to the expiration date
and not withdrawn as permitted below. The exchange offer is not conditioned upon
holders tendering a minimum number of old units. As of the date of this
prospectus, all of the old units are outstanding.

     Only whole units will be accepted in the exchange offer; no fractions of
old units will be accepted.

     Holders of the old units do not have any appraisal or dissenters' rights in
connection with the exchange offer. If you do not tender your old units or if
you tender old units that we do not accept, your old units will remain
outstanding and continue to accrue interest and you will be entitled to the
rights and benefits holders have under the indenture relating to the old units
and the new units. Existing transfer restrictions would continue to apply to
such old units. See "Risk Factors -- If you fail to exchange your old units for
new units, your old units will continue to be subject to restrictions on
transfer" for more information regarding old units outstanding after the
exchange offer.

     None of the US issuer, the Dutch issuer or the guarantors, or our
respective boards of directors or management, recommends that you tender or not
tender old units in the exchange offer or has authorized anyone to make any
recommendation. You must decide whether to tender in the exchange offer and, if
you decide to tender, the aggregate number of old units to tender.

     The expiration date is 5:00 p.m., New York City time, on           , 2005,
or such later date and time to which the exchange offer is extended.

     We have the right, in accordance with applicable law, at any time:

     - to delay the acceptance of the old units;

     - to terminate the exchange offer and not accept any old units for exchange
       if we determine that any of the conditions to the exchange offer have not
       occurred or have not been satisfied;

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<PAGE>

     - to extend the expiration date of the exchange offer and retain all old
       units tendered in the exchange offer other than those units properly
       withdrawn; and

     - to waive any condition or amend the terms of the exchange offer in any
       manner.

     If we materially amend the exchange offer, we will as promptly as
practicable distribute a prospectus supplement to the holders of the old units
disclosing the change and extend the exchange offer for a period of five to ten
business days, depending upon the significance of the amendment and the manner
of disclosure to the registered holders, if the exchange offer would otherwise
expire during the five to ten business day period.

     If we exercise any of the rights listed above, we will as promptly as
practicable give oral notice, promptly confirmed in writing, to the exchange
agent and will make a public announcement of such action. In the case of an
extension, an announcement will be made no later than 9:00 a.m., New York City
time on the next business day after the previously scheduled expiration date.
Without limiting the manner in which we may choose to make public announcements
of any delay in acceptance, extension, termination or amendment of the exchange
offer, we will have no obligation to publish, advertise, or otherwise
communicate any public announcement, other than by making a timely release to a
financial news service.

     During an extension, all old units previously tendered will remain subject
to the exchange offer and may be accepted for exchange by us. Any old units not
accepted for exchange for any reason will be returned without cost to the holder
that tendered them promptly after the expiration or termination of the exchange
offer.

     We will accept all old units validly tendered and not withdrawn. Promptly
after the expiration date, we will issue new units registered under the
Securities Act and deliver them to the exchange agent.

     The exchange agent might not deliver the new units to all tendering holders
at the same time. The timing of delivery depends upon when the exchange agent
receives and, after the expiration date, processes the required documents.

     We will be deemed to have exchanged old units validly tendered and not
withdrawn when we give oral notice, promptly confirmed in writing, to the
exchange agent of our acceptance of the tendered old units. The exchange agent
is our agent for receiving tenders of old units, letters of transmittal and
related documents.

     In tendering old units, you must warrant in the letter of transmittal or in
an agent's message (described below) that:

     - you have full power and authority to tender, exchange, sell, assign and
       transfer old units;

     - we will acquire good, marketable and unencumbered title to the tendered
       old units, free and clear of all liens, restrictions, charges and other
       encumbrances; and

     - the old units tendered for exchange are not subject to any adverse claims
       or proxies.

     You also must warrant and agree that you will, upon request, execute and
deliver any additional documents requested by us or the exchange agent to
complete the exchange, sale, assignment and transfer of the old units.

PROCEDURES FOR TENDERING OLD UNITS

  VALID TENDER

     We have forwarded to you, along with this prospectus, a letter of
transmittal relating to this exchange offer. The letter of transmittal is to be
completed by a holder of old units either if (1) a tender of old units is to be
made by delivering physical certificates for such old units to the exchange
agent, (2) a tender of old units is to be made by book-entry transfer to the
account of the exchange agent for the exchange offer at DTC, or by confirmation
of blocking instructions in accordance with the standard operating procedures of
Euroclear or Clearstream, as the case may be, pursuant to the procedures set
forth below or (3) a tender of old units is to be made according to the
guaranteed delivery procedures set forth below.

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<PAGE>

     Only a holder of record of old units may tender old units in the exchange
offer. To tender in the exchange offer, a holder must comply with the procedures
of DTC, Euroclear or Clearstream, as applicable, and either:

     - complete, sign and date the letter of transmittal, or a facsimile of the
       letter of transmittal; have the signature on the letter of transmittal
       guaranteed if the letter of transmittal so requires; and deliver the
       letter of transmittal or facsimile to the exchange agent prior to the
       expiration date; or

     - in lieu of delivering a letter of transmittal, instruct DTC, Euroclear or
       Clearstream, as the case may be, to transmit on behalf of the holder a
       computer-generated message to the exchange agent in which the holder of
       the old units acknowledges and agrees to be bound by the terms of, and to
       make all of the representations contained in, the letter of transmittal,
       which agent's message (as defined below) shall be received by the
       exchange agent prior to 5:00 p.m., New York City time, on the expiration
       date.

     In addition, either:

     - the exchange agent must receive old units along with the letter of
       transmittal; or

     - the exchange agent must receive, before expiration of the exchange offer,
       timely confirmation of book-entry transfer of such old units into the
       exchange agent's account at DTC, according to the procedure for
       book-entry transfer described below; or

     - the exchange agent must receive, before the expiration date, timely
       confirmation from Euroclear or Clearstream, as the case may be, that the
       securities account to which the old units are credited has been blocked
       from and including the day on which the confirmation is delivered to the
       exchange agent and that no transfers will be effected in relation to such
       old units at any time after such date.

     To be tendered effectively, the exchange agent must receive any physical
delivery of the letter of transmittal and other required documents at the
address set forth below under the caption "-- Exchange Agent" before expiration
of the exchange offer. To receive confirmation of valid tender of old units, a
holder should contact the exchange agent at the telephone number listed under
the caption "-- Exchange Agent."

     The tender by a holder that is not withdrawn before expiration of the
exchange offer will constitute a binding agreement between that holder and us in
accordance with the terms and subject to the conditions set forth in this
prospectus and in the letter of transmittal. Only a registered holder of old
units may tender the old units in the exchange offer. If you tender fewer than
all of your old units, you should fill in the amount of units tendered in the
appropriate box on the letter of transmittal. The amount of old units delivered
to the exchange agent will be deemed to have been tendered unless otherwise
indicated.

     The method of delivery of the certificates for the old units, the letter of
transmittal and all other required documents is at the election and sole risk of
the holders. If delivery is by mail, we recommend registered mail with return
receipt requested, properly insured, or overnight delivery service. In all
cases, you should allow sufficient time to assure timely delivery. No letters of
transmittal or old units should be sent directly to PAH or PB Netherlands.
Delivery is complete when the exchange agent actually receives the items to be
delivered. Delivery of documents to DTC in accordance with their respective
procedures does not constitute delivery to the exchange agent.

     If you beneficially own old units and those units are registered in the
name of a broker, dealer, commercial bank, trust company or other nominee or
custodian and you wish to tender your old units in the exchange offer, you
should contact the registered holder as soon as possible and instruct it to
tender the old units on your behalf and comply with the instructions set forth
in this prospectus and the letter of transmittal.

     If the applicable letter of transmittal is signed by the record holder(s)
of the old units tendered, the signature must correspond with the name(s)
written on the face of the old unit without alteration, enlargement or any
change whatsoever. If the applicable letter of transmittal is signed by a
participant in DTC, Euroclear or Clearstream, as applicable, the signature must
correspond with the name as it appears on the security position listing as the
holder of the old units.

     If any letter of transmittal, endorsement, bond power, power of attorney,
or any other document required by the letter of transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of
                                        92
<PAGE>

a corporation or other person acting in a fiduciary or representative capacity,
that person must indicate such capacity when signing. In addition, unless waived
by us, the person must submit proper evidence satisfactory to us, in our sole
discretion, of his or her authority to so act.

     Holders should receive copies of the letter of transmittal with the
prospectus. A holder may obtain additional copies of the letter of transmittal
for the old units from the exchange agent at its offices listed under the
caption "-- Exchange Agent."

SIGNATURE GUARANTEES

     Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an eligible institution unless the old units
surrendered for exchange are tendered:

     - by a registered holder of old units who has not completed the box
       entitled "Special Issuance Instructions" or "Special Delivery
       Instructions" on the letter of transmittal; or

     - for the account of an eligible institution.

     An "eligible institution" is a firm or other entity which is identified as
an "Eligible Guarantor Institution" in Rule 17Ad-15 under the Exchange Act,
including:

     - a bank;

     - a broker, dealer, municipal securities broker or dealer or government
       securities broker or dealer;

     - a credit union;

     - a national securities exchange, registered securities association or
       clearing agency; or

     - a savings association.

     If old units are registered in the name of a person other than the signer
of the letter of transmittal, the old units surrendered for exchange must be
endorsed or accompanied by a written instrument or instruments of transfer or
exchange, in satisfactory form as determined by us in our sole discretion, duly
executed by the registered holder with the holder's signature guaranteed by an
eligible institution.

DTC BOOK-ENTRY TRANSFERS

     For tenders by book-entry transfer of old units cleared through DTC, the
exchange agent will make a request to establish an account at DTC for purposes
of the exchange offer. Any financial institution that is a DTC participant may
make book-entry delivery of old units by causing DTC to transfer the old units
into the exchange agent's account at DTC in accordance with DTC's procedures for
transfer. The exchange agent and DTC have confirmed that any financial
institution that is a participant in DTC may use the Automated Tender Offer
Program, or ATOP, procedures to tender old units. Accordingly, any participant
in DTC may make book-entry delivery of old units by causing DTC to transfer
those old units into the exchange agent's account in accordance with its ATOP
procedures for transfer.

     Notwithstanding the ability of holders of old units to effect delivery of
old units through book-entry transfer at DTC, the letter of transmittal or a
facsimile thereof, or an agent's message in lieu of the letter of transmittal,
with any required signature guarantees and any other required documents must be
transmitted to and received by the exchange agent prior to the expiration date
at the address given below under "-- Exchange Agent." In this context, the term
"agent's message" means a message, transmitted by DTC and received by the
exchange agent and forming part of a book-entry confirmation, which states that
DTC has received an express acknowledgment from a participant tendering old
units that are the subject of the book-entry confirmation that the participant
has received and agrees to be bound by the terms of the letter of transmittal,
and that we may enforce that agreement against the participant.

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<PAGE>

EUROCLEAR AND CLEARSTREAM PROCEDURES FOR BLOCKING INSTRUCTIONS

     The registered holder of the old units on the records of Euroclear or
Clearstream must instruct Euroclear or Clearstream to block the securities in
the account in Euroclear or Clearstream to which such old units are credited. In
order for the exchange offer to be accepted, the exchange agent must have
received, prior to the expiration date, a confirmation from Euroclear or
Clearstream that the securities account of old units tendered has been blocked
from and including the day on which the confirmation is delivered to the
exchange agent and that no transfers will be effected in relation to the old
units at any time after such date. Old units should be blocked in accordance
with the procedures of Euroclear or Clearstream, as the case may be. The
exchange of the old units so tendered will be made only after a timely receipt
by the exchange agent of an agent's message and any other documents required by
the letter of transmittal. The term "agent's message" means a message,
transmitted by Euroclear or Clearstream and received by the exchange agent that
states that Euroclear or Clearstream has received an express acknowledgment from
a participant tendering old units that the participant has received and agrees
to be bound by the terms of the letter of transmittal, and that we may enforce
that agreement against the participant.

GUARANTEED DELIVERY PROCEDURES

     If a registered holder of the old units desires to tender the old units and
the old units are not immediately available, or time will not permit the
holder's old units or other required documents to reach the exchange agent
before the expiration date of the exchange offer, or the procedure for
book-entry transfer or a confirmation of blocking instructions cannot be
completed on a timely basis, a tender may nonetheless be effected if:

     - the tender is made through a firm which is a member of a registered
       national securities exchange or a member of the National Association of
       Securities Dealers, Inc. or a commercial bank or trust company having an
       office or correspondent in the United States;

     - prior to the expiration date of the exchange offer, the exchange agent
       received from the firm which is a member of a registered national
       securities exchange or a member of the National Association of Securities
       Dealers, Inc. or commercial bank or trust company having an office or
       correspondent in the United States a properly completed and duly executed
       Letter of Transmittal (or a facsimile of the Letter of Transmittal) and
       Notice of Guaranteed Delivery, substantially in the form provided by us
       (by facsimile transmission, mail or hand delivery), setting forth the
       name and address of the holder of old units and the amount of old units
       tendered, stating that the tender is being made and guaranteeing that
       within five New York Stock Exchange trading days after the date of
       execution of the Notice of Guaranteed Delivery, the certificates for all
       physically tendered old units, in proper form for transfer, or a
       confirmation of a book-entry transfer or a confirmation of blocking
       instructions, as the case may be, and any other documents required by the
       Letter of Transmittal will be deposited by the firm which is a member of
       a registered national securities exchange or a member of the National
       Association of Securities Dealers, Inc. or commercial bank or trust
       company having an office or correspondent in the United States with the
       exchange agent; and

     - the certificates for all physically tendered old units, in proper form
       for transfer, or a confirmation of a book-entry transfer or a
       confirmation of blocking instructions, as the case may be, and all other
       documents required by the Letter of Transmittal are received by the
       exchange agent within five New York Stock Exchange trading days after the
       date of execution of the Notice of Guaranteed Delivery.

DETERMINATION OF VALIDITY

     We, in our sole discretion, will resolve all questions regarding the form
of documents, validity, eligibility, including time of receipt, and acceptance
for exchange and withdrawal of any tendered old units. Our determination of
these questions as well as our interpretation of the terms and conditions of the
exchange offer, including the letter of transmittal, will be final and binding
on all parties. A tender of old units is invalid until all defects and
irregularities have been cured or waived. Holders must cure any defects and
irregularities in connection with tenders of old units for exchange within such
reasonable period of time as we will
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<PAGE>

determine, unless we waive the defects or irregularities. Neither we, any of our
affiliates or assigns, the exchange agent nor any other person is under any
obligation to give notice of any defects or irregularities in tenders nor will
we or they be liable for failing to give any such notice.

     We reserve the absolute right, in our sole and absolute discretion:

     - to reject any tenders determined to be in improper form or unlawful;

     - to waive any of the conditions of the exchange offer; and

     - to waive any condition or irregularity in the tender of old units by any
       holder.

     Any waiver to the exchange offer will apply to all old units tendered.

WITHDRAWAL RIGHTS

     You can withdraw tenders of old units at any time prior to 5:00 p.m., New
York City time, on the expiration date.

     For a withdrawal to be effective, you must deliver a written notice of
withdrawal to the exchange agent. The notice of withdrawal must:

     - specify the name of the person tendering the old units to be withdrawn;

     - identify the old units to be withdrawn, including the total principal
       amount of old units to be withdrawn; and

     - where certificates for old units are transmitted, the name of the
       registered holder of the old units if different from the person
       withdrawing the old units.

     If you delivered or otherwise identified old units to the exchange agent,
you must submit the serial numbers of the old units to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an eligible
institution, except in the case of old units tendered for the account of an
eligible institution. If you tendered old units as a book-entry transfer or
through the blocking procedures described above, the notice of withdrawal must
specify the name and number of the account at DTC, Euroclear or Clearstream, as
applicable, to be credited with the withdrawn old units and you must deliver the
notice of withdrawal to the exchange agent and otherwise comply with the
procedures of the facility. You may not rescind withdrawals of tender; however,
properly withdrawn old units may again be tendered by following one of the
procedures described under "-- Procedures for Tendering Old Units" above at any
time prior to 5:00 p.m., New York City time, on the expiration date.

     We will determine all questions regarding the form of withdrawal, validity,
eligibility, including time of receipt, and acceptance of withdrawal notices.
Our determination of these questions as well as our interpretation of the terms
and conditions of the exchange offer (including the letter of transmittal) will
be final and binding on all parties. Neither we, any of our affiliates or
assigns, the exchange agent nor any other person is under any obligation to give
notice of any irregularities in any notice of withdrawal, nor will we be liable
for failing to give any such notice.

     Withdrawn old units will be returned to the holder after withdrawal. In the
case of old units tendered by book-entry transfer through DTC, the old units
withdrawn or not exchanged will be credited to an account maintained with DTC.
The old units will be returned or credited to the account maintained with DTC
promptly after withdrawal, rejection of tender or termination of the exchange
offer. In the case of old units tendered in accordance with the blocking
procedures of Euroclear or Clearstream, as the case may be, the old units will
be returned to their holder by cancellation of the blocking instruction in
accordance with the standard operating procedures of Euroclear or Clearstream,
as applicable. Any old units which have been tendered for exchange but which are
not exchanged for any reason will be returned to the holder thereof without cost
to the holder.

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CONDITIONS TO THE EXCHANGE OFFER

     Notwithstanding any other provision of the exchange offer, we are not
required to accept for exchange, or to issue new units in exchange for, any old
units, and we may terminate or amend the exchange offer, if at any time prior to
5:00 p.m., New York City time, on the expiration date, we determine that:

     - the new units to be received will not be tradable by the holder, without
       restriction under the Securities Act and the Exchange Act and without
       material restrictions under the blue sky or securities laws of
       substantially all of the states of the United States;

     - we have not received all applicable governmental approvals;

     - the exchange offer, or the making of any exchange by a holder of old
       units, would violate applicable law or any applicable interpretation or
       policy of the staff of the SEC; or

     - any action or proceeding has been instituted or threatened in any court
       or by or before any governmental agency with respect to the exchange
       offer that would reasonably be expected to impair our ability to proceed
       with the exchange offer.

     The foregoing conditions are for our sole benefit, and we may assert them
regardless of the circumstances giving rise to any such condition, or we may
waive the conditions, completely or partially, whenever or as many times as we
choose, in our reasonable discretion. The foregoing rights are not deemed waived
because we fail to exercise them, but continue in effect, and we may still
assert them whenever or as many times as we choose. However, any such waiver,
other than a waiver involving governmental approval, must be satisfied or waived
before the expiration of the offer. If we determine that a waiver of conditions
materially changes the exchange offer, the prospectus will be amended or
supplemented, and the exchange offer extended, if appropriate, as described
under "-- Terms of the Exchange Offer."

     In addition, at a time when any stop order is threatened or in effect with
respect to the registration statement of which this prospectus constitutes a
part or with respect to the qualification of the indenture under the Trust
Indenture Act of 1939, as amended, we will not accept for exchange any old units
tendered, and no new units will be issued in exchange for any such old units.

     If we terminate or suspend the exchange offer based on a determination that
the exchange offer violates applicable law or SEC policy, the registration
rights agreement requires that we, as soon as practicable after such
determination, use all commercially reasonable efforts to cause a shelf
registration statement covering the resale of the old units to be filed and
declared effective by the SEC. See "-- Registration Rights and Additional
Interest on the Old Units."

EXCHANGE AGENT

     We appointed HSBC Bank USA, National Association as exchange agent for the
exchange offer. You should direct questions and requests for assistance,
requests for additional copies of this prospectus, the Letter of Transmittal or
the Notice of Guaranteed Delivery to the exchange agent at the address and phone
number as follows:

                      HSBC Bank USA, National Association
                         One Hanson Place, Lower Level
                               Brooklyn, NY 10018
                  Attention: Paulette Shaw -- Issuer Services
         By facsimile (for eligible institutions only): (718) 488-4488
              Confirm facsimile by telephone ONLY: (718) 488-4475

     If you deliver letters of transmittal and any other required documents to
an address or facsimile number other than those listed above, your tender is
invalid.

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FEES AND EXPENSES

     The registration rights agreement provides that we will bear all expenses
in connection with the performance of our obligations relating to the
registration of the new units and the conduct of the exchange offer. These
expenses include registration and filing fees, accounting and legal fees and
printing costs, among others. We will pay the exchange agent reasonable and
customary fees for its services and reasonable out-of-pocket expenses. We will
also reimburse brokerage houses and other custodians, nominees and fiduciaries
for customary mailing and handling expenses incurred by them in forwarding this
prospectus and related documents to their clients that are holders of old units
and for handling or tendering for such clients.

     We have not retained any dealer-manager in connection with the exchange
offer and will not pay any fee or commission to any broker, dealer, nominee or
other person, other than the exchange agent, for soliciting tenders of old units
pursuant to the exchange offer.

TRANSFER TAXES

     Holders who tender their old units for exchange will not be obligated to
pay any transfer taxes in connection with the exchange. If, however, new units
issued in the exchange offer are to be delivered to, or are to be issued in the
name of, any person other than the holder of the old units tendered, or if a
transfer tax is imposed for any reason other than the exchange of old units in
connection with the exchange offer, then the holder must pay any such transfer
taxes, whether imposed on the registered holder or on any other person. If
satisfactory evidence of payment of, or exemption from, such taxes is not
submitted with the letter of transmittal, the amount of such transfer taxes will
be billed directly to the tendering holder.

ACCOUNTING TREATMENT

     The new units will be recorded at the same carrying value as the old units.
Accordingly, PAH will not recognize any gain or loss for accounting purposes.
PAH intends to amortize the expenses of the exchange offer and issuance of the
old units over the term of the new units.

REGISTRATION RIGHTS AND ADDITIONAL INTEREST ON CERTAIN OLD UNITS

     In the event that applicable interpretations of the Staff do not permit the
issuers and the guarantors to effect the exchange offer or if for any other
reason the exchange offer is not consummated by the 210th day following the
Issue Date, or if the initial purchaser so requests with respect to the units
not eligible to be exchanged for exchange units in the exchange offer or if any
holder of units is prohibited by law or Commission policy from participating in
the exchange offer or does not receive freely tradeable exchange units in the
exchange offer, the issuers and the guarantors will, at their expense, (a)
promptly file the Shelf Registration Statement permitting resales from time to
time of the units, (b) use our best efforts to cause the Shelf Registration
Statement to become effective and (c) use our best efforts to keep the Shelf
Registration Statement current and effective until two years from the Issue Date
or such shorter period that will terminate when all the units covered by the
Shelf Registration Statement have been sold pursuant thereto. The issuers and
the guarantors, at their expense, will provide to each holder of the units
copies of the prospectus, which is a part of the Shelf Registration Statement,
notify each such holder when the Shelf Registration Statement has become
effective and take certain other actions as are required to permit unrestricted
resales of the units from time to time. A holder of units who sells such units
pursuant to the Shelf Registration Statement generally will be required to be
named as a selling securityholder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Rights Agreement which are
applicable to such holder (including certain indemnification obligations).

     In the event that:

          (i) the Exchange Offer Registration Statement is not filed with the
     Commission on or prior to the 120th day after the Issue Date or declared
     effective on or prior to the 180th day after the Issue Date,

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          (ii) the Exchange Offer is not consummated on or prior to the 30th day
     following the effectiveness of the Exchange Offer Registration Statement,

          (iii) the Shelf Registration Statement is not filed or declared
     effective within the required time periods or

          (iv) the Exchange Offer Registration Statement or the Shelf
     Registration Statement is declared effective but thereafter ceases to be
     effective (except as specifically permitted therein) 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 (each such event, a
     "Registration Default"),

then, the interest rate borne by the notes shall be increased by 0.25% per annum
for the 90-day period following such Registration Default. Such interest rate
will increase by an additional 0.25% per annum at the beginning of each
subsequent 90-day period following such Registration Default, up to a maximum
aggregate increase of 1.0% per annum. From and after the date that all
Registration Defaults have been cured, the notes will bear interest at the rate
set forth on the cover page of this prospectus. Following the cure of all
Registration Defaults, the accrual of such increased interest rate will cease.

     We filed a registration statement with the SEC on Form S-4 with respect to
an exchange offer for the 105,000 old units issued in October 2003, but due to
pending confidential acquisition negotiations, such registration statement did
not become effective and the Company caused a notice of withdrawal to be
submitted to the SEC on November 15, 2004. As a result, a Registration Default
exists with respect to the old notes issued in October 2003 and such notes have
borne additional interest. However, the consummation of the exchange offer of
new units for old units is expected to cure such Registration Default. In such
event, from and after such date, such old notes will bear interest at the rate
set forth on the cover page of this prospectus and cease to accrue such
additional interest.

RESALES OF NEW UNITS

     Based on existing SEC interpretations issued to third parties in unrelated
transactions, we believe that the new units will be freely transferable by
holders other than affiliates of us after the registered exchange offer without
further registration under the Securities Act if the holder of the new units is
acquiring the new units in the ordinary course of its business, has no
arrangement or understanding with any person to participate in the distribution
of the new units and is not an affiliate of us, as such terms are interpreted by
the SEC; provided that broker-dealers receiving new units in the exchange offer
will have a prospectus delivery requirement with respect to resales of such new
units. While the SEC has not taken a position with respect to this particular
transaction, under existing SEC interpretations relating to transactions
structured substantially like the exchange offer, participating broker-dealers
may fulfill their prospectus delivery requirements with respect to the new units
(other than a resale of an unsold allotment of the units) with the prospectus
contained in the exchange offer registration statement. We will not seek our own
interpretive letter. As a result, we cannot assure you that the staff will take
the same position on this exchange offer as it did in interpretive letters to
other parties in similar transactions.

     By tendering old units, the holder, other than participating
broker-dealers, as defined below, of those old units will represent to us that,
among other things:

     - the new units acquired in the exchange offer are being obtained in the
       ordinary course of business of the person receiving the new units,
       whether or not that person is the holder;

     - neither the holder nor any other person receiving the new units is
       engaged in, intends to engage in or has an arrangement or understanding
       with any person to participate in a "distribution" (as defined under the
       Securities Act) of the new units; and

     - neither the holder nor any other person receiving the new units is an
       "affiliate" (as defined under the Securities Act) of us.

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     If any holder or any such other person is an "affiliate" of us or is
engaged in, intends to engage in or has an arrangement or understanding with any
person to participate in a "distribution" of the new units, such holder or other
person:

     - may not rely on the applicable interpretations of the staff of the SEC
       referred to above; and

     - must comply with the registration and prospectus delivery requirements of
       the Securities Act in connection with any resale transaction.

     Each broker-dealer that receives new units for its own account in exchange
for old units must represent that the old units to be exchanged for the new
units were acquired by it as a result of market-making activities or other
trading activities and acknowledge that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any offer to resell,
resale or other retransfer of the new units. Any such broker-dealer is referred
to as a participating broker-dealer. However, by so acknowledging and by
delivering a prospectus, the participating broker-dealer will not be deemed to
admit that it is an "underwriter" (as defined under the Securities Act). If a
broker-dealer acquired old units as a result of market-making or other trading
activities, it may use this prospectus, as amended or supplemented, in
connection with offers to resell, resales or retransfers of new units received
in exchange for the old units pursuant to the exchange offer. We have agreed
that, for a period of 90 days after the effective date of the registration
statement of which this prospectus is a part, we will make this prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution" for a discussion of the exchange and resale obligations
of broker-dealers in connection with the exchange offer.

                          DESCRIPTION OF THE NEW UNITS

     We are offering 127,491 new units (the "New Units"), consisting of $103.207
million 13% senior secured notes due 2007 (the "U.S. Notes") of Phibro Animal
Health Corporation (the "U.S. Issuer") and $24.284 million 13% senior secured
notes due 2007 (the "Dutch Notes" and, together with the U.S. Notes, the "New
Notes") of Philipp Brothers Netherlands III B.V. (the "Dutch Issuer" and,
together with the U.S. Issuer, the "Issuers"). The New Notes of each Issuer that
comprise the New Units will not trade separately unless (i) an event of default
under the indenture has occurred, (ii) a tax redemption of the New Notes issued
by Dutch Issuer related to certain changes affecting withholding taxes has
occurred or (iii) there has been a change of control of the Dutch Issuer. See
"Description of the New Notes" for further information concerning the New Notes.

                          DESCRIPTION OF THE NEW NOTES

     You can find the definitions of certain terms used in this description
under the subheading "Certain Definitions." For purposes of this description:

     - the words "we", "our" and "us" refer only to the Issuers and not to any
       of their respective subsidiaries;

     - the word "Company" refers only to Phibro Animal Health Corporation and
       not to any of its subsidiaries;

     On October 21, 2003, we issued 105,000 Units, consisting of $85.0 million
aggregate principal amount of U.S. Notes and $20.0 million aggregate principal
amount of Dutch Notes and on December 21, 2004 we issued 22,491 additional
Units, consisting of $18.207 million aggregate principal amount of U.S. Notes
and $4.284 million aggregate principal amount of Dutch Notes (the "Outstanding
Notes") under an indenture (the "Indenture"), dated as of October 21, 2003, as
amended and supplemented, among us, the Guarantors and HSBC Bank USA, National
Association, as trustee (the "Trustee") and collateral agent (the "Collateral
Agent"). As used in this "Description of the New Notes," except as the context
otherwise requires, the term "Notes" means all U.S. Notes issued by the U.S.
Issuer and all Dutch Notes issued by the Dutch Issuer pursuant to the Indenture
(including the notes offered hereby, the Outstanding Notes and any additional
notes that we may issue from time to time 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 (the "Trust

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Indenture Act"). The Collateral Agreements referred to herein under the
subcaption "Security" contain the terms of the security interests that secure
the Notes.

     The following description is a summary of the material provisions of the
Indenture and the Collateral Agreements. It does not restate those agreements in
their entirety. We urge you to read the Indenture and the Collateral Agreements
because they, and not this description, define your rights. Copies of the
Indenture and the Collateral Agreements are available from the Company.

     The terms of the new notes are the same as the terms of the old notes,
except that:

     - the new notes will be registered under the Securities Act of 1933, as
       amended;

     - the new notes will not bear restrictive legends restricting their
       transfer under the Securities Act;

     - the holder of the new notes are not entitled to certain rights under the
       registration rights agreement; and

     - the new notes will not contain provisions relating to increased interest
       rates in connection with the old notes under circumstances related to the
       timing of the exchange offer.

BRIEF DESCRIPTION OF THE NOTES AND THE GUARANTEES

     The Notes Generally.  The U.S. Notes will be the several obligations of the
U.S. Issuer and the Dutch Notes will be the several obligations of the Dutch
Issuer, and statements herein to the effect of "we will pay all principal,
interest and premiums and Additional Interest, if any, on the Notes" or of
similar import should be interpreted as the several payment by the U.S. Issuer
of all principal, interest and premiums and Additional Interest, if any, on the
U.S. Notes and the Dutch Issuer of all principal, interest and premiums and
Additional Interest, if any, on the Dutch Notes.

     The Notes of each Issuer will not trade separately unless (i) an Event of
Default has occurred, (ii) a redemption of the Dutch Notes as described under
"-- Taxation; Redemption For Taxation Reasons" has occurred (a "Tax Redemption")
or (iii) a Change of Control of the Dutch Issuer has occurred (each, a
"Separation Event").

     The U.S. Notes.  The U.S. Notes:

     - will be the general obligations of the U.S. Issuer;

     - will rank equally in right of payment with all other senior obligations
       of the U.S. Issuer;

     - will rank senior in right of payment to all Indebtedness of the U.S.
       Issuer which by its terms is subordinated to the U.S. Notes;

     - will be secured by security interests in substantially all assets of the
       U.S. Issuer and the current and future Domestic Restricted Subsidiaries
       of the U.S. Issuer (other than real property and interests therein),
       subject to Permitted Liens;

     - will be structurally subordinated to all liabilities of the Foreign
       Subsidiaries and Unrestricted Subsidiaries of the U.S. Issuer; and

     - will be guaranteed, jointly and severally, on a senior secured basis by
       each of the current and future Domestic Restricted Subsidiaries of the
       U.S. Issuer.

     Pursuant to the terms of the Intercreditor Agreement, the security interest
on the assets of the U.S. Issuer and its current and future Domestic Restricted
Subsidiaries that secure the Notes, the Domestic Guarantees and the Company
Guarantee will be subordinated to a Lien securing the Credit Agreement.

     The Dutch Notes.  The Dutch Notes:

     - will be the general obligations of the Dutch Issuer;

     - will rank equally in right of payment with all other senior obligations
       of the Dutch Issuer;

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     - will rank senior in right of payment to all Indebtedness of the Dutch
       Issuer which by its terms is subordinated to the Dutch Notes;

     - will be secured by

     - a pledge of all of the accounts receivable, a security interest or
       floating charge on the inventory to the extent permitted by applicable
       law and a mortgage on substantially all real property of the Dutch Issuer
       and its current and future Restricted Subsidiaries,

     - a pledge of 100% of the Capital Stock of each direct Subsidiary of the
       Dutch Issuer and each Restricted Subsidiary of the Dutch Issuer, and

     - a pledge of the intercompany loans made by the Dutch Issuer to its
       Restricted Subsidiaries,

in each case, subject to Permitted Liens;

     - will be structurally subordinated to all liabilities of the Foreign
       Subsidiaries of the U.S. Issuer (other than the Dutch Issuer and its
       Restricted Subsidiaries) and Unrestricted Subsidiaries of the U.S.
       Issuer; and

     - will be guaranteed, jointly and severally, on a senior secured basis by
       the U.S. Issuer and each of the current and future Domestic Restricted
       Subsidiaries of the U.S. Issuer and by each of the current and future
       Restricted Subsidiaries of the Dutch Issuer.

     The Guarantees.  Each Guarantee of each Guarantor:

     - will be the general obligation of such Guarantor;

     - will rank equally in right of payment with all other senior obligations
       of such Guarantor; and

     - will rank senior in right of payment to all Indebtedness of such
       Guarantor which by its terms is subordinated to the Guarantees;

provided, that:

     - the Guarantee of each Foreign Guarantor shall only be in respect of the
       Dutch Notes and the other Obligations of the Dutch Issuer and not in
       respect of the U.S. Notes or any other Obligation of the U.S. Issuer; and

     - the Guarantee of each Guarantor will be secured,

     - in the case where such Guarantor is a Domestic Guarantor, by security
       interests in substantially all assets of such Guarantor (other than real
       property and interests therein), and

     - in the case where such Guarantor is a Foreign Guarantor, by security
       interests in all of the accounts receivable, a security interest or
       floating charge on the inventory to the extent permitted by applicable
       law and a mortgage on substantially all real property of such Guarantor
       and a pledge of 100% of the Capital Stock of each direct Subsidiary of
       such Guarantor.

     The U.S. Issuer will also guarantee the payment of the Dutch Notes and the
other Obligations of the Dutch Issuer under the Indenture. Such guarantee of the
U.S. Issuer will have the same characteristics that are described above with
respect to the Guarantee of each Domestic Guarantor in respect of the
Obligations of the Dutch Issuer that are guaranteed thereunder.

METHODS OF RECEIVING PAYMENTS ON THE NOTES

     If a Holder has given wire transfer instructions to us, we will pay all
principal, interest and premium and Additional Interest, if any, on that
Holder's Notes in accordance with those instructions. All other payments on the
Notes will be made at the office or agency of the paying agent and registrar
unless we elect to make interest payments by check mailed to the Holders at
their addresses set forth in the register of Holders.

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PAYING AGENT AND REGISTRAR FOR THE NOTES

     The Trustee will initially act as paying agent and registrar. We may change
the paying agent or registrar without prior notice to the Holders of the Notes,
and we or any of our Subsidiaries may act as paying agent or registrar.

TRANSFER AND EXCHANGE

     A Holder may transfer or exchange the Units and Notes in accordance with
the Indenture. The registrar and the trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents in connection
with a transfer of the Units or Notes. No service charge will be made for any
transfer, exchange or redemption of the Units or Notes. However, Holders will be
required to pay all taxes due on transfer. We are not required to transfer or
exchange any Unit or Note selected for redemption. Also, we are not required to
transfer or exchange any Unit or Note for a period of 15 days before a selection
of the Units or Notes to be redeemed.

PRINCIPAL, MATURITY AND INTEREST

     The Indenture does not limit the maximum principal amount of Units and
Notes that we may issue thereunder. We will issue 127,491 Units in this offering
which will be comprised of U.S. Notes in an aggregate principal amount of
$103.207 million and Dutch Notes in an aggregate principal amount of $24.284
million. We may issue additional notes ("Additional Notes") in additional units
("Additional Units") from time to time, subject to the limitations set forth
under "-- Certain Covenants -- Limitation on Incurrence of Indebtedness." The
Notes and any Additional Notes will be substantially identical other than the
issuance dates and the dates from which interest will accrue. We will issue the
Units in denominations of $1,000 and in integral multiples of $1,000. The Notes
will mature on December 1, 2007.

     Interest on the Notes will accrue at the rate of 13% per annum and will be
payable semi-annually in arrears on June 1 and December 1 in each year,
commencing on June 1, 2005, to Holders of record on the immediately preceding
May 15 and November 15, respectively. Interest on the Notes will accrue from the
date it was most recently paid or, if no interest has been paid, from October
21, 2003 in the case of the old notes issued in October 2003 and from December
21, 2004 in the case of the old notes issued in the 2004 Offering. We will pay
interest on overdue principal at 1% per annum in excess of the above rate and we
will pay interest on overdue installments of interest at such higher rate to the
extent lawful. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.

     Any Notes that remain outstanding after the completion of the Exchange
Offer, together with the Exchange Notes issued in connection with the Exchange
Offer, will be treated as a single class of securities under the Indenture.
Because, however, any Additional Notes may not be fungible with the Notes for
federal income tax purposes, they may have a different CUSIP number or numbers,
be represented by a different Global Note or Notes, and otherwise be treated as
a separate class or classes of Notes for other purposes.

SECURITY

     Pursuant to the terms of the Domestic Collateral Agreements, the
Outstanding Notes and the related Company Guarantee and Domestic Guarantees of
the current and future Domestic Guarantors are, and the Notes offered hereby and
the related Company Guarantee and Domestic Guarantees of the current and future
Domestic Guarantors will be, secured by substantially all of the assets of the
U.S. Issuer and such Domestic Guarantors (other than real property and interests
therein), including a pledge of the Capital Stock owned directly by the U.S.
Issuer and such Domestic Guarantors. However, no such pledge will include more
than 65% of the Voting Stock of our Foreign Subsidiaries directly owned by the
U.S. Issuer or any such Domestic Guarantor.

     In addition to the arrangements described in the immediately preceding
sentence, the outstanding Dutch Notes and the related Foreign Guarantees of the
Foreign Guarantors are, and the Dutch Notes offered hereby and the related
Foreign Guarantees of the Foreign Guarantors will be, secured, pursuant to the
Foreign

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Collateral Agreements, by a pledge of all of the accounts receivable, a security
interest or floating charge on the inventory to the extent permitted by
applicable law and a mortgage on substantially all real property of the Dutch
Issuer and the Foreign Guarantors, a pledge of 100% of the Capital Stock of each
direct Subsidiary of the Dutch Issuer and each Foreign Guarantor and a pledge of
the intercompany loans made by the Dutch Issuer to its Restricted Subsidiaries.

     The Domestic Collateral that secures the Outstanding Notes and the related
Company Guarantee and Domestic Guarantees that will secure the Notes offered
hereby and the related Company Guarantee and Domestic Guarantees currently
serves as collateral to secure the obligations under the Credit Agreement. The
U.S. Issuer, the Domestic Guarantors and the Collateral Agent, on behalf of
itself, the Trustee and the Holders, and the Administrative Agent, on behalf of
the Lenders, entered into the Intercreditor Agreement on the Issue Date of the
Units issued in October 2003, and amended the Intercreditor Agreement in
connection with the issuance of the Units issued in December 2004. The
Intercreditor Agreement, as amended, provides, among other things, that (1)
Liens in the Domestic Collateral securing the Notes are junior to the security
interests in favor of the Administrative Agent under the Credit Agreement, and
consequently, the Lenders will be entitled to receive proceeds from the
foreclosure of any Domestic Collateral prior to the Holders, (2) during any
insolvency proceedings, the Administrative Agent and the Collateral Agent will
coordinate their efforts to give effect to the relative priority of their
security interests in such assets and (3) the Administrative Agent will,
following the occurrence and during the continuance of an Event of Default or an
event of default under the Credit Agreement, have the sole and exclusive right
to make all decisions with respect to the foreclosure of any such Domestic
Collateral, including the timing and method of any disposition thereof. The
Intercreditor Agreement also provides that the Collateral Agent and the
Administrative Agent will provide notices to each other with respect to the
occurrence of events of default and the acceleration of the Notes or the
Indebtedness outstanding under the Credit Agreement, as the case may be.

     Subject to the restrictions on incurring Indebtedness in the Indenture, we
and our Restricted Subsidiaries will also have the right to grant Liens securing
Capital Lease Obligations and Purchase Money Obligations constituting Permitted
Indebtedness and to acquire any such assets subject to such Liens.

     Upon the occurrence of an Event of Default, the proceeds from the sale of
Collateral securing the Notes will likely be insufficient to satisfy our
obligations under the Notes. No appraisals of any of the Collateral have been
prepared in connection with the Offering. Moreover, the amount to be received
upon such a sale would be dependent upon numerous factors, including the
condition, age and useful life of the Collateral at the time of such sale, as
well as the timing and manner of such sale. By its nature, all or some of the
Collateral will be illiquid and may have no readily ascertainable market value.
Accordingly, there can be no assurance that the Collateral, if saleable, can be
sold in a short period of time.

     To the extent third parties hold Permitted Liens, such third parties may
have rights and remedies with respect to the property subject to such Liens
that, if exercised, could adversely affect the value of the Collateral. Given
the intangible nature of certain of the Collateral, any such sale of such
Collateral separately from the Company as a whole may not be feasible.
Additionally, the inclusion of the fixtures of the U.S. Issuer of the current
and future Domestic Guarantors in the Collateral securing the Notes will be
limited by the extent to which (a) such fixtures are deemed not to be personal
property, and (b) any applicable state laws would, for purposes of perfecting
security interests with respect thereto, require that the Collateral Agent
effectuate certain filings in applicable real estate land records. Our ability
to grant a security interest in certain Collateral may be limited by legal or
other logistical considerations. The ability of the Holders to realize upon the
Collateral may be subject to certain bankruptcy law limitations in the event of
a bankruptcy. See "-- Certain Bankruptcy and Other Limitations."

     The U.S. Issuer is permitted to form new Domestic Restricted Subsidiaries
and to transfer all or a portion of the Collateral to one or more of its
Domestic Restricted Subsidiaries. Each such new Domestic Restricted Subsidiary
will be required to execute a Guarantee in respect of our obligations under the
Notes and the Indenture and a security agreement granting to the Collateral
Agent a security interest in substantially all of the assets of such Domestic
Restricted Subsidiary (other than real property and interests therein) on the
same

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basis and subject to the same limitations as the currently existing Domestic
Restricted Subsidiaries of the U.S. Issuer as described above.

     In addition, the Dutch Issuer is permitted to form new Restricted
Subsidiaries and to transfer all or a portion of the Foreign Collateral to the
U.S. Issuer or one or more of the Guarantors. Each such newly formed Restricted
Subsidiary will be required to execute a Foreign Guarantee in respect of the
obligations of the Dutch Issuer under the Dutch Notes and the Indenture and
Foreign Collateral Agreements granting to the Collateral Agent a pledge of all
the accounts receivable, a security interest or floating charge on the inventory
to the extent permitted by applicable law and a mortgage on substantially all
real property of such Restricted Subsidiary, as well as 100% of the Capital
Stock of each Subsidiary of each Restricted Subsidiary, on the same basis and
subject to the same limitations as our currently existing Restricted
Subsidiaries of the Dutch Issuer as described above.

     So long as no Event of Default shall have occurred and be continuing, and
subject to certain terms and conditions in the Indenture, the Domestic
Collateral Agreements and the Intercreditor Agreement, we and our Domestic
Restricted Subsidiaries will be entitled to receive all cash dividends, interest
and other payments made upon or with respect to the Capital Stock of any of our
Subsidiaries and until delivery of a written notice from the Collateral Agent,
to exercise any voting, consensual rights and other rights pertaining to such
pledged Capital Stock.

     Upon the occurrence and during the continuance of an Event of Default,
subject to the terms of the Intercreditor Agreement as it relates to any
Collateral constituting Domestic Collateral, upon notice from the Collateral
Agent:

          (a) all of our rights to exercise such voting, consensual rights, or
     other rights shall cease following the delivery of such written notice and
     all such rights shall become vested in the Collateral Agent, which, to the
     extent permitted by law, shall have the sole right to exercise such voting,
     consensual rights or other rights;

          (b) all of our rights to receive all cash dividends, interest and
     other payments made upon or with respect to the Collateral shall cease, and
     such cash dividends, interest and other payments shall be paid to the
     Collateral Agent; and

          (c) the Collateral Agent may sell the Collateral or any part thereof
     in accordance with, and subject to the terms of, the Collateral Agreements.
     All funds distributed under the Collateral Agreements and received by the
     Collateral Agent for the ratable benefit of the Holders shall be
     distributed by the Collateral Agent in accordance with the provisions of
     the Indenture.

     The collateral release provisions of the Indenture permit the release of
Collateral without substitution of collateral having at least equal value under
certain circumstances, including asset sales made in compliance with the
Indenture.

CERTAIN BANKRUPTCY AND OTHER LIMITATIONS

     The right of the Collateral Agent to repossess and dispose of or otherwise
exercise remedies relating to the Collateral upon the occurrence and during the
continuance of an Event of Default is likely to be significantly impaired by
applicable bankruptcy law if a bankruptcy proceeding were to be commenced by or
against the Company or any of its Domestic Restricted Subsidiaries prior to the
Collateral Agent having repossessed and disposed of the Collateral or otherwise
completed the exercise of its remedies with respect to the Collateral. Under the
Bankruptcy Code, a secured creditor such as the Collateral Agent is prohibited
from repossessing its security from a debtor in a bankruptcy case, or from
disposing of security repossessed from such debtor, without bankruptcy court
approval. Moreover, the Bankruptcy Code permits the debtor to continue to retain
and to use collateral even though the debtor is in default under the applicable
debt instruments; provided that, under the Bankruptcy Code, the secured creditor
is given "adequate protection." The meaning of the term "adequate protection"
may vary according to circumstances, but it is intended in general to protect
the value of the secured creditor's interest in the collateral securing the
obligations owed to it and may include cash payments or the granting of
additional security, if and at such times as the bankruptcy
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<PAGE>

court in its discretion determines, for any diminution in the value of such
collateral as a result of the stay of repossession or disposition or any use of
the collateral by the debtor during the pendency of the bankruptcy case. In view
of the lack of a precise definition of the term "adequate protection" and the
broad discretionary powers of a bankruptcy court, it is impossible to predict
how long payments under the Notes could be delayed following commencement of a
bankruptcy case, whether or when the Collateral Agent could repossess or dispose
of the Domestic Collateral or whether or to what extent Holders would be
compensated for any delay in payment or loss of value of the Domestic Collateral
through the requirement of "adequate protection."

     There are two primary insolvency regimes under Dutch law: the first,
moratorium of payment (surseance van betaling) is intended to facilitate the
reorganization of a debtor's debts and enable the debtor to continue as a going
concern. The second, bankruptcy (faillissement), is designed to liquidate and
distribute the assets of a debtor to its creditors. Under Netherlands law the
Holders of the Dutch Notes can in the event of bankruptcy or moratorium of
payment exercise the rights afforded to pledgees as if there were no bankruptcy
or moratorium of payment. However, bankruptcy or moratorium of payment involving
the Dutch Issuer would affect the position of the Holders of the Dutch Notes as
pledgees in some respects, the most important of which are: (i) the right of
pledge will not extend to accounts receivable that arise under an agreement
creating continuing obligations of the Dutch Issuer and become due and payable
on or after the date on which the Dutch Issuer is declared bankrupt or granted a
moratorium of payments, (ii) the right of pledge will not extend to inventory
that is acquired by the Dutch Issuer on or after the date on which the Dutch
Issuer is declared bankrupt or granted a moratorium of payments, (iii) payments
received by the Dutch Issuer from the debtors of pledged accounts receivable
after bankruptcy or moratorium of payments involving the Dutch Issuer having
been declared, will be part of the bankrupt estate, although the Holders of the
Dutch Notes have the right to receive such amounts by preference after deduction
of certain costs, (iv) a mandatory "cooling-off" period of up to two months may
apply in case of bankruptcy or moratorium of payments involving the Dutch
Issuer, which, if applicable, would delay the exercise of the rights of pledge
on the shares of Phibro Belgium and the accounts receivable and (v) the Holders
of the Dutch Notes may be obliged to enforce their rights of pledge within a
reasonable period as determined by the judge-commissioner (rechter-commissaris)
appointed by the court in case of bankruptcy of the Dutch Issuer.

     Under Belgian insolvency law, the right of the Collateral Agent to seize or
to enforce against the Foreign Collateral provided by Phibro Belgium would be
severely restricted or prohibited altogether if Phibro Belgium were subject to
insolvency proceedings at the time of seizure or enforcement. In bankruptcy,
secured creditors may not proceed against assets from the declaration of
bankruptcy at least until the end of the proceeding for verification of claims.
Even thereafter, the trustee in bankruptcy may petition the court to disallow
enforcement for up to one year. In judicial composition (reorganization),
secured creditors cannot take enforcement or attachment measures during the
provisional composition (up to nine months) and may be barred for a further 18
months pursuant to the definitive plan of composition, if interest is paid.

     Moreover, the Collateral Agent's ability to foreclose on the Collateral may
be subject to lack of perfection, the consent of third parties, prior liens and
practical problems associated with the realization of the Collateral Agent's
Lien on the Collateral.

     In addition, because a portion of the Collateral consists of pledges of a
portion of the Capital Stock of certain of the Foreign Subsidiaries of the
Company, the validity of those pledges under applicable foreign law, and the
ability of the Collateral Agent to realize upon that Collateral under applicable
foreign law, may be limited by such law, which limitations may or may not affect
such Liens.

THE GUARANTEES

     The Guarantors will fully and unconditionally guarantee on a senior secured
basis (each a "Guarantee" and, collectively, the "Guarantees"), jointly and
severally, to each Holder, the Collateral Agent and the Trustee, the full and
prompt performance of the Issuers' Obligations under the Indenture and the
Notes; provided, that the Guarantee of each Foreign Guarantor shall only be in
respect of the Dutch Notes and the other Obligations of the Dutch Issuer and not
in respect of the U.S. Notes or any other Obligation of the U.S. Issuer.
Pursuant to the Company Guarantee, the U.S. Issuer will also fully and
unconditionally guarantee

                                       105
<PAGE>

on a senior secured basis to each Holder, the Collateral Agent and the Trustee,
the full and prompt performance of the Dutch Issuer's Obligations under the
Indenture and the Dutch Notes. The Company Guarantee and the Domestic Guarantees
will be the joint and several Obligation of the U.S. Issuer and the Domestic
Guarantors. The Obligations of each Guarantor will be limited as necessary to
prevent its Guarantee from constituting a fraudulent conveyance or fraudulent
transfer under applicable law. Each Domestic Guarantor may consolidate with or
merge into or sell its assets to the Company or any other Domestic Guarantor
without limitation. Each Foreign Guarantor may consolidate with or merge into or
sell its assets to the Dutch Issuer or any other Guarantor without limitation.
See "-- Merger, Consolidation and Sale of Assets" and "-- Certain
Covenants -- Limitation on Asset Sales."

     A Guarantor will be released from its Guarantee without any action required
on the part of the Trustee or any Holder:

          (1) if (a) all of the Capital Stock issued by such Guarantor or all or
     substantially all of the assets of such Guarantor is sold or otherwise
     disposed of (including by way of merger or consolidation) to a Person other
     than us or any of our Domestic Restricted Subsidiaries or (b) such
     Guarantor ceases to be a Restricted Subsidiary, and we otherwise comply, in
     each case, to the extent applicable, with the provisions of the covenant
     described below under the caption "-- Certain Covenants -- Limitation on
     Asset Sales" that are required to be satisfied thereunder either prior to
     or concurrent with the consummation of the applicable transaction;

          (2) if we designate such Guarantor as an Unrestricted Subsidiary in
     accordance with the covenant described below under the caption "-- Certain
     Covenants -- Limitation on Restricted Payments"; or

          (3) upon satisfaction and discharge of the Indenture or payment in
     full of the principal of, premium, if any, accrued and unpaid interest and
     Additional Interest, if any, on the Notes and all other Obligations that
     are then due and payable.

     The U.S. Issuer will be released from the Company Guarantee upon
satisfaction of the condition described in clause (3) above to the extent the
Obligations described therein relate to the Dutch Notes and all other
Obligations of the Dutch Issuer.

     At our request and expense, the Trustee will execute and deliver any
instrument evidencing such release. A Guarantor and the U.S. Issuer may also be
released from its obligations under its Guarantee or the Company Guarantee, as
applicable, in connection with a permitted amendment. See "-- Amendment,
Supplement and Waiver."

REDEMPTION

     Mandatory Redemption; Offers to Purchase; Open Market Purchases.  The Notes
are not subject to any mandatory sinking fund redemption prior to maturity.
However, under certain circumstances, we may be required to offer to purchase
the Notes as described under the captions "-- Change of Control" and "-- Certain
Covenants -- Limitation on Asset Sales." We may at any time and from time to
time purchase Units or Notes (in the event that a Separation Event has occurred)
in the open market or otherwise.

  OPTIONAL REDEMPTIONS

     Optional Redemption Prior to June 1, 2005.  At any time prior to June 1,
2005, the Issuers may, at their option, on one or more occasions redeem all or
part of their Notes at a redemption price equal to the greater of (1) 100% of
the aggregate principal amount of the Notes being redeemed and (2) the sum of
the present values of 114% of the aggregate principal amount of the Notes being
redeemed and scheduled payments of interest on such Notes to and including June
1, 2005 discounted to the date of redemption on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50
basis points, together with, in each case, accrued and unpaid interest, if any,
to the date of redemption. The foregoing optional redemption of the Notes prior
to June 1, 2005 shall include both U.S. Notes and Dutch Notes on a pro rata
basis based on the aggregate principal amount of the Notes outstanding at the
time of redemption, unless a Change in Control of the Dutch Issuer has occurred.
                                       106
<PAGE>

     "Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption period.

     "Comparable Treasury Issue" means the United States Treasury security
selected by a Reference Treasury Dealer appointed by the Company as having a
maturity comparable to the remaining term of the Notes (as if the final maturity
of the Notes was June 1, 2005) that would be utilized at the time of selection
and in accordance with customary financial practice in pricing new issues of
corporate debt securities of comparable maturity to the remaining term of the
Notes (as if the final maturity of the Notes was June 1, 2005).

     "Comparable Treasury Price" means, with respect to any redemption date, (1)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (2) if such release (or any successor release) is not
published or does not contain such prices on such business day, (A) the average
of the Reference Treasury Dealer Quotations (as defined below) for such
redemption date, after excluding the highest and lowest such Reference Treasury
Dealer Quotation or (B) if the Company obtains fewer than three such Reference
Treasury Dealer Quotations, the average of all such Reference Treasury Dealer
Quotations.

     "Reference Treasury Dealer Quotation" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Company, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Company by such Reference Treasury Dealer at 5:00 p.m. on the
third business day preceding such redemption date.

     "Reference Treasury Dealer" means any primary U.S. government securities
dealer in the City of New York selected by the Company.

     Optional Redemption on or After June 1, 2005.  The Notes are redeemable at
our option, in whole or in part, at any time on or after June 1, 2005 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 and
Additional Interest, if any, to the date of redemption, if redeemed during the
six-month period beginning on the dates indicated below:

<Table>
<Caption>
PERIOD                                                        PERCENTAGE
- ------                                                        ----------
<S>                                                           <C>
June 1, 2005................................................    114.0%
December 1, 2005............................................    109.0%
June 1, 2006................................................    105.0%
December 1, 2006, and thereafter............................    101.0%
</Table>

     In addition, at any time prior to June 1, 2005, we may, at our option,
redeem up to 35% 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
113% of the principal amount thereof, plus accrued and unpaid interest and
Additional Interest, if any, to the date of redemption; provided, that
immediately after giving effect to such redemption, at least 65% of the sum of
(i) $105.0 million (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, we will make such redemption not more than 90 days after the
consummation of any such Public Equity Offering.

                                       107
<PAGE>

     "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.

     The foregoing optional redemption of the Notes on or after June 1, 2005
shall include both U.S. Notes and Dutch Notes on a pro rata basis based on the
aggregate principal amount of the Notes outstanding at the time of redemption,
unless a Change of Control of the Dutch Issuer has occurred.

     Selection and Notice.  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, 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 depositary), 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 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 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 and Additional Interest, if applicable, will cease to accrue on Notes
or portions thereof called for redemption.

TAXATION; REDEMPTION FOR TAXATION REASONS

     All payments by the Dutch Issuer and any Guarantor (and the U.S. Issuer
with respect to the Company Guarantee) in respect of the Dutch Notes shall be
made without withholding or deduction for or on account of any present or future
taxes, duties, assessments or other governmental charges of whatsoever nature,
including penalties, interest and any other liabilities related thereto
("Taxes"), imposed or levied by or on behalf of The Netherlands, or any other
jurisdiction in which any Guarantor (or the U.S. Issuer with respect to the
Company Guarantee) in respect of the Dutch Notes is organized or resident for
tax purposes of any such jurisdiction, as the case may be, or, in each case, any
other relevant jurisdiction or any political subdivision or authority of or in
any such jurisdiction having power to tax (for purposes of this "-- Taxation;
Redemption For Taxation Reasons," the "Relevant Jurisdiction"), unless the Dutch
Issuer or any such Guarantor (or the U.S. Issuer with respect to the Company
Guarantee) is compelled by law to deduct or withhold such taxes, duties,
assessments or other governmental charges. In such event, the Dutch Issuer or
such Guarantor (or the U.S. Issuer with respect to the Company Guarantee) shall
pay such additional amounts ("Additional Amounts") as may be necessary to ensure
that the net amounts received by the holders of the Dutch Notes after such
withholding or deduction shall equal the amounts of such payments that would
have been receivable in respect of the Dutch Notes in the absence of such
withholding or deduction, except that no such Additional Amounts shall be
payable in respect of any Dutch Note (i) presented for payment of principal more
than 60 days after the later of (x) the date on which such payment first became
due and (y) if the full amount payable has not been received in New York City by
the Trustee on or prior to such due date, the date on which, the full amount
having been so received, notice to that effect shall have been given to the
holders by the Trustee, except to the extent that the holders would have been
entitled to such Additional Amounts on presenting such Dutch Note for payment on
the last day of the applicable 60 day period, (ii) if any tax, assessment or
other governmental charge is imposed or withheld by reason of the failure to
comply by the holder or, if different, the beneficial owner of the interest
payable on the Dutch Note with a timely request of the Dutch Issuer addressed to
such holder or beneficial owner to complete and return an official document
concerning the nationality, residence, identity or connection with the
Netherlands or any Relevant Jurisdiction of such holder or beneficial owner
which is required or imposed by a statute, treaty, regulation or administrative
practice of the Netherlands or any Relevant Jurisdiction as a precondition to
exemption from all or part of such tax, assessment or governmental charge and
provided that the request to so comply is made in writing and delivered to such
holder or beneficial owner, as applicable, not later than 60 days prior to the
                                       108
<PAGE>

date by which the delivery of such official document is required, (iii) held by
or on behalf of a holder who is liable for Taxes giving rise to such Additional
Amounts in respect of such Dutch Note by reason of having some connection with
the Netherlands or any Relevant Jurisdiction other than the mere purchase,
holding or disposition of any Dutch Note, or the receipt of principal or
interest in respect thereof, including, without limitation, such holder being or
having been a citizen or resident thereof or being or having been present or
engaged in a trade or business therein or having had a permanent establishment
therein, (iv) where such withholding or deduction is imposed on a payment to an
individual who is resident for tax purposes in a jurisdiction which is a member
state of the European Union (whether such payment is made through a paying agent
or otherwise) and is required to be made pursuant to European Union Directive
2003/48/EC of 3 June 2003 on the taxation of savings or any law implementing or
complying with, or introduced in order to conform to such Directive and (v) any
combination of clause (i), (ii), (iii) or (iv) above; nor shall Additional
Amounts be paid with respect to any payment of the principal of, or any interest
on, any Dutch Note to any holder who is a fiduciary or partnership or other than
the sole beneficial owner of such payment to the extent that a beneficiary or
settlor or beneficial owner would not have been entitled to any Additional
Amounts had such beneficiary or settlor or beneficial owner been the holder. The
Dutch Issuer or such Guarantor (or the U.S. Issuer with respect to the Company
Guarantee) will also (a) make such withholding or deduction compelled by
applicable law and (b) remit the full amount deducted or withheld to the
relevant authority in accordance with applicable law. The Dutch Issuer or such
Guarantor (or the U.S. Issuer with respect to the Company Guarantee) will
furnish copies of such receipts evidencing the payment of any Taxes so deducted
or withheld in such form as provided in the normal course by the taxing
authority imposing such Taxes and as is reasonably available to the Dutch Issuer
or such Guarantor (or the U.S. Issuer with respect to the Company Guarantee) to
the Trustee within 60 days after the date of receipt of such evidence. The
Trustee will make such evidence available to the holders of Dutch Notes upon
request.

     All references herein and in the Indenture or the Dutch Notes to the
principal of or interest or other payments on, or in respect of, a Dutch Note
shall be deemed to include, without duplication, any Additional Amounts payable
in connection therewith.

     The Dutch Issuer will pay any present or future stamp, court or documentary
taxes or any other excise or property taxes, charges or similar levies that
arise in any jurisdiction from the execution, delivery or registration of the
Dutch Notes or any other document or instrument referred to in the Indenture or
Dutch Notes.

     Dutch Notes may be redeemed, at the option of the Dutch Issuer, as a whole,
but not in part (limited to Dutch Notes with respect to which an Additional
Amount (as described above) is or may be required), at any time, upon giving
notice to holders not less than 30 days nor more than 60 days prior to the date
fixed for redemption (which notice shall be irrevocable), at a redemption price
equal to 100% of the principal amount thereof, together with interest accrued to
the date fixed for redemption and any Additional Amounts payable with respect
thereto, if the Dutch Issuer determines and certifies to the Trustee immediately
prior to the giving of such notice that (i) the Dutch Issuer or any Guarantor
(or the U.S. Issuer with respect to the Company Guarantee) in respect of the
Dutch Notes has or will become obligated to pay Additional Amounts in respect of
such Dutch Notes as a result of any change in or amendment to the laws (or any
regulations or rulings promulgated thereunder) of the Netherlands or any
Relevant Jurisdiction or any political subdivision or taxing authority thereof
or therein affecting taxation, or any change in the official position regarding
the application or interpretation of such laws, regulations or rulings
(including a holding by a court of competent jurisdiction) which change or
amendment becomes effective on or after the date of issuance of such Dutch Notes
and (ii) such obligation cannot be avoided by the Dutch Issuer or such Guarantor
(or the U.S. Issuer with respect to the Company Guarantee) taking reasonable
measures available to it, provided, that no such notice of redemption shall be
given earlier than 60 days prior to the earliest date on which the Dutch Issuer
or such Guarantor (or the U.S. Issuer with respect to the Company Guarantee)
would be obligated to pay such Additional Amounts if a payment in respect of
such Dutch Notes was then due. Prior to the giving of any notice of redemption
described in this paragraph, the Dutch Issuer shall deliver to the Trustee (a) a
certificate signed by two directors of the Dutch Issuer stating that the
obligation to pay Additional Amounts cannot be avoided by the Dutch Issuer or
such Guarantor (or the U.S. Issuer with respect to the Company Guarantee)

                                       109
<PAGE>

taking reasonable measures available to them and (b) a written opinion of
independent legal counsel to the Dutch Issuer to the effect that the Dutch
Issuer or such Guarantor (or the U.S. Issuer with respect to the Company
Guarantee) has become obligated to pay Additional Amounts as a result of such a
change or amendment described above and that the Dutch Issuer or such Guarantor
(or the U.S. Issuer with respect to the Company Guarantee) cannot avoid payment
of such Additional Amounts by taking reasonable measures available to them.

CHANGE OF CONTROL

     In the event of a Change of Control of the U.S. Issuer, each Holder will
have the right, unless we have given a notice of redemption, subject to the
terms and conditions of the Indenture, to require us 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 and Additional Interest, if
any, to the date of purchase, in accordance with the terms set forth below. Any
such repurchase of the Notes will include both U.S. Notes and Dutch Notes on a
pro rata basis based on the aggregate principal amount of the Notes outstanding
at the time of redemption, unless a Change of Control of the Dutch Issuer has
occurred.

     In the event of a Change of Control of the Dutch Issuer, the Dutch Issuer
may, at its option at any time, redeem the Dutch Notes in whole, and not in
part, at the optional redemption price specified in "-- Redemption -- Optional
Redemption" with respect to the date such redemption is to be effected (such
right, a "Change of Control Redemption of Dutch Notes Right", and such
redemption, a "Change of Control Redemption of Dutch Notes"). If the Dutch
Issuer has not delivered a notice of redemption within 30 days following a
Change of Control of the Dutch Issuer, each Holder of a Dutch Note shall have
the right to require that the Dutch Issuer repurchase all or a portion of such
Holder's Dutch Notes at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest and Additional Amounts, if any,
to the date of repurchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date), in accordance with the next paragraph; provided that at any time prior to
the consummation of the offer to purchase required by the Dutch Issuer in
accordance with the next paragraph, the Dutch Issuer may deliver an optional
redemption notice to redeem all of the Dutch Notes in lieu of completing such
offer to purchase.

     We currently have no outstanding securities or liabilities that are pari
passu with the Notes and also contain mandatory Change of Control repayment
provisions; however, the Credit Agreement may contain an event of default based
upon a change of control and upon the occurrence of such event of default the
obligations thereunder may be accelerated by the requisite holders thereof. In
addition, other debt instruments of the Company may in the future contain a
"change of control" provision that is similar to the provision in the Indenture
relating to a Change of Control, and the occurrence of such a "change of
control" could constitute a default under such debt instruments.

     If a Change of Control were to occur, there can be no assurance that we (or
the Dutch Issuer, if it were to exercise its Change of Control Redemption of
Dutch Notes Right) would have sufficient assets to satisfy our obligations under
other agreements relating to indebtedness (including the Credit Agreement) and
to purchase all of (i) the Notes that might be delivered by Holders seeking to
accept a Change of Control Offer (as defined below) or (ii) if a Change of
Control of the Dutch Issuer were to occur and the Dutch Issuer were to exercise
its Change of Control Redemption of Dutch Notes Right, all of the Dutch Notes.
In the event we are required to purchase outstanding Notes pursuant to a Change
of Control Offer or the Dutch Issuer is required to purchase the Dutch Notes in
connection with a Change of Control Redemption of Dutch Notes, we expect that we
would seek third party financing to the extent we do not have available funds to
meet our purchase obligations. However, there can be no assurance that we would
be able to obtain such financing and the terms of the Credit Agreement and/or
the Indenture may restrict the our ability to obtain such financing. See "Risk
Factors -- We may not be able to satisfy our obligations to Holders upon a
change of control."

     The Indenture provides the Holders protection in the event of a highly
leveraged transaction to the extent that our ability to effect a highly
leveraged transaction, in connection with any Change of Control or otherwise,

                                       110
<PAGE>

is subject to the provisions of the Indenture described below under the caption
"-- Certain Covenants," including without limitation the provisions described
thereunder under the headings "Limitation on Incurrence of Indebtedness." The
covenant described below under the heading "Limitation on Incurrence of
Indebtedness" does not specifically limit the leverage of any particular
transaction, but requires that we have a ratio of consolidated cash flow to
interest expense above a specified level in order to incur Indebtedness, subject
to certain enumerated exceptions.

     In general, the Change of Control provisions would not be triggered if
either Issuer was to recapitalize or to enter into transactions with management
or its affiliates unless at least one of the events relating to such Issuer and
specified in the definition of the term "Change of Control" were also to occur.
See "-- Certain Definitions."

     Without the consent of each Holder affected, no amendment of the Indenture
or waiver of any Default or Event of Default thereunder, will, following the
occurrence of a Change of Control, amend, change or modify our obligation to
make and consummate a Change of Control Offer as a result of such a Change of
Control a Change of Control Redemption of Dutch Notes as a result of such a
Change of Control and the exercise by the Dutch Issuer of the Change of Control
Redemption of Dutch Notes Right or modify the provisions or definitions with
respect thereto in a manner adverse to the Holders with respect to such Change
of Control. See "-- Amendment, Supplement and Waiver."

     On or before the 30th day following the occurrence of any Change of
Control, we will, and within 30 days following any Change of Control of the
Dutch Issuer, the Dutch Issuer will, mail an offer (each, a "Change of Control
Offer") to each Holder at such Holder's registered address a notice by
first-class mail stating: (i) that a Change of Control has occurred and that
such Holder has the right to require us or the Dutch Issuer, as the case may be,
to purchase all or a portion (equal to $1,000 or an integral multiple thereof)
of such Holder's Notes or Dutch Notes, as the case may be, at a purchase price
in cash equal to 101% of the aggregate principal amount thereof, plus accrued
and unpaid interest and Additional Interest, if any, to the date of purchase
(the "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 and Additional Interest, if any, as of the Change of Control Purchase
Date, (iii) that any Note not tendered will continue to accrue interest and
Additional Interest, if applicable, (iv) that, unless we or the Dutch Issuer, as
the case may be, default 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 and
Additional Interest, if applicable, on the Change of Control Purchase Date, (v)
the procedures, consistent with the Indenture, to be followed by a Holder in
order to accept a Change of Control Offer or to withdraw such acceptance, and
(vi) such other information as may be required by the Indenture and applicable
laws and regulations.

     We or the Dutch Issuer, as the case may be, will not be required to make a
Change of Control Offer upon a Change of Control if a third party makes the
Change of Control Offer in the manner, at the times and otherwise in compliance
with the requirements set forth in the Indenture applicable to a Change of
Control Offer made by us or the Dutch Issuer, as the case may be, and purchases
all Notes validly tendered and not withdrawn under such Change of Control Offer.

     On the Change of Control Purchase Date, we or the Dutch Issuer, as the case
may be, will (i) accept for payment all Notes or portions thereof tendered
pursuant to the Change of Control 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 Change of Control Offer. The Paying Agent shall promptly mail to
each Holder whose Notes or portions thereof were accepted for payment an amount
equal to the purchase price for such Notes or portion thereof plus accrued and
unpaid interest and Additional Interest, if any, thereon, and the Trustee shall
promptly authenticate and mail to each Holder whose Notes or portions thereof
were accepted for payment in part a 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 and Additional Interest, if
applicable, will cease to accrue on the Notes or portions thereof accepted for
payment,

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unless we or the Dutch Issuer, as the case may be, defaults in the payment of
the purchase price therefor. We will publicly announce the results of the Change
of Control Offer on or as soon as practicable after the Change of Control
Purchase Date.

     As used in the definition of Change of Control, the phrase "all or
substantially all" of the Capital Stock or assets of the Company and its
Restricted Subsidiaries will likely be interpreted under applicable state law
and will be dependent upon particular facts and circumstances. As a result,
there may be a degree of uncertainty in ascertaining whether a sale or
disposition of "all or substantially all" of the Capital Stock or assets of the
Company and its Restricted Subsidiaries has occurred, in which case a Holder's
ability to obtain the benefit of a Change or Control Offer may be impaired.

     We will 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 the Indenture to the extent such compliance is in conflict with
such covenants.

EXCESS CASH FLOW OFFER

     Within 120 days after the end of each fiscal year of the Company (beginning
with the fiscal year ending June 30, 2005), we may, if excess cash flow for such
fiscal year was at least $250,000, be required to make an offer (an "Excess Cash
Flow Offer") to all Holders to purchase the maximum principal amount of Notes
that may be purchased with 50% of Excess Cash Flow for such fiscal year (the
"Excess Cash Flow Offer Amount"), at a purchase price in cash equal to 102.5% of
the principal amount of the Notes to be purchased, plus accrued and unpaid
interest and Additional Interest, if any, to the date of such purchase. The
Indenture will provide for each Excess Cash Flow Offer to remain open for a
period of 30 days, unless a longer period is required by law. If the Excess Cash
Flow Offer Amount exceeds the aggregate amount of Notes tendered pursuant to any
Excess Cash Flow Offer, we shall make an offer at the end of such period to all
holders of Existing Notes, to purchase the maximum principal amount of Existing
Notes that may be purchased with such excess, at a purchase price in cash equal
to 100% of the principal amount of the Existing Notes to be purchased, plus
accrued and unpaid interest thereon to the date of such purchase. If any excess
remains following such offer in respect of the Existing Notes, we may, subject
to the other provisions of the Indenture, use any such remaining excess for
general corporate purposes. Upon receiving notice of the Excess Cash Flow Offer,
Holders may elect to tender their Notes, in whole or in part, in integral
multiples of $1,000 principal amount in exchange for cash. Any such repurchase
of the Notes shall include both U.S. Notes and Dutch Notes on a pro rata basis
based upon the aggregate principal amount of the Notes outstanding at the time
of such repurchase, unless a change of control of the Dutch Issuer has occurred.
Any Excess Cash Flow Offer Amount may be reduced by prior open market purchases
of Units or Notes during such fiscal year.

     Within 30 days prior to the required purchase date, we will mail an offer
to each Holder, with a copy to the Trustee, which offer will govern the terms of
the Excess Cash Flow Offer. Such offer will state, among other things the
purchase date and price.

     We will 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 Excess
Cash Flow Offer and will be deemed not to be in violation of any of the
covenants under the Indenture to the extent such compliance is in conflict with
such covenants. However, each Excess Cash Flow Offer is likely to be subject to
limitations in the Credit Agreement.

CERTAIN COVENANTS

     Limitation on Incurrence of Indebtedness.  The Indenture provides that the
Company will not, and will 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 Domestic Guarantor may incur Indebtedness
(including Acquired Debt) if, 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 2.25
to 1.0 if
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incurred during the period from the Issue Date through the second anniversary
thereof, and 2.50 to 1.0 if incurred thereafter.

     The foregoing limitations do 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 and its Restricted Subsidiaries
     arising under the Credit Agreement, in an aggregate principal amount not to
     exceed at any time outstanding an amount equal to (w) $37.5 million, less
     (x) during the 30 day period preceding the date on which a scheduled
     payment of interest is due on the Notes, the aggregate amount of such
     interest, less (y) during the 30 day period preceding the date on which a
     scheduled payment of interest is due on the Existing Notes, the aggregate
     amount of such interest, less (z) the aggregate principal amount of Notes
     issued pursuant to clause (xx) below;

          (ii) Indebtedness of the Issuers and the Guarantors represented by the
     Notes issued on the Issue Date in the Offering, Exchange Notes issued in
     exchange for such Notes or in exchange for Notes issued in compliance with
     the first paragraph of this covenant and the related Guarantees and the
     Company Guarantee;

          (iii) Indebtedness of the Company or any Restricted Subsidiary in
     existence, and Indebtedness pursuant to any commitment in effect under any
     credit agreement or facility, in each case, on the Issue Date ("Existing
     Indebtedness");

          (iv) Indebtedness of a Domestic Restricted Subsidiary of the Company
     to the Company or to a Restricted Subsidiary of the Company for so long as
     such Indebtedness is held by the Company or a Restricted Subsidiary of the
     Company or the holder of a Permitted Lien thereon of the type described in
     clause (i), (vii) or (xv) of the definition thereof, in each case, subject
     to no Lien held by a Person other than the Company or a Restricted
     Subsidiary of the Company or the holder of a Permitted Lien of the type
     described in clause (i), (vii) or (xv) of the definition thereof; provided
     that (a) any such Indebtedness is subordinated, pursuant to a written
     agreement by the holder thereof, to such Subsidiary's Obligations under the
     Indenture and its Guarantee and (b) if as of any date any Person other than
     the Company or a Restricted Subsidiary of the Company or the holder of a
     Permitted Lien thereon of the type described in clause (i), (vii) or (xv)
     of the definition thereof owns or holds any such Indebtedness or holds a
     Lien in respect of such Indebtedness, such date shall be deemed the
     incurrence of Indebtedness not constituting Permitted Indebtedness under
     this clause (iv) by the issuer of such Indebtedness;

          (v) Indebtedness of a Foreign Restricted Subsidiary of the Company to
     the Company or to a Restricted Subsidiary of the Company for so long as
     such Indebtedness is permitted to be made as a Permitted Investment under
     clause (i)(B), (ix) or (x) of the definition thereof and is held by the
     Company or a Restricted Subsidiary of the Company, as the case may be, or
     the holder of a Permitted Lien thereon of the type described in clause (i),
     (vii) or (xv) of the definition thereof, in each case, subject to no Lien
     held by a Person other than the Company or a Restricted Subsidiary of the
     Company, as the case may be, or the holder of a Permitted Lien of the type
     described in clause (i), (vii) or (xv) of the definition thereof; provided
     that (a) if such Indebtedness was made as a Permitted Investment under
     clause (i)(B) of the definition thereof to the Dutch Issuer or any Foreign
     Guarantor, such Indebtedness shall be subordinated, pursuant to a written
     agreement by the holder thereof, to the Dutch Issuer's or such Foreign
     Guarantor's, as the case may be, Obligations under the Indenture and the
     Dutch Notes or its Foreign Guarantee, as applicable, and (b) if as of any
     date any Person other than the Company or a Restricted Subsidiary of the
     Company, as the case may be, or the holder of a Permitted Lien thereon of
     the type described in clause (i), (vii) or (xv) of the definition thereof
     owns or holds any such Indebtedness or holds a Lien in respect of such
     Indebtedness, such date shall be deemed the incurrence of Indebtedness not
     constituting Permitted Indebtedness under this clause (v) by the issuer of
     such Indebtedness;

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          (vi) (A) Indebtedness of a Foreign Restricted Subsidiary of the
     Company to a Foreign Restricted Subsidiary of the Company that is not the
     Dutch Issuer or a Restricted Subsidiary thereof for so long as such
     Indebtedness is held by such Foreign Restricted Subsidiary of the Company
     or the holder of a Permitted Lien thereon of the type described in clause
     (xv) of the definition thereof, in each case, subject to no Lien held by a
     Person other than the Company or such Foreign Restricted Subsidiary of the
     Company or the holder of a Permitted Lien of the type described in clause
     (xv) of the definition thereof (provided that if as of any date any Person
     other than such Foreign Restricted Subsidiary of the Company or the holder
     of a Permitted Lien thereon of the type described in clause (xv) of the
     definition thereof owns or holds any such Indebtedness or holds a Lien in
     respect of such Indebtedness, such date shall be deemed the incurrence of
     Indebtedness not constituting Permitted Indebtedness under this clause (vi)
     (A) by the issuer of such Indebtedness); and (B) Indebtedness of the Dutch
     Issuer or any Restricted Subsidiary thereof to a Restricted Subsidiary of
     the Dutch Issuer or the Dutch Issuer for so long as such Indebtedness is
     held by a Restricted Subsidiary of the Dutch Issuer or the Dutch Issuer or
     the holder of a Permitted Lien thereon of the type described in clause
     (vii) or (xv) of the definition thereof, in each case, subject to no Lien
     held by a Person other than a Restricted Subsidiary of the Dutch Issuer or
     the Dutch Issuer or the holder of a Permitted Lien of the type described in
     clause (vii) or (xv) of the definition thereof (provided that (1) any such
     Indebtedness is subordinated, pursuant to a written agreement by the holder
     thereof, to the Dutch Issuer's or such Restricted Subsidiary's, as the case
     may be, Obligations under the Indenture and the Dutch Notes or its
     Guarantee, as applicable, and (2) if as of any date any Person other a
     Restricted Subsidiary of the Dutch Issuer or the Dutch Issuer or the holder
     of a Permitted Lien thereon of the type described in clause (vii) or (xv)
     of the definition thereof owns or holds any such Indebtedness or holds a
     Lien in respect of such Indebtedness, such date shall be deemed the
     incurrence of Indebtedness not constituting Permitted Indebtedness under
     this clause (vi)(B) by the issuer of such Indebtedness);

          (vii) Indebtedness of the Company to a Restricted Subsidiary of the
     Company for so long as such Indebtedness is held by a Restricted Subsidiary
     of the Company, in each case, subject to no Lien other than a Permitted
     Lien of the type described in clause (i), (vii) or (xv) of the definition
     thereof; provided that (a) any such Indebtedness is subordinated, pursuant
     to a written agreement by the holder thereof, to the Company's Obligations
     under the Indenture and the Notes and (b) if as of any date any Person
     other than a Restricted Subsidiary of the Company or the holder of a
     Permitted Lien of the type described in clause (i), (vii) or (xv) of the
     definition thereof, owns or holds any such Indebtedness or any Person holds
     a Lien in respect of such Indebtedness, such date shall be deemed the
     incurrence of Indebtedness not constituting Permitted Indebtedness under
     this clause (vii) by the Company;

          (viii) Indebtedness of the Company or any Restricted Subsidiary
     arising with respect to (A) Interest Rate 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 the Indenture to be outstanding to the extent that the
     notional amount of any such Interest Rate Agreement Obligations do not
     exceed at the time of the incurrence thereof, the principal amount of
     Indebtedness to which such Interest Rate Agreement Obligations relate and
     (B) Currency Agreement Obligations incurred for the purpose of fixing or
     hedging currency risk with respect to any receivable or liability the
     payment of which is determined by reference to a foreign currency (provided
     that in the case of Currency Agreement Obligations which relate to
     Indebtedness, such Currency Agreement Obligations do not increase the
     Indebtedness of the Company and its Restricted Subsidiaries outstanding
     other than as a result of fluctuations in foreign currency exchange rates
     or by reason of fees, indemnities and compensation payable thereunder);

          (ix) 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;

          (x) 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
     covenant or any Indebtedness
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     described in any of clauses (ii) or (iii) above, and this clause (x)
     ("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 accrued interest on the Indebtedness being refinanced
     plus the premiums, if any, on the Indebtedness being refinanced 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) the final maturity of such
     Refinancing Indebtedness shall not be earlier than the final maturity of
     the Indebtedness being Refinanced; (d) with respect to Refinancing
     Indebtedness refinancing Subordinated Indebtedness, shall be subordinated
     to the Notes at least to the same extent and in the same manner as the
     Indebtedness being refinanced; and (e) the obligor on such Refinancing
     Indebtedness shall be the obligor on the Indebtedness being refinanced;

          (xi) 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 $5.0
     million at any one time outstanding;

          (xii) (A) 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 and (B) foreign currency forward exchange
     contracts entered into in the ordinary course of business to protect
     against fluctuations in the relative values of currencies that could
     adversely affect our results of operations and not for speculative
     purposes;

          (xiii) 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 (A) in respect of (1)
     workers' compensation claims or self-insurance or (2) other Indebtedness
     with respect to reimbursement type obligations regarding workers'
     compensation claims or self-insurance or (B) for regulatory or insurance
     purposes;

          (xiv) Indebtedness incurred in respect of letters of credit issued for
     the account of the Company or any Restricted Subsidiary in an aggregate
     stated amount not to exceed $5.0 million (or the foreign currency
     equivalent thereof being determined as of the later of the date of the
     issuance thereof or any date on which the stated amount of such letter of
     credit is increased);

          (xv) Indebtedness of Foreign Restricted Subsidiaries of the Company,
     in an aggregate principal amount at any time outstanding not to exceed $2.5
     million, incurred to finance losses or costs relating to catastrophic
     occurrences or expenses occurring outside of the ordinary course of
     business; provided, that, in the case of losses or costs relating to
     catastrophic occurrences, the amount of any such losses or costs shall be
     deemed to be reduced by all insurance and condemnation proceeds on the
     thirtieth day following the receipt thereof by the Company or any of its
     Restricted Subsidiaries in connection with such catastrophic occurrence(s);

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

          (xvii) Indebtedness of the Company or any Restricted Subsidiary in
     addition to that described in clauses (i) through (xvi) above and clause
     (xviii) below, 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
     (xvii) does not exceed $2.5 million at any one time outstanding;

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          (xviii) Indebtedness arising from agreements of the Company or a
     Restricted Subsidiary providing for the guarantee, indemnification,
     adjustment of purchase price or similar obligations, in each case, incurred
     in connection with the disposition of any business, assets or Subsidiary,
     other than guarantees of Indebtedness incurred by any Person acquiring all
     or any portion of such business, assets or Subsidiary for the purpose of
     financing such acquisition; provided that the maximum aggregate liability
     in respect of such Indebtedness shall at no time exceed the gross proceeds
     or value of the consideration actually received by the Company and its
     Restricted Subsidiaries in connection with such transaction;

          (xix) Indebtedness of the Company and its Restricted Subsidiaries
     arising under the Belgium Purchase Agreement; and

          (xx) Indebtedness of the Issuers and the Guarantors represented by the
     Additional Notes issued after the Issue Date in an aggregate principal
     amount not to exceed $22.5 million, the proceeds of which are used to
     refinance or replace Indebtedness incurred pursuant to clause (i) above,
     Exchange Notes issued in exchange for such Additional Notes and the related
     Guarantees and the Company Guarantee.

     For purposes of determining any particular amount of Indebtedness under
this covenant, any guaranty, Liens or obligations with respect to letters of
credit supporting Indebtedness otherwise included in the determination of such
particular amount shall not be included, except in the case of any such letter
of credit to the extent the stated amount thereof exceeds the principal amount
of such other Indebtedness so supported.

     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.

     Limitation on Restricted Payments.  The Indenture provides that the Company
will not, and will 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 the covenant described
     under "-- Certain Covenants -- Limitation on Incurrence of Indebtedness;"
     and

          (iii) the aggregate amount of all Restricted Payments made by the
     Company and its Restricted Subsidiaries 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 Restricted Subsidiary pursuant to clause (ii) of the next

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        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 guaranty of Indebtedness of any Unrestricted
        Subsidiary, and (z) the redesignation of Unrestricted Subsidiaries as
        Restricted Subsidiaries (valued as provided in the definition of the
        term "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.

     The foregoing provisions do not prohibit, so long as no Default or Event of
Default is continuing or would occur as a consequence thereof, 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 the 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 by the Indenture or other
     agreement or instrument pursuant to which such Subordinated Indebtedness
     was issued or any refinancing of Subordinated Indebtedness permitted by the
     Indenture or other agreement or instrument pursuant to which such
     Subordinated Indebtedness was issued, but only if the Company has complied
     with its obligations under the provisions described under "-- Change of
     Control;"

          (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);

          (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 aggregate amount that shall not exceed $500,000 since the
     Issue Date 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

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     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 outstanding;

          (vii) Restricted Payments in an amount such that the sum of the
     aggregate amount of Restricted Payments made pursuant to this clause (vii)
     after the Issue Date does not exceed $2.5 million at any one time
     outstanding; and

          (viii) payments pursuant to any of the Transactions or made in a
     manner consistent with the information under the caption "Use of Proceeds"
     (other than general corporate purposes) in the Offering Circular pursuant
     to which the Notes are offered and sold.

     For purposes of clause (iii) of the first paragraph of this covenant, the
Permitted Payments referred to in clauses (i) and (v) 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.

     Limitation on Asset Sales.  The Indenture provides that the Company will
not, and will 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 75% of such consideration consists of either cash or
     Cash Equivalents (other than in the case of an Asset Sale consummated prior
     to the 180th day following the Issue Date of all or substantially all of
     the Capital Stock or assets of Wychem Limited, an English company
     indirectly wholly-owned by the Company).

     For purposes of this covenant, "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 and/or the Company Guarantee), accounts payable
and accrued expenses of the Company or such Restricted Subsidiary 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 of
Indebtedness 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 (other than customary indemnifications to the transferee and its
Affiliates) and (y) any notes, obligations or securities received by the Company
or such Restricted Subsidiary from such transferee that are due and payable
within 60 days by the Company or such Restricted Subsidiary into cash (to the
extent of the cash received).

     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:

          (a)(i) to repay Indebtedness under the Credit Agreement and
     permanently reduce the commitments thereunder (provided, however, that no
     such Net Proceeds shall be used to repay such Indebtedness to the extent
     such Net Proceeds arose from an Asset Sale of any Foreign Collateral), (ii)
     in the case where the property or asset that was the subject of such Asset
     Sale does not constitute Collateral, to repay Indebtedness secured by a
     Lien of the type described in clause (i), (iii), (vi), (viii), (xiv) or
     (xv) of the definition of the term "Permitted Lien" (provided, however,
     that no such Net Proceeds shall be used to repay Indebtedness of any
     Foreign Restricted Subsidiary except to the extent that such Net Proceeds
     arose from an Asset Sale of the assets of a Foreign Restricted Subsidiary),
     (iii) in the case where the property or asset that was the subject of such
     Asset Sale is the property or asset of a Foreign Restricted Subsidiary that
     does not constitute Foreign Collateral, to repay Indebtedness of any
     Foreign Restricted Subsidiary or (iv) a combination of the foregoing
     clauses (i), (ii) and (iii); 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; provided, however,
     that no such investments in or acquisitions of assets or properties that
     are to be used in the business of any Foreign Restricted Subsidiary or any
     Related Business thereof may be made using any
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     such Net Proceeds except to the extent that such Net Proceeds arose from an
     Asset Sale of the assets of a Foreign Restricted Subsidiary.

     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 Agreement 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."

     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 and
Additional 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
the Indenture. Upon the consummation of any Asset Sale Offer, the amount of
Excess Proceeds shall be deemed to be reset to zero.

     Notice of an Asset Sale Offer shall be mailed by the Company not later than
the 20th business day after the related Asset Sale Offer Trigger Date to each
Holder 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 and Additional 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) the amount of accrued and unpaid interest and Additional
     Interest, if any, as of the Asset Sale Offer Purchase Date;

          (iii) that any Note not tendered will continue to accrue interest and
     Additional Interest, if applicable;

          (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 and Additional Interest, if applicable, after the Asset Sale Offer
     Purchase Date;

          (v) the procedures, consistent with the Indenture, to be followed by a
     Holder in order to accept an Asset Sale Offer or to withdraw such
     acceptance; and

          (vi) such other information as may be required by the Indenture and
     applicable laws and regulations.

     On the Asset Sale Offer Purchase Date, the Company will (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 the
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,

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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 or
portions thereof accepted for payment an amount equal to the purchase price for
such Notes plus accrued and unpaid interest and Additional Interest, if any,
thereon, and the Trustee shall promptly authenticate and mail to such Holder
accepted for payment in part a 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 and Additional Interest, if applicable, 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.

     Any repurchase of Notes pursuant to an Asset Sale Offer shall include both
U.S. Notes and Dutch Notes on a pro rata basis based upon the aggregate
principal amount of the Notes outstanding at the time of such repurchase, unless
a Change of Control of the Dutch Issuer has occurred. The foregoing provisions
will not apply to a transaction consummated in compliance with the provisions of
the Indenture described under "-- Merger, Consolidation and Sale of Assets"
below.

     The Company will 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 the Indenture to the extent such compliance is in conflict with such
covenants.

     Limitation on Liens.  The Indenture provides that the Company will not, and
will not permit any Restricted Subsidiary to, directly or indirectly, create,
incur, assume or suffer to exist any Lien on any asset now owned or hereafter
acquired, or any income or profits therefrom, or assign or convey any right to
receive income therefrom, in each case, other than Permitted Liens.

     Limitation on Dividends and Other Payment Restrictions Affecting Restricted
Subsidiaries.  The Indenture provides that the Company will not, and will 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 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 any
guaranty 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 Agreement 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 Agreement (or, if more
     restrictive, than those contained in the 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) 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;

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          (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 the
     provisions described under "-- Certain Covenants -- Limitation on Asset
     Sales;" 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 (other than any such restriction or encumbrance
     contained in the Belgium Purchase Agreement);

          (g) Refinancing Indebtedness permitted under the 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) the Indenture, the Notes, the Guarantees, the Company Guarantee
     and the Collateral Agreements; 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.

     Limitation on Transactions with Affiliates.  The Indenture provides that
the Company will not, and will 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 to any transaction
or series of transactions involving aggregate payments in excess of $250,000, 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 (b) 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.

     Notwithstanding the foregoing, this covenant does 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 the second paragraph under
     "-- Certain Covenants -- Limitation on Restricted Payments,"

          (iv) transactions permitted by, and complying with, the provisions
     described under "-- Merger, Consolidation and Sale of Assets";

          (v) any Transaction or any transaction described under the caption
     "Use of Proceeds" in the Offering Circular pursuant to which the Notes are
     offered and sold; and

          (vi) agreements to make the payments described in clause (y)(2) of the
     second sentence of the definition of the term "Investment."

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<PAGE>

     The Indenture provides that as of the Issue Date, the cash salary and bonus
in the aggregate payable to Jack Bendheim in respect of each fiscal year
beginning on or after July 1, 2003 (i) for which Cash Flow of the prior fiscal
year is less than $25.0 million shall be capped at $750,000, (ii) for which Cash
Flow of the prior fiscal year is greater than or equal to $25.0 million but less
than $36.0 million, shall not exceed the sum of (A) $750,000 plus (B)(I)
$900,000 times (II) a ratio, the numerator of which is Cash Flow with respect to
such prior fiscal year less $25.0 million and the denominator of which is $11.0
million and (iii) for which Cash Flow of the prior fiscal year is greater than
or equal to $36.0 million, shall be determined by the Compensation Committee of
the Board of Directors and shall not exceed $2.0 million.

     Limitation on Issuances and Sales of Capital Stock of Subsidiaries.  The
Company will not permit or cause any of its Restricted Subsidiaries to issue or
sell any Capital Stock except:

          (1) to the Company or a Wholly-Owned Restricted Subsidiary of the
     Company and so long as concurrently with the issuance thereof all steps
     necessary for the Collateral Agent to have a perfected security interest
     therein, subject to the Permitted Liens, shall have been taken;

          (2) issuances of director's qualifying shares or sales to foreign
     nationals of shares of Capital Stock of Foreign Restricted Subsidiaries to
     the extent required by applicable law;

          (3) if, immediately after giving effect to such issuance or sale, such
     Restricted Subsidiary would no longer constitute a Restricted Subsidiary
     and any Investment in such Person remaining after giving effect to such
     issuance or sale would have been permitted to be made under the "Limitation
     on Restricted Payments" covenant if made on the date of such issuance or
     sale; or

          (4) sales of (i) all of the Capital Stock of a Restricted Subsidiary
     of the Company or (ii) Common Stock of a Foreign Subsidiary, in each case
     in compliance with the provisions of the "Limitation on Asset Sales"
     covenant.

     Limitation on Designation of Unrestricted Subsidiaries.  The Indenture
provides that the Company will 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 the Indenture (a "Designation")
unless:

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

          (b) 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 "-- Certain
     Covenants -- Limitation on Incurrence of Indebtedness;" and

          (c) the Company would not be prohibited under the Indenture from
     making an Investment at the time of Designation in an amount (the
     "Designation Amount") equal to 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 the covenant
described under "-- Certain Covenants -- Limitation on Restricted Payments" for
all purposes of the Indenture in an amount equal to the Designation Amount.

     The Indenture further provides that the Company will not designate an
Unrestricted Subsidiary as a Restricted Subsidiary (a "Redesignation"), unless:

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

          (b) 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 the Indenture.

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     The Indenture, which as previously stated was entered into on the Issue
Date in connection with the issuance of the Outstanding Notes, contains a
requirement that PMC, MRT Holdings, LLC and Prince MFG, LLC would be deemed to
be redesignated as a Restricted Subsidiaries on January 1, 2004 if the PMC Sale
Transactions were not consummated on or prior to such date. No such
redesignation occurred as we consummated the PMC Sale Transactions on December
26, 2003. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Prince Transactions."

     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 the covenant described above under the caption
"-- Certain Covenants -- Limitation on Restricted Payments."

     If any Unrestricted Subsidiary is (or is deemed to have been) redesignated
as a Restricted Subsidiary, each Subsidiary of the Company that owns all or any
portion of the Capital Stock of such Unrestricted Subsidiary shall be deemed to
have been redesignated as a Restricted Subsidiary as well.

     MRT Holdings, LLC and Prince MFG, LLC and its direct wholly-owned
subsidiary, PMC, were the only Unrestricted Subsidiaries as of the Issue Date.

     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.

     Noteholder Representative.  The Indenture provides that from and after the
Issue Date until the date on which all principal and interest (including any
Additional Interest) on all of the outstanding Units (and the underlying Notes)
have been paid in full as provided in the Indenture, the Company will take such
action as shall be necessary in accordance with applicable law and its
certificate of incorporation and by-laws so that the Board of Directors of the
Company may include one Noteholder Representative.

     The Noteholder Representative shall be designated mutually by Jefferies &
Company, Inc. ("Jefferies") and the Company. If Jefferies and the Company cannot
agree on a mutually acceptable candidate within 60 days after the Issue Date (or
the date of any subsequent vacancy), each of Jefferies and the Company shall
nominate a candidate meeting the criteria below and the Company shall mail a
ballot to the Holders within 90 days of the Issue Date (or the date of any
subsequent vacancy). The ballot may include biographical and other information
with respect to each candidate under Regulation 14A of the Securities Exchange
Act of 1934, as amended. The Noteholder Representative will be selected by
Holders of a majority in aggregate principal amount of the Notes who complete
and submit to the Company a ballot. The initial Noteholder Representative
designated by the holders of the Notes in accordance with this covenant was Mr.
Sam Gejdenson. See "Management -- Directors and Executive Officers."

     Each candidate submitted by Jefferies and the Company for election as the
Noteholder Representative shall be a person who is not an executive officer or
director of (i) a significant supplier of the Company or any Subsidiary or
Affiliate thereof or (ii) any competitor of the Company or any Subsidiary or
Affiliate thereof, unless otherwise agreed by the Company.

     If a Noteholder Representative resigns, dies or becomes incapacitated, or
such position is otherwise vacant, no action requiring the affirmative vote of
the Noteholder Representative shall be taken until the earlier of (i) the
expiration of 45 days after the mailing of such ballot and (ii) the designation
of a successor

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Noteholder Representative by the Holders and approval of such action by the
successor Noteholder Representative.

     The Noteholder Representative shall be a member of the Compensation
Committee and, except as provided above, all decisions of the Compensation
Committee shall require the consent of the Noteholder Representative.

     Business Activities.  The Indenture provides that the Company will not, and
will not permit any of its Restricted Subsidiaries to, engage in any business
other than such business as conducted by it on the Issue Date and any Related
Business. The Indenture also provides that for so long as any of MRT Holdings,
LLC, Prince MFG, LLC or PMC shall be an Unrestricted Subsidiary of the Company
or the PMC Sale Transactions shall not have been consummated, no such entity
shall engage in any activities other than those currently conducted by such
entity or those necessary or incidental to consummating the PMC Sale
Transactions; provided, however, that notwithstanding the foregoing, no such
entity shall incur any Indebtedness, make any Investments, or pay the
obligations of any other person or entity, in an aggregate amount exceeding
$25,000 or dispose of any of its assets other than in the ordinary course of
business, if such entity is an Unrestricted Subsidiary of the Company other than
as necessary or incidental to consummate the PMC Sale Transactions.

     Impairment of Security Interest.  No Issuer nor any Guarantor may take or
knowingly omit to take any action which would materially impair the Liens in
favor of the Collateral Agent, on behalf of itself, the Trustee and the Holders,
with respect to any material portion of the Collateral securing the Notes or any
Guarantee either the U.S. Notes, the Domestic Guarantees and the Company
Guarantee or the Dutch Notes and the Foreign Guarantees. No Issuer nor any
Guarantor may grant to any Person (other than the Collateral Agent), or permit
any Person (other than the Collateral Agent) to retain any interest whatsoever
in the Collateral other than Permitted Liens or as otherwise permitted by the
Indenture. No Issuer nor any Guarantor may enter into any agreement that
requires the proceeds received from any sale of Collateral to be applied to
repay, redeem, defease or otherwise acquire or retire any Indebtedness of any
Person, other than as permitted by the Indenture, the Notes and the Collateral
Agreements, subject to the terms of the Intercreditor Agreement (as it relates
to the Domestic Collateral). Each Issuer and each Guarantor will, at its sole
cost and expense, execute and deliver all such agreements and instruments as the
Collateral Agent or the Trustee shall reasonably request to more fully or
accurately describe the property intended to be Collateral or the obligations
intended to be secured by the Collateral Agreements. Each Issuer and each
Guarantor will, at its sole cost and expense, file any such notice filings or
other agreements or instruments as may be required under applicable law to
perfect the Liens created by the Collateral Agreements, subject to Permitted
Liens.

     Landlord, Bailee and Consignee Waivers.  Each of the Company, the Dutch
Issuer, each Domestic Restricted Subsidiary of the Company and each Restricted
Subsidiary of the Dutch Issuer that is a lessee of, or becomes a lessee of, real
property (whether used for manufacturing purposes or otherwise) on or in which
it will maintain, store, hold or locate all or any of its assets having an
aggregate fair market value of at least $50,000, is, and will be, required to
use commercially reasonable best efforts (which shall not require the
expenditure of cash or the making of any material concessions under any relevant
lease that was in effect on the Issue Date or if such (i) Domestic Restricted
Subsidiary of the Company was not a Domestic Restricted Subsidiary of the
Company on the Issue Date, the date such Domestic Restricted Subsidiary became a
Domestic Restricted Subsidiary of the Company or (ii) Restricted Subsidiary of
the Dutch Issuer was not a Restricted Subsidiary of the Dutch Issuer on the
Issue Date, the date such Restricted Subsidiary became a Restricted Subsidiary
of the Dutch Issuer) to deliver to the Collateral Agent a landlord waiver,
substantially in the form of the exhibit form thereof to be attached to the
Indenture, executed by the lessor of such real property; provided that in the
case where such lease is a lease in existence on the Issue Date or the lessee
thereof that is a (A) Domestic Restricted Subsidiary of the Company was not a
Domestic Restricted Subsidiary of the Company on the Issue Date or (B)
Restricted Subsidiary of the Dutch Issuer was not a Restricted Subsidiary of the
Dutch Issuer on the Issue Date, the Company or its Domestic Restricted
Subsidiary or the Dutch Issuer or its Restricted Subsidiary that is the lessee
thereunder shall have 60 days from the Issue Date (or from the date the lessee
thereof becomes a Domestic Restricted Subsidiary of the Company or a Restricted
Subsidiary of the Dutch Issuer) to satisfy such requirement and shall be
relieved of
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such obligation with respect to any landlord waiver to the extent such lessor
has refused to deliver such a waiver following such Person's use of such
commercially reasonable efforts. Each of the Company, each of its Domestic
Restricted Subsidiaries, the Dutch Issuer and each of its Restricted
Subsidiaries that provides any of its assets having an aggregate fair market
value of at least $50,000 to a bailee or consignee agrees to be bound by the
terms of the immediately preceding sentence, mutatis mutandis; provided that (i)
the terms "landlord", "lessee" and "lease" shall be replaced, respectively, with
the terms "bailee" or "consignee", as applicable, "bailor" or "consignor", as
applicable, and the "applicable agreement" and (ii) the condition that the
lessee maintain, store, hold or locate all or any of its assets having an
aggregate fair market value of at least $50,000 shall instead be replaced with
the condition that the fair market value of the assets subject to the applicable
bailment or consignment have a fair market value of at least $50,000.

     Real Estate Mortgages and Recordings.  With respect to any real property
(individually and collectively, the "Premises") that (a) is owned as of the
Issue Date by the Dutch Issuer or any of its Restricted subsidiaries or (b)(i)
is acquired by Dutch Issuer or any of its Restricted Subsidiaries after the
Issue Date and (ii) has a purchase price or a Fair Market Value, of at least
$250,000 (other than properties purchased subject to Acquired Indebtedness or
Purchase Money Indebtedness), the Dutch Issuer or such Restricted Subsidiary, as
the case may be, shall, at its sole cost and expense:

          (A) take all such actions as the Collateral Agent deems necessary or
     desirable to cause the Collateral Agent to have a valid first priority
     perfected Lien in such Premises free and clear of all defects and
     encumbrances (other than Permitted Liens), including, without limitation,
     (1) duly executing and delivering a Foreign Collateral Agreement, (2)
     recording, registering or filing such Foreign Collateral Agreement with the
     necessary offices or authorities to result in such Lien being a valid,
     perfected first priority Lien against the such Premises under the laws of
     the jurisdiction in which such Premises is located and (3) paying all
     recordation taxes, fees and expenses required in connection with such
     recordation, registration or filing; and

          (B) deliver to the Collateral Agent, with respect to such Premises, a
     copy of such Foreign Collateral Agreement and evidence of such recordation,
     registration or filing, as the case may be, local counsel opinions and such
     other documents, instruments, certificates and agreements as the Collateral
     Agent and its counsel shall, consistent with the laws of the jurisdiction
     in which such Premises is located, reasonably request or as may be required
     under the Indenture;

provided that the Dutch Issuer or such Restricted Subsidiary, as the case may
be, shall have a period of 90 days from (x) the date of the Issue Date to
satisfy the foregoing requirements with respect to any such Premises that is
owned by the Dutch Issuer or such Restricted Subsidiary, as the case may be, as
of the Issue Date and (y) the date such interest was acquired by the Dutch
Issuer or such Restricted Subsidiary, as the case may be, to satisfy the
foregoing requirements with respect to any such Premises that was acquired after
the Issue Date.

     Future Guarantors.  The Indenture provides that the Company and each
Domestic Guarantor shall cause each Domestic Restricted Subsidiary of the
Company which, after the date of the Indenture (if not then a Guarantor),
becomes a Domestic Restricted Subsidiary (including, without limitation, as the
result of the redesignation of an Unrestricted Subsidiary that is a Domestic
Subsidiary as a Restricted Subsidiary) to:

          (1) execute and deliver to the Trustee a supplemental indenture
     pursuant to which such Domestic Restricted Subsidiary shall unconditionally
     guarantee on a senior secured basis all of the Company's obligations under
     the U.S. Notes and the Indenture on the terms set forth in the Indenture;

          (2) (a) execute and deliver to the Collateral Agent and the Trustee
     such amendments or supplements to the Domestic Collateral Agreements as may
     be necessary or as the Collateral Agent deems reasonably desirable in order
     to grant to Collateral Agent, for the benefit of itself, the Holders and
     the Trustee, a perfected security interest in the Capital Stock of such new
     Domestic Restricted Subsidiary and the debt securities of such new Domestic
     Restricted Subsidiary, subject to Permitted Liens, which are owned by the
     Company or any Domestic Restricted Subsidiary and required to be pledged
     pursuant to the Domestic Collateral Agreements, and (b) deliver to
     Collateral Agent the

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     certificates representing such Capital Stock and debt securities, together
     with (i) in the case of such Capital Stock, undated stock powers or
     instruments of transfer, as applicable, endorsed in blank, and (ii) in the
     case of such debt securities, endorsed in blank, in each case executed and
     delivered by a Officer of the Company or such Domestic Restricted
     Subsidiary, as the case may be;

          (3) cause such new Domestic Restricted Subsidiary to take such actions
     as may be necessary or as necessary or as the Collateral Agent deems
     reasonably desirable to grant to the Collateral Agent for the benefit of
     itself, the Holders and the Trustee a perfected security interest in
     substantially all of the assets of such new Domestic Restricted Subsidiary
     (excluding real property and interests therein), subject to Permitted
     Liens, including the filing of Uniform Commercial Code financing statements
     in such jurisdictions as may be required by the Domestic Collateral
     Agreements or by law or as may be reasonably requested by the Collateral
     Agent;

          (4) take such further action and execute and deliver such other
     documents specified in the Indenture or otherwise reasonably requested by
     the Trustee or the Collateral Agent to effectuate the foregoing; and

          (5) deliver to the Trustee an opinion of counsel relating to the
     foregoing actions and the perfection of such security interests so granted,
     in each case, to the extent required under the Trust Indenture Act.

     The Indenture also provides that the Dutch Issuer and each Restricted
Subsidiary of the Dutch Issuer shall cause each Restricted Subsidiary of the
Dutch Issuer which, after the date of the Indenture (if not then a Foreign
Guarantor), becomes a Restricted Subsidiary of the Dutch Issuer (including,
without limitation, as the result of the redesignation of an Unrestricted
Subsidiary that is a Subsidiary of the Dutch Issuer as a Restricted Subsidiary
thereof) to take the actions and make the deliveries specified in the
immediately preceding paragraph, mutatis mutandis; provided that (i) the terms
"Domestic Restricted Subsidiary", "Company's" and "U.S. Notes" as used in the
immediately preceding paragraph shall be deemed to refer to the terms
"Restricted Subsidiary", "Dutch Issuer's" and "Dutch Notes", respectively, and
(ii) clauses (2) and (3) thereof shall be deemed to read in their respective
entireties as follows:

          "(2) execute and deliver to the Collateral Agent and the Trustee such
     Foreign Collateral Agreements or amendments or supplements thereto and take
     all such other actions including, without limitation, recording,
     registering or filing such amendments, supplements or any other documents
     or instruments and paying all such taxes, fees and expenses required in
     connection with such recordation, registration or filing, in each case, as
     may be necessary or as the Collateral Agent deems reasonably desirable in
     order to grant to the Collateral Agent, for the benefit of itself, the
     Holders and the Trustee, a Lien in 100% of the Capital Stock of such new
     Restricted Subsidiary, which is owned by the Dutch Issuer or any Restricted
     Subsidiary of the Dutch Issuer, and provide the Collateral Agent with a
     valid first priority perfected Lien (subject to Permitted Liens) in all
     such Capital Stock for the benefit of itself, the Holders and the Trustee;

          (3) cause such new Restricted Subsidiary of the Dutch Issuer to (x)
     execute and deliver to the Collateral Agent and the Trustee such Foreign
     Collateral Agreements or amendments or supplements thereto and take all
     such other actions including, without limitation, recording, registering or
     filing such amendments, supplements or any other documents or instruments
     and paying all such taxes, fees and expenses required in connection with
     such recordation, registration or filing, in each case, as may be necessary
     or as the Collateral Agent deems reasonably desirable in order to grant to
     the Collateral Agent, for the benefit of itself, the Holders and the
     Trustee, a Lien in all of the accounts receivable, inventory (to the extent
     permitted by applicable law) and Capital Stock of each direct Subsidiary of
     such new Restricted Subsidiary that is then owned or thereafter acquired by
     such new Restricted Subsidiary, and provide the Collateral Agent with a
     valid first priority perfected Lien (subject to Permitted Liens) in all
     such accounts receivable, inventory (to the extent permitted by applicable
     law) and Capital Stock for the benefit of itself, the Holders and the
     Trustee and (y) to the extent such new Restricted Subsidiary of the Dutch
     Issuer owns any real property on the date it became a new Restricted
     Subsidiary of the Dutch Issuer, comply with the requirements of the
     covenant "-- Certain Covenants -- Real Estate Mortgages

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     and Recordings" as if such new Restricted Subsidiary of the Dutch Issuer
     had acquired such real property on such date;".

     Provision of Financial Statements and Information.  Whether or not either
Issuer is then subject to Section 13(a) or 15(d) of the Exchange Act, the
Indenture provides that the Company will 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 will 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 and prospective purchasers of the Notes, 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 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 or prospective Holders of
Notes the information required by Rule 144A(d)(4) under the Securities Act.

     Payments for Consent.  Neither Issuer will, nor will either Issuer permit
any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration to or for the benefit of any Holder for or as an inducement to any
consent, waiver or amendment of any of the terms or provisions of the Indenture,
the Notes, the Registration Rights Agreement, the Collateral Agreements or the
Intercreditor Agreement unless such consideration is offered to be paid or is
paid to all Holders that consent, waive or agree to amend in the time frame set
forth in the solicitation documents relating to such consent, waiver or
agreement.

     Additional Covenants.  The Indenture also contains covenants with respect
to the following matters: (i) payment of principal, premium, interest and
Additional Interest; (ii) maintenance of an office or agency in The City of New
York; (iii) maintenance of corporate existence; (iv) payment of taxes and other
claims; (v) maintenance of properties; and (vi) maintenance of insurance.

MERGER, CONSOLIDATION AND SALE OF ASSETS

     The Indenture provides that 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 (a) all
     the obligations of the Company under the U.S. Notes (and the Guarantees of
     the Company's Domestic Restricted Subsidiaries shall be confirmed as
     applying to such Surviving Person's obligations), the Indenture, the
     Company Guarantee 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 and (b) by
     amendment, supplement or other instrument (in form and substance
     satisfactory to the Trustee and the Collateral Agent), executed and
     delivered to the Trustee, all Obligations of the Company under the
     Collateral Agreements and the Intercreditor Agreement, and in connection
     therewith shall cause such
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     instruments to be filed and recorded in such jurisdictions and take such
     other actions as may be required by applicable law to perfect or continue
     the perfection of the Lien created under the Collateral Agreements on the
     Collateral owned by or transferred to the surviving entity;

          (iii) immediately both before and after giving effect to such
     transaction, no Default or Event of Default shall have occurred and be
     continuing;

          (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 the
     covenant described under "-- Certain Covenants -- Limitation on Incurrence
     of Indebtedness;" and

          (v) the Company or the Surviving Person shall have delivered to the
     Trustee an officers' certificate and an opinion of counsel, each stating
     that such consolidation, merger, sale, assignment, transfer, lease,
     conveyance or other disposition and, if a supplemental indenture or any
     amendment or supplement to the Collateral Agreements is required in
     connection with such transaction, such supplemental indenture or such
     amendment or supplement comply with the applicable provisions of the
     Indenture and that all conditions precedent in the Indenture relating to
     such transaction have been satisfied to the extent such conditions are
     required to be satisfied thereunder either prior to or concurrent with the
     consummation of the applicable transaction.

     Notwithstanding clauses (iii) and (iv) above, any Restricted Subsidiary
(other than the Dutch Issuer) may consolidate with, merge into or transfer all
or part of its properties and assets to the Company.

     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, the
Indenture, the U.S. Notes, the Domestic Collateral Agreements and the
Registration Rights Agreement.

     Each Domestic Guarantor (other than any Domestic Guarantor whose Domestic
Guarantee is to be released in accordance with the terms of the Domestic
Guarantee and the Indenture in connection with any transaction complying with
the provisions of "-- Certain Covenants -- Limitation on Asset Sales") will not,
and the Company will not cause or permit any Domestic Guarantor to, consolidate
with or merge with or into any Person other than the Company or any other
Domestic Guarantor unless:

          (1) the entity formed by or surviving any such consolidation or merger
     (if other than the Domestic Guarantor) or to which such sale, lease,
     conveyance or other disposition shall have been made is a corporation
     organized and existing under the laws of the United States or any State
     thereof or the District of Columbia;

          (2) such entity assumes (a) by supplemental indenture (in form and
     substance satisfactory to the Trustee), executed and delivered to the
     Trustee, all of the obligations of the Domestic Guarantor under the
     Domestic Guarantee and, to the extent applicable, the Intercreditor
     Agreement and (b) by amendment, supplement or other instrument (in form and
     substance satisfactory to the Trustee and the Collateral Agent) executed
     and delivered to the Trustee and the Collateral Agent, all obligations of
     the Domestic Guarantor under the Domestic Collateral Agreements and, to the
     extent applicable, the Intercreditor Agreement and in connection therewith
     shall cause such instruments to be filed and recorded in such jurisdictions
     and take such other actions as may be required by applicable law to perfect
     or continue the perfection of the Lien created under the Domestic
     Collateral Agreements on the Collateral owned by or transferred to the
     surviving entity;

          (3) immediately both before and after giving effect to such
     transaction, no Default or Event of Default shall have occurred and be
     continuing;

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          (4) immediately after giving effect to such transaction and the use of
     any net proceeds therefrom on a pro forma basis, the Company could satisfy
     the provisions of clause (iv) of the first paragraph of this covenant; and

          (5) the Company shall have delivered to the Trustee an officers'
     certificate and an opinion of counsel, each stating that such
     consolidation, merger, sale, assignment, transfer, lease, conveyance or
     other disposition and, if a supplemental indenture or any amendment or
     supplement to the Domestic Collateral Agreements is required in connection
     with such transaction, such supplemental indenture or such amendment or
     supplement comply with the applicable provisions of the Indenture and that
     all conditions precedent in the Indenture relating to such transaction have
     been satisfied.

     Notwithstanding clauses (3) and (4) above, any Restricted Subsidiary (other
than the Dutch Issuer) may consolidate with, merge into or transfer all or part
of its properties and assets to the Company or any Domestic Guarantor.

     Any merger or consolidation of (i) a Domestic Guarantor with and into the
Company (with the Company being the surviving entity) or another Domestic
Guarantor or (ii) a Domestic Guarantor or the Company with an Affiliate
organized solely for the purpose of reincorporating such Domestic Guarantor or
the Company in another jurisdiction in the United States or any State thereof or
the District of Columbia or changing the legal form of such Domestic Guarantor
or the Company need only comply with in the case of a merger or consolidation
involving (x) the Company as described in clause (ii) above, clauses (ii) and
(v) of the first paragraph of this covenant and (y) in the case of a Domestic
Guarantor as described in (1) clause (i) above, clause (5) of the immediately
preceding paragraph and (2) clause (ii) above, clauses (2) and (5) of the
immediately preceding paragraph.

     The Indenture will contain similar restrictions on mergers, consolidations
and sales of assets by the Dutch Issuer and the Foreign Guarantors as those
contained in the paragraphs set forth above in this covenant, mutatis mutandis;
provided that

          (i) the terms "Company", "Restricted Subsidiary", "Restricted
     Subsidiaries", "the United States, any State thereof or the District of
     Columbia", "U.S. Notes", "Domestic Guarantee", "Domestic Guarantor", and
     "Domestic Collateral Agreements" as used in the preceding paragraphs of
     this covenant, other than clause (iv) of the first paragraph hereof and
     clause (4) of the third paragraph hereof shall remain unchanged, shall be
     deemed to refer to the terms "Dutch Issuer", "Restricted Subsidiary of the
     Dutch Issuer", "Restricted Subsidiaries of the Dutch Issuer", "the
     jurisdiction of organization of the Dutch Issuer or Foreign Guarantor that
     is the subject of such transaction", "Dutch Notes", "Foreign Guarantee",
     "Foreign Guarantor", and "Foreign Collateral Agreements", respectively;

          (ii) the words "of the Company's Domestic Restricted Subsidiaries"
     contained in clause (ii)(a) of the first paragraph of this covenant shall
     be deemed to have been replaced with the words "of the Guarantors and the
     Company Guarantee";

          (iii) clause (ii) of the first paragraph of this covenant shall also
     be deemed to be revised to delete the words "and the Intercreditor
     Agreement" and the words ", the Company Guarantee" therefrom;

          (iv) the last sentence of the first paragraph of this covenant shall
     be deemed to read in its entirety as follows "Notwithstanding clauses (iii)
     and (iv) above, any Restricted Subsidiary of the Dutch Issuer may
     consolidate with, merge into or transfer all or part of its properties and
     assets to the Dutch Issuer.";

          (v) clause (2) of the third paragraph of this covenant shall also be
     deemed to be revised to delete the words "and, to the extent applicable,
     the Intercreditor Agreement";

          (vi) the last sentence of the third paragraph of this covenant shall
     be deemed to read in its entirety as follows "Notwithstanding clauses (3)
     and (4) above, any Restricted Subsidiary of the Dutch Issuer may
     consolidate with, merge into or transfer all or part of its properties and
     assets to the Dutch Issuer, the U.S. Issuer or any other Guarantor; and

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          (vii) at the end of such covenant, the following provision would be
     inserted as an additional provision thereof:

     "Notwithstanding the foregoing, the Dutch Issuer may permit, and there may
be effected, the Belgium Plant Sale and Virginiamycin Production Transactions."

POSSESSION, USE AND RELEASE OF COLLATERAL

     Unless an Event of Default shall have occurred and be continuing, each
Issuer and each Guarantor has the right to remain in possession and retain
exclusive control of its Collateral securing the Notes (other than as set forth
in the Collateral Agreements), to freely operate the Collateral and to collect,
invest and dispose of any income therefrom; provided that until delivery of a
written notice from the Collateral Agent to the Company or the applicable
Domestic Guarantor, when any Event of Default shall have occurred and be
continuing, to refrain from exercising any voting, consensual rights and other
rights pertaining to Collateral consisting of Capital Stock pledged by it to the
Collateral Agent for the benefit of itself, the Trustee and the Holders, the
Company or such Domestic Guarantor, as the case may be, shall be entitled to
exercise all such voting, consensual rights and other rights pertaining to such
Collateral.

     Release of Collateral.  Upon compliance by the applicable Issuer or
Guarantor with the conditions set forth below under the caption "-- Asset Sale
Release," "-- Non-Asset Sale Release" or "-- Release of Inventory and Accounts
Receivable Collateral" in respect of any release of items of its Collateral
described thereunder (and in the case of any such items of Collateral subject to
the conditions set forth below under the caption "-- Asset Sale Release," upon
delivery by the Company to the Collateral Agent and the Trustee of an opinion of
counsel to the effect that such conditions have been met), (a)(i) in the case of
any such items of Collateral subject to the conditions set forth below under the
caption "-- Asset Sale Release," the Collateral Agent will terminate and release
its Lien granted under the Collateral Agreements on such items of Collateral and
(ii) in the case of any such items of Collateral subject to the conditions set
forth below under the caption "-- Non-Asset Sale Release" or "-- Release of
Inventory and Accounts Receivable Collateral", the Lien granted under the
Collateral Agreements on such items of Collateral shall terminate and be
released automatically and without any action by or on behalf of the Collateral
Agent, and (b) in each such case, the Collateral Agent shall, at the sole cost
and expense of such applicable Issuer or Guarantor, execute and deliver to such
applicable Issuer or Guarantor such documents, without any representation,
warranty or recourse of any kind whatsoever, as or such applicable Issuer or
Guarantor shall reasonably request to evidence such termination and release.

     Asset Sale Release.  Each Issuer and Guarantor have the right to obtain a
release of items of Collateral (the "Released Interests") subject to an Asset
Sale permitted hereunder upon compliance with the condition that the Company
deliver to the Collateral Agent the following:

          (1) A notice from the Company requesting the release of Released
     Interests: (i) describing the proposed Released Interests; and (ii)
     specifying the Fair Market Value of such Released Interests on a date
     within 60 days of such notice (the "Valuation Date"); and

          (2) An Officers' Certificate of the Company certifying that: (i) such
     Asset Sale complies with the terms and conditions of the Indenture with
     respect to such Asset Sale to the extent such terms and conditions are
     required to be satisfied thereunder either prior to or concurrent with the
     consummation of such Asset Sale; (ii) there is no Default or Event of
     Default in effect or continuing on the date thereof or the date of such
     Asset Sale; (iii) the release of the Collateral will not result in a
     Default or Event of Default under the Indenture; (iv) the purchase price
     received is at least equal to the Fair Market Value of the Released
     Interests; (v) the release of such Released Interests would not be expected
     to interfere in any material respect with the Collateral Agent's ability to
     realize the value of the remaining Collateral and will not impair in any
     material respect the maintenance and operation of the remaining Collateral;
     and (vi) all conditions precedent in the Indenture relating to the release
     in question have been or will be complied with.

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     Non-Asset Sale Releases.  The Liens granted in favor of the Collateral
Agent for the benefit of itself, the Trustee and the Holders on Collateral
(including Collateral consisting of the Capital Stock of any Restricted
Subsidiary and any equipment that is obsolete or no longer useful in the
business of the applicable Issuer or Guarantor) and proceeds thereof that is
sold, conveyed or otherwise disposed of by the applicable Issuer or Guarantor
(including by way of a sale-and-leaseback) in the ordinary course of business,
whether in a single transaction or a series of related transactions, to any
Person (other than to the Company or any Guarantor) for Net Proceeds of $250,000
or less shall be subject to termination and release upon the consummation of any
such sale, conveyance or disposition.

     Release of Inventory and Accounts Receivable Collateral.  Notwithstanding
any provision to the contrary in the Indenture, Collateral comprised of accounts
receivable, inventory or (prior to an Event of Default) the proceeds of the
foregoing shall be subject to termination and release upon sales of such
inventory and collection of the proceeds of such receivables in the ordinary
course of business.

EVENTS OF DEFAULT

     The Indenture provides that each of the following constitutes an event of
default (each, an "Event of Default"):

          (i) a default for 30 days in the payment when due of premium, if any,
     or interest or Additional Interest, if any, on or with respect to any Note;

          (ii) a default in the payment when due of principal on any Note,
     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 the Indenture (other than the defaults specified in clauses (i)
     and (ii) above) or any Collateral Agreement 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) certain events of bankruptcy, insolvency or reorganization of
     either Issuer or any Significant Subsidiary;

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

          (viii) any Collateral Agreement at any time for any reason shall cease
     to be in full force and effect, or either Issuer or any Guarantor which is
     a Significant Subsidiary denies that it has any further liability under any
     Collateral Agreement, or gives notice to such effect (other than by reason
     of the termination of the Indenture or the release of such Guarantor from
     any Collateral Agreement in accordance with the Indenture), or any
     Collateral Agreement at any time for any reason shall cease to be effective
     in all material respects to grant the Collateral Agent the Liens purported
     to be created thereby on a material
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     portion of the Collateral thereunder, subject to Permitted Liens and no
     other Liens except as permitted by the Indenture or the Collateral
     Agreements, in each case for 30 days after the Company receives written
     notice thereof specifying such occurrence from the Trustee, the Collateral
     Agent or the Holders of at least 25% of the outstanding principal amount at
     maturity of the Notes.

     If any Event of Default (other than as specified in clause (vi) of the
preceding paragraph with respect to either Issuer) 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 request of such Holders shall,
declare all the Notes to be due and payable immediately by notice in writing to
the Issuers, and to the Issuers 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) of the preceding paragraph with respect to
either Issuer, the principal of, premium, if any, and any accrued interest and
Additional Interest, if any, on all outstanding Notes of both Issuers shall ipso
facto become immediately due and payable without further action or notice.
Holders may not enforce the Indenture or the Notes except as provided in the
Indenture and under the Trust Indenture Act.

     The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of all of the Holders waive
any existing Default or Event of Default and its consequences under the
Indenture except (i) a continuing Default or Event of Default in the payment of
the principal of, or premium, if any, or interest or Additional Interest, if
any, on, the Notes (which may only be waived with the consent of each affected
Holder), or (ii) in respect of a covenant or provision which under the Indenture
cannot be modified or amended without the consent of each Holder. Subject to
certain limitations, the Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from the Holders notice of any continuing Default or
Event of Default (except a Default or Event of Default relating to the payment
of principal, premium, interest or Additional Interest) if it determines that
withholding notice is in their interest.

     The Issuers are required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required, upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.

NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS

     The Indenture provides that no recourse for the payment of the principal
of, premium, if any, interest on or Additional Interest, if any, with respect to
any of the Notes or for any claim based thereon or otherwise in respect thereof,
and no recourse under or upon any obligation, covenant or agreement of either
Issuer in the Indenture, or in any of the Notes or because of the creation of
any Indebtedness represented thereby, shall be had against any officer,
employee, incorporator, direct or indirect controlling person, shareholder,
member, partner or Affiliate of such Issuer or of any successor Person thereof.
Each Holder, by accepting the Notes, and the Collateral Agent and the Trustee,
waive and release all such liability.

DEFEASANCE

     The Issuers may, at their option and at any time, elect to have the
obligations of the Issuers discharged with respect to the outstanding Notes
("defeasance"). Such defeasance means that the Issuers shall be deemed to have
paid and discharged the entire Indebtedness represented by the outstanding Notes
and to have satisfied all other obligations under the Notes and the Indenture
except for:

          (i) the rights of the Holders to receive, solely from the trust fund
     described below, payments in respect of the principal of, premium, if any,
     and interest and Additional Interest, if any, on such Notes when such
     payments are due;

          (ii) the Issuers' obligations with respect to the Notes concerning
     issuing temporary Notes, registration of Notes, mutilated, destroyed, lost
     or stolen Notes, and the maintenance of an office or agency for payment;

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          (iii) the rights, powers, trusts, duties and immunities of the Trustee
     under the Indenture; and

          (iv) the defeasance provisions of the Indenture.

     In addition, the Issuers may, at their option and at any time, elect to
have the obligations of the Issuers released with respect to certain covenants
that are described in the Indenture ("covenant defeasance") and any omission to
comply with such obligations shall not constitute a Default or an Event of
Default with respect to the Notes. In the event that a covenant defeasance
occurs, certain events (not including non-payment, bankruptcy and insolvency
events) described under "-- Events of Default" will no longer constitute Events
of Default with respect to the Notes.

     In order to exercise either defeasance or covenant defeasance:

          (i) the Issuers shall irrevocably deposit with the Trustee, as trust
     funds in trust, for the benefit of the Holders, cash in United States
     dollars, U.S. Government Obligations (as defined in the Indenture), or a
     combination thereof, in such amounts as will be sufficient, in the report
     of a nationally recognized firm of independent public accountants or a
     nationally recognized investment banking firm, to pay and discharge the
     principal of, premium, if any, and interest and Additional Interest, if
     any, on the outstanding Notes to redemption or maturity;

          (ii) the Issuers shall have delivered to the Trustee an opinion of
     counsel in the United States to the effect that the Holders 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 (in the case of
     defeasance, such opinion must refer to and be based upon a ruling of the
     Internal Revenue Service or a change in applicable Federal income tax
     laws);

          (iii) no Default or Event of Default shall have occurred and be
     continuing on the date of such deposit or insofar as clause (vi) under the
     first paragraph under "-- Events of Default" is concerned, at any time
     during the period ending on the 91st day after the date of deposit;

          (iv) such defeasance or covenant defeasance shall not result in a
     breach or violation of, or constitute a Default under the Indenture or a
     default under any other agreement or instrument to which either Issuer is a
     party or by which it is bound;

          (v) the Issuers shall have delivered to the Trustee opinions of
     counsel to the effect that (A) the trust funds will not be subject to any
     rights of holders of Indebtedness (other than the Holders) and (B) 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; and

          (vi) the Issuers shall have delivered to the Trustee Officers'
     Certificate and opinions of counsel, each stating that all conditions
     precedent under the Indenture 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 would result
     therefrom.

SATISFACTION AND DISCHARGE

     The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when:

          (i) either (a) all Notes theretofore authenticated and delivered
     (except lost, stolen or destroyed Notes which have been replaced or paid
     and Notes for whose payment money has theretofore been deposited in trust
     and thereafter repaid to the Issuers) have been delivered to the Trustee
     for cancellation or (b) all Notes not theretofore delivered to the Trustee
     for cancellation have become due and payable and the Issuers have
     irrevocably deposited or caused to be deposited with the Trustee an amount
     in United States dollars sufficient to pay and discharge the entire
     indebtedness on the Notes not theretofore

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     delivered to the Trustee for cancellation, for the principal of, premium,
     if any, interest and Additional Interest, if any, to the date of deposit;

          (ii) the Issuers have paid or caused to be paid all other sums payable
     under the Indenture by the Company; and

          (iii) the Issuers have delivered to the Trustee Officers' Certificate
     and opinions of counsel each stating that all conditions precedent under
     the Indenture relating to the satisfaction and discharge of the Indenture
     have been complied with.

RELEASE OF GUARANTEE

     So long as no Event of Default shall have occurred and be continuing, upon
(i)(A) the sale or disposition (whether by merger, stock purchase, asset or sale
or otherwise) of a Guarantor (or all or substantially all of the assets of any
such Guarantor or all of the Capital Stock of any such Guarantor) to an entity
which is not a Subsidiary of the Company or (B) such Guarantor ceases to be a
Restricted Subsidiary, and our compliance, in each case, to the extent
applicable, with the provisions of the covenant described above under the
caption "-- Certain Covenants -- Limitation on Asset Sales" that are required to
be satisfied thereunder either prior to or concurrent with the consummation of
the applicable transaction; (ii) the designation by the Company of such
Guarantor as an Unrestricted Subsidiary in accordance with the "-- Certain
Covenants -- Limitation on Restricted Payments" covenant described above; (iii)
upon satisfaction and discharge of the Indenture or payment in full of the
principal of, premium, if any, accrued and unpaid interest and Additional
Interest, if any, on the Notes and all other Obligations that are then due and
payable, such Guarantor or the U.S. Issuer with respect to the Company Guarantee
shall be deemed released from all its obligations under its Guarantee of the
Notes and the Indenture or the Company Guarantee, as applicable, or (iv) in the
case of any Foreign Guarantor or the U.S. Issuer with respect to the Company
Guarantee, upon payment in full of the principal of, premium, if any, accrued
and unpaid interest and Additional Interest, if any, on the Dutch Notes and all
other Obligations of the Dutch Issuer that are then due and payable, such
Foreign Guarantor or the U.S. Issuer, as the case may be, shall be deemed
released from all its Obligations under its Foreign Guarantee of the Dutch Notes
and the Indenture or the Company Guarantee, as applicable. Upon the release of
any Guarantor or the U.S. Issuer, as the case may be, from its Guarantee or the
Company Guarantee, as applicable, pursuant to the provisions of the Indenture,
each other Guarantor not so released shall remain liable for the full amount of
principal of, premium, if any, and interest and Additional Interest, if any, on,
the Notes as and to the extent provided in the Indenture.

     Upon delivery by the Company to the Collateral Agent and the Trustee of an
opinion of counsel to the effect that the conditions described in the
immediately preceding paragraph have been met, the Collateral Agent shall, at
the sole cost and expense of the Company, execute and deliver to the Company
such documents, without any representation, warranty or recourse of any kind
whatsoever, as the Company shall reasonably request to evidence such release.

AMENDMENT, SUPPLEMENT AND WAIVER

     Except as provided in the next two paragraphs, the Indenture, the Notes,
the Collateral Agreements, the Guarantees, the U.S. Guarantee or the
Registration Rights Agreement may be amended or supplemented with the written
consent of the Holders of at least 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), and any existing Default or Event
of Default or compliance with any provision of the Indenture or the Notes may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the then outstanding Notes (including consents obtained in connection
with a tender offer or exchange offer for Notes).

     Without the consent of each affected Holder, an amendment or waiver shall
not:

          (i) reduce the principal amount of the Notes whose Holders must
     consent to an amendment, supplement or waiver;

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          (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 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 or
     Additional Interest on any Notes;

          (iv) waive a Default or Event of Default in the payment of principal
     of, premium, if any, or interest or Additional Interest, if any, on the
     Notes (except that the 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 the Indenture relating to
     the right of the Holders to waive past Defaults or the rights of the
     Holders to receive payments of principal of, or premium, if any, or
     interest or Additional Interest, if any, on, the Notes;

          (vii) following the occurrence of a Change of Control, amend, change
     or modify either Issuer's obligation to make and consummate a Change of
     Control Offer by reason of such a 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 exercise
     by the Dutch Issuer of the Change of Control Redemption of Dutch Notes
     Right or Tax Redemption, amend, change or modify the Dutch Issuer's
     obligation to make and consummate a Change of Control Redemption of Dutch
     Notes or Tax Redemption with respect to such exercise 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 Redemption of Dutch Notes
     Right, Change of Control Redemption of Dutch Notes or Tax Redemption, or
     following the occurrence of an Asset Sale or any fiscal year of the Company
     ending on or after June 30, 2004, for which Excess Cash Flow was in an
     amount at least equal to $250,000, amend, change or modify the Issuers'
     obligations to make and consummate an Asset Sale Offer with respect to such
     Asset Sale or an Excess Flow Offer with respect to such fiscal year, as the
     case may be, or modify any of the provisions or definitions with respect
     thereto in a manner adverse to the Holders with respect to such Asset Sale
     Offer or Excess Cash Flow Offer, as the case may be;

          (viii) release any Guarantor that is a Significant Subsidiary or the
     U.S. Issuer with respect to the Company Guarantee from any of its
     obligations under its Guarantee or the Indenture or the Company Guarantee,
     as applicable, other than in accordance with the terms of the Indenture; or

          (ix) release all or substantially all of the Collateral.

     Notwithstanding the foregoing, without the consent of any Holder, the
Issuers and the Trustee may amend or supplement the Indenture or the Notes:

          (i) to cure any ambiguity, defect or inconsistency;

          (ii) to provide for uncertificated Notes in addition to or in place of
     certificated Notes;

          (iii) to provide for the assumption of either Issuer's Obligations to
     Holders in the event of any Disposition involving such Issuer in which such
     Issuer is not the Surviving Person;

          (iv) to make any change that would provide any additional rights or
     benefits to the Holders or that does not adversely affect the rights of any
     such Holder;

          (v) to release any Guarantor from its Guarantee and the Indenture or
     the U.S. Issuer with respect to the Company Guarantee from the Company
     Guarantee that is permitted to be released under the Indenture in
     accordance with the terms thereof; or

          (vi) to comply with the requirements of the Commission in order to
     effect or maintain the qualification of the Indenture under the Trust
     Indenture Act.
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TRANSFER AND EXCHANGE

     The registered Holder of a Note will be treated as the owner of such Note
for all purposes. A Holder may transfer or exchange Notes in accordance with the
Indenture. The Registrar and the Trustee may require a Holder among other
things, to furnish appropriate endorsements and transfer documents and the
applicable Issuer may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. Neither either Issuer nor the Registrar shall be
required to issue, register the transfer of or exchange any Note (i) during a
period beginning at the opening of business on the day that the Trustee receives
notice of any redemption from such Issuer and ending at the close of business on
the day the notice of redemption is sent to the Holders, (ii) selected for
redemption, in whole or in part, except the unredeemed portion of any Note being
redeemed in part may be transferred or exchanged, and (iii) during a Change of
Control Offer, Change of Control Redemption of Dutch Notes, Tax Redemption or an
Asset Sale Offer if such Note is tendered pursuant to such Change of Control
Offer, Change of Control Redemption of Dutch Notes, Tax Redemption or Asset Sale
Offer and not withdrawn.

THE TRUSTEE

     HSBC Bank USA, National Association is the Trustee under the Indenture and
has been appointed by the Issuers as Registrar and Paying Agent with regard to
the Notes.

     The Indenture (including the provisions of the Trust Indenture Act
incorporated by reference therein) contains limitations on the rights of the
Trustee thereunder, should it become a creditor of either Issuer, to obtain
payment of claims in certain cases or to realize on certain property received by
it in respect of any such claims, as security or otherwise. The Trustee is
permitted to engage in other transactions; provided, however, if it acquires any
conflicting interest (as defined in the Trust Indenture Act) it must eliminate
such conflict or resign.

GOVERNING LAW

     The Indenture is, and the Notes, the Guarantees, the Company Guarantee and
the U.S. Security Agreement will be, governed by the laws of the State of New
York, without regard to the principles of conflicts of law.

ENFORCEABILITY OF JUDGMENTS

     Since the operating assets of the Dutch Issuer and the Foreign Guarantors
are outside the United States, any judgment obtained in the United States
against either the Dutch Issuer or any Foreign Guarantor, including judgments
with respect to the payment of principal, premium, if any, interest, Additional
Amounts, if any, Additional Interest, if any, redemption price and any purchase
price with respect to the Dutch Notes, or any guarantee in respect thereof, may
not be collectible within the United States.

     A judgment obtained in the courts of another EU Member State would be
enforced by Dutch courts without re-examination of the merits of the case
subject to and in accordance with the EU Regulation on jurisdiction and
Recognition and Enforcement of Judgements in Civil and Commercial Matters, as
amended. In the absence of an applicable treaty between the United States and
The Netherlands, a judgment rendered by a court in the United States (the
"Foreign Court") will not be enforced by Dutch courts. In order to obtain a
judgment which is enforceable in The Netherlands, the claim must be relitigated
before a competent Dutch court. If and to the extent that the Dutch court finds
that the jurisdiction of the Foreign Court has been based on grounds which are
internationally acceptable and that proper legal procedures have been observed,
the Dutch court would, in principle, give binding effect to the final judgment
of the Foreign Court unless such judgment contravenes principles of Dutch public
policy.

     A final and conclusive judgment rendered in a court in another EU Member
State would be recognized and enforced by the Belgian courts without
re-examination of the merits, subject to the conditions set out in EU
legislation (the EU Regulation on Jurisdiction and Enforcement of Judgments in
Civil and Commercial Matters (44/2001) of 22 December 2001). A final and
conclusive judgment rendered in a court of a non-EU

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Member State would be recognized and enforced by the Belgian courts, provided
that the procedure set out in Article 570 of the Belgian Judicial Code is
followed. The foreign judgment would only be recognized and enforced in Belgium
after review of the merits by a court of first instance, and if the court is
satisfied that certain conditions have been fulfilled.

CERTAIN DEFINITIONS

     Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for the definition of all other terms used in the
Indenture.

     "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" has the meaning set forth in the Registration Rights
Agreement.

     "Administrative Agent" has the meaning set forth in the definition of the
term "Credit 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.

     "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 (A) (1) in the case of the Company or
any Domestic Restricted Subsidiary to the Company or any Guarantor and (2) in
the case of any Foreign Restricted Subsidiary to the Company or any Wholly Owned
Restricted Subsidiary, (B) directors' qualifying shares and (C) sales or grants
of licenses to use the patents, trade secrets, know-how and other intellectual
property of the Company or any of its Restricted Subsidiaries to the extent that
such license does not prohibit the Company and its Restricted Subsidiaries from
using the intellectual property so licensed or require the Company or any of its
Restricted Subsidiaries to pay any fees for such use) for Net Proceeds in excess
of $250,000.

     "Belgium Equipment" means all equipment located at the Belgium Plant.

     "Belgium Plant" means the plant owned by Phibro Belgium in Rixensart,
Belgium.

     "Belgium Plant Sale and Virginiamycin Production Transactions" means the
following transactions and payments, including payments required pursuant to the
documents to evidence such transactions, each of which is subject to entering
into definitive documentation containing customary representations, warranties,
covenants and indemnities for a transaction of that type, and changes in the
definitive economic terms which are not, individually or in the aggregate,
material to the Company: (i) the transfer of substantially all of the land and
buildings and certain equipment of Phibro Belgium at the Belgium Plant, as well
as the industrial activities and intellectual property relating to certain
solvent technology of Phibro Belgium, for a purchase price of EUR 6.2 million,
payable at closing; (ii) the transfer to GSK of a majority of the employees of
Phibro Belgium and the corresponding responsibility for statutory severance
obligations; (iii) GSK agreeing to be responsible for costs of cleaning-up, by
demolition or otherwise, certain buildings not to be used by it, but for Phibro
Belgium to reimburse GSK up to a maximum of EUR 0.7 million for such clean-up
costs; (iv) in

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recognition of the benefits to the Company from the proposed transaction, Phibro
Belgium agreeing to pay to GSK EUR 1.5 million within six months from the
closing date, EUR 1.5 million within eighteen months from the closing date,
EUR 1.5 million within thirty months from the closing date, and EUR 0.5 million
within forty-two months from the closing date; (v) Phibro Belgium retaining
certain excess land (valued at approximately EUR 0.4 million) and being able to
sell such land for its own account; (vi) Phibro Belgium being responsible for
certain plant closure costs and legally required severance indemnities in
connection with workforce reductions, estimated in total to be EUR 7.7 million,
of which an amount estimated to be approximately EUR 4.1 million would be
payable at or around the closing and an aggregate amount so estimated to be
approximately EUR 3.6 million would be payable over periods up to thirteen
years; and (vii) Phibro Belgium retaining any or all equipment at the Belgium
Plant, and being able to sell such equipment for the account of Phibro Belgium
or transfer such equipment, together with other assets and rights related to the
production of virginiamycin, to the Company's Restricted Subsidiary in Brazil
that owns the facility in Guarulhos or in connection with alternative production
arrangements.

     "Belgium Purchase Agreement" means a Purchase Agreement between Phibro
Belgium and GSK relating to the Belgium Plant Sale and Virginiamycin Production
Transactions, and any related or ancillary agreements or instruments entered
into by Phibro Belgium, GSK, their respective Affiliates and/or other persons in
connection with the Belgium Plant Sale and Virginiamycin Production
Transactions, in each case, as such agreements may be amended, modified or
supplemented (so long as such amendments, modifications or supplements are not,
individually or in the aggregate, materially adverse to the Company or the
Holders).

     "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.

     "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, having at
     the date of acquisition thereof combined capital and surplus of not less
     than $250.0 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;

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          (vi) in the case of any Foreign Restricted Subsidiary, Investments:
     (a) in direct obligations of the sovereign nation (or any agency or
     instrumentality thereof) in which such Foreign Restricted 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), plus (v) any non-recurring fees, charges or other expenses
made or incurred by the Company in connection with the Transactions.

     "Change of Control" means:

          (a) with respect to the Company, 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 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 the
        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; and

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          (b) with respect to the Dutch Issuer, the failure of the Company to
     own, directly or indirectly, 100% of the issued and outstanding Capital
     Stock of the Dutch Issuer (other than directors' qualifying shares).

     "Collateral" means, collectively, the Domestic Collateral and the Foreign
Collateral.

     "Collateral Agent" means HSBC Bank USA, National Association, as collateral
agent, and any successor thereto in accordance with the terms of the Indenture.

     "Collateral Agreements" means, collectively, the Domestic Collateral
Agreements and the Foreign Collateral Agreements.

     "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 Guarantee" means a guarantee by the U.S. Issuer in respect of the
Dutch Notes and all other Obligations of the Dutch Issuer under the Indenture.

     "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 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;
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          (iii) for purposes of the covenant entitled "-- Certain
     Covenants -- Limitation on Restricted Payments," 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;

          (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; and

          (vii) the amount of accretions on preferred stock not paid in cash and
     dividends paid in kind on preferred stock reducing Consolidated Net Income
     in accordance with FASB 150.

     "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 Restricted Subsidiaries, 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.

     "Copyright Security Agreement" means a Copyright Security Agreement made by
any of the Company or any Domestic Guarantor in favor of the Collateral Agent,
as amended or supplemented from time to time in accordance with its terms.

     "Credit Agreement" means the Loan and Security Agreement, dated as of the
Issue Date, among the Company, each of its Subsidiaries parties thereto, lenders
parties thereto as such (together with their successors and assigns, the
"Lenders") and Wells Fargo Foothill, Inc., as administrative agent (in such
capacity, together with its successors and assigns, the "Administrative Agent"),
or any other agreement providing for revolving credit loans, term loans,
receivables financing or letters of credit, 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, 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.

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

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     "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 would have similar
rights), in whole or in part on or prior to the stated maturity of the Notes.

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

     "Domestic Collateral" shall mean Collateral as defined in the Domestic
Collateral Agreements.

     "Domestic Collateral Agreements" means, collectively, the U.S. Security
Agreement, the U.S. Pledge Agreement, each Patent Security Agreement, each
Copyright Security Agreement and each Trademark Security Agreement, in each
case, as the same may be amended, supplemented or modified from time to time in
accordance with its terms.

     "Domestic Guarantee" means a guarantee by a Domestic Restricted Subsidiary
of the U.S. Issuer in respect of the U.S. Notes and all other Obligations of the
U.S. Issuer under the Indenture and the Dutch Notes and all other Obligations of
the Dutch Issuer under the Indenture.

     "Domestic Guarantor" means each Domestic Restricted Subsidiary of the U.S.
Issuer that is designated as such on the signature pages of the Indenture and
each other Domestic Restricted Subsidiary of the U.S. Issuer that has issued a
Domestic Guarantee.

     "Domestic Restricted Subsidiary" means any Restricted Subsidiary of the
Company that is not a Foreign Restricted Subsidiary.

     "Domestic Subsidiary" means any Subsidiary of the Company that is not a
Foreign Subsidiary.

     "Excess Cash Flow" means, for any period, Cash Flow for such period minus
the sum of (i) the lesser of (x) all Capital Expenditures made during such
period by the Company and its Restricted Subsidiaries and (y) $8.5 million; (ii)
the sum of (x) the cash portion of the Consolidated Interest Expense (net of
interest income) for such period and (y) the cash portion of any related
financing fees for such period; (iii) the aggregate amount (without duplication)
of all federal, state and foreign income taxes and franchise taxes actually paid
in cash by the Company and its Restricted Subsidiaries during such period.

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

     "Existing Notes" shall mean the Company's outstanding 9.875% senior
subordinated notes due 2008 as the same may be amended, modified, renewed,
refunded or refinanced from time to time.

     "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 Collateral" shall mean the assets or property subject to any Lien
under a Foreign Collateral Agreement.

     "Foreign Collateral Agreements" means, collectively, any and all agreements
purporting to grant a Lien on assets and properties of the Dutch Issuers and the
Foreign Guarantors to secure their respective Obligations under the Dutch Notes,
the Indenture and the Foreign Guarantees, which agreements shall be in form and
substance reasonably satisfactory to the Collateral Agent, in each case as
amended or supplemented from time to time in accordance with its terms.

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     "Foreign Guarantee" means a guarantee by Restricted Subsidiary of the Dutch
Issuer in respect of the Dutch Notes and all other Obligations of the Dutch
Issuer under the Indenture.

     "Foreign Guarantor" means each Restricted Subsidiary of the Dutch Issuer
that is designated as such on the signature pages of the Indenture and each
other Restricted Subsidiary of the Dutch Issuer that has issued a Foreign
Guarantee.

     "Foreign Restricted Subsidiary" means a Restricted Subsidiary of the
Company that is a Foreign Subsidiary.

     "Foreign Subsidiary" means a Subsidiary of the Company (1) which is
organized under the laws of any jurisdiction outside of the United States of
America, (2) which conducts the major portion of its business outside of the
United States of America and (3) all or substantially all of the property and
assets of which are located outside of the United States of America.

     "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.

     "GSK" means Glaxosmithkline Biologicals SA and/or Affiliates thereof.

     "Guarantees" means, collectively, the Domestic Guarantees and the Foreign
Guarantees.

     "Guarantors" means, collectively, the Domestic Guarantors and the Foreign
Guarantors; provided that any Person constituting a Guarantor as described above
shall cease to constitute a Guarantor when its respective Guarantee is released
in accordance with the terms of the Indenture.

     "guaranty" 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.

     "Holder" means the Person in whose name a Unit or, if a Separation Event
has occurred, a Note, is registered on the Registrar's books.

     "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;

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<PAGE>

          (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 guaranty 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 guaranty 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 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 Documents" means, collectively, the Indenture, the Notes, the
Guarantees, the Company Guarantee and the Collateral Agreements.

     "Intercreditor Agreement" means the Intercreditor Agreement, dated as of
the Issue Date, among the Administrative Agent, the Collateral Agent, the
Company and the Domestic Guarantors, as the same may be amended, supplemented or
modified from time to time.

     "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, any guaranty) 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 (x) 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, and (y) payments made by the Company and its
Restricted Subsidiaries in respect of liabilities of the type described in
clauses (ii)(b) and (e) of the definition of the term "Net Proceeds" in
connection with (1) any Asset Sales by the Company or any of its Restricted
Subsidiaries (provided, however, that the aggregate amount of such payments
relating to any such Asset Sale shall at no time exceed the gross proceeds
actually received by the Company or such Restricted Subsidiary in connection
with such Asset Sale) and (2) the disposition of all or substantially all of the
Capital Stock or assets of MRT and PMC. For the purposes of the "Limitation on
Restricted Payments" covenant, (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,
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however, that no such payment of dividends or distributions or 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 October 21, 2003, the date of the original issuance of
the Units and the underlying Notes.

     "Lenders" has the meaning set forth in the definition of the term "Credit
Agreement."

     "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).

     "MRT" means Mineral Resource Technologies, Inc., a Delaware corporation.

     "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 required to be (and is in fact) 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 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.

     "Obligations" means any principal, premium, interest (including Additional
Interest), Additional Amounts, penalties, fees, indemnifications, reimbursement
obligations, damages and other liabilities and obligations payable under the
Indenture, any Note or any other Indenture Document.

     "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 the Indenture.

     "Patent Security Agreement" means a Patent Security Agreement made by any
of the Company or any Domestic Guarantor in favor of the Collateral Agent, as
amended or supplemented from time to time in accordance with its terms.

     "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
thereof (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 any of the

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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 Investments" means:

          (i) Investments by the Company or any Restricted Subsidiary of the
     Company (A) in any Person that is or will become immediately after such
     Investment a Domestic Guarantor or that will merge or consolidate into the
     Company or a Domestic Guarantor or (B) in either Issuer or any Guarantor,
     to the extent 100% of the net proceeds thereof are used substantially
     contemporaneously with the receipt of such proceeds to make any redemption,
     repurchase or other retirement for value or payment on or in respect of the
     Dutch Notes or its Guarantee or the Company Guarantee, as applicable, in
     respect thereof, as applicable;

          (ii) any investment in cash or Cash Equivalents;

          (iii) Investments in the Company by any Restricted Subsidiary of the
     Company; provided that any Indebtedness evidencing such Investment held by
     a Restricted Subsidiary shall satisfy the requirements of clause (vii) of
     the definition of the term "Permitted Indebtedness";

          (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 the covenant described under
     "Limitations on Asset Sales" or any other disposition not constituting an
     Asset Sale;

          (vi) Interest Rate Agreement Obligations and Currency Agreement
     Obligations permitted pursuant to the second paragraph of the covenant
     described under "Limitation on Incurrence of Indebtedness" above;

          (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) Investments by any Foreign Subsidiary of the Company that (A)
     is not the Dutch Issuer or a Restricted Subsidiary of the Dutch Issuer, in
     any other Foreign Subsidiary of the Company and (B) is the Dutch Issuer or
     a Foreign Guarantor, in either Issuer or any Guarantor;

          (ix) Investments in any Foreign Subsidiary of the Company by the
     Company or any Restricted Subsidiary of the Company to the extent the
     aggregate amount of such Investments at any one time outstanding does not
     exceed $5.0 million;

          (x) other Investments made after the Issue Date in an aggregate amount
     at any one time outstanding not to exceed $2.5 million; and

          (xi) Investments in Restricted Subsidiaries of the Company in
     connection with the production of virginiamycin in an amount not to exceed
     the Fair Market Value of the Belgium Equipment plus $15.0 million.

     "Permitted Liens" means:

          (i) Liens securing Indebtedness under the Credit Agreement to the
     extent such Indebtedness is permitted under clause (i), (xiii), (xiv) or
     (xvii) of the definition of the term "Permitted Indebtedness";

          (ii) Liens securing Acquired Debt incurred in accordance with the
     terms of the Indenture; provided, however, that (A) such Liens secured such
     Acquired Debt at the time of and prior to the incurrence of such Acquired
     Debt by the Company or a Restricted Subsidiary of the Company and were not
     granted in connection with, or in anticipation of, the incurrence of such
     Acquired Debt by the Company or a Restricted Subsidiary of the Company and
     (B) such Liens do not extend to or cover any property or assets of the
     Company or of any of its Restricted Subsidiaries other than the property or
     assets

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     that secured the Acquired Debt prior to the time such Indebtedness became
     Acquired Debt of the Company or a Restricted Subsidiary of the Company (and
     property or assets acquired in replacement of any such property or assets
     after such time to the extent acquired using the proceeds of any such
     replaced property or assets) and are not materially more favorable to the
     lienholders than those securing the Acquired Debt prior to the incurrence
     of such Acquired Debt by the Company or a Restricted Subsidiary of the
     Company;

          (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 other
     property of the Company or such Restricted Subsidiary;

          (iv) Liens in respect of Interest Rate Agreement Obligations and
     Currency Agreement Obligations permitted under the Indenture;

          (v) Liens in favor of the Company or any Restricted Subsidiary so long
     as such Liens are subordinated to the Liens described in clause (vii)
     below;

          (vi) Liens existing or created on the Issue Date;

          (vii) Liens securing the Notes, the Guarantees or the Company
     Guarantee;

          (viii) Liens securing Capital Lease Obligations and Purchase Money
     Obligations permitted pursuant to clause (xi) of the definition of
     "Permitted Indebtedness"; provided, however, that (A) in the case of any
     Capital Lease Obligations, such Liens do not extend to any property or
     assets which is not leased property subject to such Capitalized Lease
     Obligations (whether or not such property or assets were the initial leased
     property thereunder) and (B) in the case of any Purchase Money Obligations,
     (1) the Indebtedness shall not exceed the cost of the real property
     acquired, together with the cost of the installation and construction
     thereof and improvements thereto, and shall not be secured by any property
     or assets of the Company or any Restricted Subsidiary of the Company other
     than such property and improvements thereto so acquired, installed or
     constructed (and property or assets acquired in replacement of any such
     property or assets after such date of acquisition, installation or
     construction to the extent acquired using the proceeds of any such replaced
     property or assets) and (2) the Lien securing such Indebtedness shall be
     created within 30 days of such acquisition, installation or construction
     or, in the case of a refinancing of any such Purchase Money Obligations,
     within 30 days of such refinancing;

          (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 operating 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 the Indenture; provided that (a) any such Lien not extend
     to or cover any assets or property not securing the Indebtedness so
     refinanced; (b) any such Lien is no less favorable to the Holders and are
     not more favorable to the lienholders with respect to
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     such Lien than the Lien in respect of the Indebtedness being amended,
     modified, renewed refunded, replaced or refinanced and (c) the Refinancing
     Indebtedness secured by such Lien shall have been permitted to be incurred
     under the Indenture;

          (xv) Liens securing Indebtedness of Foreign Restricted Subsidiaries to
     the extent such Indebtedness is permitted under clauses (x), (xv) and
     (xvii) of the definition of the term "Permitted Indebtedness;" provided,
     however, that no asset of the Company or any Domestic Restricted Subsidiary
     shall be subject to any such Lien;

          (xvi) judgment Liens not giving rise to an Event of Default so long as
     such Lien is adequately bonded and any appropriate legal proceedings which
     may have been duly initiated for the review of such judgment shall not have
     been finally terminated or the period within which such proceedings may be
     initiated shall not have expired;

          (xvii) easements, rights-of-way, zoning restrictions, title
     irregularities and other similar charges or encumbrances in respect of real
     property not interfering in any material respect with the ordinary conduct
     of the business of the Company or any if its Restricted Subsidiaries;

          (xviii) Liens upon specific items of inventory or other goods and
     proceeds of any Person securing such Person's obligation in respect of
     bankers' acceptances issued or created for the account of such Person (to
     the extent the Indebtedness evidenced thereby was permitted to be incurred
     under the terms of the Indenture) to facilitate the purchase, shipment or
     storage of such inventory or other goods; and

          (xix) Liens arising in connection with the placement by either Issuer
     or any Restricted Subsidiary of the Company, as the case may be, of a
     reasonable amount of cash (as determined in good faith by such Person's
     board of director) in escrow against any obligations permitted pursuant to
     clause (xviii) of "Certain Covenants -- Limitation on Incurrence of
     Indebtedness."

     "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.

     "Phibro Belgium" means Phibro Animal Health SA (formerly Phibro Animal
Health (Belgium) SPRL).

     "PMC Sale Transactions" means the following transactions and payments,
including payments required pursuant to the documents evidencing such
transactions: (i) the transfer of ownership to the Palladium Investors of The
Prince Manufacturing Company ("PMC") which would be valued at approximately $21
million; (ii) the reduction of the preferred stock of the Palladium Investors to
$15.2 million (as of September 30, 2003); (iii) the termination of any
obligation of the Company or any Restricted Subsidiary of the Company in respect
of the $2.25 million annual management advisory fee (subject to reinstatement if
these transactions are not consummated on or before December 31, 2003); (iv) a
separate cash payment to the Palladium Investors of $10 million from the recent
sale of MRT; (v) payments by PMC to the Company for central support services for
the three years ending June 30, 2006 of $1 million, $0.5 million and $0.2
million, respectively; (vi) supply arrangements between the Company and PMC with
respect to manganous oxide and red iron oxide; (vii) customary representations,
warranties and indemnities by the Company, and provisions for closing working
capital balance adjustments, settlement of intercompany accounts owed to PMC, a
closing fee payable to Palladium and the agreement of the Company to pay or
reimburse the Palladium Investors for their reasonable out-of-pocket expenses;
and (viii) the establishment by the Company of a $1 million escrow or other
credit support for two years to secure its net working capital and foregoing
indemnification obligations, and indemnification of the Palladium Investors,
payable after the maturity of the Notes, for a portion, at the rate of $0.65 for
every dollar, of the amount they receive in respect of the disposition of PMC
less than $21 million, up to a maximum payment by the Company of $4 million.

     "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

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distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over Capital Stock of any other class of such
Person.

     "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.

     "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.

     "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); (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 the covenant described under "-- Certain
Covenants -- Limitation on Incurrence of Indebtedness;" or (iv) any Restricted
Investment. A Permitted Investment is not a Restricted Payment.

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

     "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 Severance Agreement
between Phibro-Tech, Inc. and James O. Herlands, dated February 21, 1995 and
(iv) the Stockholders Agreement, dated as of November 30, 2000, among, inter
alia, the Company, Jack C. Bendheim and the Palladium Investors; 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 or Phibro-Tech, 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.

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     "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 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, has more than 50% of the outstanding partnership or
similar interests or has 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.

     "Trademark Security Agreement" means a Trademark Security Agreement made by
any of the Company or any Domestic Guarantor in favor of the Collateral Agent,
as amended or supplemented from time to time in accordance with its terms.

     "Transactions" means, collectively, the Offering, the PMC Sale Transactions
and the solicitation of consents with respect to the Company's Existing Notes to
amendments to the indenture governing the Existing Notes, the Belgium Plant Sale
and Virginiamycin Production Transactions and the offering of the Notes
described in clause (xx) of the second paragraph under "-- Certain
Covenants -- Limitation on Incurrence of Indebtedness" to refinance a portion of
the Credit Agreement and the solicitation of consents with respect to the Notes
to amendments to the indenture to permit the foregoing.

     "U.S. Pledge Agreement" means the Pledge Agreement, dated as of the Issue
Date, made by the Company and the Domestic Guarantors parties thereto in favor
of the Collateral Agent, as amended or supplemented from time to time in
accordance with its terms.

     "U.S. Security Agreement" means the Security Agreement, dated as of the
Issue Date, made by the Company and the Domestic Guarantors in favor of the
Collateral Agent, as amended or supplemented from time to time in accordance
with its terms.

     "Unrestricted Subsidiary" means any Subsidiary of the Company designated as
such pursuant to and in compliance with the covenant described under
"-- Limitation on Designation of Unrestricted Subsidiaries" and not redesignated
a Restricted Subsidiary in compliance with such covenant.

     "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 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 nominee shares held by a third party to comply with local
law) of which are owned, directly or indirectly, by the Company or a Surviving
Person of any Disposition involving the Company, as the case may be.

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BOOK-ENTRY; DELIVERY AND FORM

     The certificates representing each Unit will be issued in fully registered
form without interest coupons.

     Units sold in reliance on Rule 144A will initially be represented by
permanent global units (each a "Restricted Global Unit") consisting of U.S.
Notes and Dutch Notes in fully registered form without interest coupons (each a
"Restricted Global Note") and will be deposited with the Trustee as a custodian
for The Depository Trust Company ("DTC") and registered in the name of a nominee
of such depositary.

     Units sold in offshore transactions in reliance on Regulation S under the
Securities Act will initially be represented by global units (a "Regulation S
Global Unit") consisting of U.S. Notes and Dutch Notes in fully registered form
without interest coupons (each a "Regulation S Global Note") and will be
deposited with the Trustee as custodian for DTC, as depositary, and registered
in the name of a nominee of such depositary for the account of the operator of
the Euroclear System or Clearstream Banking. Prior to the expiration of the
"distribution compliance period" (as defined in Regulation S), a beneficial
interest in the Regulation S Global Unit may be transferred to a Person who
takes delivery in the form of an interest in the Restricted Global Unit only
upon receipt by the Trustee of a written certification from the transferor to
the effect that such transfer is being made to a Person whom the transferor
reasonably believes is a QIB in a transaction meeting the requirements of Rule
144A. Beneficial interests in a Restricted Global Unit may be transferred to a
Person who takes delivery in the form of an interest in a Regulation S Global
Unit whether before, on or after such a time, only upon receipt by the Trustee
of a written certification to the effect that such transfer is being made in
accordance with Regulation S.

     Any beneficial interest in a Regulation S Global Unit or a Restricted
Global Unit (each a "Global Unit") that is transferred to a Person who takes
delivery in the form of an interest in a Restricted Global Unit or a Regulation
S Global Unit, respectively, will, upon transfer, cease to be an interest in the
type of Global Unit previously held and become an interest in the other type of
Global Unit and, accordingly, will thereafter be subject to all transfer
restrictions, if any, and other procedures applicable to beneficial interests in
such other type of Global Unit for as long as it remains an interest.

     The Global Units and Global Notes (and any Units or Notes issued in
exchange therefore) will be subject to certain restrictions on transfer set
forth therein and in the indenture and will bear the legend regarding such
restrictions set forth under the heading "Notice to Investors" herein. Subject
to such restrictions, QIBs or non-U.S. purchasers may elect to take physical
delivery of their certificates (each a "Certified Security") instead of holding
their interests through the Global Units and Global Notes (and which are then
ineligible to trade through DTC) (collectively referred to herein as the
"Non-Global Purchasers"). Upon the transfer to a QIB of any Certificated
Security initially issued to a Non-Global Purchaser, such Certified Security
will, unless the transferee requests otherwise or the Global Units have
previously been exchanged in whole for Certificated Securities, be exchanged for
an interest in the Global Units. For a description of the restrictions on
transfer of Certificated Securities and any interest in the Global Units, see
"Notice to Investors."

     Book-entry interests for Restricted Global Units and Permanent Regulation S
Global Units will be shown on, and transfers thereof will be effected only
through, records maintained by Euroclear or Clearstream and their participants.
The laws of some jurisdictions, including some states of the United States, may
require that certain purchasers of securities take physical delivery of those
securities in definitive form.

THE GLOBAL UNITS

     We expect that pursuant to procedures established by DTC (i) upon the
issuance of the Global Units, DTC or its custodian will credit, on its internal
system, the principal amount at maturity of the individual beneficial interests
represented by the underlying Global Notes to the respective accounts of Persons
who have accounts with such depositary and (ii) ownership of beneficial
interests in the Global Units will be shown on, and the transfer of such
ownership will be effected only through, records maintained by DTC or its
nominee (with respect to interests of participants) and the records of
participants (with respect to interests of Persons other than participants).
Such accounts initially will be designated by or on behalf of the initial
purchasers and

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ownership of beneficial interests in the Global Units will be limited to Persons
who have accounts with DTC ("participants") or Persons who hold interests
through participants. Holders may hold their interests in the Global Units
directly through DTC if they are participants in such system, or indirectly
through organizations that are participants in such system.

     So long as DTC, Euroclear, Clearstream, or any of their respective
nominees, is the registered owner or holder of the Units, DTC, Euroclear,
Clearstream or such nominee, as the case may be, will be considered the sole
owner or holder of the Notes represented by such Global Units for all purposes
under the indenture. No beneficial owner of an interest in the Global Units will
be able to transfer that interest except in accordance with DTC's, Euroclear's
or Clearstream's, as applicable, procedures, in addition to those provided for
under the indenture with respect to the Units.

     Payments of the principal of, and premium (if any) and interest (including
Additional Interest) on, the Global Notes will be made to DTC, Euroclear,
Clearstream or their respective nominees, as the case may be, as the registered
owner thereof. None of us, the Trustee or any paying agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global Units
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interest.

     We expect that DTC, Euroclear, Clearstream or their respective nominees,
upon receipt of any payment of principal, premium, if any, interest (including
Additional Interest) on the Global Notes, will credit participants' accounts
with payments in amounts proportionate to their respective beneficial interests
in the principal amount of the Global Notes as shown on the records of DTC,
Euroclear, Clearstream or their respective nominees. We also expect that
payments by participants to owners of beneficial interests in the Global Units
held through such participants will be governed by standing instructions and
customary practice, as is now the case with securities held for the accounts of
customers registered in the names of nominees for such customers. Such payments
will be the responsibility of such participants.

     Transfers between participants in DTC will be effected in the ordinary way
through DTC's same-day funds system in accordance with DTC rules and will be
settled in same day funds. If a Holder requires physical delivery of a
Certificated Security for any reason, including to sell Units to Persons in
states which require physical delivery of the Units, or to pledge such
securities, such Holder must transfer its interest in a Global Unit, in
accordance with the normal procedures of DTC and with the procedures set forth
in the indenture.

     Participants in Euroclear and/or Clearstream must rely upon the procedures
of Euroclear and Clearstream in order to transfer their interests in the Global
Units, and indirect participants must rely on the procedures of the participants
through which they own book-entry interests to transfer their interests or to
exercise any rights of holders under the indenture.

     DTC, Euroclear and Clearstream have advised us that they will take any
action permitted to be taken by a Holder of Units and Notes (including the
presentation of Units and Notes for exchange as described below) only at the
direction of one or more participants to whose account the DTC, Euroclear or
Clearstream interests in the Global Units are credited and only in respect of
such portion of the aggregate principal amount of Notes as to which such
participant or participants has or have given such direction. However, if there
is an event of default under the indenture, DTC, Euroclear and Clearstream will
exchange the Global Units and Global Notes for Certificated Securities, which
they will distribute to their participants and which will be legended as set
forth under the heading "Notice to Investors."

     DTC has advised us as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code and a "Clearing Agency" registered pursuant to the provisions of
Section 17A of the Securities Exchange Act of 1934. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and

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certain other organizations. Indirect access to the DTC system is available to
others such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly. Although DTC has agreed to the foregoing procedures in order to
facilitate transfers of interests in the Global Units among participants of DTC,
it is under no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Trustee nor we will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.

     We understand as follows with respect to Euroclear and Clearstream:
Euroclear and Clearstream hold securities for participating organizations and
facilitate the clearance and settlement of securities transactions between their
respective participants through electronic book-entry changes in accounts of
such participants. Euroclear and Clearstream provide to their participants,
among other things, services for safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing. Euroclear and Clearstream interface with domestic securities markets.
Euroclear and Clearstream participants are financial institutions such as
underwriters, securities brokers and dealers, banks, trust companies and certain
other organizations. Indirect access to Euroclear or Clearstream is also
available to others such as banks, brokers, dealers and trust companies that
clear through or maintain a custodian relationship with Euroclear or Clearstream
participants, either directly or indirectly.

CERTIFICATED SECURITIES

     Certificated Securities shall be issued in exchange for beneficial
interests in the Global Units and underlying Global Notes (i) for Global Units
or Global Notes held by DTC, if requested by a Holder of such interests or (ii)
if DTC, Euroclear or Clearstream is at any time unwilling or unable to continue
as a depositary for the Global Notes and a successor depositary is not appointed
by us within 90 days.

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                         CERTAIN UNITED STATES FEDERAL
                            INCOME TAX CONSEQUENCES

     The following is a summary of certain material U.S. federal income tax
consequences of the exchange, ownership and disposition of Notes and Units to
holders of old units that acquired old units at the initial offering price
thereof pursuant to the initial offering thereof. Unless the context otherwise
requires, any reference in this summary to Units refers to both old units and
Exchange Units and any reference to Notes refers to both old notes and Exchange
Notes. Unless otherwise stated under the heading "Non-U.S. holders" below, this
summary deals only with Units (and the notes comprising the components thereof)
held as capital assets within the meaning of Section 1221 of the Code (as
defined below) by U.S. holders (as defined below). It does not deal with special
classes of holders such as banks, thrifts and other financial institutions, real
estate investment trusts, regulated investment companies, insurance companies,
dealers or traders in securities or currency or tax-exempt investors. This
summary also does not address the tax consequences to U.S. holders that have a
functional currency other than the U.S. Dollar, U.S. expatriates, partnerships
or other entities treated as partnerships that hold Units, persons that hold
Units as part of a straddle, hedging, constructive sale or conversion
transaction, or shareholders, partners or beneficiaries of a holder of Units. It
also does not include any description of any tax consequences under the tax laws
of any state or local government or of any foreign jurisdiction that may be
applicable to the Units (and the notes comprising the components thereof) (a
description of certain Dutch tax consequences follows this summary). This
summary is based on the Internal Revenue Code of 1986, as amended, which we
refer to in this prospectus as the Code, Treasury regulations under the Code,
which we refer to in this prospectus as the Treasury Regulations, and
administrative and judicial interpretations thereof, as of the date of this
prospectus, all of which are subject to change, possibly on a retroactive basis.

     IF YOU ARE CONSIDERING EXCHANGING UNITS, YOU SHOULD CONSULT YOUR OWN TAX
ADVISOR TO DETERMINE THE FEDERAL, STATE, LOCAL AND FOREIGN INCOME TAX
CONSEQUENCES OF THE EXCHANGE, OWNERSHIP AND DISPOSITION OF THE OLD NOTES AND THE
APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO YOUR SITUATION.

     As used in this section, the term "U.S. holder" means any beneficial owner
of old units (and the old notes comprising the components thereof) that is, for
United States federal income tax purposes,

     - a citizen or resident of the United States,

     - a corporation (or other entity taxable as a corporation for U.S. federal
       income tax purposes) created or organized in or under the laws of the
       United States or of any state thereof or the District of Columbia,

     - an estate the income of which is subject to United States federal income
       taxation regardless of its source, or

     - a trust if (1) a court within the United States is able to exercise
       primary supervision over the administration of the trust and one or more
       United States persons have the authority to control all substantial
       decisions of the trust or (2) the trust has in effect a valid election to
       be treated as a domestic trust for United States federal income tax
       purposes.

     As used in this discussion, the term Non-U.S. holder means a beneficial
owner of old units (and the old notes comprising the components thereof) that is
not a U.S. holder and is not an entity organized in or under the laws of the
United States, any state thereof or the District of Columbia.

TAX CONSEQUENCES OF THE EXCHANGE OFFER

     The exchange of old units and underlying old notes for publicly registered
Units ("Exchange Units") and underlying publicly registered notes ("Exchange
Notes") having substantially identical terms, under current law, will not be
treated as an "exchange" or other taxable event for federal income tax purposes.
Accordingly,

     - holders will not recognize taxable gain or loss upon the receipt of
       Exchange Units (and underlying Exchange Notes) in exchange for old units
       (and underlying old notes) in the Exchange Offer,

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     - the holding period for an Exchange Unit (or underlying Exchange Note)
       received in the exchange offer will include the holding period of the old
       unit (or underlying old note) surrendered in exchange therefor, and

     - the adjusted tax basis of an Exchange Unit (or underlying Exchange Note)
       immediately after the exchange will be the same as the adjusted tax basis
       of the old unit (or underlying old note) surrendered in exchange
       therefor.

TAX CONSEQUENCES OF OWNERSHIP AND DISPOSITION OF NOTES AND UNITS

  U.S. HOLDERS

     Allocation of Issue Price.  The issue price of a Unit for U.S. federal
income tax purposes will be the first price at which a substantial amount of the
Units are sold to the public. Under Treasury Regulations, we are required to
allocate the issue price of a Unit between the Notes comprising the components
of the Unit based on the relative fair market values of each. The portion of the
issue price of a Unit allocated to each Note will constitute the issue price of
such Note. Such allocation is binding on a U.S. holder unless the holder
discloses on a statement attached to its U.S. federal income tax return that it
is using a different allocation. There can be no assurance, however, that the
IRS will respect our determination of the relative fair market values of the
Notes. If our determination were successfully challenged by the IRS, the amount,
timing, and character of income on a Note could be different from that resulting
under the allocation determined by us.

     Interest Income.  Stated interest on a Note comprising a portion of a Unit
will be includible in a U.S. holder's gross income as ordinary interest income
at the time it is accrued or received in accordance with the U.S. holder's
method of accounting for United States federal income tax purposes.

     Premium.  The Notes issued pursuant to the 2004 Offering are treated as
issued at a premium. The amount of premium on any such Note will be the
difference between the portion of the U.S. holder's cost of the related Unit
that is allocable to the Note and the principal amount of the Note. A U.S.
holder may elect to amortize such premium (as an offset to interest income),
using a constant-yield method over the term of the Note. Such election, once
made, generally applies to all taxable debt instruments held or subsequently
acquired by the U.S. holder during or after the first taxable year to which the
election applies and may not be revoked without the consent of the IRS.

     Sale, Exchange or Retirement of Notes or Units.  Upon sale, exchange, or
retirement of a Note, a U.S. holder generally will recognize gain or loss equal
to the difference between the U.S. holder's adjusted tax basis in the Note and
the amount realized on the sale, exchange, or retirement (less any accrued but
previously unpaid interest, which would be treated as a payment of previously
accrued interest on the Notes). A U.S. holder's adjusted tax basis in a Note
will generally equal the cost of the related Unit allocable to such note as
described above in "-- U.S. Holders -- Allocation of Issue Price" reduced by the
amount of premium previously amortized on the Note. If a U.S. holder does not
elect to amortize premium on a Note, then the holder's tax basis will include
amounts representing the premium. Thus, if such U.S. holder holds the Note to
maturity, the holder would generally be required to treat the premium as a loss
when the Note matures. The amount realized on disposition of a Unit will be
treated as an amount realized on disposition of each Note comprising the
components thereof, such amount to be allocated between the Notes on the basis
of the relative fair market values of each. Assuming the Unit and related Note
was held as a capital asset, gain or loss so recognized will be capital gain or
loss and will be long-term capital gain or loss if, at the time of the sale,
exchange, or retirement, the Unit and related note was held for more than one
year. Under current law, net capital gains of non-corporate taxpayers, under
certain circumstances, are taxed at lower rates than items of ordinary income.
The deduction of capital losses is subject to certain limitations applicable to
both corporations and individuals.

NON-U.S. HOLDERS

     Interest Income.  Generally, interest income on a U.S. Note (including
original issue discount) of a Non-U.S. holder that is not effectively connected
with a United States trade or business will be subject to a

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withholding tax at a 30% rate or, if applicable, a lower tax rate specified by a
treaty. However, interest income (including original issue discount) earned on a
U.S. Note by a Non-U.S. holder may qualify for the "portfolio interest"
exemption and therefore not be subject to United States federal income tax or
withholding tax, if such interest income is not effectively connected with a
United States trade or business of the Non-U.S. holder and if:

     - the Non-U.S. holder does not actually or constructively own 10% or more
       of the total combined voting power of all classes of the Company's stock
       entitled to vote,

     - the Non-U.S. holder is not a controlled foreign corporation that is
       related to the Company through stock ownership,

     - the Non-U.S. holder certifies to the Company or the Company's agent,
       under penalties of perjury, that it is not a U.S. holder and provides its
       name and address or otherwise satisfies applicable identification
       requirements, and

     - neither the Company nor its paying agent knows or has reason to know that
       the conditions of the exemption are, in fact, not satisfied.

     In the case of U.S. Notes held by foreign partnerships, the certification
described above generally must be provided by the partners, rather than by the
partnerships, and the partnership must provide certain information, including a
U.S. taxpayer identification number. A look through rule applies in the case of
tiered partnerships.

     Subject to the discussion below, a Non-U.S. holder generally will not be
subject to U.S. federal income or withholding tax on interest income on a Dutch
Note.

     A Non-U.S. holder generally will be taxed in the same manner as a U.S.
holder with respect to interest income on U.S. Notes or Dutch Notes that is
effectively connected with a United States trade or business of the Non-U.S.
holder unless an applicable treaty provides otherwise. In the case of a Non-U.S.
holder that is eligible for benefits of an income tax treaty with the United
States, such Non-U.S. holder generally will be taxed on its effectively
connected interest income in the same manner as a U.S. holder only if such
income is attributable to a permanent establishment maintained by the Non-U.S.
holder in the United States. Such effectively connected interest received or
accrued by a corporate Non-U.S. holder may also, under certain circumstances, be
subject to an additional "branch profits" tax at a 30% rate or, if applicable, a
lower tax rate specified by a treaty. Even though such effectively connected
interest is subject to U.S. income tax and may be subject to the branch profits
tax, it is not subject to U.S. withholding tax if the holder delivers a properly
executed IRS Form W-8ECI (or a suitable substitute form) to us or our paying
agent and neither we nor our paying agent knows or has reason to know that the
information on the form is incorrect.

     Sale, Exchange, or Retirement of Note or Units.  A Non-U.S. holder
generally will not be subject to United States federal income tax or withholding
tax on any gain realized on the sale, exchange, or retirement of U.S. Notes or
Dutch Notes or Units unless:

     - the gain is effectively connected with a United States trade or business
       of the Non-U.S. holder (and, if a treaty applies, the gain is generally
       attributable to a United States permanent establishment maintained by
       that Non-U.S. holder), or

     - in the case of a Non-U.S. holder who is an individual, such holder is
       present in the United States for a period or periods aggregating 183 days
       or more during the taxable year of the disposition, and either such
       holder has a "tax home" in the United States or the disposition is
       attributable to an office or other fixed place of business maintained by
       such holder in the United States.

                                       156
<PAGE>

INFORMATION REPORTING AND BACKUP WITHHOLDING TAX

     In general, information reporting on IRS Form 1099 will apply to payments
to a U.S. Holder of principal, premium (if any) and interest on the Notes
comprising the Units and the proceeds of the sale of the Units. Backup
withholding tax may apply to such payments to a non-corporate U.S. holder if:

     - the U.S. holder fails to furnish or certify its correct taxpayer
       identification number to us or our paying agent in the manner required,

     - we are notified by the IRS that the U.S. holder has failed to report
       payments of interest or dividends properly, or

     - under certain circumstances the U.S. holder fails to certify that it has
       not been notified by the IRS that it is subject to backup withholding for
       failure to report interest or dividend payments.

     Information reporting on IRS Form 1099 and backup withholding tax generally
will not apply to payments of interest on Notes to a Non-U.S. holder if the
certification or identification requirements described in "-- Non-U.S.
holders -- Interest Income" above are satisfied by the holder, unless the payor
knows or has reason to know that the holder is not entitled to an exemption from
information reporting or backup withholding tax. However, we may report payments
of interest on the U.S. Notes to a Non-U.S. holder on IRS Form 1042-S regardless
of whether a Non-U.S. holder provides the certification or identification
requirements described above.

     Information reporting requirements and backup withholding tax will not
apply to any payment of the proceeds of the sale of Notes or Units effected
outside the United States by a foreign office of a "broker" (as defined in
applicable Treasury Regulations), unless the broker is a United States person or
has certain other connections to the United States. Payment of the proceeds of
any such sale effected outside the United States by a foreign office of a broker
with such connections to the United States described in the preceding sentence
will not be subject to backup withholding tax, but will be subject to
information reporting requirements, unless the broker has documentary evidence
in its records that the beneficial owner is a Non-U.S. holder and certain other
conditions are met, or the beneficial owner otherwise establishes an exemption.
Payment of the proceeds of any such sale to or through the United States office
of a broker is subject to information reporting and backup withholding
requirements unless the beneficial owner of the Notes provides the certification
described in "-- Non-U.S. holders -- Interest Income" or otherwise establishes
an exemption.

     Any amounts withheld under the backup withholding rules will be allowed as
a credit against that holder's United States federal income tax liability and
may entitle the holder to a refund, provided that the required information is
furnished to the IRS. The current rate for backup withholding tax is 28%.

     The foregoing summary of certain United States federal income tax
consequences of the exchange, ownership and disposition of Units and Notes is
intended for general information. You are urged to consult with your own tax
advisor as the U.S. federal income tax consequences of an investment in the
Units as well as the consequences under state, local and foreign income tax law.
Non-U.S. holders are urged to consult their own tax advisors as to the effect of
income tax treaties and reporting requirements with regard to the Units.

                                       157
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                         CERTAIN DUTCH TAX CONSEQUENCES

GENERAL

     The following summary describes the principal Dutch tax consequences of the
acquisition, holding, redemption and disposal of Dutch notes. This summary does
not purport to be a comprehensive description of all Dutch tax considerations
that may be relevant to a decision to acquire, to hold, and to dispose of the
Dutch notes. Each prospective noteholder should consult a professional adviser
with respect to the tax consequences of an investment in the Dutch notes. The
discussion of certain Dutch taxes set forth below is included for general
information purposes only.

     This summary is based on the Dutch tax legislation, published case law,
treaties, rules, regulations and similar documentation, in force as of the date
of this prospectus, without prejudice to any amendments introduced at a later
date and implemented with retroactive effect.

     This summary does not address the Dutch tax consequences of a holder of
Dutch notes who holds a substantial interest (aanmerkelijk belang) in the Dutch
issuer, within the meaning of Section 4.3 of the Income Tax Act 2001. Generally
speaking, a noteholder holds a substantial interest in the Dutch issuer, if such
noteholder, alone or together with his or her partner (statutory defined term)
or certain other related persons, directly or indirectly, holds (i) an interest
of 5 percent or more of the total issued capital of the Dutch issuer or of 5
percent or more of the issued capital of a certain class of shares of the Dutch
issuer, (ii) rights to acquire, directly or indirectly, such interest or (iii)
certain profit sharing rights in the Dutch issuer.

WITHHOLDING TAX

     No Dutch withholding tax is due upon payments on the Dutch notes.

CORPORATE INCOME TAX AND INDIVIDUAL INCOME TAX

     Residents of the Netherlands.  If the holder of Dutch notes is subject to
Dutch corporate income tax and the Dutch notes are attributable to its (deemed)
business assets, income derived from the Dutch notes and gains realized upon the
redemption and disposal of the Dutch notes are generally taxable in the
Netherlands.

     If the holder of Dutch notes is an individual, resident or deemed to be
resident of the Netherlands for Dutch tax purposes (including the individual
holder of Dutch notes who has opted to be taxed as a resident of the
Netherlands), the income derived from the Dutch notes and the gains realized
upon the redemption and disposal of the Dutch notes are taxable at the
progressive rates of the Income Tax Act 2001, if:

          (i) the holder of Dutch notes has an enterprise or an interest in an
     enterprise, to which enterprise the Dutch notes are attributable; or

          (ii) such income or gains qualify as "income from miscellaneous
     activities" (resultaat uit overige werkzaamheden) within the meaning of
     Section 3.4 of the Income Tax Act 2001, which include activities with
     respect to the Dutch notes that exceed "regular, active portfolio
     management" (normaal, actief vermogensbeheer).

     If neither condition (i) nor condition (ii) applies to the individual
holder of Dutch notes, the actual income derived from the Dutch notes and the
actual gains realized with respect to the Dutch notes will not be taxable.
Instead, such holder of Dutch notes will be taxed at a flat rate of 30% on
deemed income from "savings and investments" (sparen en beleggen) within the
meaning of Section 5.1 of the Income Tax Act 2001. This deemed income amounts to
4% of the average of the individual's "yield basis" (rendementsgrondslag) within
the meaning of article 5.3 of the Income Tax Act 2001 at the beginning of the
calendar year and the individual's yield basis at the end of the calendar year,
insofar the average exceeds a certain threshold. The fair market value of the
Dutch notes will be included in the individual's yield basis.

     Non-residents of the Netherlands.  A holder of Dutch notes that is not a
resident nor deemed to be a resident of the Netherlands for Dutch tax purposes
(nor, if he or she is an individual, has opted to be taxed as

                                       158
<PAGE>

a resident of the Netherlands) is not taxable in respect of income derived from
the Dutch notes and gains realized upon the redemption and disposal of the Dutch
notes, unless:

          (i) the holder of Dutch notes has an enterprise or an interest in an
     enterprise, that is, in whole or in part, carried on through a permanent
     establishment or a permanent representative in the Netherlands to which
     Dutch permanent establishment or permanent representative the Dutch notes
     are attributable, or

          (ii) the holder of Dutch notes is an individual and such income or
     gains qualify as "income from miscellaneous activities" (resultaat uit
     overige werkzaamheden) in the Netherlands within the meaning of Section 3.4
     of the Income Tax Act 2001, which include activities in the Netherlands
     with respect to the Dutch notes that exceed "regular, active portfolio
     management" (normaal, actief vermogensbeheer).

GIFT AND INHERITANCE TAXES

     Residents of the Netherlands.  Generally, gift and inheritance taxes will
be due in the Netherlands in respect of the acquisition of the Dutch notes by
way of a gift by, or on the death of, a holder of Dutch notes who is a resident
or deemed to be a resident of the Netherlands for the purposes of Dutch gift and
inheritance tax at the time of the gift or his or her death.

     An individual of Dutch nationality is deemed to be a resident of the
Netherlands for the purposes of the Dutch gift and inheritance tax, if he or she
has been resident in the Netherlands during the ten years preceding the gift or
his or her death. An individual of any other nationality is deemed to be a
resident of the Netherlands for the purposes of the Dutch gift and inheritance
tax only if he or she has been residing in the Netherlands at any time during
the twelve months preceding the time of the gift.

     Non-residents of the Netherlands.  No gift or inheritance taxes will arise
in the Netherlands in respect of the acquisition of the Dutch notes by way of
gift by, or as a result of the death of, a holder of Dutch notes who is neither
a resident nor deemed to be a resident of the Netherlands for the purposes of
the Dutch gift and inheritance tax, unless:

          (i) such holder of Dutch notes at the time of the gift has or at the
     time of his or her death had an enterprise or an interest in an enterprise
     that is or was, in whole or in part, carried on through a permanent
     establishment or a permanent representative in the Netherlands and to which
     Dutch permanent establishment or permanent representative the Dutch notes
     are or were attributable; or

          (ii) in the case of a gift of the Dutch notes by an individual who at
     the date of the gift was neither a resident nor deemed to be a resident of
     the Netherlands, such individual dies within 180 days after the date of the
     gift, while at the time of his or her death, being a resident or deemed to
     be a resident of the Netherlands.

     Treaties.  Treaties may limit the Dutch sovereignty to levy gift and
inheritance tax.

OTHER TAXES AND DUTIES

     No Dutch VAT, capital duty, registration tax, customs duty, transfer tax,
stamp duty or any other similar documentary tax or duty, will be due in the
Netherlands by a holder of Dutch notes in respect of or in connection with the
subscription, issue, placement, allotment or delivery of the Dutch notes.

EU SAVINGS DIRECTIVE

     On June 3, 2003, the European Council of Economics and Finance Ministers
adopted a Directive on the taxation of savings income. Under the Directive
Member States will (if equivalent measures have been introduced by certain
non-EU countries) be required, from July 1, 2005, to provide to the tax
authorities of another Member State details of payments of interest (or similar
income) paid by a person within its jurisdiction to an individual resident in
that other Member State. However, for a transitional period, Belgium, Luxembourg
and Austria will instead be required (unless during that period they elect
otherwise) to operate a withholding system in relation to such payments (the
ending of such transitional period being dependent upon the conclusion of
certain other agreements relating to information exchange with certain other
countries).
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<PAGE>

DUTCH TAX ASPECTS IN RELATION TO THE EXCHANGE

     Considering the fact that, except for the removal of the legend relating to
the SEC registration, the terms and conditions of the old notes are identical to
the terms and conditions of the new notes, it is reasonable to take the view
that the Exchange should not constitute a taxable event for Dutch tax purposes.
Since there is no authority or guidance with respect to this issue, it is,
however, possible that the Dutch tax authorities will assert that the Exchange
does constitute a taxable event.

     In the situation that the Dutch tax authorities take the view that the
Exchange constitutes a taxable event, a gain (if any) realized as a result of
the Exchange by a Dutch resident corporate noteholder will, in principle, be
taxable. If certain conditions are met, the gain can be deferred under the
"like-kind-exchange" case law (ruilarresten).

     If any gain would be realized as a result of the Exchange by a Dutch
resident individual noteholder, such gain would not be taxable when the notes
are held as a passive investment and as such are part of the "yield basis"
(rendementsgrondslag) within the meaning of article 5.3 of the Income Tax Act
2001. Such Dutch resident individual holder will be taxed on deemed income from
"savings and investments" (sparen en beleggen) within the meaning of Section 5.1
of the Income Tax Act 2001. A possible gain realized by a Dutch resident
individual holder would only be taxable if:

          (i) the noteholder has an enterprise or an interest in an enterprise,
     to which enterprise the Notes are attributable, with an exception for a
     possible deferral for gains realized upon the Exchange under the
     "like-kind-exchange" case law (ruilarresten); or

          (ii) such gain qualifies as "income from miscellaneous activities"
     (resultaat uit overige werkzaamheden) within the meaning of Section 3.4 of
     the Dutch Income Tax Act 2001, which include the performance of activities
     with respect to the Notes that exceed "regular, active portfolio
     management" (normaal, actief vermogensbeheer).

     If a non-resident noteholder would realize a gain as a result of the
Exchange, such gain would only be taxable if:

          (i) the noteholder has an enterprise or an interest in an enterprise,
     that is, in whole or in part, carried on through a permanent establishment
     or a permanent representative in the Netherlands to which enterprise Dutch
     permanent establishment or permanent representative the Notes are
     attributable, with an exception for a possible deferral for gains realized
     upon the Exchange under the "like-kind-exchange" case law (ruilarresten);
     or

          (ii) the noteholder is an individual and such gain qualifies as
     "income from miscellaneous activities" (resultaat uit overige
     werkzaamheden) in the Netherlands within the meaning of Section 3.4 of the
     Dutch Income Tax Act 2001, which include the performance of activities in
     the Netherlands with respect to the Notes that exceed "regular, active
     portfolio management" (normaal, actief vermogensbeheer).

                                       160
<PAGE>

                              PLAN OF DISTRIBUTION

     The exchange offer is not being made to, nor will we accept surrenders of
old units for exchange from, holders of old units in any jurisdiction in which
the exchange offer or the acceptance thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction.

     This communication is directed solely at persons who are outside the
Netherlands and Belgium. (all such persons together are referred to as "relevant
persons"). This communication must not be acted on or relied on by persons who
are not relevant persons. Any investment or investment activity to which this
communication relates is available only to relevant persons and will be engaged
in only with relevant persons.

     The distribution of this prospectus and the offer and sale of the new units
may be restricted by law in certain jurisdictions. Persons who come into
possession of this prospectus or any of the new units must inform themselves
about and observe any such restrictions. You must comply with all applicable
laws and regulations in force in any jurisdiction in which you purchase, offer
or sell the new units or possess or distribute this prospectus and, in
connection with any purchase, offer or sale by you of the new units, must obtain
any consent, approval or permission required under the laws and regulations in
force in any jurisdiction to which you are subject or in which you make such
purchase, offer or sale.

     Under existing SEC interpretations, the new units will be freely
transferable by holders other than our affiliates after the exchange offer
without further registration under the Securities Act if the holder of the new
units represents that it is acquiring the new units in the ordinary course of
its business, that it has no arrangement or understanding with any person to
participate in the distribution of the new units and that it is not an affiliate
of ours, as such terms are interpreted by the SEC; provided that broker-dealers
receiving new units in the exchange offer will have a prospectus delivery
requirement with respect to resales of such new units. While the SEC has not
taken a position with respect to this particular transaction, under existing SEC
interpretations relating to transactions structured substantially like this
exchange offer, participating broker-dealers may fulfill their prospectus
delivery requirements with respect to new units (other than a resale of an
unsold allotment of the new units) with the prospectus contained in the exchange
offer registration statement.

     Each broker-dealer that receives new units for its own account pursuant to
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of such new units. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of new units received in exchange for old units where
such old units were acquired as a result of market-making activities or other
trading activities. We have agreed that, for a period of 90 days after the date
of this prospectus, we will make this prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until           , 2005 (90 days after the date of this prospectus),
all dealers effecting transactions in the new units may be required to deliver a
prospectus.

     A broker-dealer intending to use this prospectus in the resale of new units
must so notify us on or prior to the expiration date. This notice may be given
in the space provided in the letter of transmittal or may be delivered to the
exchange agent.

     We may, in certain cases, issue a notice suspending use of this exchange
offer registration statement. If we do so, the period during which the
registration statement must remain effective will be extended for a number of
days equal to the number of days the registration statement was in suspense.

     We will not receive any proceeds from any sale of new units by
brokers-dealers. New units received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the new units or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such new units. Any broker-dealer
that resells the new units that were received by it for its own account pursuant
to the exchange offer and any broker or dealer that participates in a
distribution of such new units may be deemed to be an "underwriter" within the
meaning of the Securities Act and any profit of any such resale of new units and
any commissions or
                                       161
<PAGE>

concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The letter of transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.

     For a period of 90 days after the date of this prospectus, we will promptly
send additional copies of this prospectus and any amendment or supplement to
this prospectus to any broker-dealer that requests such documents in the letter
of transmittal. We have agreed to pay all expenses incident to the exchange
offer (including the expenses of one counsel for the holder of the old units)
other than commissions or concessions of any brokers or dealers and will
indemnify the holders of the old units (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act.

                                 LEGAL MATTERS

     Certain legal matters with respect to the new units and the guarantees
offered hereby will be passed upon for the Company by Golenbock Eiseman Assor
Bell & Peskoe LLP, New York, New York. Certain legal matters with respect to
Philipp Brothers Netherlands III B.V. and Phibro Animal Health SA will be passed
upon for the Company by Allen & Overy LLP.

                                    EXPERTS

     The consolidated financial statements of Phibro Animal Health Corporation
as of June 30, 2004 and 2003 and for each of the three years in the period ended
June 30, 2004, the consolidated financial statements of Philipp Brothers
Netherlands I B.V. as of June 30, 2004 and 2003 and for each of the three years
in the period ended June 30, 2004 and the financial statements of Phibro Animal
Health SA (Belgium) as of June 30, 2004 and 2003 and for each of the three years
in the period ended June 30, 2004 included in this prospectus, have all been so
included in reliance on the report of PricewaterhouseCoopers LLP, an independent
registered public accounting firm, given on the authority of said firm as
experts in auditing and accounting.

                      WHERE YOU CAN FIND MORE INFORMATION

     We are not subject to the reporting requirements of the Securities Exchange
Act of 1934, but have voluntarily filed certain periodic reports and other
information with the SEC. Upon effectiveness of the registration statement, we
will become subject to the informational requirements of the Securities and
Exchange Act of 1934, and, in accordance therewith, will file reports and other
information with the SEC. Those reports and other information so filed with the
SEC may be inspected and copied at the public reference facilities maintained by
the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. Copies of those materials can be obtained from the Public Reference
Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. You may call the SEC at 1-800-SEC-0330 to obtain information
on the operation of the public reference room. The SEC also maintains a site on
the World Wide Web at http://www.sec.gov, which contains reports and other
information regarding registrants that file electronically with the SEC.

     We have filed with the SEC a registration statement on Form S-4 under the
Securities Act of 1933, covering the new units to be issued in the exchange
offer (Registration No. 333-       ). This prospectus, which is a part of the
registration statement, does not contain all of the information included in the
registration statement. Any statement made in this prospectus concerning the
contents of any contract, agreement or other document is not necessarily
complete. For further information regarding us and the new units to be issued in
the exchange offer, please reference the registration statement, including its
exhibits. If we have filed any

                                       162
<PAGE>

contract, agreement or other document as an exhibit to the registration
statement, you should read the exhibit for a more complete understanding of the
documents or matter involved.

     Copies of the registration statement, including all related exhibits and
schedules, may be inspected without charge at the public reference facilities
maintained by the SEC, or obtained at prescribed rates from the Public Reference
Section of the SEC. In addition, you may request a copy of any of these filings,
at no cost, by writing our Chief Financial Officer at our principal executive
offices, which are located at 65 Challenger Road, Ridgefield Park, NJ 07660
telephone number (201) 329-7300.

               SERVICE OF PROCESS AND ENFORCEMENT OF LIABILITIES

     Philipp Brothers Netherlands III B.V. ("PB Netherlands") is a company
incorporated under the laws of the Netherlands. Certain of its directors and
executive officers are resident outside of the United States and many of its
assets are located outside of the United States. Although PB Netherlands has
agreed, in accordance with the terms of the indenture, to accept service of
process in the United States by agents designated for such purpose, it may not
be possible for holders of new notes (a) to effect service of process upon
certain of its directors or officers or (b) to enforce judgements of courts of
the United States predicated upon the civil liability of such persons under the
United States securities law against any such persons in the courts of a foreign
jurisdiction.

                     PHILIPP BROTHERS NETHERLANDS III B.V.

     Philipp Brothers Netherlands III B.V., the Dutch issuer, is an indirect
wholly-owned subsidiary of the US issuer and is incorporated under the laws of
the Netherlands as a private company with limited liability. The Dutch issuer is
a holding company formed to finance the operations of Phibro Animal Health SA, a
Belgian company, which owns and operates our Rixensart, Belgium plant. Such
plant uses fermentation processes to produce the active ingredients semduramycin
and virginiamycin and conducts all of our fermentation development activities.
On December 16, 2004, we entered into an agreement to sell the Rixensart,
Belgium plant to Glaxosmithkline Biologicals S.A. (see "Prospectus
Summary -- The Company -- Recent Developments -- Sale of Belgium Plant").

     The managing directors of Philipp Brothers Netherlands III B.V. are Mr.
Jack Bendheim and Mr. Joseph Katzenstein (each a managing director, class B) and
Mr. Robbert Elshout and Ms. Liselotte Heine (each a managing director, class A).
Mr. Bendheim has served as a managing director B of Philipp Brothers Netherlands
III B.V., since June 2004. See also "Management" for additional information
regarding Mr. Bendheim. Mr. Joseph Katzenstein, age 62, has served as a managing
director B of Philipp Brothers Netherlands III B.V. since June 2004. Mr.
Katzenstein, has also served as the secretary of Phibro Animal Health
Corporation since 1982 and the treasurer of Phibro Animal Health Corporation
from 1982 through 2002. Mr. Katzenstein served as corporate controller of Phibro
Animal Health Corporation from 1965 to 1985. Mr. Elshout and Ms. Heine have been
managing directors A of Philipp Brothers Netherlands III B.V. since June 2004.

                                       163
<PAGE>

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<Table>
<Caption>
                                                              PAGE
                                                              ----
<S>                                                           <C>
AUDITED CONSOLIDATED FINANCIAL STATEMENTS:
Report of Independent Registered Public Accounting Firm.....   F-2
Consolidated Balance Sheets as of June 30, 2004 and 2003....   F-3
Consolidated Statements of Operations and Comprehensive
  Income (Loss) for the years ended June 30, 2004, 2003 and
  2002......................................................   F-4
Consolidated Statements of Changes in Stockholders' Deficit
  for the years ended June 30, 2004, 2003 and 2002..........   F-5
Consolidated Statements of Cash Flows for the years ended
  June 30, 2004, 2003 and 2002..............................   F-6
Notes to Consolidated Financial Statements..................   F-7
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets as of September 30,
  2004 and June 30, 2004....................................  F-45
Condensed Consolidated Statements of Operations and
  Comprehensive Income for the three months ended September
  30, 2004 and 2003.........................................  F-46
Condensed Consolidated Statements of Changes in
  Stockholders' Deficit for the three months ended September
  30, 2004..................................................  F-47
Condensed Consolidated Statements of Cash Flows for the
  three months ended September 30, 2004 and 2003............  F-48
Notes to Unaudited Condensed Consolidated Financial
  Statements................................................  F-49
</Table>

OTHER FINANCIAL STATEMENTS OF CERTAIN PHIBRO ANIMAL HEALTH CORPORATION
SUBSIDIARIES

The following financial statements for certain of Phibro Animal Health
Corporation's indirectly wholly owned subsidiaries are included pursuant to
Regulation S-X Rule 3-16 of the Exchange Act, "Financial Statements of
Affiliates Whose Securities Collateralize an Issue Registered or Being
Registered." See Note 9 to the Phibro Animal Health Corporation consolidated
financial statements.

<Table>
<S>                                                           <C>
PHILIPP BROTHERS NETHERLANDS I B.V
Report of Independent Registered Public Accounting Firm.....  F-66
Consolidated Balance Sheets as of June 30, 2004 and 2003....  F-67
Consolidated Statements of Operations and Comprehensive Loss
  for the years ended June 30, 2004, 2003 and 2002..........  F-68
Consolidated Statements of Changes in Stockholders' Deficit
  for the years ended June 30, 2004, 2003 and 2002..........  F-69
Consolidated Statements of Cash Flows for the years ended
  June 30, 2004, 2003 and 2002..............................  F-70
Notes to Consolidated Financial Statements..................  F-71
PHIBRO ANIMAL HEALTH SA
Report of Independent Registered Public Accounting Firm.....  F-82
Balance Sheets as of June 30, 2004 and 2003.................  F-83
Statements of Operations and Comprehensive Income (Loss) for
  the years ended June 30, 2004, 2003 and 2002..............  F-84
Statements of Changes in Stockholders' Equity for the years
  ended June 30, 2004, 2003 and 2002........................  F-85
Statements of Cash Flows for the years ended June 30, 2004,
  2003 and 2002.............................................  F-86
Notes to Financial Statements...............................  F-87
</Table>

                                       F-1
<PAGE>

            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of Phibro Animal Health Corporation:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations and comprehensive income (loss), changes
in stockholders' deficit and cash flows present fairly, in all material
respects, the financial position of Phibro Animal Health Corporation and its
subsidiaries at June 30, 2004 and 2003, and the results of their operations and
their cash flows for each of the three years in the period ended June 30, 2004,
in conformity with accounting principles generally accepted in the United States
of America. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Florham Park, New Jersey
September 27, 2004

                                       F-2
<PAGE>

               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>
                                                                AS OF JUNE 30,
                                                              -------------------
                                                                2004       2003
                                                              --------   --------
                                                                (IN THOUSANDS)
<S>                                                           <C>        <C>
                                     ASSETS
Current Assets:
  Cash and cash equivalents.................................  $  5,568   $ 11,179
  Trade receivables, less allowance for doubtful accounts of
     $1,358 and $1,437 at June 30, 2004 and 2003,
     respectively...........................................    57,658     52,714
  Other receivables.........................................     2,766      3,503
  Inventories...............................................    79,910     87,849
  Prepaid expenses and other current assets.................     8,688      9,868
  Current assets from discontinued operations...............        --      9,276
                                                              --------   --------
       Total current assets.................................   154,590    174,389
Property, plant and equipment, net..........................    58,786     63,905
Intangibles.................................................    11,695      8,669
Other assets................................................    16,298     14,059
Other assets from discontinued operations...................        --     13,325
                                                              --------   --------
                                                              $241,369   $274,347
                                                              ========   ========

                      LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
  Cash overdraft............................................  $    891   $  1,686
  Loans payable to banks....................................    10,996     37,878
  Current portion of long-term debt.........................     1,351     24,124
  Accounts payable..........................................    46,972     55,355
  Accrued expenses and other current liabilities............    40,010     40,699
  Current liabilities from discontinued operations..........        --      5,557
                                                              --------   --------
       Total current liabilities............................   100,220    165,299
Long-term debt..............................................   158,018    102,263
Other liabilities...........................................    22,286     21,241
Other liabilities from discontinued operations..............        --      1,173
                                                              --------   --------
       Total liabilities....................................   280,524    289,976
                                                              --------   --------
Commitments and contingencies
Redeemable securities:
  Series B and C preferred stock............................    24,678     68,881
                                                              --------   --------
Stockholders' deficit:
  Preferred stock -- $100 par value, 150,543 shares
     authorized, none issued at June 30, 2004 and 2003;
     Series A preferred stock -- $100 par value, 6% non-
     cumulative, 5,207 shares authorized, issued and
     outstanding at June 30, 2004 and 2003..................       521        521
  Common stock -- $0.10 par value, 30,300 authorized and
     24,488 shares issued and outstanding at June 30, 2004
     and 2003...............................................         2          2
  Paid-in capital...........................................       860        860
  Accumulated deficit.......................................   (57,964)   (79,489)
  Accumulated other comprehensive income (loss):
     Gain on derivative instruments.........................         9         81
     Cumulative currency translation adjustment.............    (7,261)    (6,485)
                                                              --------   --------
       Total stockholders' deficit..........................   (63,833)   (84,510)
                                                              --------   --------
                                                              $241,369   $274,347
                                                              ========   ========
</Table>

   The accompanying notes are an integral part of the Consolidated Financial
                                  Statements.
                                       F-3
<PAGE>

               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

     CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

<Table>
<Caption>
                                                               FOR THE YEARS ENDED JUNE 30,
                                                              ------------------------------
                                                                2004       2003       2002
                                                              --------   --------   --------
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
Net sales...................................................  $358,274   $341,746   $328,676
Cost of goods sold..........................................   267,871    251,200    247,411
                                                              --------   --------   --------
  Gross profit..............................................    90,403     90,546     81,265
Selling, general and administrative expenses (includes
  litigation income of $3,040 in 2003 and $742 in 2002).....    66,128     65,050     70,636
Costs of non-completed transaction..........................     5,261         --         --
                                                              --------   --------   --------
  Operating income..........................................    19,014     25,496     10,629
Other:
  Interest expense..........................................    18,618     16,281     18,070
  Interest (income).........................................      (130)       (85)      (346)
  Other (income) expense, net...............................      (781)     1,539      3,349
  Net (gain) on extinguishment of debt......................   (23,226)        --         --
                                                              --------   --------   --------
  Income from continuing operations before income taxes.....    24,533      7,761    (10,444)
Provision for income taxes..................................     7,969     10,060     14,767
                                                              --------   --------   --------
  Income (loss) from continuing operations..................    16,564     (2,299)   (25,211)
Discontinued operations:
  (Loss) from discontinued operations (net of income
     taxes).................................................    (1,625)   (14,577)   (26,559)
  (Loss) on disposal of discontinued operations (net of
     income taxes)..........................................    (2,089)      (683)        --
                                                              --------   --------   --------
  Net income (loss).........................................    12,850    (17,559)   (51,770)
Other comprehensive income (loss):
  Change in derivative instruments, net of tax..............       (72)      (981)     1,062
  Change in currency translation adjustment.................      (776)     7,377     (6,125)
                                                              --------   --------   --------
  Comprehensive income......................................  $ 12,002   $(11,163)  $(56,833)
                                                              ========   ========   ========
  Net income (loss).........................................    12,850    (17,559)   (51,770)
Excess of the reduction of redeemable preferred stock over
  total assets divested and costs and liabilities incurred
  on the Prince Transactions................................    20,138         --         --
Dividends and equity value accreted on Series B and C
  redeemable preferred stock................................   (11,463)   (12,278)    (7,623)
                                                              --------   --------   --------
  Net income (loss) available to common shareholders........  $ 21,525   $(29,837)  $(59,393)
                                                              ========   ========   ========
</Table>

   The accompanying notes are an integral part of the Consolidated Financial
                                  Statements.
                                       F-4
<PAGE>

               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

<Table>
<Caption>
                                              FOR THE YEARS ENDED JUNE 30, 2004, 2003 AND 2002
                              ---------------------------------------------------------------------------------
                                                                                        ACCUMULATED
                                                                          RETAINED         OTHER
                              PREFERRED     COMMON STOCK                  EARNINGS     COMPREHENSIVE
                                STOCK     -----------------   PAID-IN   (ACCUMULATED      (LOSS)
                              SERIES A    CLASS A   CLASS B   CAPITAL     DEFICIT)        INCOME        TOTAL
                              ---------   -------   -------   -------   ------------   -------------   --------
                                                          (IN THOUSANDS)
<S>                           <C>         <C>       <C>       <C>       <C>            <C>             <C>
Balance, June 30, 2001......    $521        $1        $1       $ 878      $  9,741       $ (7,737)     $  3,405
  Dividends on Series B and
     C redeemable preferred
     stock..................                                                (7,623)                      (7,623)
  Change in derivative
     instruments, net of
     tax....................                                                                1,062         1,062
  Foreign currency
     translation
     adjustment.............                                                               (6,125)       (6,125)
  Receivable from principal
     shareholder............                                    (138)                                      (138)
  Net (loss)................                                               (51,770)                     (51,770)
                                ----        --        --       -----      --------       --------      --------
Balance, June 30, 2002......    $521        $1        $1       $ 740      $(49,652)      $(12,800)     $(61,189)
                                ====        ==        ==       =====      ========       ========      ========
  Dividends on Series B and
     C redeemable preferred
     stock..................                                                (8,808)                      (8,808)
  Equity value accreted on
     Series B and C
     redeemable preferred
     stock..................                                                (3,470)                      (3,470)
  Change in derivative
     instruments, net of
     tax....................                                                                 (981)         (981)
  Foreign currency
     translation
     adjustment.............                                                                7,377         7,377
  Payable to principal
     shareholder............                                     120                                        120
  Net (loss)................                                               (17,559)                     (17,559)
                                ----        --        --       -----      --------       --------      --------
Balance, June 30, 2003......    $521        $1        $1       $ 860      $(79,489)      $ (6,404)     $(84,510)
                                ====        ==        ==       =====      ========       ========      ========
  Excess of the reduction in
     redeemable preferred
     stock over total assets
     divested and costs and
     liabilities incurred on
     the Prince
     Transactions...........                                                20,138                       20,138
  Dividends on Series B and
     C redeemable preferred
     stock..................                                                (6,042)                      (6,042)
  Equity value accreted on
     Series B and C
     redeemable preferred
     stock..................                                                (5,421)                      (5,421)
  Change in derivative
     instruments, net of
     tax....................                                                                  (72)          (72)
  Foreign currency
     translation
     adjustment.............                                                                 (776)         (776)
  Net (loss)................                                                12,850                       12,850
                                ----        --        --       -----      --------       --------      --------
Balance, June 30, 2004......    $521        $1        $1       $ 860      $(57,964)      $ (7,252)     $(63,833)
                                ====        ==        ==       =====      ========       ========      ========
</Table>

   The accompanying notes are an integral part of the Consolidated Financial
                                  Statements.
                                       F-5
<PAGE>

               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                               FOR THE YEARS ENDED JUNE 30,
                                                              ------------------------------
                                                                2004       2003       2002
                                                              --------   --------   --------
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
OPERATING ACTIVITIES:
  Net income (loss).........................................  $ 12,850   $(17,559)  $(51,770)
  Adjustment for discontinued operations....................     3,714     15,260     26,559
                                                              --------   --------   --------
  Income (loss) from continuing operations..................    16,564     (2,299)   (25,211)
  Adjustments to reconcile income (loss) from continuing
    operations to net cash provided (used) by operating
    activities:
    Depreciation and amortization...........................    13,183     12,524     12,355
    Deferred income taxes...................................       326      6,460     11,238
    Net gain from sales of assets...........................      (692)      (127)        (5)
    Net gain on extinguishment of debt......................   (23,226)        --         --
    Change in redemption amount of redeemable common
      stock.................................................        --         --       (378)
    Effects of changes in foreign currency..................      (548)       390      2,120
    Other...................................................     1,114        387      2,416
    Changes in operating assets and liabilities:
      Accounts receivable...................................    (7,222)     3,810      6,046
      Inventories...........................................     3,660     (1,598)   (13,991)
      Prepaid expenses and other current assets.............      (314)    (3,122)    (2,819)
      Other assets..........................................    (3,079)    (2,632)     2,667
      Accounts payable......................................    (5,650)    20,503     (6,606)
      Accrued expenses and other liabilities................     6,965       (355)     8,511
      Accrued costs of non-completed transaction............     3,970         --         --
  Cash provided (used) by discontinued operations...........    (2,189)       716     (1,088)
                                                              --------   --------   --------
      Net cash provided (used) by operating activities......     2,862     34,657     (4,745)
                                                              --------   --------   --------
INVESTING ACTIVITIES:
  Capital expenditures......................................    (6,244)    (8,636)    (8,518)
  Acquisition of a business, net of cash acquired...........        --         --     (7,182)
  Proceeds from property damage claim.......................        --         --        411
  Proceeds from sale of assets..............................     1,094      2,565         19
  Other investing...........................................      (655)       737        580
  Discontinued operations...................................    14,875      1,363     (2,671)
                                                              --------   --------   --------
      Net cash provided (used) by investing activities......     9,070     (3,971)   (17,361)
                                                              --------   --------   --------
FINANCING ACTIVITIES:
  Net increase (decrease) in cash overdraft.................      (795)    (6,081)     3,438
  Net increase (decrease) in short-term debt................   (26,954)    (6,660)    14,237
  Proceeds from long-term debt..............................   109,661      2,000      2,322
  Payments of long-term debt................................   (35,453)   (16,014)    (4,730)
  Payment of Pfizer obligations.............................   (28,300)        --         --
  Payments relating to the Prince Transactions and related
    costs...................................................   (21,393)        --         --
  Debt refinancing costs....................................   (15,548)        --         --
  Discontinued operations...................................     1,005        377     (1,590)
                                                              --------   --------   --------
      Net cash provided (used) by financing activities......   (17,777)   (26,378)    13,677
                                                              --------   --------   --------
Effect of exchange rate changes on cash.....................       234        452          3
                                                              --------   --------   --------
      Net increase (decrease) in cash and cash
         equivalents........................................    (5,611)     4,760     (8,426)
Cash and cash equivalents at beginning of period............    11,179      6,419     14,845
                                                              --------   --------   --------
Cash and cash equivalents at end of period..................  $  5,568   $ 11,179   $  6,419
                                                              ========   ========   ========
Supplemental Cash Flow Information:
  Interest paid.............................................  $ 17,578   $ 16,104   $ 17,003
  Income taxes paid.........................................     4,755      3,046      2,629
</Table>

   The accompanying notes are an integral part of the Consolidated Financial
                                  Statements.
                                       F-6
<PAGE>

               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (IN THOUSANDS)

1.  DESCRIPTION OF BUSINESS

     Phibro Animal Health Corporation (the "Company" or "PAHC") is a leading
diversified global manufacturer and marketer of a broad range of animal health
and nutrition products, specifically medicated feed additives ("MFA") and
nutritional feed additives ("NFA"), which the Company sells throughout the world
predominately to the poultry, swine and cattle markets. The Company is also a
specialty chemicals manufacturer and marketer, serving numerous markets.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION:

     The consolidated financial statements include the accounts of the Company
and all majority-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in the consolidated financial statements.

     The Company consolidates the financial statements of Koffolk (1949) Ltd.
(Israel) ("Koffolk") and Planalquimica Industrial Ltda. (Brazil)
("Planalquimica") on the basis of their March 31 fiscal year-ends to facilitate
the timely inclusion of such entities in the Company's consolidated financial
reporting.

     The Company's Odda Smelteverk (Norway) ("Odda"), Carbide Industries (U.K.)
("Carbide"), Mineral Resource Technologies, Inc. ("MRT"), and La Cornubia S.A.
(France) ("La Cornubia") businesses have been classified as discontinued
operations as discussed in Note 5. The Company's consolidated financial
statements have been reclassified to report separately the operating results,
financial position and cash flows of the discontinued operations. These
footnotes present information only for continuing operations, unless otherwise
indicated.

     The Company presents its consolidated financial statements on the basis of
its fiscal year ending June 30. All references to years 2004, 2003, and 2002 in
these financial statements refer to the fiscal year ended June 30 of that year.

  RISKS, UNCERTAINTIES AND LIQUIDITY:

     The Company's ability to fund its operating plan relies upon the continued
availability of borrowing under the domestic senior credit facility. The Company
believes that it will be able to comply with the terms of its covenants under
the amended domestic senior credit facility based on its forecasted operating
plan. In the event of adverse operating results and/or violation of covenants
under this facility, there can be no assurance that the Company would be able to
obtain waivers or amendments on favorable terms, if at all. The Company's 2005
operating plan projects adequate liquidity throughout the year, with periods of
reduced availability around the dates of the semi-annual interest payments due
December 1, 2004 and June 1, 2005. The Company is pursuing additional cost
reduction activities, working capital improvement plans, and sales of
non-strategic assets to ensure additional liquidity. The Company also has
availability under foreign credit lines that would be available as needed. The
Company has also undertaken a strategic review of its manufacturing
capabilities, and is currently increasing inventory levels of certain products
to enhance future flexibility and reduce costs. There can be no assurance the
Company will be successful in any of the above-noted actions.

     The use of antibiotics in medicated feed additives is a subject of
legislative and regulatory interest. The issue of potential for increased
bacterial resistance to certain antibiotics used in certain food-producing
animals is the subject of discussions on a worldwide basis and, in certain
instances, has led to government restrictions on the use of antibiotics in
food-producing animals. The sale of feed additives containing antibiotics is a
material portion of the Company's business. Should regulatory or other
developments result in

                                       F-7
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

further restrictions on the sale of such products, it could have a material
adverse impact on the Company's financial position, results of operations and
cash flows.

     The testing, manufacturing, and marketing of certain products are subject
to extensive regulation by numerous government authorities in the United States
and other countries.

     The Company has significant assets located outside of the United States,
and a significant portion of the Company's sales and earnings are attributable
to operations conducted abroad.

     The Company has assets located in Israel and a portion of its sales and
earnings are attributable to operations conducted in Israel. The Company is
affected by social, political and economic conditions affecting Israel, and any
major hostilities involving Israel as well as the Middle East or curtailment of
trade between Israel and its current trading partners, either as a result of
hostilities or otherwise, could have a material adverse effect on the Company.

     The Company's operations, properties and subsidiaries are subject to a wide
variety of complex and stringent federal, state, local and foreign environmental
laws and regulations, including those governing the use, storage, handling,
generation, treatment, emission, release, discharge and disposal of certain
materials and wastes, the remediation of contaminated soil and groundwater, the
manufacture, sale and use of pesticides and the health and safety of employees.
As such, the nature of the Company's current and former operations and those of
its subsidiaries exposes the Company and its subsidiaries to the risk of claims
with respect to such matters.

  USE OF ESTIMATES:

     Preparation of the Company's financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make certain estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues, expenses and related
disclosures. Actual results could differ from these estimates. Significant
estimates include reserves for bad debts, inventory obsolescence, environmental
matters, depreciation and amortization periods of long-lived assets,
recoverability of long-lived assets, realizability of deferred tax assets and
actuarial assumptions related to the Company's pension plans.

  REVENUE RECOGNITION:

     Revenue is recognized upon transfer of title and when risk of loss passes
to the customer, generally at the time of shipment. Net sales reflect total
sales billed, less reductions for goods returned, trade discounts and customer
allowances.

  CASH AND CASH EQUIVALENTS:

     Cash equivalents include highly liquid investments with maturities of three
months or less when purchased.

  ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS:

     Trade accounts receivable are recorded at the invoiced amount and do not
bear interest. The allowance for doubtful accounts is the Company's best
estimate of the probable credit losses in its existing accounts receivable. The
allowance is based on historical write-off experience and is reviewed
periodically. Past due balances are reviewed individually for collectibility.
Account balances are charged against the allowance when

                                       F-8
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the Company feels that it is probable that the receivable will not be recovered.
Receivables consist of the following:

<Table>
<Caption>
                                                                          AS OF
                                                              -----------------------------
                                                              JUNE 30, 2004   JUNE 30, 2003
                                                              -------------   -------------
<S>                                                           <C>             <C>
Trade receivables...........................................     $57,658         $52,714
Employee receivables........................................         256             267
Other receivables...........................................       2,510           3,236
                                                                 -------         -------
Total receivables...........................................     $60,424         $56,217
                                                                 =======         =======
</Table>

     The allowance for doubtful accounts was:

<Table>
<Caption>
                                                             2004     2003     2002
                                                            ------   ------   -------
<S>                                                         <C>      <C>      <C>
Balance at beginning of period............................  $1,437   $1,461   $ 1,760
Provision for bad debts...................................     565      347       979
Bad debt write-offs.......................................    (644)    (371)   (1,278)
                                                            ------   ------   -------
Balance at end of period..................................  $1,358   $1,437   $ 1,461
                                                            ======   ======   =======
</Table>

  INVENTORIES:

     Inventories are valued at the lower of cost or market. Cost is determined
principally under the first-in, first-out (FIFO) and average methods; cost for
certain inventories is determined under the last-in, first-out (LIFO) method.
Inventories valued at LIFO amounted to $0 and $3,805 at June 30, 2004 and 2003,
respectively. Obsolete and unsaleable inventories are reflected at estimated net
realizable value. Inventory costs include materials, direct labor and
manufacturing overhead. Inventories are comprised of:

<Table>
<Caption>
                                                                          AS OF
                                                              -----------------------------
                                                              JUNE 30, 2004   JUNE 30, 2003
                                                              -------------   -------------
<S>                                                           <C>             <C>
Raw materials...............................................     $16,313         $21,668
Work-in-process.............................................       1,764           1,565
Finished goods..............................................      61,833          65,248
Excess of FIFO cost over LIFO cost..........................          --            (632)
                                                                 -------         -------
Total inventory.............................................     $79,910         $87,849
                                                                 =======         =======
</Table>

  PROPERTY, PLANT AND EQUIPMENT:

     Property, plant and equipment are stated at cost. The Company capitalizes
interest expense as part of the cost of construction of facilities and
equipment. Interest expense capitalized was $0, $0 and $106 in 2004, 2003 and
2002, respectively.

     Depreciation is charged to results of operations using the straight-line
method based upon the assets' estimated useful lives ranging from 8 to 20 years
for buildings and improvements and 3 to 10 years for machinery and equipment.

     The Company capitalizes costs that extend the useful life or productive
capacity of an asset. Repair and maintenance costs are expensed as incurred. In
the case of disposals, the assets and related accumulated depreciation are
removed from the accounts, and the net amounts, less proceeds from disposal, are
included in the statements of operations and comprehensive income (loss).

                                       F-9
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  DEFERRED FINANCING COSTS:

     Deferred financing costs related to the senior secured notes and senior
subordinated notes are amortized over the respective lives of the notes.
Deferred financing costs related to the domestic senior credit facility are
amortized over the life of the agreement.

  INTANGIBLES:

     Product intangibles cost arising from the MFA acquisition was $10,673 and
$10,449 at June 30, 2004 and 2003, respectively, and accumulated amortization of
$3,230 and $1,780 at June 30, 2004 and 2003, respectively. Amortization expense
was $1,229, $964 and $816 for 2004, 2003 and 2002, respectively. Amortization
expense from the MFA acquisition for each of the next five years from 2005 to
2009 is expected to be $1,145 per year.

     In May 2004 the Company acquired the rights to sell amprolium, an
anticoccidial MFA, in most international markets. In payment for the acquired
rights, the Company relinquished its claims against the seller for certain
purchase order commitments, and will make $2,100 of cash payments to the seller
over the next five years. The present value of these payments is $1,898 and was
recorded as a liability. The $2,354 value of the purchase order commitments was
recorded as a reduction in cost of goods sold and inventory, and an intangible
asset of $4,252 was recorded representing the fair value of the acquired rights
and is included on the Company's balance sheet at June 30, 2004. The Company
will amortize this intangible over a ten year period. No amortization was
recorded in 2004. Amortization expense for each of the next five years from 2005
to 2009 is expected to be $425 per year.

  FOREIGN CURRENCY TRANSLATION:

     Financial position and results of operations of the Company's international
subsidiaries generally are measured using local currencies as the functional
currency. Assets and liabilities of these operations are translated at the
exchange rates in effect at each fiscal year end. The translation adjustments
related to assets and liabilities that arise from the use of differing exchange
rates from period to period are included in accumulated other comprehensive loss
in stockholders' deficit. Income statement accounts are translated at the
average rates of exchange prevailing during the year.

     A business unit of Koffolk and all of Planalquimica operate primarily in
U.S. dollars. The U.S. dollar is designated as the functional currency for these
businesses and translation gains and losses are included in determining net
income or loss.

     Foreign currency transaction gains and losses primarily arise from
short-term intercompany balances. Net foreign currency transaction and
translation (gains) losses were $(116), $789 and $3,385 for 2004, 2003 and 2002,
respectively, and were included in other expense, net in the consolidated
statements of operations and comprehensive income (loss).

  DERIVATIVE FINANCIAL INSTRUMENTS:

     The Company records all derivative financial instruments on the
consolidated balance sheet at fair value. Changes in the fair value of
derivatives are recorded in results of operations or accumulated other
comprehensive income (loss), depending on whether a derivative is designated and
effective as part of a hedge transaction and, if it is, the type of hedge
transaction. Gains and losses on derivative instruments reported in accumulated
other comprehensive income (loss) are included in operations in the periods in
which operations are affected by the hedged item.

                                       F-10
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  RECOVERABILITY OF LONG-LIVED ASSETS:

     The Company evaluates the recoverability of long-lived assets, including
intangible assets, when events or circumstances indicate that a diminution in
value may have occurred, using financial indicators such as historical and
future ability to generate cash flows from operations. The Company's policy is
to record an impairment loss in the period it is determined the carrying amount
of the asset may not be recoverable. This determination is based on an
evaluation of such factors as the occurrence of a significant event, a
significant change in the environment in which the business operates, or if the
expected future net cash flows (undiscounted and without interest or income
taxes) are less than the carrying amount of the assets.

  ENVIRONMENTAL LIABILITIES:

     Expenditures for ongoing compliance with environmental regulations that
relate to current operations are expensed or capitalized as appropriate. The
Company capitalizes expenditures made to improve the condition of property,
compared with the condition of that property when constructed or acquired. The
Company also capitalizes expenditures that prevent future environmental
contamination. Other expenditures are expensed as incurred. The Company records
the expense and related liability in the period an environmental assessment
indicates remedial efforts are probable and the costs can be reasonably
estimated. Estimates of the liability are based upon currently available facts,
existing technology, and presently enacted laws and regulations taking into
consideration the likely effects of inflation and other societal and economic
factors. All available evidence is considered, including prior experience in
remediation of contaminated sites, other companies' experience, and data
released by the U.S. Environmental Protection Agency or other organizations.
When such costs will be incurred over a long-term period and can be reliably
estimated as to timing, the liabilities are included in the consolidated balance
sheet at their discounted amounts.

  INCOME TAXES:

     Income tax expense includes U.S. federal, state, and foreign income taxes.
The tax effect of certain temporary differences between amounts recognized for
financial reporting purposes and amounts recognized for tax purposes are
reported as deferred income taxes. Deferred tax balances are adjusted to reflect
tax rates, based on current tax laws, which will be in effect in the years in
which the temporary differences are expected to reverse. Valuation allowances
are established as necessary to reduce deferred tax assets to amounts more
likely than not to be realized.

  RESEARCH AND DEVELOPMENT EXPENDITURES:

     Research and development expenditures are expensed as incurred, recorded in
selling, general and administrative expenses and were $5,076, $4,634 and $4,251
for 2004, 2003 and 2002, respectively.

  NEW ACCOUNTING PRONOUNCEMENTS:

     The Company adopted the following new and revised accounting pronouncements
in fiscal 2004:

     Statement of Financial Accounting Standards No. 149, "Amendment of SFAS No.
133 on Derivative Instruments and Hedging Activities" ("SFAS No. 149"). SFAS No.
149 amends and clarifies accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities under SFAS No. 133. The adoption of SFAS No. 149 did not
result in a material impact on the Company's financial statements.

     Statement of Financial Accounting Standards No. 150, "Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity" ("SFAS No. 150"). SFAS No. 150 requires that an issuer classify a
financial instrument, that is within its scope, as a liability (or an asset in
some circumstances). SFAS No. 150 also revises the definition of liabilities to
encompass certain obligations that can, or must, be
                                       F-11
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

settled by issuing equity shares, depending on the nature of the relationship
established between the holder and the issuer. The adoption of SFAS No. 150 did
not result in a material impact on the Company's financial statements.

     Statement of Financial Accounting Standards No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits, an amendment to
FASB Statements No. 87, 88, and 106 (revised 2003)" ("SFAS No. 132"). This
revision to SFAS No. 132 relates to employers' disclosures about pension plans
and other postretirement benefit plans. SFAS No. 132 now requires additional
disclosures to describe the types of plan assets, investment strategy,
measurement date(s), plan obligations, cash flows, and components of net
periodic benefit cost recognized during interim periods of defined pension plans
and other defined postretirement plans. The additional disclosures required by
this revision to SFAS No. 132 have been provided in the notes to consolidated
financial statements.

     FASB Interpretation No. 46, "Consolidation of Variable Interest Entities
(revised December 2003)" ("FIN No. 46"). This revision to FIN No. 46 clarifies
the application of Accounting Research Bulletin No. 51, "Consolidated Financial
Statements", to certain entities in which equity investors do not have the
characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support. The adoption of FIN No. 46 did not result in a
material impact on the Company's financial statements.

3.  REFINANCING

     On October 21, 2003, the Company issued 105,000 units consisting of $85,000
of 13% Senior Secured Notes due 2007 (the "US Senior Secured Notes") and $20,000
13% Senior Secured Notes due 2007 of Philipp Brothers Netherlands III B.V. (the
"Dutch Senior Secured Notes" and, together with the US Senior Secured Notes, the
"Senior Secured Notes"), an indirect wholly-owned subsidiary of the Company (the
"Dutch issuer"). The Company used the proceeds from the issuance to: (i)
repurchase $51,971 of its 9 7/8% Senior Subordinated Notes due 2008 at a price
equal to 60% of the principal amount thereof, plus accrued and unpaid interest;
(ii) repay its domestic senior credit facility of $34,888 outstanding at the
repayment date; (iii) satisfy, for a payment of approximately $29,315, certain
of its outstanding obligations to Pfizer Inc., including: (a) $20,075 aggregate
principal amount of its promissory note plus accrued and unpaid interest, (b)
$9,748 of accounts payable, (c) $9,040 of accrued expenses, and (d) future
contingent purchase price obligations under its agreements with Pfizer Inc. by
which the Company acquired Pfizer's medicated feed additive business; and (iv)
pay fees and expenses relating to the above transactions.

     A net gain on extinguishment of debt is included in the Company's condensed
consolidated statement of operations, calculated as follows:

<Table>
<S>                                                           <C>
NET GAIN ON REPURCHASE OF 9 7/8% SENIOR SUBORDINATED NOTES
  DUE 2008:
  Principal amount of repurchased notes.....................  $ 51,971
  Repurchased at 60% of principal amount....................   (31,183)
  Transaction costs.........................................    (4,107)
                                                              --------
NET GAIN ON REPURCHASE OF NOTES.............................    16,681
                                                              --------
LOSS ON REPAYMENT OF SENIOR CREDIT FACILITY.................    (1,018)
                                                              --------
</Table>

                                       F-12
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<Table>
<S>                                                           <C>
NET GAIN ON PAYMENT OF PFIZER OBLIGATIONS:
  Obligations paid:
  -- promissory note........................................    20,075
  -- accrued interest on promissory note....................     1,015
  -- accounts payable and accrued expenses..................    18,788
                                                              --------
  Total obligations paid....................................    39,878
  Cash payment to Pfizer....................................   (29,315)
  Transaction costs.........................................    (3,000)
                                                              --------
NET GAIN ON PAYMENT OF PFIZER OBLIGATIONS...................     7,563
                                                              --------
NET GAIN ON EXTINGUISHMENT OF DEBT..........................  $ 23,226
                                                              ========
</Table>

     The US Senior Secured Notes and the Dutch Senior Secured Notes are senior
secured obligations of each of the Company (the "US Issuer") and the Dutch
issuer, respectively. The US Senior Secured Notes and the Dutch Senior Secured
Notes are guaranteed on a senior secured basis by all the US Issuer's domestic
restricted subsidiaries, and the Dutch Senior Secured Notes are guaranteed on a
senior secured basis by the US Issuer and by the restricted subsidiaries of the
Dutch issuer, presently consisting of Phibro Animal Health SA. The US Senior
Secured Notes and related guarantees are collateralized by substantially all of
the US Issuer's assets and the assets of its domestic restricted subsidiaries,
other than real property and interests therein, including a pledge of all the
capital stock of such domestic restricted subsidiaries. The Dutch Senior Secured
Notes and related guarantees are collateralized by a pledge of all the accounts
receivable, a security interest or floating charge on the inventory to the
extent permitted by applicable law, and a mortgage on substantially all of the
real property of the Dutch issuer and each of its restricted subsidiaries, a
pledge of 100% of the capital stock of each subsidiary of the Dutch issuer, a
pledge of the intercompany loans made by the Dutch issuer to its restricted
subsidiaries and substantially all of the assets of the U.S. guarantors, other
than real property and interests therein. The indenture governing the Senior
Secured Notes provides for optional make-whole redemptions at any time prior to
June 1, 2005, optional redemption on or after June 1, 2005, and requires the
Company to make certain offers to purchase Senior Secured Notes upon a change of
control, upon certain asset sales and from fifty percent (50%) of excess cash
flow (as such terms are defined in the indenture).

     Also, on October 21, 2003, the Company entered into a new replacement
domestic senior credit facility ("domestic senior facility") with Wells Fargo
Foothill, Inc., providing for a working capital facility plus a letter of credit
facility. The aggregate amount of borrowings under such working capital and
letter of credit facilities initially could not exceed $25,000, including
aggregate borrowings under the working capital facility up to $15,000. On April
29, 2004, the Company amended the domestic senior facility to increase the
aggregate amount of borrowings available under such working capital and letter
of credit facilities from $25,000 to $27,500 and to increase the amount of
aggregate borrowings available under the working capital facility from $15,000
to $17,500. As of September 24, 2004, the Company amended the domestic senior
credit facility to: (i) increase the aggregate amount of borrowings available
under such working capital and letter of credit facilities from $27,500 to
$32,500; the amount of aggregate borrowings available under the working capital
facility remained unchanged at $17,500; (ii) amend the EBITDA definition to
exclude charges and expenses related to unsuccessful acquisitions and related
financings in an aggregate amount not to exceed $5,300 for the period beginning
January 1, 2004 and ending June 30, 2004; (iii) amend the definition of
Additional Indebtedness to exclude advances under the working capital facility;
(iv) amend the definition of Permitted Investments to allow other investments
made during the period from January 1, 2004 through June 30, 2004 in an
aggregate amount not to exceed $336; and (v) establish covenant EBITDA levels
for the periods ending

                                       F-13
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

after June 30, 2004. The amendment was effective June 30, 2004 for items (i),
(ii) and (iii); effective January 1, 2004 for item (iv); and effective September
24, 2004 for all other items.

     Borrowings under the domestic senior credit facility are subject to a
borrowing base formula based on percentages of eligible domestic receivables and
domestic inventory. Under the domestic senior credit facility, the Company may
choose between two interest rate options: (i) the applicable base rate as
defined plus 0.50% and (ii) the LIBOR rate as defined plus 2.75%. Indebtedness
under the domestic senior credit facility is secured by a first priority lien on
substantially all of the Company's assets and assets of substantially all of the
Company's domestic subsidiaries. The Company is required to pay an unused line
fee of 0.375% on the unused portion of the domestic senior credit facility, a
monthly servicing fee and standard letter of credit fees to issuing banks.
Borrowings under the domestic senior credit facility are available until, and
are repayable no later than, October 31, 2007, although borrowings must be
repaid by June 30, 2007 if the maturity of the Senior Secured Notes has not been
extended, as required by the domestic senior credit facility, by that date.

     Pursuant to the terms of an intercreditor agreement, the security interest
securing the Senior Secured Notes and the guarantees made by the Company's
domestic restricted subsidiaries are subordinated to a lien securing the
domestic senior credit facility.

4.  PRINCE TRANSACTIONS

     Effective December 26, 2003 (the "Closing Date"), the Company completed the
divestiture of substantially all of the business and assets of The Prince
Manufacturing Company ("PMC") to a company ("Buyer") formed by Palladium Equity
Partners II, LP and certain of its affiliates (the "Palladium Investors"), and
the related reduction of the Company's preferred stock held by the Palladium
Investors (collectively the "Prince Transactions").

     Pursuant to definitive purchase and other agreements executed on and
effective as of the Closing Date, the Prince Transactions included the following
elements: (i) the transfer of substantially all of the business and assets of
PMC to Buyer; (ii) the reduction of the value of the Company's Preferred Stock
owned by the Palladium Investors from $72,184 to $16,517 (accreted through the
Closing Date) by means of the redemption of all of its shares of Series B
Preferred Stock and a portion of its Series C Preferred Stock; (iii) the
termination of $2,250 in annual management advisory fees payable by the Company
to Palladium; (iv) a cash payment of $10,000 to the Palladium Investors in
respect of the portion of the Company's Preferred Stock not exchanged in
consideration of the business and assets of PMC; (v) the agreement of the Buyer
to pay the Company for advisory fees for the next three years of $1,000, $500,
and $200, respectively (which were pre-paid at closing by the Buyer and
satisfied for $1,300, the net present value of such payments); and (vi) the
Buyer agreed to supply manganous oxide and red iron oxide products and to
provide certain mineral blending services to the Company's Prince Agriproducts
subsidiary ("Prince Agri"). Prince Agri agreed to continue to provide the Buyer
with certain laboratory, MIS and telephone services, all on terms substantially
consistent with the historic relationship between Prince Agri and PMC, and to
lease to Buyer office space used by PMC in Quincy, Illinois. The Company has an
agreement to receive certain treasury services from Palladium for $100 per year.
Pursuant to definitive agreements, the Company made customary representations,
warranties and environmental and other indemnities, agreed to a post-closing
working capital adjustment, paid $3,958 in full satisfaction of all intercompany
debt owed to PMC, paid a closing fee to Palladium of $500, made certain capital
expenditure adjustments included as part of the intercompany settlement amount,
and agreed to pay for certain out-of-pocket transaction expenses. PMC retained
$414 of its accounts receivable. The Company established a $1,000 letter of
credit escrow for two years to secure its working capital adjustment and certain
indemnification obligations. The Company agreed to indemnify the Palladium
Investors for a portion, at the rate of $0.65 for every dollar, of the amount
they receive in respect of the disposition of Buyer for less than $21,000, up to
a maximum payment by the Company of $4,000 (the "Backstop Indemnification
Amount"). The Backstop Indemnification Amount would be payable on the

                                       F-14
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

earlier to occur of July 1, 2008 or six months after the redemption date of all
of the Company's Senior Secured Notes due 2007 if such a disposition closes
prior to such redemption and six months after the closing of any such
disposition if the disposition closes after any such redemption. The Company's
obligations with respect to the Backstop Indemnification Amount will cease if
the Palladium Investors do not close the disposition of Buyer by January 1,
2009. The definition of "Equity Value" in the Company's Certificate of
Incorporation was amended to reduce the multiple of trailing EBITDA payable in
connection with any future redemption of Series C Preferred to 6.0 from 7.5

     The excess of the reduction in redeemable preferred stock over total assets
divested and costs and liabilities incurred on the Prince Transactions was
recorded as a decrease to accumulated deficit on the Company's consolidated
balance sheet at December 31, 2003, and was calculated as follows:

<Table>
<S>                                                           <C>
SERIES B & C REDEEMABLE PREFERRED STOCK:
Accreted value pre-transaction..............................  $72,184
Accreted value post-transaction.............................   16,517
                                                              -------
REDUCTION IN REDEEMABLE PREFERRED STOCK.....................   55,667
                                                              -------
ASSETS DIVESTED AND COSTS INCURRED:
PMC net assets divested.....................................    7,430
Cash paid to Palladium Investors for:
  -- reduction of redeemable preferred stock................   10,000
  -- settlement of PMC intercompany debt....................    3,958
  -- working capital adjustment.............................    1,331
  -- closing fee............................................      500
Transaction costs...........................................    8,310
Contingent Backstop Indemnification Amount accrued..........    4,000
                                                              -------
TOTAL ASSETS DIVESTED AND COSTS AND LIABILITIES INCURRED....   35,529
                                                              -------
EXCESS AMOUNT RECORDED AS A DECREASE TO ACCUMULATED
  DEFICIT...................................................  $20,138
                                                              =======
</Table>

     PMC is included in the Company's Industrial Chemicals segment. The results
of operations of PMC were:

<Table>
<Caption>
                                                           FOR THE YEARS ENDED JUNE 30,
                                                          ------------------------------
                                                            2004       2003       2002
                                                          --------   --------   --------
<S>                                                       <C>        <C>        <C>
Net sales...............................................  $11,118    $22,332    $21,451
Operating income........................................    2,278      3,579      3,640
Depreciation and amortization...........................      487        956        966
</Table>

     The divestiture of PMC has not been reflected as a discontinued operation
due to the existence of the Backstop Indemnification and continuing supply and
service agreements.

                                       F-15
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5.  DISCONTINUED OPERATIONS

     The Company shutdown Odda and divested Carbide during 2003, and sold MRT
and shutdown La Cornubia during 2004. These businesses have been classified as
discontinued operations.

  ODDA AND CARBIDE

     Operating results and loss on disposal of Odda and Carbide were:

<Table>
<Caption>
                                                              FOR THE YEARS ENDED
                                                                   JUNE 30,
                                                              -------------------
                                                                2003       2002
                                                              --------   --------
<S>                                                           <C>        <C>
OPERATING RESULTS:
Net sales...................................................  $ 11,217   $ 31,219
Cost of goods sold..........................................    13,723     46,116
Selling, general and administrative expenses................     3,175     12,812
Asset writedowns............................................     7,781         --
Other income................................................     2,327      3,699
                                                              --------   --------
(Loss) before income taxes..................................   (11,135)   (24,010)
(Benefit) for income taxes..................................       (58)    (1,170)
                                                              --------   --------
(Loss) from operations......................................  $(11,077)  $(22,840)
                                                              ========   ========
Depreciation and amortization...............................  $    894   $ 17,676
                                                              ========   ========
LOSS ON DISPOSAL:
Assets......................................................  $ (3,359)
Liabilities.................................................     6,432
Unsecured debt..............................................     2,488
Currency translation adjustment.............................    (6,244)
                                                              --------
(Loss) on disposal..........................................  $   (683)
                                                              ========
</Table>

  MINERAL RESOURCE TECHNOLOGIES, INC.

     The Company sold MRT on August 28, 2003. Net proceeds, after transaction
costs, were approximately $13,836. Operating results, gain on sale and balance
sheet items of MRT were:

<Table>
<Caption>
                                                         FOR THE YEARS ENDED JUNE 30,
                                                         -----------------------------
                                                           2004       2003      2002
                                                         --------   --------   -------
<S>                                                      <C>        <C>        <C>
OPERATING RESULTS:
Net sales..............................................  $  3,327   $18,671    $17,045
Cost of goods sold.....................................     3,135    19,943     17,676
Selling, general and administrative expenses...........       316     2,182      2,299
                                                         --------   -------    -------
(Loss) before income taxes.............................      (124)   (3,454)    (2,930)
Provision for income taxes.............................        --        --         --
                                                         --------   -------    -------
(Loss) from operations.................................  $   (124)  $(3,454)   $(2,930)
                                                         ========   =======    =======
Depreciation and amortization..........................  $     --   $ 1,309    $ 1,192
                                                         ========   =======    =======
</Table>

                                       F-16
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                               FOR THE YEAR
                                                              ENDED JUNE 30,
                                                                   2003
                                                              --------------
<S>                                                           <C>
GAIN ON SALE:
Current assets..............................................     $ (5,813)
Property, plant & equipment -- net and other assets.........      (10,703)
Liabilities.................................................        2,911
Net proceeds of sale........................................       13,836
                                                                 --------
Gain on sale................................................     $    231
                                                                 ========
</Table>

<Table>
<Caption>
                                                                  AS OF
                                                                 JUNE 30,
                                                                   2003
                                                                 --------
<S>                                                           <C>
BALANCE SHEET:
Trade receivables...........................................     $ 2,633
Other receivables...........................................         304
Inventories.................................................       1,643
Prepaid expenses and other current assets...................         362
                                                                 -------
Current assets from discontinued operations.................     $ 4,942
                                                                 =======
Property, plant and equipment, net..........................     $ 9,999
Intangibles.................................................         196
Other assets................................................         455
                                                                 -------
Other assets from discontinued operations...................     $10,650
                                                                 =======
Accounts payable............................................     $ 1,466
Accrued expenses and other current liabilities..............         585
                                                                 -------
Current liabilities from discontinued operations............     $ 2,051
                                                                 =======
Other liabilities...........................................     $   198
                                                                 -------
Other liabilities from discontinued operations..............     $   198
                                                                 =======
</Table>

  LA CORNUBIA, S.A.

     During June 2004 the Company determined that it would no longer fund the
operations of La Cornubia. On June 30, 2004, La Cornubia filed for bankruptcy in
France. The bankruptcy is proceeding in accordance with French law. The Company
has been advised that, as a result of the bankruptcy, the creditors of La
Cornubia have recourse only to the assets of La Cornubia. The Company removed
all assets, liabilities, and cumulative translation adjustments related to La
Cornubia from the Company's consolidated balance sheet as of June 30, 2004, and
recorded a loss on disposal of discontinued operations. The Company obtained the
consent of a majority of the holders of its senior secured notes due 2007 and
its senior subordinated notes due 2008 to amend the indentures governing these
notes in such a manner that the bankruptcy of La Cornubia would not create an
event of default thereunder. The Company also obtained a waiver under its
domestic senior credit facility so that the bankruptcy of La Cornubia would not
constitute an event of default under the terms of the domestic senior credit
facility.

                                       F-17
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Operating results, loss on disposal and balance sheet items of La Cornubia
were:

<Table>
<Caption>
                                                           FOR THE YEARS ENDED JUNE 30,
                                                          ------------------------------
                                                            2004       2003       2002
                                                          --------   --------   --------
<S>                                                       <C>        <C>        <C>
OPERATING RESULTS:
Net sales...............................................  $13,918    $13,479    $11,873
Cost of goods sold......................................   13,723     12,528     11,144
Selling, general and administrative expenses............    1,686      1,310      1,641
Other income............................................      102        389        263
Interest (expense) -- net...............................      (94)       (60)       (78)
                                                          -------    -------    -------
(Loss) before income taxes..............................   (1,483)       (30)      (727)
Provision for income taxes..............................       18         16         62
                                                          -------    -------    -------
(Loss) from operations..................................  $(1,501)   $   (46)   $  (789)
                                                          =======    =======    =======
Depreciation and amortization...........................  $   400    $   359    $   325
                                                          =======    =======    =======
LOSS ON DISPOSAL:
Current Assets..........................................  $(5,085)
Property, plant & equipment -- net and other assets.....   (2,557)
Liabilities.............................................    3,614
Unsecured debt..........................................    2,167
Currency translation adjustment.........................     (459)
                                                          -------
(Loss) on disposal......................................  $(2,320)
                                                          =======
</Table>

<Table>
<Caption>
                                                                     AS OF
                                                                    JUNE 30,
                                                                      2003
                                                                    --------
<S>                                                       <C>       <C>        <C>
BALANCE SHEET:
Trade receivables.......................................            $ 2,957
Other receivables.......................................                139
Inventories.............................................                918
Prepaid expenses and other current assets...............                348
                                                                    -------
Current assets from discontinued operations.............            $ 4,362
                                                                    =======
Property, plant and equipment, net......................            $ 2,535
Other assets............................................                140
                                                                    -------
Other assets from discontinued operations...............            $ 2,675
                                                                    =======
Accounts payable........................................            $ 1,560
Accrued expenses and other current liabilities..........                910
Unsecured debt..........................................              1,036
                                                                    -------
Current liabilities from discontinued operations........            $ 3,506
                                                                    =======
Other liabilities.......................................            $   975
                                                                    -------
Other liabilities from discontinued operations..........            $   975
                                                                    =======
</Table>

                                       F-18
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6.  PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment was:

<Table>
<Caption>
                                                                AS OF JUNE 30,
                                                              -------------------
                                                                2004       2003
                                                              --------   --------
<S>                                                           <C>        <C>
Land........................................................  $  5,657   $  5,816
Buildings and improvements..................................    27,925     29,841
Machinery and equipment.....................................   105,308    106,026
                                                              --------   --------
                                                               138,890    141,683
Less: accumulated depreciation..............................    80,104     77,778
                                                              --------   --------
                                                              $ 58,786   $ 63,905
                                                              ========   ========
</Table>

     Certain of the buildings of Koffolk are on land leased for a nominal amount
from the Israel Land Authority. The lease expires on July 9, 2027.

     Depreciation expense was $9,122, $9,202 and $10,235 for 2004, 2003 and
2002, respectively.

7.  RELATED PARTY TRANSACTIONS

     The Company owns approximately $2,300 par value of preferred stock of a
pharmaceutical company. The principal common stockholder of the Company owns
approximately 15% voting common stock interest in the pharmaceutical company,
acquired for approximately $500. The preferred stock investment, included in
other assets, has a net carrying value of $1,610 at June 30, 2004.

     A subsidiary of the Company leases the property underlying its Santa Fe
Springs, California plant from a limited partnership controlled by common
shareholders of the Company. The lease requires annual base rent of $250 and
terminates on December 31, 2008. The Company is responsible under the lease
agreement to pay all real property taxes.

     In accordance with the terms of the Prince Transactions (Note 4) the Buyer
paid the Company advisory fees of $500 for the year ended June 30, 2004. The
Buyer also supplied manganous oxide and red iron oxide products, and provided
certain mineral blending services to the Company's Prince Agriproducts
subsidiary ("Prince Agri") for which Prince Agri paid $2,149 during the year
ended June 30, 2004. Prince Agri provided the Buyer with certain laboratory, MIS
and telephone services, and leased to Buyer office space in Quincy, Illinois for
which the buyer paid Prince Agri $421 during the year ended June 30, 2004. The
Company also has an agreement to receive certain treasury services from the
Palladium Investors for $100 per year. Prior to the Prince Transactions an
annual management advisory fee of $2,250 was payable to the Palladium Investors.
Payments were due quarterly in advance and were charged to selling, general and
administrative expenses. The management fee was $1,125, $2,250 and $2,250 for
2004, 2003 and 2002, respectively.

                                       F-19
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8.  ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

     Accrued expenses and other current liabilities were:

<Table>
<Caption>
                                                               AS OF JUNE 30,
                                                              -----------------
                                                               2004      2003
                                                              -------   -------
<S>                                                           <C>       <C>
Employee related expenses...................................  $11,444   $10,003
Payments due to Pfizer......................................       --     9,040
Interest and tax accruals...................................    4,836     9,249
Other accrued liabilities...................................   23,730    12,407
                                                              -------   -------
                                                              $40,010   $40,699
                                                              =======   =======
</Table>

9.  DEBT

  LOANS PAYABLE TO BANKS

     At June 30, 2004, loans payable to banks included $10,996 under the
domestic senior credit facility with Wells Fargo Foothill, Inc. The weighted
average interest rate under the domestic senior credit facility from its
inception at October 21, 2003 through June 30, 2004 was 8.0%. At June 30, 2004,
the Company had $6,504 of borrowings available under the borrowing base formula
in effect for the domestic senior credit facility that is provided under the
domestic senior credit facility.

     On October 21, 2003, the Company entered into a new domestic senior credit
facility with Wells Fargo Foothill, Inc., providing for a working capital
facility plus a letter of credit facility. The aggregate amount of borrowings
under such working capital and letter of credit facilities may not exceed
$25,000, including aggregate borrowings under the working capital facility of up
to $15,000. On April 29, 2004, the Company amended the domestic senior credit
facility to increase the aggregate amount of borrowings available under such
working capital and letter of credit facilities from $25,000 to $27,500 and to
increase the amount of aggregate borrowings available under the working capital
facility from $15,000 to $17,500. As of September 24, 2004, the Company amended
the domestic senior credit facility to: (i) increase the aggregate amount of
borrowings available under such working capital and letter of credit facilities
from $27,500 to $32,500; the amount of aggregate borrowings available under the
working capital facility remained unchanged at $17,500; (ii) amend the EBITDA
definition to exclude charges and expenses related to unsuccessful acquisitions
and related financings in an aggregate amount not to exceed $5,300 for the
period beginning January 1, 2004 and ending June 30, 2004; (iii) amend the
definition of Additional Indebtedness to exclude advances under the working
capital facility; (iv) amend the definition of Permitted Investments to allow
other investments made during the period from January 1, 2004 through June 30,
2004 in an aggregate amount not to exceed $336; and (v) establish covenant
EBITDA levels for the periods after June 30, 2004. The amendment was effective
June 30, 2004 for items (i), (ii) and (iii); effective January 1, 2004 for item
(iv); and effective September 24, 2004 for all other items.

     Borrowings under the domestic senior credit facility are subject to a
borrowing base formula based on percentages of eligible domestic receivables and
domestic inventory. Under the domestic senior credit facility, the Company may
choose between two interest rate options: (i) the applicable base rate as
defined plus 0.50% and (ii) the LIBOR rate as defined plus 2.75%. Indebtedness
under the domestic senior credit facility is secured by a first priority lien on
substantially all of the Company's assets and assets of substantially all of the
Company's domestic subsidiaries. The Company is required to pay an unused line
fee of 0.375% on the unused portion of the domestic senior credit facility, a
monthly servicing fee and standard letter of credit fees to issuing banks.
Borrowings under the domestic senior credit facility are available until, and
are repayable no later than, October 31, 2007, although borrowings must be
repaid by June 30, 2007 if the maturity of the Senior Secured Notes has not been
extended, as required by the domestic senior credit facility, by that date.

                                       F-20
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     As of June 30, 2004, the Company was in compliance with the financial
covenants of the amended domestic senior credit facility. The domestic senior
credit facility requires, among other things, the maintenance of certain levels
of trailing consolidated and domestic EBITDA (earnings before interest, taxes,
depreciation and amortization) calculated on a monthly basis, and an
acceleration clause should an event of default (as defined in the agreement)
occur. In addition, there are certain restrictions on additional borrowings,
additional liens on the Company's assets, guarantees, dividend payments,
redemption or purchase of the Company's stock, sale of subsidiaries' stock,
disposition of assets, investments, and mergers and acquisitions.

     The domestic senior credit facility contains a lock-box requirement and a
material adverse change clause should an event of default (as defined in the
agreement) occur. Accordingly, the amounts outstanding have been classified as
short-term and are included in loans payable to banks in the consolidated
balance sheet.

  LONG-TERM DEBT

<Table>
<Caption>
                                                                AS OF JUNE 30,
                                                              -------------------
                                                                2004       2003
                                                              --------   --------
<S>                                                           <C>        <C>
Senior secured notes due December 1, 2007...................  $105,000   $     --
Senior subordinated notes due June 1, 2008..................    48,029    100,000
Foreign bank loans..........................................     6,237      3,906
Pfizer promissory note......................................        --     20,075
Bank capital expenditure facility...........................        --      1,496
Capitalized lease obligations and other.....................       103        910
                                                              --------   --------
                                                               159,369    126,387
Less: current maturities....................................     1,351     24,124
                                                              --------   --------
                                                              $158,018   $102,263
                                                              ========   ========
</Table>

  Senior Secured Notes due 2007

     In October 2003 the Company issued 105,000 units, consisting of $85,000 of
13% Senior Secured Notes due 2007 (the "US Senior Secured Notes") and $20,000 of
13% Senior Secured Notes due 2007 of Philipp Brothers Netherlands III B.V. (the
"Dutch Senior Secured Notes" and, together with the US Senior Secured Notes, the
"Senior Secured Notes"), an indirect wholly-owned subsidiary of the Company (the
"Dutch issuer").

     The US Senior Secured Notes and the Dutch Senior Secured Notes are senior
secured obligations of each of the Company (the "US issuer") and the Dutch
issuer, respectively. The US Senior Secured Notes and the Dutch Senior Secured
Notes are guaranteed on a senior secured basis by all the US Issuer's domestic
restricted subsidiaries, and the Dutch Senior Secured Notes are guaranteed on a
senior secured basis by the US Issuer and by the restricted subsidiaries of the
Dutch issuer, presently consisting of Phibro Animal Health SA. The US Senior
Secured Notes and related guarantees are collateralized by substantially all of
the US Issuer's assets and the assets of its domestic restricted subsidiaries,
other than real property and interests therein, including a pledge of all the
capital stock of such domestic restricted subsidiaries. The Dutch Senior Secured
Notes and related guarantees are collateralized by a pledge of all the accounts
receivable, a security interest or floating charge on the inventory to the
extent permitted by applicable law, and a mortgage on substantially all of the
real property of the Dutch issuer and each of its restricted subsidiaries, a
pledge of 100% of the capital stock of each subsidiary of the Dutch issuer, a
pledge of the intercompany loans made by the Dutch issuer to its restricted
subsidiaries and substantially all of the assets of the U.S. guarantors, other
than real property and interests therein. The indenture governing the Senior
Secured Notes provides for optional

                                       F-21
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

make-whole redemptions at any time prior to June 1, 2005, optional redemption on
or after June 1, 2005, and requires the Company to make certain offers to
purchase Senior Secured Notes upon a change of control, upon certain asset sales
and from fifty percent (50%) of excess cash flow (as such terms are defined in
the indenture).

     The indenture contains certain covenants with respect to the Company and
the guarantors, which restrict, among other things, (a) the incurrence of
additional indebtedness, (b) the payment of dividends and other restricted
payments, (c) the creation of certain liens, (d) the sale of assets, (e) certain
payment restrictions affecting subsidiaries, and (f) transactions with
affiliates. The indenture restricts the Company's ability to consolidate, or
merge with or into, or to transfer all or substantially all of its assets to,
another person.

  Senior Subordinated Notes due 2008

     The Company issued $100,000 aggregate principal amount of 9 7/8% Senior
Subordinated Notes due 2008 ("Senior Subordinated Notes") of which $51,971
principal amount was repurchased with proceeds of the Senior Secured Notes. The
Senior Subordinated Notes are general unsecured obligations of the Company and
are subordinated in right of payment to all existing and future senior debt (as
defined in the indenture agreement of the Company) and rank pari passu in right
of payment with all other existing and future senior subordinated indebtedness
of the Company. The Senior Subordinated Notes are unconditionally guaranteed on
a senior subordinated basis by the domestic restricted subsidiaries of the
Company. Additional future domestic subsidiaries may become guarantors under
certain circumstances.

     The indenture contains certain covenants with respect to the Company and
the Guarantors, which restrict, among other things, (a) the incurrence of
additional indebtedness, (b) the payment of dividends and other restricted
payments, (c) the creation of certain liens, (d) the sale of assets, (e) certain
payment restrictions affecting subsidiaries, and (f) transactions with
affiliates. The indenture restricts the Company's ability to consolidate, or
merge with or into, or to transfer all or substantially all of its assets to,
another person.

  Foreign Bank Loans

     The bank loans of the Company's Koffolk Ltd. (Israel) subsidiary are
collateralized by its receivables and inventory, accrue interest at LIBOR plus
1.25%, and are repayable in equal quarterly payments through 2005. The LIBOR
rate was 1.15% at June 30, 2004.

     The Company's foreign subsidiaries have aggregate credit lines of $11,044.
At June 30, 2004, the Company had $4,807 of borrowings available under these
credit lines.

  Aggregate Maturities of Long-Term Debt

     The aggregate maturities of long-term debt as of June 30, 2004 were:

<Table>
<Caption>
YEAR ENDED JUNE 30,
- -------------------
<S>                                                           <C>
2005........................................................  $  1,351
2006........................................................     4,127
2007........................................................        --
2008........................................................   153,891
2009........................................................        --
                                                              --------
  Total.....................................................  $159,369
                                                              ========
</Table>

                                       F-22
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10.  REDEEMABLE COMMON STOCK OF SUBSIDIARY

     A key executive of the Company has a 2.1% ownership interest in the common
stock of a subsidiary. The subsidiary's shares are redeemable at fair market
value, based on independent appraisal, upon the death, disability or termination
of the key executive. The Company and its subsidiary have entered into a
severance agreement with the executive for payments based on a multiple of
pre-tax earnings (as defined). The payments are subject to certain restrictions
pursuant to terms of the domestic senior credit facility. At June 30, 2004 no
severance payments would have been due upon termination.

11.  REDEEMABLE PREFERRED STOCK

     Effective December 26, 2003 (the "Closing Date"), the Company entered into
the Prince Transactions with the Palladium Investors (Note 4). Pursuant to
definitive purchase and other agreements executed on and effective as of the
Closing Date, the Prince Transactions included the following elements which
relate to the Company's Redeemable Preferred Stock: the reduction of the value
of the Company's Preferred Stock owned by the Palladium Investors from $72,184
(25,000 Series B shares and 20,000 Series C shares) to $16,517 (accreted through
the Closing Date) (10,591 Series C shares) by means of the redemption of all of
its shares of Series B Preferred Stock and a portion of its Series C Preferred
Stock; the termination of $2,250 in annual management advisory fees payable by
the Company to Palladium; a cash payment of $10,000 to the Palladium Investors
in respect of the portion of the Company's Preferred Stock not exchanged in
consideration of the business and assets of PMC; and the agreement of the
Palladium Investors to pay the Company for advisory fees for the next three
years of $1,000, $500, and $200, respectively (which were pre-paid at closing by
the Palladium Investors and satisfied for $1,300, the net present value of such
payments). The Company has an agreement to receive certain treasury services
from the Palladium Investors for $100 per year.

     The redeemable preferred stock is entitled to cumulative cash dividends,
payable semi-annually, at 15% per annum of the liquidation value. The redeemable
Preferred C stock is entitled to the Liquidation Value plus a percentage of the
equity value of the Company, as defined in the amended Certificate of
Incorporation. The equity value is calculated as a multiple of earnings before
interest, taxes, depreciation and amortization ("EBITDA") of the Company's
business ("Equity Value").

     On the third closing anniversary and on each closing anniversary
thereafter, the Company may redeem, for cash only, in whole the Preferred C, at
the Liquidation Value plus the Equity Value payment. At any time after the
redemption of the Company's Senior Subordinated Notes (due June 2008), Palladium
Investors shall have the right to require the Company to redeem, for cash, the
Preferred C at the Liquidation Value plus the Equity Value payment.

     Dividends of $6,042, $8,808 and $7,623 for the years ended June 30, 2004,
2003 and 2002, respectively, were accrued on the preferred shares and charged to
retained earnings. Equity Value of $5,421, $3,470 and $0 for the years ended
June 30, 2004, 2003 and 2002, respectively, was accrued and charged to retained
earnings.

                                       F-23
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Redeemable preferred stock is comprised of:

<Table>
<Caption>
                                                                          AS OF
                                                              -----------------------------
                                                              JUNE 30, 2004   JUNE 30, 2003
                                                              -------------   -------------
<S>                                                           <C>             <C>
Series B
  Value at issuance.........................................     $    --         $25,000
  Accrued dividends.........................................          --          11,339
Series C
  Value at issuance.........................................      10,591          20,000
  Accrued dividends.........................................       7,200           9,072
  Accreted equity value.....................................       6,887           3,470
                                                                 -------         -------
Total redeemable preferred stock............................     $24,678         $68,881
                                                                 =======         =======
</Table>

     The agreement with the Palladium Investors contains covenants which
restrict, without the consent of at least one director designated by the
Palladium Investors (or if no such director is then serving on the Board, at
least one of the Palladium Investors), certain (a) issuances of equity
securities, (b) sales of assets in excess of $10,000, (c) purchases of business
and other investments in excess of $10,000, (d) incurrence of indebtedness for
borrowed money in excess of $12,500, (e) redemptions, acquisitions or other
purchases of equity securities, (f) transactions with officers, directors,
stockholders or employees or any family member or affiliate thereof in excess of
$500, (g) compensation and benefits of certain officers, and (h) transactions
involving a change of control.

12.  COMMON STOCK AND PAID-IN CAPITAL

  COMMON STOCK:

     Common stock at June 30, 2004 and 2003 was:

<Table>
<Caption>
                                                           AUTHORIZED   ISSUED   AMOUNT
                                                             SHARES     SHARES   AT PAR
                                                           ----------   ------   ------
<S>                                                        <C>          <C>      <C>
Class A common stock.....................................    16,200     12,600    $.10
Class B common stock.....................................    14,100     11,888    $.10
                                                             ------     ------
                                                             30,300     24,488
</Table>

     The entire voting power is vested in the holders of Class A common stock,
except the holders of Class A common stock are entitled to elect all but four of
the directors. The holders of Class B common stock are entitled to elect one
director, and the purchasers of the Preferred B and Preferred C are entitled by
contract to elect two directors. No dividends may be paid to common stockholders
until all dividends have been paid to preferred stockholders. Thereafter,
holders of Class A common stock shall receive dividends, when and as declared by
the directors, at the rate of 5.5% of the par value of such stock
(non-cumulative). After all declared dividends have been paid to Class A common
stockholders, dividends may be declared and paid to the holders of Class B
common stock. In the event of any complete liquidation, dissolution, winding-up
of the business, or sale of all the assets of the Company, and after the
redemption of the preferred stock, the Class A common stockholders are entitled
to a distribution equal to the par value of the stock plus declared and unpaid
dividends. Thereafter, the remaining assets of the Company shall be distributed
to the holders of Class B common stock.

                                       F-24
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  REDEEMABLE COMMON STOCK:

     Pursuant to terms of an agreement with a minority shareholder, who is also
an officer of the Company, the Company is required to purchase at book value,
the Class B shares of such shareholder upon his retirement, death, disability,
or the termination of his employment. Should such shareholder elect to sell his
shares, the Company has a right of first offer and an option to purchase the
shares. The Company records a liability for the redemption amount as calculated
at each balance sheet date. No liability was recorded as of June 30, 2004 and
2003. Income of $378 was recorded during 2002 to adjust the shares to redeemable
value.

13.  EMPLOYEE BENEFIT PLANS

     The Company and its domestic subsidiaries maintain noncontributory defined
benefit pension plans for all eligible domestic nonunion employees who meet
certain requirements of age, length of service and hours worked per year. The
Company's Belgium subsidiary maintains a defined contribution and defined
benefit plan for eligible employees. The benefits provided by the plans are
based upon years of service and the employees' average compensation, as defined.
The measurement date for the domestic and international pension plans was June
30, 2004 and 2003, respectively.

     Reconciliations of changes in benefit obligations, plan assets, and funded
status of the plans were:

<Table>
<Caption>
                                                       DOMESTIC         INTERNATIONAL
                                                   -----------------   ---------------
                                                    2004      2003      2004     2003
                                                   -------   -------   ------   ------
<S>                                                <C>       <C>       <C>      <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year..........  $15,846   $11,821   $6,595   $4,251
Service cost.....................................    1,260     1,056      467      310
Employee contributions...........................       --        --       27      100
Interest cost....................................      891       784      374      259
Benefits paid....................................     (595)     (243)      (3)     (29)
Actuarial (gain) or loss.........................     (251)     (663)    (475)     879
Curtailment......................................     (922)       --       --       --
Change in Discount Rate..........................     (786)    3,091       --       --
Exchange rate impact.............................       --        --      338      825
                                                   -------   -------   ------   ------
Benefit obligation at end of year................  $15,443   $15,846   $7,323   $6,595
                                                   =======   =======   ======   ======
</Table>

At June 30, 2004 and 2003, the accumulated benefit obligation was $13,075 and
$12,458, respectively, for domestic pension plans and $4,383 and $4,248,
respectively, for international pension plans.

<Table>
<S>                                              <C>       <C>       <C>       <C>
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of
  year.........................................  $10,387   $ 9,717   $ 4,566   $ 2,882
Actual return on plan assets...................    1,068       537       435       204
Employer contributions.........................      935       376       558       841
Employee contributions.........................       --        --        27       100
Benefits paid..................................     (595)     (243)       (3)      (29)
Exchange rate impact...........................       --        --       245       568
                                                 -------   -------   -------   -------
Fair value of plan assets at end of year.......  $11,795   $10,387   $ 5,828   $ 4,566
                                                 =======   =======   =======   =======
</Table>

                                       F-25
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<Table>
<S>                                              <C>       <C>       <C>       <C>
FUNDED STATUS
Funded status of the plan......................  $(3,648)  $(5,459)  $(1,495)  $(2,029)
Unrecognized net actuarial (gain) or loss......      152     2,358       368       961
Unrecognized prior service cost................     (338)     (553)       --        --
Unrecognized transition obligation/(asset).....       (8)      (12)       --        --
                                                 -------   -------   -------   -------
(Accrued) pension cost.........................  $(3,842)  $(3,666)  $(1,127)  $(1,068)
                                                 =======   =======   =======   =======
</Table>

     The Company expects to contribute $990 and $602 to its Domestic and
International plans, respectively, during fiscal 2005. The Company's policy is
to fund the pension plans in amounts which comply with contribution limits
imposed by law.

     Components of net periodic pension expense were:

<Table>
<Caption>
                                                               2004     2003    2002
                                                              ------   ------   -----
<S>                                                           <C>      <C>      <C>
DOMESTIC PENSION EXPENSE
Service cost -- benefits earned during the year.............  $1,260   $1,056   $ 879
Interest cost on benefit obligation.........................     891      784     714
Expected return on plan assets..............................    (846)    (756)   (709)
Amortization of initial unrecognized net transition
  (asset)...................................................      (3)      (3)     (3)
Amortization of prior service costs.........................    (153)    (162)   (165)
Amortization of net actuarial loss (gain)...................      25      (57)    (31)
Curtailment benefit.........................................     (64)      --      --
                                                              ------   ------   -----
Net periodic pension cost -- domestic.......................  $1,110   $  862   $ 685
                                                              ======   ======   =====
INTERNATIONAL PENSION EXPENSE
Service cost -- benefits earned during the year.............  $  467   $  310   $ 217
Interest cost on benefit obligation.........................     374      259     164
Expected return on plan assets..............................    (300)    (203)   (123)
Amortization of net actuarial loss..........................      22       --      --
                                                              ------   ------   -----
Net periodic pension cost -- international..................  $  563   $  366   $ 258
                                                              ======   ======   =====
</Table>

     Significant actuarial assumptions for the plans were:

<Table>
<Caption>
                                                          2004       2003       2002
                                                        --------   --------   --------
<S>                                                     <C>        <C>        <C>
DOMESTIC ACTUARIAL ASSUMPTIONS
Discount rate for service and interest................      5.8%       7.1%       7.5%
Expected rate of return on plan assets................      7.5%       7.5%       7.5%
Rate of compensation increase.........................  3.0%-4.5%  3.0%-4.5%  3.0%-4.5%
Discount rate for year-end benefit obligation.........      6.1%       5.8%       7.1%
INTERNATIONAL ACTUARIAL ASSUMPTIONS
Discount rate for service and interest................      5.5%       5.8%       5.8%
Expected rate of return on plan assets................      6.0%       6.0%       6.0%
Rate of compensation increase.........................      3.0%       3.0%       3.0%
Discount rate for year-end benefit obligation.........      5.5%       5.5%       5.8%
</Table>

                                       F-26
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Estimated future benefit payments, including benefits attributable to
future service, are as follows:

<Table>
<Caption>
                                                              DOMESTIC   INTERNATIONAL
                                                              --------   -------------
<S>                                                           <C>        <C>
2005........................................................   $  295       $   37
2006........................................................      301           38
2007........................................................      311           40
2008........................................................      451           41
2009........................................................      508           42
2010-2014...................................................    4,500        1,817
</Table>

     The Company's domestic plan target allocations for fiscal 2005 and the
weighted asset allocation of plan assets as of June 30, 2004 and 2003 are as
follows:

<Table>
<Caption>
                                                               2005     2004   2003
                                                              -------   ----   ----
<S>                                                           <C>       <C>    <C>
DOMESTIC PLAN ASSET ALLOCATIONS
Debt Securities.............................................  45%-55%    50%    59%
Equity Securities...........................................  15%-25%    19%     9%
Other.......................................................  25%-35%    31%    32%
</Table>

     The expected long-term rate of return for the plan's total assets is based
on the expected return of each of the above categories, weighted based on the
median of the target allocation of each class. Equity securities are expected to
return 8% to 10% over the long-term, while debt securities are expected to
return 4% to 6%. Based on historical experience, the Committee expects that the
Plan's asset managers will provide a modest (1/2% to 1% per annum) premium to
their respective market benchmark indices.

     The investment policy and strategy is to earn a long-term investment return
sufficient to meet the obligations of the Plan, while assuming a moderate amount
of risk in order to maximize investment return. In order to achieve this goal,
assets are invested in a diversified portfolio consisting of equity securities,
debt securities, limited partnerships and other investments in a manner
consistent with ERISA's fiduciary requirements.

     The Company's international plan target allocations for fiscal 2005 and the
weighted asset allocation of plan assets as of June 30, 2004 and 2003 are as
follows:

<Table>
<Caption>
                                                              2005   2004   2003
                                                              ----   ----   ----
<S>                                                           <C>    <C>    <C>
INTERNATIONAL PLAN ASSET ALLOCATIONS
Debt Securities.............................................   59%    62%    79%
Equity Securities...........................................   25%    21%    20%
Other.......................................................   16%    17%     1%
</Table>

     The expected long-term rate of return for the plan's total assets is based
on the expected return of each of the above categories, weighted based on the
target allocation for each class. Equity securities are expected to return 7.5%
over the long-term, while debt securities are expected to return 5.5%.

     The Company assumed the liability for the International pension plan during
2002 as part of the MFA acquisition.

     In addition to Belgium, most of the Company's foreign subsidiaries have
retirement plans covering substantially all employees. Contributions to these
plans are generally deposited under fiduciary-type arrangements. Benefits under
these plans primarily are based on compensation levels. Funding policies are
based on legal requirements and local practices. Expense under these plans was
$585, $522 and $534 for 2004, 2003 and 2002, respectively.

                                       F-27
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The Company and its domestic subsidiaries provide a 401(k) savings plan,
under which an employee may make a pre-tax contribution of up to 60% of base
compensation. The Company makes a non-matching contribution equal to 1% of the
employee's base compensation and a matching contribution equal to 50% of the
employee's contribution up to the first 3% of base compensation and 25% of the
employee's contribution from 3% to 6% of base compensation. All employee
contributions are subject to the maximum amounts permitted for federal income
tax purposes. Employees vest in the Company's matching contributions over 5
years. The Company's contribution was $502, $528 and $539 in 2004, 2003 and
2002, respectively.

     The Company has a deferred compensation and supplemental retirement plan
for certain senior executives. The benefits provided by the plan are based upon
years of service and the executives' average compensation, subject to certain
limits. The plan also provides for death benefits before retirement. Expense
under this plan was $259, $249, and $204 in 2004, 2003 and 2002, respectively.
The aggregate liability under this plan amounted to $2,018 and $1,678 at June
30, 2004 and 2003, respectively. To assist in funding the benefits of the plan,
the Company invested in corporate-owned life insurance policies, through a
trust, which at June 30, 2004 and 2003 had cash surrender values of $1,481 and
$1,299, respectively, and are included in other assets.

     The Company has an executive income program to provide a pre-retirement
death benefit and a supplemental retirement benefit for certain senior
executives. The aggregate liability under this plan amounted to $416 and $385 at
June 30, 2004 and 2003, respectively. To assist in funding the benefits of the
plan, the Company invested in split-dollar life insurance policies, which at
June 30, 2004 and 2003 had cash surrender values to the Company of $1,529 and
$1,392, respectively, and are included in other assets.

14.  INCOME TAXES

     Income (loss) from continuing operations before income taxes was:

<Table>
<Caption>
                                                           2004      2003      2002
                                                          -------   ------   --------
<S>                                                       <C>       <C>      <C>
Domestic................................................  $27,587   $3,855   $ (5,507)
Foreign.................................................   (3,054)   3,906     (4,937)
                                                          -------   ------   --------
Income (loss) from continuing operations before income
  taxes.................................................  $24,533   $7,761   $(10,444)
                                                          =======   ======   ========
</Table>

     Components of the provision for income taxes were:

<Table>
<Caption>
                                                           2004      2003      2002
                                                          -------   -------   -------
<S>                                                       <C>       <C>       <C>
Current tax provision (benefit):
  Federal...............................................  $   563   $    --   $    --
  State and local.......................................    1,333       516      (256)
  Foreign...............................................    5,747     3,084     3,785
                                                          -------   -------   -------
  Total current tax provision...........................    7,643     3,600     3,529
                                                          -------   -------   -------
Deferred tax provision (benefit):
  Federal...............................................   10,150     1,705    (1,225)
  State and local.......................................   (1,396)     (345)     (590)
  Foreign...............................................   (1,671)      850    (1,673)
  Change in valuation allowance -- domestic.............   (8,754)   (1,360)   14,726
                                  -- foreign............    1,997     5,610        --
                                                          -------   -------   -------
  Total deferred tax provision..........................      326     6,460    11,238
                                                          -------   -------   -------
Provision for income taxes..............................  $ 7,969   $10,060   $14,767
                                                          =======   =======   =======
</Table>

                                       F-28
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Reconciliations of the Federal statutory rate to the Company's effective
tax rate are:

<Table>
<Caption>
                                                              2004    2003    2002
                                                              -----   -----   -----
<S>                                                           <C>     <C>     <C>
Federal income tax rate.....................................   35.0%   35.0%  (35.0)%
State and local taxes, net of federal income tax effect.....    3.5     1.4    (4.9)
Foreign tax rate differences and taxes in certain profitable
  foreign jurisdictions.....................................   22.9    33.2    50.8
Change in valuation allowance...............................  (41.4)   55.0   131.8
Gain not taxable for book purposes..........................   10.4      --      --
Expenses with no tax benefit................................    1.7     4.4     1.0
Other.......................................................    0.3     0.6    (2.3)
                                                              -----   -----   -----
Effective tax rate..........................................   32.4%  129.6%  141.4%
                                                              =====   =====   =====
</Table>

     Most of the investments in fixed assets of the Company's Israeli subsidiary
have been granted "approved enterprise" status under Israeli law. The subsidiary
is also a "foreign investors' company" as defined by Israeli law. This status
entitles the subsidiary to reduced tax rates. The entitlement of the reduced tax
rates is conditional upon the subsidiary fulfilling the conditions stipulated by
Israeli law, regulations published there-under and the instruments of approval
for the specific investments in approved enterprises. In the event of failure to
comply with these conditions, the benefits may be canceled and the subsidiary
may be required to refund the amount of the benefits, in whole or in part, with
the addition of interest. The periods of benefits expire in various years
through 2010.

     Provision has not been made for United States or additional foreign taxes
on undistributed earnings of foreign subsidiaries of approximately $39,200,
whose earnings have been or are intended to be reinvested. It is not practicable
at this time to determine the amount of income tax liability that would result
should such earnings be repatriated.

     The tax effects of significant temporary differences that comprise deferred
tax assets and liabilities at June 30, 2004 and 2003 were:

<Table>
<Caption>
                                                                AS OF JUNE 30,
                                                              -------------------
                                                                2004       2003
                                                              --------   --------
<S>                                                           <C>        <C>
Deferred tax assets:
  Employee benefits.........................................  $  3,274   $  3,194
  Property, plant and equipment.............................       475        686
  Insurance.................................................       350        341
  Receivables allowances....................................       724        770
  Inventory.................................................     3,441      4,588
  Environmental remediation.................................     1,322      1,232
  Alternative minimum tax...................................       701        163
  Net operating loss carry forwards -- domestic.............    11,645     20,186
                                     -- foreign.............    10,432      1,290
  Other.....................................................     1,333      2,059
                                                              --------   --------
                                                                33,697     34,509
  Valuation allowance.......................................   (30,045)   (32,954)
                                                              --------   --------
                                                                 3,652      1,555
                                                              --------   --------
</Table>

                                       F-29
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                                AS OF JUNE 30,
                                                              -------------------
                                                                2004       2003
                                                              --------   --------
<S>                                                           <C>        <C>
Deferred tax liabilities
  Property, plant and equipment.............................    (2,727)    (2,354)
  Other.....................................................    (2,649)        --
                                                              --------   --------
                                                                (5,376)    (2,354)
                                                              --------   --------
Net deferred tax liability..................................  $ (1,724)  $   (799)
                                                              ========   ========
</Table>

     Deferred taxes are included in the following line items in the consolidated
balance sheets:

<Table>
<Caption>
                                                               2004      2003
                                                              -------   -------
<S>                                                           <C>       <C>
Prepaid expenses and other current assets...................  $   502   $   543
Accrued expenses and other current liabilities..............     (138)     (111)
Other assets................................................      669       624
Other liabilities...........................................   (2,757)   (1,855)
                                                              -------   -------
                                                              $(1,724)  $  (799)
                                                              =======   =======
</Table>

     The Company has incurred domestic and foreign losses in recent years and
has reassessed the likelihood of recovering net deferred tax assets, resulting
in the recording of valuation allowances due to the uncertainty of future
profitability. The Company recorded income tax expense and increased the
valuation allowances by $5,610 and $11,594 during the fourth quarters of 2003
and 2002, respectively. The Company will continue to evaluate the likelihood of
recoverability of these deferred tax assets based upon actual and expected
operating performance.

     The valuation allowance for deferred tax assets was:

<Table>
<Caption>
                                                           2004      2003      2002
                                                          -------   -------   -------
<S>                                                       <C>       <C>       <C>
Balance at beginning of period..........................  $32,954   $18,495   $ 1,434
Change in valuation allowance...........................   (6,757)    4,250    14,726
Other adjustments.......................................    3,848    10,209     2,335
                                                          -------   -------   -------
Balance at end of period................................  $30,045   $32,954   $18,495
                                                          =======   =======   =======
</Table>

     The other adjustments in the valuation allowance consist primarily of
changes in the valuation allowance attributable to discontinued operations.

     The Company has domestic federal net operating loss carry forwards of
approximately $25,000 that expire in 2019 through 2024, state net operating loss
carry forwards of approximately $55,000 that expire over various periods
beginning in 2005 and foreign net operating loss carry forwards of approximately
$30,000 that expire over various periods beginning in 2010.

                                       F-30
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15.  COMMITMENTS AND CONTINGENCIES

  LEASES:

     The Company leases office, warehouse and manufacturing equipment and
facilities for minimum annual rentals (plus certain cost escalations) as
follows:

<Table>
<Caption>
                                                                NON-CANCELABLE
                                                              -------------------
                                                              CAPITAL   OPERATING
YEAR ENDED JUNE 30                                            LEASES     LEASES
- ------------------                                            -------   ---------
<S>                                                           <C>       <C>
2005........................................................   $103      $1,524
2006........................................................      2         778
2007........................................................     --         568
2008........................................................     --         456
2009........................................................     --         167
Thereafter..................................................     --          72
                                                               ----      ------
Total minimum lease payments................................   $105      $3,565
                                                                         ======
Amounts representing interest...............................      2
                                                               ----
Present value of minimum lease payments.....................   $103
                                                               ====
</Table>

     Equipment under capitalized leases included in the consolidated balance
sheet at June 30, 2004 was $1,027, net of accumulated depreciation of $440.

     Operating lease commitments include $1,125 with a related party controlled
by shareholders of the Company, as described in Related Party Transactions.

     Rent expense under operating leases for 2004, 2003 and 2002 was $2,441,
$2,221 and $2,015, respectively.

  LITIGATION:

     On or about April 17, 1997, CP Chemicals, Inc. (a subsidiary, "CP") and the
Company were served with a complaint filed by Chevron U.S.A. Inc. ("Chevron") in
the United States District Court for the District of New Jersey, alleging that
the operations of CP at its Sewaren plant affected adjoining property owned by
Chevron and alleging that the Company, as the parent of CP, is also responsible
to Chevron. In July 2002, a phased settlement agreement was reached and a
Consent Order entered by the Court. That settlement is in the process of being
implemented. The Company's and CP's portion of the settlement for past costs and
expenses through the entry of the Consent Order was $495 and was included in
selling, general and administrative expenses in fiscal 2002 and was paid in
fiscal 2003. The Consent Order then provides for a period of due diligence
investigation of the property owned by Chevron. The investigation has been
conducted and the results are under review. The investigation costs are being
split with one other defendant, Vulcan Materials Company. Upon completion of the
review of the results of the investigation, a decision will be made whether to
opt out of the settlement or proceed. If no party opts out of the settlement,
the Company and CP will take title to the adjoining Chevron property, probably
through the use of a three-member New Jersey limited liability company. In
preparation to move forward, a limited liability company has been formed, with
Vulcan Materials Company as the third member. The Company also has commenced
negotiations with Chevron regarding its allocation of responsibility and
associated costs under the Consent Order. While the costs cannot be estimated
with any degree of certainty at this time, the Company believes that insurance
recoveries will be available to offset some of those costs.

     The Company's Phibro-Tech subsidiary was named in 1993 as a potentially
responsible party ("PRP") in connection with an action commenced under the
Federal Comprehensive Environmental Response, Compen-

                                       F-31
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

sation, and Liability Act ("CERCLA") by the United States Environmental
Protection Agency ("the EPA"), involving a former third-party fertilizer
manufacturing site in Jericho, South Carolina. An agreement has been reached
under which such subsidiary agreed to contribute up to $900 of which $635 has
been paid as of June 30, 2004. Some recovery from insurance and other sources is
expected but has not been recorded. The Company also has accrued its best
estimate of any future costs.

     Phibro-Tech, Inc. has resolved certain alleged technical permit violations
with the California Department of Toxic Substances Control and has reached an
agreement to pay $425 over a six year period ending October 2008.

     In February 2000, the EPA notified numerous parties of potential liability
for waste disposal at a licensed Casmalia, California disposal site, including a
business, assets of which were originally acquired by a subsidiary in 1984. A
settlement has been reached in this matter and the Company has paid $171 in full
settlement.

     On or about April 5, 2002, the Company was served, as a potentially
responsible party, with an information request from the EPA relating to a
third-party superfund site in Rhode Island. The Company is investigating the
matter, which relates to events in the 1950's and 1960's, but management does
not believe that the Company has any liability in this matter.

     On or about August 13, 2004 the Company was served with a Request for
Information pursuant to Section 104 of CERCLA and Section 3007 of RCRA relating
to possible discharges into Turkey Creek in Sumter, South Carolina. The Company
is preparing its response to the Request for Information and believes that,
because its Sumter, South Carolina facility is distant from Turkey Creek and
does not discharge into Turkey Creek, there is a low probability of liability
associated with this matter.

     The Company and its subsidiaries are party to a number of claims and
lawsuits arising out of the normal course of business including product
liabilities and governmental regulation. Certain of these actions seek damages
in various amounts. In most cases, such claims are covered by insurance. The
Company believes that none of the claims or pending lawsuits, either
individually or in the aggregate, will have a material adverse effect on its
financial position.

  ENVIRONMENTAL REMEDIATION:

     The Company's operations, properties and subsidiaries are subject to a wide
variety of complex and stringent federal, state, local and foreign environmental
laws and regulations, including those governing the use, storage, handling,
generation, treatment, emission, release, discharge and disposal of certain
materials and wastes, the remediation of contaminated soil and groundwater, the
manufacture, sale and use of pesticides and the health and safety of employees.
As such, the nature of the Company's current and former operations and those of
its subsidiaries exposes the Company and its subsidiaries to the risk of claims
with respect to such matters. Under certain circumstances, the Company or any of
its subsidiaries might be required to curtail operations until a particular
problem is remedied. Known costs and expenses under environmental laws
incidental to ongoing operations are generally included within operating
results. Potential costs and expenses may also be incurred in connection with
the repair or upgrade of facilities to meet existing or new requirements under
environmental laws or to investigate or remediate potential or actual
contamination and from time to time the Company establishes reserves for such
contemplated investigation and remediation costs. In many instances, the
ultimate costs under environmental laws and the time period during which such
costs are likely to be incurred are difficult to predict.

     The Company's subsidiaries have, from time to time, implemented procedures
at their facilities designed to respond to obligations to comply with
environmental laws. The Company believes that its operations are currently in
material compliance with such environmental laws, although at various sites its
subsidiaries are

                                       F-32
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

engaged in continuing investigation, remediation and/or monitoring efforts to
address contamination associated with their historic operations.

     The nature of the Company's and its subsidiaries' current and former
operations exposes the Company and its subsidiaries to the risk of claims with
respect to environmental matters and the Company cannot assure it will not incur
material costs and liabilities in connection with such claims. Based upon its
experience to date, the Company believes that the future cost of compliance with
existing environmental laws, and liability for known environmental claims
pursuant to such environmental laws, will not have a material adverse effect on
the Company's financial position.

     Based upon information available, the Company estimates the cost of
litigation proceedings described above and the cost of further investigation and
remediation of identified soil and groundwater problems at operating sites,
closed sites and third-party sites, and closure costs for closed sites to be
approximately $2,933, which is included in current and long-term liabilities in
the June 30, 2004 consolidated balance sheet (approximately $2,652 at June 30,
2003). Environmental provisions were $1,511, $1,610 and $2,148 for 2004, 2003
and 2002, respectively, and were included in selling, general and administrative
expenses in the consolidated statements of operations.

16.  GUARANTEES

     As part of the Prince Transactions (Note 4), as is normal for such
transactions, the Company has agreed to indemnify the Palladium Investors for
losses arising out of breach of representations, warranties and covenants. The
Company's maximum liability under such indemnifications is limited to $15,000.

     The Company agreed to indemnify the Palladium Investors for a portion, at
the rate of $0.65 for every dollar, of the amount they receive in respect of the
disposition of Buyer for less than $21,000, up to a maximum payment by the
Company of $4,000 (the "Backstop Indemnification Amount"). The Backstop
Indemnification Amount would be payable on the earlier to occur of July 1, 2008
or six months after the redemption date of all of the Company's Senior Secured
Notes due 2007 if such a disposition closes prior to such redemption and six
months after the closing of any such disposition if the disposition closes after
any such redemption. The Company's obligations with respect to the Backstop
Indemnification Amount will cease if the Palladium Investors do not close the
disposition of Buyer by January 1, 2009. The maximum potential Backstop
Indemnification Amount is included in other liabilities on the Company's
consolidated balance sheet at June 30, 2004.

     The Company established a $1,000 letter of credit escrow for two years to
collateralize its working capital adjustment and certain other indemnification
obligations relating to the Prince Transactions.

17.  FINANCIAL INSTRUMENTS

     Financial instruments that potentially subject the Company to credit risk
consist principally of cash and cash equivalents and trade receivables. The
Company places its cash and cash equivalents with high quality financial
institutions in various countries. The Company sells to customers in a variety
of industries, markets and countries. Concentrations of credit risk with respect
to receivables arising from these sales are limited due to the large number of
customers comprising the Company's customer base. Ongoing credit evaluations of
customers' financial conditions are performed and, generally, no collateral is
required. The Company maintains appropriate reserves for uncollectible
receivables.

     The carrying amounts of cash and cash equivalents, trade receivables, trade
payables and short-term debt is considered to be representative of their fair
value because of their short maturities. The fair values of the Company's Senior
Secured Notes and Senior Subordinated Notes are estimated based on quoted market
prices. At June 30, 2004 the fair values of the Company's Senior Secured Notes
and Senior Subordinated Notes were $114,450 and $43,706, respectively, and the
related carrying amounts were $105,000 and $48,029,
                                       F-33
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

respectively. At June 30, 2003 the fair value of the Company's Senior
Subordinated Notes was $40,000 and the related carrying amount was $100,000. The
fair value of the Company's other long-term debt does not differ materially from
its carrying amount based on the variable interest rate structure of these
obligations.

     The Company obtains third-party letters of credit in connection with
certain inventory purchases and insurance obligations. The contract values of
the letters of credit at June 30, 2004 and 2003 were $9,263 and $2,593,
respectively. The difference between the carrying values and fair values of
these letters of credit was not material.

     The Company operates internationally, with manufacturing and sales
facilities in various locations around the world and utilizes certain financial
instruments to manage its foreign currency and commodity exposures, primarily
related to forecasted transactions. To qualify a derivative as a hedge at
inception and throughout the hedge period, the Company formally documents the
nature and relationships between hedging instruments and hedged items, as well
as its risk-management objectives, strategies for undertaking the various hedge
transactions and method of assessing hedge effectiveness. Additionally, for
hedges of forecasted transactions, the significant characteristics and expected
terms of a forecasted transaction must be specifically identified, and it must
be probable that each forecasted transaction would occur. If it were deemed
probable that the forecasted transaction would not occur, the gain or loss would
be recognized in operations currently. Financial instruments qualifying for
hedge accounting must maintain a specified level of effectiveness between the
hedging instrument and the item being hedged, both at inception and throughout
the hedged period. The Company hedges forecasted transactions for periods not
exceeding the next twelve months. The Company does not engage in trading or
other speculative uses of financial instruments.

     From time to time, the Company uses forward contracts and options to
mitigate its exposure to changes in foreign currency exchange rates and as a
means of hedging forecasted operating costs. When using options as a hedging
instrument, the Company excludes the time value from the assessment of
effectiveness. Pursuant to SFAS No. 133, all cumulative changes in a foreign
currency option's fair value are deferred as a component of accumulated other
comprehensive income until the underlying hedged transactions are reported on
the Company's consolidated statement of operations and comprehensive income. The
Company also utilizes, on a limited basis, certain commodity derivatives,
primarily on copper used in its manufacturing process, to hedge the cost of its
anticipated production requirements. The Company's foreign currency options and
forward contracts and commodity futures contracts were designated as cash flow
hedges and qualified for hedge accounting treatment. The Company deferred $9 and
$81 of cumulative gains (net of losses) on various copper futures contracts
designated as cash flow hedges as of June 30, 2004 and 2003, respectively.

     The fair value of commodity contracts is estimated based on quotes from the
market makers of these instruments and represents the estimated amounts that the
Company would expect to receive or pay to terminate the agreements as of the
reporting date.

18.  BUSINESS SEGMENTS

     The Company's reportable segments are Animal Health and Nutrition,
Industrial Chemicals, Distribution and All Other. Reportable segments have been
determined primarily on the basis of the nature of products and services and
certain similar operating units have been aggregated. The Company's Animal
Health and Nutrition segment manufactures and markets more than 500 formulations
and concentrations of medicated feed additives and nutritional feed additives
including antibiotics, antibacterials, anticoccidials, anthelmintics, trace
minerals, vitamins, vitamin premixes and other animal health and nutrition
products. The Industrial Chemicals segment manufactures and markets a number of
chemicals for use in the pressure-treated wood, chemical catalyst,
semiconductor, automotive, and aerospace industries. The Distribution segment
markets and distributes a variety of industrial, specialty and fine organic
chemicals and intermediates produced primarily by third parties. The All Other
segment manufactures and markets a variety of specialty

                                       F-34
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

custom chemicals and copper-based fungicides. Intersegment sales and transfers
were not significant. The following segment data includes information only for
continuing operations.

<Table>
<Caption>
                                ANIMAL                                              CORPORATE
                               HEALTH &    INDUSTRIAL                              EXPENSES &
2004 SEGMENT DETAIL            NUTRITION   CHEMICALS    DISTRIBUTION   ALL OTHER   ADJUSTMENTS    TOTAL
- -------------------            ---------   ----------   ------------   ---------   -----------   --------
<S>                            <C>         <C>          <C>            <C>         <C>           <C>
Net Sales....................  $265,421     $42,253       $30,861       $19,739     $     --     $358,274
Operating income/(loss)......    33,307       2,899         2,900         2,301      (17,132)      24,275
Depreciation and
  amortization...............     8,263       2,123            11           419        2,367       13,183
Identifiable assets..........   185,601      26,146         7,715         5,696       16,211      241,369
Capital expenditures.........     3,850       2,216             6           115           57        6,244
</Table>

<Table>
<Caption>
                                ANIMAL                                              CORPORATE
                               HEALTH &    INDUSTRIAL                              EXPENSES &
2003 SEGMENT DETAIL            NUTRITION   CHEMICALS    DISTRIBUTION   ALL OTHER   ADJUSTMENTS    TOTAL
- -------------------            ---------   ----------   ------------   ---------   -----------   --------
<S>                            <C>         <C>          <C>            <C>         <C>           <C>
Net Sales....................  $250,706     $48,797       $30,072       $12,171     $     --     $341,746
Operating income/(loss)......    38,472      (1,855)        3,207           620      (14,948)      25,496
Depreciation and
  amortization...............     7,690       2,904            12           364        1,554       12,524
Identifiable assets..........   190,864      33,191         9,154         5,726       12,811      251,746
Capital expenditures.........     5,669       2,836            --           129            2        8,636
</Table>

<Table>
<Caption>
                                ANIMAL                                              CORPORATE
                               HEALTH &    INDUSTRIAL                              EXPENSES &
2002 SEGMENT DETAIL            NUTRITION   CHEMICALS    DISTRIBUTION   ALL OTHER   ADJUSTMENTS    TOTAL
- -------------------            ---------   ----------   ------------   ---------   -----------   --------
<S>                            <C>         <C>          <C>            <C>         <C>           <C>
Net Sales....................  $239,602     $50,854       $27,852       $10,368     $     --     $328,676
Operating income/(loss)......    28,298      (7,324)        2,345         1,164      (13,854)      10,629
Depreciation and
  amortization...............     7,438       3,535            12           321        1,049       12,355
Identifiable assets..........   186,118      38,985         8,059         8,097       10,393      251,652
Capital expenditures.........     5,915       2,328            12           144          119        8,518
</Table>

19.  GEOGRAPHIC INFORMATION

     The following is information about the Company's geographic operations.
Information is attributed to the geographic areas based on the location of the
Company's subsidiaries.

<Table>
<Caption>
                                                         2004       2003       2002
                                                       --------   --------   --------
<S>                                                    <C>        <C>        <C>
NET SALES:
  United States......................................  $248,577   $233,942   $219,981
  Europe.............................................    18,605     16,643     12,004
  Israel.............................................    43,170     44,383     45,266
  Latin America......................................    26,800     25,235     28,970
  Asia/Pacific.......................................    21,122     21,543     22,455
                                                       --------   --------   --------
  Total..............................................  $358,274   $341,746   $328,676
                                                       ========   ========   ========
</Table>

                                       F-35
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                         2004       2003       2002
                                                       --------   --------   --------
<S>                                                    <C>        <C>        <C>
PROPERTY, PLANT AND EQUIPMENT, NET:
  United States......................................  $ 13,836   $ 16,719   $ 19,370
  Europe.............................................    20,732     20,463     17,451
  Israel.............................................     9,157     10,990     12,647
  Latin America......................................    14,783     15,396     13,772
  Asia/Pacific.......................................       278        337        258
                                                       --------   --------   --------
  Total..............................................  $ 58,786   $ 63,905   $ 63,498
                                                       ========   ========   ========
</Table>

20.  CONSOLIDATING FINANCIAL STATEMENTS

     The units of Senior Secured Notes due 2007, consisting of US Senior Secured
Notes issued by the Company (the "Parent Issuer") and Dutch Senior Secured Notes
issued by Philipp Brothers Netherlands III B.V. (the "Dutch Issuer"), are
guaranteed by certain subsidiaries. The Company and its U.S. subsidiaries ("U.S.
Guarantor Subsidiaries"), excluding The Prince Manufacturing Company, Prince
MFG, LLC and Mineral Resource Technologies, Inc. (until divested) (the
"Unrestricted Subsidiaries", as defined in the indenture), fully and
unconditionally guarantee all of the Senior Secured Notes on a joint and several
basis. In addition, the Dutch Issuer's subsidiaries, presently consisting of
Phibro Animal Health SA (the "Belgium Guarantor"), fully and unconditionally
guarantee the Dutch Senior Secured Notes. The Dutch issuer and the Belgium
Guarantor do not guarantee the US Senior Secured Notes. Other foreign
subsidiaries ("Non-Guarantor Subsidiaries") do not presently guarantee the
Senior Secured Notes. The U.S. Guarantor Subsidiaries include all domestic
subsidiaries of the Company other than the Unrestricted Subsidiaries and
include: CP Chemicals, Inc., Phibro-Tech, Inc., Prince Agriproducts, Inc,
Phibrochem, Inc., Phibro Chemicals, Inc., Western Magnesium Corp., Phibro Animal
Health Holdings, Inc., and Phibro Animal Health U.S., Inc.

     The Senior Subordinated Notes due 2008, issued by the Parent Issuer, are
guaranteed by certain subsidiaries. The Company's U.S. subsidiaries, including
the U.S. Guarantor Subsidiaries and the Unrestricted Subsidiaries, fully and
unconditionally guarantee the Senior Subordinated Notes on a joint and several
basis. The Dutch Issuer, Belgium Guarantor and Non-Guarantor Subsidiaries do not
presently guarantee the Senior Subordinated Notes. The U.S. Guarantor
Subsidiaries and Unrestricted Subsidiaries include all domestic subsidiaries of
the Company including: CP Chemicals, Inc., Phibro-Tech, Inc., Prince
Agriproducts, Inc., The Prince Manufacturing Company, Prince MFG, LLC, Mineral
Resource Technologies, Inc. (until divested), Phibrochem, Inc., Phibro
Chemicals, Inc., Western Magnesium Corp., Phibro Animal Health Holdings, Inc.,
and Phibro Animal Health U.S., Inc.

     The following consolidating financial data summarizes the assets,
liabilities and results of operations and cash flows of the Parent Issuer,
Unrestricted Subsidiaries, U.S. Guarantor Subsidiaries, Dutch Issuer, Belgium
Guarantor and Non-Guarantor Subsidiaries. The Unrestricted Subsidiaries, U.S.
Guarantor Subsidiaries, Dutch Issuer, Belgium Guarantor and Non-Guarantor
Subsidiaries are directly or indirectly wholly owned as to voting stock by the
Company.

     Investments in subsidiaries are accounted for by the Parent Issuer using
the equity method. Income tax expense (benefit) is allocated among the
consolidating entities based upon taxable income (loss) by jurisdiction within
each group. The principal consolidation adjustments are to eliminate investments
in subsidiaries and intercompany balances and transactions.

                                       F-36
<PAGE>

               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                          CONSOLIDATING BALANCE SHEET
<Table>
<Caption>
                                                          AS OF JUNE 30, 2004
                             ------------------------------------------------------------------------------
                              PARENT    UNRESTRICTED   U.S. GUARANTOR    DUTCH     BELGIUM    NON-GUARANTOR
                              ISSUER    SUBSIDIARIES    SUBSIDIARIES    ISSUER    GUARANTOR   SUBSIDIARIES
                             --------   ------------   --------------   -------   ---------   -------------
                                                             (IN THOUSANDS)
<S>                          <C>        <C>            <C>              <C>       <C>         <C>
                                                  ASSETS
Current Assets:
  Cash and cash
    equivalents............  $    136     $    --         $    801      $    17    $   212      $  4,402
  Trade receivables........     2,670          --           26,996           --      2,592        25,400
  Other receivables........       317         414            1,195           --         72           768
  Inventory................     1,994          --           37,890           --     23,159        16,867
  Prepaid expenses and
    other..................     3,195         110              565           --      1,018         3,800
                             --------     -------         --------      -------    -------      --------
    Total current assets...     8,312         524           67,447           17     27,053        51,237
                             --------     -------         --------      -------    -------      --------
Property, plant &
  equipment, net...........       105          --           13,730           --     17,321        27,630
Intangibles................        --          --            4,252           --      1,569         5,874
Investment in
  subsidiaries.............   125,355          --            3,619        1,604         --            --
Intercompany...............   (14,995)     20,995           60,030       20,181      1,630       (12,497)
Other assets...............    14,506          --            1,056           --         --           736
                             --------     -------         --------      -------    -------      --------
                             $133,283     $21,519         $150,134      $21,802    $47,573      $ 72,980
                             ========     =======         ========      =======    =======      ========

                              LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
  Cash overdraft...........  $     --     $    10         $    881      $    --    $    --      $     --
  Loan payable to banks....    10,996          --               --           --         --            --
  Current portion of
    long-term debt.........        --          --              101           --         --         1,250
  Accounts payable.........     4,734           9           28,434           --      2,258        11,537
  Accrued expenses and
    other..................    11,857         159            8,306          216     12,022         7,450
                             --------     -------         --------      -------    -------      --------
    Total current
      liabilities..........    27,587         178           37,722          216     14,280        20,237
                             --------     -------         --------      -------    -------      --------
Long-term debt.............   133,029          --                2       20,000         --         4,987
Intercompany debt..........        --          --               --           --     30,553        44,791
Other liabilities..........    11,822          --            4,897           --      1,136         4,431
                             --------     -------         --------      -------    -------      --------
    Total liabilities......   172,438         178           42,621       20,216     45,969        74,446
                             --------     -------         --------      -------    -------      --------
Redeemable Securities:
  Series C preferred
    stock..................    24,678          --               --           --         --            --
                             --------     -------         --------      -------    -------      --------
Stockholders' Equity
  (Deficit):
  Series A preferred
    stock..................       521          --               --           --         --            --
  Common stock.............         2           1               31           --         --            --
  Paid-in capital..........       860          --          112,004           21         52         1,537
  Retained earnings
    (accumulated
    deficit)...............   (57,964)     21,340           (4,339)      (2,744)    (2,757)        8,374
  Accumulated other
    comprehensive income
    (loss):
    Gain on derivative
      instruments..........         9          --                9           --         --            --
    Cumulative currency
      translation
      adjustment...........    (7,261)         --             (192)       4,309      4,309       (11,377)
                             --------     -------         --------      -------    -------      --------
    Total stockholders'
      equity (deficit).....   (63,833)     21,341          107,513        1,586      1,604        (1,466)
                             --------     -------         --------      -------    -------      --------
                             $133,283     $21,519         $150,134      $21,802    $47,573      $ 72,980
                             ========     =======         ========      =======    =======      ========

<Caption>
                                 AS OF JUNE 30, 2004
                             ----------------------------
                             CONSOLIDATION   CONSOLIDATED
                              ADJUSTMENTS      BALANCE
                             -------------   ------------
                                    (IN THOUSANDS)
<S>                          <C>             <C>
                                        ASSETS
Current Assets:
  Cash and cash
    equivalents............    $      --       $  5,568
  Trade receivables........           --         57,658
  Other receivables........           --          2,766
  Inventory................                      79,910
  Prepaid expenses and
    other..................           --          8,688
                               ---------       --------
    Total current assets...           --        154,590
                               ---------       --------
Property, plant &
  equipment, net...........           --         58,786
Intangibles................           --         11,695
Investment in
  subsidiaries.............     (130,578)            --
Intercompany...............      (75,344)            --
Other assets...............           --         16,298
                               ---------       --------
                               $(205,922)      $241,369
                               =========       ========

                                   LIABILITIES AND
                                  STOCKHOLDERS' EQUITY
                                       (DEFICIT)
Current Liabilities:
  Cash overdraft...........    $      --       $    891
  Loan payable to banks....           --         10,996
  Current portion of
    long-term debt.........           --          1,351
  Accounts payable.........           --         46,972
  Accrued expenses and
    other..................                      40,010
                               ---------       --------
    Total current
      liabilities..........           --        100,220
                               ---------       --------
Long-term debt.............           --        158,018
Intercompany debt..........      (75,344)            --
Other liabilities..........           --         22,286
                               ---------       --------
    Total liabilities......      (75,344)       280,524
                               ---------       --------
Redeemable Securities:
  Series C preferred
    stock..................           --         24,678
                               ---------       --------
Stockholders' Equity
  (Deficit):
  Series A preferred
    stock..................           --            521
  Common stock.............          (32)             2
  Paid-in capital..........     (113,614)           860
  Retained earnings
    (accumulated
    deficit)...............      (19,874)       (57,964)
  Accumulated other
    comprehensive income
    (loss):                                          --
    Gain on derivative
      instruments..........           (9)             9
    Cumulative currency
      translation
      adjustment...........        2,951         (7,261)
                               ---------       --------
    Total stockholders'
      equity (deficit).....     (130,578)       (63,833)
                               ---------       --------
                               $(205,922)      $241,369
                               =========       ========
</Table>

                                       F-37
<PAGE>

               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                     CONSOLIDATING STATEMENT OF OPERATIONS

<Table>
<Caption>
                                                             FOR THE YEAR ENDED JUNE 30, 2004
                       -------------------------------------------------------------------------------------------------------------
                        PARENT    UNRESTRICTED   U.S. GUARANTOR    DUTCH     BELGIUM    NON-GUARANTOR   CONSOLIDATION   CONSOLIDATED
                        ISSUER    SUBSIDIARIES    SUBSIDIARIES    ISSUER    GUARANTOR   SUBSIDIARIES     ADJUSTMENTS      BALANCE
                       --------   ------------   --------------   -------   ---------   -------------   -------------   ------------
                                                                      (IN THOUSANDS)
<S>                    <C>        <C>            <C>              <C>       <C>         <C>             <C>             <C>
Net sales............  $ 21,868     $11,118         $215,591      $    --    $ 5,742      $103,955        $     --        $358,274
Net sales --
  intercompany.......       150       2,598              468           --     28,970         4,375         (36,561)             --
Cost of goods sold...    17,318      10,139          160,136           --     25,293        91,546         (36,561)        267,871
                       --------     -------         --------      -------    -------      --------        --------        --------
  Gross profit.......     4,700       3,577           55,923           --      9,419        16,784              --          90,403
Selling, general and
  administrative
  expenses...........    20,238       1,299           25,317            4      2,676        16,594              --          66,128
Costs of
  non-completed
  transaction........     5,261          --               --           --         --            --              --           5,261
                       --------     -------         --------      -------    -------      --------        --------        --------
  Operating income
    (loss)...........   (20,799)      2,278           30,606           (4)     6,743           190              --          19,014
Other:
  Interest expense...    16,208          18               --        1,806         95           491              --          18,618
  Interest
    (income).........        (4)         --               --           --         --          (126)             --            (130)
  Other (income)
    expense, net.....       578          --             (605)          --       (265)         (489)             --            (781)
  Net (gain) on
    extinguishment of
    debt.............   (23,226)         --               --           --         --            --              --         (23,226)
  Intercompany
    interest and
    other............   (26,755)      1,892           16,392       (1,823)     3,335         6,959              --              --
  (Profit) loss
    relating to
    subsidiaries.....    (5,349)         --               --       (2,124)        --            --           7,473              --
                       --------     -------         --------      -------    -------      --------        --------        --------
  Income (loss) from
    continuing
    operations before
    income taxes.....    17,749         368           14,819        2,137      3,578        (6,645)         (7,473)         24,533
Provision for income
  taxes..............     1,185         221            1,294           --      1,454         3,815              --           7,969
                       --------     -------         --------      -------    -------      --------        --------        --------
  Income (loss) from
    continuing
    operations.......    16,564         147           13,525        2,137      2,124       (10,460)         (7,473)         16,564
Discontinued
  operations:
  Profit (loss)
    relating to
    discontinued
    operations.......      (517)         --               --           --         --            --             517              --
  (Loss) from
    discontinued
    operations (net
    of income
    taxes)...........        --        (124)              --           --         --        (1,501)             --          (1,625)
  Gain (loss) from
    disposal of
    discontinued
    operations (net
    of income
    taxes)...........    (3,197)         --           (2,735)          --         --         3,843              --          (2,089)
                       --------     -------         --------      -------    -------      --------        --------        --------
  Net income
    (loss)...........  $ 12,850     $    23         $ 10,790      $ 2,137    $ 2,124      $ (8,118)       $ (6,956)       $ 12,850
                       ========     =======         ========      =======    =======      ========        ========        ========
</Table>

                                       F-38
<PAGE>

               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                     CONSOLIDATING STATEMENT OF CASH FLOWS
<Table>
<Caption>
                                                  FOR THE YEAR ENDED JUNE 30, 2004
                                   ---------------------------------------------------------------
                                    PARENT    UNRESTRICTED   U.S. GUARANTOR    DUTCH      BELGIUM
                                    ISSUER    SUBSIDIARIES    SUBSIDIARIES     ISSUER    GUARANTOR
                                   --------   ------------   --------------   --------   ---------
                                                           (IN THOUSANDS)
<S>                                <C>        <C>            <C>              <C>        <C>
Operating Activities:
 Net income (loss)...............  $ 12,850     $     23        $10,790       $  2,137    $2,124
 Adjustment for discontinued
   operations....................     3,714          124          2,735             --        --
                                   --------     --------        -------       --------    ------
 Income (loss) from continuing
   operations....................    16,564          147         13,525          2,137     2,124
 Adjustments to reconcile income
   (loss) from continuing
   operations to net cash
   provided (used) by operating
   activities:
   Depreciation and
     amortization................     2,367          487          2,542             --     2,669
   Deferred income taxes.........       733           --             --             --        --
   Net gain from sales of
     assets......................        --           --           (689)            --        --
   Net gain on extinguishment of
     debt........................   (23,226)          --             --             --        --
   Effects of changes in foreign
     currency....................        --           --             84             --      (264)
   Other.........................       525           --            395             --        --
   Changes in operating assets
     and liabilities:
     Accounts receivable.........        79          336         (4,826)            --      (945)
     Inventory...................       618         (543)         4,143             --    (8,762)
     Prepaid expenses and
       other.....................      (268)         188           (479)            --     1,369
     Other assets................     1,997           --         (4,548)            --        --
     Intercompany................      (981)      17,331         (8,706)       (22,336)   13,316
     Accounts payable............      (370)        (328)        (2,368)            --    (2,395)
     Accrued expenses and
       other.....................     2,803          (89)         5,089            216     2,742
     Accrued costs of non-
       completed transaction.....     3,970           --             --             --        --
 Cash provided (used) by
   discontinued operations.......    (3,197)        (652)        (2,735)            --        --
                                   --------     --------        -------       --------    ------
   Net cash provided (used) by
     operating activities........     1,614       16,877          1,427        (19,983)    9,854
                                   --------     --------        -------       --------    ------
Investing Activities:
 Capital expenditures............       (57)         (62)        (2,506)            --    (1,613)
 Proceeds from sale of assets....        --           --          1,057             --        --
 Other investing.................      (654)          --             --             --        --
 Discontinued operations.........    14,343           --             --             --        --
                                   --------     --------        -------       --------    ------
   Net cash provided (used) by
     investing activities........    13,632          (62)        (1,449)            --    (1,613)
                                   --------     --------        -------       --------    ------
Financing Activities:
 Net (decrease) in cash
   overdraft.....................      (350)        (276)          (160)            --        --
 Net (decrease) in short-term
   debt..........................   (26,882)          --             --             --        --
 Proceeds from long-term debt....    85,000           --             --         20,000        --
 Payments of long-term debt......   (32,679)         (13)        (1,055)            --        --
 Payments of Pfizer
   obligations...................   (20,075)          --             --             --    (8,225)
   Transactions and transaction
     costs.......................    (4,619)     (16,645)          (129)            --        --
 Debt refinancing costs..........   (15,548)          --             --             --        --
 Discontinued operations.........        --           --             --             --        --
                                   --------     --------        -------       --------    ------
   Net cash provided (used) by
     financing activities........   (15,153)     (16,934)        (1,344)        20,000    (8,225)
                                   --------     --------        -------       --------    ------
Effect of exchange rate changes
 on cash.........................        --           --             --             --        11
                                   --------     --------        -------       --------    ------
Net increase (decrease) in cash
 and cash equivalents............        93         (119)        (1,366)            17        27
Cash and cash equivalents at
 beginning of period.............        43          119          2,167             --       185
                                   --------     --------        -------       --------    ------
Cash and cash equivalents at end
 of period.......................  $    136     $     --        $   801       $     17    $  212
                                   ========     ========        =======       ========    ======

<Caption>
                                         FOR THE YEAR ENDED JUNE 30, 2004
                                   --------------------------------------------
                                   NON-GUARANTOR   CONSOLIDATION   CONSOLIDATED
                                   SUBSIDIARIES     ADJUSTMENTS      BALANCE
                                   -------------   -------------   ------------
                                                  (IN THOUSANDS)
<S>                                <C>             <C>             <C>
Operating Activities:
 Net income (loss)...............    $ (8,118)        $(6,956)       $ 12,850
 Adjustment for discontinued
   operations....................      (2,342)           (517)          3,714
                                     --------         -------        --------
 Income (loss) from continuing
   operations....................     (10,460)         (7,473)         16,564
 Adjustments to reconcile income
   (loss) from continuing
   operations to net cash
   provided (used) by operating
   activities:
   Depreciation and
     amortization................       5,118              --          13,183
   Deferred income taxes.........        (407)             --             326
   Net gain from sales of
     assets......................          (3)             --            (692)
   Net gain on extinguishment of
     debt........................          --              --         (23,226)
   Effects of changes in foreign
     currency....................        (368)             --            (548)
   Other.........................         194              --           1,114
   Changes in operating assets
     and liabilities:                                                      --
     Accounts receivable.........      (1,866)             --          (7,222)
     Inventory...................       8,204              --           3,660
     Prepaid expenses and
       other.....................      (1,124)             --            (314)
     Other assets................        (528)             --          (3,079)
     Intercompany................      (6,097)          7,473              --
     Accounts payable............        (189)             --          (5,650)
     Accrued expenses and
       other.....................      (3,796)             --           6,965
     Accrued costs of non-
       completed transaction.....          --              --           3,970
 Cash provided (used) by
   discontinued operations.......       4,395              --          (2,189)
                                     --------         -------        --------
   Net cash provided (used) by
     operating activities........      (6,927)             --           2,862
                                     --------         -------        --------
Investing Activities:
 Capital expenditures............      (2,006)             --          (6,244)
 Proceeds from sale of assets....          37              --           1,094
 Other investing.................          (1)             --            (655)
 Discontinued operations.........         532              --          14,875
                                     --------         -------        --------
   Net cash provided (used) by
     investing activities........      (1,438)             --           9,070
                                     --------         -------        --------
Financing Activities:
 Net (decrease) in cash
   overdraft.....................          (9)             --            (795)
 Net (decrease) in short-term
   debt..........................         (72)             --         (26,954)
 Proceeds from long-term debt....       4,661              --         109,661
 Payments of long-term debt......      (1,706)             --         (35,453)
 Payments of Pfizer
   obligations...................          --              --         (28,300)
   Transactions and transaction
     costs.......................          --              --         (21,393)
 Debt refinancing costs..........          --              --         (15,548)
 Discontinued operations.........       1,005              --           1,005
                                     --------         -------        --------
   Net cash provided (used) by
     financing activities........       3,879              --         (17,777)
                                     --------         -------        --------
Effect of exchange rate changes
 on cash.........................         223                             234
                                     --------         -------        --------
Net increase (decrease) in cash
 and cash equivalents............      (4,263)             --          (5,611)
Cash and cash equivalents at
 beginning of period.............       8,665                          11,179
                                     --------         -------        --------
Cash and cash equivalents at end
 of period.......................    $  4,402         $    --        $  5,568
                                     ========         =======        ========
</Table>

                                       F-39
<PAGE>

               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                          CONSOLIDATING BALANCE SHEET
<Table>
<Caption>
                                                            AS OF JUNE 30, 2003
                                 --------------------------------------------------------------------------
                                                               U.S.                                NON-
                                  PARENT    UNRESTRICTED    GUARANTOR     DUTCH     BELGIUM     GUARANTOR
                                  ISSUER    SUBSIDIARIES   SUBSIDIARIES   ISSUER   GUARANTOR   SUBSIDIARIES
                                 --------   ------------   ------------   ------   ---------   ------------
                                                               (IN THOUSANDS)
<S>                              <C>        <C>            <C>            <C>      <C>         <C>
                                                  ASSETS
Current Assets:
  Cash and cash equivalents....  $     43     $    119       $  2,167     $  --     $   185      $  8,665
  Trade receivables............     2,759        2,452         22,071        --       1,542        23,890
  Other receivables............       957            3            733        --         518         1,292
  Inventory....................     2,612        4,278         41,266        --      13,460        26,233
  Prepaid expenses and other...     3,267          458            981        --       1,866         3,296
  Current assets from
    discontinued operations....        --        4,942             --        --          --         4,334
                                 --------     --------       --------     ------    -------      --------
    Total Current Assets.......     9,638       12,252         67,218        --      17,571        67,710
                                 --------     --------       --------     ------    -------      --------
Property, plant & equipment,
  net..........................       153        3,269         13,297        --      17,049        30,137
Intangibles....................        --           --             --        --       1,818         6,851
Investment in subsidiaries.....   103,574           --          3,619        --          --            --
Intercompany...................    35,034      (19,431)        59,765        --       6,731        (9,116)
Other assets...................    11,516          710          1,122        --          --           711
Other assets from discontinued
  operations...................        --       10,650             --        --          --         2,675
                                 --------     --------       --------     ------    -------      --------
                                 $159,915     $  7,450       $145,021     $  --     $43,169      $ 98,968
                                 ========     ========       ========     ======    =======      ========

                                         )                    LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT
                                         )
Current Liabilities:
  Cash overdraft...............  $    350     $    286       $  1,041     $  --     $    --      $      9
  Loan payable to banks........    37,878           --             --        --          --            --
  Current portion of long-term
    debt.......................    21,599           66            381        --          --         2,078
  Accounts payable.............     3,304        2,350         25,926        --      12,115        11,660
  Accrued expenses and other...     7,943        1,151          9,931        --       8,583        13,091
  Current liabilities from
    discontinued operations....        --        2,051             --        --          --         3,506
                                 --------     --------       --------     ------    -------      --------
    Total Current
      Liabilities..............    71,074        5,904         37,279        --      20,698        30,344
                                 --------     --------       --------     ------    -------      --------
Long-term debt.................   100,073          213            149        --          --         1,828
Intercompany debt..............        --           --             --        --      22,319        50,664
Other liabilities..............     4,397          114         13,289        --       1,256         2,185
Other liabilities from
  discontinued operations......        --          198             --        --          --           975
                                 --------     --------       --------     ------    -------      --------
Total Liabilities..............   175,544        6,429         50,717        --      44,273        85,996
                                 --------     --------       --------     ------    -------      --------
Redeemable Securities:
  Series B and C preferred
    stock......................    68,881           --             --        --          --            --
                                 --------     --------       --------     ------    -------      --------
Stockholders' Equity (Deficit):
  Series A preferred stock.....       521           --             --        --          --            --
  Common stock.................         2            1             31        --          --            --
  Paid-in capital..............       860           --        110,883        --          --         5,179
  Retained earnings
    (accumulated deficit)......   (79,489)       1,020        (16,499)       --      (4,881)       17,862
  Accumulated other
    comprehensive income
    (loss):....................
    Gain on derivative
      instruments..............        81           --             81        --          --            --
    Cumulative foreign currency
      translation adjustment...    (6,485)          --           (192)       --       3,777       (10,069)
                                 --------     --------       --------     ------    -------      --------
      Total Stockholders'
        Equity (Deficit).......   (84,510)       1,021         94,304        --      (1,104)       12,972
                                 --------     --------       --------     ------    -------      --------
                                 $159,915     $  7,450       $145,021     $  --     $43,169      $ 98,968
                                 ========     ========       ========     ======    =======      ========

<Caption>
                                     AS OF JUNE 30, 2003
                                 ----------------------------

                                 CONSOLIDATION   CONSOLIDATED
                                  ADJUSTMENTS      BALANCE
                                 -------------   ------------
                                        (IN THOUSANDS)
<S>                              <C>             <C>
                                            ASSETS
Current Assets:
  Cash and cash equivalents....                    $ 11,179
  Trade receivables............                      52,714
  Other receivables............                       3,503
  Inventory....................                      87,849
  Prepaid expenses and other...                       9,868
  Current assets from
    discontinued operations....                       9,276
                                   ---------       --------
    Total Current Assets.......           --        174,389
                                   ---------       --------
Property, plant & equipment,
  net..........................                      63,905
Intangibles....................                       8,669
Investment in subsidiaries.....     (107,193)            --
Intercompany...................      (72,983)            --
Other assets...................                      14,059
Other assets from discontinued
  operations...................                      13,325
                                   ---------       --------
                                   $(180,176)      $274,347
                                   =========       ========

                                              LIABILITIES AND
                                         STOCKHOLDERS' EQUITY
                                                     (DEFICIT
Current Liabilities:
  Cash overdraft...............                    $  1,686
  Loan payable to banks........                      37,878
  Current portion of long-term
    debt.......................                      24,124
  Accounts payable.............                      55,355
  Accrued expenses and other...                      40,699
  Current liabilities from
    discontinued operations....                       5,557
                                   ---------       --------
    Total Current
      Liabilities..............           --        165,299
                                   ---------       --------
Long-term debt.................                     102,263
Intercompany debt..............      (72,983)            --
Other liabilities..............                      21,241
Other liabilities from
  discontinued operations......                       1,173
                                   ---------       --------
Total Liabilities..............      (72,983)       289,976
                                   ---------       --------
Redeemable Securities:
  Series B and C preferred
    stock......................                      68,881
                                   ---------       --------
Stockholders' Equity (Deficit):
  Series A preferred stock.....                         521
  Common stock.................          (32)             2
  Paid-in capital..............     (116,062)           860
  Retained earnings
    (accumulated deficit)......        2,498        (79,489)
  Accumulated other
    comprehensive income
    (loss):....................
    Gain on derivative
      instruments..............          (81)            81
    Cumulative foreign currency
      translation adjustment...        6,484         (6,485)
                                   ---------       --------
      Total Stockholders'
        Equity (Deficit).......     (107,193)       (84,510)
                                   ---------       --------
                                   $(180,176)      $274,347
                                   =========       ========
</Table>

                                       F-40
<PAGE>

               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                     CONSOLIDATING STATEMENT OF OPERATIONS
<Table>
<Caption>
                                              FOR THE YEAR ENDED JUNE 30, 2003
                                 -----------------------------------------------------------
                                                               U.S.
                                  PARENT    UNRESTRICTED    GUARANTOR     DUTCH     BELGIUM
                                  ISSUER    SUBSIDIARIES   SUBSIDIARIES   ISSUER   GUARANTOR
                                 --------   ------------   ------------   ------   ---------
                                                       (IN THOUSANDS)
<S>                              <C>        <C>            <C>            <C>      <C>
Net sales......................  $ 23,982     $22,332        $187,628     $  --     $ 6,625
Net sales -- intercompany......     1,338       4,244             775        --      26,994
Cost of goods sold.............    20,083      20,422         144,543        --      31,435
                                 --------     -------        --------     ------    -------
  Gross profit.................     5,237       6,154          43,860        --       2,184
Selling, general and
  administrative expenses......    18,064       2,575          26,632        --       1,868
                                 --------     -------        --------     ------    -------
Operating income (loss)........   (12,827)      3,579          17,228        --         316
Other:
  Interest expense.............    15,050          86               1        --          62
  Interest (income)............        (2)         --              --        --          --
  Other (income) expense,
    net........................     3,283          --          (3,481)       --       1,283
  Intercompany interest and
    other......................   (33,819)      4,952          18,997        --       2,849
  (Profit) loss relating to
    subsidiaries...............     4,036          --              --        --          --
                                 --------     -------        --------     ------    -------
  Income (loss) from continuing
    operations before income
    taxes......................    (1,375)     (1,459)          1,711        --      (3,878)
Provision for income taxes.....       924          52             570        --         572
                                 --------     -------        --------     ------    -------
  Income (loss) from continuing
    operations.................    (2,299)     (1,511)          1,141        --      (4,450)
Discontinued operations:
  Profit (loss) relating to
    discontinued operations....    14,759          --              --        --          --
  (Loss) from discontinued
    operations (net of income
    taxes).....................        --      (3,454)             --        --          --
  Gain (loss) from disposal of
    discontinued operations
    (net of income taxes)......   (30,019)         --              --        --          --
                                 --------     -------        --------     ------    -------
    Net income (loss)..........  $(17,559)    $(4,965)       $  1,141     $  --     $(4,450)
                                 ========     =======        ========     ======    =======

<Caption>
                                      FOR THE YEAR ENDED JUNE 30, 2003
                                 -------------------------------------------
                                     NON-
                                  GUARANTOR     CONSOLIDATION   CONSOLIDATED
                                 SUBSIDIARIES    ADJUSTMENTS      BALANCE
                                 ------------   -------------   ------------
                                               (IN THOUSANDS)
<S>                              <C>            <C>             <C>
Net sales......................    $101,179       $     --        $341,746
Net sales -- intercompany......       6,812        (40,163)             --
Cost of goods sold.............      74,880        (40,163)        251,200
                                   --------       --------        --------
  Gross profit.................      33,111             --          90,546
Selling, general and
  administrative expenses......      15,911                         65,050
                                   --------       --------        --------
Operating income (loss)........      17,200             --          25,496
Other:
  Interest expense.............       1,082                         16,281
  Interest (income)............         (83)                           (85)
  Other (income) expense,
    net........................         454                          1,539
  Intercompany interest and
    other......................       7,021                             --
  (Profit) loss relating to
    subsidiaries...............          --         (4,036)             --
                                   --------       --------        --------
  Income (loss) from continuing
    operations before income
    taxes......................       8,726          4,036           7,761
Provision for income taxes.....       7,942                         10,060
                                   --------       --------        --------
  Income (loss) from continuing
    operations.................         784          4,036          (2,299)
Discontinued operations:
  Profit (loss) relating to
    discontinued operations....          --        (14,759)             --
  (Loss) from discontinued
    operations (net of income
    taxes).....................     (11,123)                       (14,577)
  Gain (loss) from disposal of
    discontinued operations
    (net of income taxes)......      29,336                           (683)
                                   --------       --------        --------
    Net income (loss)..........    $ 18,997       $(10,723)       $(17,559)
                                   ========       ========        ========
</Table>

                                       F-41
<PAGE>

               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                     CONSOLIDATING STATEMENT OF CASH FLOWS
<Table>
<Caption>
                                              FOR THE YEAR ENDED JUNE 30, 2003
                                 -----------------------------------------------------------
                                                               U.S.
                                  PARENT    UNRESTRICTED    GUARANTOR     DUTCH     BELGIUM
                                  ISSUER    SUBSIDIARIES   SUBSIDIARIES   ISSUER   GUARANTOR
                                 --------   ------------   ------------   ------   ---------
                                                       (IN THOUSANDS)
<S>                              <C>        <C>            <C>            <C>      <C>
Operating Activities:
  Net income (loss)............  $(17,559)    $(4,965)       $  1,141     $  --     $(4,450)
  Adjustment for discontinued
    operations.................    15,260       3,454              --        --          --
                                 --------     -------        --------     ------    -------
  Income (loss) from continuing
    operations.................    (2,299)     (1,511)          1,141        --      (4,450)
  Adjustments to reconcile
    income (loss) from
    continuing operations to
    net cash provided (used) by
    operating activities:
    Depreciation and
      amortization.............     1,554         956           2,900        --       2,019
    Deferred income taxes......        --          --              --        --          --
    Net gain from sales of
      assets...................        --          --            (118)       --          --
    Effects of changes in
      foreign currency.........        --          --            (399)       --       1,268
    Other......................       218          13             540        --          --
    Changes in operating assets
      and liabilities:
      Accounts receivable......       301         245           1,489        --        (322)
      Inventory................        95         (61)         (3,658)       --       2,270
      Prepaid expenses and
        other..................      (702)       (195)            558        --      (1,191)
      Other assets.............    (3,171)         --           1,131        --          --
      Intercompany.............    12,780       2,717         (12,285)       --       4,989
      Accounts payable.........     2,280         714          12,542        --       3,523
      Accrued expenses and
        other..................     1,415          95           2,326        --      (6,444)
  Cash provided (used) by
    discontinued operations....        --      (1,928)             --        --          --
                                 --------     -------        --------     ------    -------
    Net cash provided (used) by
      operating activities.....    12,471       1,045           6,167        --       1,662
                                 --------     -------        --------     ------    -------
Investing Activities:
  Capital expenditures.........        (2)       (350)         (2,573)       --      (2,149)
  Proceeds from sale of
    assets.....................        --          --           2,530        --          --
  Other investing..............        --          --              --        --          --
  Discontinued operations......        --        (493)             --        --          --
                                 --------     -------        --------     ------    -------
    Net cash provided (used) by
      Investing Activities.....        (2)       (843)            (43)       --      (2,149)
                                 --------     -------        --------     ------    -------
Financing Activities:
  Net (decrease) in cash
    overdraft..................      (226)        (24)         (4,151)       --          --
  Net (decrease) in short-term
    debt.......................    (5,844)         --              --        --          --
  Proceeds from long-term
    debt.......................        --          --              --        --          --
  Payments of long-term debt...    (6,813)       (111)           (415)       --          --
  Discontinued operations......        --          --              --        --          --
                                 --------     -------        --------     ------    -------
    Net cash provided (used) by
      financing activities.....   (12,883)       (135)         (4,566)       --          --
                                 --------     -------        --------     ------    -------
Effect of exchange rate changes
  on cash......................        --          --               9        --          54
                                 --------     -------        --------     ------    -------
Net increase (decrease) in cash
  and cash equivalents.........      (414)         67           1,567        --        (433)
Cash and cash equivalents at
  beginning of period..........       457          52             600        --         618
                                 --------     -------        --------     ------    -------
Cash and cash equivalents at
  end of period................  $     43     $   119        $  2,167     $  --     $   185
                                 ========     =======        ========     ======    =======

<Caption>
                                      FOR THE YEAR ENDED JUNE 30, 2003
                                 -------------------------------------------
                                     NON-
                                  GUARANTOR     CONSOLIDATION   CONSOLIDATED
                                 SUBSIDIARIES    ADJUSTMENTS      BALANCE
                                 ------------   -------------   ------------
                                               (IN THOUSANDS)
<S>                              <C>            <C>             <C>
Operating Activities:
  Net income (loss)............    $ 18,997       $(10,723)       $(17,559)
  Adjustment for discontinued
    operations.................     (18,213)        14,759          15,260
                                   --------       --------        --------
  Income (loss) from continuing
    operations.................         784          4,036          (2,299)
  Adjustments to reconcile
    income (loss) from
    continuing operations to
    net cash provided (used) by
    operating activities:
    Depreciation and
      amortization.............       5,095                         12,524
    Deferred income taxes......       6,460                          6,460
    Net gain from sales of
      assets...................          (9)                          (127)
    Effects of changes in
      foreign currency.........        (479)                           390
    Other......................        (384)                           387
    Changes in operating assets
      and liabilities:
      Accounts receivable......       2,097                          3,810
      Inventory................        (244)                        (1,598)
      Prepaid expenses and
        other..................      (1,592)                        (3,122)
      Other assets.............        (592)                        (2,632)
      Intercompany.............      (4,165)        (4,036)             --
      Accounts payable.........       1,444                         20,503
      Accrued expenses and
        other..................       2,253                           (355)
  Cash provided (used) by
    discontinued operations....       2,644                            716
                                   --------       --------        --------
    Net cash provided (used) by
      operating activities.....      13,312             --          34,657
                                   --------       --------        --------
Investing Activities:
  Capital expenditures.........      (3,562)                        (8,636)
  Proceeds from sale of
    assets.....................          35                          2,565
  Other investing..............         737                            737
  Discontinued operations......       1,856                          1,363
                                   --------       --------        --------
    Net cash provided (used) by
      Investing Activities.....        (934)            --          (3,971)
                                   --------       --------        --------
Financing Activities:
  Net (decrease) in cash
    overdraft..................      (1,680)                        (6,081)
  Net (decrease) in short-term
    debt.......................        (816)                        (6,660)
  Proceeds from long-term
    debt.......................       2,000                          2,000
  Payments of long-term debt...      (8,675)                       (16,014)
  Discontinued operations......         377                            377
                                   --------       --------        --------
    Net cash provided (used) by
      financing activities.....      (8,794)            --         (26,378)
                                   --------       --------        --------
Effect of exchange rate changes
  on cash......................         389                            452
                                   --------       --------        --------
Net increase (decrease) in cash
  and cash equivalents.........       3,973             --           4,760
Cash and cash equivalents at
  beginning of period..........       4,692                          6,419
                                   --------       --------        --------
Cash and cash equivalents at
  end of period................    $  8,665       $     --        $ 11,179
                                   ========       ========        ========
</Table>

                                       F-42
<PAGE>

               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                     CONSOLIDATING STATEMENT OF OPERATIONS
<Table>
<Caption>
                                               FOR THE YEAR ENDED JUNE 30, 2002
                               ----------------------------------------------------------------
                                                                  U.S.
                                               UNRESTRICTED    GUARANTOR     DUTCH     BELGIUM
                               PARENT ISSUER   SUBSIDIARIES   SUBSIDIARIES   ISSUER   GUARANTOR
                               -------------   ------------   ------------   ------   ---------
                                                        (IN THOUSANDS)
<S>                            <C>             <C>            <C>            <C>      <C>
Net sales....................    $ 24,578        $21,451        $173,952     $  --     $ 4,196
Net sales -- intercompany....       1,114          4,212             924        --      21,509
Cost of goods sold...........      20,837         19,400         135,378        --      21,631
                                 --------        -------        --------     ------    -------
  Gross profit...............       4,855          6,263          39,498        --       4,074
Selling, general and
  administrative expenses....      16,786          2,623          32,959        --       1,559
                                 --------        -------        --------     ------    -------
  Operating income (loss)....     (11,931)         3,640           6,539        --       2,515
Other:
  Interest expense...........      15,858            (29)           (172)       --         365
  Interest (income)..........         (15)            --              --        --          --
  Other (income) expense,
    net......................      (2,001)            --            (839)       --       2,294
  Intercompany interest and
    other....................     (28,534)         5,210          12,467        --       2,486
  (Profit) loss relating to
    subsidiaries.............      17,913             --              --        --          --
                                 --------        -------        --------     ------    -------
  Income (loss) from
    continuing operations
    before income taxes......     (15,152)        (1,541)         (4,917)       --      (2,630)
Provision (benefit) for
  income taxes...............      10,059           (407)          4,636        --        (626)
                                 --------        -------        --------     ------    -------
  Income (Loss) from
    continuing operations....     (25,211)        (1,134)         (9,553)       --      (2,004)
Discontinued Operations:
  Profit (loss) relating to
    discontinued
    operations...............     (26,559)            --              --        --          --
  (Loss) from discontinued
    operations (net of income
    taxes)...................          --         (2,930)             --        --          --
                                 --------        -------        --------     ------    -------
    Net income (loss)........    $(51,770)       $(4,064)       $ (9,553)    $  --     $(2,004)
                                 ========        =======        ========     ======    =======

<Caption>
                                    FOR THE YEAR ENDED JUNE 30, 2002
                               -------------------------------------------
                                   NON-
                                GUARANTOR     CONSOLIDATION   CONSOLIDATED
                               SUBSIDIARIES    ADJUSTMENTS      BALANCE
                               ------------   -------------   ------------
                                             (IN THOUSANDS)
<S>                            <C>            <C>             <C>
Net sales....................    $104,499       $     --        $328,676
Net sales -- intercompany....       9,607        (37,366)             --
Cost of goods sold...........      87,531        (37,366)        247,411
                                 --------       --------        --------
  Gross profit...............      26,575             --          81,265
Selling, general and
  administrative expenses....      16,709                         70,636
                                 --------       --------        --------
  Operating income (loss)....       9,866             --          10,629
Other:
  Interest expense...........       2,048                         18,070
  Interest (income)..........        (331)                          (346)
  Other (income) expense,
    net......................       3,895                          3,349
  Intercompany interest and
    other....................       8,371                             --
  (Profit) loss relating to
    subsidiaries.............          --        (17,913)             --
                                 --------       --------        --------
  Income (loss) from
    continuing operations
    before income taxes......      (4,117)        17,913         (10,444)
Provision (benefit) for
  income taxes...............       1,105                         14,767
                                 --------       --------        --------
  Income (Loss) from
    continuing operations....      (5,222)        17,913         (25,211)
Discontinued Operations:
  Profit (loss) relating to
    discontinued
    operations...............          --         26,559              --
  (Loss) from discontinued
    operations (net of income
    taxes)...................     (23,629)                       (26,559)
                                 --------       --------        --------
    Net income (loss)........    $(28,851)      $ 44,472        $(51,770)
                                 ========       ========        ========
</Table>

                                       F-43
<PAGE>

                        PHIBRO ANIMAL HEALTH CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                     CONSOLIDATING STATEMENT OF CASH FLOWS
<Table>
<Caption>
                                                      FOR THE YEAR ENDED JUNE 30, 2002
                                         -----------------------------------------------------------
                                                                       U.S.
                                          PARENT    UNRESTRICTED    GUARANTOR     DUTCH     BELGIUM
                                          ISSUER    SUBSIDIARIES   SUBSIDIARIES   ISSUER   GUARANTOR
                                         --------   ------------   ------------   ------   ---------
                                                               (IN THOUSANDS)
<S>                                      <C>        <C>            <C>            <C>      <C>
Operating Activities:
  Net income (loss)....................  $(51,770)    $(4,064)       $(9,553)     $  --    $ (2,004)
  Adjustment for discontinued
    operations.........................    26,559       2,930             --         --          --
                                         --------     -------        -------      -----    --------
  Income (loss) from continuing
    operations.........................   (25,211)     (1,134)        (9,553)        --      (2,004)
  Adjustments to reconcile income
    (loss) from continuing operations
    to net cash provided (used) by
    operating activities:
    Depreciation and amortization......     1,049         966          3,434         --       2,252
    Deferred income taxes..............     9,297        (466)         5,356         --          --
    Net gain from sales of assets......        --          --             --         --          --
    Change in redemption amount of
      redeemable common stock..........      (378)         --             --         --          --
    Effects of changes in foreign
      currency.........................        --          --           (100)        --       1,912
    Other..............................       (43)         12            985         --          --
    Changes in operating assets and
      liabilities:
      Accounts receivable..............     1,299         278          1,932         --         886
      Inventory........................       606       1,165         (2,915)        --     (10,325)
      Prepaid expenses and other.......       210        (157)        (1,550)        --         273
      Other assets.....................    (1,335)          1          2,519         --          66
      Intercompany.....................       473       4,753          2,164         --       7,562
      Accounts payable.................      (719)       (844)         1,460         --       1,472
      Accrued expenses and other.......      (119)       (225)        (3,248)        --       3,487
  Cash provided (used) by discontinued
    operations.........................        --      (2,437)            --         --          --
                                         --------     -------        -------      -----    --------
    Net cash provided (used) by
      operating activities.............   (14,871)      1,912            484         --       5,581
                                         --------     -------        -------      -----    --------
Investing Activities:
  Capital expenditures.................      (119)       (192)        (3,022)        --      (1,939)
  Acquisition of a business............        --          --             --         --      (4,421)
  Proceeds from property damage
    claim..............................        --          --            411         --          --
  Proceeds from sale of assets.........        --          --             --         --          --
  Other investing......................       613          --             --         --          --
  Discontinued operations..............        --      (1,832)            --         --          --
                                         --------     -------        -------      -----    --------
    Net cash provided (used) by
      investing activities.............       494      (2,024)        (2,611)        --      (6,360)
                                         --------     -------        -------      -----    --------
Financing Activities:
  Net increase (decrease) in cash
    overdraft..........................       563        (116)         1,447         --          --
  Net increase in short-term debt......    13,520          --             --         --          --
  Proceeds from long-term debt.........     2,000         322             --         --          --
  Payments of long-term debt...........    (2,541)        (98)          (396)        --          --
  Discontinued operations..............        --          --             --         --          --
                                         --------     -------        -------      -----    --------
    Net cash provided (used) by
      financing activities.............    13,542         108          1,051         --          --
                                         --------     -------        -------      -----    --------
Effect of exchange rate changes on
  cash.................................        --          --             --         --         128
                                         --------     -------        -------      -----    --------
Net increase (decrease) in cash and
  cash equivalents.....................      (835)         (4)        (1,076)        --        (651)
Cash and cash equivalents at beginning
  of period............................     1,292          56          1,676         --       1,269
                                         --------     -------        -------      -----    --------
Cash and cash equivalents at end of
  period...............................  $    457     $    52        $   600      $  --    $    618
                                         ========     =======        =======      =====    ========

<Caption>
                                              FOR THE YEAR ENDED JUNE 30, 2002
                                         -------------------------------------------
                                             NON-
                                          GUARANTOR     CONSOLIDATION   CONSOLIDATED
                                         SUBSIDIARIES    ADJUSTMENTS      BALANCE
                                         ------------   -------------   ------------
                                                       (IN THOUSANDS)
<S>                                      <C>            <C>             <C>
Operating Activities:
  Net income (loss)....................    $(28,851)      $ 44,472        $(51,770)
  Adjustment for discontinued
    operations.........................      23,629        (26,559)         26,559
                                           --------       --------        --------
  Income (loss) from continuing
    operations.........................      (5,222)        17,913         (25,211)
  Adjustments to reconcile income
    (loss) from continuing operations
    to net cash provided (used) by
    operating activities:
    Depreciation and amortization......       4,654                         12,355
    Deferred income taxes..............      (2,949)                        11,238
    Net gain from sales of assets......          (5)                            (5)
    Change in redemption amount of
      redeemable common stock..........          --                           (378)
    Effects of changes in foreign
      currency.........................         308                          2,120
    Other..............................       1,462                          2,416
    Changes in operating assets and
      liabilities:
      Accounts receivable..............       1,651                          6,046
      Inventory........................      (2,522)                       (13,991)
      Prepaid expenses and other.......      (1,595)                        (2,819)
      Other assets.....................       1,416                          2,667
      Intercompany.....................       2,961        (17,913)             --
      Accounts payable.................      (7,975)                        (6,606)
      Accrued expenses and other.......       8,616                          8,511
  Cash provided (used) by discontinued
    operations.........................       1,349                         (1,088)
                                           --------       --------        --------
    Net cash provided (used) by
      operating activities.............       2,149             --          (4,745)
                                           --------       --------        --------
Investing Activities:
  Capital expenditures.................      (3,246)                        (8,518)
  Acquisition of a business............      (2,761)                        (7,182)
  Proceeds from property damage
    claim..............................          --                            411
  Proceeds from sale of assets.........          19                             19
  Other investing......................         (33)                           580
  Discontinued operations..............        (839)                        (2,671)
                                           --------       --------        --------
    Net cash provided (used) by
      investing activities.............      (6,860)            --         (17,361)
                                           --------       --------        --------
Financing Activities:
  Net increase (decrease) in cash
    overdraft..........................       1,544                          3,438
  Net increase in short-term debt......         717                         14,237
  Proceeds from long-term debt.........          --                          2,322
  Payments of long-term debt...........      (1,695)                        (4,730)
  Discontinued operations..............      (1,590)                        (1,590)
                                           --------       --------        --------
    Net cash provided (used) by
      financing activities.............      (1,024)            --          13,677
                                           --------       --------        --------
Effect of exchange rate changes on
  cash.................................        (125)                             3
                                           --------       --------        --------
Net increase (decrease) in cash and
  cash equivalents.....................      (5,860)            --          (8,426)
Cash and cash equivalents at beginning
  of period............................      10,552                         14,845
                                           --------       --------        --------
Cash and cash equivalents at end of
  period...............................    $  4,692       $     --        $  6,419
                                           ========       ========        ========
</Table>

                                       F-44
<PAGE>

               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

               CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

<Table>
<Caption>
                                                                       AS OF
                                                              ------------------------
                                                              SEPTEMBER 30,   JUNE 30,
                                                                  2004          2004
                                                              -------------   --------
                                                                   (IN THOUSANDS)
<S>                                                           <C>             <C>
                                        ASSETS
Current Assets:
  Cash and cash equivalents.................................    $  5,778      $  5,568
  Trade receivables, less allowance for doubtful accounts of
     $1,344 at September 30, 2004 and $1,358 at June 30,
     2004...................................................      52,721        57,658
  Other receivables.........................................       3,440         2,766
  Inventories...............................................      87,122        79,910
  Prepaid expenses and other current assets.................       7,707         8,688
                                                                --------      --------
     Total current assets...................................     156,768       154,590
Property, plant and equipment, net..........................      59,818        58,786
Intangibles.................................................      11,354        11,695
Other assets................................................      15,611        16,298
                                                                --------      --------
                                                                $243,551      $241,369
                                                                ========      ========

                        LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Cash overdraft..............................................    $    654      $    891
Loans payable to banks......................................      11,268        10,996
Current portion of long-term debt...........................         953         1,351
Accounts payable............................................      38,892        46,972
Accrued expenses and other current liabilities..............      47,331        40,010
                                                                --------      --------
     Total current liabilities..............................      99,098       100,220
Long-term debt..............................................     157,992       158,018
Other liabilities...........................................      22,676        22,286
                                                                --------      --------
     Total liabilities......................................     279,766       280,524
                                                                --------      --------
Commitments and Contingencies
Redeemable securities:
  Series C preferred stock..................................      25,359        24,678
                                                                --------      --------
Stockholders' Deficit:
  Series A preferred stock..................................         521           521
  Common stock..............................................           2             2
  Paid-in capital...........................................         860           860
  Accumulated deficit.......................................     (58,787)      (57,964)
  Accumulated other comprehensive income (loss):
     Gain on derivative instruments.........................          84             9
     Cumulative currency translation adjustment.............      (4,254)       (7,261)
                                                                --------      --------
     Total stockholders' deficit............................     (61,574)      (63,833)
                                                                --------      --------
                                                                $243,551      $241,369
                                                                ========      ========
</Table>

      See notes to unaudited condensed consolidated financial statements.

                                       F-45
<PAGE>

               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
                        COMPREHENSIVE INCOME (UNAUDITED)

<Table>
<Caption>
                                                              FOR THE THREE MONTHS
                                                               ENDED SEPTEMBER 30,
                                                              ---------------------
                                                                2004        2003
                                                              ---------   ---------
                                                                 (IN THOUSANDS)
<S>                                                           <C>         <C>
Net sales...................................................   $88,275     $84,950
Cost of goods sold..........................................    65,653      63,790
                                                               -------     -------
  Gross profit..............................................    22,622      21,160
Selling, general and administrative expenses................    16,594      15,785
                                                               -------     -------
  Operating income..........................................     6,028       5,375
Other:
  Interest expense..........................................     5,246       3,933
  Interest (income).........................................       (25)       (242)
  Other (income) expense, net...............................        24        (585)
                                                               -------     -------
  Net (gain) on extinguishment of debt......................        --          --
  Income from continuing operations before income taxes.....       783       2,269
Provision for income taxes..................................       924         783
                                                               -------     -------
  Income (loss) from continuing operations..................      (141)      1,486
DISCONTINUED OPERATIONS:
  (Loss) from discontinued operations (net of income
     taxes).................................................        --        (462)
  Gain on disposal of discontinued operations (net of income
     taxes).................................................        --         231
                                                               -------     -------
  Net income (loss).........................................      (141)      1,255
Other comprehensive income (loss):
  Change in derivative instruments, net of tax..............        75         317
  Change in currency translation adjustment.................     3,007        (859)
                                                               -------     -------
  Comprehensive income......................................   $ 2,941     $   713
                                                               =======     =======
  Net income (loss).........................................      (141)      1,255
Dividends and equity value accreted on Series B and C
  redeemable preferred stock................................      (682)       (987)
                                                               -------     -------
  Net income (loss) available to common shareholders........   $  (823)    $   268
                                                               =======     =======
</Table>

      See notes to unaudited condensed consolidated financial statements.

                                       F-46
<PAGE>

               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
                       STOCKHOLDERS' DEFICIT (UNAUDITED)

<Table>
<Caption>
                                                  FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004
                           -------------------------------------------------------------------------------------------
                           PREFERRED        COMMON STOCK                                  ACCUMULATED OTHER
                             STOCK     -----------------------   PAID-IN   ACCUMULATED      COMPREHENSIVE
                           SERIES A     CLASS A      CLASS B     CAPITAL     DEFICIT        INCOME (LOSS)      TOTAL
                           ---------   ----------   ----------   -------   ------------   -----------------   --------
                                                                 (IN THOUSANDS)
<S>                        <C>         <C>          <C>          <C>       <C>            <C>                 <C>
Balance, June 30, 2004...    $521          $1           $1        $860       $(57,964)         $(7,252)       $(63,833)
  Dividends on Series C
     redeemable preferred
     stock...............                                                        (668)                            (668)
  Equity value accreted
     on Series C
     redeemable preferred
     stock...............                                                         (14)                             (14)
  Change in derivative
     instruments, net of
     tax.................                                                                           75              75
  Foreign currency
     translation
     adjustment..........                                                                        3,007           3,007
  Net (loss).............                                                        (141)                            (141)
                             ----          --           --        ----       --------          -------        --------
Balance, September 30,
  2004...................    $521          $1           $1        $860       $(58,787)         $(4,170)       $(61,574)
                             ====          ==           ==        ====       ========          =======        ========
</Table>

      See notes to unaudited condensed consolidated financial statements.

                                       F-47
<PAGE>

               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<Table>
<Caption>
                                                              FOR THE THREE MONTHS
                                                               ENDED SEPTEMBER 30,
                                                              ---------------------
                                                                2004         2003
                                                              --------     --------
                                                                 (IN THOUSANDS)
<S>                                                           <C>          <C>
Operating activities:
  Net income (loss).........................................  $  (141)     $ 1,255
  Adjustment for discontinued operations....................       --          231
                                                              -------      -------
  Income (loss) from continuing operations..................     (141)       1,486
  Adjustments to reconcile income (loss) from continuing
    operations to net cash provided (used) by operating
    activities:
    Depreciation and amortization...........................    3,355        3,168
    Deferred income taxes...................................       68           53
    Effects of changes in foreign currency..................     (122)      (1,364)
    Other...................................................       47          153
    Changes in operating assets and liabilities:
      Accounts receivable...................................    4,689          832
      Inventories...........................................   (4,602)      (4,126)
      Prepaid expenses and other current assets.............    1,077            7
      Other assets..........................................       (1)        (375)
      Accounts payable......................................   (8,580)      (5,483)
      Accrued expenses and other liabilities................    7,695        7,293
      Accrued costs of non-completed transaction............   (1,100)          --
Cash provided (used) by discontinued operations.............       --         (376)
                                                              -------      -------
  Net cash provided (used) by operating activities..........    2,385        1,268
                                                              -------      -------
Investing activities:
  Capital expenditures......................................   (1,748)        (852)
  Proceeds from sale of assets..............................       12           12
  Discontinued operations...................................       --       14,049
                                                              -------      -------
    Net cash provided (used) by investing activities........   (1,736)      13,209
                                                              -------      -------
Financing activities:
  Net increase (decrease) in cash overdraft.................     (237)         731
  Net increase (decrease) in short-term debt................      272         (280)
  Proceeds from long-term debt..............................      445        1,500
  Payments of long-term debt................................     (872)        (944)
  Discontinued operations...................................       --           86
                                                              -------      -------
    Net cash provided (used) by financing activities........     (392)       1,093
                                                              -------      -------
Effect of exchange rate changes on cash.....................      (47)         168
                                                              -------      -------
Net increase (decrease) in cash and cash equivalents........      210       15,738
Cash and cash equivalents at beginning of period............    5,568       11,179
                                                              -------      -------
Cash and cash equivalents at end of period..................  $ 5,778      $26,917
                                                              =======      =======
</Table>

      See notes to unaudited condensed consolidated financial statements.

                                       F-48
<PAGE>

               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                 (IN THOUSANDS)

1.  GENERAL

  PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION:

     In the opinion of Phibro Animal Health Corporation (the "Company" or
"PAHC"), the accompanying unaudited condensed consolidated financial statements
contain all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly its financial position as of September 30, 2004 and
its results of operations and cash flows for the three months ended September
30, 2004 and 2003.

     The condensed consolidated balance sheet as of June 30, 2004 was derived
from audited financial statements, but does not include all disclosures required
by accounting principles generally accepted in the United States. Additionally
it should be noted the accompanying condensed consolidated financial statements
and notes thereto have been prepared in accordance with accounting standards
appropriate for interim financial statements. While the Company believes that
the disclosures presented are adequate to make the information contained herein
not misleading, it is suggested that these financial statements be read in
conjunction the Company's audited consolidated financial statements as found in
the Company's annual report filed on Form 10-K for the year ended June 30, 2004.

     The Company's Mineral Resource Technologies, Inc. ("MRT") and La Cornubia
S.A. (France) ("La Cornubia") businesses have been classified as discontinued
operations as discussed in Note 6. The Company's condensed consolidated
financial statements have been reclassified to report separately the financial
position, operating results and cash flows of the discontinued operations. These
footnotes present information only for continuing operations, unless otherwise
noted.

     The results of operations for the three months ended September 30, 2004 may
not be indicative of results for the full year.

  NEW ACCOUNTING PRONOUNCEMENTS:

     The Company has reviewed the Statements of Financial Accounting Standards
and the FASB Interpretations of the Financial Accounting Standards Board and has
determined that no new statements or interpretations have been issued which
would apply to the Company's financial statements or disclosures.

2.  RISKS, UNCERTAINTIES, AND LIQUIDITY

     The Company's ability to fund its operating plan depends upon the continued
availability of borrowing under its domestic senior credit facility. The Company
believes that it will be able to comply with the terms of its covenants under
the domestic senior credit facility based on its forecasted operating plan. In
the event of adverse operating results and/or violation of covenants under this
facility, there can be no assurance that the Company would be able to obtain
waivers or amendments on favorable terms, if at all. The Company's fiscal 2005
operating plan projects adequate liquidity throughout the year, with periods of
reduced availability around the dates of the semi-annual interest payments due
December 1, 2004 and June 1, 2005 related to its senior secured and senior
subordinated notes. The Company is pursuing additional cost reduction
activities, working capital improvement plans, and sales of non-strategic assets
to ensure additional liquidity. The Company also has availability under foreign
credit lines that likely would be available. The Company also has undertaken a
strategic review of its manufacturing capabilities, and is currently increasing
inventory levels of certain products to enhance future supply flexibility and
reduce costs. There can be no assurance the Company will be successful in any of
the above-noted actions.

     The use of antibiotics in medicated feed additives is a subject of
legislative and regulatory interest. The issue of potential for increased
bacterial resistance to certain antibiotics used in certain food-producing
animals is the subject of discussions on a worldwide basis and, in certain
instances, has led to government

                                       F-49
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

restrictions on the use of antibiotics in food-producing animals. The sale of
feed additives containing antibiotics is a material portion of the Company's
business. Should regulatory or other developments result in further restrictions
on the sale of such products, it could have a material adverse impact on the
Company's financial position, results of operations and cash flows.

     The testing, manufacturing, and marketing of certain of the Company's
products are subject to extensive regulation by numerous government authorities
in the United States and other countries.

     The Company has significant assets located outside of the United States,
and a significant portion of the Company's sales and earnings are attributable
to operations conducted abroad.

     The Company has assets located in Israel and a portion of its sales and
earnings are attributable to operations conducted in Israel. The Company is
affected by social, political and economic conditions affecting Israel, and any
major hostilities involving Israel as well as the Middle East or curtailment of
trade between Israel and its current trading partners, either as a result of
hostilities or otherwise, could have a material adverse effect on the Company.

     The Company's operations, properties and subsidiaries are subject to a wide
variety of complex and stringent federal, state, local and foreign environmental
laws and regulations, including those governing the use, storage, handling,
generation, treatment, emission, release, discharge and disposal of certain
materials and wastes, the remediation of contaminated soil and groundwater, the
manufacture, sale and use of pesticides and the health and safety of employees.
As such, the nature of the Company's current and former operations and those of
its subsidiaries exposes the Company and its subsidiaries to the risk of claims
with respect to such matters.

3.  INVENTORIES

     Inventories are valued at the lower of cost or market. Cost is determined
principally under the first-in, first-out (FIFO) and average methods. Obsolete
and unsaleable inventories are reflected at estimated net realizable value.
Inventory costs include materials, direct labor and manufacturing overhead.
Inventories are comprised of:

<Table>
<Caption>
                                                                       AS OF
                                                              ------------------------
                                                              SEPTEMBER 20,   JUNE 30,
                                                                  2004          2004
                                                              -------------   --------
<S>                                                           <C>             <C>
Raw materials...............................................     $16,651      $16,313
Work-in-process.............................................       1,329        1,764
Finished goods..............................................      69,142       61,833
                                                                 -------      -------
Total inventory.............................................     $87,122      $79,910
                                                                 =======      =======
</Table>

4.  INTANGIBLES

     Product intangible cost arising from the acquisition of the medicated feed
additive business of Pfizer, Inc. and the acquisition of the rights to sell
amprolium was $14,832 and $14,925 at September 30, 2004 and June 30, 2004,
respectively, with related accumulated amortization of $3,478 and $3,230 at
September 30, 2004 and June 30, 2004, respectively. Amortization expense was
$371 and $304 for the three months ended September 30, 2004 and 2003
respectively.

5.  PRINCE TRANSACTIONS

     Effective December 26, 2003, the Company completed the divestiture of
substantially all of the business and assets of Prince Quincy, Inc. (f/k/a The
Prince Manufacturing Company ("PMC")), to a company

                                       F-50
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

("Buyer") formed by Palladium Equity Partners II, LP and certain of its
affiliates (the "Palladium Investors"), and the related reduction of the
Company's preferred stock held by the Palladium Investors (collectively, the
"Prince Transactions").

     The divestiture of PMC has not been reflected as a discontinued operation
due to the existence of the Backstop Indemnification Amount and continuing
supply and service agreements.

     PMC is included in the Company's Industrial Chemicals segment. The results
of operations of PMC were:

<Table>
<Caption>
                                                              THREE MONTHS ENDED
                                                              SEPTEMBER 30, 2003
                                                              ------------------
<S>                                                           <C>
Net sales...................................................        $5,683
Operating income............................................         1,213
Depreciation and amortization...............................           243
</Table>

6.  DISCONTINUED OPERATIONS

     The Company divested MRT and shutdown La Cornubia during fiscal 2004. These
businesses have been classified as discontinued operations.

     Operating results and gain on sale of MRT were:

<Table>
<Caption>
                                                              THREE MONTHS ENDED
                                                              SEPTEMBER 30, 2003
                                                              ------------------
<S>                                                           <C>
OPERATING RESULTS:
Net sales...................................................       $  3,327
Cost of goods sold..........................................          3,135
Selling, general and administrative expenses................            316
                                                                   --------
Loss before income taxes....................................           (124)
Provision for income taxes..................................             --
                                                                   --------
(Loss) from operations......................................       $   (124)
                                                                   ========
GAIN ON SALE:
Current assets..............................................       $ (5,813)
Property, plant & equipment -- net and other assets.........        (10,703)
Current liabilities.........................................          2,911
Net proceeds of sale........................................         13,836
                                                                   --------
Gain on sale................................................       $    231
                                                                   ========
</Table>

                                       F-51
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

     Operating results of La Cornubia were:

<Table>
<Caption>
                                                              THREE MONTHS ENDED
                                                              SEPTEMBER 30, 2003
                                                              ------------------
<S>                                                           <C>
OPERATING RESULTS:
Net sales...................................................        $2,220
Cost of goods sold..........................................         2,216
Selling, general and administrative expenses................           376
Other (income)..............................................           (50)
Interest expense............................................            16
                                                                    ------
Loss before income taxes....................................          (338)
Provision for income taxes..................................            --
                                                                    ------
Loss from operations........................................        $ (338)
                                                                    ======
Depreciation and amortization...............................        $  100
                                                                    ======
</Table>

7.  DEBT

  LOANS PAYABLE TO BANKS

     At September 30, 2004, loans payable to banks included $11,268 under the
domestic senior credit facility with Wells Fargo Foothill, Inc. The weighted
average interest rate under the domestic senior credit facility during the three
months ended September 30, 2004 was 4.5%.

     As of September 24, 2004, the Company amended its domestic senior credit
facility to: (i) increase the aggregate amount of borrowings available under the
working capital and letter of credit facilities from $27,500 to $32,500; the
amount of aggregate borrowings available under the working capital facility
remained unchanged at $17,500; (ii) amend the EBITDA definition to exclude
charges and expenses related to unsuccessful acquisitions and related financings
in an aggregate amount not to exceed $5,300 for the period beginning January 1,
2004 and ending June 30, 2004; (iii) amend the definition of Additional
Indebtedness to exclude advances under the working capital facility; (iv) amend
the definition of Permitted Investments to allow other investments made during
the period from January 1, 2004 through June 30, 2004 in an aggregate amount not
to exceed $336; and (v) establish covenant EBITDA levels for the periods after
June 30, 2004. The amendment was effective June 30, 2004 for items (i), (ii) and
(iii); effective January 1, 2004 for item (iv); and effective September 24, 2004
for item (v).

     As of September 30, 2004, the Company was in compliance with the financial
covenants of its domestic senior credit facility. The domestic senior credit
facility requires, among other things, the maintenance of certain levels of
trailing consolidated and domestic EBITDA (earnings before interest, taxes,
depreciation and amortization) calculated on a monthly basis, and an
acceleration clause should an event of default (as defined in the agreement)
occur. In addition, there are certain restrictions on additional borrowings,
additional liens on the Company's assets, guarantees, dividend payments,
redemption or purchase of the Company's stock, sale of subsidiaries' stock,
disposition of assets, investments, and mergers and acquisitions.

     The domestic senior credit facility contains a lock-box requirement and a
material adverse change clause should an event of default (as defined in the
agreement) occur. Accordingly, the amounts outstanding have been classified as
short-term and are included in loans payable to banks in the consolidated
balance sheet.

                                       F-52
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

  LONG-TERM DEBT

<Table>
<Caption>
                                                                       AS OF
                                                              ------------------------
                                                              SEPTEMBER 30,   JUNE 30,
                                                                  2004          2004
                                                              -------------   --------
<S>                                                           <C>             <C>
Senior secured notes due December 1, 2007...................    $105,000      $105,000
Senior subordinated notes due June 1, 2008..................      48,029        48,029
Foreign bank loans..........................................       5,912         6,237
Capitalized lease obligations and other.....................           4           103
                                                                --------      --------
                                                                 158,945       159,369
Less: current maturities....................................         953         1,351
                                                                --------      --------
                                                                $157,992      $158,018
                                                                ========      ========
</Table>

8.  EMPLOYEE BENEFIT PLANS

     The Company and its domestic subsidiaries maintain noncontributory defined
benefit pension plans for all eligible domestic nonunion employees who meet
certain requirements of age, length of service and hours worked per year. The
Company's Belgium subsidiary maintains a defined contribution and defined
benefit plan for eligible employees.

     Components of net periodic pension expense were:

<Table>
<Caption>
                                                              THREE MONTHS
                                                                  ENDED
                                                              SEPTEMBER 30,
                                                              -------------
DOMESTIC PENSION EXPENSE                                      2004    2003
- ------------------------                                      -----   -----
<S>                                                           <C>     <C>
Service cost -- benefits earned during the year.............  $ 287   $ 362
Interest cost on benefit obligation.........................    164     230
Expected return on plan assets..............................   (150)   (210)
Amortization of initial unrecognized net transition
  (asset)...................................................     --      (1)
Amortization of prior service costs.........................    (17)    (41)
Amortization of net actuarial loss (gain)...................      2      16
                                                              -----   -----
NET PERIODIC PENSION COST -- DOMESTIC.......................  $ 286   $ 356
                                                              =====   =====
</Table>

<Table>
<Caption>
                                                              THREE MONTHS
                                                                  ENDED
                                                              SEPTEMBER 30,
                                                              -------------
INTERNATIONAL PENSION EXPENSE                                 2004    2003
- -----------------------------                                 -----   -----
<S>                                                           <C>     <C>
Service cost -- benefits earned during the year.............  $122    $110
Interest cost on benefit obligation.........................    98      88
Expected return on plan assets..............................   (79)    (71)
Amortization of net actuarial loss..........................     6       6
                                                              ----    ----
NET PERIODIC PENSION COST -- INTERNATIONAL..................  $147    $133
                                                              ====    ====
</Table>

                                       F-53
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

9.  CONTINGENCIES

  LITIGATION:

     On or about April 17, 1997, CP Chemicals, Inc. (a subsidiary, "CP") and the
Company were served with a complaint filed by Chevron U.S.A. Inc. ("Chevron") in
the United States District Court for the District of New Jersey, alleging that
the operations of CP at its Sewaren plant affected adjoining property owned by
Chevron and alleging that the Company, as the parent of CP, is also responsible
to Chevron. In July 2002, a phased settlement agreement was reached and a
Consent Order entered by the Court. That settlement is in the process of being
implemented. The Company's and CP's portion of the settlement for past costs and
expenses through the entry of the Consent Order was $495 and was included in
selling, general and administrative expenses in fiscal 2002 and was paid in
fiscal 2003. The Consent Order then provides for a period of due diligence
investigation of the property owned by Chevron. The investigation has been
conducted and the results are under review. The investigation costs are being
split with one other defendant, Vulcan Materials Company. Upon completion of the
review of the results of the investigation, a decision will be made whether to
opt out of the settlement or proceed. If no party opts out of the settlement,
the Company and CP will take title to the adjoining Chevron property, probably
through the use of a three-member New Jersey limited liability company. In
preparation to move forward, a limited liability company has been formed, with
Vulcan Materials Company as the third member. The Company also has commenced
negotiations with Chevron regarding its allocation of responsibility and
associated costs under the Consent Order. While the costs cannot be estimated
with any degree of certainty at this time, the Company believes that insurance
recoveries will be available to offset some of those costs.

     The Company's Phibro-Tech subsidiary was named in 1993 as a potentially
responsible party ("PRP") in connection with an action commenced under the
Federal Comprehensive Environmental Response, Compensation, and Liability Act
("CERCLA") by the United States Environmental Protection Agency ("the EPA"),
involving a former third-party fertilizer manufacturing site in Jericho, South
Carolina. An agreement has been reached under which such subsidiary agreed to
contribute up to $900 of which $635 has been paid as of September 30, 2004. Some
recovery from insurance and other sources is expected but has not been recorded.
The Company also has accrued its best estimate of any future costs.

     Phibro-Tech, Inc. has resolved certain alleged technical permit violations
with the California Department of Toxic Substances Control and has reached an
agreement to pay $425 over a six year period ending October 2008.

     In February 2000, the EPA notified numerous parties of potential liability
for waste disposal at a licensed Casmalia, California disposal site, including a
business, assets of which were originally acquired by a subsidiary in 1984. A
settlement has been reached in this matter and the Company has paid $171 in full
settlement.

     On or about April 5, 2002, the Company was served, as a potentially
responsible party, with an information request from the EPA relating to a
third-party superfund site in Rhode Island. The Company has investigated the
matter, which relates to events in the 1950's and 1960's, and management does
not believe that the Company has any liability in this matter.

     On or about August 13, 2004 the Company was served with a Request for
Information pursuant to Section 104 of CERCLA and Section 3007 of RCRA relating
to possible discharges into Turkey Creek in Sumter, South Carolina. The Company
is preparing its response to the Request for Information and believes that,
because its Sumter, South Carolina facility is distant from Turkey Creek and
does not discharge into Turkey Creek, the likelihood of liability associated
with this matter is remote.

     The Company and its subsidiaries are party to a number of claims and
lawsuits arising out of the normal course of business including product
liabilities and governmental regulation. Certain of these actions seek

                                       F-54
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

damages in various amounts. In most cases, such claims are covered by insurance.
The Company believes that none of the claims or pending lawsuits, either
individually or in the aggregate, will have a material adverse effect on its
financial position.

  ENVIRONMENTAL REMEDIATION:

     The Company's operations, properties and subsidiaries are subject to a wide
variety of complex and stringent federal, state, local and foreign environmental
laws and regulations, including those governing the use, storage, handling,
generation, treatment, emission, release, discharge and disposal of certain
materials and wastes, the remediation of contaminated soil and groundwater, the
manufacture, sale and use of pesticides and the health and safety of employees.
As such, the nature of the Company's current and former operations and those of
its subsidiaries exposes the Company and its subsidiaries to the risk of claims
with respect to such matters. Under certain circumstances, the Company or any of
its subsidiaries might be required to curtail operations until a particular
problem is remedied. Known costs and expenses under environmental laws
incidental to ongoing operations are generally included within operating
results. Potential costs and expenses may also be incurred in connection with
the repair or upgrade of facilities to meet existing or new requirements under
environmental laws or to investigate or remediate potential or actual
contamination and from time to time the Company establishes reserves for such
contemplated investigation and remediation costs. In many instances, the
ultimate costs under environmental laws and the time period during which such
costs are likely to be incurred are difficult to predict.

     The Company's subsidiaries have, from time to time, implemented procedures
at their facilities designed to respond to obligations to comply with
environmental laws. The Company believes that its operations are currently in
material compliance with such environmental laws, although at various sites its
subsidiaries are engaged in continuing investigation, remediation and/or
monitoring efforts to address contamination associated with their historic
operations.

     The nature of the Company's and its subsidiaries' current and former
operations exposes the Company and its subsidiaries to the risk of claims with
respect to environmental matters and the Company cannot assure it will not incur
material costs and liabilities in connection with such claims. Based upon its
experience to date, the Company believes that the future cost of compliance with
existing environmental laws, and liability for known environmental claims
pursuant to such environmental laws, will not have a material adverse effect on
the Company's financial position.

     Based upon information available, the Company estimates the cost of
litigation proceedings described above and the cost of further investigation and
remediation of identified soil and groundwater problems at operating sites,
closed sites and third-party sites, and closure costs for closed sites to be
approximately $2,870, which is included in current and long-term liabilities in
the September 30, 2004 condensed consolidated balance sheet (approximately
$2,933 at June 30, 2004).

10.  GUARANTEES

     As part of the Prince Transactions (Note 5), as is normal for such
transactions, the Company has agreed to indemnify the Palladium Investors for
losses arising out of breach of representations, warranties and covenants. The
Company's maximum liability under such indemnification is limited to $15,000.

     The Company agreed to indemnify the Palladium Investors for a portion, at
the rate of $0.65 for every dollar, of the amount they receive in respect of the
disposition of the Buyer for less than $21,000, up to a maximum payment by the
Company of $4,000 (the "Backstop Indemnification Amount"). The Backstop
Indemnification Amount would be payable on the earlier to occur of July 1, 2008
or six months after the redemption date of all of the Company's Senior Secured
Notes due 2007 if such a disposition closes prior to such redemption and six
months after the closing of any such disposition if the disposition closes after
any

                                       F-55
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

such redemption. The Company's obligations with respect to the Backstop
Indemnification Amount will cease if the Palladium Investors do not close the
disposition of the Buyer by January 1, 2009. The maximum potential Backstop
Indemnification Amount is included in other liabilities on the Company's
condensed consolidated balance sheet.

     The Company established a $1,000 letter of credit escrow for two years to
collateralize its working capital adjustment and certain other indemnification
obligations relating to the Prince Transactions.

11.  BUSINESS SEGMENTS

     The Company's reportable segments are Animal Health and Nutrition,
Industrial Chemicals, Distribution and All Other. Reportable segments have been
determined primarily on the basis of the nature of products and services and
certain similar operating units have been aggregated. The Company's Animal
Health and Nutrition segment manufactures and markets more than 500 formulations
and concentrations of medicated feed additives and nutritional feed additives
including antibiotics, antibacterials, anticoccidials, anthelmintics, trace
minerals, vitamins, vitamin premixes and other animal health and nutrition
products. The Industrial Chemicals segment manufactures and markets a number of
chemicals for use in the pressure-treated wood, chemical catalyst,
semiconductor, automotive, and aerospace industries. The Distribution segment
markets and distributes a variety of industrial, specialty and fine organic
chemicals and intermediates produced primarily by third parties. The All Other
segment manufactures and markets a variety of specialty custom chemicals and
copper-based fungicides. Intersegment sales and transfers were not significant.
The following segment data includes information only for continuing operations.

<Table>
<Caption>
                                          ANIMAL
                                         HEALTH &    INDUSTRIAL                   ALL     CORPORATE
THREE MONTHS ENDED SEPTEMBER 30, 2004    NUTRITION   CHEMICALS    DISTRIBUTION   OTHER     & OTHER     TOTAL
- -------------------------------------    ---------   ----------   ------------   ------   ---------   -------
<S>                                      <C>         <C>          <C>            <C>      <C>         <C>
Net sales..............................   $65,806      $8,393        $7,661      $6,415    $    --    $88,275
Operating income/(loss)................     7,815         773           864         705     (4,129)     6,028
Depreciation and amortization..........     2,195         403             2         100        655      3,355
</Table>

<Table>
<Caption>
                                          ANIMAL
                                         HEALTH &    INDUSTRIAL                   ALL     CORPORATE
THREE MONTHS ENDED SEPTEMBER 30, 2003    NUTRITION   CHEMICALS    DISTRIBUTION   OTHER     & OTHER     TOTAL
- -------------------------------------    ---------   ----------   ------------   ------   ---------   -------
<S>                                      <C>         <C>          <C>            <C>      <C>         <C>
Net sales..............................   $59,841     $11,982        $7,939      $5,188    $    --    $84,950
Operating income/(loss)................     6,900         822           841         669     (3,857)     5,375
Depreciation and amortization..........     2,029         649             3         115        372      3,168
</Table>

<Table>
<Caption>
                                          ANIMAL
                                         HEALTH &    INDUSTRIAL                   ALL     CORPORATE
IDENTIFIABLE ASSETS                      NUTRITION   CHEMICALS    DISTRIBUTION   OTHER     & OTHER     TOTAL
- -------------------                      ---------   ----------   ------------   ------   ---------   --------
<S>                                      <C>         <C>          <C>            <C>      <C>         <C>
At September 30, 2004..................  $188,620     $25,632        $8,607      $5,818    $14,874    $243,551
At June 30, 2004.......................   185,601      26,146         7,715       5,696     16,211     241,369
</Table>

12.  CONSOLIDATING FINANCIAL STATEMENTS

     The units of Senior Secured Notes due 2007, consisting of US Senior Secured
Notes issued by the Company (the "Parent Issuer") and Dutch Senior Secured Notes
issued by Philipp Brothers Netherlands III B.V. (the "Dutch Issuer"), are
guaranteed by certain subsidiaries. The Company and its U.S. subsidiaries ("U.S.
Guarantor Subsidiaries"), excluding PMC, Prince MFG, LLC and MRT (until
divested) (the "Unrestricted Subsidiaries", as defined in the indenture), fully
and unconditionally guarantee all of the Senior Secured Notes on a joint and
several basis. In addition, the Dutch Issuer's subsidiaries, presently
consisting of Phibro Animal Health SA (the "Belgium Guarantor"), fully and
unconditionally guarantee the Dutch Senior

                                       F-56
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

Secured Notes. The Dutch issuer and the Belgium Guarantor do not guarantee the
US Senior Secured Notes. Other foreign subsidiaries ("Non-Guarantor
Subsidiaries") do not presently guarantee the Senior Secured Notes. The U.S.
Guarantor Subsidiaries include all domestic subsidiaries of the Company other
than the Unrestricted Subsidiaries and include: CP Chemicals, Inc., Phibro-Tech,
Inc., Prince Agriproducts, Inc, Phibrochem, Inc., Phibro Chemicals, Inc.,
Western Magnesium Corp., Phibro Animal Health Holdings, Inc., and Phibro Animal
Health U.S., Inc.

     The Senior Subordinated Notes due 2008, issued by the Parent Issuer, are
guaranteed by certain subsidiaries. The Company's U.S. subsidiaries, including
the U.S. Guarantor Subsidiaries and the Unrestricted Subsidiaries, fully and
unconditionally guarantee the Senior Subordinated Notes on a joint and several
basis. The Dutch Issuer, Belgium Guarantor and Non-Guarantor Subsidiaries do not
presently guarantee the Senior Subordinated Notes. The U.S. Guarantor
Subsidiaries and Unrestricted Subsidiaries include all domestic subsidiaries of
the Company including: CP Chemicals, Inc., Phibro-Tech, Inc., Prince
Agriproducts, Inc., PMC, Prince MFG, LLC, MRT (until divested), Phibrochem,
Inc., Phibro Chemicals, Inc., Western Magnesium Corp., Phibro Animal Health
Holdings, Inc., and Phibro Animal Health U.S., Inc.

     The following consolidating financial data summarizes the assets,
liabilities and results of operations and cash flows of the Parent Issuer,
Unrestricted Subsidiaries, U.S. Guarantor Subsidiaries, Dutch Issuer, Belgium
Guarantor and Non-Guarantor Subsidiaries. The Unrestricted Subsidiaries, U.S.
Guarantor Subsidiaries, Dutch Issuer, Belgium Guarantor and Non-Guarantor
Subsidiaries are directly or indirectly wholly owned as to voting stock by the
Company.

     Investments in subsidiaries are accounted for by the Parent Issuer using
the equity method. Income tax expense (benefit) is allocated among the
consolidating entities based upon taxable income (loss) by jurisdiction within
each group. The principal consolidation adjustments are to eliminate investments
in subsidiaries and intercompany balances and transactions.

                                       F-57
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

                     CONDENSED CONSOLIDATING BALANCE SHEET
<Table>
<Caption>
                                                       AS OF SEPTEMBER 30, 2004
                            ------------------------------------------------------------------------------
                             PARENT    UNRESTRICTED   U.S. GUARANTOR    DUTCH     BELGIUM    NON-GUARANTOR
                             ISSUER    SUBSIDIARIES    SUBSIDIARIES    ISSUER    GUARANTOR   SUBSIDIARIES
                            --------   ------------   --------------   -------   ---------   -------------
                                                            (IN THOUSANDS)
<S>                         <C>        <C>            <C>              <C>       <C>         <C>
                                                  ASSETS
Current Assets:
  Cash and cash
    equivalents...........  $    184     $    --         $    568      $    --    $   202       $ 4,824
  Trade receivables.......     2,828          --           27,208           --      2,015        20,670
  Other receivables.......       338          --            1,942           --        133         1,027
  Inventory...............     3,316          --           36,410           --     29,112        18,284
  Prepaid expenses and
    other.................     2,278          --              691           --        863         3,875
                            --------     -------         --------      -------    -------       -------
    Total current
      assets..............     8,944          --           66,819           --     32,325        48,680
                            --------     -------         --------      -------    -------       -------
Property, plant &
  equipment, net..........       136          --           14,052           --     17,270        28,360
Intangibles...............        --          --            4,146           --      1,544         5,664
Investment in
  subsidiaries............   107,628          --            3,619        1,304         --            --
Intercompany..............     8,802          --           59,723       20,853     (1,833)       (9,222)
Other assets..............    14,051          --              833           --         --           727
                            --------     -------         --------      -------    -------       -------
                            $139,561     $    --         $149,192      $22,157    $49,306       $74,209
                            ========     =======         ========      =======    =======       =======

                              LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
  Cash overdraft..........  $     --     $    --         $    654      $    --    $    --       $    --
  Loan payable to banks...    11,268          --               --           --         --            --
  Current portion of long-
    term debt.............        --          --                3           --         --           950
  Accounts payable........     3,985          --           24,014           --      1,567         9,326
  Accrued expenses and
    other.................    15,328          --            9,083          867     13,766         8,287
                            --------     -------         --------      -------    -------       -------
    Total current
      liabilities.........    30,581          --           33,754          867     15,333        18,563
                            --------     -------         --------      -------    -------       -------
Long-term debt............   133,029          --                1       20,000         --         4,962
Intercompany debt.........        --          --               --           --     31,720        46,603
Other liabilities.........    12,166          --            5,054           --        949         4,507
                            --------     -------         --------      -------    -------       -------
    Total liabilities.....   175,776          --           38,809       20,867     48,002        74,635
                            --------     -------         --------      -------    -------       -------
Redeemable Securities:
  Series C preferred
    stock.................    25,359          --               --           --         --            --
                            --------     -------         --------      -------    -------       -------
Stockholders' Equity
  (Deficit):
  Series A preferred
    stock.................       521          --               --           --         --            --
  Common stock............         2          --               31           --         --            --
  Paid-in capital.........       860          --          112,004           21         52         1,537
  Retained earnings
    (accumulated
    deficit)..............   (58,787)         --           (1,484)      (3,500)    (3,517)        6,807
  Accumulated other
    comprehensive income
    (loss):...............
    Gain on derivative
      instruments.........        84          --               84           --         --            --
    Cumulative currency
      translation
      adjustment..........    (4,254)         --             (252)       4,769      4,769        (8,770)
                            --------     -------         --------      -------    -------       -------
    Total stockholders'
      equity (deficit)....   (61,574)         --          110,383        1,290      1,304          (426)
                            --------     -------         --------      -------    -------       -------
                            $139,561     $    --         $149,192      $22,157    $49,306       $74,209
                            ========     =======         ========      =======    =======       =======

<Caption>
                              AS OF SEPTEMBER 30, 2004
                            ----------------------------
                            CONSOLIDATION   CONSOLIDATED
                             ADJUSTMENTS      BALANCE
                            -------------   ------------
                                   (IN THOUSANDS)
<S>                         <C>             <C>
                                       ASSETS
Current Assets:
  Cash and cash
    equivalents...........    $      --       $  5,778
  Trade receivables.......           --         52,721
  Other receivables.......           --          3,440
  Inventory...............           --         87,122
  Prepaid expenses and
    other.................           --          7,707
                              ---------       --------
    Total current
      assets..............           --        156,768
                              ---------       --------
Property, plant &
  equipment, net..........           --         59,818
Intangibles...............           --         11,354
Investment in
  subsidiaries............     (112,551)            --
Intercompany..............      (78,323)            --
Other assets..............           --         15,611
                              ---------       --------
                              $(190,874)      $243,551
                              =========       ========

                                  LIABILITIES AND
                                STOCKHOLDERS' EQUITY
                                     (DEFICIT)
Current Liabilities:
  Cash overdraft..........    $      --       $    654
  Loan payable to banks...           --         11,268
  Current portion of long-
    term debt.............           --            953
  Accounts payable........           --         38,892
  Accrued expenses and
    other.................           --         47,331
                              ---------       --------
    Total current
      liabilities.........           --         99,098
                              ---------       --------
Long-term debt............           --        157,992
Intercompany debt.........      (78,323)            --
Other liabilities.........           --         22,676
                              ---------       --------
    Total liabilities.....      (78,323)       279,766
                              ---------       --------
Redeemable Securities:
  Series C preferred
    stock.................           --         25,359
                              ---------       --------
Stockholders' Equity
  (Deficit):
  Series A preferred
    stock.................           --            521
  Common stock............          (31)             2
  Paid-in capital.........     (113,614)           860
  Retained earnings
    (accumulated
    deficit)..............        1,694        (58,787)
  Accumulated other
    comprehensive income
    (loss):...............                          --
    Gain on derivative
      instruments.........          (84)            84
    Cumulative currency
      translation
      adjustment..........         (516)        (4,254)
                              ---------       --------
    Total stockholders'
      equity (deficit)....     (112,551)       (61,574)
                              ---------       --------
                              $(190,874)      $243,551
                              =========       ========
</Table>

                                       F-58
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

                     CONSOLIDATING STATEMENT OF OPERATIONS
<Table>
<Caption>
                             FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004
                           -------------------------------------------------
                           PARENT    UNRESTRICTED   U.S. GUARANTOR    DUTCH
                           ISSUER    SUBSIDIARIES    SUBSIDIARIES    ISSUER
                           -------   ------------   --------------   -------
                                            (IN THOUSANDS)
<S>                        <C>       <C>            <C>              <C>
Net sales................  $ 5,929     $     --        $56,675       $    --
Net
 sales -- intercompany...       56           --             93            --
Cost of goods sold.......    4,620           --         41,634            --
                           -------     --------        -------       -------
  Gross profit...........    1,365           --         15,134            --
Selling, general and
  administrative
  expenses...............    4,903           --          6,956             6
                           -------     --------        -------       -------
  Operating income
    (loss)...............   (3,538)          --          8,178            (6)
Other:
  Interest expense.......    4,352           --             (2)          650
  Interest (income)......       (1)          --             --            --
  Other (income) expense,
    net..................        1           --           (228)           --
  Intercompany interest
    and other............   (7,527)          --          5,449          (660)
  (Profit) loss relating
    to subsidiaries......     (532)          --             --        (1,567)
                           -------     --------        -------       -------
  Income (loss) from
    continuing operations
    before income
    taxes................      169           --          2,959         1,571
Provision for income
  taxes..................      310           --            104            --
                           -------     --------        -------       -------
  Income (loss) from
    continuing
    operations...........     (141)          --          2,855         1,571
Discontinued operations:
  Profit (loss) relating
    to discontinued
    operations...........       --           --             --            --
  (Loss) from
    discontinued
    operations (net of
    income taxes)........       --           --             --            --
  Gain (loss) from
    disposal of
    discontinued
    operations (net of
    income taxes)........       --           --             --            --
                           -------     --------        -------       -------
  Net income (loss)......  $  (141)    $     --        $ 2,855       $ 1,571
                           =======     ========        =======       =======

<Caption>
                                FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004
                           --------------------------------------------------------
                            BELGIUM    NON-GUARANTOR   CONSOLIDATION   CONSOLIDATED
                           GUARANTOR   SUBSIDIARIES     ADJUSTMENTS      BALANCE
                           ---------   -------------   -------------   ------------
                                                (IN THOUSANDS)
<S>                        <C>         <C>             <C>             <C>
Net sales................   $1,668        $24,003         $    --        $88,275
Net
 sales -- intercompany...    6,204          1,075          (7,428)            --
Cost of goods sold.......    4,699         22,128          (7,428)        65,653
                            ------        -------         -------        -------
  Gross profit...........    3,173          2,950              --         22,622
Selling, general and
  administrative
  expenses...............      553          4,176              --         16,594
                            ------        -------         -------        -------
  Operating income
    (loss)...............    2,620         (1,226)             --          6,028
Other:
  Interest expense.......       11            235              --          5,246
  Interest (income)......       --            (24)             --            (25)
  Other (income) expense,
    net..................      (59)           310              --             24
  Intercompany interest
    and other............      939          1,799              --             --
  (Profit) loss relating
    to subsidiaries......       --             --           2,099             --
                            ------        -------         -------        -------
  Income (loss) from
    continuing operations
    before income
    taxes................    1,729         (3,546)         (2,099)           783
Provision for income
  taxes..................      162            348              --            924
                            ------        -------         -------        -------
  Income (loss) from
    continuing
    operations...........    1,567         (3,894)         (2,099)          (141)
Discontinued operations:
  Profit (loss) relating
    to discontinued
    operations...........       --             --              --             --
  (Loss) from
    discontinued
    operations (net of
    income taxes)........       --             --              --             --
  Gain (loss) from
    disposal of
    discontinued
    operations (net of
    income taxes)........       --             --              --             --
                            ------        -------         -------        -------
  Net income (loss)......   $1,567        $(3,894)        $(2,099)       $  (141)
                            ======        =======         =======        =======
</Table>

                                       F-59
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

                     CONSOLIDATING STATEMENT OF CASH FLOWS
<Table>
<Caption>
                                  FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004
                                 ------------------------------------------------
                                 PARENT    UNRESTRICTED   U.S. GUARANTOR   DUTCH
                                 ISSUER    SUBSIDIARIES    SUBSIDIARIES    ISSUER
                                 -------   ------------   --------------   ------
                                                  (IN THOUSANDS)
<S>                              <C>       <C>            <C>              <C>
Operating Activities:
  Net income (loss)............  $  (141)      $ --           $2,855       $1,571
  Adjustment for discontinued
    operations.................       --         --               --           --
                                 -------       ----           ------       ------
  Income (loss) from continuing
    operations.................     (141)        --            2,855        1,571
  Adjustments to reconcile
    income (loss) from
    continuing operations to
    net cash provided (used) by
    operating activities:
    Depreciation and
      amortization.............      655         --              703           --
    Deferred income taxes......       --         --               --           --
    Net gain from sales of
      assets...................       --         --               --           --
    Effects of changes in
      foreign currency.........       --         --             (227)          --
    Other......................        3         --               31           --
    Changes in operating assets
      and liabilities:.........
      Accounts receivable......     (161)        --              216           --
      Inventory................   (1,322)        --            3,251           --
      Prepaid expenses and
        other..................      896         --             (267)          --
      Other assets.............     (175)        --              173           --
      Intercompany.............   (2,988)         5           (2,153)      (2,238)
      Accounts payable.........     (749)         6           (4,441)          --
      Accrued expenses and
        other..................    3,813         (1)             781          650
                                 -------       ----           ------       ------
    Net cash provided (used) by
      operating activities.....     (169)        10              922          (17)
                                 -------       ----           ------       ------
Investing Activities:
  Capital expenditures.........      (55)        --             (834)          --
  Proceeds from sale of
    assets.....................       --         --               --           --
                                 -------       ----           ------       ------
    Net cash provided (used) by
      investing activities.....      (55)        --             (834)          --
                                 -------       ----           ------       ------
Financing Activities:
  Net (decrease) in cash
    overdraft..................       --        (10)            (227)          --
  Net (decrease) in short-term
    debt.......................      272         --               --           --
  Proceeds from long-term
    debt.......................       --         --               --           --
  Payments of long-term debt...       --         --              (99)          --
                                 -------       ----           ------       ------
    Net cash provided (used) by
      financing activities.....      272        (10)            (326)          --
                                 -------       ----           ------       ------
Effect of exchange rate changes
  on cash......................       --         --                5           --
                                 -------       ----           ------       ------
Net increase (decrease) in cash
  and cash equivalents.........       48         --             (233)         (17)
Cash and cash equivalents at
  beginning of period..........      136         --              801           17
                                 -------       ----           ------       ------
Cash and cash equivalents at
  end of period................  $   184       $ --           $  568       $   --
                                 =======       ====           ======       ======

<Caption>
                                      FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004
                                 --------------------------------------------------------
                                  BELGIUM    NON-GUARANTOR   CONSOLIDATION   CONSOLIDATED
                                 GUARANTOR   SUBSIDIARIES     ADJUSTMENTS      BALANCE
                                 ---------   -------------   -------------   ------------
                                                      (IN THOUSANDS)
<S>                              <C>         <C>             <C>             <C>
Operating Activities:
  Net income (loss)............   $1,567        $(3,894)        $(2,099)       $  (141)
  Adjustment for discontinued
    operations.................       --             --              --             --
                                  ------        -------         -------        -------
  Income (loss) from continuing
    operations.................    1,567         (3,894)         (2,099)          (141)
  Adjustments to reconcile
    income (loss) from
    continuing operations to
    net cash provided (used) by
    operating activities:
    Depreciation and
      amortization.............      713          1,284              --          3,355
    Deferred income taxes......       --             68              --             68
    Net gain from sales of
      assets...................       --             (1)             --             (1)
    Effects of changes in
      foreign currency.........      (59)           164              --           (122)
    Other......................       --             14              --             48
    Changes in operating assets
      and liabilities:.........
      Accounts receivable......      618          4,016              --          4,689
      Inventory................   (5,409)        (1,122)             --         (4,602)
      Prepaid expenses and
        other..................      107            341              --          1,077
      Other assets.............       --              1              --             (1)
      Intercompany.............    2,450          2,825           2,099             --
      Accounts payable.........     (724)        (2,288)             --         (8,196)
      Accrued expenses and
        other..................      997            (29)             --          6,211
                                  ------        -------         -------        -------
    Net cash provided (used) by
      operating activities.....      260          1,379              --          2,385
                                  ------        -------         -------        -------
Investing Activities:
  Capital expenditures.........     (274)          (585)             --         (1,748)
  Proceeds from sale of
    assets.....................       --             12              --             12
                                  ------        -------         -------        -------
    Net cash provided (used) by
      investing activities.....     (274)          (573)             --         (1,736)
                                  ------        -------         -------        -------
Financing Activities:
  Net (decrease) in cash
    overdraft..................       --             --              --           (237)
  Net (decrease) in short-term
    debt.......................       --             --              --            272
  Proceeds from long-term
    debt.......................       --            445              --            445
  Payments of long-term debt...       --           (773)             --           (872)
                                  ------        -------         -------        -------
    Net cash provided (used) by
      financing activities.....       --           (328)             --           (392)
                                  ------        -------         -------        -------
Effect of exchange rate changes
  on cash......................        4            (56)                           (47)
                                  ------        -------         -------        -------
Net increase (decrease) in cash
  and cash equivalents.........      (10)           422              --            210
Cash and cash equivalents at
  beginning of period..........      212          4,402                          5,568
                                  ------        -------         -------        -------
Cash and cash equivalents at
  end of period................   $  202        $ 4,824         $    --        $ 5,778
                                  ======        =======         =======        =======
</Table>

                                       F-60
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

                     CONDENSED CONSOLIDATING BALANCE SHEET
<Table>
<Caption>
                                                          AS OF JUNE 30, 2004
                             ------------------------------------------------------------------------------
                              PARENT    UNRESTRICTED   U.S. GUARANTOR    DUTCH     BELGIUM    NON-GUARANTOR
                              ISSUER    SUBSIDIARIES    SUBSIDIARIES    ISSUER    GUARANTOR   SUBSIDIARIES
                             --------   ------------   --------------   -------   ---------   -------------
                                                             (IN THOUSANDS)
<S>                          <C>        <C>            <C>              <C>       <C>         <C>
                                                  ASSETS
Current Assets:
 Cash and cash
   equivalents.............  $    136     $    --         $    801      $    17    $   212      $  4,402
 Trade receivables.........     2,670          --           26,996           --      2,592        25,400
 Other receivables.........       317         414            1,195           --         72           768
 Inventory.................     1,994          --           37,890           --     23,159        16,867
 Prepaid expenses and
   other...................     3,195         110              565           --      1,018         3,800
                             --------     -------         --------      -------    -------      --------
   Total Current Assets....     8,312         524           67,447           17     27,053        51,237
                             --------     -------         --------      -------    -------      --------
Property, plant &
 equipment, net............       105          --           13,730           --     17,321        27,630
Intangibles................        --          --            4,252           --      1,569         5,874
Investment in
 subsidiaries..............   125,355          --            3,619        1,604         --            --
Intercompany...............   (14,995)     20,995           60,030       20,181      1,630       (12,497)
Other assets...............    14,506          --            1,056           --         --           736
                             --------     -------         --------      -------    -------      --------
                             $133,283     $21,519         $150,134      $21,802    $47,573      $ 72,980
                             ========     =======         ========      =======    =======      ========
                              LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
 Cash overdraft............  $     --     $    10         $    881      $    --    $    --      $     --
 Loan payable to banks.....    10,996          --               --           --         --            --
 Current portion of long-
   term debt...............        --          --              101           --         --         1,250
 Accounts payable..........     4,734           9           28,434           --      2,258        11,537
 Accrued expenses and
   other...................    11,857         159            8,306          216     12,022         7,450
                             --------     -------         --------      -------    -------      --------
   Total Current
     Liabilities...........    27,587         178           37,722          216     14,280        20,237
                             --------     -------         --------      -------    -------      --------
Long-term debt.............   133,029          --                2       20,000         --         4,987
Intercompany debt..........        --          --               --           --     30,553        44,791
Other liabilities..........    11,822          --            4,897           --      1,136         4,431
                             --------     -------         --------      -------    -------      --------
   Total Liabilities.......   172,438         178           42,621       20,216     45,969        74,446
                             --------     -------         --------      -------    -------      --------
Redeemable Securities:
 Series C preferred
   stock...................    24,678          --               --           --         --            --
                             --------     -------         --------      -------    -------      --------
Stockholders' Equity
 (Deficit):
 Series A preferred
   stock...................       521          --               --           --         --            --
 Common stock..............         2           1               31           --         --            --
 Paid-in capital...........       860          --          112,004           21         52         1,537
 Retained earnings
   (accumulated deficit)...   (57,964)     21,340           (4,339)      (2,744)    (2,757)        8,374
 Accumulated other
   comprehensive income
   (loss):
Gain on derivative
 instruments...............         9          --                9           --         --            --
Cumulative currency
 translation adjustment....    (7,261)         --             (192)       4,309      4,309       (11,377)
                             --------     -------         --------      -------    -------      --------
   Total Stockholders'
     Equity (Deficit)......   (63,833)     21,341          107,513        1,586      1,604        (1,466)
                             --------     -------         --------      -------    -------      --------
                             $133,283     $21,519         $150,134      $21,802    $47,573      $ 72,980
                             ========     =======         ========      =======    =======      ========

<Caption>
                                 AS OF JUNE 30, 2004
                             ----------------------------
                             CONSOLIDATION   CONSOLIDATED
                              ADJUSTMENTS      BALANCE
                             -------------   ------------
                                    (IN THOUSANDS)
<S>                          <C>             <C>
                                        ASSETS
Current Assets:
 Cash and cash
   equivalents.............    $      --       $  5,568
 Trade receivables.........           --         57,658
 Other receivables.........           --          2,766
 Inventory.................                      79,910
 Prepaid expenses and
   other...................           --          8,688
                               ---------       --------
   Total Current Assets....           --        154,590
                               ---------       --------
Property, plant &
 equipment, net............           --         58,786
Intangibles................           --         11,695
Investment in
 subsidiaries..............     (130,578)            --
Intercompany...............      (75,344)            --
Other assets...............           --         16,298
                               ---------       --------
                               $(205,922)      $241,369
                               =========       ========
                                   LIABILITIES AND
                                 STOCKHOLDERS' EQUITY
                                       (DEFICIT)
Current Liabilities:
 Cash overdraft............    $      --       $    891
 Loan payable to banks.....           --         10,996
 Current portion of long-
   term debt...............           --          1,351
 Accounts payable..........           --         46,972
 Accrued expenses and
   other...................                      40,010
                               ---------       --------
   Total Current
     Liabilities...........           --        100,220
                               ---------       --------
Long-term debt.............           --        158,018
Intercompany debt..........      (75,344)            --
Other liabilities..........           --         22,286
                               ---------       --------
   Total Liabilities.......      (75,344)       280,524
                               ---------       --------
Redeemable Securities:
 Series C preferred
   stock...................           --         24,678
                               ---------       --------
Stockholders' Equity
 (Deficit):
 Series A preferred
   stock...................           --            521
 Common stock..............          (32)             2
 Paid-in capital...........     (113,614)           860
 Retained earnings
   (accumulated deficit)...      (19,874)       (57,964)
 Accumulated other
   comprehensive income
   (loss):
Gain on derivative
 instruments...............           (9)             9
Cumulative currency
 translation adjustment....        2,951         (7,261)
                               ---------       --------
   Total Stockholders'
     Equity (Deficit)......     (130,578)       (63,833)
                               ---------       --------
                               $(205,922)      $241,369
                               =========       ========
</Table>

                                       F-61
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

                     CONSOLIDATING STATEMENT OF OPERATIONS
<Table>
<Caption>
                               FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003
                              ------------------------------------------------
                              PARENT    UNRESTRICTED   U.S. GUARANTOR   DUTCH
                              ISSUER    SUBSIDIARIES    SUBSIDIARIES    ISSUER
                              -------   ------------   --------------   ------
                                               (IN THOUSANDS)
<S>                           <C>       <C>            <C>              <C>
Net sales...................  $ 5,697      $5,683         $48,095       $  --
Net sales -- intercompany...       45       1,339             209          --
Cost of goods sold..........    4,508       5,134          35,893          --
                              -------      ------         -------       -----
  Gross profit..............    1,234       1,888          12,411          --
Selling, general and
  administrative expenses...    4,673         675           6,221          --
                              -------      ------         -------       -----
  Operating income (loss)...   (3,439)      1,213           6,190          --
Other:
  Interest expense..........    3,712          11              --          --
  Interest (income).........       --          --              --          --
  Other (income) expense,
    net.....................      228          --            (242)         --
  Intercompany interest and
    other...................   (5,992)      1,082           2,539          --
  (Profit) loss relating to
    subsidiaries............   (2,874)         --              --          --
                              -------      ------         -------       -----
  Income (loss) from
    continuing operations
    before income taxes.....    1,487         120           3,893          --
Provision for income
  taxes.....................        1          16             218          --
                              -------      ------         -------       -----
  Income (loss) from
    continuing operations...    1,486         104           3,675          --
Discontinued operations:
  Profit (loss) relating to
    discontinued
    operations..............     (462)         --              --          --
  (Loss) from discontinued
    operations (net of
    income taxes)...........       --        (124)             --          --
  Gain from disposal of
    discontinued operations
    (net of income taxes)...      231          --              --          --
                              -------      ------         -------       -----
    Net income (loss).......  $ 1,255      $  (20)        $ 3,675       $  --
                              =======      ======         =======       =====

<Caption>
                                   FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003
                              --------------------------------------------------------
                               BELGIUM    NON-GUARANTOR   CONSOLIDATION   CONSOLIDATED
                              GUARANTOR   SUBSIDIARIES     ADJUSTMENTS      BALANCE
                              ---------   -------------   -------------   ------------
                                                   (IN THOUSANDS)
<S>                           <C>         <C>             <C>             <C>
Net sales...................   $  992        $24,483        $     --        $84,950
Net sales -- intercompany...    9,269            770         (11,632)            --
Cost of goods sold..........    9,196         20,691         (11,632)        63,790
                               ------        -------        --------        -------
  Gross profit..............    1,065          4,562              --         21,160
Selling, general and
  administrative expenses...      524          3,692                         15,785
                               ------        -------        --------        -------
  Operating income (loss)...      541            870              --          5,375
Other:
  Interest expense..........       --            210                          3,933
  Interest (income).........      (30)          (212)                          (242)
  Other (income) expense,
    net.....................     (978)           407                           (585)
  Intercompany interest and
    other...................      696          1,675                             --
  (Profit) loss relating to
    subsidiaries............       --             --           2,874             --
                               ------        -------        --------        -------
  Income (loss) from
    continuing operations
    before income taxes.....      853         (1,210)         (2,874)         2,269
Provision for income
  taxes.....................      333            215                            783
                               ------        -------        --------        -------
  Income (loss) from
    continuing operations...      520         (1,425)         (2,874)         1,486
Discontinued operations:
  Profit (loss) relating to
    discontinued
    operations..............       --             --             462             --
  (Loss) from discontinued
    operations (net of
    income taxes)...........       --           (338)                          (462)
  Gain from disposal of
    discontinued operations
    (net of income taxes)...       --             --                            231
                               ------        -------        --------        -------
    Net income (loss).......   $  520        $(1,763)       $ (2,412)       $ 1,255
                               ======        =======        ========        =======
</Table>

                                       F-62
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

                     CONSOLIDATING STATEMENT OF CASH FLOWS
<Table>
<Caption>
                                  FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003
                                -------------------------------------------------
                                 PARENT    UNRESTRICTED   U.S. GUARANTOR   DUTCH
                                 ISSUER    SUBSIDIARIES    SUBSIDIARIES    ISSUER
                                --------   ------------   --------------   ------
                                                 (IN THOUSANDS)
<S>                             <C>        <C>            <C>              <C>
Operating Activities:
 Net income (loss)............  $  1,255     $   (20)        $ 3,675       $  --
 Adjustment for discontinued
   operations.................       231         124              --          --
                                --------     -------         -------       -----
 Income (loss) from continuing
   operations.................     1,486         104           3,675          --
 Adjustments to reconcile
   income (loss) from
   continuing operations to
   net cash provided (used) by
   operating activities:
   Depreciation and
     amortization.............       372         243             630          --
   Deferred income taxes......        --          --              --          --
   Net gain from sales of
     assets...................        --          --              --          --
   Effects of changes in
     foreign currency.........        --          --            (164)         --
   Other......................       126          --             319          --
   Changes in operating assets
     and liabilities:
     Accounts receivable......       119          83          (1,351)         --
     Inventory................      (778)     (1,305)         (9,995)         --
     Prepaid expenses and
       other..................       433         404            (955)         --
     Other assets.............      (530)          1              78          --
     Intercompany.............   (11,621)        523           7,744          --
     Accounts payable.........    (1,176)        289            (996)         --
     Accrued expenses and
       other..................     4,015          (9)           (174)         --
 Cash provided (used) by
   discontinued operations....       231        (652)             --          --
                                --------     -------         -------       -----
   Net cash provided (used) by
     operating activities.....    (7,323)       (319)         (1,189)         --
                                --------     -------         -------       -----
Investing Activities:
 Capital expenditures.........        --         (32)           (286)         --
 Proceeds from sale of
   assets.....................        --          --              --          --
 Other investing..............        --          --              --          --
 Discontinued operations......    13,788          --              --          --
                                --------     -------         -------       -----
   Net cash provided (used) by
     investing activities.....    13,788         (32)           (286)         --
                                --------     -------         -------       -----
Financing Activities:
 Net (decrease) in cash
   overdraft..................        18         277             365          --
 Net (decrease) in short-term
   debt.......................    (6,280)         --              --          --
 Proceeds from long-term
   debt.......................        --          --              --          --
 Payments of long-term debt...      (203)        (12)           (143)         --
 Other financing..............        --          --              --          --
 Discontinued operations......        --          --              --          --
                                --------     -------         -------       -----
   Net cash provided (used) by
     financing activities.....    (6,465)        265             222          --
                                --------     -------         -------       -----
Effect of exchange rate
 changes on cash..............        --          --               2          --
                                --------     -------         -------       -----
Net increase (decrease) in
 cash and cash equivalents....        --         (86)         (1,251)         --
Cash and cash equivalents at
 beginning of period..........        43         119           2,167          --
                                --------     -------         -------       -----
Cash and cash equivalents at
 end of period................  $     43     $    33         $   916       $  --
                                ========     =======         =======       =====

<Caption>
                                     FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003
                                --------------------------------------------------------
                                 BELGIUM    NON-GUARANTOR   CONSOLIDATION   CONSOLIDATED
                                GUARANTOR   SUBSIDIARIES     ADJUSTMENTS      BALANCE
                                ---------   -------------   -------------   ------------
                                                     (IN THOUSANDS)
<S>                             <C>         <C>             <C>             <C>
Operating Activities:
 Net income (loss)............   $   520       $(1,763)        $(2,412)       $ 1,255
 Adjustment for discontinued
   operations.................        --           338            (462)           231
                                 -------       -------         -------        -------
 Income (loss) from continuing
   operations.................       520        (1,425)         (2,874)         1,486
 Adjustments to reconcile
   income (loss) from
   continuing operations to
   net cash provided (used) by
   operating activities:
   Depreciation and
     amortization.............       632         1,291                          3,168
   Deferred income taxes......        --            53                             53
   Net gain from sales of
     assets...................        --             1                              1
   Effects of changes in
     foreign currency.........      (913)         (287)                        (1,364)
   Other......................        --          (293)                           152
   Changes in operating assets
     and liabilities:
     Accounts receivable......       544         1,437                            832
     Inventory................     6,828         1,124                         (4,126)
     Prepaid expenses and
       other..................       441          (316)                             7
     Other assets.............        --            76                           (375)
     Intercompany.............    (7,853)        8,333           2,874             --
     Accounts payable.........    (2,152)       (1,448)                        (5,483)
     Accrued expenses and
       other..................     2,641           820                          7,293
 Cash provided (used) by
   discontinued operations....        --            45                           (376)
                                 -------       -------         -------        -------
   Net cash provided (used) by
     operating activities.....       688         9,411              --          1,268
                                 -------       -------         -------        -------
Investing Activities:
 Capital expenditures.........      (226)         (308)                          (852)
 Proceeds from sale of
   assets.....................        --            12                             12
 Other investing..............        --            --                             --
 Discontinued operations......        --           261                         14,049
                                 -------       -------         -------        -------
   Net cash provided (used) by
     investing activities.....      (226)          (35)             --         13,209
                                 -------       -------         -------        -------
Financing Activities:
 Net (decrease) in cash
   overdraft..................        --            71                            731
 Net (decrease) in short-term
   debt.......................        --         6,000                           (280)
 Proceeds from long-term
   debt.......................        --         1,500                          1,500
 Payments of long-term debt...        --          (586)                          (944)
 Other financing..............        --            --                             --
 Discontinued operations......        --            86                             86
                                 -------       -------         -------        -------
   Net cash provided (used) by
     financing activities.....        --         7,071              --          1,093
                                 -------       -------         -------        -------
Effect of exchange rate
 changes on cash..............        16           150                            168
                                 -------       -------         -------        -------
Net increase (decrease) in
 cash and cash equivalents....       478        16,597              --         15,738
Cash and cash equivalents at
 beginning of period..........       185         8,665                         11,179
                                 -------       -------         -------        -------
Cash and cash equivalents at
 end of period................   $   663       $25,262         $    --        $26,917
                                 =======       =======         =======        =======
</Table>

                                       F-63
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

13.  SUBSEQUENT EVENTS

  ISSUANCE OF ADDITIONAL 13% SENIOR SECURED NOTES:

     On December 21, 2004, the Company completed a private offering of 22,491
additional units consisting of $18,207 13% Senior Secured Notes due 2007 of the
Company (the "U.S. Notes") and $4,284 13% Senior Secured Notes due 2007 (the
"Dutch Notes" and together with the U.S. Notes, the "Additional Notes") of
Philipp Brothers Netherlands III B.V., an indirect wholly-owned subsidiary of
the Company (the "Dutch Issuer" and together with the Company, the "Issuers").
The Additional Notes were issued under the Indenture dated October 21, 2003, as
amended and supplemented (the "Indenture") under which the Issuers previously
issued 105,000 units consisting of $85,000 aggregate principal amount of U.S.
Notes and $20,000 aggregate principal amount of Dutch Notes. The proceeds from
the sale of the Additional Notes will be used to refinance a portion of the
Company's indebtedness under its domestic senior credit facility.

  AMENDMENT TO THE SENIOR DOMESTIC CREDIT FACILITY:

     On December 21, 2004, concurrent with the completion of the offering of the
Additional Notes, the Company amended the domestic senior credit facility to:
(i) amend the EBITDA definition to exclude charges and expenses related to the
sale of the Belgium Plant in an aggregate amount not to exceed $26,800 for
purposes of calculating a certain financial covenant; (ii) amend the Indenture
reserve definition to include scheduled payments of interest due on the
Additional Notes; (iii) amend the maximum aggregate amount of borrowing
available under the working capital facility to permit a temporary increase to
$22,500 and for its reduction to $17,500 on such borrowings being refinanced by
the proceeds of the Additional Notes; (iv) amend the Permitted Investments
definition to include investments in connection with the sale of the Belgium
Plant and transfer of certain equipment, together with other assets and rights
related to the production of virginiamycin, to Philipp Brothers Brasil Holdings
Ltda, ("PAH Brazil") or in connection with alternative production arrangements;
and (v) provide for the issuance of the Additional Notes and the sale of the
Belgium Plant and related transactions.

  SALE OF BELGIUM PLANT:

     On December 16, 2004, Phibro Animal Health SA, ("PAH Belgium") entered into
an agreement with GlaxoSmithKline Biologicals ("GSK") to sell to GSK
substantially all of PAH Belgium's facilities in Rixensart, Belgium ("the
Belgium Plant") as follows (U.S. dollar amounts at the December 16, 2004
exchange rate): (i) the transfer of substantially all of the land and buildings
and certain equipment of PAH Belgium at the Belgium Plant, as well as the
industrial activities and intellectual property relating to certain solvent
technology of PAH Belgium for a purchase price of EUR 6,200 ($8,238), payable at
closing; (ii) the transfer to GSK of a majority of the employees of the Belgium
Plant and the corresponding responsibility for statutory severance obligations;
(iii) GSK agreeing to be responsible for costs of removal, by demolition or
otherwise, certain buildings not to be used by it, but for PAH Belgium to
reimburse GSK up to a maximum of EUR 700 ($930) for such removal costs; (iv) in
recognition of the benefits to PAHC from the proposed transaction, PAH Belgium
agreeing to pay to GSK EUR 1,500 ($1,993) within six months from the closing
date, EUR 1,500 ($1,993) within eighteen months from the closing date, EUR 1,500
($1,993) within thirty months from the closing date, and EUR 500 ($664) within
forty-two months from the closing date; (v) PAH Belgium retaining certain excess
land (valued at approximately EUR 400 ($531)) and being able to sell such land
for its own account; (vi) PAH Belgium being responsible for certain plant
closure costs and legally required severance indemnities in connection with
workforce reductions, estimated in total to be EUR 7,700 ($10,231), of which an
amount estimated to be approximately EUR 4,100 ($5,448) would be payable at or
around the closing and an aggregate amount so estimated to be approximately
EUR 3,600 ($4,783) would be payable over periods up to thirteen years; and (vii)
PAH Belgium retaining any or all equipment at the Belgium Plant, and being able
to sell such equipment for the account of PAH Belgium or transfer such

                                       F-64
<PAGE>
               PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

equipment, together with other assets and rights related to the production of
virginiamycin, to PAH Brazil which owns a facility in Guarulhos, Brazil or in
connection with alternative production arrangements.

     The foregoing transactions and agreements are subject to a closing that is
expected to occur no earlier than July 1, 2005 nor later than June 30, 2006.

     The Dutch Notes and related guarantees are secured by a mortgage on the
Belgium Plant which will be released in connection with the closing of the sale
of the Belgium Plant to GSK.

     The carrying value of the Belgium Plant and related assets at September 30,
2004 is EUR 13.908 ($18,480). The Company is in the process of evaluating the
accounting for this transaction and will record an impairment loss, if required,
in the second quarter ended December 31, 2004. In addition, the company will
expense severance, plant closure and other related costs in the period in which
such liabilities are incurred in accordance with Statement of Financial
Accounting Standards No. 146, "Accounting for Costs Associated with Exit or
disposal Activities". As of the date of this filing, estimates of such costs are
in process of being determined.

                                       F-65
<PAGE>

            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of Philipp Brothers Netherlands I B.V.:

     In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations and comprehensive loss, changes in
stockholders' deficit and cash flows present fairly, in all material respects,
the financial position of Philipp Brothers Netherlands I B.V. and its
subsidiaries at June 30, 2004 and June 30, 2003, and the results of their
operations and their cash flows for each of the three years in the period ended
June 30, 2004, in conformity with accounting principles generally accepted in
the United States of America. These financial statements are the responsibility
of the Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these
statements in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Florham Park, New Jersey
January 10, 2005

                                       F-66
<PAGE>

              PHILIPP BROTHERS NETHERLANDS I B.V. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

<Table>
<Caption>
                                                                 AS OF JUNE 30,
                                                              ---------------------
                                                                2004        2003
                                                              ---------   ---------
                                                              (U.S.$ IN THOUSANDS)
<S>                                                           <C>         <C>
                                      ASSETS
CURRENT ASSETS:
  Cash, including restricted balance of $175 at June 30,
     2004 and 2003..........................................  $    422    $    689
  Trade receivables, less allowance for doubtful accounts of
     $39 and $58 at June 30, 2004 and 2003, respectively....     4,344       3,090
  Other receivables.........................................       304         711
  Inventories...............................................    32,611      22,768
  Prepaid expenses and other current assets.................     4,020       4,429
  Trade receivables -- related parties......................     7,917      11,116
                                                              --------    --------
     TOTAL CURRENT ASSETS...................................    49,618      42,803
PROPERTY, PLANT AND EQUIPMENT, net..........................    30,588      30,732
INTANGIBLES.................................................     1,569       1,818
OTHER ASSETS................................................     1,084          --
                                                              --------    --------
                                                              $ 82,859    $ 75,353
                                                              ========    ========

                       LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
  Accounts payable..........................................  $  3,223    $ 12,928
  Accrued expenses and other current liabilities............    13,438       9,160
  Trade payables -- related parties.........................     1,687         922
                                                              --------    --------
     TOTAL CURRENT LIABILITIES..............................    18,348      23,010
LONG-TERM DEBT..............................................    20,000          --
OTHER LIABILITIES...........................................     2,897       2,905
NOTES PAYABLE -- RELATED PARTIES............................    55,124      60,034
                                                              --------    --------
     TOTAL LIABILITIES......................................    96,369      85,949
                                                              --------    --------
STOCKHOLDERS' DEFICIT:
  Paid-in capital...........................................     7,405       3,877
  Accumulated deficit.......................................   (14,860)    (10,258)
  Cumulative foreign currency translation adjustment........    (6,055)     (4,215)
                                                              --------    --------
     TOTAL STOCKHOLDERS' DEFICIT............................   (13,510)    (10,596)
                                                              --------    --------
                                                              $ 82,859    $ 75,353
                                                              ========    ========
</Table>

   The accompanying notes are an integral part of the consolidated financial
                                   statements

                                       F-67
<PAGE>

              PHILIPP BROTHERS NETHERLANDS I B.V. AND SUBSIDIARIES

          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

<Table>
<Caption>
                                                               FOR THE YEARS ENDED JUNE 30,
                                                              ------------------------------
                                                                2004       2003       2002
                                                              --------   --------   --------
                                                                   (U.S.$ IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
NET SALES...................................................  $15,601    $15,467    $14,639
NET SALES -- RELATED PARTIES................................   34,357     31,216     32,261
                                                              -------    -------    -------
  TOTAL SALES...............................................   49,958     46,683     46,900
COST OF GOODS SOLD..........................................   37,940     38,744     35,856
                                                              -------    -------    -------
  GROSS PROFIT..............................................   12,018      7,939     11,044
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES................    6,966      5,205      5,071
                                                              -------    -------    -------
  OPERATING INCOME..........................................    5,052      2,734      5,973
OTHER:
  Interest expense..........................................    2,097        251        185
  Interest expense -- related parties.......................    6,624      7,336      6,397
  Other (income) expense, net...............................     (681)     1,650        231
  Other (income) expense, net -- related parties............       --      2,880         --
                                                              -------    -------    -------
  (LOSS) BEFORE INCOME TAXES................................   (2,988)    (9,383)      (840)
PROVISION FOR INCOME TAXES..................................    1,614        359        (10)
                                                              -------    -------    -------
  NET LOSS..................................................   (4,602)    (9,742)      (830)
OTHER COMPREHENSIVE INCOME (LOSS):
  Change in currency translation adjustment.................   (1,840)     2,669     (3,612)
                                                              -------    -------    -------
  COMPREHENSIVE LOSS........................................  $(6,442)   $(7,073)   $(4,442)
                                                              =======    =======    =======
</Table>

   The accompanying notes are an integral part of the consolidated financial
                                   statements

                                       F-68
<PAGE>

              PHILIPP BROTHERS NETHERLANDS I B.V. AND SUBSIDIARIES

          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

<Table>
<Caption>
                                                    FOR THE YEARS ENDED JUNE 30, 2004 AND 2003 AND 2002
                                                    ---------------------------------------------------
                                                                                 FOREIGN
                                                                                 CURRENCY
                                                    PAID-IN    (ACCUMULATED    TRANSLATION
                                                    CAPITAL      DEFICIT)       ADJUSTMENT      TOTAL
                                                    --------   -------------   ------------   ---------
                                                                   (U.S.$ IN THOUSANDS)
<S>                                                 <C>        <C>             <C>            <C>
BALANCE, JUNE 30, 2001............................   $   25      $    314        $(3,272)     $ (2,933)
  Contribution from parent........................    1,922                                      1,922
  Net (loss)......................................                   (830)                        (830)
  Foreign currency translation adjustment.........                                (3,612)       (3,612)
                                                     ------      --------        -------      --------
BALANCE, JUNE 30, 2002............................   $1,947      $   (516)       $(6,884)     $ (5,453)
                                                     ======      ========        =======      ========
  Contribution from parent........................    1,930                                      1,930
  Net (loss)......................................                 (9,742)                      (9,742)
  Foreign currency translation adjustment.........                                 2,669         2,669
                                                     ------      --------        -------      --------
BALANCE, JUNE 30, 2003............................   $3,877      $(10,258)       $(4,215)     $(10,596)
                                                     ======      ========        =======      ========
  Contribution from parent........................    3,528                                      3,528
  Net (loss)......................................                 (4,602)                      (4,602)
  Foreign currency translation adjustment.........                                (1,840)       (1,840)
                                                     ------      --------        -------      --------
BALANCE, JUNE 30, 2004............................   $7,405      $(14,860)       $(6,055)     $(13,510)
                                                     ======      ========        =======      ========
</Table>

   The accompanying notes are an integral part of the consolidated financial
                                   statements

                                       F-69
<PAGE>

              PHILIPP BROTHERS NETHERLANDS I B.V. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                              FOR THE YEARS ENDED JUNE 30,
                                                              ----------------------------
                                                               2004      2003       2002
                                                              -------   -------   --------
                                                                  (U.S.$ IN THOUSANDS)
<S>                                                           <C>       <C>       <C>
OPERATING ACTIVITIES:
  Net (loss)................................................  $(4,602)  $(9,742)  $   (830)
  Adjustments to reconcile net (loss) to net cash used by
     operating activities:
     Depreciation and amortization..........................    3,558     2,449      2,889
     Deferred taxes.........................................      112     1,376        862
     Allocated selling, general and administrative expenses
       from parent..........................................    2,217     1,930      1,922
     Effects of changes in foreign currency and other.......     (378)    1,419       (474)
     Changes in operating assets and liabilities:
       Accounts receivable..................................   (1,287)     (572)     1,469
       Inventories..........................................   (9,699)   (1,398)   (13,181)
       Prepaid expenses and other current assets............      354    (2,534)      (791)
       Other assets.........................................       --        --         66
       Related party receivables and payables...............    6,227     6,611      1,466
       Accounts payable.....................................   (2,169)    3,540        971
       Accrued expenses and other liabilities...............    4,022    (6,611)     5,021
                                                              -------   -------   --------
          NET CASH USED BY OPERATING ACTIVITIES.............   (1,645)   (3,532)      (610)
                                                              -------   -------   --------
INVESTING ACTIVITIES:
  Capital expenditures......................................   (3,024)   (4,260)    (2,657)
  Acquisition of a business.................................       --        --     (4,422)
  Other investing...........................................     (189)       --         --
                                                              -------   -------   --------
          NET CASH USED BY INVESTING ACTIVITIES.............   (3,213)   (4,260)    (7,079)
                                                              -------   -------   --------
FINANCING ACTIVITIES:
  Net increase (decrease) in intercompany debt..............   (7,176)    7,578        809
  Proceeds from long-term debt..............................   20,000        --         --
  Payment of Pfizer obligations.............................   (8,225)       --         --
                                                              -------   -------   --------
          NET CASH PROVIDED BY FINANCING ACTIVITIES.........    4,599     7,578        809
                                                              -------   -------   --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH.....................       (8)       78         86
                                                              -------   -------   --------
          NET DECREASE IN CASH AND CASH EQUIVALENTS.........     (267)     (136)    (6,794)
CASH AND CASH EQUIVALENTS at beginning of period............      689       825      7,619
                                                              -------   -------   --------
CASH AND CASH EQUIVALENTS at end of period..................  $   422   $   689   $    825
                                                              =======   =======   ========
Supplemental Cash Flow Information:
  Interest paid.............................................  $    89   $    88   $     --
  Income taxes paid.........................................       63       956        358
</Table>

   The accompanying notes are an integral part of the consolidated financial
                                   statements

                                       F-70
<PAGE>

              PHILIPP BROTHERS NETHERLANDS I B.V. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (U.S. $ IN THOUSANDS)

1.  DESCRIPTION OF BUSINESS

     Philipp Brothers Netherlands I B.V., a company organized under the laws of
The Netherlands, (the "Company") is a global manufacturer and marketer of a
broad range of animal health and nutrition products, specifically medicated feed
additives ("MFA"), which the Company sells throughout the world predominately to
the poultry, swine and cattle markets.

     The Company is a direct wholly-owned subsidiary of Phibro Animal Health
Holdings, Inc ("PAH Holdings") and an indirect wholly-owned subsidiary of Phibro
Animal Health Corporation ("PAHC"). PAHC has agreed to fund the Company's cash
flows to the extent required through January 31, 2006.

     On November 30, 2000, PAHC purchased the medicated feed additive ("MFA")
business of Pfizer, Inc. The Company, the Company's subsidiaries and PAH
Holdings were part of that acquisition. In connection with the MFA acquisition
additional purchase price of $4,422, was earned and paid in 2002. All earn-out
requirements have been satisfied and no further payments are necessary.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION:

     The consolidated financial statements include the accounts of the Company
and all majority-owned subsidiaries, including Phibro Animal Health SA ("PAH
Belgium") and Philipp Brothers Brasil Holdings Ltda. ("PAH Brazil"). All
significant intercompany accounts and transactions have been eliminated in the
consolidated financial statements.

     The Company presents its consolidated financial statements on the basis of
its fiscal year ending June 30. All references to years 2004, 2003, and 2002 in
these financial statements refer to the fiscal year ended June 30 of that year.

  RISKS AND UNCERTAINTIES:

     The use of antibiotics in medicated feed additives is a subject of
legislative and regulatory interest. The issue of potential for increased
bacterial resistance to certain antibiotics used in certain food-producing
animals is the subject of discussions on a worldwide basis and, in certain
instances, has led to government restrictions on the use of antibiotics in
food-producing animals. The sale of feed additives containing antibiotics is a
material portion of the Company's business. Should regulatory or other
developments result in further restrictions on the sale of such products, it
could have a material adverse impact on the Company's financial position,
results of operations and cash flows.

     The testing, manufacturing, and marketing of certain products are subject
to extensive regulation by numerous government authorities in the United States
and other countries.

     A significant portion of the Company's sales and earnings are attributable
to transactions with related parties.

  USE OF ESTIMATES:

     Preparation of the Company's financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make certain estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues, expenses and related
disclosures. Actual results

                                       F-71
<PAGE>
              PHILIPP BROTHERS NETHERLANDS I B.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

could differ from these estimates. Significant estimates include reserves for
bad debts, inventory obsolescence, environmental matters, depreciation and
amortization periods of long-lived assets, recoverability of long-lived assets
and realizability of deferred tax assets and actuarial assumptions related to
the Company's pension plan.

  REVENUE RECOGNITION:

     Revenue is recognized upon transfer of title and when risk of loss passes
to the customer, generally at time of shipment. Net sales reflect total sales
billed, less reductions for goods returned and trade discounts.

  CASH:

     Cash includes cash in banks. Cash also includes cash, of a subsidiary of
the Company, which is on deposit in a restricted bank account under a
contractual obligation with a customer, in the amount of $175 at June 30, 2004
and 2003. This cash was subsequently released during December 2004.

  ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS:

     Trade accounts receivable are recorded at the invoiced amount and do not
bear interest. The allowance for doubtful accounts is the Company's best
estimate of the probable credit losses in its existing accounts receivable. The
allowance is based on historical write-off experience and is reviewed
periodically. Past due balances are reviewed individually for collectibility.
Account balances are charged against the allowance when the Company feels that
it is probable that the receivable will not be recovered.

     The allowance for doubtful accounts was:

<Table>
<Caption>
                                                              2004   2003   2002
                                                              ----   ----   ----
<S>                                                           <C>    <C>    <C>
Balance at beginning of period..............................  $ 58   $20    $25
Provision for bad debts.....................................    --    38     --
Bad debt write-offs.........................................   (19)   --     (5)
                                                              ----   ---    ---
Balance at end of period....................................  $ 39   $58    $20
                                                              ====   ===    ===
</Table>

  INVENTORIES:

     Inventories are valued at the lower of cost or market. Cost is determined
principally under the first-in, first-out (FIFO) method. Obsolete and unsaleable
inventories are reflected at estimated net realizable value. Inventory costs
include materials, direct labor and manufacturing overhead. Inventories are
comprised of:

<Table>
<Caption>
                                                               AS OF JUNE 30,
                                                              -----------------
                                                               2004      2003
                                                              -------   -------
<S>                                                           <C>       <C>
Raw materials...............................................  $ 1,454   $ 2,016
Work-in-process.............................................      585       220
Finished goods..............................................   30,572    20,532
                                                              -------   -------
Total inventory.............................................  $32,611   $22,768
                                                              =======   =======
</Table>

  PROPERTY, PLANT AND EQUIPMENT:

     Property, plant and equipment are stated at cost.

     Depreciation is charged to results of operations using the straight-line
method based upon the assets' estimated useful lives ranging from 8 to 20 years
for buildings and improvements and 3 to 10 years for machinery and equipment.

                                       F-72
<PAGE>
              PHILIPP BROTHERS NETHERLANDS I B.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The Company capitalizes costs that extend the useful life or productive
capacity of an asset. Repair and maintenance costs are expensed as incurred. In
the case of disposals, the assets and related accumulated depreciation are
removed from the accounts, and the net amounts, less proceeds from disposal, are
included in the statements of operations and comprehensive loss.

  DEFERRED FINANCING COSTS:

     Deferred financing costs related to the 13% Senior Secured Notes due 2007
were allocated to the Company from PAHC and were $1,311 net of accumulated
amortization of $227 at June 30, 2004. These deferred financing costs are being
amortized over the life of the notes. Amortization expense was $227 for 2004.

  INTANGIBLES:

     Product intangibles cost arising from the MFA acquisition was $2,191 and
$2,069 at June 30, 2004 and 2003, respectively, and accumulated amortization of
$622 and $251 at June 30, 2004 and 2003, respectively. Amortization expense was
$252, $156 and $201 for 2004, 2003 and 2002, respectively. Amortization expense
from the MFA acquisition for each of the next five years from 2005 to 2009 is
expected to be approximately $250 per year. These product intangible costs are
being amortized on a straight-line basis over ten years with 6 1/2 years
remaining at June 30, 2004.

  FOREIGN CURRENCY TRANSLATION:

     Financial position and results of operations of the Company are measured
using the Euro as the functional currency. Assets and liabilities are translated
at the exchange rates in effect at each fiscal year end. The translation
adjustments related to assets and liabilities that arise from the use of
differing exchange rates from period to period are included in cumulative
foreign currency translation adjustment on the Company's balance sheet. Income
statement accounts are translated at the average rates of exchange prevailing
during the year.

     Foreign currency transaction gains and losses primarily arise from
short-term intercompany balances. Net foreign currency transaction (gains)
losses were $(378), $1,419 and $(474) for 2004, 2003 and 2002, respectively, and
were included in other (income) expense, net in the consolidated statements of
operations and comprehensive loss.

     PAHC considers long-term notes payable with related parties to be balances
for which settlement is not planned or anticipated in the foreseeable future.
PAHC considers these balances to be part of the net investment and, accordingly,
foreign currency transaction (gains) losses from such items are recorded in
cumulative foreign currency translation adjustment on the Company's balance
sheet.

  RECOVERABILITY OF LONG-LIVED ASSETS:

     The Company evaluates the recoverability of long-lived assets, including
intangible assets, when events or circumstances indicate that a diminution in
value may have occurred, using financial indicators such as historical and
future ability to generate cash flows from operations. The Company's policy is
to record an impairment loss in the period it is determined the carrying amount
of the asset may not be recoverable. This determination is based on an
evaluation of such factors as the occurrence of a significant event, a
significant change in the environment in which the business operates, or if the
expected future net cash flows (undiscounted and without interest or income
taxes) are less than the carrying amount of the assets.

                                       F-73
<PAGE>
              PHILIPP BROTHERS NETHERLANDS I B.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  INCOME TAXES:

     Income tax expense includes The Netherlands, Belgium and Brazil income
taxes. The tax effect of certain temporary differences between amounts
recognized for financial reporting purposes and amounts recognized for tax
purposes are reported as deferred income taxes. Deferred tax balances are
adjusted to reflect tax rates, based on current tax laws, which will be in
effect in the years in which the temporary differences are expected to reverse.
Valuation allowances are established as necessary to reduce deferred tax assets
to amounts more likely than not to be realized.

  RESEARCH AND DEVELOPMENT EXPENDITURES:

     Research and development expenditures are expensed as incurred, recorded in
selling, general and administrative expenses and were $520, $273 and $273 for
2004, 2003 and 2002, respectively.

  NEW ACCOUNTING PRONOUNCEMENTS:

     The Company adopted the following new and revised accounting pronouncements
in fiscal 2004:

     Statement of Financial Accounting Standards No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits, an amendment to
FASB Statements No. 87, 88, and 106 (revised 2003)" ("SFAS No. 132"). This
revision to SFAS No. 132 relates to employers' disclosures about pension plans
and other postretirement benefit plans. SFAS No. 132 now requires additional
disclosures to describe the types of plan assets, investment strategy,
measurement date(s), plan obligations, cash flows, and components of net
periodic benefit cost recognized during interim periods of defined pension plans
and other defined postretirement plans. The additional disclosures required by
this revision to SFAS No. 132 have been provided.

     FASB Interpretation No. 46, "Consolidation of Variable Interest Entities
(revised December 2003)" ("FIN No. 46"). This revision to FIN No. 46 clarifies
the application of Accounting Research Bulletin No. 51, "Consolidated Financial
Statements", to certain entities in which equity investors do not have the
characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support. The adoption of FIN No. 46 did not result in a
material impact on the Company's financial statements.

     The Company will adopt the following new accounting pronouncements during
2005:

     Statement of Financial Accounting Standards No. 151, "Inventory Costs, an
amendment to Accounting Research Bulletin No. 43, Chapter 4" ("SFAS No. 151").
SFAS No. 151 amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing"
to clarify the accounting for abnormal amounts of idle facility expense,
freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB No.
43, Chapter 4, previously stated that "...under some circumstances, items such
as idle facility expense, excessive spoilage, double freight, and rehandling
costs may be so abnormal as to require treatment as current period charges...."
SFAS No. 151 requires that those items be recognized as current period charges
regardless of whether they meet the criterion of "so abnormal". In addition,
SFAS No. 151 requires that allocation of fixed production overheads to the costs
of conversion be based on the normal capacity of the production facilities. SFAS
No. 151 is effective for inventory costs incurred during fiscal years beginning
after June 30, 2005 and the provisions of this statement shall be applied
prospectively. The Company is currently assessing the impact of this statement.

     Statement of Financial Accounting Standards No. 153, "Exchanges of
Nonmonetary Assets, an amendment of APB Opinion No. 29" ("SFAS No. 153"). SFAS
No. 153 amends APB Opinion No. 29 to eliminate the exception for nonmonetary
exchanges of similar productive assets and replaces it with a general exception
for exchanges of nonmonetary assets that do not have commercial substance. A
nonmonetary exchange has commercial substance if the future cash flows of the
entity are expected to change significantly

                                       F-74
<PAGE>
              PHILIPP BROTHERS NETHERLANDS I B.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

as a result of the exchange. SFAS No. 153 is effective for nonmonetary asset
exchanges occurring in fiscal periods beginning after December 2004. The
provisions of this statement shall be applied prospectively. The Company is
currently assessing the impact of this statement.

3.  REFINANCING

     On October 21, 2003, PAHC issued 105,000 units consisting of $85,000 of 13%
Senior Secured Notes due 2007 of PAHC and $20,000 13% Senior Secured Notes due
2007 of Philipp Brothers Netherlands III B.V., an indirect wholly-owned
subsidiary of the Company. Certain proceeds from the issuance were to satisfy
its outstanding obligations to Pfizer Inc., including $8,225 of accounts
payable.

4.  PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment is comprised of:

<Table>
<Caption>
                                                               AS OF JUNE 30,
                                                              -----------------
                                                               2004      2003
                                                              -------   -------
<S>                                                           <C>       <C>
Land........................................................  $ 4,199   $ 4,287
Buildings and improvements..................................   10,267     8,820
Machinery and equipment.....................................   25,321    23,859
                                                              -------   -------
                                                               39,787    36,966
Less: accumulated depreciation..............................   (9,199)   (6,234)
                                                              -------   -------
                                                              $30,588   $30,732
                                                              =======   =======
</Table>

     Depreciation expense was $3,079, $2,293 and $2,688 for 2004, 2003 and 2002,
respectively.

5.  RELATED PARTY TRANSACTIONS

     The Company transacts business with PAHC and certain of its subsidiaries.
The amounts of these transactions, and the related receivables and payables,
reflected in the Company's financial statements are as follows:

<Table>
<Caption>
                                                           2004      2003      2002
                                                          -------   -------   -------
<S>                                                       <C>       <C>       <C>
Product sales...........................................  $34,357   $31,216   $32,261
Product purchases.......................................      913     3,086     4,028
Receivables at June 30..................................    7,917    11,116    16,730
Payables at June 30.....................................    1,687       922     1,989
</Table>

     The Company has notes payable to related parties. These notes bear interest
at 6%, 9%, 13% and 13.125% per annum and interest is payable annually on
December 31. The Company's related interest obligations to related parties will
be payable only to the extent that the Company's cash flows are sufficient to
service such obligations. These notes mature on June 23, 2006, September 22,
2006, December 1, 2007 and July 2, 2011. These notes payable are included in
notes payable -- related parties on the Company's consolidated balance sheet.

     During August and September 2001, Odda, a Norwegian subsidiary of PAHC,
issued $2,000 of 9 7/8% promissory notes, with a 5-year maturity, to PAH Brazil.
During 2003 PAHC determined it would permanently shutdown and no longer fund the
operations of Odda, and on February 28, 2003 Odda filed for bankruptcy in
Norway. As a result of the bankruptcy, during 2003, the Company recorded a
reserve of $2,280 for the principal amount of the promissory notes plus accrued
interest. This reserve was included in other

                                       F-75
<PAGE>
              PHILIPP BROTHERS NETHERLANDS I B.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(income) expense, net -- related parties on the Company's consolidated
statements of operations and comprehensive loss.

     Cost allocations from PAHC and certain other related parties are included
in selling, general and administrative expenses on the Company's consolidated
statements of operations and comprehensive loss. These allocations are based
upon the ratio of the Company's third party sales to the third party sales of
PAHC and certain other related parties, and represent administrative costs
incurred by these entities in support of the operations of the Company. These
cost allocations amounted to $2,217, $1,930 and $1,922 for 2004, 2003 and 2002,
respectively. PAHC and the certain other related parties have decided not to
seek repayment for these amounts from the Company and contributed these amounts
as additional capital to the Company.

6.  ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

     Accrued expenses and other current liabilities are comprised of:

<Table>
<Caption>
                                                               AS OF JUNE 30,
                                                              -----------------
                                                               2004      2003
                                                              -------   -------
<S>                                                           <C>       <C>
Employee related expenses...................................  $ 3,264   $ 2,876
Tax accruals................................................    8,167     5,188
Interest accruals...........................................      217        --
Other accrued liabilities...................................    1,790     1,096
                                                              -------   -------
                                                              $13,438   $ 9,160
                                                              =======   =======
</Table>

7.  DEBT

     In October 2003 PAHC issued 105,000 units, consisting of $85,000 of 13%
Senior Secured Notes due 2007 of PAHC (the "US Senior Notes") and $20,000 of 13%
Senior Secured Notes due 2007 of Philipp Brothers Netherlands III B.V. (the
"Dutch Senior Notes" and together with the US Senior notes, the "Senior Secured
Notes"), (the "Dutch issuer"), an indirect wholly-owned subsidiary of the
Company.

     The Dutch Senior Notes are senior secured obligations of the Dutch issuer
and are guaranteed on a senior secured basis by PAHC and by the restricted
subsidiaries of the Dutch issuer, presently consisting of Phibro Animal Health
SA. The Dutch Senior Notes and related guarantees are secured by a pledge of all
the accounts receivable, a security interest or floating charge on the inventory
to the extent permitted by applicable law, and a mortgage on substantially all
of the real property of the Dutch issuer and each of its restricted
subsidiaries, a pledge of 100% of the capital stock of each subsidiary of the
Dutch issuer, and a pledge of the intercompany loans made by the Dutch issuer to
its restricted subsidiaries.

     The indenture governing the Senior Secured Notes provides for optional
make-whole redemptions at any time prior to June 1, 2005, optional redemption on
or after June 1, 2005, and requires PAHC to make certain offers to purchase
Senior Secured Notes upon a change of control, upon certain asset sales and from
fifty percent (50%) of excess cash flow (as such terms are defined in the
indenture).

     The indenture contains certain covenants with respect to PAHC, the Company
and the guarantors, which restrict, among other things, (a) the incurrence of
additional indebtedness, (b) the payment of dividends and other restricted
payments, (c) the creation of certain liens, (d) the sale of assets, (e) certain
payment restrictions affecting subsidiaries, and (f) transactions with
affiliates. The indenture restricts the Company's ability to consolidate, or
merge with or into, or to transfer all or substantially all of its assets to,
another person.

                                       F-76
<PAGE>
              PHILIPP BROTHERS NETHERLANDS I B.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8.  EMPLOYEE BENEFIT PLANS

     The Company's Belgium subsidiary maintains a defined benefit plan for
eligible employees. The benefits provided by the plan are based upon years of
service and the employees' average compensation, as defined. The measurement
date for the plan was June 30, 2004 and 2003, respectively.

     Reconciliations of changes in benefit obligations, plan assets, and funded
status of the plans were:

<Table>
<Caption>
                                                              JUNE 2004   JUNE 2003
                                                              ---------   ---------
<S>                                                           <C>         <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year.....................   $6,595      $4,251
Service cost................................................      467         310
Employee contributions......................................       27         100
Interest cost...............................................      374         259
Benefits paid...............................................       (3)        (29)
Actuarial (gain) or loss....................................     (475)        879
Exchange rate impact........................................      338         825
                                                               ------      ------
Benefit obligation at end of year...........................   $7,323      $6,595
                                                               ======      ======
</Table>

     At June 30, 2004 and 2003, the accumulated benefit obligations were $4,383
and $4,248, respectively.

<Table>
<Caption>
                                                              JUNE 2004   JUNE 2003
                                                              ---------   ---------
<S>                                                           <C>         <C>
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year..............   $4,566      $2,882
Actual return on plan assets................................      435         204
Employer contributions......................................      558         841
Employee contributions......................................       27         100
Benefits paid...............................................       (3)        (29)
Exchange rate impact........................................      245         568
                                                               ------      ------
Fair value of plan assets at end of year....................   $5,828      $4,566
                                                               ======      ======
</Table>

<Table>
<Caption>
                                                              JUNE 2004   JUNE 2003
                                                              ---------   ---------
<S>                                                           <C>         <C>
FUNDED STATUS
Funded status of the plan...................................   $(1,495)    $(2,029)
Unrecognized net actuarial (gain) or loss...................       368         961
                                                               -------     -------
(Accrued) pension cost......................................   $(1,127)    $(1,068)
                                                               =======     =======
</Table>

     The Company expects to contribute $602 to the plan during fiscal 2005. The
Company's policy is to fund the plan in amounts which comply with contribution
limits imposed by law.

                                       F-77
<PAGE>
              PHILIPP BROTHERS NETHERLANDS I B.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Components of net periodic pension expense were:

<Table>
<Caption>
                                                              2004    2003    2002
                                                              -----   -----   -----
<S>                                                           <C>     <C>     <C>
Service cost -- benefits earned during the year.............  $ 467   $ 310   $ 217
Interest cost on benefit obligation.........................    374     259     164
Expected return on plan assets..............................   (300)   (203)   (123)
Amortization of net actuarial loss..........................     22      --      --
                                                              -----   -----   -----
Net periodic pension cost...................................  $ 563   $ 366   $ 258
                                                              =====   =====   =====
</Table>

     Significant actuarial assumptions for the plan were:

<Table>
<Caption>
                                                              2004   2003   2002
                                                              ----   ----   ----
<S>                                                           <C>    <C>    <C>
Discount rate for service and interest......................  5.5%   5.8%   5.8%
Expected rate of return on plan assets......................  6.0%   6.0%   6.0%
Rate of compensation increase...............................  3.0%   3.0%   3.0%
Discount rate for year-end benefit obligation...............  5.5%   5.5%   5.8%
</Table>

     Estimated future benefit payments, including benefits attributable to
future service, are as follows:

<Table>
<S>                                                           <C>
2005........................................................  $   37
2006........................................................      38
2007........................................................      40
2008........................................................      41
2009........................................................      42
2010-2014...................................................   1,817
</Table>

     The Company's plan target allocations for fiscal 2005 and the weighted
asset allocation of plan assets as of June 30, 2004 and 2003 are as follows:

<Table>
<Caption>
                                                              2005   2004   2003
                                                              ----   ----   ----
<S>                                                           <C>    <C>    <C>
Debt securities.............................................  59%    62%    79%
Equity securities...........................................  25%    21%    20%
Other.......................................................  16%    17%     1%
</Table>

     The expected long-term rate of return for the plan's total assets is based
on the expected return of each of the above categories, weighted based on the
target allocation for each class. Equity securities are expected to return 7.5%
over the long-term, while debt securities are expected to return 5.5%.

     The Company assumed the liability for the plan during 2002 as part of the
MFA acquisition from Pfizer.

     The Company's Brazil subsidiary provides a savings plan, under which
eligible employees may make a pre-tax contribution of up to 12% of base
compensation. The Company makes a matching contribution equal to the employee's
contribution up to the first 6% of base compensation. All employee contributions
are subject to the maximum amounts permitted under statutory income tax
guidelines. Expense related to the Company's contribution under this plan was
$58, $41 and $39 for 2004, 2003 and 2002, respectively.

     In addition the Company's Brazil subsidiary makes a supplemental retirement
contribution on behalf of certain eligible employees transferred to the Company
in December 2000. Expense related to the Company's contribution was $30, $24 and
$30 in 2004, 2003 and 2002, respectively.

                                       F-78
<PAGE>
              PHILIPP BROTHERS NETHERLANDS I B.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9.  INCOME TAXES

<Table>
<Caption>
                                                             2004      2003     2002
                                                            -------   -------   -----
<S>                                                         <C>       <C>       <C>
Loss before income taxes..................................  $(2,988)  $(9,383)  $(840)
                                                            =======   =======   =====
Current tax provision (benefit)...........................  $ 1,502   $(1,017)  $(872)
Deferred tax provision....................................      112     1,376     862
                                                            -------   -------   -----
Provision (benefit) for income taxes......................  $ 1,614   $   359   $ (10)
                                                            =======   =======   =====
</Table>

     Reconciliations of the statutory income tax rate and the Company's
effective income tax rate are:

<Table>
<Caption>
                                                              2004    2003    2002
                                                              -----   -----   -----
                                                                %       %       %
<S>                                                           <C>     <C>     <C>
Statutory income tax rate...................................  (34.0)  (34.0)  (34.0)
Foreign tax rate differences................................    9.3     1.5   (36.4)
Expenses with no tax benefit................................   34.2     6.4    72.4
Changes in valuation allowance..............................   33.8    27.2      --
Other.......................................................   10.7     2.7    (3.2)
                                                              -----   -----   -----
Effective income tax rate...................................   54.0     3.8    (1.2)
                                                              =====   =====   =====
</Table>

     The tax effects of significant temporary differences that comprise deferred
tax assets and deferred tax liabilities at June 30, 2004 and 2003 were:

<Table>
<Caption>
                                                               AS OF JUNE 30,
                                                              -----------------
                                                               2004      2003
                                                              -------   -------
<S>                                                           <C>       <C>
Deferred tax assets:
  Depreciation..............................................  $     7   $     7
  Inventory.................................................      615       615
  Net operating loss carry forwards.........................    3,686     1,849
  Other.....................................................       97        11
                                                              -------   -------
                                                                4,405     2,482
  Less: valuation allowance.................................   (3,686)   (1,849)
                                                              -------   -------
                                                                  719       633
                                                              -------   -------
Deferred tax liabilities:
  Depreciation..............................................   (1,022)     (990)
  Other.....................................................   (1,143)     (977)
                                                              -------   -------
                                                               (2,165)   (1,967)
                                                              -------   -------
Net deferred tax liability..................................  $(1,446)  $(1,334)
                                                              =======   =======
</Table>

     Deferred taxes are included in the following line items on the Company's
consolidated balance sheets:

<Table>
<Caption>
                                                               AS OF JUNE 30,
                                                              -----------------
                                                               2004      2003
                                                              -------   -------
<S>                                                           <C>       <C>
Prepaid expenses and other current assets...................  $   315   $   315
Other liabilities...........................................   (1,761)   (1,649)
                                                              -------   -------
                                                              $(1,446)  $(1,334)
                                                              =======   =======
</Table>

                                       F-79
<PAGE>
              PHILIPP BROTHERS NETHERLANDS I B.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The Company has incurred losses in recent years and has reassessed the
likelihood of recovering net deferred tax assets, resulting in the recording of
valuation allowances due to the uncertainty of future profitability. The Company
will continue to evaluate the likelihood of recoverability of these deferred tax
assets based upon actual and expected operating performance.

10.  SUBSEQUENT EVENTS

  ISSUANCE OF ADDITIONAL 13% SENIOR SECURED NOTES:

     On December 21, 2004, PAHC completed a private offering of 22,491
additional units consisting of $18,207 13% Senior Secured Notes due 2007 of PAHC
(the "U.S. Notes") and $4,284 13% Senior Secured Notes due 2007 (the "Dutch
Notes" and together with the U.S. Notes, the "Additional Notes") of Philipp
Brothers Netherlands III B.V., an indirect wholly-owned subsidiary of the
Company (the "Dutch Issuer" and together with PAHC, the "Issuers"). The
Additional Notes were issued under the Indenture dated October 21, 2003, as
amended and supplemented (the "Indenture") under which the Issuers previously
issued 105,000 units consisting of $85,000 aggregate principal amount of U.S.
Notes and $20,000 aggregate principal amount of Dutch Notes. The proceeds from
the sale of the Additional Notes will be used to refinance a portion of PAHC's
indebtedness under its domestic senior credit facility.

  SALE OF BELGIUM PLANT:

     On December 16, 2004 PAH Belgium entered into an agreement with
GlaxoSmithKline Biologicals ("GSK") to sell to GSK substantially all of PAH
Belgium's facilities in Rixensart, Belgium ("the Belgium Plant") as follows
(U.S. dollar amounts at the December 16, 2004 exchange rate): (i) the transfer
of substantially all of the land and buildings and certain equipment of PAH
Belgium at the Belgium Plant, as well as the industrial activities and
intellectual property relating to certain solvent technology of PAH Belgium for
a purchase price of EUR 6,200 ($8,238), payable at closing; (ii) the transfer to
GSK of a majority of the employees of the Belgium Plant and the corresponding
responsibility for statutory severance obligations; (iii) GSK agreeing to be
responsible for costs of removal, by demolition or otherwise, certain buildings
not to be used by it, but for PAH Belgium to reimburse GSK up to a maximum of
EUR 700 ($930) for such removal costs; (iv) in recognition of the benefits to
PAHC from the proposed transaction, PAH Belgium agreeing to pay to GSK EUR 1,500
($1,993) within six months from the closing date, EUR 1,500 ($1,993) within
eighteen months from the closing date, EUR 1,500 ($1,993) within thirty months
from the closing date, and EUR 500 ($664) within forty-two months from the
closing date; (v) PAH Belgium retaining certain excess land (valued at
approximately EUR 400 ($531)) and being able to sell such land for its own
account; (vi) PAH Belgium being responsible for certain plant closure costs and
legally required severance indemnities in connection with workforce reductions,
estimated in total to be EUR 7,700 ($10,231), of which an amount estimated to be
approximately EUR 4,100 ($5,448) would be payable at or around the closing and
an aggregate amount so estimated to be approximately EUR 3,600 ($4,783) would be
payable over periods up to thirteen years; and (vii) PAH Belgium retaining any
or all equipment at the Belgium Plant, and being able to sell such equipment for
the account of PAH Belgium or transfer such equipment, together with other
assets and rights related to the production of virginiamycin, to PAH Brazil
which owns a facility in Guarulhos, Brazil or in connection with alternative
production arrangements.

     The foregoing transactions and agreements are subject to a closing that is
expected to occur no earlier than July 1, 2005 nor later than June 30, 2006.

     The Dutch Notes and related guarantees are secured by a mortgage on the
Belgium Plant which will be released in connection with the closing of the sale
of the Belgium Plant to GSK.

                                       F-80
<PAGE>
              PHILIPP BROTHERS NETHERLANDS I B.V. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The carrying value of the Belgium Plant and related assets at September 30,
2004 is EUR 13,098 ($18,480). The Company is in the process of evaluating the
accounting for this transaction and will record an impairment loss, if required
in the second quarter ended December 31, 2004. In addition, the Company will
expense severance, plant closure and other related costs in the period in which
such liabilities are incurred in accordance with Statement of Financial
Accounting Standards No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities". As of the date of this filing, estimates of such costs are
in process of being determined.

11.  FINANCIAL INSTRUMENTS

     Financial instruments that potentially subject the Company to credit risk
consist principally of cash and trade receivables. The Company places its cash
with high quality financial institutions. The Company sells to customers in a
variety of industries, markets and countries. Concentrations of credit risk with
respect to receivables arising from these sales are limited due to the large
number of customers comprising the Company's customer base. Ongoing credit
evaluations of customers' financial conditions are performed and, generally, no
collateral is required. The Company maintains appropriate reserves for
uncollectible receivables.

     The carrying amounts of cash, trade receivables and trade payables is
considered to be representative of their fair value because of their short
maturities. The fair value of the Company's Dutch Senior Notes is estimated
based on quoted market prices. At June 30, 2004 the fair value of the Company's
Dutch Senior Notes was $21,800 and the related carrying amount was $20,000.

12.  BUSINESS SEGMENTS

     The Company has determined that it operates only in one segment. The
Company manufactures and markets numerous formulations and concentrations of
medicated feed additives including antibiotics, antibacterials, anticoccidials,
anthelmintics, and other animal health and nutrition products.

13.  GEOGRAPHIC INFORMATION

     The following is information about the Company's geographic operations.
Information is attributed to the geographic areas based on the location of the
Company's subsidiaries.

<Table>
<Caption>
                                                           2004      2003      2002
                                                          -------   -------   -------
<S>                                                       <C>       <C>       <C>
TOTAL SALES
  Europe................................................  $34,713   $33,619   $25,705
  South America.........................................   15,245    13,064    21,195
                                                          -------   -------   -------
  Total.................................................  $49,958   $46,683   $46,900
                                                          =======   =======   =======
</Table>

<Table>
<Caption>
                                                           2004      2003      2002
                                                          -------   -------   -------
<S>                                                       <C>       <C>       <C>
PROPERTY, PLANT AND EQUIPMENT, NET
  Europe................................................  $17,320   $17,049   $14,399
  South America.........................................   13,268    13,683    11,799
                                                          -------   -------   -------
  Total.................................................  $30,588   $30,732   $26,198
                                                          =======   =======   =======
</Table>

                                       F-81
<PAGE>

            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of Phibro Animal Health SA (Belgium):

     In our opinion, the accompanying balance sheets and the related statements
of operations and comprehensive (loss), changes in stockholders' equity and cash
flows present fairly, in all material respects, the financial position of Phibro
Animal Health SA (Belgium) at June 30, 2004 and June 30, 2003, and the results
of its operations and its cash flows for each of the three years in the period
ended June 30, 2004, in conformity with accounting principles generally accepted
in the United States of America. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

PricewaterhouseCoopers LLP
Florham Park, New Jersey
January 10, 2005

                                       F-82
<PAGE>

                       PHIBRO ANIMAL HEALTH SA (BELGIUM)

                                 BALANCE SHEETS

<Table>
<Caption>
                                                                 AS OF JUNE 30,
                                                              ---------------------
                                                                2004        2003
                                                              ---------   ---------
                                                              (U.S.$ IN THOUSANDS)
<S>                                                           <C>         <C>
                                      ASSETS
CURRENT ASSETS:
  Cash, including restricted balance of $175 at June 30,
     2004 and 2003..........................................   $   212     $   185
  Trade receivables, less allowance for doubtful accounts of
     $13 and $22 at June 30, 2004 and 2003, respectively....     2,592       1,542
  Other receivables.........................................        72         518
  Inventories...............................................    23,159      13,460
  Prepaid expenses and other current assets.................     1,018       1,866
  Trade receivables -- related parties......................     4,527       8,553
                                                               -------     -------
     TOTAL CURRENT ASSETS...................................    31,580      26,124
PROPERTY, PLANT AND EQUIPMENT, net..........................    17,321      17,049
INTANGIBLES.................................................     1,569       1,818
                                                               -------     -------
                                                               $50,470     $44,991
                                                               =======     =======

                       LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable..........................................   $ 2,258     $12,115
  Accrued expenses and other current liabilities............     8,291       4,804
  Trade payables -- related parties.........................     2,879       1,835
                                                               -------     -------
     TOTAL CURRENT LIABILITIES..............................    13,428      18,754
OTHER LIABILITIES...........................................     2,897       2,905
NOTES PAYABLE -- RELATED PARTIES............................    30,571      22,306
                                                               -------     -------
     TOTAL LIABILITIES......................................    46,896      43,965
                                                               -------     -------
STOCKHOLDERS' EQUITY:
  Paid-in capital...........................................     1,896       1,186
  Accumulated deficit.......................................    (2,631)     (3,937)
  Cumulative foreign currency translation adjustment........     4,309       3,777
                                                               -------     -------
     TOTAL STOCKHOLDERS' EQUITY.............................     3,574       1,026
                                                               -------     -------
                                                               $50,470     $44,991
                                                               =======     =======
</Table>

    The accompanying notes are an integral part of the financial statements

                                       F-83
<PAGE>

                       PHIBRO ANIMAL HEALTH SA (BELGIUM)

            STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

<Table>
<Caption>
                                                               FOR THE YEARS ENDED JUNE 30,
                                                              ------------------------------
                                                                2004       2003       2002
                                                              --------   --------   --------
                                                                   (U.S.$ IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
NET SALES...................................................  $ 5,742    $ 6,625    $ 4,196
NET SALES -- RELATED PARTIES................................   28,970     26,994     21,509
                                                              -------    -------    -------
  TOTAL SALES...............................................   34,712     33,619     25,705
COST OF GOODS SOLD..........................................   25,293     31,435     21,631
                                                              -------    -------    -------
  GROSS PROFIT..............................................    9,419      2,184      4,074
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES................    3,334      2,595      2,018
                                                              -------    -------    -------
  OPERATING INCOME (LOSS)...................................    6,085       (411)     2,056
OTHER:
  Interest expense..........................................       95         62        365
  Interest expense -- related parties.......................    3,335      2,849      2,486
  Other (income) expense, net...............................     (265)     1,283      2,294
                                                              -------    -------    -------
  INCOME (LOSS) BEFORE INCOME TAXES.........................    2,920     (4,605)    (3,089)
PROVISION (BENEFIT) FOR INCOME TAXES........................    1,614     (1,086)    (1,098)
                                                              -------    -------    -------
  NET INCOME (LOSS).........................................    1,306     (3,519)    (1,991)
OTHER COMPREHENSIVE INCOME:
  Change in currency translation adjustment.................      532      2,401      1,319
                                                              -------    -------    -------
  COMPREHENSIVE INCOME (LOSS)...............................  $ 1,838    $(1,118)   $  (672)
                                                              =======    =======    =======
</Table>

    The accompanying notes are an integral part of the financial statements

                                       F-84
<PAGE>

                       PHIBRO ANIMAL HEALTH SA (BELGIUM)

                 STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<Table>
<Caption>
                                                     FOR THE YEARS ENDED JUNE 30, 2004 AND 2003 AND 2002
                                                    ------------------------------------------------------
                                                                                    FOREIGN
                                                                                   CURRENCY
                                                     PAID-IN     (ACCUMULATED     TRANSLATION
                                                     CAPITAL       DEFICIT)       ADJUSTMENT       TOTAL
                                                    ---------   --------------   -------------   ---------
                                                                     (U.S.$ IN THOUSANDS)
<S>                                                 <C>         <C>              <C>             <C>
BALANCE, JUNE 30, 2001............................    $   --        $ 1,573          $   57       $ 1,630
  Contribution from parent........................       459                                          459
  Net (loss)......................................                   (1,991)                       (1,991)
  Foreign currency translation adjustment.........                                    1,319         1,319
                                                      ------        -------          ------       -------
BALANCE, JUNE 30, 2002............................    $  459        $  (418)         $1,376       $ 1,417
                                                      ======        =======          ======       =======
  Contribution from parent........................       727                                          727
  Net (loss)......................................                   (3,519)                       (3,519)
  Foreign currency translation adjustment.........                                    2,401         2,401
                                                      ------        -------          ------       -------
BALANCE, JUNE 30, 2003............................    $1,186        $(3,937)         $3,777       $ 1,026
                                                      ======        =======          ======       =======
  Contribution from parent........................       710                                          710
  Net (loss)......................................                    1,306                         1,306
  Foreign currency translation adjustment.........                                      532           532
                                                      ------        -------          ------       -------
BALANCE, JUNE 30, 2004............................    $1,896        $(2,631)         $4,309       $ 3,574
                                                      ======        =======          ======       =======
</Table>

    The accompanying notes are an integral part of the financial statements

                                       F-85
<PAGE>

                       PHIBRO ANIMAL HEALTH SA (BELGIUM)

                            STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                              FOR THE YEARS ENDED JUNE 30,
                                                              ----------------------------
                                                               2004      2003       2002
                                                              -------   -------   --------
                                                                  (U.S.$ IN THOUSANDS)
<S>                                                           <C>       <C>       <C>
OPERATING ACTIVITIES:
  Net income (loss).........................................  $ 1,306   $(3,519)  $ (1,991)
  Adjustments to reconcile net income (loss) to net cash
     provided (used) by operating activities:
     Depreciation and amortization..........................    2,669     2,019      2,252
     Deferred taxes.........................................      112       142       (178)
     Allocated selling, general and administrative expenses
       from parent..........................................      658       727        459
     Effects of changes in foreign currency and other.......     (264)    1,268      1,912
     Changes in operating assets and liabilities:
       Accounts receivable..................................     (945)     (322)       886
       Inventories..........................................   (8,762)    2,270    (10,325)
       Prepaid expenses and other current assets............    1,369    (1,191)       273
       Other assets.........................................       --        --         66
       Related party receivables and payables...............    5,135     1,557      4,022
       Accounts payable.....................................   (2,395)    3,523      1,472
       Accrued expenses and other liabilities...............    2,790    (8,244)     3,193
                                                              -------   -------   --------
          NET CASH PROVIDED (USED) BY OPERATING
            ACTIVITIES......................................    1,673    (1,770)     2,041
                                                              -------   -------   --------
INVESTING ACTIVITIES:
  Capital expenditures......................................   (1,613)   (2,149)    (1,938)
  Acquisition of a business.................................       --        --     (4,422)
  Other investing...........................................       --        --         --
                                                              -------   -------   --------
          NET CASH USED BY INVESTING ACTIVITIES.............   (1,613)   (2,149)    (6,360)
                                                              -------   -------   --------
FINANCING ACTIVITIES:
  Net increase in intercompany debt.........................    8,181     3,432      3,540
  Payment of Pfizer obligations.............................   (8,225)       --         --
                                                              -------   -------   --------
          NET CASH PROVIDED (USED) BY FINANCING
            ACTIVITIES......................................      (44)    3,432      3,540
                                                              -------   -------   --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH.....................       11        54        128
                                                              -------   -------   --------
          NET INCREASE (DECREASE) IN CASH AND CASH
            EQUIVALENTS.....................................       27      (433)      (651)
CASH AND CASH EQUIVALENTS at beginning of period............      185       618      1,269
                                                              -------   -------   --------
CASH AND CASH EQUIVALENTS at end of period..................  $   212   $   185   $    618
                                                              =======   =======   ========
Supplemental Cash Flow Information:
  Interest paid.............................................  $    55   $    88   $     --
  Income taxes paid.........................................       --       366        358
</Table>

    The accompanying notes are an integral part of the financial statements

                                       F-86
<PAGE>

                       PHIBRO ANIMAL HEALTH SA (BELGIUM)

                         NOTES TO FINANCIAL STATEMENTS
                              (U.S.$ IN THOUSANDS)

1.  DESCRIPTION OF BUSINESS

     Phibro Animal Health SA, a company organized under the laws of Belgium,
(the "Company") is a manufacturer and marketer of a broad range of animal health
and nutrition products, specifically medicated feed additives ("MFA"), which the
Company sells in various markets predominately to the poultry, swine and cattle
markets.

     The Company is a direct wholly-owned subsidiary of Philipp Brothers
Netherlands III B.V. ("BV III") and an indirect wholly-owned subsidiary of both
Philipp Brothers Netherlands I B.V. ("BV I") and Phibro Animal Health
Corporation ("PAHC").

     On November 30, 2000, PAHC purchased the medicated feed additive ("MFA")
business of Pfizer, Inc. The Company, BV III and BV I were part of that
acquisition. In connection with the MFA acquisition additional purchase price of
$4,422 was earned and paid in 2002. All earn-out requirements have been
satisfied and no further payments are necessary.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  BASIS OF PRESENTATION:

     The Company presents its financial statements on the basis of its fiscal
year ending June 30. All references to years 2004, 2003, and 2002 in these
financial statements refer to the fiscal year ended June 30 of that year.

  RISKS AND UNCERTAINTIES:

     The use of antibiotics in medicated feed additives is a subject of
legislative and regulatory interest. The issue of potential for increased
bacterial resistance to certain antibiotics used in certain food-producing
animals is the subject of discussions on a worldwide basis and, in certain
instances, has led to government restrictions on the use of antibiotics in
food-producing animals. The sale of feed additives containing antibiotics is a
material portion of the Company's business. Should regulatory or other
developments result in further restrictions on the sale of such products, it
could have a material adverse impact on the Company's financial position,
results of operations and cash flows.

     The testing, manufacturing, and marketing of certain products are subject
to extensive regulation by numerous government authorities in the United States
and other countries.

     A significant portion of the Company's sales and earnings are attributable
to transactions with related parties.

  USE OF ESTIMATES:

     Preparation of the Company's financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make certain estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues, expenses and related
disclosures. Actual results could differ from these estimates. Significant
estimates include reserves for bad debts, inventory obsolescence, environmental
matters, depreciation and amortization periods of long-lived assets,
recoverability of long-lived assets and realizability of deferred tax assets and
actuarial assumptions related to the Company's pension plan.

  REVENUE RECOGNITION:

     Revenue is recognized upon transfer of title and when risk of loss passes
to the customer, generally at time of shipment. Net sales reflect total sales
billed, less reductions for goods returned and trade discounts.

                                       F-87
<PAGE>
                       PHIBRO ANIMAL HEALTH SA (BELGIUM)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

  CASH:

     Cash includes cash in banks. Cash also includes cash on deposit in a
restricted bank account under a contractual obligation with a customer, in the
amount of $175 at June 30, 2004 and 2003. This cash was subsequently released
during December 2004.

  ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS:

     Trade accounts receivable are recorded at the invoiced amount and do not
bear interest. The allowance for doubtful accounts is the Company's best
estimate of the probable credit losses in its existing accounts receivable. The
allowance is based on historical write-off experience and is reviewed
periodically. Past due balances are reviewed individually for collectibility.
Account balances are charged against the allowance when the Company feels that
it is probable that the receivable will not be recovered.

     The allowance for doubtful accounts was:

<Table>
<Caption>
                                                              2004   2003   2002
                                                              ----   ----   -----
<S>                                                           <C>    <C>    <C>
Balance at beginning of period..............................  $22    $--    $  --
Provision for bad debts.....................................   --     22       --
Bad debt write-offs.........................................   (9)    --       --
                                                              ---    ---    -----
Balance at end of period....................................  $13    $22    $  --
                                                              ===    ===    =====
</Table>

  INVENTORIES:

     Inventories are valued at the lower of cost or market. Cost is determined
principally under the first-in, first-out (FIFO) method. Obsolete and unsaleable
inventories are reflected at estimated net realizable value. Inventory costs
include materials, direct labor and manufacturing overhead. Inventories are
comprised of:

<Table>
<Caption>
                                                               AS OF JUNE 30,
                                                              -----------------
                                                               2004      2003
                                                              -------   -------
<S>                                                           <C>       <C>
Raw materials...............................................  $   910   $   820
Work-in-process.............................................      166        60
Finished goods..............................................   22,083    12,580
                                                              -------   -------
Total inventory.............................................  $23,159   $13,460
                                                              =======   =======
</Table>

  PROPERTY, PLANT AND EQUIPMENT:

     Property, plant and equipment are stated at cost.

     Depreciation is charged to results of operations using the straight-line
method based upon the assets' estimated useful lives ranging from 8 to 20 years
for buildings and improvements and 3 to 10 years for machinery and equipment.

     The Company capitalizes costs that extend the useful life or productive
capacity of an asset. Repair and maintenance costs are expensed as incurred. In
the case of disposals, the assets and related accumulated depreciation are
removed from the accounts, and the net amounts, less proceeds from disposal, are
included in the statements of operations and comprehensive income (loss).

  INTANGIBLES:

     Product intangibles cost arising from the MFA acquisition was $2,191 and
$2,069 at June 30, 2004 and 2003, respectively, and accumulated amortization of
$622 and $251 at June 30, 2004 and 2003, respectively.

                                       F-88
<PAGE>
                       PHIBRO ANIMAL HEALTH SA (BELGIUM)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Amortization expense was $252, $156 and $201 for 2004, 2003 and 2002,
respectively. Amortization expense from the MFA acquisition for each of the next
five years from 2005 to 2009 is expected to be approximately $250 per year.
These product intangible costs are being amortized on a straight-line basis over
ten years with 6 1/2 years remaining at June 30, 2004.

  FOREIGN CURRENCY TRANSLATION:

     Financial position and results of operations of the Company are measured
using the Euro as the functional currency. Assets and liabilities are translated
at the exchange rates in effect at each fiscal year end. The translation
adjustments related to assets and liabilities that arise from the use of
differing exchange rates from period to period are included in cumulative
foreign currency translation adjustment on the Company's balance sheet. Income
statement accounts are translated at the average rates of exchange prevailing
during the year.

     Foreign currency transaction gains and losses primarily arise from
short-term intercompany balances. Net foreign currency transaction (gains)
losses were $(264), $1,268 and $1,912 for 2004, 2003 and 2002, respectively, and
were included in other (income) expense, net in the statements of operations and
comprehensive income (loss).

     PAHC considers long-term notes payable with related parties to be balances
for which settlement is not planned or anticipated in the foreseeable future.
PAHC considers these balances to be part of the net investment and, accordingly,
foreign currency transaction (gains) losses from such items are recorded in
cumulative foreign currency translation adjustment on the Company's balance
sheet.

  RECOVERABILITY OF LONG-LIVED ASSETS:

     The Company evaluates the recoverability of long-lived assets, including
intangible assets, when events or circumstances indicate that a diminution in
value may have occurred, using financial indicators such as historical and
future ability to generate cash flows from operations. The Company's policy is
to record an impairment loss in the period it is determined the carrying amount
of the asset may not be recoverable. This determination is based on an
evaluation of such factors as the occurrence of a significant event, a
significant change in the environment in which the business operates, or if the
expected future net cash flows (undiscounted and without interest or income
taxes) are less than the carrying amount of the assets.

  INCOME TAXES:

     Income tax expense includes Belgium income taxes. The tax effect of certain
temporary differences between amounts recognized for financial reporting
purposes and amounts recognized for tax purposes are reported as deferred income
taxes. Deferred tax balances are adjusted to reflect tax rates, based on current
tax laws, which will be in effect in the years in which the temporary
differences are expected to reverse. Valuation allowances are established as
necessary to reduce deferred tax assets to amounts more likely than not to be
realized.

  RESEARCH AND DEVELOPMENT EXPENDITURES:

     Research and development expenditures are expensed as incurred, recorded in
selling, general and administrative expenses and were $122 for 2004. There were
no research and development expenditures in 2003 and 2002.

                                       F-89
<PAGE>
                       PHIBRO ANIMAL HEALTH SA (BELGIUM)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

  NEW ACCOUNTING PRONOUNCEMENTS:

     The Company adopted the following new and revised accounting pronouncements
in fiscal 2004:

     Statement of Financial Accounting Standards No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits, an amendment to
FASB Statements No. 87, 88, and 106 (revised 2003)" ("SFAS No. 132"). This
revision to SFAS No. 132 relates to employers' disclosures about pension plans
and other postretirement benefit plans. SFAS No. 132 now requires additional
disclosures to describe the types of plan assets, investment strategy,
measurement date(s), plan obligations, cash flows, and components of net
periodic benefit cost recognized during interim periods of defined pension plans
and other defined postretirement plans. The additional disclosures required by
this revision to SFAS No. 132 have been provided.

     FASB Interpretation No. 46, "Consolidation of Variable Interest Entities
(revised December 2003)" ("FIN No. 46"). This revision to FIN No. 46 clarifies
the application of Accounting Research Bulletin No. 51, "Consolidated Financial
Statements", to certain entities in which equity investors do not have the
characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support. The adoption of FIN No. 46 did not result in a
material impact on the Company's financial statements.

     The Company will adopt the following new accounting pronouncements during
2005:

     Statement of Financial Accounting Standards No. 151, "Inventory Costs, an
amendment to Accounting Research Bulletin No. 43, Chapter 4" ("SFAS No. 151").
SFAS No. 151 amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing"
to clarify the accounting for abnormal amounts of idle facility expense,
freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB No.
43, Chapter 4, previously stated that ". . . under some circumstances, items
such as idle facility expense, excessive spoilage, double freight, and
rehandling costs may be so abnormal as to require treatment as current period
charges. . . ." SFAS No. 151 requires that those items be recognized as current
period charges regardless of whether they meet the criterion of "so abnormal".
In addition, SFAS No. 151 requires that allocation of fixed production overheads
to the costs of conversion be based on the normal capacity of the production
facilities. SFAS No. 151 is effective for inventory costs incurred during fiscal
years beginning after June 30, 2005 and the provisions of this statement shall
be applied prospectively. The Company is currently assessing the impact of this
statement.

     Statement of Financial Accounting Standards No. 153, "Exchanges of
Nonmonetary Assets, an amendment of APB Opinion No. 29" ("SFAS No. 153"). SFAS
No. 153 amends APB Opinion No. 29 to eliminate the exception for nonmonetary
exchanges of similar productive assets and replaces it with a general exception
for exchanges of nonmonetary assets that do not have commercial substance. A
nonmonetary exchange has commercial substance if the future cash flows of the
entity are expected to change significantly as a result of the exchange. SFAS
No. 153 is effective for nonmonetary asset exchanges occurring in fiscal periods
beginning after December 2004. The provisions of this statement shall be applied
prospectively. The Company is currently assessing the impact of this statement.

3.  REFINANCING

     On October 21, 2003, PAHC issued 105,000 units consisting of $85,000 of 13%
Senior Secured Notes due 2007 of PAHC and $20,000 13% Senior Secured Notes due
2007 of Philipp Brothers Netherlands III B.V., the direct parent of the Company.
Certain proceeds from the issuance were to satisfy its outstanding obligations
to Pfizer Inc., including $8,225 of accounts payable.

                                       F-90
<PAGE>
                       PHIBRO ANIMAL HEALTH SA (BELGIUM)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4.  PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment is comprised of:

<Table>
<Caption>
                                                               AS OF JUNE 30,
                                                              -----------------
                                                               2004      2003
                                                              -------   -------
<S>                                                           <C>       <C>
Land........................................................  $ 1,912   $ 1,806
Buildings and improvements..................................    6,153     5,811
Machinery and equipment.....................................   16,425    14,133
                                                              -------   -------
                                                               24,490    21,750
Less: accumulated depreciation..............................   (7,169)   (4,701)
                                                              -------   -------
                                                              $17,321   $17,049
                                                              =======   =======
</Table>

     Depreciation expense was $2,417, $1,863 and $2,051 for 2004, 2003 and 2002,
respectively.

5.  RELATED PARTY TRANSACTIONS

     The Company transacts business with PAHC and certain of its subsidiaries.
The amounts of these transactions, and the related receivables and payables,
reflected in the Company's financial statements are as follows:

<Table>
<Caption>
                                                           2004      2003      2002
                                                          -------   -------   -------
<S>                                                       <C>       <C>       <C>
Product sales...........................................  $28,970   $26,994   $21,509
Product purchases.......................................    3,553     5,344     3,498
Receivables at June 30..................................    4,527     8,553     9,770
Payables at June 30.....................................    2,879     1,835     1,371
</Table>

     The Company has notes payable to related parties. These notes bear interest
at 13.125% per annum and interest is payable annually on December 31. The
Company's related interest obligations to related parties will be payable only
to the extent that the Company's cash flows are sufficient to service such
obligations. These notes mature on December 7, 2007 and July 2, 2011. These
notes payable are included in notes payable -- related parties on the Company's
balance sheet.

     Cost allocations from PAHC and certain other related parties are included
in selling, general and administrative expenses on the Company's statements of
operations and comprehensive income (loss). These allocations are based upon the
ratio of the Company's third party sales to the third party sales of PAHC and
certain other related parties, and represent administrative costs incurred by
these entities in support of the operations of the Company. These cost
allocations amounted to $658, $727 and $459 for 2004, 2003 and 2002,
respectively. PAHC and the certain other related parties have elected not to
seek repayment for these amounts from the Company and have contributed these
amounts as additional capital to the Company.

                                       F-91
<PAGE>
                       PHIBRO ANIMAL HEALTH SA (BELGIUM)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

6.  ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

     Accrued expenses and other current liabilities are comprised of:

<Table>
<Caption>
                                                              AS OF JUNE 30,
                                                              ---------------
                                                               2004     2003
                                                              ------   ------
<S>                                                           <C>      <C>
Employee related expenses...................................  $2,507   $2,053
Tax accruals................................................   4,059    2,072
Other accrued liabilities...................................   1,725      679
                                                              ------   ------
                                                              $8,291   $4,804
                                                              ======   ======
</Table>

7.  DEBT GUARANTEED

     In October 2003 PAHC issued 105,000 units, consisting of $85,000 of 13%
Senior Secured Notes due 2007 of PAHC (the "US Senior Notes") and $20,000 of 13%
Senior Secured Notes due 2007 of Philipp Brothers Netherlands III B.V. (the
"Dutch Senior Notes" and together with the US Senior notes, the "Senior Secured
Notes"), (the "Dutch issuer"), the direct parent of the Company.

     The Dutch Senior Notes are senior secured obligations of the Dutch issuer
and are guaranteed on a senior secured basis by PAHC and by the restricted
subsidiaries of the Dutch issuer, presently consisting of the Company. The Dutch
Senior Notes and related guarantees are secured by a pledge of all the accounts
receivable, a security interest or floating charge on the inventory to the
extent permitted by applicable law, and a mortgage on substantially all of the
real property of the Dutch issuer and each of its restricted subsidiaries, a
pledge of 100% of the capital stock of each subsidiary of the Dutch issuer, and
a pledge of the intercompany loans made by the Dutch issuer to its restricted
subsidiaries.

     The indenture governing the Senior Secured Notes provides for optional
make-whole redemptions at any time prior to June 1, 2005, optional redemption on
or after June 1, 2005, and requires PAHC to make certain offers to purchase
Senior Secured Notes upon a change of control, upon certain asset sales and from
fifty percent (50%) of excess cash flow (as such terms are defined in the
indenture).

     The indenture contains certain covenants with respect to PAHC, the Company
and the guarantors, which restrict, among other things, (a) the incurrence of
additional indebtedness, (b) the payment of dividends and other restricted
payments, (c) the creation of certain liens, (d) the sale of assets, (e) certain
payment restrictions affecting subsidiaries, and (f) transactions with
affiliates. The indenture restricts the Company's ability to consolidate, or
merge with or into, or to transfer all or substantially all of its assets to,
another person.

8.  EMPLOYEE BENEFIT PLANS

     The Company maintains a defined benefit plan for eligible employees. The
benefits provided by the plan are based upon years of service and the employees'
average compensation, as defined. The measurement date for the plan was June 30,
2004 and 2003, respectively.

                                       F-92
<PAGE>
                       PHIBRO ANIMAL HEALTH SA (BELGIUM)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     Reconciliations of changes in benefit obligations, plan assets, and funded
status of the plans were:

<Table>
<Caption>
                                                              JUNE 2004   JUNE 2003
                                                              ---------   ---------
<S>                                                           <C>         <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year.....................   $6,595      $4,251
Service cost................................................      467         310
Employee contributions......................................       27         100
Interest cost...............................................      374         259
Benefits paid...............................................       (3)        (29)
Actuarial (gain) or loss....................................     (475)        879
Exchange rate impact........................................      338         825
                                                               ------      ------
Benefit obligation at end of year...........................   $7,323      $6,595
                                                               ======      ======
</Table>

     At June 30, 2004 and 2003, the accumulated benefit obligations were $4,383
and $4,248, respectively.

<Table>
<Caption>
                                                              JUNE 2004   JUNE 2003
                                                              ---------   ---------
<S>                                                           <C>         <C>
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year..............   $4,566      $2,882
Actual return on plan assets................................      435         204
Employer contributions......................................      558         841
Employee contributions......................................       27         100
Benefits paid...............................................       (3)        (29)
Exchange rate impact........................................      245         568
                                                               ------      ------
Fair value of plan assets at end of year....................   $5,828      $4,566
                                                               ======      ======
</Table>

<Table>
<Caption>
                                                              JUNE 2004   JUNE 2003
                                                              ---------   ---------
<S>                                                           <C>         <C>
FUNDED STATUS
Funded status of the plan...................................   $(1,495)    $(2,029)
Unrecognized net actuarial (gain) or loss...................       368         961
                                                               -------     -------
(Accrued) pension cost......................................   $(1,127)    $(1,068)
                                                               =======     =======
</Table>

     The Company expects to contribute $602 to the plan during fiscal 2005. The
Company's policy is to fund the plan in amounts which comply with contribution
limits imposed by law.

     Components of net periodic pension expense were:

<Table>
<Caption>
                                                              2004    2003    2002
                                                              -----   -----   -----
<S>                                                           <C>     <C>     <C>
Service cost -- benefits earned during the year.............  $ 467   $ 310   $ 217
Interest cost on benefit obligation.........................    374     259     164
Expected return on plan assets..............................   (300)   (203)   (123)
Amortization of net actuarial loss..........................     22      --      --
                                                              -----   -----   -----
Net periodic pension cost...................................  $ 563   $ 366   $ 258
                                                              =====   =====   =====
</Table>

                                       F-93
<PAGE>
                       PHIBRO ANIMAL HEALTH SA (BELGIUM)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     Significant actuarial assumptions for the plan were:

<Table>
<Caption>
                                                              2004   2003   2002
                                                              ----   ----   ----
<S>                                                           <C>    <C>    <C>
Discount rate for service and interest......................  5.5%   5.8%   5.8%
Expected rate of return on plan assets......................  6.0%   6.0%   6.0%
Rate of compensation increase...............................  3.0%   3.0%   3.0%
Discount rate for year-end benefit obligation...............  5.5%   5.5%   5.8%
</Table>

     Estimated future benefit payments, including benefits attributable to
future service, are as follows:

<Table>
<S>                                                           <C>
2005........................................................  $   37
2006........................................................      38
2007........................................................      40
2008........................................................      41
2009........................................................      42
2010-2014...................................................   1,817
</Table>

     The Company's plan target allocations for fiscal 2005 and the weighted
asset allocation of plan assets as of June 30, 2004 and 2003 are as follows:

<Table>
<Caption>
                                                              2005   2004   2003
                                                              ----   ----   ----
<S>                                                           <C>    <C>    <C>
Debt securities.............................................  59%    62%    79%
Equity securities...........................................  25%    21%    20%
Other.......................................................  16%    17%     1%
</Table>

     The expected long-term rate of return for the plan's total assets is based
on the expected return of each of the above categories, weighted based on the
target allocation for each class. Equity securities are expected to return 7.5%
over the long-term, while debt securities are expected to return 5.5%.

     The Company assumed the liability for the plan during 2002 as part of the
MFA acquisition from Pfizer.

9.  INCOME TAXES

<Table>
<Caption>
                                                            2004     2003      2002
                                                           ------   -------   -------
<S>                                                        <C>      <C>       <C>
Income (loss) before income taxes........................  $2,920   $(4,605)  $(3,089)
                                                           ======   =======   =======
Current tax provision (benefit)..........................  $1,502   $(1,228)  $  (920)
Deferred tax provision (benefit).........................     112       142      (178)
                                                           ------   -------   -------
Provision (benefit) for income taxes.....................  $1,614   $(1,086)  $(1,098)
                                                           ======   =======   =======
</Table>

     Reconciliations of the statutory income tax rate to the Company's effective
tax rate are:

<Table>
<Caption>
                                                              2004   2003    2002
                                                              ----   -----   -----
                                                               %       %       %
<S>                                                           <C>    <C>     <C>
Statutory income tax rate...................................  34.0   (34.0)  (40.0)
Expenses with no tax benefit................................  16.9     5.4     6.0
Changes in valuation allowance..............................  (6.5)    4.1      --
Other.......................................................  10.9     0.9    (1.5)
                                                              ----   -----   -----
Effective income tax rate...................................  55.3   (23.6)  (35.5)
                                                              ====   =====   =====
</Table>

                                       F-94
<PAGE>
                       PHIBRO ANIMAL HEALTH SA (BELGIUM)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     The tax effects of significant temporary differences that comprise deferred
tax assets and deferred tax liabilities at June 30, 2004 and 2003 were:

<Table>
<Caption>
                                                               AS OF JUNE 30,
                                                              -----------------
                                                               2004      2003
                                                              -------   -------
<S>                                                           <C>       <C>
Deferred tax assets:
  Depreciation..............................................  $     7   $     7
  Inventory.................................................      615       615
  Net operating loss carry forwards.........................       --       191
  Other.....................................................       97        11
                                                              -------   -------
                                                                  719       824
  Less: valuation allowance.................................       --      (191)
                                                              -------   -------
                                                                  719       633
                                                              -------   -------
Deferred tax liabilities:
  Depreciation..............................................   (1,022)     (990)
  Other.....................................................   (1,143)     (977)
                                                              -------   -------
                                                               (2,165)   (1,967)
                                                              -------   -------
Net deferred tax liability..................................  $(1,446)  $(1,334)
                                                              =======   =======
</Table>

     Deferred taxes are included in the following line items on the Company's
balance sheets:

<Table>
<Caption>
                                                               AS OF JUNE 30,
                                                              -----------------
                                                               2004      2003
                                                              -------   -------
<S>                                                           <C>       <C>
Prepaid expenses and other current assets...................  $   315   $   315
Other liabilities...........................................   (1,761)   (1,649)
                                                              -------   -------
                                                              $(1,446)  $(1,334)
                                                              =======   =======
</Table>

     The Company incurred losses in 2003 and prior years and assessed the
likelihood of recovering net deferred tax assets, which resulted in the
recording of valuation allowances. In 2004 the Company had taxable income and
utilized the net operating loss carry forwards from 2003 and prior years. The
Company will continue to evaluate the likelihood of recoverability of the
remaining deferred tax assets based upon actual and expected operating
performance.

10.  SUBSEQUENT EVENTS

 ISSUANCE OF ADDITIONAL 13% SENIOR SECURED NOTES:

     On December 21, 2004, PAHC completed a private offering of 22,491
additional units consisting of $18,207 13% Senior Secured Notes due 2007 of PAHC
(the "U.S. Notes") and $4,284 13% Senior Secured Notes due 2007 (the "Dutch
Notes" and together with the U.S. Notes, the "Additional Notes") of Philipp
Brothers Netherlands III B.V., the direct parent of the Company (the "Dutch
Issuer" and together with PAHC, the "Issuers"). The Additional Notes were issued
under the Indenture dated October 21, 2003, as amended and supplemented (the
"Indenture") under which the Issuers previously issued 105,000 units consisting
of $85,000 aggregate principal amount of U.S. Notes and $20,000 aggregate
principal amount of Dutch Notes. The proceeds from the sale of the Additional
Notes will be used to refinance a portion of PAHC's indebtedness under its
domestic senior credit facility.

                                       F-95
<PAGE>
                       PHIBRO ANIMAL HEALTH SA (BELGIUM)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

  SALE OF BELGIUM PLANT:

     On December 16, 2004 the Company entered into an agreement with
GlaxoSmithKline Biologicals ("GSK") to sell to GSK substantially all of the
Company's facilities in Rixensart, Belgium ("the Belgium Plant") as follows
(U.S. dollar amounts at the December 16, 2004 exchange rate): (i) the transfer
of substantially all of the land and buildings and certain equipment of the
Company at the Belgium Plant, as well as the industrial activities and
intellectual property relating to certain solvent technology of the Company for
a purchase price of EUR 6,200 ($8,238), payable at closing; (ii) the transfer to
GSK of a majority of the employees of the Belgium Plant and the corresponding
responsibility for statutory severance obligations; (iii) GSK agreeing to be
responsible for costs of removal, by demolition or otherwise, certain buildings
not to be used by it, but for the Company to reimburse GSK up to a maximum of
EUR 700 ($930) for such removal costs; (iv) in recognition of the benefits to
PAHC from the proposed transaction, the Company agreeing to pay to GSK EUR 1,500
($1,993) within six months from the closing date, EUR 1,500 ($1,993) within
eighteen months from the closing date, EUR 1,500 ($1,993) within thirty months
from the closing date, and EUR 500 ($664) within forty-two months from the
closing date; (v) the Company retaining certain excess land (valued at
approximately EUR 400 ($531)) and being able to sell such land for its own
account; (vi) the Company being responsible for certain plant closure costs and
legally required severance indemnities in connection with workforce reductions,
estimated in total to be EUR 7,700 ($10,231), of which an amount estimated to be
approximately EUR 4,100 ($5,448) would be payable at or around the closing and
an aggregate amount so estimated to be approximately EUR 3,600 ($4,783) would be
payable over periods up to thirteen years; and (vii) the Company retaining any
or all equipment at the Belgium Plant, and being able to sell such equipment for
the account of the Company or transfer such equipment, together with other
assets and rights related to the production of virginiamycin, to Philipp
Brothers Brasil Holdings Ltda., a related party, which owns a facility in
Guarulhos, Brazil or in connection with alternative production arrangements.

     The foregoing transactions and agreements are subject to a closing that is
expected to occur no earlier than July 1, 2005 nor later than June 30, 2006.

     The Dutch Notes and related guarantees are secured by a mortgage on the
Belgium Plant which will be released in connection with the closing of the sale
of the Belgium Plant to GSK.

     The carrying value of the Belgium Plant and related assets at September 30,
2004 is EUR 13,908 ($18,480). The Company is in the process of evaluating the
accounting for this transaction and will record an impairment loss, if required,
in the second quarter ended December 31, 2004. In addition, the Company will
expense severance, plant closure and other related costs in the period in which
such liabilities are incurred in accordance with Statement of Financial
Accounting Standards No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities". As of the date of this filing, estimates of such costs are
in process of being determined.

11.  FINANCIAL INSTRUMENTS

     Financial instruments that potentially subject the Company to credit risk
consist principally of cash and trade receivables. The Company places its cash
with high quality financial institutions. The Company sells to customers in a
variety of industries, markets and countries. Concentrations of credit risk with
respect to receivables arising from these sales are limited due to the large
number of customers comprising the Company's customer base. Ongoing credit
evaluations of customers' financial conditions are performed and, generally, no
collateral is required. The Company maintains appropriate reserves for
uncollectible receivables.

     The carrying amounts of cash, trade receivables and trade payables is
considered to be representative of their fair value because of their short
maturities.

                                       F-96
<PAGE>

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

     The following summaries are subject to the complete text of the statutes
and organizational documents of the Registrants described below and are
qualified in their entirety by reference thereto.

     Phibro Animal Health Corporation and Phibro Chemicals, Inc. are New York
corporations. Phibro-Tech, Inc., Prince Agriproducts, Inc., Phibro Animal Health
Holdings, Inc., and Phibro Animal Health U.S., Inc. are Delaware corporations.
Phibrochem, Inc. and C P Chemicals, Inc. are New Jersey Corporations. Western
Magnesium Corp. is a California corporation.

     1. Phibro Animal Health Corporation and Phibro Chemicals, Inc., each a New
York corporation.

     Under Sections 721 through 725 of the New York Business Corporation Law
(the "NYBCL"), a corporation has broad powers to indemnify its directors,
officers and other employees. These sections (i) provide that the statutory
indemnification and advancement of expenses provisions of the NYBCL are not
exclusive, provided that no indemnification may be made to or on behalf of any
director or officer if a judgment or other final adjudication adverse to the
director or officer establishes that his or her acts were committed in bad faith
or were the result of active and deliberate dishonesty and were material to the
cause of action so adjudicated, or that he or she personally gained in fact a
financial profit or other advantage to which he or she was not legally entitled,
(ii) establish procedures for indemnification and advancement of expenses that
may be contained in the certificate of incorporation or by-laws, or, when
authorized by either of the foregoing, set forth in a resolution of the
shareholders or directors or an agreement providing for indemnification and
advancement of expenses, (iii) apply a single standard for statutory
indemnification for third-party and derivative suits by providing that
indemnification for third-party and derivative suits by providing that
indemnification is available if the director or officer acted in good faith, for
a purpose which he or she reasonably believed to be in the best interests of the
corporation, and in criminal actions, had no reasonable cause to believe that
his or her conduct was unlawful and (iv) permit the advancement of litigation
expenses upon receipt of an undertaking to repay such advance if the director or
officer is ultimately determined not to be entitled to indemnification or to the
extent the expenses advanced exceed the indemnification to which the director or
officer is entitled. Section 726 of the NYBCL permits the purchase of insurance
to indemnify a corporation or its officers and directors to the extent
permitted.

     Article Sixth of the Certificate of Incorporation of Phibro Animal Health
Corporation provides that each and every person who may become a director of the
corporation shall be relieved from any liability that might exist through
contracting or dealing with the corporation for the benefit of himself or any
firm, association or corporation in which he is or may be in any manner
interested, provided that the interest in any such contract or transaction of
any such director shall be fully disclosed. Article Sixth further provides that
the corporation shall indemnify each director and officer against expenses
reasonably incurred by him in connection with any action, suit, or proceeding to
which he may be made a party by reason of his being or having been a director or
officer of the corporation, to the fullest extent permitted by the NYBCL.
Article Eighth provides that, to the fullest extent permitted by the NYBCL, the
personal liability of directors of the corporation to the corporation or its
shareholders for damages for any breach of duty in such capacity is eliminated.

     Article VI of the By-Laws of Phibro Chemicals, Inc. provides that, to the
fullest extent permitted by the laws of the State of New York, a director of the
corporation shall not be liable to the corporation or the shareholders for
monetary damages for breach of fiduciary duty as director. Article VI further
provides that each person who was or is made a party or is threatened to be made
a party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "proceeding"), by reason of the
fact that he or she, or a person of whom he or she is the legal representative,
is or was a director or officer of the corporation or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a

                                       II-1
<PAGE>

director, officer, employee or agent in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the corporation to the fullest extent authorized by the laws of the State of New
York, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the corporation
to provide broader indemnification rights than said law permitted the
corporation to provide prior to such amendment), against all expense, liability
and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith and such indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however that the corporation shall indemnify any such
person seeking indemnification in connection with a proceeding initiated by such
person only if such proceeding was authorized by the Board of Directors of the
corporation. Such right to indemnification shall be a contract right and shall
include the right to be paid by the corporation the expense incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that if the laws of the State of New York require, the payment of such
expenses incurred by a director or officer in advance of the final disposition
of a proceeding shall be made only upon delivery to the corporation of an
undertaking, by or on behalf of such director or officer, to repay all amounts
so advanced if it shall ultimately be determined that such director or officer
is not entitled to be indemnified by the corporation. The corporation may
maintain insurance, at its expense, to protect itself and any director, officer,
employee or agent of the corporation or another corporation, partnership, joint
venture, trust or other enterprise against any such expense, liability or loss,
whether or not the corporation would have the power to indemnify such person
against such expense, liability or loss under the laws of the State of New York.

     2. Phibro-Tech, Inc., Prince Agriproducts, Inc., Phibro Animal Health
Holdings, Inc., and Phibro Animal Health U.S., Inc., each a Delaware
corporation.

     Section 145 of the Delaware General Corporation Law ("DGCL") provides
generally and in pertinent part that a Delaware corporation may indemnify its
directors and officers who are or were party or are threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, other than an action
by or in the right of the corporation, by reason of the fact that they are or
were a director, officer, employee or agent of the corporation, or are or were
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by them in
connection with such action, suit or proceeding if they acted in good faith and
in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful.
Section 145 further provides that a Delaware corporation may indemnify its
directors and officers who were or are a party or are threatened to be a made
party to any threatened, pending or completed action or suit by or in the right
of the corporation to procure a judgment in its favor by reason of the fact that
they are or were a director, officer, employee or agent of the corporation, or
are or were serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by them in connection with the defense or settlement of such
action or suit if they acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.

     Section 102(b)(7) of the DGCL provides that a certificate of incorporation
may contain a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director provided that such provision shall not eliminate
or limit the liability of a director (i) for any breach of the director's duty
of loyalty to the corporation or its stockholders,

                                       II-2
<PAGE>

(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL
(relating to liability for unauthorized acquisitions or redemptions of, or
dividends on, capital stock) or (iv) for any transaction from which the director
derived an improper personal benefit.

PHIBRO-TECH, INC.

     Article Nine of the Certificate of Incorporation of Phibro-Tech, Inc.
provides that the corporation shall indemnify, to the full extent permitted by
Section 145 of the DGCL, as amended from time to time, all persons whom it may
indemnify pursuant thereto.

     Article V of the By-Laws of Phibro-Tech, Inc. provides that the
corporation, to the full extent permitted by the laws of the State of Delaware,
shall indemnify any person who, was or is made a party to or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding
(including any appeal thereof), whether civil, criminal, administrative or
investigative in nature (other than an action by or in the right of the
corporation), by reason of the fact that such person is or was a director or
officer of the corporation, or it at a time when he was a director or officer of
the corporation, is or was serving at the request of, or to represent the
interests of, the corporation as a director, officer, partner, fiduciary,
employee or agent (a "Subsidiary Officer") of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise (and "Affiliated
Entity"), against expenses (including attorneys' fees and disbursements), costs,
judgment, fines, penalties and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interest of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful; provided, however,
that the corporation shall not be obligated to indemnify against any amount paid
in settlement unless the corporation has consented to such settlement, which
consent shall not be unreasonably withheld. The termination or any action suit
or proceeding by judgment, order, settlement or conviction or upon a plea of
nolo contendere or its equivalent shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which such person
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, that such
person had reasonable cause to believe that his or her conduct was unlawful.
Article V further provides that the corporation, to the full extent permitted by
the laws of the State of Delaware, shall indemnify any person who was or is made
a party to or is threatened to be made a party to any threatened, pending or
completed action or suit (including any appeal thereof) brought in the right of
the corporation to procure a judgment in its favor by reason of the fact that
such person is or was a director or officer of the corporation, or, if at a time
when he was a director or officer to the corporation, is or was serving at the
request or, or to represent the interests of, the corporation as a Subsidiary
Officer of an Affiliated Entity against expenses (including attorneys' fees and
disbursements) and costs actually and reasonably incurred by such person in
connection with such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, and except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to the corporation unless, and except to the extent that, the Court of
Chancery of the State of Delaware or the court in which such judgment was
rendered shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses and costs as the
Court of Chancery of the State of Delaware or such other court shall deem
proper. Any indemnification described in the preceding paragraph shall be made
by the corporation only as authorized in the specific case upon a determination
that indemnification is proper under the circumstances because such person has
met the applicable standard as set forth above. Such determination shall be made
(a) by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to the action, suit or proceeding in respect of
which indemnification is sought or by majority vote of the members of a
committee of the Board of Directors composed of at least three members each of
whom is not a party to such action, suit or proceeding, or (b) if such quorum is
not obtainable and/or such a committee is not established or obtainable, or,
even if obtainable, if a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (c) by the stockholders.
Expenses and costs incurred by an officer or director in defending
                                       II-3
<PAGE>

any such action, suit or proceeding may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding upon receipt or an
undertaking by or on behalf of such person to repay such amount if it shall
ultimately be determined that such person is not entitled to be indemnified by
the corporation. In addition, the corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of, or to
represent the interests of, the corporation as a Subsidiary Officer of any
Affiliated Entity, against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of such person's
status as such, whether or not the corporation would have the power to indemnify
such person against such liability under the provisions of Article V or
applicable law.

PRINCE AGRIPRODUCTS, INC.

     Article IX of the Certificate of Incorporation of Prince Agriproducts, Inc.
provides that the corporation shall indemnify each director and officer thereof
against all costs and expenses reasonably incurred by or imposed upon him in
connection with or arising out of any action, suit or proceeding in which he may
be involved or to which he may be made a party by reason of his being or having
been a director of officer of the corporation, except in relation to matters as
to which he shall be finally adjudged in any such action, suit or proceeding to
be liable for negligence or misconduct in the performance of his duty as such
director or officer. In the case of settlement of any such action, suit or
proceeding, such director or officer shall be indemnified by the corporation
against the cost and expense of such settlement, including any amount paid to
the corporation or to such other corporation, reasonably incurred by him, after
and only after (a) the corporation shall have been advised by independent
counsel that such director or officer is not liable for negligence or misconduct
in the performance of his duty as such director or officer in relation to the
matters covered by such action, suit or proceeding, and that such cost and
expense does not substantially exceed the expense which might reasonably be
incurred by such director or officer in conducting such action, suit or
proceeding to a final conclusion, or (b) the holders of a majority of the shares
of the capital stock of the corporation issued and outstanding in the hands of
disinterested persons and entitled to vote shall by vote at any annual meeting
of the stockholders, or at any special meeting called for the purpose, approve
such settlement and the indemnification of such director or officer.
"Disinterested persons" as used therein shall mean any (w) person other than a
director or officer who, at the time, is or may, as such director or officer, be
entitled to indemnification pursuant to the foregoing provisions, (x) any
corporation or organization of which any such person owns of record or
beneficially five per cent (5%) or more of the voting stock, (y) any firm or
association of which any such person is a member, and (z) any spouse, child,
parent, brother or sister or any such stockholder.

PHIBRO ANIMAL HEALTH HOLDINGS, INC.

     Article Eighth of the Certificate of Incorporation of Phibro Animal Health
Holdings, Inc. provides that the corporation shall, to the fullest extent
permitted by law, as the same is now or may hereafter be in effect, indemnity
each person (including the heirs, executors, administrators and other personal
representatives of such person) against expenses, including attorneys' fees,
judgements, fines and amounts paid in settlement, actually and reasonably
incurred by such person in connection with any threatened, pending or completed
suit, action or proceeding (whether civil, criminal, administrative or
investigative in nature or otherwise) in which such person may be involved by
reason of the fact that he or she is or was a director or officer of the
corporation or is or was serving any other incorporated or unincorporated
enterprise in such capacity at the request of the corporation.

     Section 6 of the By-Laws of Phibro Animal Health Holdings, Inc. provides
that Each person who was or is a party or is threatened to be made a party to or
is involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "proceeding"), by reason of the fact that he,
or a person of whom he is the legal representative, is or was a director or
officer of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such proceeding is
alleged action or inaction in an official capacity or in any other capacity
while serving as director, officer, employee or agent, shall be indemnified and
held harmless by the corporation to the fullest

                                       II-4
<PAGE>

extent permitted by the General Corporation Law of Delaware, as amended from
time to time, against all costs, charges, expenses, liabilities and losses
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
such person in connection therewith, and that indemnification shall continue as
to a person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of his heirs, executors and administrators; provided,
however, that, except as provided in section 6.2, the corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by that person, only if that proceeding
(or part thereof) was authorized by the Board. The right to indemnification
conferred in these by-laws shall be a contract right and shall include the right
to be paid by the corporation the expenses incurred in defending any such
proceeding in advance of its final disposition; provided, however, that, if the
General Corporation Law of Delaware, as amended from time to time, requires, the
payment of such expenses incurred by a director or officer in his capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by that person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding shall be made only upon delivery to the corporation
of an undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced, if it shall ultimately be determined that such director or
officer is not entitled to be indemnified under these by-laws or otherwise. The
corporation may, by action of its Board, provide indemnification to employees
and agents of the corporation with the same scope and effect as the foregoing
indemnification of directors and officers.

PHIBRO ANIMAL HEALTH U.S., INC.

     Article Eighth of the Certificate of Incorporation of Phibro Animal Health
U.S., Inc. provides that the corporation shall, to the fullest extent permitted
by law, as the same is now or may hereafter be in effect, indemnity each person
(including the heirs, executors, administrators and other personal
representatives of such person) against expenses, including attorneys' fees,
judgements, fines and amounts paid in settlement, actually and reasonably
incurred by such person in connection with any threatened, pending or completed
suit, action or proceeding (whether civil, criminal, administrative or
investigative in nature or otherwise) in which such person may be involved by
reason of the fact that he or she is or was a director or officer of the
corporation or is or was serving any other incorporated or unincorporated
enterprise in such capacity at the request of the corporation.

     Section 6 of the By-Laws of Phibro Animal Health U.S., Inc. provides that
Each person who was or is a party or is threatened to be made a party to or is
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "proceeding"), by reason of the fact that he,
or a person of whom he is the legal representative, is or was a director or
officer of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such proceeding is
alleged action or inaction in an official capacity or in any other capacity
while serving as director, officer, employee or agent, shall be indemnified and
held harmless by the corporation to the fullest extent permitted by the General
Corporation Law of Delaware, as amended from time to time, against all costs,
charges, expenses, liabilities and losses (including attorneys' fees, judgments,
fines, ERISA excise taxes or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by such person in connection
therewith, and that indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
his heirs, executors and administrators; provided, however, that, except as
provided in section 6.2, the corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
that person, only if that proceeding (or part thereof) was authorized by the
Board. The right to indemnification conferred in these by-laws shall be a
contract right and shall include the right to be paid by the corporation the
expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that, if the General Corporation Law of
Delaware, as amended from time to time, requires, the payment of such expenses
incurred by a director or officer in his capacity as a director or officer (and
not in any other capacity in which service was or is rendered by that person
while a director or officer, including, without limitation, service to an
employee benefit plan) in advance of the final disposition of a proceeding shall
be made only upon delivery to
                                       II-5
<PAGE>

the corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced, if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under these bylaws or
otherwise. The corporation may, by action of its Board, provide indemnification
to employees and agents of the corporation with the same scope and effect as the
foregoing indemnification of directors and officers.

     3. C P Chemicals, Inc. and Phibrochem, Inc, each a New Jersey corporation.

     Section 14A:3-5 of the New Jersey Business Corporation Act ("NJBCA")
provides that a New Jersey business corporation shall have the power to
indemnify a corporate agent against expenses and liabilities in connection with
any proceeding involving such persons by reason of his serving or having served
in such capacity or for such person's acts taken in such capacity as a director,
officer, employee or agent of the corporation if such actions were taken in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and with respect to any criminal
proceeding, if he had no reasonable cause to believe his conduct was unlawful,
provided that any such proceeding is not by or in the right of the corporation.
Section 14A:3-5 further provides that a New Jersey corporation shall have the
power to indemnify its corporate agent against expenses incurred in connection
with any proceeding by or in the right of the corporation to procure a judgment
in its favor which involves such person by reason of his serving or having
served in such capacity, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation.
However, in such proceeding no indemnification shall be provided in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the corporation, unless and only to the extent that the Superior
Court or the court in which such proceeding was brought shall determine upon
application that despite the adjudication of liability, but in view of all
circumstances of the case, such person is fairly and reasonably entitled to
indemnification for such expenses as the Superior Court or such other court
shall deem proper. Section 14A:3-5 defines a "corporate agent" as any person who
is or was a director, officer, employee or agent of the indemnifying corporation
or of any constituent corporation absorbed by the indemnifying corporation in a
consolidation or merger and any person who is or was a director, officer,
trustee, employee or agent of any other enterprise, serving as such at the
request of the indemnifying corporation, or of any such constituent corporation,
or the legal representative of any such director, officer, trustee, employee or
agent. Section 14A:2-7(3) of the NJBCA enables a corporation in its certificate
of incorporation to limit the liability of directors and officers of the
corporation to the corporation or its shareholders. Specifically, the
certificate of incorporation may provide that directors and officers of the
corporation will not be personally liable for money damages for breach of a duty
as a director or an officer, except for any breach of duty based upon an act or
omission (i) in breach of the director's or officer's duty of loyalty to the
corporation or its shareholders, (ii) not in good faith or involving a knowing
violation of law, or (iii) resulting in the receipt by such director of an
improper personal benefit.

C P CHEMICALS, INC.

     Article VII, Section 7 of the By-Laws of C P Chemicals, Inc. provides that
the corporation shall indemnify its officers, directors, employees and agents to
the extent permitted by the General Corporation Law of New Jersey.

PHIBROCHEM, INC.

     Article VII of the By-Laws of Phibrochem, Inc. provides that, to the
fullest extent permitted by the NJBCA as the same exists or may be amended, a
director of the corporation shall not be liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as director.

     Article VII further provides that each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding"), by reason of the fact that he or she, or a person of whom he or
she is the legal representative, is or was a director or officer of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such

                                       II-6
<PAGE>

proceeding is alleged action in an official capacity as a director, officer,
employee or agent or in any other capacity while serving as a director, officer,
employee or agent, shall be indemnified and held harmless by the corporation to
the fullest extent authorized by the NJBCA, as the same exists or may hereafter
be amended (but, in the case of any such amendment, only to the extent that such
amendment permits the corporation to provide broader indemnification rights than
said law permitted the corporation to provide prior to such amendment), against
all expense, liability and loss (including attorneys' fees, judgments, fines,
ERISA excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however that the corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding or part thereof initiated by such person only if such proceeding or
part thereof was authorized by the Board of Directors of the corporation. Such
right to indemnification shall be a contract right and shall include the right
to be paid by the corporation the expenses incurred in defending any such
proceeding in advance of its final disposition; provided, however, that if the
NJBCA requires, the payment of such expenses incurred by a director or officer
in his or her capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding shall be made only upon delivery to the
corporation of an undertaking, by or on behalf of such director or officer, to
repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified by the corporation The
corporation may, by action of its Board of Directors, provide indemnification to
employees and agents of the corporation with the same scope and effect as the
foregoing indemnification of directors and officers.

     Article VII further provides that the corporation may maintain insurance,
at its expense, to protect itself and any director, officer, employee or agent
of the corporation or another corporation, partnership, joint venture, trust or
other enterprise against any such expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against such expense,
liability or loss under the NJBCA.

     4. Western Magnesium Corp., a California corporation.

     Section 317 of the California General Corporation Law provides generally
and in pertinent part that a California corporation may indemnify its directors
and officers against expenses, judgments, fines and settlements actually and
reasonably incurred in connection with any threatened, pending or completed
civil, criminal, administrative or investigative action, other than an action by
or in the right of the corporation, if, in connection with the matters in issue,
they acted in good faith and in a manner the person reasonably believed to be in
the best interests of the corporation and, in the case of a criminal proceeding,
had no reasonable cause to believe the conduct of the person was unlawful.
Section 317 further provides that, in connection with the defense or settlement
of any action by or in the right of the corporation, a California corporation
may indemnify its directors and officers against expenses actually and
reasonably incurred by that person in connection with the defense or settlement
of the action if the person acted in good faith, in a manner the person believed
to be in the best interest of the corporation and its shareholders. Section 317
further provides that a California corporation may grant its directors and
officer additional rights of indemnification through Articles of Incorporation
and By-Laws provisions, and otherwise.

     5. Philipp Brothers Netherlands III B.V.

     Dutch law in general provides that a company organized under Dutch law in
The Netherlands may indemnify its managing directors against managing directors'
liability, provided, however, that such indemnity cannot include; acts of wilful
intent (opzet) by the managing directors; intentional violations of law, gaining
of personal profits or other advantages to which the managing director(s) was
not entitled (including violation of insider trading rules insofar these have
been committed intentionally and whereby the director has relied on internal or
external correct advice).

     Further, under Dutch law, it is uncertain whether such indemnity can cover
liability of a managing director for grossly negligent (grove nalatigheid) or
intentionally reckless (bewuste roekeloosheid) wrongful acts committed by that
managing director. In bankruptcy situations, the indemnity may not always be
upheld
                                       II-7
<PAGE>

in cases where gross negligence can be proven. Furthermore, it is uncertain
whether the indemnity can cover liability of a managing director vis-a-vis the
Company in case of serious fault (ernstig verwijt) on the basis of article 2:9
Dutch Civil Code, but generally speaking leading legal doctrine has taken the
view that granting of an indemnity of internal liability vis-a-vis the Company
on the basis of article 2:9 Dutch Civil Code is not permitted. The criterium of
serious fault relates to the criterium gross negligence.

     6. Phibro Animal Health SA

     Under Belgian law, directors and the statutory auditor may be liable for
damages to the company, a trustee in bankruptcy and third parties in case of
improper performance of their duties, violation of the company's Articles of
Association or the Companies Act, or tortious misconduct. Under certain
circumstances, directors may also be criminally liable. One or more stockholders
holding at least one percent of our common stock or holding shares representing
a fractional value in our capital of at least EUR 1,250,000 can, under certain
conditions provided in the Companies Act, sue the directors and the statutory
auditor derivatively on behalf of the company.

     A simple majority of the stockholders at a duly convened stockholders
meeting may discharge directors and the statutory auditor from liability to the
company relating to the performance of their respective duties after the
presentation of a management report and the annual accounts by the company's
directors and presentation of the statutory auditors' report to the company's
stockholders. This discharge prohibits stockholders who voted in favor of the
discharge from bringing derivative suits on behalf of the company on such
grounds. A general discharge of director or auditor liability does not relieve
such persons from liability to third parties or for violations of the Companies
Act or the Articles of Association. Violations of the Articles of Association
may only be discharged if specifically disclosed to the stockholders.
Notwithstanding a general discharge, directors and auditors may be held liable
in the performance of their duties for the company, if the stockholders were not
aware of the true situation of the company at the time the discharge was voted.

                                       II-8
<PAGE>

ITEM 21.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

<Table>
<Caption>
EXHIBIT NO.                      DESCRIPTION OF EXHIBIT
- -----------                      ----------------------
<S>           <C>
   3.1        Composite Certificate of Incorporation of Phibro Animal
              Health Corporation(14)
   3.2        By-laws of Phibro Animal Health Corporation(1)
   3.3        Certificate of Incorporation of Phibro-Tech, Inc.(1)
   3.4        By-Laws of Phibro-Tech, Inc.(1)
   3.5        Certificate of Incorporation of C P Chemicals, Inc.(19)
   3.6        By-Laws of C P Chemicals, Inc.(1)
   3.7        Certificate of Incorporation of Prince Agriproducts, Inc.(1)
   3.8        By-Laws of Prince Agriproducts, Inc.(1)
   3.9        Certificate of Incorporation of Phibro Animal Health
              Holdings, Inc.(19)
   3.10       By-Laws of Phibro Animal Health Holdings, Inc.(19)
   3.11       Certificate of Incorporation of Phibro Animal Health U.S.,
              Inc.(19)
   3.12       By-Laws of Phibro Animal Health U.S., Inc.(19)
   3.13       Certificate of Incorporation of Phibrochem, Inc.(1)
   3.15       By-Laws of Phibrochem, Inc.(1)
   3.16       Certificate of Incorporation of Phibro Chemicals, Inc.(1)
   3.17       By-Laws of Phibro Chemicals, Inc.(1)
   3.18       Certificate of Incorporation of Western Magnesium Corp.(1)
   3.19       By-Laws of Western Magnesium Corp.(1)
   3.20       Articles of Association and Deed of Incorporation of Philipp
              Brothers Netherlands III B.V.(19)
   3.21       Articles of Association of Phibro Animal Health SA.(19)
   4.1        Indenture, dated as of June 11, 1998, among Registrant, the
              Guarantors named therein and The Chase Manhattan Bank, as
              trustee, relating to the 9 7/8% Senior Subordinated Notes
              due 2008 of Registrant, and exhibits thereto, including Form
              of 9 7/8% Senior Subordinated Note due 2008 of Company.(1)
   4.1.1      First Supplemental Indenture, dated as of January 15, 1999,
              among Registrant, the Guarantors named therein and The Chase
              Manhattan Bank, as trustee, relating to the 9 7/8% Senior
              Subordinated Notes due 2008 of Registrant.(10)
   4.1.2      Second Supplemental Indenture, dated as of March 19, 2003,
              among Registrant, the Guarantors named therein and JPMorgan
              Chase Bank, as trustee, relating to the 9 7/8% Senior
              Subordinated Notes due 2008 of Registrant.(10)
   4.1.3      Third Supplemental Indenture, dated as of June 10, 2003,
              among Registrant, the Guarantors named therein and JPMorgan
              Chase Bank, as trustee, relating to the 9 7/8% Senior
              Subordinated Notes due 2008 of Registrant.(10)
   4.1.4      Fourth Supplemental Indenture, dated as of October 1, 2003,
              among Registrant, the Guarantors named therein and JPMorgan
              Chase Bank, as trustee, relating to the 9 7/8% Senior
              Subordinated Notes due 2008 of Registrant.(11)
   4.1.5      Fifth Supplemental Indenture, dated as of October 21, 2003,
              among Registrant, the Guarantors named therein and JPMorgan
              Chase Bank, as trustee, relating to the 9 7/8% Senior
              Subordinated Notes due 2008 of Registrant.(12)
   4.1.6      Sixth Supplemental Indenture, dated as of June 25, 2004,
              among Registrant, the Guarantors named therein and JPMorgan
              Chase Bank, as trustee, relating to the 9 7/8% Senior
              Subordinated Notes due 2008 of Registrant.(16)
   4.2        Indenture, dated as of October 21, 2003, by and among Phibro
              Animal Health Corporation and Philipp Brothers Netherlands
              III B.V., as Issuers, the Guarantors named therein, and HSBC
              Bank USA, as Trustee and Collateral Agent.(13)
</Table>

                                       II-9
<PAGE>

<Table>
<Caption>
EXHIBIT NO.                      DESCRIPTION OF EXHIBIT
- -----------                      ----------------------
<S>           <C>
   4.2.1      First Supplemental Indenture, dated as of June 25, 2004, by
              and among Phibro Animal Health Corporation and Philipp
              Brothers Netherlands III B.V., as Issuers, the Guarantors
              named therein, and HSBC Bank USA, National Association as
              Trustee and Collateral Agent.(16)
   4.2.2      Second Supplemental Indenture, dated as of December 8, 2004,
              by and among Phibro Animal Health Corporation and Philipp
              Brothers Netherlands III B.V., as Issuers, the Guarantors
              named therein, and HSBC Bank USA, National Association as
              Trustee and Collateral Agent.(18)
              Certain instruments which define the rights of holders of
              long-term debt of Registrant and its consolidated
              subsidiaries have not been filed as Exhibits to this Report
              since the total amount of securities authorized under any
              such instrument does not exceed 10% of the total assets of
              Registrant and its subsidiaries on a consolidated basis, as
              of June 30, 2004. For a description of such indebtedness,
              see Note 8 of Notes to Consolidated Financial Statements.
              Registrant 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 & Peskoe LLP.(20)
   5.2        Opinion of Allen & Overy LLP.(20)
   5.3        Opinion of Allen & Overy LLP.(20)
  10.1        Manufacturing and Supply Agreement, dated as of the 12th day
              of May 2004, by and between Merial Limited, Koffolk, Ltd.,
              and Phibro Animal Health Corporation.(20)
  10.2        Lease, dated September 27, 2004 between Phibro Animal Health
              Corporation and Hartz Mountain Industries, Inc.(19)
  10.3        Lease, dated June 30, 1995, between First Dice Road Co. and
              Phibro-Tech, Inc., as amended May 1998.(1)
  10.4        Lease, dated December 24, 1981, between Koffolk (1949) Ltd.
              and Israel Land Administration.(1)
  10.5        Master Lease Agreement, dated February 27, 1998, between
              General Electric Capital Corp., Registrant and Phibro-Tech,
              Inc.(1)
  10.6        Stockholders Agreement, dated December 29, 1987, by and
              between Registrant, Charles H. Bendheim, Jack C. Bendheim
              and Marvin S. Sussman.(1)
  10.7        Employment Agreement, dated December 29, 1987, by and
              between Phibro Animal Health Corporation and Marvin S.
              Sussman.(1)++
  10.8        Stockholders Agreement, dated February 21, 1995, between
              James O. Herlands and Phibro-Tech, Inc., as amended as of
              June 11, 1998.(1)
  10.9        Form of Severance Agreement, dated as of February 21, 1995,
              between Phibro Animal Health Corporation and James O.
              Herlands.(1)++
  10.10       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.(1)
  10.11       Philipp Brothers Chemicals, Inc. Retirement Income and
              Deferred Compensation Plan Trust, dated as of January 1,
              1994, by and between Registrant 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, dated
              March 18, 1994 "Retirement Income and Deferred Compensation
              Plan").(1)++
  10.11.1     First, Second and Third Amendments to Retirement Income and
              Deferred Compensation Plan.(2)++
  10.12       Form of Executive Income Deferred Compensation Agreement,
              each dated March 11, 1990, by and between Registrant and
              each of Jack Bendheim, James Herlands and Marvin
              Sussman.(1)++
  10.13       Form of Executive Income Split Dollar Agreement, each dated
              March 1, 1990, by and between Registrant and each of Jack
              Bendheim, James Herlands and Marvin Sussman.(1)++
  10.14       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.(1)
</Table>

                                      II-10
<PAGE>

<Table>
<Caption>
EXHIBIT NO.                      DESCRIPTION OF EXHIBIT
- -----------                      ----------------------
<S>           <C>
  10.15       Agreement for Transfer of Ownership, dated as of June 8,
              2000, between C. P. Chemicals, Inc. ("CP") and the Township
              of Woodbridge ("Township"), and related Environmental
              Indemnification Agreement, between CP and Township, and
              Lease, between Township and CP.(2)
  10.16       Stockholders' Agreement, dated as of January 5, 2000, among
              shareholders of Penick Holding Company ("PHC"), and
              Certificate of Incorporation of PHC and Certificate of
              Designation, Preferences and Rights of Series A Redeemable
              Cumulative Preferred Stock of PHC.(2)
  10.17       Asset Purchase Agreement, dated as of September 28, 2000,
              among Pfizer, Inc., the Asset Selling Corporations (named
              therein) and Registrant, and various exhibits and certain
              Schedules thereto.(3)+
  10.17.1     Amendment, dated August 11, 2003 to Asset Purchase
              Agreement, dated as of September 28, 2000, among Pfizer,
              Inc., the Asset Selling Corporations (named therein) and
              Registrant.(10)
  10.18       Stock Purchase Agreement, dated as of November 30, 2000,
              between Registrant and the Purchasers (as defined
              therein).(4)
  10.19       Stockholders' Agreement, dated as of November 30, 2000,
              among Registrant, the Investor Stockholders (as defined
              therein) and Jack C. Bendheim.(4)
  10.20       United States Asset Purchase Agreement between Phibro-Tech,
              Inc. and Nufarm, Inc. dated as of May 1, 2001.(5)
  10.20.1     Amendment No. 1 to United States Asset Purchase Agreement
              between Phibro-Tech, Inc. and Nufarm, Inc. dated as of June
              14, 2001.(6)
  10.21       Supply Agreement between Phibro-Tech, Inc. and Nufarm, Inc.
              dated as of May 1, 2001.(5)
  10.22       License Agreement between Phibro-Tech, Inc. and Nufarm, Inc.
              dated as of May 1, 2001.(5)
  10.23       Management and Advisory Services Agreement dated November
              30, 2000 between Registrant and Palladium Equity Partners,
              L.L.C.(7)++
  10.24       Employment Agreement, dated May 28, 2002, by and between
              Registrant and Gerald K. Carlson.(8)++
  10.25       Consulting Agreement dated as of November 1, 2004, by and
              between Phibro Animal Health Corporation and David
              McBeath.(19)++
  10.26       Stock Purchase Agreement, dated August 14, 2003, by and
              between Registrant and Cemex, Inc.(9)
  10.27       Loan and Security Agreement, dated October 21, 2003, by and
              among, the lenders identified on the signature pages
              thereto, Wells Fargo Foothill, Inc., and Phibro Animal
              Health Corporation ("Parent), and each of Parent's
              Subsidiaries identified on the signature pages thereto.(13)
  10.27.1     Amendment Number One to Loan and Security Agreement dated
              November 14, 2003.(12)
  10.27.2     Amendment Number Two to Loan and Security Agreement dated
              April 29, 2004.(14)
  10.27.3     Amendment Number Three to Loan and Security Agreement dated
              September 24, 2004.(16)
  10.27.4     Amendment Number Four to Loan and Security Agreement dated
              December 20, 2004.(18)
  10.28       Intercreditor and Lien Subordination Agreement, dated as of
              October 21, 2003, made by and among Wells Fargo Foothill,
              Inc., HSBC Bank USA, Phibro Animal Health Corporation ("Par-
              ent") and those certain subsidiaries of the Parent party
              thereto.(12)
  10.28.1     Amendment One to Intercreditor Agreement dated December 20,
              2004.(18)
  10.29       Purchase and Sale Agreement dated as of December 26, 2003 by
              and among Phibro Animal Health Corporation ("PAHC"), Prince
              MFG, LLC ("Prince MFG"), The Prince Manufacturing Company
              ("Prince" and together with PAHC and Prince MFG, the "Phibro
              Parties"), Palladium Equity Partners II, L.P. ("PEP II"),
              Palladium Equity Partners II-A, L.P., ("PEP II-A"),
              Palladium Equity Investors II, L.P. ("PEI II", and together
              with PEP II and PEP II-A, the "Investor Stockholders", and
              Prince Mineral Company, Inc. ("Buyer")(15)
  10.30       Environmental Indemnification Agreement dated as of December
              26, 2003 between the Phibro Parties and Buyer.(15)
  10.31       Amendment to Stockholders Agreement dated as of December 26,
              2003 between PAHC, the Investor Stockholders and Jack
              Bendheim.(15)
</Table>

                                      II-11
<PAGE>

<Table>
<Caption>
EXHIBIT NO.                      DESCRIPTION OF EXHIBIT
- -----------                      ----------------------
<S>           <C>
  10.32       Advisory Fee Agreement dated as of December 26, 2003 between
              Buyer and PAHC.(15)
  10.33       Purchase Agreement by and between Phibro Animal Health SA
              and Glaxosmithkline Biologicals SA, dated December 16,
              2004.(20)
  12          Computation of Ratio of Earnings to Fixed Charges.(19)
  21          List of Subsidiaries.(19)
  23.1        Consent of PricewaterhouseCoopers LLP.(19)
  23.2        Consent of Golenbock Eiseman Assor Bell & Peskoe LLP
              (included in Exhibit 5.1).(20)
  23.3        Consent of Allen & Overy LLP (included in Exhibit 5.2).(20)
  23.4        Consent of Allen & Overy LLP (included in Exhibit 5.3).(20)
  24.1        Powers of Attorney (included on signature pages hereof).
  25.1        Statement of Eligibility of HSBC Bank USA, National
              Association on Form T-1.(19)
  99.1        Form of Letter of Transmittal.(20)
  99.2        Form of Notice of Guaranteed Delivery.(20)
  99.3        Form of Letter to Holders of Units.(20)
  99.4        Form of Letter to Brokers, Dealers, Commercial Banks, Trust
              Companies and Other Nominees Concerning Offer For All
              Outstanding.(20)
  99.5        Form of Letter to Clients Concerning Offer For All
              Outstanding Units.(20)
  99.6        Guidelines for Certification of Taxpayer Identification
              Number on Substitute Form W-9.(20)
</Table>

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

 (1) Filed as an Exhibit to the Registrant's Registration Statement on Form S-4,
     No. 333-64641.

 (2) Filed as an Exhibit to the Registrant's Annual Report on Form 10-K for the
     fiscal year ended June 30, 2000.

 (3) Filed as an Exhibit to the Registrant's Report on Form 10-Q for the quarter
     ended September 30, 2000.

 (4) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
     November 30, 2000.

 (5) Filed as an Exhibit to the Registrant's Report on Form 10-Q for the quarter
     ended March 31, 2001.

 (6) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
     June 14, 2001.

 (7) Filed as an Exhibit to the Registrant's Annual Report on Form 10-K for the
     fiscal year ended June 30, 2001.

 (8) Filed as an Exhibit to the Registrant's Annual Report on Form 10-K for the
     fiscal year ended June 30, 2002.

 (9) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
     September 11, 2003, as amended by the Registrant's Form 8-K/A dated June 2,
     2004.

(10) Filed as an Exhibit to the Registrant's Annual Report on Form 10-K for the
     fiscal year ended June 30, 2003.

(11) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
     October 2, 2003.

(12) Filed as an Exhibit to the Registrant's Report on Form 10-Q for the quarter
     ended September 30, 2003.

(13) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
     October 31, 2003.

(14) Filed as an Exhibit to the Registrant's Report on Form 10-Q for the quarter
     ended March 31, 2004.

(15) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
     January 12, 2004.

(16) Filed as an Exhibit to the Registrant's Annual Report on Form 10-K for the
     fiscal year ended June 30, 2004.

(17) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
     December 9, 2004.

(18) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
     December 23, 2004.

(19) Filed herewith.

                                      II-12
<PAGE>

(20) To be filed by amendment.

 (+) A request for confidential treatment has been granted for portions of such
     document. Confidential portions have been omitted and furnished separately
     to the SEC in accordance with Rule 406(b).

(++) This Exhibit is a management compensatory plan or arrangement.

ITEM 22.  UNDERTAKINGS.

     (a) The undersigned registrant hereby undertakes:

          (1) To file, during any period in which offers or sales are being
     made, a post-effective amendment to this registration statement:

             (i) To include any prospectus required by section 10(a)(3) of the
        Securities Act of 1933;

             (ii) To reflect in the prospectus any facts or events arising after
        the effective date of the registration statement (or the most recent
        post-effective amendment thereof) which, individually or in the
        aggregate, represent a fundamental change in the information in the
        registration statement. Notwithstanding the foregoing, any increase or
        decrease in volume of securities offered (if the total dollar value of
        securities offered would not exceed that which was registered) and any
        deviation from the low or high end of the estimated maximum offering
        range may be reflected in the form of prospectus filed with the
        Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
        volume and price represent no more than a 20% change in the maximum
        aggregate offering price set forth in the "Calculation of Registration
        Fee" table in the effective registration statement;

             (iii) To include any material information with respect to the plan
        of distribution not previously disclosed in the registration statement
        or any material change to such information in the registration
        statement;

          (2) That, for the purpose of determining any liability under the
     Securities Act of 1933, each such post-effective amendment shall be deemed
     to be a new registration statement relating to the securities offered
     therein, and the offering of such securities at that time shall be deemed
     to be the initial bona fide offering thereof.

          (3) To remove from registration by means of a post-effective amendment
     any of the securities being registered which remain unsold at the
     termination of the offering.

     (b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

     (c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

                                      II-13
<PAGE>

     (d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.

     (e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

                                      II-14
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the registrant
has caused this registration statement to be signed by the undersigned,
thereunto duly authorized, in the city of Ridgefield Park, State of New Jersey
on January 14, 2005.

                                          PHIBRO ANIMAL HEALTH CORPORATION

                                          By:     /s/ JACK C. BENDHEIM
                                            ------------------------------------
                                                      Jack C. Bendheim
                                                   Chairmain of the Board

                                          By:     /s/ GERALD K. CARLSON
                                            ------------------------------------
                                                     Gerald K. Carlson
                                                  Chief Executive Officer

     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Jack C. Bendheim and Gerald K. Carlson,
severally, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place or stead, in any
and all capacities, to sign the within Registration Statement and any and all
amendments thereto, and to file the same, and all exhibits thereto, and any
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of the
registrant in the capacities and on the dates indicated.

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

        /s/ GERALD K. CARLSON                 Chief Executive Officer        January 14, 2005
- --------------------------------------     (Principal Executive Officer)
          Gerald K. Carlson

         /s/ JACK C. BENDHEIM             Director, Chairman of the Board    January 14, 2005
- --------------------------------------     (Principal Executive Officer)
           Jack C. Bendheim

        /s/ RICHARD G. JOHNSON                Chief Financial Officer        January 14, 2005
- --------------------------------------   (Principal Financial Officer and
          Richard G. Johnson               Principal Accounting Officer)

        /s/ MARVIN S. SUSSMAN                        Director                January 14, 2005
- --------------------------------------
          Marvin S. Sussman

        /s/ JAMES O. HERLANDS                        Director                January 14, 2005
- --------------------------------------
          James O. Herlands

          /s/ SAM GEJDENSON                          Director                January 14, 2005
- --------------------------------------
            Sam Gejdenson
</Table>

                                      II-15
<PAGE>

     Pursuant to the requirements of the Securities Act of 1933, the registrant
has caused this registration statement to be signed by the undersigned,
thereunto duly authorized, in the city of Ridgefield Park, State of New Jersey
on January 14, 2005.

                                          PHILIPP BROTHERS NETHERLANDS III B.V.

                                          By:     /s/ JACK C. BENDHEIM
                                            ------------------------------------
                                                      Jack C. Bendheim
                                                     Managing Director

                                          By:    /s/ JOSEPH KATZENSTEIN
                                            ------------------------------------
                                                     Joseph Katzenstein
                                                     Managing Director

     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jack C. Bendheim his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place or stead, in any and all capacities, to sign the
within Registration Statement and any and all amendments thereto, and to file
the same, and all exhibits thereto, and any other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of the
registrant in the capacities and on the dates indicated.

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

               /s/ JACK C. BENDHEIM                    Managing Director (Principal      January 14, 2005
 ------------------------------------------------      Executive Officer, Principle
                 Jack C. Bendheim                     Financial Officer and Principal
                                                            Accounting Officer)


              /s/ JOSEPH KATZENSTEIN                         Managing Director           January 14, 2005
 ------------------------------------------------
                Joseph Katzenstein
</Table>

                                      II-16
<PAGE>

     Pursuant to the requirements of the Securities Act of 1933, the registrant
has caused this registration statement to be signed by the undersigned,
thereunto duly authorized, in the city of Ridgefield Park, State of New Jersey
on January 14, 2005.

                                          PHIBRO-TECH, INC.

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

     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jack C. Bendheim, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place or stead, in any and all capacities, to sign the
within Registration Statement and any and all amendments thereto, and to file
the same, and all exhibits thereto, and any other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of the
registrant in the capacities and on the dates indicated.

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

               /s/ JACK C. BENDHEIM                         Director and Chief           January 14, 2005
 ------------------------------------------------      Executive Officer (Principal
                 Jack C. Bendheim                           Executive Officer)


              /s/ MARVIN S. SUSSMAN                              Director                January 14, 2005
 ------------------------------------------------
                Marvin S. Sussman


              /s/ JAMES O. HERLANDS                              Director                January 14, 2005
 ------------------------------------------------
                James O. Herlands


               /s/ W. DWIGHT GLOVER                              President               January 14, 2005
 ------------------------------------------------
                 W. Dwight Glover


               /s/ DAVID C. STOBEK                    Vice President, Chief Financial    January 14, 2005
 ------------------------------------------------      Officer (Principle Financial
                David C. Storbeck                    Officer and Principal Accounting
                                                                 Officer)
</Table>

                                      II-17
<PAGE>

     Pursuant to the requirements of the Securities Act of 1933, the registrant
has caused this registration statement to be signed by the undersigned,
thereunto duly authorized, in the city of Ridgefield Park, State of New Jersey
on January 14, 2005.

                                          PRINCE AGRIPRODUCTS, INC.

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

     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jack C. Bendheim, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place or stead, in any and all capacities, to sign the
within Registration Statement and any and all amendments thereto, and to file
the same, and all exhibits thereto, and any other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of the
registrant in the capacities and on the dates indicated.

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

               /s/ JACK C. BENDHEIM                    Director, President and Chief     January 14, 2005
 ------------------------------------------------      Executive Officer (Principal
                 Jack C. Bendheim                           Executive Officer)


              /s/ MARVIN S. SUSSMAN                       Director and President         January 14, 2005
 ------------------------------------------------
                Marvin S. Sussman


              /s/ JAMES O. HERLANDS                              Director                January 14, 2005
 ------------------------------------------------
                James O. Herlands


              /s/ DAVID C. STORBECK                   Vice President, Chief Financial    January 14, 2005
 ------------------------------------------------      Officer (Principle Financial
                David C. Storbeck                    Officer and Principal Accounting
                                                                 Officer)
</Table>

                                      II-18
<PAGE>

     Pursuant to the requirements of the Securities Act of 1933, the registrants
have caused this registration statement to be signed by the undersigned,
thereunto duly authorized, in the city of Ridgefield Park, State of New Jersey
on January 14, 2005.

                                          PHIBRO ANIMAL HEALTH HOLDINGS, INC.
                                          PHIBRO ANIMAL HEALTH U.S., INC.

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

     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jack C. Bendheim, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place or stead, in any and all capacities, to sign the
within Registration Statement and any and all amendments thereto, and to file
the same, and all exhibits thereto, and any other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of the
registrant in the capacities and on the dates indicated.

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

               /s/ JACK C. BENDHEIM                    Director and Chief Executive      January 14, 2005
 ------------------------------------------------           Officer (Principal
                 Jack C. Bendheim                           Executive Officer)


              /s/ MARVIN S. SUSSMAN                              Director                January 14, 2005
 ------------------------------------------------
                Marvin S. Sussman


              /s/ JAMES O. HERLANDS                              Director                January 14, 2005
 ------------------------------------------------
                James O. Herlands


              /s/ DAVID C. STORBECK                   Vice President, Chief Financial    January 14, 2005
 ------------------------------------------------      Officer (Principle Financial
                David C. Storbeck                          Officer and Principal
                                                            Accounting Officer)
</Table>

                                      II-19
<PAGE>

     Pursuant to the requirements of the Securities Act of 1933, the registrants
have caused this registration statement to be signed by the undersigned,
thereunto duly authorized, in the city of Ridgefield Park, State of New Jersey
on January 14, 2005.

                                          C P CHEMICALS, INC.
                                          PHIBRO CHEMICALS, INC.
                                          PHIBRO CHEM, INC.
                                          WESTERN MAGNESIUM CORP.

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

     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jack C. Bendheim, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place or stead, in any and all capacities, to sign the
within Registration Statement and any and all amendments thereto, and to file
the same, and all exhibits thereto, and any other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of the
registrant in the capacities and on the dates indicated.

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

               /s/ JACK C. BENDHEIM                  Director and Chief Executive      January 14, 2005
 ------------------------------------------------         Officer (Principal
                 Jack C. Bendheim                         Executive Officer)


              /s/ MARVIN S. SUSSMAN                            Director                January 14, 2005
 ------------------------------------------------
                Marvin S. Sussman


              /s/ JAMES O. HERLANDS                            Director                January 14, 2005
 ------------------------------------------------
                James O. Herlands


              /s/ DAVID C. STORBECK                     Vice President, Chief          January 14, 2005
 ------------------------------------------------             Financial
                David C. Storbeck                    Officer (Principle Financial
                                                        Officer and Principal
                                                          Accounting Offier
</Table>

                                      II-20
<PAGE>

     Pursuant to the requirements of the Securities Act of 1933, the registrant
has caused this registration statement to be signed by the undersigned,
thereunto duly authorized, in the city of Ridgefield Park, State of New Jersey
on January 14, 2005.

                                          PHIBRO ANIMAL HEALTH SA

                                          By:     /s/ JACK C. BENDHEIM
                                            ------------------------------------
                                                      Jack C. Bendheim
                                                          Director

     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jack C. Bendheim, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place or stead, in any and all capacities, to sign the
within Registration Statement and any and all amendments thereto, and to file
the same, and all exhibits thereto, and any other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of the
registrant in the capacities and on the dates indicated.

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

         /s/ JACK C. BENDHEIM              (Principal Executive Officer,     January 14, 2005
- --------------------------------------    Principal Financial Officer and
           Jack C. Bendheim                Principal Accounting Officer)


        /s/ MARVIN S. SUSSMAN                        Director                January 14, 2005
- --------------------------------------
          Marvin S. Sussman


        /s/ JAMES O. HERLANDS                        Director                January 14, 2005
- --------------------------------------
          James O. Herlands
</Table>

                                      II-21
<PAGE>

                                 EXHIBIT INDEX

<Table>
<Caption>
 EXHIBIT NO.                        DESCRIPTION OF EXHIBIT
 -----------                        ----------------------
<S>          <C> <C>
   3.1           Composite Certificate of Incorporation of Phibro Animal
                 Health Corporation(14)
   3.2           By-laws of Phibro Animal Health Corporation(1)
   3.3           Certificate of Incorporation of Phibro-Tech, Inc.(1)
   3.4           By-Laws of Phibro-Tech, Inc.(1)
   3.5           Certificate of Incorporation of C P Chemicals, Inc.(19)
   3.6           By-Laws of C P Chemicals, Inc.(1)
   3.7           Certificate of Incorporation of Prince Agriproducts, Inc.(1)
   3.8           By-Laws of Prince Agriproducts, Inc.(1)
   3.9           Certificate of Incorporation of Phibro Animal Health
                 Holdings, Inc.(19)
   3.10          By-Laws of Phibro Animal Health Holdings, Inc.(19)
   3.11          Certificate of Incorporation of Phibro Animal Health U.S.,
                 Inc.(19)
   3.12          By-Laws of Phibro Animal Health U.S., Inc.(19)
   3.13          Certificate of Incorporation of Phibrochem, Inc.(1)
   3.15          By-Laws of Phibrochem, Inc.(1)
   3.16          Certificate of Incorporation of Phibro Chemicals, Inc.(1)
   3.17          By-Laws of Phibro Chemicals, Inc.(1)
   3.18          Certificate of Incorporation of Western Magnesium Corp.(1)
   3.19          By-Laws of Western Magnesium Corp.(1)
   3.20          Articles of Association and Deed of Incorporation of Philipp
                 Brothers Netherlands III B.V.(19)
   3.21          Articles of Association of Phibro Animal Health SA.(19)
   4.1           Indenture, dated as of June 11, 1998, among Registrant, the
                 Guarantors named therein and The Chase Manhattan Bank, as
                 trustee, relating to the 9 7/8% Senior Subordinated Notes
                 due 2008 of Registrant, and exhibits thereto, including Form
                 of 9 7/8% Senior Subordinated Note due 2008 of Company.(1)
   4.1.1         First Supplemental Indenture, dated as of January 15, 1999,
                 among Registrant, the Guarantors named therein and The Chase
                 Manhattan Bank, as trustee, relating to the 9 7/8% Senior
                 Subordinated Notes due 2008 of Registrant.(10)
   4.1.2         Second Supplemental Indenture, dated as of March 19, 2003,
                 among Registrant, the Guarantors named therein and JPMorgan
                 Chase Bank, as trustee, relating to the 9 7/8% Senior
                 Subordinated Notes due 2008 of Registrant.(10)
   4.1.3         Third Supplemental Indenture, dated as of June 10, 2003,
                 among Registrant, the Guarantors named therein and JPMorgan
                 Chase Bank, as trustee, relating to the 9 7/8% Senior
                 Subordinated Notes due 2008 of Registrant.(10)
   4.1.4         Fourth Supplemental Indenture, dated as of October 1, 2003,
                 among Registrant, the Guarantors named therein and JPMorgan
                 Chase Bank, as trustee, relating to the 9 7/8% Senior
                 Subordinated Notes due 2008 of Registrant.(11)
   4.1.5         Fifth Supplemental Indenture, dated as of October 21, 2003,
                 among Registrant, the Guarantors named therein and JPMorgan
                 Chase Bank, as trustee, relating to the 9 7/8% Senior
                 Subordinated Notes due 2008 of Registrant.(12)
   4.1.6         Sixth Supplemental Indenture, dated as of June 25, 2004,
                 among Registrant, the Guarantors named therein and JPMorgan
                 Chase Bank, as trustee, relating to the 9 7/8% Senior
                 Subordinated Notes due 2008 of Registrant.(16)
   4.2           Indenture, dated as of October 21, 2003, by and among Phibro
                 Animal Health Corporation and Philipp Brothers Netherlands
                 III B.V., as Issuers, the Guarantors named therein, and HSBC
                 Bank USA, as Trustee and Collateral Agent.(13)
   4.2.1         First Supplemental Indenture, dated as of June 25, 2004, by
                 and among Phibro Animal Health Corporation and Philipp
                 Brothers Netherlands III B.V., as Issuers, the Guarantors
                 named therein, and HSBC Bank USA, National Association as
                 Trustee and Collateral Agent.(16)
</Table>
<PAGE>

<Table>
<Caption>
 EXHIBIT NO.                        DESCRIPTION OF EXHIBIT
 -----------                        ----------------------
<S>          <C> <C>
   4.2.2         Second Supplemental Indenture, dated as of December 8, 2004,
                 by and among Phibro Animal Health Corporation and Philipp
                 Brothers Netherlands III B.V., as Issuers, the Guarantors
                 named therein, and HSBC Bank USA, National Association as
                 Trustee and Collateral Agent.(18)
                 Certain instruments which define the rights of holders of
                 long-term debt of Registrant and its consolidated
                 subsidiaries have not been filed as Exhibits to this Report
                 since the total amount of securities authorized under any
                 such instrument does not exceed 10% of the total assets of
                 Registrant and its subsidiaries on a consolidated basis, as
                 of June 30, 2004. For a description of such indebtedness,
                 see Note 8 of Notes to Consolidated Financial Statements.
                 Registrant 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 & Peskoe LLP.(20)
   5.2           Opinion of Allen & Overy LLP.(20)
   5.3           Opinion of Allen & Overy LLP.(20)
  10.1           Manufacturing and Supply Agreement, dated as of the 12th day
                 of May 2004, by and between Merial Limited, Koffolk, Ltd.,
                 and Phibro Animal Health Corporation.(20)
  10.2           Lease, dated September 27, 2004 between Phibro Animal Health
                 Corporation and Hartz Mountain Industries, Inc.(19)
  10.3           Lease, dated June 30, 1995, between First Dice Road Co. and
                 Phibro-Tech, Inc., as amended May 1998.(1)
  10.4           Lease, dated December 24, 1981, between Koffolk (1949) Ltd.
                 and Israel Land Administration.(1)
  10.5           Master Lease Agreement, dated February 27, 1998, between
                 General Electric Capital Corp., Registrant and Phibro-Tech,
                 Inc.(1)
  10.6           Stockholders Agreement, dated December 29, 1987, by and
                 between Registrant, Charles H. Bendheim, Jack C. Bendheim
                 and Marvin S. Sussman.(1)
  10.7           Employment Agreement, dated December 29, 1987, by and
                 between Phibro Animal Health Corporation and Marvin S.
                 Sussman.(1)++
  10.8           Stockholders Agreement, dated February 21, 1995, between
                 James O. Herlands and Phibro-Tech, Inc., as amended as of
                 June 11, 1998.(1)
  10.9           Form of Severance Agreement, dated as of February 21, 1995,
                 between Phibro Animal Health Corporation and James O.
                 Herlands.(1)++
  10.10          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.(1)
  10.11          Philipp Brothers Chemicals, Inc. Retirement Income and
                 Deferred Compensation Plan Trust, dated as of January 1,
                 1994, by and between Registrant on its own behalf and on
                 behalf of CP Chemicals, Inc., Phibro-Tech, Inc. and the
                 Trustee thereunder; Philipp Brothers Chemicals, Inc.
                 Retirement Income and Deferred Compensation Plan, dated
                 March 18, 1994 "Retirement Income and Deferred Compensation
                 Plan").(1)++
  10.11.1        First, Second and Third Amendments to Retirement Income and
                 Deferred Compensation Plan.(2)++
  10.12          Form of Executive Income Deferred Compensation Agreement,
                 each dated March 11, 1990, by and between Registrant and
                 each of Jack Bendheim, James Herlands and Marvin
                 Sussman.(1)++
  10.13          Form of Executive Income Split Dollar Agreement, each dated
                 March 1, 1990, by and between Registrant and each of Jack
                 Bendheim, James Herlands and Marvin Sussman.(1)++
  10.14          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.(1)
  10.15          Agreement for Transfer of Ownership, dated as of June 8,
                 2000, between C.P. Chemicals, Inc. ("CP") and the Township
                 of Woodbridge ("Township"), and related Environmental
                 Indemnification Agreement, between CP and Township, and
                 Lease, between Township and CP.(2)
</Table>
<PAGE>

<Table>
<Caption>
 EXHIBIT NO.                        DESCRIPTION OF EXHIBIT
 -----------                        ----------------------
<S>          <C> <C>
  10.16          Stockholders' Agreement, dated as of January 5, 2000, among
                 shareholders of Penick Holding Company ("PHC"), and
                 Certificate of Incorporation of PHC and Certificate of
                 Designation, Preferences and Rights of Series A Redeemable
                 Cumulative Preferred Stock of PHC.(2)
  10.17          Asset Purchase Agreement, dated as of September 28, 2000,
                 among Pfizer, Inc., the Asset Selling Corporations (named
                 therein) and Registrant, and various exhibits and certain
                 Schedules thereto.(3)+
  10.17.1        Amendment, dated August 11, 2003 to Asset Purchase
                 Agreement, dated as of September 28, 2000, among Pfizer,
                 Inc., the Asset Selling Corporations (named therein) and
                 Registrant.(10)
  10.18          Stock Purchase Agreement, dated as of November 30, 2000,
                 between Registrant and the Purchasers (as defined
                 therein).(4)
  10.19          Stockholders' Agreement, dated as of November 30, 2000,
                 among Registrant, the Investor Stockholders (as defined
                 therein) and Jack C. Bendheim.(4)
  10.20          United States Asset Purchase Agreement between Phibro-Tech,
                 Inc. and Nufarm, Inc. dated as of May 1, 2001.(5)
  10.20.1        Amendment No. 1 to United States Asset Purchase Agreement
                 between Phibro-Tech, Inc. and Nufarm, Inc. dated as of June
                 14, 2001.(6)
  10.21          Supply Agreement between Phibro-Tech, Inc. and Nufarm, Inc.
                 dated as of May 1, 2001.(5)
  10.22          License Agreement between Phibro-Tech, Inc. and Nufarm, Inc.
                 dated as of May 1, 2001.(5)
  10.23          Management and Advisory Services Agreement dated November
                 30, 2000 between Registrant and Palladium Equity Partners,
                 L.L.C.(7)++
  10.24          Employment Agreement, dated May 28, 2002, by and between
                 Registrant and Gerald K. Carlson.(8)++
  10.25          Consulting Agreement dated as of November 1, 2004, by and
                 between Phibro Animal Health Corporation and David
                 McBeath.(19)++
  10.26          Stock Purchase Agreement, dated August 14, 2003, by and
                 between Registrant and Cemex, Inc.(9)
  10.27          Loan and Security Agreement, dated October 21, 2003, by and
                 among, the lenders identified on the signature pages
                 thereto, Wells Fargo Foothill, Inc., and Phibro Animal
                 Health Corporation ("Parent"), and each of Parent's
                 Subsidiaries identified on the signature pages thereto.(13)
  10.27.1        Amendment Number One to Loan and Security Agreement dated
                 November 14, 2003.(12)
  10.27.2        Amendment Number Two to Loan and Security Agreement dated
                 April 29, 2004.(14)
  10.27.3        Amendment Number Three to Loan and Security Agreement dated
                 September 24, 2004.(16)
  10.27.4        Amendment Number Four to Loan and Security Agreement dated
                 December 20, 2004.(18)
  10.28          Intercreditor and Lien Subordination Agreement, dated as of
                 October 21, 2003, made by and among Wells Fargo Foothill,
                 Inc., HSBC Bank USA, Phibro Animal Health Corporation
                 ("Parent") and those certain subsidiaries of the Parent
                 party thereto.(12)
  10.28.1        Amendment One to Intercreditor Agreement dated December 20,
                 2004.(18)
  10.29          Purchase and Sale Agreement dated as of December 26, 2003 by
                 and among Phibro Animal Health Corporation ("PAHC"), Prince
                 MFG, LLC ("Prince MFG"), The Prince Manufacturing Company
                 ("Prince" and together with PAHC and Prince MFG, the "Phibro
                 Parties"), Palladium Equity Partners II, L.P. ("PEP II"),
                 Palladium Equity Partners II-A, L.P., ("PEP II-A"),
                 Palladium Equity Investors II, L.P. ("PEI II", and together
                 with PEP II and PEP II-A, the "Investor Stockholders", and
                 Prince Mineral Company, Inc.("Buyer")(15)
  10.30          Environmental Indemnification Agreement dated as of December
                 26, 2003 between the Phibro Parties and Buyer.(15)
  10.31          Amendment to Stockholders Agreement dated as of December 26,
                 2003 between PAHC, the Investor Stockholders and Jack
                 Bendheim.(15)
  10.32          Advisory Fee Agreement dated as of December 26, 2003 between
                 Buyer and PAHC.(15)
  10.33          Purchase Agreement by and between Phibro Animal Health SA
                 and Glaxosmithkline Biologicals SA, dated December 16,
                 2004(20)
  12             Computation of Ratio of Earnings to Fixed Charges.(19)
</Table>
<PAGE>

<Table>
<Caption>
 EXHIBIT NO.                        DESCRIPTION OF EXHIBIT
 -----------                        ----------------------
<S>          <C> <C>
  21             List of Subsidiaries.(19)
  23.1           Consent of PricewaterhouseCoopers LLP.(19)
  23.2           Consent of Golenbock Eiseman Assor Bell & Peskoe LLP
                 (included in Exhibit 5.1).(20)
  23.3           Consent of Allen & Overy LLP (included in Exhibit 5.2).(20)
  23.4           Consent of Allen & Overy LLP (included in Exhibit 5.3).(20)
  24.1           Powers of Attorney (included on signature pages hereof).
  25.1           Statement of Eligibility of HSBC Bank USA, National
                 Association on Form T-1.(19)
  99.1           Form of Letter of Transmittal.(20)
  99.2           Form of Notice of Guaranteed Delivery.(20)
  99.3           Form of Letter to Holders of Units.(20)
  99.4           Form of Letter to Brokers, Dealers, Commercial Banks, Trust
                 Companies and Other Nominees Concerning Offer For All
                 Outstanding(20)
  99.5           Form of Letter to Clients Concerning Offer For All
                 Outstanding Units(20)
  99.6           Guidelines for Certification of Taxpayer Identification
                 Number on Substitute Form W-9.(20)
</Table>

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

 (1) Filed as an Exhibit to the Registrant's Registration Statement on Form S-4,
     No. 333-64641.

 (2) Filed as an Exhibit to the Registrant's Annual Report on Form 10-K for the
     fiscal year ended June 30, 2000.

 (3) Filed as an Exhibit to the Registrant's Report on Form 10-Q for the quarter
     ended September 30, 2000.

 (4) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
     November 30, 2000.

 (5) Filed as an Exhibit to the Registrant's Report on Form 10-Q for the quarter
     ended March 31, 2001.

 (6) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
     June 14, 2001.

 (7) Filed as an Exhibit to the Registrant's Annual Report on Form 10-K for the
     fiscal year ended June 30, 2001.

 (8) Filed as an Exhibit to the Registrant's Annual Report on Form 10-K for the
     fiscal year ended June 30, 2002.

 (9) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
     September 11, 2003, as amended by the Registrant's Form 8-K/A dated June 2,
     2004.

(10) Filed as an Exhibit to the Registrant's Annual Report on Form 10-K for the
     fiscal year ended June 30, 2003.

(11) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
     October 2, 2003.

(12) Filed as an Exhibit to the Registrant's Report on Form 10-Q for the quarter
     ended September 30, 2003.

(13) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
     October 31, 2003.

(14) Filed as an Exhibit to the Registrant's Report on Form 10-Q for the quarter
     ended March 31, 2004.

(15) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
     January 12, 2004.

(16) Filed as an Exhibit to the Registrant's Annual Report on Form 10-K for the
     fiscal year ended June 30, 2004.

(17) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
     December 9, 2004.

(18) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
     December 23, 2004.

(19) Filed herewith.

(20) To be filed by amendment.

 (+) A request for confidential treatment has been granted for portions of such
     document. Confidential portions have been omitted and furnished separately
     to the SEC in accordance with Rule 406(b).

(++) This Exhibit is a management compensatory plan or arrangement.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.5
<SEQUENCE>2
<FILENAME>y04700exv3w5.txt
<DESCRIPTION>CERTIFICATE OF INCORPORATION
<TEXT>
<PAGE>
                                                                     Exhibit 3.5

                          CERTIFICATE OF INCORPORATION

                                      -of-

                     COPPER PIGMENT & CHEMICAL WORKS, INC.



      THIS IS TO CERTIFY, that we, Hannah Burstein, Pauline Kent and Joel L.
Bohrer, do hereby associate ourselves into a corporation, under and by virtue
of the provisions of an Act of the Legislature of the State of New Jersey,
entitled, "An Act Concerning Corporations (Revised Statutes, 1937, Title 14)",
and the several supplements thereto and acts amendatory thereof, and do
severally agree to take the number of shares of capital stock set opposite our
respective names.

      FIRST:  The name of the corporation is COPPER PIGMENT & CHEMICAL WORKS,
INC.

      SECOND:  The location of the principal office in this State is at No. 60
Park Place, Newark, New Jersey.

      The name of the agent therein and in charge thereof, upon whom process
against this corporation may be served, is MARTIN SIMON.

      THIRD:  The objects for which this corporation is formed are:

      To conduct the business of buying, selling or dealing in and with
      vegetable, animal or mineral matter of all descriptions, whether new or
      used and without regard to the shape or form in which the same may be, and
      in connection with this general purpose, to do any and all things in
      connection, with such materials including handling, processing, reforming,
      re-constituting, disintegrating or treating such material in any way in
      which the company may deem advantageous, including the manufacturing of
      products therefrom in any shape or form.

      For the purpose of conducting its business to maintain in such plants of
      whatever description the same may be as the business may require, and to
      maintain such stores, warehouses, depots or plants in such places or
      places as may be in the best interests of the business.


<PAGE>
     To do any and all the foregoing things in any part of the world, either as
     principal, agent, broker, sales agency, contractor, trustee, or in any
     capacity which shall be in the best interest of the company.

     To conduct its business and have one or more offices and unlimitedly and
     without restriction and to hold, purchase, lease, mortgage, and convey,
     real and personal property in or out of the State, and in such place and
     places in the several states and territories of the United States, the
     District of Columbia, colonial possession or territorial acquisitions of
     the United States and in foreign countries as shall from time to time be
     found necessary and convenient for the purpose of the company's business.

     To borrow or lend money and in this connection to make and issue, or to
     receive, promissory notes, bills of exchange, bonds, debentures and
     evidences of indebtedness of the company or of others, secured by mortgage,
     pledge or otherwise, without limit as to the amount, and, with security for
     the same in any lawful manner as may be determined by the board of
     directors.

     Subject to the provisions of law, the company may purchase or otherwise
     acquire, hold, and re-issue the shares of its capital stock.

     To do any or all of the things in this certificate set forth, as objects,
     purposes,  powers or otherwise, to the same extent and as fully as natural
     persons might or could do.

     FOURTH: The total authorized capital stock of the corporation is one
hundred shares without nominal or par value. All or any part of the shares of
common stock bearing no par value may be issued by the corporation from time to
time, and for such consideration as from time to time may be fixed by the Board
of Directors, and as provided by law, and any and all shares bearing no par
value so issued for which the considerations so fixed has been paid or
delivered, shall be deemed fully paid and non-assessable and the holders of such
shares shall not be liable for the corporation or its creditors in respect to
such shares.

     FIFTH: The name and post office addresses of the incorporators, and the
number of shares subscribed for by each, the aggregate of such subscription
being the amount


                                      -2-
<PAGE>
of capital stock with which this corporation will commence business, is as
follows:

   NAME                     P. O. ADDRESS                      NO. OF
                                                               SHARES.

Hannah Burstein          60 Park Pl., Newark, N. J.              8

Pauline Kent             60 Park Pl., Newark, N. J.              1

Joel L. Bohrer           60 Park Pl., Newark, N. J.              1

     SIXTH:  The period of existence of this corporation is perpetual.

     IN WITNESS WHEREOF, we have hereunto set our hands and seals this 12th day
of November, 1953.

                                          /s/ Hannah Burstein
Signed, Sealed and                      ---------------------------
                                        HANNAH BURSTEIN
Delivered in the
                                          /s/ Pauline Kent
Presence of:                            ---------------------------
                                        PAULINE KENT

 /s/ Martin Simon                         /s/ Joel L. Bohrer
- -----------------------                 ----------------------------
MARTIN SIMON                            JOEL L. BOHRER


STATE OF NEW JERSEY :
                     ss
COUNTY OF ESSEX     :

     BE IT REMEMBERED that on this 12th day of November, 1953, before me, the
subscriber, an Attorney at Law of New Jersey, personally appeared Hannah
Burstein, Pauline Kent, and Joel L. Bohrer, who I am satisfied are the persons
named in and who executed the foregoing Certificate, and I, having first made
known to them the contents thereof, they did acknowledge that they signed,
sealed and delivered the same as their voluntary act and deed for the used and
purposes therein expressed.

                                          /s/ Martin Simon
                                        ----------------------------
                                        MARTIN SIMON
                                        An Attorney at Law State of
                                        New Jersey
<PAGE>

                          CERTIFICATE OF AMENDMENT OF
                          CERTIFICATE OF INCORPORATION
                                       of
                     COPPER PIGMENT & CHEMICAL WORKS, INC.
                     -------------------------------------

     The location of the principal office in this State is at No. 60 Park Place,
in the City of Newark, County of Essex.

     The name of the agent therein and in charge thereof upon whom process
against this corporation may be served, is Martin Simon.

                            RESOLUTION OF DIRECTORS:
                            ------------------------

     The Board of Directors of Copper Pigment & Chemical Works, Inc., a
corporation of New Jersey, on this 17th day of April, 1958, do hereby RESOLVE
and DECLARE that it is advisable to change the capital stock structure of the
company by dividing the same into three classes, and for that purpose to amend
Article Fourth of the certificate of incorporation to read as follows:

     "FOURTH: The amount of the total authorized capital stock of the
     corporation is one hundred (100) shares without nominal or par value. All
     or any part of the shares of Common Stock having no par value may be issued
     by the corporation from time to time, and for such consideration as from
     time to time may be fixed by the Board of Directors, and as provided by
     law, and any and all shares having no par value so issued for which the
     consideration so fixed has been paid or delivered, shall be deemed fully
     paid and non-assessable, and the holders of such shares shall not be liable
     to the corporation or its creditors in respect to such shares. Said shares
     shall be divided into three classes

<PAGE>
     as follows: Class A, which shall consist of forty-five (45) shares; Class
     B, which shall consist of forty-five (45) shares; Class C, which shall
     consist of (10) shares. All voting power shall be vested in the Class A
     capital stock and the Class B capital stock, and no voting power whatsoever
     shall be vested in the Class C capital stock. The Board of Directors of the
     Corporation shall consist of four Directors. The holders of the Class A
     capital stock shall have the exclusive right to vote for and elect two
     Directors, and the holders of Class B capital stock shall have the right to
     vote for and elect two Directors. In the event of a vacancy, for any
     reason, on the Board of Directors, the holders of the class of stock which
     originally elected the Director whose office may be vacant, shall
     exclusively be entitled to elect a successor to fill such vacancy. The two
     members of the Board of Directors to be elected by the holders of the Class
     A capital stock shall be designated as Class A Directors, and the two
     members of the Board of Directors to be elected by the holders of the Class
     B capital stock shall be designated as Class B Directors. Any and all
     dividends which may be distributed by the corporation, if, as and when
     declared by the Board of Directors shall be distributed pro rata, without
     regard to class, among the holders of the Class A, Class B, and Class C
     capital stock, in accordance with the number of shares of any class held by
     them. In the event of any liquidation, dissolution or winding up of the
     corporation, whether voluntary of involuntary, the assets of the
     corporation shall be distributed pro rata, without regard to class, among
     the holders of the Class A, Class B, and Class C capital stock, in
     accordance with the number of shares of any class held by them.

                                      -2-
<PAGE>
     The one hundred (100) shares of capital stock of the corporation now issued
and outstanding, having no par value, are hereby changed as follows: Forty-five
(45) shares thereof are hereby changed into forty-five (45) shares of Class A
capital stock, having no par value; forty-five (45) shares thereof are hereby
changed into forty-five (45) shares of Class B capital stock, having no par
value and ten (10) shares thereof are hereby changed into ten (10) shares of
Class C capital stock, having no par value.

     Be it further RESOLVED, that the foregoing proposed amendment in the
Certificate of Incorporation of the company shall be submitted for action
thereon by the stockholders of the company at a special meeting thereof to be
held on the 17th day of April, 1985, at 11:00 o'clock in the forenoon, and that
notice of the time, place and purposes of such meeting shall be given in
accordance with the requirements of the By-Laws of the company, consistent with
the proposed amendment.

                             CERTIFICATE OF CHANGE
                             ---------------------

     COPPER PIGMENT & CHEMICAL WORKS, INC., a corporation of New Jersey, does
hereby certify that it has adopted the foregoing amendment to its certificate of
incorporation, the said amendment having been declared by resolution of the
Board of Directors of the said corporation, as above recited, to be advisable,
and having been duly and regularly assented to by the unanimous vote of all the
stockholders, at a meeting duly called by the Board of Directors for that
purpose; and the written assent of the said stockholders is hereto appended.

     IN WITNESS WHEREOF, said corporation has caused this certificate to be
signed by its President and Secretary


                                      -3-
<PAGE>
and its corporate seal to be hereto affixed the 17th day of April, 1958.



                                               /s/ Albert Kerzner
                                             ----------------------------
                                             Albert Kerzner
                                             President

ATTEST:



  /s/ Norman Feldman
- -----------------------------
Norman Feldman
Secretary
<PAGE>


STATE OF NEW JERSEY )
                    )   SS:
COUNTY OF ESSEX     )

     BE IT REMEMBERED, that on this 22nd day of April, 1958, before me, the
subscriber, a Notary Public of New Jersey, personally appeared Norman Feldman,
Secretary of Copper Pigment & Chemical Works, Inc., the corporation mentioned in
and which executed the foregoing certificate, who, being by me duly sworn, on
his oath says that he is such secretary, and that the seal affixed to said
certificate is the corporate seal of said corporation, the same being well known
to him; that Albert Kerzner is President of said corporation, and that he signed
said certificate and affixed said seal thereto, and delivered said certificate
by authority of the Board of Directors and with the unanimous assent of the
stockholders of said corporation as and for his voluntary act and deed, and the
voluntary act and deed of said corporation in the presence of deponent, who
thereupon subscribed his name thereto as witness.

     And deponent further says that the assent hereto appended is signed by all
the stockholders of said corporation.

Subscribed and sworn to
before me the day and year                 /s/  Norman Feldman
first above written.                       ----------------------
                                                Norman Feldman
                                                Secretary

[SEAL]

/s/ Anna Mae Zukauskas
- ----------------------
    Anna Mae Zukauskas
    of New Jersey

NOTARY PUBLIC OF NEW JERSEY
MY COMMISSION EXPIRES NOV. 2, 1961
<PAGE>
                         STOCKHOLDERS' ASSENT TO CHANGE
                         ------------------------------

     We, the undersigned, being all of the stockholders of Copper Pigment &
Chemical Works, Inc., having, at a meeting regularly called for the purpose,
voted in favor of amending and changing the certificate of incorporation as set
forth in the resolution of the Directors above recited, do now, pursuant to the
statute in such case made and provided, hereby give our written assent to said
change.

     WITNESS our hands this 17th day of April, 1958.


         Stockholders               No. of Shares
         ------------               -------------

/s/ Edward Ehrenkrantz                   1
- ----------------------
Edward Ehrenkrantz


/s/ Norman Feldman                       10
- ----------------------
Norman Feldman


/s/ Albert Kerzner                       88
- ----------------------
Albert Kerzner


/s/ Ivan Kerzner                         1
- ----------------------
Ivan Kerzner
<PAGE>
                            CERTIFICATE OF AMENDMENT

                                     of the

                          CERTIFICATE OF INCORPORATION

                                      -of-

                     COPPER PIGMENT & CHEMICAL WORKS, INC.
                     -------------------------------------

To:  The Secretary of State
     State of New Jersey

     Pursuant to the provisions of Section 14A:9-2(4) and Section 14A:9-4(a),
Corporations, General, of the New Jersey Statutes, the undersigned Corporation
executes the executes the following Certificate of Amendment to its Certificate
of Incorporation:

     1. The name of the Corporation is COPPER PIGMENT & CHEMICAL WORKS, INC.

     2. THE CERTIFICATE OF INCORPORATION WAS FILED BY THE SECRETARY OF State on
November 16, 1953.

     3. Paragraph ""FIRST'' of the Certificate of Incorporation is hereby
amended to read as follows:

          ""FIRST: The name of the Corporation shall be C P CHEMICALS, INC.''

     The foregoing amendment to the Certificate of Incorporation was duly
adopted at Special Joint Meeting of the Board of Directors and Stockholders held
October 6th, 1972.
<PAGE>
by the unanimous affirmative vote of all of the directors of the Corporation and
of the holders of all of the issued and outstanding shares of the Corporation
entitled to vote thereon.

     4. At the time of the adoption of said amendment, there were issued and
outstanding forty-five (45) shares of the Class A capital stock of the
Corporation, forty-five (45) shares of the Class B capital stock of the
Corporation and ten (10) shares of the Class C capital stock of the Corporation
of which only the Class A and Class B shares of such stock were entitled to vote
thereon.

     IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to its Certificate of Incorporation to be signed by its President this
26th day of October, 1972.

                          COPPER PIGMENT & CHEMICAL WORKS, INC.,


                          By: /s/ Norman Feldman
                              ----------------------------------
                              NORMAN FELDMAN, President
<PAGE>
                              CERTIFICATE OF MERGER

                                       OF

                               C.P. CHEMICALS, INC.
                             (a Georgia corporation)

                                      INTO

                               C.P. CHEMICALS, INC.
                           (a New Jersey corporation)

TO:   The Secretary of State
      State of New Jersey

        Pursuant to the provisions of Section 14A:1O-7 Corporations, General, of
the New Jersey Statutes, the undersigned corporations hereby execute the
following Certificate of Merger.

                                   ARTICLE ONE

        The names of the corporations proposing to merge and the names of the
States under the laws of which such corporations are organized, are as follows:

<TABLE>
<CAPTION>
      Name of Corporation                       State of Incorporation
      -------------------                       ----------------------
<S>                                             <C>
      C.P. Chemicals, Inc.                            New Jersey
      (formerly known as
      Copper Pigment &
      Chemical Works, Inc.)

      C.P. Chemicals Inc.                             Georgia
      (formerly known as
      Vertac Metal Chemicals Inc.)
</TABLE>

                                   ARTICLE TWO

        The laws of Georgia, the State under which such foreign corporation is
organized, permit such merger and the applicable provisions of the laws of said
jurisdiction under which such foreign corporation was organized have been or,
upon compliance with filing and recording requirements will have been complied
with.
<PAGE>
                                  ARTICLE THREE

        The name of the surviving corporation shall be C.P. Chemicals, Inc. and
it shall be governed by the laws of the State of New Jersey.

        The total authorized capital stock of the surviving corporation shall.
be, as presently existing, 2,500 shares of common stock, each having a par value
of $1.00.

        The address of the surviving corporation's registered office is Arbor
Street, Seawaren, New Jersey 07077 and the name of its registered agent at. such
address is Mr. Norman Feldman.

                                  ARTICLE FOUR

        The Plan of Merger, a copy of which is annexed hereto as Exhibit "A",
was approved by the sole shareholder and the board of directors of C.P.
CHEMICALS, INC., a New Jersey corporation, the surviving corporation, in the
manner prescribed by the New Jersey Business Corporation Act, and was approved
by the undersigned foreign corporation in the manner prescribed by the laws of
the State under which it is organized. No vote of the shareholders of the
surviving corporation was required because of the applicability of the
provisions of Section 14A:l0-3(4), Title 14A, Revised Statutes of New Jersey.

                                  ARTICLE FIVE

        As to each corporation whose shareholders are entitled to vote, the
number of shares entitled to vote thereon, and if the shares of any class or
series are entitled to vote thereon as a class, the designation and number of
shares of each such class or series, is as follows;

<TABLE>
<CAPTION>
                                                  Designation of         Number
                                                  Class or Series      of Shares
                                Total Number        Entitled to        of Such
                                  of Shares          Vote as a         Class or
                                  Entitled            Class             Series
Name of Corporation               to Vote            (if any)          (if any)
- -------------------             ------------      ---------------      ---------
<S>                             <C>               <C>                  <C>
C.P. Chemicals, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                             <C>               <C>                  <C>
(N J.)                              2,500             None               None

C.P. Chemicals, Inc.
(GA,)                               1,000             None               None
</TABLE>

                                   ARTICLE SIX

        As to each corporation whose shareholders are entitled to vote, the
number of shares that voted for and against the merger respectively, and the
number of shares of any class or series entitled to vote as a class, if any,
that voted for and against the merger are:
<PAGE>
<TABLE>
<CAPTION>
                                    Total Shares            Total Shares
Name of Corporation                 Voted For               Voted Against
- -------------------                 ------------------      -------------
<S>                                 <C>
C.P. Chemicals Inc.                 2,500                   None
(N.J.)
C.P. Chemicals Inc                  1,000                   None
(GA.)
</TABLE>

                                  ARTICLE SEVEN

        The effective date of this Certificate shall be October 31, 1985 or the
date of the filing thereof by the Secretary of State of New Jersey, whichever
date shall be later.

        IN WITNESS WHEREOF each of the undersigned corporations has caused this
Certificate of Merger to be executed in its name by its President as of the 11th
day of October, 1985.

                                    C.P. CHEMICALS INC. (N.J.)

                                    By:  /s/ Jack C. Bendheim
                                    Jack C Bendheim, Vice President


                                    C.P. CHEMICALS, INC. (GA)

                                    By:  /s/ Jack C. Bendheim
                                    Jack C. Bendheim, Vice President
<PAGE>
                        STATEMENT OF POST MERGER ADDRESS

                                       OF

                            C. P. CHEMICALS INC (GA.)
                            -------------------------
                              A MERGED CORPORATION

To:   The Secretary of State
      State of Georgia

        C. P. CHEMICALS, INC., a domestic corporation baying been merged into
C. P. CHEMICALS INC., a New Jersey corporation being a foreign corporation, the
undersigned corporation hereby designates the following post-office address, to
which the Secretary of State may mail a copy of any process against the
undersigned corporation that may be served on him or to which any other
communications intended for the corporation shall be mailed:

                             Arbor Street, Seawaren, New Jersey 07077

Dated this 11th day of October, 1985

                                    C.P. CHEMICALS, INC. (N.J.)

                                    By:  /s/ Jack C. Bendheim
                                         -------------------------------------
                                         Jack C. Bendheim, Vice President
<PAGE>
                              CERTIFICATE OF MERGER

                                       OF

                     SOUTHERN CALIFORNIA CHEMICAL CO., INC.
                           (a California corporation)

                                      INTO

                              C.P. CHEMICALS, INC.
                           (a New Jersey corporation)

TO:   The Secretary of State
      State of New Jersey

                  Pursuant to the provisions of Section 14A:lO-7 Corporations,
General, of the New Jersey Statutes, the undersigned corporations hereby execute
the following Certificate at Merger.

                                   ARTICLE ONE

                  The names of the corporations proposing to merge and the names
of the States under the laws of which such corporations are organized, are as
follows:

            Name of Corporation                 State of Incorporation

            C.P. Chemicals, Inc.                New Jersey
            (formerly known as
            Copper Pigment &
            Chemical Works, Inc.)

            Southern California Chemical        California
                  Co., Inc.
<PAGE>
                                   ARTICLE TWO

                  The laws of California, the State under which such foreign
corporation is organized, permit merger and the applicable provisions of the
laws of said jurisdiction under which such foreign corporation was organized
have been, or, upon compliance with filing and recording requirements will have
been, complied with.

                                  ARTICLE THREE

        The name of the surviving corporation shall be C.P. CHEMICALS, INC. and
it shall be governed by the laws of the State of New Jersey.

        The total authorized capital Stock of the surviving corporation shall
be, as presently existing, 2,500 shares of common stock, each having a par value
of $1.00.

        The address of the surviving corporation's registered office is Arbor
Street, Seawaren, New Jersey 07077 and the name of its registered agent at such
address is Mr. Norman Feldman

                                  ARTICLE FOUR

        The Plan of Merger, a copy of which is annexed hereto as Exhibit A was
approved by the board of directors of C.P. CHEMICALS, INC., a New Jersey
corporation, the surviving corporation, in the manner prescribed by the New
Jersey Business Corporation Act, and was approved by the' undersigned foreign
corporation in the manner prescribed by the laws of the State under which it is
organized. No vote of the shareholders of the surviving corporation was required
because of the applicability of the provisions of Section 14A:10-3(4), Title
14A, Revised Statutes of New Jersey.

                                  ARTICLE FIVE

        The effective date of this Certificate shall be July 31, 1987 or the
date of the filing hereof by the Secretary of State of New Jersey, whichever
date shall be later.

        IN WITNESS WHEREOF, each of the undersigned corporations has caused this
Certificate of Merger to be executed in its name by its President as of the 21st
day of July, 1997.
<PAGE>
                                    C.P. CHEMICALS, INC.


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

                                    SOUTHERN CALIFORNIA
                                    CHEMICAL CO., INC.

                                    By:  /s/ Jack C. Bendheim
                                         ------------------------------------
                                          Jack C. Bendheim, President
<PAGE>
                                    EXHIBIT A

                                 PLAN OF MERGER

                                       OF

         SOUTHERN CALIFORNIA CHEMICAL CO. INC. INTO C.P. CHEMICALS, INC.

        1. It is proposed to merge Southern California Chemical Co., Inc., a
California corporation, into C.P. Chemicals, Inc., a New Jersey corporation, so
that the latter corporation shall be the surviving corporation. Said
corporations are hereinafter referred to, respectively, as the California
corporation and the New Jersey or surviving corporation.

        2. The terms and conditions of the merger are as follows:

        (a) On the effective date of this Plan, all of the shares of stock of
the California corporation which shall be authorized, issued or outstanding
shall be surrendered and canceled and each of the certificates evidencing said
shares shall be endorsed to indicate their cancellation by reason of merger
pursuant to this Plan.

        (b) The authorized, issued and outstanding shares of the New Jersey
corporation, the surviving corporation, shall not be changed in any respect, and
no change shall be effected with respect to the provisions of the certificate of
incorporation of said surviving corporation.

        (c) Upon the effective date of this Plan, the separate existence of the
California corporation shall cease and said corporation shall be merged into the
surviving corporation and the surviving corporation shall possess all the
rights, privileges, powers, and franchises of a public and private nature and
shall be subject to all the duties at said California corporation: all of the
rights, privileges, powers and franchises of laid California corporation, and
all property, real, personal, and mixed, and all debts due to said California
corporation on whatever account shall be vested in the surviving corporation;
and all property, rights, privileges, powers, contracts, and franchises and
every other interest of said California corporation shall be thereafter
effectively the property of the surviving corporation as they were of said
California corporation; but all rights of creditor, and all liens upon any
property of said California corporation shall be preserved unimpaired and all
debts, liabilities and duties of said California corporation shall thenceforth
attach to the surviving corporation and be enforceable against
<PAGE>
said surviving corporation to the same extent as if said debts, liabilities and
duties had been incurred or contracted by said surviving corporation.

        (d) if, at any time, the surviving consider that any further assignments
or assurances in law or any other acts or deeds are necessary or desirable to
vest in the surviving corporation, according to the terms hereof, the title to
any property or rights of said California corporation, the proper officers and
directors of said California corporation shall make and execute all such
assignments and assurances and do all things necessary or proper to vest title
in such property or rights in the surviving corporation and Otherwise to carry
out the purposes of this Plan.

        (e) Upon the effective date of the merger, the assets and liabilities of
maid California corporation shall be carried on the books of the surviving
corporation at the amounts at which they are respectively carried on such date
on the books of said California corporation. The capital surplus and earned
surplus of the surviving corporation shall be the sum of the respective capital
surpluses and earned surpluses of the corporations party to this Plan, subject
in each case to such intercompany or accounting adjustments as may be
appropriate or may be required to give effect to the merger. The aggregate
amount, if any, of the net assets of the corporations party to this Plan which
was legally available for the payment of dividends immediately prior to the
merger, to the extent that the value thereof is not transferred to stated
capital by the issuance of shares or otherwise, shall continue to be available
for payment of dividends by the surviving corporation.

        (f) The directors and officers of the corporation shall continue in
office until they resign and their successors are duly elected.

        (g) The by-laws of the surviving corporation, as they shall exist on
the effective date of this merger, shall be and remain the by-laws of the
surviving corporation until the same shall be altered, amended or repealed as
therein provided.

        4. The effective date of this Plan shall be July 31, 1987 or as soon
thereafter as the Certificate of Merger with respect to the Merger is filed by
the Secretary of State of New Jersey, whichever is later.

        5. The President, other officers and directors of each of the
corporations which are party to this Plan shall be authorized and directed to
prepare and execute such agreements, certificates and other documents as may be
necessary in order to carry out this Plan.
<PAGE>
        6. Anything herein or elsewhere to the contrary notwithstanding, this
Plan may be terminated and abandoned by mutual consent of the Board of Directors
of either corporation party hereto at any time prior to the effective date of
this Plan, If, in the opinion of said Boards of Directors the merger is
impractical or undesirable for any reason whatsoever.

Dated:  July 21, 1987

                                    C.P. CHEMICALS, INC.


                                    By:  /s/ Jack C. Bendheim
                                         --------------------
                                          Jack C. Bendheim President



                                    SOUTHERN CALIFORNIA
                                     CHEMICAL CO., INC.

                                    By:  /s/ Jack C. Bendheim
                                         --------------------
                                          Jack C. Bendheim, President
<PAGE>
                              CERTIFICATE OF MERGER

                                       OF

                              C. P. INORGANICS, INC.
                            (An Illinois Corporation)

                                       AND

                               CHEM-EX CORPORATION
                            (An Illinois Corporation)

                                      INTO

                              C. P. CHEMICALS, INC.
                           (A New Jersey Corporation)

                  UNDER SECTION 14A:l0-7 CORPORATIONS, GENERAL,
                             OF NEW JERSEY STATUTES

        Pursuant to the provisions of Section 14A:l0-7 Corporations, General, of
New Jersey Statutes, the undersigned corporations hereby execute the following
Certificate of Merger:

        1. (a) The name of each subsidiary corporation to be merged is as
follows:

        C.P. Inorganic., Inc. (incorporated in Illinois)

        Chem-Ex Corporation (incorporated in Illinois)

        (b) The name of the surviving corporation is C.P. Chemicals, Inc.,
(incorporated in New Jersey), and following the merger its name shall be C.P.
Chemicals, Inc. Following the merger the surviving corporation shall continue to
be governed by the laws of the State of New Jersey.

        2. The laws of Illinois, the state under which such foreign subsidiary
corporations are organized, permit such merger: and the applicable provisions of
the laws of such jurisdiction have been, or upon compliance with filing and
recording requirements will have been, complied with.

        3.  The total authorized capital stock of the surviving corporation
shall be, as presently existing, 2,500 shares of common stock, par value $1.00
per share. The address of the surviving corporations registered office is Arbor
Street, Sewaren, New Jersey 07077, and the name of the registered agent at such
address is Mr. I. David Paley.
<PAGE>
        4. As to each subsidiary corporation to be merged, the designation and
number of outstanding shares of each class, and the number of such shares of
each class owned by the surviving corporation, are as follows:

        C.P. Inorganics. Inc. (incorporated in Illinois):

            525 shares of common stock outstanding; 525 shares of common stock
            owned by the surviving corporation

        Chem-Ex Corporation (incorporated in Illinois):

            1,000 shares of common stock outstanding; 1,000 shares of common
            stock owned by the surviving corporation.

The number of shares of each subsidiary corporation outstanding and owned by the
surviving corporation, as set forth above, is not subject to change prior to the
effective date of the merger.

        5. The Plan of Merger, a copy of which is annexed hereto as Exhibit "A"
hereof, was adopted by the board of directors of C.P. Chemicals, Inc., a New
Jersey Corporation and the surviving corporation, on March 1, 1993, in the
manner prescribed by the New Jersey Business Corporation Act, and was approved
by the undersigned foreign corporations in the manner prescribed by the laws of
the State of Illinois, under which they are organized. No vote of the
shareholders of the surviving corporation was required because of the
applicability of the provisions of Section 14A: 10-3(4), Title 14A, Revised
Statutes of New Jersey.

        IN WITNESS WHEREOF, each of the undersigned corporations has caused this
Certificate of merger to be executed in its name by its President as of the lst
day of March, 1993.

                                          C.P. CHEMICALS, INC.


                                          By:  /s/ I. David Paley
                                               --------------------------------
                                                I. David Paley, President

                                          C.P. INORGANICS INC
<PAGE>
                                          By:  /s/ Jack C. Bendheim
                                               --------------------------------
                                                Jack C. Bendheim, President

                                          CHEM-EX CORPORATION


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


                                   EXHIBIT "A"

                                 PLAN OF MERGER

        FIRST:    (a) The name of each subsidiary corporation to be merged is as
follows: C.P. Inorganics, Inc. (incorporated in Illinois) and Chem-Ex
Corporation (incorporated in Illinois).

                  (b) The name of the surviving corporation is C.P. Chemicals,
Inc. (incorporated in New Jersey), and following the merger its name shall be
C.P. Chemicals, Inc.

        SECOND:   (a) As to each subsidiary corporation to be merged, the
designation and number of outstanding shares of each class, and the number of
such shares of each class owned by the surviving corporation, are as follows:

        C.P. Inorganics. Inc.:

            525 shares of common stock outstanding; 525 shares of common stock
            owned by the surviving corporation.

        Chem-Ex Corporation.:

            1,000 shares of common stock outstanding; 1,000 shares of common
            stock owned by the surviving corporation.

                  (b) The number of shares of each subsidiary corporation
outstanding and owned by the surviving corporation, set forth above in paragraph
"SECOND (a)", is not subject to change prior to the effective date of the
merger.

        THIRD:    The terms and conditions of the merger are as follows:

                  (a) On the effective date of this Plan, all of the issued and
outstanding shares of stock of the subsidiary corporations to be merged
hereunder, identified in paragraph "FIRST (a)"
<PAGE>
hereof, shall be surrendered and canceled, and each of the certificates
evidencing such shares shall be endorsed to indicate their cancellation by
reason of merger pursuant to this Plan.

                   (b) The issued and outstanding shares of the surviving
corporation, identified in paragraph "FIRST (b)" hereof, shall not be changed in
any respect, and no change shall be effected with respect to the provisions of
the certificate of incorporation of such surviving corporation.

                   (c) On the effective date of this Plan, the separate
existence of each of the subsidiary corporations identified in paragraph "FIRST
(a)" hereof shall cease and such corporations shall be merged into the surviving
corporation, and the surviving corporation shall possess all rights, privileges,
powers and franchises of a public and private nature and shall be subject to all
the duties of each such subsidiary corporation; all of the rights, privileges,
powers and franchises of each such subsidiary corporation, and all property,
real, personal, and mixed (including all debts due to any of such subsidiary
corporations on whatever account) of each such subsidiary corporation, shall be
vested in the surviving corporation; and all property, rights, privileges,
powers, contracts, and franchises and every other interest of each such
subsidiary corporation shall be thereafter effectively the property of the
surviving corporation as they were of the respective subsidiary corporations;
but all rights of creditors and all liens upon any property of any such
subsidiary corporation shall be preserved unimpaired, and all debts, liabilities
and duties of each such subsidiary corporation shall thenceforth attach to the
surviving corporation and be enforceable against such surviving corporation to
the same extent AS it such debts, liabilities and duties had been incurred or
contracted by the surviving corporation.

                  (d) If, at any time, the surviving corporation shall consider
that any further assignments or assurances in law or any other acts or deeds are
necessary or desirable to vest in the surviving corporation, according to the
terms hereof, the title to any property or rights of any merging subsidiary
corporation, the proper officers and directors of such subsidiary corporation
shall make and execute all such assignments and assurances and do all things
necessary or proper to vest title in such property or rights in the surviving
corporation and otherwise to carry out the purposes of this Plan.

                  (e) On the effective date of this Plan, the assets and
liabilities of each merging subsidiary corporation shall be carried on the books
of the surviving corporation at the amounts at which they are respectively
carried on such date on the books of the subsidiary corporations. The capital
surplus and earned surplus of the surviving corporation shall be the sum of the
<PAGE>
respective capital surpluses and earned surpluses of the merging subsidiary
corporations and the surviving corporation, subject in each case to such inter
company or accounting adjustments as may be appropriate. The aggregate amount,
if any, of the net assets of the merging subsidiary corporations and the
surviving corporation which was legally available for the payment of dividends
immediately prior to the merger, to the extent that the value thereof is not
transferred to stated capital by the issuance of shares or otherwise, shall
continue to be available for payment of dividends by the surviving corporation.

                   (f) The directors and officers of the surviving corporation
shall continue in office until the expiration of their terms and the election of
their respective successors, or until their earlier death, resignation or
removal.

                   (g) The by-laws of the surviving corporation, as they shall
exist on the effective date of this merger, shall be and remain the by-laws of
the surviving corporation until the same shall be altered, amended or repealed
as therein provided.

        FOURTH:   The effective date of this Plan shall be the later of the
following: (I) the date on which the Certificate of Merger with respect to the
merger is filed by the Secretary of State of New Jersey;


        FIFTH:    Under Illinois law, shareholders of a merging subsidiary
corporation have the right to dissent to a proposed merger.  As stated above in
paragraph "SECOND (a)," C. P. Chemicals, Inc., the surviving corporation under
the present Plan of Merger, owns all of the outstanding shares of each merging
subsidiary corporation, both of which are incorporated in Illinois. Distribution
of this Plan of Merger shall constitute notice to the sole shareholder of the
subsidiary corporations of its right to dissent under Illinois law. Adoption of
this Plan of Merger by the unanimous written consent of the directors of C.P.
Chemicals, Inc., the sole shareholder of the subsidiary corporation., shall
constitute the written consent of such sole shareholder for the merger.

        SIXTH:    The President, Treasurer/Secretary, and other officers and
directors of the surviving corporation are hereby authorized and directed to
prepare and execute such agreements, certificates and other documents as may be
necessary or appropriate in order to carry out this Plan.

        SEVENTH:  Anything herein or elsewhere to the contrary notwithstanding,
this Plan may be terminated and abandoned by consent of the Board of Directors
of the surviving corporation at any time
<PAGE>
prior to the effective date of this Plan, if, in the opinion of such Board of
Directors, the merger is impractical or undesirable for any reason whatever.
<PAGE>
                              CERTIFICATE OF MERGER

                                       OF

                          KEYSTONE PLATING SUPPLY, INC.
                            (A Michigan Corporation)

                                      INTO

                              C. P. CHEMICALS, INC.
                            (A New Jersey Corporation)

                  UNDER SECTION 14A:lO-7 CORPORATIONS, GENERAL,
                             OF NEW JERSEY STATUTES

        Pursuant to the provisions of Section 14A:lO-7 Corporations, General, of
New Jersey Statutes, the undersigned corporations hereby execute the following
Certificate of Merger:

        1.  (a) The name of the subsidiary corporation to be merged is as
follows: Keystone Plating Supply, Inc. (incorporated in Michigan).

            (b) The name of the surviving corporation is C.P. Chemicals, Inc.
(incorporated in New Jersey), and following the ( merger its name shall be C.P.
Chemicals, Inc. Following the merger the surviving corporation shall continue to
be governed by the laws of the State of New Jersey.

        2.  The laws of Michigan, the state under which such foreign subsidiary
corporation is organized, permit such merger; and the applicable provisions of
the laws of such jurisdiction have been, or upon compliance with filing and
recording requirements will have been, complied with.

        3.  The total authorized capital stock of the surviving corporation
shall be, as presently existing, 2,500 shares of common stock, par value $1.00
per share. The address of the surviving corporation's registered office is Arbor
Street, Sewaren, New Jersey 07077, and the name of the registered agent at such
address is Mr. I. David Paley.

        4. As to the subsidiary corporation to be merged, the designation and
number of outstanding shares of each class, and the number of such shares of
each class owned by the surviving corporation, are as follows:

        Keystone Plating Supply, Inc. (incorporated in Michigan):

1 share of common stock outstanding: 1 share of
<PAGE>
common stock owned by the surviving corporation.

        The number of shares of the subsidiary corporation outstanding and owned
by the surviving corporation, as set forth above, is not subject to change prior
to the effective date of the merger.

        5. The Plan of Merger, a copy of which is annexed hereto as Exhibit "A"
hereof, was adopted by the board of directors of C.P. Chemicals, Inc., a New
Jersey Corporation and the surviving corporation, on December 10, 1993, in the
manner prescribed by the New Jersey Business Corporation Act, and was approved
by the undersigned foreign corporation (Keystone Plating Supply, Inc.) in the
manner prescribed by the laws of the State of Michigan, under which it is
organized. No vote of the shareholders of the surviving corporation was required
because of the applicability of the provisions of Section 14A: 10-3(4), Title
14A, Revised Statutes of New Jersey.

        IN WITNESS WHEREOF, each of the undersigned corporations has caused this
Certificate of merger to be executed in its name by its President as of the 10th
day of December, 1993.

                                    C.P. CHEMICALS, INC.

                                    By:  /s/ I. David Paley
                                         ------------------
                                          I. David Paley, President

                                    KEYSTONE PLATING SUPPLY, INC


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

                                    EXHIBIT "A"

                                 PLAN OF MERGER
<PAGE>
        FIRST:    (a) The name of the subsidiary corporation to be merged is as
follows: Keystone Plating Supply, Inc. (incorporated in Michigan).

                  (b) The name of the surviving corporation is C P. Chemicals,
Inc. (incorporated in New Jersey), and following the merger its name shall be
C.P. Chemicals, Inc.

        SECOND:   (a) As to the subsidiary corporation to be merged, the
designation and number of outstanding shares of each class, and the number of
such shares of each class owned by the surviving corporation, are as follows:

1. share of common stock outstanding; 1 share of common stock owned by the
surviving corporation.

                  (b) The number of shares of the subsidiary corporation
outstanding and owned by the surviving corporation, set forth above in paragraph
"SECOND (a)", is not subject to change prior to the effective date of the
merger.

        THIRD:    The terms and conditions of the merger are as follows:

                  (a) On the effective date of this Plan, all of the issued and
outstanding shares of stock of the subsidiary corporation to be merged
hereunder, identified in paragraph "FIRST (a)" hereof, shall be surrendered and
canceled, and each of the certificates evidencing such shares shall be endorsed
to indicate their cancellation by reason of merger pursuant to this Plan.

                  (b) The issued and outstanding shares of the surviving
corporation, identified in paragraph "FIRST (b)" hereof, shall not be changed in
any respect, and no change shall be effected with respect to the provisions of
the certificate of incorporation of such surviving corporation.

                  (c) On the effective date of this Plan, the separate existence
of the subsidiary corporation identified in paragraph "FIRST (a)" hereof shall
cease and such corporation shall be merged into the surviving corporation, and
the surviving corporation shall possess all rights, privileges, powers and
franchises of a public and private nature and shall be subject to all the duties
of such subsidiary corporation; all of the rights, privileges, powers and
franchises of such subsidiary corporation, and all property, real, personal, and
mixed (including all debts due to such subsidiary corporation on whatever
account) of such subsidiary corporation, shall be vested in the surviving
corporation; and all property, rights, privileges, powers, contracts, and
franchises and every other
<PAGE>
interest of such subsidiary corporation shall be thereafter effectively the
property of the surviving corporation as they were of the subsidiary
corporation; but all rights of creditors and all liens upon any property of such
subsidiary corporation shall be preserved unimpaired, and all debts, liabilities
and duties of such subsidiary corporation shall thenceforth attach to the
surviving corporation and be enforceable against such surviving corporation to
the same extent as if such debts, liabilities and duties had been incurred or
contracted by the surviving corporation.

                  (d) If, at any time, the surviving corporation shall consider
that any further assignments or assurances in law or any other acts or deeds are
necessary or desirable to vest in the surviving corporation, according to the
terms hereof, the title to any property or rights of the merging subsidiary
corporation, the proper officers and directors of such subsidiary corporation
shall make and execute all such assignments and assurances and do all things
necessary or proper to vest title in such property or rights in the surviving
corporation and otherwise to carry out the purposes of this Plan.

                  (e) On the effective date of this Plan, the assets and
liabilities of the merging subsidiary corporation shall be carried on the books
of the surviving corporation at the amounts at which they are respectively
carried on such date on the books of the subsidiary corporation. The capital
surplus and earned surplus of the surviving corporation shall be the sum of the
capital surplus and earned surplus of the merging subsidiary corporation and the
surviving corporation, subject to such intercompany or accounting adjustments as
may be appropriate. The aggregate amount, if any, of the net assets of the
merging subsidiary corporation and the surviving corporation which was legally
available for the payment of dividends immediately prior to the merger, to the
extent that the value thereof is not transferred to stated capital by the
issuance of shares or otherwise, shall continue to be available for payment of
dividends by the surviving corporation.

                   (f) The directors and officers of the surviving corporation
shall continue in office until the expiration of their terms and the election of
their respective successors, or until their earlier death, resignation or
removal.
<PAGE>
                  (g) The by-laws of the surviving corporation, as they shall
exist on the effective date of this merger, shall be and remain the by-laws of
the surviving corporation until the same shall be altered, amended or repealed
as therein provided.

        FOURTH: The effective date of this Plan shall be the later of the
following: (i) the date on which the Certificate of Merger with respect to the
merger is filed by the Secretary of State of New Jersey; (ii) or the date on
which the Certificate of Merger with respect to the merger is filed with the
Secretary of State of Michigan: or (iii) December 31, 1993.

        FIFTH: Under Michigan law, shareholders of a merging subsidiary
corporation have the right to dissent to a proposed merger. As stated above in
paragraph "SECOND (a)," C. P. Chemicals, Inc., the surviving corporation under
the present Plan of Merger, owns all of the outstanding shares of the merging
subsidiary corporation, which is incorporated in Michigan. Distribution of this
Plan of Merger shall constitute notice to the sole shareholder of the subsidiary
corporation of its right to dissent under Michigan law. Adoption of this Plan of
Merger by the unanimous written consent of the directors of C.P. Chemicals,
Inc., the sole shareholder of the subsidiary corporation, shall constitute the
written consent of such sole shareholder for the merger.

        SIXTH: The President, Treasurer/Secretary, and other officers and
directors of the surviving corporation are hereby authorized and directed to
prepare and execute such agreements, certificates and other documents as may be
necessary or appropriate in order to carry out this Plan.

        SEVENTH: Anything herein or elsewhere to the contrary notwithstanding,
this Plan may be terminated and abandoned by consent of the Board of Directors
of the surviving corporation at any time prior to the effective date of this
Plan, if, in the opinion of such Board of Directors, the merger is impractical
or undesirable for any reason whatever.
<PAGE>
                              CERTIFICATE OF MERGER

                                       OF

                          SEABOARD MINERAL SUPPLY, INC.
                          (A Pennsylvania Corporation)

                                      INTO

                              C. P. CHEMICALS, INC.
                           (A New Jersey Corporation)

                   UNDER SECTIONS 14A:10-5.l AND 14A:l0-7 OF
                    THE NEW JERSEY BUSINESS CORPORATION ACT


        The undersigned domestic corporation, C. P. Chemicals, Inc., and its
wholly-owned foreign subsidiary, Seaboard Mineral Supply, Inc., desiring to
merge, do hereby certify as follows:


        1. Names of Merging and Surviving Corporations. (a) The name of the
subsidiary corporation to be merged is Seaboard Mineral Supply, Inc.
(incorporated in Pennsylvania)

            (b) The name of the surviving corporation is C. P. Chemicals, Inc.
(incorporated in New Jersey), and following the merger its name shall continue
to be C. P. Chemicals, Inc.

        2. Plan of Merger. The Plan of Merger is set forth on Exhibit "A"
attached hereto and hereby made a part hereof.

        3. Approval By Directors. The Board of Directors of the surviving parent
corporation approved the Plan of Merger on May 27, 1994.

        4. Subsidiary Shares Outstanding and Owned By Surviving Parent
Corporation. As to the subsidiary corporation to be merged, the designation and
number of outstanding shares of each class, and the number of such shares of
each class owned by the surviving corporation, are as follows:

            1,000 shares of common stock outstanding; 1,000 shares of common
stock owned by the surviving corporation.

The number of shares of the subsidiary corporation outstanding and owned by the
surviving corporation, as set forth above, is not subject to change prior to the
effective date of the merger.
<PAGE>
        5. Additional Information Relating to Foreign Corporation. The
applicable provisions of the laws of the Commonwealth of Pennsylvania, the
jurisdiction under which the foreign subsidiary corporation to be merged
hereunder is organized, have been, or, upon compliance with filing and recording
requirements, will have been, complied with in connection with the proposed
merger.
<PAGE>
        IN WITNESS WHEREOF, the undersigned corporations have signed this
certificate on the 27 day of May, 1994.

                        Surviving Corporation:

                                    C.P. CHEMICALS, INC.
                                    (A New Jersey Domestic Corporation)

                                    /s/ I. David Paley
                                    ---------------------------
                                    I. David Paley, President


                        Corporation To Be Merged:

                                    SEABOARD MINERAL SUPPLY, INC.
                                    (A Pennsylvania Corporation and
                                    100% Subsidiary of C. P. Chemicals, Inc.)

                                    /s/ Marvin S. Sussman
                                    ---------------------------
                                    Marvin S. Sussman, President
<PAGE>
                                 PLAN OF MERGER

        FIRST:    (a) The name of the constituent corporation to be merged is as
follows: Seaboard Mineral Supply, Inc., a Pennsylvania corporation which is a
wholly-owned subsidiary of the surviving corporation. The name of the surviving
corporation is C.P. Chemicals, Inc., a New Jersey corporation, and following the
merger its name shall continue to be C. P. Chemicals, Inc.

        SECOND:   (a) As to the corporation to be merged, the designation and
number of outstanding shares of each class and series, and the voting rights
thereof, including information relating to class voting, if any, are as follows:

<TABLE>
<CAPTION>
                              No. of                        Voting Rights and
  Class     Series      Shares Outstanding                  Class Voting
  -----     ------      ------------------                  ------------------
<S>         <C>         <C>                                 <C>
  Common    None              1,000                         Full voting rights
                                                            (no class voting)
</TABLE>

                  (b) As to the surviving corporation, the designation and
number of outstanding shares of each class and series, and the voting rights
thereof, including information relating to class voting, if any, are as follows:

<TABLE>
<CAPTION>
                              No. of                        Voting Rights and
  Class     Series      Shares Outstanding                  Class Voting
  -----     ------      ------------------                  ------------------
<S>         <C>         <C>                                 <C>
  Common    None              2,500                         Full voting rights
                                                            (no class voting)
</TABLE>

                  (c) The number of outstanding shares in each class of the
corporation to be merged and of the surviving corporation, as set forth above in
subparagraphs (a) and (b) of paragraph "SECOND," is not subject to change prior
to the effective date of the merger.

        THIRD:    The terms and conditions of the merger are as follows: On the
effective date of this Plan: (i) all of the issued and outstanding shares of the
corporation to be merged shall be canceled, and each of the certificates
evidencing such shares shall be endorsed to indicate their cancellation by
reason of merger pursuant to this Plan.
<PAGE>
        FOURTH:   The Certificate of Incorporation of the surviving corporation
will be not be amended in connection with the merger.

        FIFTH:    (a) On the effective date of this Plan, the separate existence
of the corporation to be merged shall cease and such corporation shall be merged
into the surviving corporation, and the surviving corporation shall possess all
the rights, privileges, powers and franchises of a public and private nature and
shall be subject to all the duties of such corporation to be merged; all of the
rights, privileges, powers and franchises of such corporation to be merged, and
all property, real, personal, and mixed (including all debts due to such
corporation on whatever account) of such corporation to be merged, shall be
vested in the surviving corporation; and all property, rights, privileges,
powers, contracts, and franchises and every other interest of such corporation
to be merged shall be thereafter effectively the property of the surviving
corporation as they were of the corporation to be merged; but all rights of
creditors and all liens upon any property of such corporation to be merged shall
be preserved unimpaired, and all debts, liabilities and duties of such
corporation to be merged shall thenceforth attach to the surviving corporation
and be enforceable against such surviving corporation to the same extent as if
such debts, liabilities and duties had been incurred or contracted by the
surviving corporation.

        (b) If, at any time, the surviving corporation shall consider that any
further assignments or assurances in law or any other acts or deeds are
necessary or desirable to vest in the surviving corporation, according to the
terms hereof, the title to any property or rights of the merging corporation,
the proper officers and directors of such merging corporation shall make and
execute all such assignments and assurances and do all things necessary or
proper to vest title in such property or rights in the surviving corporation and
otherwise to carry out the purposes of this Plan.

        (c) On the effective date of this Plan, the assets and liabilities of
the merging corporation shall be carried on the books of the surviving
corporation at the amounts at which they are carried on such date on the books
of the merging corporation. The capital surplus and earned surplus of the
surviving corporation shall be the sum of the capital surpluses and earned
<PAGE>
surpluses of the merging corporation and the surviving corporation, subject to
such intercompany or accounting adjustments as may be appropriate. The aggregate
amount, if any, of the net assets of the merging corporation and the surviving
corporation which was legally available for the payment of dividends immediately
prior to the merger, to the extent that the value thereof is not transferred to
stated capital by the issuance of shares or otherwise, shall continue to be
available for payment of dividends by the surviving corporation.

        (d) The directors and officers of the surviving corporation shall
continue in office until the expiration of their terms and the election of their
respective successors, or until their earlier death, resignation or removal.

        (e) The by-laws of the surviving corporation, as they shall exist on the
effective date of this merger, shall be and remain the by-laws of the surviving
corporation until the same shall be altered, amended or repealed as therein
provided.

        SIXTH: The effective date of this Plan shall be the date on which the
Certificate of Merger with respect to the merger is filed by the Secretary of
State of New Jersey.

        SEVENTH: The President, Treasurer/Secretary, and other officers and
directors of the merging and of the surviving corporation are hereby authorized
and directed to prepare and execute such agreements, certificates and other
documents as may be necessary or appropriate in order to carry out this Plan.

        EIGHTH: Anything herein or elsewhere to the contrary notwithstanding,
this Plan may be terminated and abandoned by consent of the Board of Directors
of the merging corporation or of the surviving corporation at any time prior to
the effective date of this Plan, if, in the opinion of such Board of Directors,
the merger is impractical or undesirable for any reason whatever.

<PAGE>

                                                                     FILED
                                                                  OCT 22 2003
                                                                 State Treasurer

                        Certificate of Amendment to the
                        Certificate of Incorporation of
                              C P Chemicals, Inc.
                (Formerly Copper Pigment & Chemical Works, Inc.)

Pursuant to the provisions of Section 14A:9-2(4) and Section 14A:9-4(5),
Corporation General, of the New Jersey Statutes, the undersigned corporation
executes the following Certificate of Amendment to its Certificate of
Incorporation:

1. The name of the corporation is:  C P Chemicals, Inc. (Formerly Copper Pigment
                                    & Chemical Works, Inc.)

2. The following amendment to the Certificate of Incorporation was approved by
the Board of Directors and thereafter duly adopted by the sole shareholder of
the corporation on the 21st day of October 2003;

Resolved, that Article Third of the Certificate of Incorporation be amended to
read as follows;

(Article) Third: The objects for which this corporation is formed are;
- ---------------

To conduct the business of buying, selling or dealing in and with vegetable,
animal or mineral matter of all descriptions, whether new or used and without
regard to the  shape or form in which the same amy be, and in connection with
this general purpose, to do any and all things in connection with such
materials including handling, processing, reforming, re-constituting,
disintegrating or treating such material in any way in which the company may
deem advantageous, including the manufacturing of products therefrom in any
shape or form.

For the purpose of conducting its business to maintain such plants of whatever
description the same may be as the business may require, and to maintain such
stores, warehouses, depots or plants in such place or places as may be in the
best interests of the business.

To do any and all the foregoing things in any part of the world, either as
principal, agent, broker, sales agency, contractor, trustee, or in any capacity
which shall be in the best interest of the Company.

To conduct its business and have one or more officers and unlimitedly and
without restriction and to hold, purchase, lease, mortgage, and convey, real and
personal property in or out of the State, and in such place and places in the
several states and territories of the United States, the District of Columbia,
colonial possession or territorial acquisitions of the United States and in
foreign countries as shall from time to time be found necessary and convenient
for the purpose of the company's business.

To borrow or lend money and in this connection, to make and issue, or receive,
promissory notes, bills of exchange, bonds, debentures and evidences of
indebtedness of the company or of others, secured by mortgage, pledge or
otherwise, without limit as to the amount, and with security for the same in any
lawful manner as may be determined by the board of directors.

Subject to the provisions of law, the company may purchase or otherwise acquire,
hold and re-issue the shares of its capital stock.

To do any or all of these things this certificate sets forth, as objects,
purpose, powers or otherwise, to the same extent and as fully as natural persons
might or could do.

And in general, to carry on any other business in connection with the foregoing,
and to have and exercise all the powers conferred by Title 14A, Corporations,
General;, of the New Jersey Statutes, and to do any or all of the things
hereinbefore set forth to the same extent as natural persons might or could do,
and in any part of the world.

<PAGE>
3.  With respect to the corporation, the following table shows the number of
shares entitled to vote thereon, the number of shares voted for, and the number
of shares voted against the amendment.

                                Shares             Shares             Shares
                             Entitled to            For               Against
      Shareholder               Vote             Amendment           Amendment
      -----------               ----             ---------           ---------

   Phibro Animal Health        2,500               2,500                 0
       Corporation

4.  This amendment is effective upon filing.





By:  /s/ David C. Storbeck
    -----------------------------------------------
     Name:  David C. Storbeck
     Title: Chief Financial Officer, Vice President

Dated this 21st day of October, 2003

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.9
<SEQUENCE>3
<FILENAME>y04700exv3w9.txt
<DESCRIPTION>CERTIFICATE OF INCORPORATION
<TEXT>
<PAGE>

                                                                     Exhibit 3.9

                          CERTIFICATE OF INCORPORATION

                                       OF

                       PHIBRO ANIMAL HEALTH HOLDINGS, INC.

            The undersigned incorporator, in order to form a corporation under
the General Corporation Law of Delaware, certifies as follows:

            FIRST:   The name of the corporation is Phibro Animal Health
Holdings, Inc.

            SECOND:  The registered office of the corporation is to be located
at 1013 Centre Road, Wilmington, Delaware, 19805-1297, New Castle County. The
name of its registered agent at that address is Corporation Service Company.

            THIRD:   The purpose of the corporation is to engage in any lawful
act or activity for which corporations may be organized under the General
Corporation Law of Delaware.

            FOURTH:  The corporation shall have the authority to issue 1,000
shares of common stock, par value $0.01 per share.

            FIFTH:   The name and mailing address of the incorporator are as
follows:

                     Alexa D. Isbell
                     Proskauer Rose LLP
                     1585 Broadway
                     New York, New York 10036

            SIXTH:   Whenever a compromise or arrangement is proposed between
the corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
corporation under the provisions of Section 279 of Title 8 of the Delaware Code
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the corporation, as the case may be, and also on the
corporation.

<PAGE>

            SEVENTH: A director of this corporation shall not be personally
liable to the corporation or its stockholders for monetary damages for the
breach of any fiduciary duty as a director, except in the case of (a) any breach
of the director's duty of loyalty to the corporation or its stockholders, (b)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (c) under section 174 of the General Corporation Law
of the State of Delaware or (d) for any transaction from which the director
derives an improper personal benefit. Any repeal or modification of this Article
by the stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification with respect to acts or omissions occurring prior to such repeal
or modification.

            EIGHTH:  The corporation shall, to the fullest extent permitted by
law, as the same is now or may hereafter be in effect, indemnify each person
(including the heirs, executors, administrators and other personal
representatives of such person) against expenses including attorneys' fees,
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by such person in connection with any threatened, pending or completed
suit, action or proceeding (whether civil, criminal, administrative or
investigative in nature or otherwise) in which such person may be involved by
reason of the fact that he or she is or was a director or officer of the
corporation or is or was serving any other incorporated or unincorporated
enterprise in such capacity at the request of the corporation.

            NINTH:   Unless, and except to the extent that, the by-laws of the
corporation shall so require, the election of directors of the corporation need
not be by written ballot.

            TENTH:   The corporation hereby confers the power to adopt, amend or
repeal bylaws of the corporation upon the directors.

            IN WITNESS WHEREOF, I have hereunto set my hand this eleventh day of
July, 2000.

                                                       /s/ Alexa D. Isbell
                                                       -------------------------
                                                       Sole Incorporator


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.10
<SEQUENCE>4
<FILENAME>y04700exv3w10.txt
<DESCRIPTION>BY-LAWS
<TEXT>
<PAGE>

                                                                    Exhibit 3.10
                                     BY-LAWS

                                       OF

                       PHIBRO ANIMAL HEALTH HOLDINGS, INC.

1.    MEETINGS OF STOCKHOLDERS.

            1.1   Annual Meeting. The annual meeting of stock-holders shall be
held on the first Monday of June in each year, or as soon thereafter as
practicable, and shall be held at a place and time determined by the board of
directors (the "Board").

            1.2   Special Meetings. Special meetings of the stockholders may be
called by resolution of the Board or the president and shall be called by the
president or secretary upon the written request (stating the purpose or purposes
of the meeting) of a majority of the directors then in office or of the holders
of a majority of the outstanding shares entitled to vote. Only business related
to the purposes set forth in the notice of the meeting may be transacted at a
special meeting.

            1.3   Place and Time of Meetings. Meetings of the stockholders may
be held in or outside Delaware at the place and time specified by the Board or
the officers or stockholders requesting the meeting.

            1.4   Notice of Meetings; Waiver of Notice. Written notice of each
meeting of stockholders shall be given to each stockholder entitled to vote at
the meeting, except that (a) it shall not be necessary to give notice to any
stockholder who submits a signed waiver of notice before or after the meeting,
and (b) no notice of an adjourned meeting need be given, except when required
under section 1.5 below or by law. Each notice of a meeting shall be given,
personally or by mail, not fewer than 10 nor more than 60 days before the
meeting and shall state the time and place of the meeting, and, unless it is the
annual meeting, shall state at whose direction or request the meeting is called
and the purposes for which it is called. If mailed, notice shall be considered
given when mailed to a stockholder at his address on the corporation's

<PAGE>

records. The attendance of any stockholder at a meeting, without protesting at
the beginning of the meeting that the meeting is not lawfully called or
convened, shall constitute a waiver of notice by him.

            1.5   Quorum. At any meeting of stockholders, the presence in person
or by proxy of the holders of a majority of the shares entitled to vote shall
constitute a quorum for the transaction of any business. In the absence of a
quorum, a majority in voting interest of those present or, if no stockholders
are present, any officer entitled to preside at or to act as secretary of the
meeting, may adjourn the meeting until a quorum is present. At any adjourned
meeting at which a quorum is present, any action may be taken that might have
been taken at the meeting as originally called. No notice of an adjourned
meeting need be given, if the time and place are announced at the meeting at
which the adjournment is taken, except that, if adjournment is for more than 30
days or if, after the adjournment, a new record date is fixed for the meeting,
notice of the adjourned meeting shall be given pursuant to section 1.4.

            1.6   Voting; Proxies. Each stockholder of record shall be entitled
to one vote for each share registered in his name. Corporate action to be taken
by stockholder vote, other than the election of directors, shall be authorized
by a majority of the votes cast at a meeting of stockholders, except as
otherwise provided by law or by section 1.8. Directors shall be elected in the
manner provided in section 2.1. Voting need not be by ballot, unless requested
by a majority of the stockholders entitled to vote at the meeting or ordered by
the chairman of the meeting. Each stockholder entitled to vote at any meeting of
stockholders or to express consent to or dissent from corporate action in
writing without a meeting may authorize another person to act for him by proxy.
No proxy shall be valid after three years from its date, unless it provides
otherwise.

            1.7   List of Stockholders. Not fewer than 10 days prior to the date
of any meeting of stockholders, the secretary of the corporation shall prepare a
complete list of stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in his name. For a period of not fewer than 10 days prior to
the meeting, the list shall be available during ordinary business hours

<PAGE>

for inspection by any stockholder for any purpose germane to the meeting. During
this period, the list shall be kept either (a) at a place within the city where
the meeting is to be held, if that place shall have been specified in the notice
of the meeting, or (b) if not so specified, at the place where the meeting is to
be held. The list shall also be available for inspection by stockholders at the
time and place of the meeting.

            1.8   Action by Consent Without a Meeting. Any action required or
permitted to be taken at any meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not fewer than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voting. Prompt notice of the taking of any such
action shall be given to those stockholders who did not consent in writing.

      2.    BOARD OF DIRECTORS.

            2.1   Number, Qualification, Election and Term of Directors. The
business of the corporation shall be managed by the entire Board, which
initially shall consist of three (3) directors. The number of directors may be
changed by resolution of a majority of the Board or by the stockholders, but no
decrease may shorten the term of any incumbent director. Directors shall be
elected at each annual meeting of stockholders by a plurality of the votes cast
and shall hold office until the next annual meeting of stockholders and until
the election and qualification of their respective successors, subject to the
provisions of section 2.9. As used in these by-laws, the term "entire Board"
means the total number of directors the corporation would have, if there were no
vacancies on the Board.

            2.2   Quorum and Manner of Acting. A majority of the entire Board
shall constitute a quorum for the transaction of business at any meeting, except
as provided in section 2.10. Action of the Board shall be authorized by the vote
of the majority of the directors present at the time of the vote, if there is a
quorum, unless otherwise provided by law or these by-laws. In the absence of a
quorum, a majority of the directors present may adjourn any meeting from

<PAGE>

time to time until a quorum is present.

            2.3   Place of Meetings. Meetings of the Board may be held in or
outside Delaware.

            2.4   Annual and Regular Meetings. Annual meetings of the Board, for
the election of officers and consideration of other matters, shall be held
either (a) without notice immediately after the annual meeting of stockholders
and at the same place, or (b) as soon as practicable after the annual meeting of
stockholders, on notice as provided in section 2.6. Regular meetings of the
Board may be held without notice at such times and places as the Board
determines, If the day fixed for a regular meeting is a legal holiday, the
meeting shall be held on the next business day.

            2.5   Special Meetings. Special meetings of the Board may be called
by the president or by a majority of the directors.

            2.6   Notice of Meetings; Waiver of Notice. Notice of the time and
place of each special meeting of the Board, and of each annual meeting not held
immediately after the annual meeting of stockholders and at the same place,
shall be given to each director by mailing it to him at his residence or usual
place of business at least three days before the meeting, or by delivering or
telephoning or telegraphing it to him at least two days before the meeting.
Notice of a special meeting also shall state the purpose or purposes for which
the meeting is called. Notice need not be given to any director who submits a
signed waiver of notice before or after the meeting or who attends the meeting
without protesting at the beginning of the meeting the transaction of any
business because the meeting was not lawfully called or convened. Notice of any
adjourned meeting need not be given, other than by announcement at the meeting
at which the adjournment is taken.

            2.7   Board or Committee Action Without a Meeting. Any action
required or permitted to be taken by the Board or by any committee of the Board
may be taken without a meeting, if all the members of the Board or the committee
consent in writing to the adoption of a

<PAGE>

resolution authorizing the action. The resolution and the written consents by
the members of the Board or the committee shall be filed with the minutes of the
proceedings of the Board or the committee.

            2.8   Participation in Board or Committee Meetings by Conference
Telephone. Any or all members of the Board or any committee of the Board may
participate in a meeting of the Board or the committee by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation by such means
shall constitute presence in person at the meeting.

            2.9   Resignation and Removal of Directors. Any director may resign
at any time by delivering his resignation in writing to the president or
secretary of the corporation, to take effect at the time specified in the
resignation; the acceptance of a resignation, unless required by its terms,
shall not be necessary to make it effective. Any or all of the directors may be
removed at any time, either with or without cause, by vote of the stockholders.

            2.10  Vacancies. Any vacancy in the Board, including one created by
an increase in the number of directors, may be filled for the unexpired term by
a majority vote of the remaining directors, though less than a quorum.

            2.11  Compensation. Directors shall receive such compensation as the
Board determines, together with reimbursement of their reasonable expenses in
connection with the performance of their duties. A director also may be paid for
serving the corporation or its affiliates or subsidiaries in other capacities.

3. COMMITTEES.

            3.1   Executive Committee. The Board, by resolution adopted by a
majority of the entire Board, may designate an executive committee of one or
more directors, which shall have all the powers and authority of the Board,
except as otherwise provided in the resolution, section 141(c) of the General
Corporation Law of Delaware or any other applicable law. The

<PAGE>

members of the executive committee shall serve at the pleasure of the Board. All
action of the executive committee shall be reported to the Board at its next
meeting.

            3.2   Other Committees. The Board, by resolution adopted by a
majority of the entire Board, may designate other committees of one or more
directors, which shall serve at the Board's pleasure and have such powers and
duties as the Board determines.

            3.3   Rules Applicable to Committees. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In case of the absence
or disqualification of any member of a committee, the member or members present
at a meeting of the committee and not disqualified, whether or not a quorum, may
unanimously appoint another director to act at the meeting in place of the
absent or disqualified member. All action of a committee shall be reported to
the Board at its next meeting. Each committee shall adopt rules of procedure and
shall meet as provided by those rules or by resolutions of the Board.

4.    OFFICERS.

            4.1   Number; Security. The executive officers of the corporation
shall be the president, one or more vice presidents (including an executive vice
president, if the Board so determines), a secretary and a treasurer. Any two or
more offices may be held by the same person. The board may require any officer,
agent or employee to give security for the faithful performance of his duties.

            4.2   Election; Term of Office. The executive officers of the
corporation shall be elected annually by the Board, and each such officer shall
hold office until the next annual meeting of the Board and until the election of
his successor, subject to the provisions of section 4.4.

            4.3   Subordinate Officers. The Board may appoint subordinate
officers (including assistant secretaries and assistant treasurers), agents or
employees, each of whom shall

<PAGE>

hold office for such period and have such powers and duties as the Board
determines. The Board may delegate to any executive officer or committee the
power to appoint and define the powers and duties of any subordinate officers,
agents or employees.

            4.4   Resignation and Removal of Officers. Any officer may resign at
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary to make it effective. Any officer elected or appointed by the Board or
appointed by an executive officer or by a committee may be removed by the Board
either with or without cause, and in the case of an officer appointed by an
executive officer or by a committee, by the officer or committee that appointed
him or by the president.

            4.5   Vacancies. A vacancy in any office may be filled for the
unexpired term in the manner prescribed in sections 4.2 and 4.3 for election or
appointment to the office.

            4.6   Chairman. The Chairman of the Board shall preside over all
meetings of the Board at which he is present, and shall have such other powers
and duties as chairman of the boards of corporations usually have or the Board
assigns to him.

            4.7   The Chief Executive Officer. Subject to the control of the
Board, the chief executive officer of the corporation shall manage and direct
the daily business and affairs of the corporation and shall communicate to the
Board, and any Committee thereof, reports, proposals and recommendations for
their respective consideration or action. He may do and perform all acts on
behalf of the Corporation and shall preside at all meetings of the stockholders
if present thereat, and in the absence of the Chairman of the Board of Directors
have such powers and perform such duties as the Board or the chairman may from
time to time prescribe or as may be prescribed in these By-laws, and in the
event of the absence, incapacity or inability to act of the chairman, then the
chief executive officer shall perform the duties and exercise the powers of the
chairman.

            4.8   The President. Subject to the control of the Board, the
president shall have

<PAGE>

general supervision over the business of the corporation and shall have such
other powers and duties as presidents of corporations usually have or as the
Board assigns to him.

            4.9   Vice President. Each vice president shall have such powers and
duties as the Board or the president assigns to him.

            4.10  The Treasurer. The treasurer shall be in charge of the
corporation's books and accounts. Subject to the control of the Board, he shall
have such other powers and duties as the Board or the president assigns to him.

            4.11  The Secretary. The secretary shall be the secretary of, and
keep the minutes of, all meetings of the Board and the stockholders, shall be
responsible for giving notice of all meetings of stockholders and the Board, and
shall keep the seal and, when authorized by the Board, apply it to any
instrument requiring it. Subject to the control of the Board, he shall have such
powers and duties as the Board or the president assigns to him. In the absence
of the secretary from any meeting, the minutes shall be kept by the person
appointed for that purpose by the presiding officer.

            4.12  Salaries. The Board may fix the officers' salaries, if any, or
it may authorize the president to fix the salary of any other officer.

5. SHARES.

            5.1   Certificates. The corporation's shares shall be represented by
certificates in the form approved by the Board. Each certificate shall be signed
by the president or a vice president, and by the secretary or an assistant
secretary or the treasurer or an assistant treasurer, and shall be sealed with
the corporation's seal or a facsimile of the seal. Any or all of the signatures
on the certificate may be a facsimile.

            5.2   Transfers. Shares shall be transferable only on the
corporation's books, upon surrender of the certificate for the shares, properly
endorsed. The Board may require satisfactory

<PAGE>

surety before issuing a new certificate to replace a certificate claimed to have
been lost or destroyed.

            5.3   Determination of Stockholders of Record. The Board may fix, in
advance, a date as the record date for the determination of stockholders
entitled to notice of or to vote at any meeting of the stockholders, or to
express consent to or dissent from any proposal without a meeting, or to receive
payment of any dividend or the allotment of any rights, or for the purpose of
any other action. The record date may not be more than 60 or fewer than 10 days
before the date of the meeting or more than 60 days before any other action.

6. INDEMNIFICATION AND INSURANCE.

            6.1   Right to Indemnification. Each person who was or is a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding"), by reason of the fact that he, or a person of whom he is the
legal representative, is or was a director or officer of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action or inaction in an
official capacity or in any other capacity while serving as director, officer,
employee or agent, shall be indemnified and held harmless by the corporation to
the fullest extent permitted by the General Corporation Law of Delaware, as
amended from time to time, against all costs, charges, expenses, liabilities and
losses (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith, and that indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his heirs, executors and administrators;
provided, however, that, except as provided in section 6.2, the corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by that person, only if that proceeding
(or part thereof) was authorized by the Board. The right to indemnification
conferred in these by-laws shall be a contract right and shall include the right
to be paid by the corporation the

<PAGE>

expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that, if the General Corporation Law of
Delaware, as amended from time to time, requires, the payment of such expenses
incurred by a director or officer in his capacity as a director or officer (and
not in any other capacity in which service was or is rendered by that person
while a director or officer, including, without limitation, service to an
employee benefit plan) in advance of the final disposition of a proceeding shall
be made only upon delivery to the corporation of an undertaking, by or on behalf
of such director or officer, to repay all amounts so advanced, if it shall
ultimately be determined that such director or officer is not entitled to be
indemnified under these by-laws or otherwise. The corporation may, by action of
its Board, provide indemnification to employees and agents of the corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.

            6.2   Right of Claimant to Bring Suit. If a claim under section 6.1
is not paid in full by the corporation within 30 days after a written claim has
been received by the corporation, the claimant may at any time thereafter bring
suit against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant also shall be entitled to be paid
the expense of prosecuting that claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition, where the required
undertaking, if any, is required and has been tendered to the corporation) that
the claimant has failed to meet a standard of conduct that makes it permissible
under Delaware law for the corporation to indemnify the claimant for the amount
claimed. Neither the failure of the corporation (including its Board, its
independent legal counsel or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
permissible in the circumstances because he has met that standard of conduct,
nor an actual determination by the corporation (including its Board, its
independent counsel or its stockholders) that the claimant has not met that
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has failed to meet that standard of conduct.

            6.3   Non-Exclusivity of Rights. The right to indemnification and
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in

<PAGE>

this section 6 shall not be exclusive of any other right any person may have or
hereafter acquire under any statute, provision of the certificate of
incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.

            6.4   Insurance. The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against that expense,
liability or loss under Delaware law.

            6.5   Expenses as a Witness. To the extent any director, officer,
employee or agent of the corporation is by reason of such position, or a
position with another entity at the request of the corporation, a witness in any
action, suit or proceeding, he shall be indemnified against all costs and
expenses actually and reasonably incurred by him or on his behalf in connection
therewith.

            6.6   Indemnity Agreements. The corporation may enter into agreement
with any director, officer, employee or agent of the corporation providing for
indemnification to the fullest extent permitted by Delaware law.

7. MISCELLANEOUS.

            7.1   Seal. The Board shall adopt a corporate seal, which shall be
in the form of a circle and shall bear the corporation's name and the year and
state in which it was incorporated.

            7.2   Fiscal Year. The Board may determine the corporation's fiscal
year. Until changed by the Board, the last day of the corporation's fiscal year
shall be December 31.

            7.3   Voting of Shares in Other Corporations. Shares in other
corporations held by the corporation may be represented and voted by an officer
of this corporation or by a proxy or proxies appointed by one of them. The Board
may, however, appoint some other person to

<PAGE>

vote the shares.

            7.4   Amendments. By-laws may be amended, repealed or adopted by the
stockholders.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.11
<SEQUENCE>5
<FILENAME>y04700exv3w11.txt
<DESCRIPTION>CERTIFICATE OF INCORPORATION
<TEXT>
<PAGE>

                                                                    Exhibit 3.11

                          CERTIFICATE OF INCORPORATION

                                       OF

                         PHIBRO ANIMAL HEALTH U.S., INC.

            The undersigned incorporator, in order to form a corporation under
the General Corporation Law of Delaware, certifies as follows:

            FIRST:  The name of the corporation is Phibro Animal Health U.S,
Inc.

            SECOND: The registered office of the corporation is to be located at
1013 Centre Road, Wilmington, Delaware, 19805-1297, New Castle County. The name
of its registered agent at that address is Corporation Service Company.

            THIRD:  The purpose of the corporation is to engage in any lawful
act or activity for which corporations may be organized under the General
Corporation Law of Delaware.

            FOURTH: The corporation shall have the authority to issue 1,000
shares of common stock, par value $0.01 per share.

            FIFTH:  The name and mailing address of the incorporator are as
follows:

                    Alexa D. Isbell
                    Proskauer Rose LLP
                    1585 Broadway
                    New York, New York 10036

            SIXTH:  Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
corporation under the provisions of Section 279 of Title 8 of the Delaware Code
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the corporation, as the case may be, and also on the
corporation.

<PAGE>

            SEVENTH: A director of this corporation shall not be personally
liable to the corporation or its stockholders for monetary damages for the
breach of any fiduciary duty as a director, except in the case of (a) any breach
of the director's duty of loyalty to the corporation or its stockholders, (b)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (c) under section 174 of the General Corporation Law
of the State of Delaware or (d) for any transaction from which the director
derives an improper personal benefit. Any repeal or modification of this Article
by the stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification with respect to acts or omissions occurring prior to such repeal
or modification.

            EIGHTH: The corporation shall, to the fullest extent permitted by
law, as the same is now or may hereafter be in effect, indemnify each person
(including the heirs, executors, administrators and other personal
representatives of such person) against expenses including attorneys' fees,
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by such person in connection with any threatened, pending or completed
suit, action or proceeding (whether civil, criminal, administrative or
investigative in nature or otherwise) in which such person may be involved by
reason of the fact that he or she is or was a director or officer of the
corporation or is or was serving any other incorporated or unincorporated
enterprise in such capacity at the request of the corporation.

            NINTH:  Unless, and except to the extent that, the by-laws of the
corporation shall so require, the election of directors of the corporation need
not be by written ballot.

            TENTH:  The corporation hereby confers the power to adopt, amend or
repeal bylaws of the corporation upon the directors.

            IN WITNESS WHEREOF, I have hereunto set my hand this eleventh day of
July, 2000.

                                                      /s/ Alexa D. Isbell
                                                      --------------------------
                                                      Sole Incorporator


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.12
<SEQUENCE>6
<FILENAME>y04700exv3w12.txt
<DESCRIPTION>BY-LAWS
<TEXT>
<PAGE>

                                                                    Exhibit 3.12
                                     BY-LAWS

                                       OF

                         PHIBRO ANIMAL HEALTH U.S., INC.

1.    MEETINGS OF STOCKHOLDERS.

            1.1   Annual Meeting. The annual meeting of stock-holders shall be
held on the first Monday of June in each year, or as soon thereafter as
practicable, and shall be held at a place and time determined by the board of
directors (the "Board").

            1.2   Special Meetings. Special meetings of the stockholders may be
called by resolution of the Board or the president and shall be called by the
president or secretary upon the written request (stating the purpose or purposes
of the meeting) of a majority of the directors then in office or of the holders
of a majority of the outstanding shares entitled to vote. Only business related
to the purposes set forth in the notice of the meeting may be transacted at a
special meeting.

            1.3   Place and Time of Meetings. Meetings of the stockholders may
be held in or outside Delaware at the place and time specified by the Board or
the officers or stockholders requesting the meeting.

            1.4   Notice of Meetings; Waiver of Notice. Written notice of each
meeting of stockholders shall be given to each stockholder entitled to vote at
the meeting, except that (a) it shall not be necessary to give notice to any
stockholder who submits a signed waiver of notice before or after the meeting,
and (b) no notice of an adjourned meeting need be given, except when required
under section 1.5 below or by law. Each notice of a meeting shall be given,
personally or by mail, not fewer than 10 nor more than 60 days before the
meeting and shall state the time and place of the meeting, and, unless it is the
annual meeting, shall state at whose direction or request the meeting is called
and the purposes for which it is called. If mailed, notice shall be considered
given when mailed to a stockholder at his address on the corporation's

<PAGE>

records. The attendance of any stockholder at a meeting, without protesting at
the beginning of the meeting that the meeting is not lawfully called or
convened, shall constitute a waiver of notice by him.

            1.5   Quorum. At any meeting of stockholders, the presence in person
or by proxy of the holders of a majority of the shares entitled to vote shall
constitute a quorum for the transaction of any business. In the absence of a
quorum, a majority in voting interest of those present or, if no stockholders
are present, any officer entitled to preside at or to act as secretary of the
meeting, may adjourn the meeting until a quorum is present. At any adjourned
meeting at which a quorum is present, any action may be taken that might have
been taken at the meeting as originally called. No notice of an adjourned
meeting need be given, if the time and place are announced at the meeting at
which the adjournment is taken, except that, if adjournment is for more than 30
days or if, after the adjournment, a new record date is fixed for the meeting,
notice of the adjourned meeting shall be given pursuant to section 1.4.

            1.6   Voting; Proxies. Each stockholder of record shall be entitled
to one vote for each share registered in his name. Corporate action to be taken
by stockholder vote, other than the election of directors, shall be authorized
by a majority of the votes cast at a meeting of stockholders, except as
otherwise provided by law or by section 1.8. Directors shall be elected in the
manner provided in section 2.1. Voting need not be by ballot, unless requested
by a majority of the stockholders entitled to vote at the meeting or ordered by
the chairman of the meeting. Each stockholder entitled to vote at any meeting of
stockholders or to express consent to or dissent from corporate action in
writing without a meeting may authorize another person to act for him by proxy.
No proxy shall be valid after three years from its date, unless it provides
otherwise.

            1.7   List of Stockholders. Not fewer than 10 days prior to the date
of any meeting of stockholders, the secretary of the corporation shall prepare a
complete list of stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in his name. For a period of not fewer than 10 days prior to
the meeting, the list shall be available during ordinary business hours

<PAGE>

for inspection by any stockholder for any purpose germane to the meeting. During
this period, the list shall be kept either (a) at a place within the city where
the meeting is to be held, if that place shall have been specified in the notice
of the meeting, or (b) if not so specified, at the place where the meeting is to
be held. The list shall also be available for inspection by stockholders at the
time and place of the meeting.

            1.8   Action by Consent Without a Meeting. Any action required or
permitted to be taken at any meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not fewer than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voting. Prompt notice of the taking of any such
action shall be given to those stockholders who did not consent in writing.

      2.    BOARD OF DIRECTORS.

            2.1   Number, Qualification, Election and Term of Directors. The
business of the corporation shall be managed by the entire Board, which
initially shall consist of three (3) directors. The number of directors may be
changed by resolution of a majority of the Board or by the stockholders, but no
decrease may shorten the term of any incumbent director. Directors shall be
elected at each annual meeting of stockholders by a plurality of the votes cast
and shall hold office until the next annual meeting of stockholders and until
the election and qualification of their respective successors, subject to the
provisions of section 2.9. As used in these by-laws, the term "entire Board"
means the total number of directors the corporation would have, if there were no
vacancies on the Board.

            2.2   Quorum and Manner of Acting. A majority of the entire Board
shall constitute a quorum for the transaction of business at any meeting, except
as provided in section 2.10. Action of the Board shall be authorized by the vote
of the majority of the directors present at the time of the vote, if there is a
quorum, unless otherwise provided by law or these by-laws. In the absence of a
quorum, a majority of the directors present may adjourn any meeting from

<PAGE>

time to time until a quorum is present.

            2.3   Place of Meetings. Meetings of the Board may be held in or
the election and

            2.4   Annual and Regular Meetings. Annual meetings of the Board, for
the election of officers and consideration of other matters, shall be held
either (a) without notice immediately after the annual meeting of stockholders
and at the same place, or (b) as soon as practicable after the annual meeting of
stockholders, on notice as provided in section 2.6. Regular meetings of the
Board may be held without notice at such times and places as the Board
determines, If the day fixed for a regular meeting is a legal holiday, the
meeting shall be held on the next business day.

            2.5   Special Meetings. Special meetings of the Board may be called
by the president or by a majority of the directors.

            2.6   Notice of Meetings; Waiver of Notice. Notice of the time and
place of each special meeting of the Board, and of each annual meeting not held
immediately after the annual meeting of stockholders and at the same place,
shall be given to each director by mailing it to him at his residence or usual
place of business at least three days before the meeting, or by delivering or
telephoning or telegraphing it to him at least two days before the meeting.
Notice of a special meeting also shall state the purpose or purposes for which
the meeting is called. Notice need not be given to any director who submits a
signed waiver of notice before or after the meeting or who attends the meeting
without protesting at the beginning of the meeting the transaction of any
business because the meeting was not lawfully called or convened. Notice of any
adjourned meeting need not be given, other than by announcement at the meeting
at which the adjournment is taken.

            2.7   Board or Committee Action Without a Meeting. Any action
required or permitted to be taken by the Board or by any committee of the Board
may be taken without a meeting, if all the members of the Board or the committee
consent in writing to the adoption of a

<PAGE>

resolution authorizing the action. The resolution and the written consents by
the members of the Board or the committee shall be filed with the minutes of the
proceedings of the Board or the committee.

            2.8   Participation in Board or Committee Meetings by Conference
Telephone. Any or all members of the Board or any committee of the Board may
participate in a meeting of the Board or the committee by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation by such means
shall constitute presence in person at the meeting.

            2.9   Resignation and Removal of Directors. Any director may resign
at any time by delivering his resignation in writing to the president or
secretary of the corporation, to take effect at the time specified in the
resignation; the acceptance of a resignation, unless required by its terms,
shall not be necessary to make it effective. Any or all of the directors may be
removed at any time, either with or without cause, by vote of the stockholders.

            2.10  Vacancies. Any vacancy in the Board, including one created by
an increase in the number of directors, may be filled for the unexpired term by
a majority vote of the remaining directors, though less than a quorum.

            2.11  Compensation. Directors shall receive such compensation as the
Board determines, together with reimbursement of their reasonable expenses in
connection with the performance of their duties. A director also may be paid for
serving the corporation or its affiliates or subsidiaries in other capacities.

3. COMMITTEES.

            3.1   Executive Committee. The Board, by resolution adopted by a
majority of the entire Board, may designate an executive committee of one or
more directors, which shall have all the powers and authority of the Board,
except as otherwise provided in the resolution, section 141(c) of the General
Corporation Law of Delaware or any other applicable law. The

<PAGE>

members of the executive committee shall serve at the pleasure of the Board. All
action of the executive committee shall be reported to the Board at its next
meeting.

            3.2   Other Committees. The Board, by resolution adopted by a
majority of the entire Board, may designate other committees of one or more
directors, which shall serve at the Board's pleasure and have such powers and
duties as the Board determines.

            3.3   Rules Applicable to Committees. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In case of the absence
or disqualification of any member of a committee, the member or members present
at a meeting of the committee and not disqualified, whether or not a quorum, may
unanimously appoint another director to act at the meeting in place of the
absent or disqualified member. All action of a committee shall be reported to
the Board at its next meeting. Each committee shall adopt rules of procedure and
shall meet as provided by those rules or by resolutions of the Board.

4.    OFFICERS.

            4.1   Number; Security. The executive officers of the corporation
shall be the president, one or more vice presidents (including an executive vice
president, if the Board so determines), a secretary and a treasurer. Any two or
more offices may be held by the same person. The board may require any officer,
agent or employee to give security for the faithful performance of his duties.

            4.2   Election; Term of Office. The executive officers of the
corporation shall be elected annually by the Board, and each such officer shall
hold office until the next annual meeting of the Board and until the election of
his successor, subject to the provisions of section 4.4.

            4.3   Subordinate Officers. The Board may appoint subordinate
officers (including assistant secretaries and assistant treasurers), agents or
employees, each of whom shall

<PAGE>

hold office for such period and have such powers and duties as the Board
determines. The Board may delegate to any executive officer or committee the
power to appoint and define the powers and duties of any subordinate officers,
agents or employees.

            4.4   Resignation and Removal of Officers. Any officer may resign at
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary to make it effective. Any officer elected or appointed by the Board or
appointed by an executive officer or by a committee may be removed by the Board
either with or without cause, and in the case of an officer appointed by an
executive officer or by a committee, by the officer or committee that appointed
him or by the president.

            4.5   Vacancies. A vacancy in any office may be filled for the
unexpired term in the manner prescribed in sections 4.2 and 4.3 for election or
appointment to the office.

            4.6   Chairman. The Chairman of the Board shall preside over all
meetings of the Board at which he is present, and shall have such other powers
and duties as chairman of the boards of corporations usually have or the Board
assigns to him.

            4.7   The Chief Executive Officer. Subject to the control of the
Board, the chief executive officer of the corporation shall manage and direct
the daily business and affairs of the corporation and shall communicate to the
Board, and any Committee thereof, reports, proposals and recommendations for
their respective consideration or action. He may do and perform all acts on
behalf of the Corporation and shall preside at all meetings of the stockholders
if present thereat, and in the absence of the Chairman of the Board of Directors
have such powers and perform such duties as the Board or the chairman may from
time to time prescribe or as may be prescribed in these By-laws, and in the
event of the absence, incapacity or inability to act of the chairman, then the
chief executive officer shall perform the duties and exercise the powers of the
chairman.

            4.8   The President. Subject to the control of the Board, the
president shall have

<PAGE>

general supervision over the business of the corporation and shall have such
other powers and duties as presidents of corporations usually have or as the
Board assigns to him.

            4.9   Vice President. Each vice president shall have such powers and
duties as the Board or the president assigns to him.

            4.10  The Treasurer. The treasurer shall be in charge of the
corporation's books and accounts. Subject to the control of the Board, he shall
have such other powers and duties as the Board or the president assigns to him.

            4.11  The Secretary. The secretary shall be the secretary of, and
keep the minutes of, all meetings of the Board and the stockholders, shall be
responsible for giving notice of all meetings of stockholders and the Board, and
shall keep the seal and, when authorized by the Board, apply it to any
instrument requiring it. Subject to the control of the Board, he shall have such
powers and duties as the Board or the president assigns to him. In the absence
of the secretary from any meeting, the minutes shall be kept by the person
appointed for that purpose by the presiding officer.

            4.12  Salaries. The Board may fix the officers' salaries, if any, or
it may authorize the president to fix the salary of any other officer.

5. SHARES.

            5.1   Certificates. The corporation's shares shall be represented by
certificates in the form approved by the Board. Each certificate shall be signed
by the president or a vice president, and by the secretary or an assistant
secretary or the treasurer or an assistant treasurer, and shall be sealed with
the corporation's seal or a facsimile of the seal. Any or all of the signatures
on the certificate may be a facsimile.

            5.2   Transfers. Shares shall be transferable only on the
corporation's books, upon surrender of the certificate for the shares, properly
endorsed. The Board may require satisfactory

<PAGE>

surety before issuing a new certificate to replace a certificate claimed to have
been lost or destroyed.

            5.3   Determination of Stockholders of Record. The Board may fix, in
advance, a date as the record date for the determination of stockholders
entitled to notice of or to vote at any meeting of the stockholders, or to
express consent to or dissent from any proposal without a meeting, or to receive
payment of any dividend or the allotment of any rights, or for the purpose of
any other action. The record date may not be more than 60 or fewer than 10 days
before the date of the meeting or more than 60 days before any other action.

6. INDEMNIFICATION AND INSURANCE.

            6.1   Right to Indemnification. Each person who was or is a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding"), by reason of the fact that he, or a person of whom he is the
legal representative, is or was a director or officer of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action or inaction in an
official capacity or in any other capacity while serving as director, officer,
employee or agent, shall be indemnified and held harmless by the corporation to
the fullest extent permitted by the General Corporation Law of Delaware, as
amended from time to time, against all costs, charges, expenses, liabilities and
losses (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith, and that indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his heirs, executors and administrators;
provided, however, that, except as provided in section 6.2, the corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by that person, only if that proceeding
(or part thereof) was authorized by the Board. The right to indemnification
conferred in these by-laws shall be a contract right and shall include the right
to be paid by the corporation the

<PAGE>

expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that, if the General Corporation Law of
Delaware, as amended from time to time, requires, the payment of such expenses
incurred by a director or officer in his capacity as a director or officer (and
not in any other capacity in which service was or is rendered by that person
while a director or officer, including, without limitation, service to an
employee benefit plan) in advance of the final disposition of a proceeding shall
be made only upon delivery to the corporation of an undertaking, by or on behalf
of such director or officer, to repay all amounts so advanced, if it shall
ultimately be determined that such director or officer is not entitled to be
indemnified under these by-laws or otherwise. The corporation may, by action of
its Board, provide indemnification to employees and agents of the corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.

            6.2   Right of Claimant to Bring Suit. If a claim under section 6.1
is not paid in full by the corporation within 30 days after a written claim has
been received by the corporation, the claimant may at any time thereafter bring
suit against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant also shall be entitled to be paid
the expense of prosecuting that claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition, where the required
undertaking, if any, is required and has been tendered to the corporation) that
the claimant has failed to meet a standard of conduct that makes it permissible
under Delaware law for the corporation to indemnify the claimant for the amount
claimed. Neither the failure of the corporation (including its Board, its
independent legal counsel or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
permissible in the circumstances because he has met that standard of conduct,
nor an actual determination by the corporation (including its Board, its
independent counsel or its stockholders) that the claimant has not met that
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has failed to meet that standard of conduct.

            6.3   Non-Exclusivity of Rights. The right to indemnification and
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in

<PAGE>

this section 6 shall not be exclusive of any other right any person may have or
hereafter acquire under any statute, provision of the certificate of
incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.

            6.4   Insurance. The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against that expense,
liability or loss under Delaware law.

            6.5   Expenses as a Witness. To the extent any director, officer,
employee or agent of the corporation is by reason of such position, or a
position with another entity at the request of the corporation, a witness in any
action, suit or proceeding, he shall be indemnified against all costs and
expenses actually and reasonably incurred by him or on his behalf in connection
therewith.

            6.6   Indemnity Agreements. The corporation may enter into agreement
with any director, officer, employee or agent of the corporation providing for
indemnification to the fullest extent permitted by Delaware law.

7. MISCELLANEOUS.

            7.1   Seal. The Board shall adopt a corporate seal, which shall be
in the form of a circle and shall bear the corporation's name and the year and
state in which it was incorporated.

            7.2   Fiscal Year. The Board may determine the corporation's fiscal
year. Until changed by the Board, the last day of the corporation's fiscal year
shall be December 31.

            7.3   Voting of Shares in Other Corporations. Shares in other
corporations held by the corporation may be represented and voted by an officer
of this corporation or by a proxy or proxies appointed by one of them. The Board
may, however, appoint some other person to

<PAGE>

vote the shares.

            7.4   Amendments. By-laws may be amended, repealed or adopted by the
stockholders.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.20
<SEQUENCE>7
<FILENAME>y04700exv3w20.txt
<DESCRIPTION>ARTICLES OF ASSOCIATION AND DEED OF INCORPORATION
<TEXT>
<PAGE>

                                                                    Exhibit 3.20

ARTICLES OF ASSOCIATION:

Article 1. Definitions.

1.1   In these Articles of Association. the following terms shall have the
      following meanings:

      "Share" means a share in the capital of the Company.

      "Shareholder" means a holder of one or more Shares.

      "General Meeting" or "General Meeting of Shareholders" means the body of
      the Company consisting of the Shareholders or (as the case may be) a
      meeting of Shareholders (or their representatives) and other persons
      entitled to attend such meetings.

      "Managing Director" means a member of the Management Board; unless stated
      otherwise this includes each Managing Director A and each Managing
      Director B.

      "Management Board" means the management board of the Company.

      "in writing" means by letter, by telecopier, by e-mail, or by message
      which is transmitted via any other current means of communication and
      which can be received in the written form.

      "Distributable Equity" means the part of the Company's equity which
      exceeds the aggregate of the issued capital and the reserves which must be
      maintained pursuant to the law. "Company" means the company the internal
      organisation of which is governed by these Articles of Association.

1.2   References to "Articles" refer to articles which are part of these
      Articles of Association, except where expressly indicated otherwise.

Article 2. Name and Official Seat.

2.1   The Company's name is:

      Philipp Brothers Netherlands III B.V.

2.2   The official seat of the Company is in Amsterdam.

Article 3. Objects.

The objects of the Company are:

(a)   to incorporate. to participate in any way whatsoever in, to manage, to
      supervise businesses and companies;

(b)   to finance businesses and companies;

(c)   to borrow, to lend and to raise funds, including the issue of bonds,
      promissory notes or other securities or evidence of indebtedness as well
      as to enter into agreements in connection with aforementioned activities;

(d)   to render advice and services to businesses and companies with which the
      Company forms a group and to third parties;

(e)   to grant guarantees. to bind the Company and to pledge its assets for
      obligations of businesses and companies with which it forms a group and on
      behalf of third parties;

(f)   to acquire, alienate, manage and exploit registered property and items of
      properly in general;

(g)   to trade in currencies, securities and items of property in general;

<PAGE>

(h)   to develop and trade in patents, trade marks, licenses, know-how and other
      industrial property rights;

(i)   to perform any and all activities of an industrial, financial or
      commercial nature;

and to do all that is connected therewith or may be conducive thereto, all to be
interpreted in the broadest sense.

Article 4. Authorised Capital.

4.1   The authorised capital of the Company is ninety thousand euro (EUR
      90,000).

4.2   The authorised capital of the Company is divided into nine hundred (900)
      Shares with a nominal value of one hundred euro (EUR 100) each.

4.3   All Shares shall be registered. No share certificates shall be issued.

Article 5. Register of Shareholders.

5.1   The Management Board shall keep a register of Shareholders in which the
      names and addresses of all Shareholders are recorded.

5.2   Section 2:194 of the Dutch Civil Code applies to the register of
      Shareholders.

Article 6. Issuance of Shares.

6.1   Shares may be issued pursuant to a resolution of the General Meeting. The
      General Meeting may transfer this authority to another body of the Company
      and may also revoke such transfer.

6.2   A resolution to issue Shares shall stipulate the issue price and the other
      conditions of issue.

6.3   The issue of a Share shall furthermore require a notarial deed, to be
      executed for that purpose before a civil law notary registered in the
      Netherlands, to which deed those involved in the issuance shall be
      parties.

6.4   Upon issuance of Shares, each Shareholder shall have a right of
      pre-emption in proportion to the aggregate nominal value of his Shares,
      subject to the relevant limitations prescribed by law and the provisions
      of Article 6.5.

6.5   Prior to each single issuance of Shares, the right of pre-emption may be
      limited or excluded by the body of the Company competent to issue such
      Shares.

6.6   The full nominal value of each Share must be paid upon subscription.

Article 7. Own Shares; Reduction of the Issued Capital.

7.1   The Company and its subsidiaries may acquire fully paid in Shares or
      depositary receipts thereof: with due observance of the limitations
      prescribed by law.

<PAGE>

7.2   The Company and its subsidiaries may grant loans with a view to a
      subscription for or an acquisition of Shares or depositary receipts
      thereof, but not in excess of the amount of the Company's distributable
      reserves.

7.3   The General Meeting may resolve to reduce the Company's issued capital in
      accordance with the relevant provisions prescribed by law.

Article 8. Transfer of Shares.

8.1   The transfer of a Share shall require a notarial deed, to be executed for
      that purpose before a civil law notary registered in the Netherlands, to
      which deed those involved in the transfer shall be parties.

8.2   Unless the Company itself is party to the transfer, the rights
      attributable to the Share can only be exercised after the Company has
      acknowledged said transfer or said deed has been served upon it, in
      accordance with the relevant provisions of the law.

Article 9. Share Transfer Restrictions (Offer to co-Shareholders).

9.1   The provisions of this Article 9 below are applicable to a transfer of one
      or more Shares, unless (i) all Shareholders have granted permission for
      the intended transfer in writing, which permission shall then be valid for
      a period of three months, or (ii) the Shareholder concerned is obliged by
      law to transfer his Shares to a former Shareholder.

9.2   A transfer of one or more Shares can only be effected after the Shares
      have been offered for sale to the co-Shareholders first. The relevant
      Shareholder (the "Offeror") shall make the offer by means of a written
      notification to the Management Board, stating the number of Shares he
      wishes to transfer and the person or persons to whom he wishes to transfer
      the Shares. The Management Board shall give notice of the offer to the
      co-Shareholders. Co-Shareholders interested in purchasing one or more of
      the offered Shares (the "Interested Parties") must notify the Management
      Board of their interest. If the Company itself is a co-Shareholder, it
      shall only be entitled to act as an Interested Party with the consent of
      the Offeror.

9.3   The price for which the offered Shares can be purchased by the Interested
      Parties shall be set by the Offeror and the Interested Parties in joint
      consultation or by one or more experts designated by them. If an agreement
      on the price or on the expert or experts, as the case may be, is not
      reached, the price shall be set by one or more independent experts to be
      designated, at the request of one or more of the parties concerned, by the
      chairperson of the Chamber of Commerce and Factories where the Company is
      registered in the Commercial Register.

9.4   Within one month of the set price having been notified to them, the
      Interested Parties must give notice to the Management Board of the number
      of the offered Shares they wish to purchase. Once the notice mentioned in
      the preceding sentence has been given, an Interested Party can only
      withdraw with the consent of the other Interested Parties.

<PAGE>

9.5   If the Interested Parties together wish to purchase more Shares than have
      been offered the offered Shares shall be distributed among them. The
      Interested Parties shall decide together upon the distribution. If an
      agreement on the distribution is not reached. the Management Board shall
      determine the distribution, as tar as possible in propol1ion to the total
      nominal value of the Shares held by each Interested Pat1y at the time of
      the distribution. The number of offered Shares allocated to an Interested
      Party cannot exceed the number of Shares he wishes to purchase.

9.6   The Offeror may withdraw his offer up to one month from the day on which
      he is informed of the Interested Party or Pal1ies to whom he can sell all
      offered Shares and at what price.

9.7   If it becomes apparent that none of the co-Shareholders is an Interested
      Party or that not all offered Shares will be purchased against payment in
      cash by one or more Interested Parties, the Offeror may, within a period
      of three months, freely transfer all the offered Shares, but not part
      thereof, to the person or persons listed in the offer.

Article 10. Pledging of Shares and Usufruct in Shares.

10.1  The provisions of Article 8 shall apply by analogy to the pledging of
      Shares and to the creation or transfer of a usufruct in Shares.

10.2  If a Share is pledged or if a usufruct is created in a Share, the voting
      rights attributable to such Share may not be assigned to the pledgee or
      usufructuary.

Article 11. Depositary Receipts for Shares.

The Company shall not cooperate in the issuance of depositary receipts for
Shares.

Article 12. Managing Directors.

12.1  The Management Board shall consist of at least one Managing Director A and
      one Managing Director B. Both individuals and legal entities can be
      Managing Directors.

12.2  Managing Directors are appointed, as a Managing Director A or as a
      Managing Director B, by the General Meeting.

12.3  A Managing Director may be suspended or removed by the General Meeting at
      any time.

12.4  The authority to establish remuneration and other conditions of employment
      for Managing Directors is vested in the General Meeting.

Article 13. Duties, Decision-making Process and Allocation of Duties.

13.1  The Management Board shall be entrusted with the management of the
      Company.

13.2  The Management Board may establish rules regarding its decision-making
      process and working methods. In this context, the Management Board may
      also determine the duties which each Managing Director shall be
      particularly responsible for. The General Meeting

<PAGE>

      may resolve that such rules and allocation of duties must be put in
      writing and that such rules and allocation of duties shall he subject to
      its approval.

13.3  Management Board resolutions at all times may be adopted in writing,
      provided the proposal concerned is submitted to all Managing Directors
      then in office and none of them objects to this manner of adopting
      resolutions.

Article 14. Representation; Conflicts of Interest.

14.1  The Company shall be represented by the Management Board. The authority to
      represent the Company shall also be vested in one Managing Director A and
      one Managing Director B acting jointly.

14.2  The Management Board may appoint officers with general or limited power to
      represent the Company. Each officer shall be competent to represent the
      Company, subject to the restrictions imposed on him. The Management Board
      shall determine each officer's title. The authority of an officer thus
      appointed may not extend to any transaction where the Company has a
      conflict of interest with the officer concerned or with one or more
      Managing Directors.

14.3  In the event of a conflict of interest between the Company and a Managing
      Director, the provisions of Article 14.1 shall continue to apply
      unimpaired unless the General Meeting has appointed one or more other
      persons to represent the Company in the case at hand or in general in the
      event of such a conflict. A resolution of the Management Board with
      respect to a matter involving a conflict of interest with a Managing
      Director in a private capacity shall be subject to the approval of the
      General Meeting, but the absence of such approval shall not affect the
      authority of the Management Board or the Managing Directors to represent
      the Company.

Article 15. Approval of Management Board Resolutions.

15.1  The General Meeting may require Management Board resolutions to be subject
      to its approval. The Management Board shall be notified in writing of such
      resolutions, which shall be clearly specified.

15.2  The absence of approval by the General Meeting of a resolution referred to
      in this Article 15 shall not affect the authority of the Management Board
      or the Managing Directors to represent the Company.

Article 16. Vacancy or Inability to Act.

      If a seat on the Management Board is vacant (`ontstentenis') or a Managing
      Director is unable to perform his duties (`belet'), the remaining Managing
      Directors or Managing Director shall be temporarily entrusted with the
      management of the Company. If all seats on the Management Board are vacant
      or all Managing Directors are unable to perform their duties, the
      management of the Company shall be temporarily entrusted to the person
      designated for that purpose by the General Meeting.

<PAGE>

Article 17. Financial Year and Annual Accounts.

17.1  The Company's financial year shall run from the first day of July through
      the thirtieth day of June.

17.2  Annually, not later than five months after the end of the financial year,
      save where this period is extended by the General Meeting by not more than
      six months by reason of special circumstances, the Management Board shall
      prepare annual accounts, and shall deposit the same for inspection by the
      Shareholders at the Company's office.

17.3  Within the same period, the Management Board shall also deposit the annual
      report for inspection by the Shareholders, unless Section 2:396,
      subsection 6, or Section 2:403 of the Dutch Civil Code applies to the
      Company.

17.4  The annual accounts shall consist of a balance sheet, a profit and loss
      account and explanatory notes.

17.5  The annual accounts shall be signed by the Managing Directors. If the
      signature of one or more of them is missing, this shall be stated and
      reasons for this omission shall be given.

17.6  The Company may, and if the law so requires shall, appoint an accountant
      to audit the annual accounts. Such appointment shall be made by the
      General Meeting.

17.7  The General Meeting shall adopt the annual accounts.

17.8  After adoption of the annual accounts, the General Meeting shall pass a
      resolution concerning release of the Managing Directors from liability for
      the exercise of their duties, insofar as the exercise of such duties is
      reflected in the annual accounts or otherwise disclosed to the General
      Meeting prior to the adoption of the annual accounts. The scope of a
      release from liability shall be subject to limitations by virtue of the
      law.

Article 18. Profits and Distributions.

18.1  The allocation of profits accrued in a financial year shall be determined
      by the General Meeting.

18.2  Distribution of profits shall be made after adoption of the annual
      accounts if permissible under the law given the contents of the annual
      accounts.

18.3  The General Meeting may resolve to make interim distributions and/or to
      make distributions at the expense of any reserve of the Company.

18.4  Distributions may be made only up to an amount which does not exceed the
      amount of the Distributable Equity.

Article 19. General Meetings of Shareholders.

<PAGE>

19.1  The annual General Meeting of Shareholders shall be held within six months
      after the end of the financial year.

19.2  Other General Meetings of Shareholders shall be held as often as the
      Management Board deems such necessary.

19.3  Shareholders representing in the aggregate at least one-tenth of the
      Company's issued capital may request the Management Board to convene a
      General Meeting of Shareholders, stating specifically the business to be
      discussed. If the Management Board has not given proper notice of a
      General Meeting of Shareholders within four weeks following receipt of
      such request such that the meeting can be held within six weeks after
      receipt of the request, the applicants shall be authorised to convene a
      meeting themselves.

Article 20. Notice, Agenda and Venue of Meetings.

20.1  Notice of General Meetings of Shareholders shall be given by the
      Management Board, without prejudice to the provisions of Article 19.3.

20.2  Notice of the meeting shall be given no later than on the fifteenth day
      prior to the day of the meeting.

20.3  The notice convening the meeting shall specify the business to be
      discussed. Other business not specified in such notice may be announced at
      a later date, with due observance of the term referred to in Article 20.2.

20.4  The notice of the meeting shall be sent to the addresses of the
      Shareholders shown in the register of Shareholders.

20.5  General Meetings of Shareholders are held in the municipality in which,
      according to these Articles of Association, the Company has its official
      seat. General Meetings of Shareholders may also be held elsewhere, in
      which case valid resolutions of the General Meeting may only be adopted if
      all of the Company's issued capital is represented.

Article 21. Admittance and Rights at Meetings.

21.1  Each Shareholder shall be entitled to attend the General Meetings of
      Shareholders, to address the meeting and to exercise his voting rights.
      Shareholders may be represented in a meeting by a proxy authorised in
      writing.

21.2  At a meeting, each person present with voting rights must sign the
      attendance list. The chairperson of the meeting may decide that the
      attendance list must also be signed by other persons present at the
      meeting.

21.3  The Managing Directors shall have the right to give advice in the General
      Meetings of Shareholders.

21.4  The chairperson of the meeting shall decide on the admittance of other
      persons to the meeting.

<PAGE>

Article 22. Chairperson and Secretary of the Meeting.

22.1  The chairperson of a General Meeting of Shareholders shall be appointed by
      a majority of the votes cast by the persons with voting rights present at
      the meeting.

22.2  The chairperson of the meeting shall appoint a secretary for the meeting.

Article 23. Minutes; Recording of Shareholders' Resolutions.

23.1  The secretary of a General Meeting of Shareholders shall keep minutes of
      the proceedings at the meeting. The minutes shall be adopted by the
      chairperson and the secretary of the meeting and as evidence thereof shall
      be signed by them.

23.2  The Management Board shall keep record of all resolutions adopted by the
      General Meeting. If the Management Board is not represented at a meeting,
      the chairperson of the meeting shall ensure that the Management Board is
      provided with a transcript of the resolutions adopted, as soon as possible
      after the meeting. The records shall be deposited at the Company's office
      for inspection by the Shareholders. On application, each of them shall be
      provided with a copy of or an extract from the records.

Article 24. Adoption of Resolutions in a Meeting.

24.1  Each Share confers the right to cast one vote.

24.2  To the extent that the law or these Articles of Association do not provide
      otherwise, all resolutions of the General Meeting shall be adopted by a
      simple majority of the votes cast, without a quorum being required.

24.3  If there is a tie in voting, the proposal shall be deemed to have been
      rejected.

24.4  If the formalities for convening and holding of General Meetings of
      Shareholders, as prescribed by law or these Articles of Association, have
      not been complied with, valid resolutions of the General Meeting may only
      be adopted in a meeting, if in such meeting all of the Company's issued
      capital is represented and such resolution is carried by unanimous vote.

Article 25. Adoption of Resolutions without holding Meetings.

25.1  Shareholders may adopt resolutions of the General Meeting in writing
      without holding a meeting, provided they are adopted by the unanimous vote
      of all Shareholders entitled to vote. The provisions of Article 21.3 shall
      apply by analogy.

25.2  Each Shareholder must ensure that the Management Board is informed of the
      resolutions thus adopted as soon as possible in writing. The Management
      Board shall keep record of the resolutions adopted and it shall add such
      records to those referred to in Article 23.2.

Article 26. Amendment of the Articles of Association.

<PAGE>

The General Meeting may resolve to amend these Articles of Association. When a
proposal to amend these Articles of Association is to be made to the General
Meeting, the notice convening the General Meeting must state so and a copy of
the proposal, including the verbatim text thereof: shall be deposited and kept
available at the Company's office for inspection by the Shareholders, until the
conclusion of the meeting.

Article 27. Dissolution and Liquidation.

27.1  The Company may be dissolved pursuant to a resolution to that effect by
      the General Meeting. When a proposal to dissolve the Company is to be made
      to the General Meeting, this must be stated in the notice convening the
      General Meeting.

27.2  If the Company is dissolved pursuant to a resolution of the General
      Meeting, each person who is Managing Director B at the time the
      dissolution takes effect shall become liquidator of the dissolved
      Company's property. Each person who is Managing Director A at the time the
      dissolution takes effect shall cease to be Managing Director by operation
      of law as of that moment Notwithstanding the provisions of Article 14.1,
      each liquidator shall be solely authorised to represent the Company.

27.3  During liquidation, the provisions of these Articles of Association,
      subject to Article 27.2, shall remain in force to the extent possible.

27.4  The balance remaining after payment of the debts of the dissolved Company
      shall be transferred to the Shareholders in proportion to the aggregate
      nominal value of the Shares held by each.

27.5  In addition, the liquidation shall be subject to the relevant provisions
      of Book 2, Title I, of the Dutch Civil Code.

                                     -0-0-0-
<PAGE>

DEED OF AMENDMENT OF ARTICLES OF ASSOCIATION
(Philip Brothers Netherlands III B. V.)

This sixteenth day of June two thousand and four, there appeared before me,
Christiaan Maria Stokkermans, civil law notary in Amsterdam:

Wieger ten Hove, with office address at Apollolaan 15, 1077 AB Amsterdam, the
Netherlands, born in Almelo, the Netherlands, on the sixteenth day of April
nineteen hundred and seventy-seven.

The person appearing declared the following:

The sole shareholder of the Company, as defined hereinafter, has resolved on the
twenty-eighth day of May two thousand and four to partially amend the Articles
of Association of Philipp Brothers Netherlands III B.V., a private limited
liability company under Dutch law (`besloten vennootschap met beperkte
aansprakelijkheid'), having its official seat in Amsterdam, the Netherlands, its
office address at Rokin 55, 1012 KK Amsterdam, the Netherlands, and registered
in the Commercial Register under number 34195548 (the "Company"), as well as to
authorise the person appearing to have this deed executed. The adoption of such
resolutions is evidenced by a shareholder's resolution attached to this deed
(Annex).

The Articles of Association of the Company were established at the incorporation
of the Company, by a deed, executed on the eleventh day of September two
thousand and three before Chr.M. Stokkermans, civil law notary in Amsterdam,
with respect to which a ministerial Statement of No Objections was granted on
the twentieth day of August two thousand and three, under number BV 1250665. The
Articles of Association of the Company have not been amended since. In
implementing the aforementioned resolution, the Articles of Association of the
Company are hereby amended as follows.

Amendment A.

The definition "Managing Director" in Article 1, paragraph 1 is amended and
shall forthwith read as follows:

""Managing Director" means a member of the Management Board; unless stated
otherwise this includes each Managing Director A and each Managing Director B.".

Amendment B.

Article 12, paragraph 1 is amended and shall forthwith read as follows:

"12.1    The Management Board shall consist of at least one Managing Director A
         and one Managing Director B. Both individuals and legal entities can be
         Managing Directors.".

Amendment C.

Article 12. paragraph 2 is amended and shall forthwith read as follows:

"12.2    Managing Directors are appointed, as a Managing Director A or as a
         Managing Director B, by the General Meeting.".

Amendment D.

<PAGE>

Article 14. paragraph 1. last sentence is amended and shall forthwith read as
follows:

"The authority to represent the Company shall also be vested in one Managing
Director A and one Managing Director B acting jointly.".

Amendment E.

Article 16 is amended and shall forthwith read as follows:

"Article 16. Vacancy or Inability to Act. If a seat on the Management Board is
vacant (`ontstentenis') or a Managing Director is unable to perform his duties
(`belet'), the remaining Managing Directors or Managing Director shall be
temporarily entrusted with the management of the Company. If all scats on the
Management Board are vacant or all Managing Directors are unable to perform
their duties, the management of the Company shall be temporarily entrusted to
the person designated for that purpose by the General Meeting.".

Amendment F.

Article 27 paragraphs 2 and 3 is amended and shall forthwith read as follows:

"27.2 If the Company is dissolved pursuant to a resolution of the General
Meeting, each person who is Managing Director B at the time the dissolution
takes effect shall become liquidator of the dissolved Company's property. Each
person who is Managing Director A at the time the dissolution takes effect shall
cease to be Managing Director by operation or law as of that moment.
Notwithstanding the provisions of Article 14.1. each liquidator shall be solely
authorised to represent the Company.

27.3 During liquidation, the provisions of these Articles of Association,
subject to Article 27.2, shall remain in force to the extent possible.".

Finally, the person appearing has declared:

Statement of No Objections.

With respect to the foregoing amendment of the Articles of Association, a
ministerial Statement of No Objections was granted on the fourteenth day of June
two thousand and four. under number BV 1250665, which is evidenced by a written
statement from the Dutch Ministry of Justice attached to this deed (Annex).

Close.

The person appearing is known to me, civil law notary. This deed was executed in
Amsterdam on the date first above written. Before reading out, a concise summary
and an explanation of the contents of this deed were given to the person
appearing. The person appearing then declared that he had taken note of and
agreed to the contents of this decd and did not want the complete deed to be
read to him. Thereupon, after limited reading, this deed was signed by the
person appearing and by me, civil law notary.

<PAGE>

DEED OF INCORPORATION

(Philipp Brothers Netherlands III B.V.)

This eleventh day of September two thousand and three, there appeared before me,
Christiaan Maria Stokkermans, civil law notary in Amsterdam:

Wieger ten Hove, with office address at Apollolaan 15, 1077 AB Amsterdam (the
Netherlands), born in Almelo (the Netherlands) on the sixteenth day of April
nineteen hundred and seventy-seven, in this respect acting as attorney-in-fact
of:

Philipp Brothers Netherlands II B.V., a private limited liability company
(`besloten vennootschap met beperkte aansprakelijkheid') under Dutch law, having
its official seat in Amsterdam, its office address at Koningslaan 34, 1075 AD
Amsterdam, and registered in the Dutch Commercial Register under number 34146090
(the "Incorporator").

The aforementioned proxy appears from a written power of attorney attached to
this deed (Annex). The person appearing declared the following:

The Incorporator hereby incorporates a private limited liability company under
Dutch law (`besloten vennootschap met beperkte aansprakelijkheid'), with the
following Articles of Association.

<PAGE>
\
ARTICLES OF ASSOCIATION:
Article 1. Definitions.

1.1      In these Articles of Association. the following terms shall have the
         following meanings:

         "Share" means a share in the capital of the Company.

         "Shareholder" means a holder of one or more Shares.

         "General Meeting" or "General Meeting of Shareholders" means the body
         of the Company consisting of the Shareholders or (as the case may be) a
         meeting of Shareholders (or their representatives) and other persons
         entitled to attend such meetings.

         "Managing Director" means a member of the Management Board.

         "Management Board" means the management board of the Company.

         "in writing" means by letter, by telecopier, bye-mail, or by message
         which is transmitted via any other current means of communication and
         which can be received in the written form.

         "Distributable Equity" means the part of the Company's equity which
         exceeds the aggregate of the issued capital and the reserves which must
         be maintained pursuant to the law.

         "Company" means the company the internal organisation of which is
         governed by these Articles of Association.

1.2      References to "Articles" refer to articles which are part of these
         Articles of Association, except where expressly indicated otherwise.

Article 2. Name and Official Seat.

2.1      The Company's name is:

         Philipp Brothers Netherlands III B.V.

2.2      The official seat of the Company is in Amsterdam.

Article 3. Objects.

The objects of the Company are:

(a)      to incorporate. to participate in any way whatsoever in, to manage, to
         supervise businesses and companies;

(b)      to finance businesses and companies;

(c)      to borrow, to lend and to raise funds, including the issue of bonds,
         promissory notes or other securities or evidence of indebtedness as
         well as to enter into agreements in connection with aforementioned
         activities;

(d)      to render advice and services to businesses and companies with which
         the Company forms a group and to third parties;

(e)      to grant guarantees. to bind the Company and to pledge its assets for
         obligations of businesses and companies with which it forms a group and
         on behalf of third parties;

(f)      to acquire, alienate, manage and exploit registered property and items
         of properly in general;

(g)      to trade in currencies, securities and items of property in general;

(h)      to develop and trade in patents, trade marks, licenses, know-how and
         other industrial property rights;

(i)      to perform any and all activities of an industrial, financial or
         commercial nature;

<PAGE>

and to do all that is connected therewith or may be conducive thereto, all to be
interpreted in the broadest sense.

Article 4. Authorised Capital.

4.1      The authorised capital of the Company is ninety thousand euro (EUR
         90,000).

4.2      The authorised capital of the Company is divided into nine hundred
         (900) Shares with a nominal value of one hundred euro (EUR 100) each.

4.3      All Shares shall be registered. No share certificates shall be issued.

Article 5. Register of Shareholders.

5.1      The Management Board shall keep a register of Shareholders in which the
         names and addresses of all Shareholders are recorded.

5.2      Section 2:194 of the Dutch Civil Code applies to the register of
         Shareholders.

Article 6. Issuance of Shares.

6.1      Shares may be issued pursuant to a resolution of the General Meeting.
         The General Meeting may transfer this authority to another body of the
         Company and may also revoke such transfer.

6.2      A resolution to issue Shares shall stipulate the issue price and the
         other conditions of issue.

6.3      The issue of a Share shall furthermore require a notarial deed, to be
         executed for that purpose before a civil law notary registered in the
         Netherlands, to which deed those involved in the issuance shall be
         parties.

6.4      Upon issuance of Shares, each Shareholder shall have a right of
         pre-emption in proportion to the aggregate nominal value of his Shares,
         subject to the relevant limitations prescribed by law and the
         provisions of Article 6.5.

6.5      Prior to each single issuance of Shares, the right of pre-emption may
         be limited or excluded by the body of the Company competent to issue
         such Shares.

6.6      The full nominal value of each Share must be paid upon subscription.

Article 7. Own Shares; Reduction of the Issued Capital.

7.1      The Company and its subsidiaries may acquire fully paid in Shares or
         depositary receipts thereof: with due observance of the limitations
         prescribed by law.

7.2      The Company and its subsidiaries may grant loans with a view to a
         subscription for or an acquisition of Shares or depositary receipts
         thereof, but not in excess of the amount of the Company's distributable
         reserves.

<PAGE>

7.3      The General Meeting may resolve to reduce the Company's issued capital
         in accordance with the relevant provisions prescribed by law.

Article 8. Transfer of Shares.

8.1      The transfer of a Share shall require a notarial deed, to be executed
         for that purpose before a civil law notary registered in the
         Netherlands, to which deed those involved in the transfer shall be
         parties.

8.2      Unless the Company itself is party to the transfer, the rights
         attributable to the Share can only be exercised after the Company has
         acknowledged said transfer or said deed has been served upon it, in
         accordance with the relevant provisions of the law.

Article 9. Share Transfer Restrictions (Offer to co-Shareholders).

9.1      The provisions of this Article 9 below are applicable to a transfer of
         one or more Shares, unless (i) all Shareholders have granted permission
         for the intended transfer in writing, which permission shall then be
         valid for a period of three months, or (ii) the Shareholder concerned
         is obliged by law to transfer his Shares to a former Shareholder.

9.2      A transfer of one or more Shares can only be effected after the Shares
         have been offered for sale to the co-Shareholders first. The relevant
         Shareholder (the "Offeror") shall make the offer by means of a written
         notification to the Management Board, stating the number of Shares he
         wishes to transfer and the person or persons to whom he wishes to
         transfer the Shares. The Management Board shall give notice of the
         offer to the co-Shareholders. Co-Shareholders interested in purchasing
         one or more of the offered Shares (the "Interested Parties") must
         notify the Management Board of their interest. If the Company itself is
         a co-Shareholder, it shall only be entitled to act as an Interested
         Party with the consent of the Offeror.

9.3      The price for which the offered Shares can be purchased by the
         Interested Parties shall be set by the Offeror and the Interested
         Parties in joint consultation or by one or more experts designated by
         them. If an agreement on the price or on the expert or experts, as the
         case may be, is not reached, the price shall be set by one or more
         independent experts to be designated, at the request of one or more of
         the parties concerned, by the chairperson of the Chamber of Commerce
         and Factories where the Company is registered in the Commercial
         Register.

9.4      Within one month of the set price having been notified to them, the
         Interested Parties must give notice to the Management Board of the
         number of the offered Shares they wish to purchase. Once the notice
         mentioned in the preceding sentence has been given, an Interested Party
         can only withdraw with the consent of the other Interested Parties.

9.5      If the Interested Parties together wish to purchase more Shares than
         have been offered the offered Shares shall be distributed among them.
         The Interested Parties shall decide together upon the distribution. If
         an agreement on the distribution is not reached. the Management Board
         shall determine the distribution, as tar as possible in propol1ion to
         the total nominal value of the Shares held by each Interested Pat1y at
         the time of the distribution. The number

<PAGE>

         of offered Shares allocated to an Interested Party cannot exceed the
         number of Shares he wishes to purchase.

9.6      The Offeror may withdraw his offer up to one month from the day on
         which he is informed of the Interested Party or Pal1ies to whom he can
         sell all offered Shares and at what price.

9.7      If it becomes apparent that none of the co-Shareholders is an
         Interested Party or that not all offered Shares will be purchased
         against payment in cash by one or more Interested Parties, the Offeror
         may, within a period of three months, freely transfer all the offered
         Shares, but not part thereof, to the person or persons listed in the
         offer.

Article 10. Pledging of Shares and Usufruct in Shares.

10.1     The provisions of Article 8 shall apply by analogy to the pledging of
         Shares and to the creation or transfer of a usufruct in Shares.

10.2     If a Share is pledged or if a usufruct is created in a Share, the
         voting rights attributable to such Share may not be assigned to the
         pledgee or usufructuary.

Article 11. Depositary Receipts for Shares.

The Company shall not cooperate in the issuance of depositary receipts for
Shares.

Article 12. Managing Directors.

12.1     The Management Board shall consist of at least one Managing Directors.
         Both individuals and legal entities can be Managing Directors.

12.2     Managing Directors are appointed by the General Meeting.

12.3     A Managing Director may be suspended or removed by the General Meeting
         at any time.

12.4     The authority to establish remuneration and other conditions of
         employment for Managing Directors is vested in the General Meeting.

Article 13. Duties, Decision-making Process and Allocation of Duties.

13.1     The Management Board shall be entrusted with the management of the
         Company.

13.2     The Management Board may establish rules regarding its decision-making
         process and working methods. In this context, the Management Board may
         also determine the duties which each Managing Director shall be
         particularly responsible for. The General Meeting may resolve that such
         rules and allocation of duties must be put in writing and that such
         rules and allocation of duties shall he subject to its approval.

13.3     Management Board resolutions at all times may be adopted in writing,
         provided the proposal concerned is submitted to all Managing Directors
         then in office and none of them objects to this manner of adopting
         resolutions.

<PAGE>

Article 14. Representation; Conflicts of Interest.

14.1     The Company shall be represented by the Management Board. Each Managing
         Director shall also be authorised to represent the Company.

14.2     The Management Board may appoint officers with general or limited power
         to represent the Company. Each officer shall be competent to represent
         the Company, subject to the restrictions imposed on him. The Management
         Board shall determine each officer's title. The authority of an officer
         thus appointed may not extend to any transaction where the Company has
         a conflict of interest with the officer concerned or with one or more
         Managing Directors.

14.3     In the event of a conflict of interest between the Company and a
         Managing Director, the provisions of Article 14.1 shall continue to
         apply unimpaired unless the General Meeting has appointed one or more
         other persons to represent the Company in the case at hand or in
         general in the event of such a conflict. A resolution of the Management
         Board with respect to a matter involving a conflict of interest with a
         Managing Director in a private capacity shall be subject to the
         approval of the General Meeting, but the absence of such approval shall
         not affect the authority of the Management Board or the Managing
         Directors to represent the Company.

Article 15. Approval of Management Board Resolutions.

15.1     The General Meeting may require Management Board resolutions to be
         subject to its approval. The Management Board shall be notified in
         writing of such resolutions, which shall be clearly specified.

15.2     The absence of approval by the General Meeting of a resolution referred
         to in this Article 15 shall not affect the authority of the Management
         Board or the Managing Directors to represent the Company.

Article 16. Vacancy or Inability to Act.

         If a seat on the Management Board is vacant (`ontstentenis') or a
         Managing Director is unable to perform his duties (`belet'), the
         remaining Managing Directors or Managing Director shall be temporarily
         entrusted with the management of the Company. If all seats on the
         Management Board are vacant or all Managing Directors or the sole
         Managing Director, as the case may be, are unable to perform their
         duties, the management of the Company shall be temporarily entrusted to
         the person designated for that purpose by the General Meeting.

Article 17. Financial Year and Annual Accounts.

17.1     The Company's financial year shall run from the first day of July
         through the thirtieth day of June.

17.2     Annually, not later than five months after the end of the financial
         year, save where this period is extended by the General Meeting by not
         more than six months by reason of special

<PAGE>

         circumstances, the Management Board shall prepare annual accounts, and
         shall deposit the same for inspection by the Shareholders at the
         Company's office.

17.3     Within the same period, the Management Board shall also deposit the
         annual report for inspection by the Shareholders, unless Section 2:396,
         subsection 6, or Section 2:403 of the Dutch Civil Code applies to the
         Company.

17.4     The annual accounts shall consist of a balance sheet, a profit and loss
         account and explanatory notes.

17.5     The annual accounts shall be signed by the Managing Directors. If the
         signature of one or more of them is missing, this shall be stated and
         reasons for this omission shall be given.

17.6     The Company may, and if the law so requires shall, appoint an
         accountant to audit the annual accounts. Such appointment shall be made
         by the General Meeting.

17.7     The General Meeting shall adopt the annual accounts.

17.8     After adoption of the annual accounts, the General Meeting shall pass a
         resolution concerning release of the Managing Directors from liability
         for the exercise of their duties, insofar as the exercise of such
         duties is reflected in the annual accounts or otherwise disclosed to
         the General Meeting prior to the adoption of the annual accounts. The
         scope of a release from liability shall be subject to limitations by
         virtue of the law.

Article 18. Profits and Distributions.

18.1     The allocation of profits accrued in a financial year shall be
         determined by the General Meeting.

18.2     Distribution of profits shall be made after adoption of the annual
         accounts if permissible under the law given the contents of the annual
         accounts.

18.3     The General Meeting may resolve to make interim distributions and/or to
         make distributions at the expense of any reserve of the Company.

18.4     Distributions may be made only up to an amount which does not exceed
         the amount of the Distributable Equity.

Article 19. General Meetings of Shareholders.

19.1     The annual General Meeting of Shareholders shall be held within six
         months after the end of the financial year.

19.2     Other General Meetings of Shareholders shall be held as often as the
         Management Board deems such necessary.

19.3     Shareholders representing in the aggregate at least one-tenth of the
         Company's issued capital may request the Management Board to convene a
         General Meeting of Shareholders,

<PAGE>

         stating specifically the business to be discussed. If the Management
         Board has not given proper notice of a General Meeting of Shareholders
         within four weeks following receipt of such request such that the
         meeting can be held within six weeks after receipt of the request, the
         applicants shall be authorised to convene a meeting themselves.

Article 20. Notice, Agenda and Venue of Meetings.

20.1     Notice of General Meetings of Shareholders shall be given by the
         Management Board, without prejudice to the provisions of Article 19.3.

20.2     Notice of the meeting shall be given no later than on the fifteenth day
         prior to the day of the meeting.

20.3     The notice convening the meeting shall specify the business to be
         discussed. Other business not specified in such notice may be announced
         at a later date, with due observance of the term referred to in Article
         20.2.

20.4     The notice of the meeting shall be sent to the addresses of the
         Shareholders shown in the register of Shareholders.

20.5     General Meetings of Shareholders are held in the municipality in which,
         according to these Articles of Association, the Company has its
         official seat. General Meetings of Shareholders may also be held
         elsewhere, in which case valid resolutions of the General Meeting may
         only be adopted if all of the Company's issued capital is represented.

Article 21. Admittance and Rights at Meetings.

21.1     Each Shareholder shall be entitled to attend the General Meetings of
         Shareholders, to address the meeting and to exercise his voting rights.
         Shareholders may be represented in a meeting by a proxy authorised in
         writing.

21.2     At a meeting, each person present with voting rights must sign the
         attendance list. The chairperson of the meeting may decide that the
         attendance list must also be signed by other persons present at the
         meeting.

21.3     The Managing Directors shall have the right to give advice in the
         General Meetings of Shareholders.

21.4     The chairperson of the meeting shall decide on the admittance of other
         persons to the meeting.

Article 22. Chairperson and Secretary of the Meeting.

22.1     The chairperson of a General Meeting of Shareholders shall be appointed
         by a majority of the votes cast by the persons with voting rights
         present at the meeting.

22.2     The chairperson of the meeting shall appoint a secretary for the
         meeting.

<PAGE>

Article 23. Minutes; Recording of Shareholders' Resolutions.

23.1     The secretary of a General Meeting of Shareholders shall keep minutes
         of the proceedings at the meeting. The minutes shall be adopted by the
         chairperson and the secretary of the meeting and as evidence thereof
         shall be signed by them.

23.2     The Management Board shall keep record of all resolutions adopted by
         the General Meeting. If the Management Board is not represented at a
         meeting, the chairperson of the meeting shall ensure that the
         Management Board is provided with a transcript of the resolutions
         adopted, as soon as possible after the meeting. The records shall be
         deposited at the Company's office for inspection by the Shareholders.
         On application, each of them shall be provided with a copy of or an
         extract from the records.

Article 24. Adoption of Resolutions in a Meeting.

24.1     Each Share confers the right to cast one vote.

24.2     To the extent that the law or these Articles of Association do not
         provide otherwise, all resolutions of the General Meeting shall be
         adopted by a simple majority of the votes cast, without a quorum being
         required.

24.3     If there is a tie in voting, the proposal shall be deemed to have been
         rejected.

24.4     If the formalities for convening and holding of General Meetings of
         Shareholders, as prescribed by law or these Articles of Association,
         have not been complied with, valid resolutions of the General Meeting
         may only be adopted in a meeting, if in such meeting all of the
         Company's issued capital is represented and such resolution is carried
         by unanimous vote.

Article 25. Adoption of Resolutions without holding Meetings.

25.1     Shareholders may adopt resolutions of the General Meeting in writing
         without holding a meeting, provided they are adopted by the unanimous
         vote of all Shareholders entitled to vote. The provisions of Article
         21.3 shall apply by analogy.

25.2     Each Shareholder must ensure that the Management Board is informed of
         the resolutions thus adopted as soon as possible in writing. The
         Management Board shall keep record of the resolutions adopted and it
         shall add such records to those referred to in Article 23.2.

Article 26. Amendment of the Articles of Association.

The General Meeting may resolve to amend these Articles of Association. When a
proposal to amend these Articles of Association is to be made to the General
Meeting, the notice convening the General Meeting must state so and a copy of
the proposal, including the verbatim text thereof: shall be deposited and kept
available at the Company's office for inspection by the Shareholders, until the
conclusion of the meeting.

Article 27. Dissolution and Liquidation.

<PAGE>

27.1     The Company may be dissolved pursuant to a resolution to that effect by
         the General Meeting. When a proposal to dissolve the Company is to be
         made to the General Meeting, this must be stated in the notice
         convening the General Meeting.

27.2     If the Company is dissolved pursuant to a resolution of the General
         Meeting, the Managing Directors shall become liquidators of the
         dissolved Company's property.

27.3     During liquidation, the provisions of these Articles of Association
         shall remain in force to the extent possible.

27.4     The balance remaining after payment of the debts of the dissolved
         Company shall be transferred to the Shareholders in proportion to the
         aggregate nominal value of the Shares held by each.

27.5     In addition, the liquidation shall be subject to the relevant
         provisions of Book 2, Title I, of the Dutch Civil Code.

Article 28. Final Provision.

The first financial year of the Company shall end on the thirtieth day of June
two thousand and four.

Finally, the person appearing has declared:

Issued Capital.

At incorporation, the issued capital of the Company equals eighteen thousand
euro (EUR 18,000) and is divided into one hundred eighty (180) shares with a
nominal value of one hundred euro (EUR 100) each (the "Issued Shares"). All of
the Issued Shares are hereby subscribed for by the Incorporator.

The Issued Shares are issued at par.

The Issued Shares have been paid It)!" in cash. Payment in foreign currency was
permitted. The documents which must be attached by virtue of Section 2:203a of
the Dutch Civil Code have been attached to this deed (Annex). The Company hereby
accepts the payments made for the Issued Shares.

First Managing Directors.

The first Managing Director of the Company is; the Incorporator.

Statement of No Objections.

With respect to the incorporation in question a ministerial Statement of No
Objections was granted on the twentieth day of August two thousand and three,
under number BV 1250665, which is evidenced by a written statement from the
Dutch Ministry of Justice attached to this deed (Annex). Close.

The person appearing is known to me, civil law notary.

This deed was executed in Amsterdam on the date first above written. Before
reading out, a concise summary and an explanation of the contents of this deed
were given to the person appearing. The person appearing then declared that he
had taken note of and agreed to the contents of this deed and did not want the
complete deed to be read to him. Thereupon, after limited reading, this deed was
signed by the person appearing and by me, civil law notary.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.21
<SEQUENCE>8
<FILENAME>y04700exv3w21.txt
<DESCRIPTION>ARTICLES OF ASSOCIATION
<TEXT>
<PAGE>

                                                                    Exhibit 3.21

                              PHIBRO ANIMAL HEALTH
                                 SOCIETE ANONYME
                              RUE DE L'INSTITUT 87A
                                 1330 RIXENSART
                             RPR NIVELLES 0472931319

               COORDINATED VERSION OF THE ARTICLES OF ASSOCIATION

                  AFTER THE AMENDMENTS MADE ON 17 NOVEMBER 2003

              CHAPTER I. NAME - REGISTERED OFFICE - PURPOSE - TERM

                                    ARTICLE 1
                                LEGAL FORM - NAME

The company is constituted as a public limited liability company (Naamloze
Vennootschap/Societe Anonyme). Its name is "PHIBRO ANIMAL HEALTH".

                                    ARTICLE 2
                                REGISTERED OFFICE

The registered office of the company is situated at rue de l'Institut 87a, 1330
Rixensart.

It may be transferred to any other place in Belgium by decision of the board of
directors, subject to the application of the laws on the use of languages.

The company may, by decision of the board of directors, establish administrative
offices and operating offices, subsidiaries, branches and warehouses in Belgium
or abroad.

                                    ARTICLE 3
                                     PURPOSE

The Company's object is, in Belgium and abroad, in its own name or in the name
of third parties, for its own account or for the account of third parties, the
fabrication, distribution and sale of medical additive products for the
alimentation of animals.

In respect thereof, the Company may co-operate with, participate in, or hold
interests in other companies, directly or indirectly in any way whatsoever.

The Company may grant security to secure its own obligations or to secure
obligations of third parties, including the companies that are part of the group
of which the company forms part, by amongst other things mortgage or pledge its
goods, including the own business.

<PAGE>

The Company may in general carry out all commercial, industrial, financial,
movable and immovable transactions directly or indirectly related to its object
or that would be likely to facilitate the achievement thereof

                                    ARTICLE 4
                                      TERM

The company is incorporated for an indefinite term.

                      CHAPTER II. CAPITAL - SHARES - BONDS

                                    ARTICLE 5
                                COMPANY'S CAPITAL

The share capital amounts to sixty-one thousand five hundred and three Euros and
50 cent (EUR 61,503.50).

It is represented by two thousand four hundred eighty one (2,481) shares,
without nominal value.

                                    ARTICLE 6
                    CAPITAL INCREASE BY CONTRIBUTION IN CASH

In case of a capital increase the new shares to be subscribed in cash must first
be offered to the existing shareholders, pro rata to the part of the capital
constituted by their shares.

The preferential subscription right may be exercised during a period of not less
than fifteen days from the date on which the subscription is opened. Such period
shall be determined by the general meeting.

The issue with preferential subscription right and the time period within which
it may be exercised shall be announced in accordance with Article 593 of the
Company Code.

The subscription rights shall be negotiable during the entire subscription.

After expiration of the period in which the subscription rights may be
exercised, provided that no public offer to investors was made, the board of
directors shall have the right to decide whether third parties may take part in
the capital increase or whether the fact that shareholders did not or only
partially use their preferential subscription right, has as consequence that the
proportional part of the shareholders who already used their right to subscribe
shall be increased. The board of directors also determines the modalities for
the next subscription.

The general meeting may restrict or cancel the preferential subscription right
in the interest of the company, respecting the quorum and majority requirements
for modifications of the article of association.

<PAGE>

In that event a proposal to this effect must be specified in the notice and the
board of directors and the statutory auditor or, in his absence, an auditor or
an accountant registered on the Roll of Practising Accountants of the Institute
of Accountants and appointed by the board of directors, must make the reports
provided in Article 596 of the Company Code. These reports shall be mentioned in
the agenda and shall be communicated to the shareholders.

In the event of a restriction or cancellation of the preferential subscription
right the general meeting may provide that when allocating the newly issued
priority shall be given to the existing shareholders in which event the
subscription term must amount to ten days.

When the preferential subscription right is restricted or cancelled in favour of
one or more particular persons who are not employees of the company or of one of
its subsidiaries the conditions set forth in Article 598 of the Company Code
must be respected.

                                    ARTICLE 7
                    CAPITAL INCREASE BY CONTRIBUTION IN KIND

In the event that a capital increase includes any contribution in kind, the
statutory auditor or, in his absence, an auditor to be appointed by the board of
directors, shall prior thereto make a report in respect thereof. In a special
report to which the report of the auditor is attached, the board of directors
shall explain why both the contribution and the proposed capital increase are
important for the company and, if applicable, also why the conclusions of the
appended report are not followed.

Notwithstanding Article 586, second paragraph, of the Company Code the shares
entirely or partially corresponding to a contribution in kind, must be paid up
immediately.

                                    ARTICLE 8
                              CALLING UP ON SHARES

Payments on not fully paid-up shares must occur at the place and on the date set
by the board of directors which is solely competent in this matter; the
membership rights attached to these shares shall be suspended until the
payments, duly called and due, have been made.

After due notice has been given by registered letter which has remained
unanswered for one month, the board of directors may revoke the shareholder's
rights and sell those shares which have not been fully paid up, either directly
to the other shareholders, or through the intermediary of a stock trading
company. In this case the price of the transfer is calculated on the basis of
the net assets of the company as they appear on the last balance sheet approved
by the shareholders. Payments must be made according to the conditions
established by the board of directors.

                                    ARTICLE 9
                              NATURE OF THE SHARES

All the shares are and shall remain registered shares.

Title to a registered share shall be proved by the registration in the register
of shares. Any transfer of shares shall only be effective after registration in
the register of shares of the

<PAGE>

declaration of transfer, which shall be dated and signed by the transferor and
the transferee, or their representatives, or after complying with the
formalities required by the law in respect of the assignment of receivables.

If the share belongs to bare owners and usufructuaries, all the rights related
to the shares, including the voting right, will be exercised by the
usufructuaries.

                                   ARTICLE 10
               TRANSFER OF SHARES , CONVERTIBLE BONDS AND WARRANTS

Transfer of shares is not subject to any restrictions.

This rule is also applicable to all shares of the company as well as to all
possible convertible bonds and warrants issued by the company.

                                   ARTICLE 11
                              BUY-IN OF OWN SHARES

With respect of the articles of the Company Code, the company can acquire its
own shares or certificates.

                                   ARTICLE 12
                                NON-VOTING SHARES

In accordance with Articles 480, 481 and 482 of the Company Code the company may
proceed to the creation of shares without voting rights, provided that the
formalities which apply for modifications of the articles of association are
respected.

                                   ARTICLE 13
                        BONDS, WARRANTS AND CERTIFICATES

The company may at any time issue bonds upon decision by the board of directors.

However, issuance of bonds convertible into shares or warrants may only be
authorised by the general meeting deliberating according to the formalities
which apply for modifications of the articles of association.

The company can, in its own interest, grant co-operation to a third party for
issuing by this third party of certificates representing the shares of the
company in accordance with Article 503 of the Company Code. The company can
decide to take at his charge the costs related to issuing certificates and to
the incorporation and the work of the entity issuing the certificates. The
holders of the certificates, the entity issuing them or third parties can only
invoke the co-operation of the company for issuing certificates if the company
has confirmed its co-operation in writing to the issuing entity. The entity
issuing the certificates regarding registered shares has to identify itself as
such to the company. The company notes this in the register of shares.

<PAGE>

                     CHAPTER III. MANAGEMENT AND SUPERVISION

                                   ARTICLE 14
                      COMPOSITION OF THE BOARD OF DIRECTORS

The company is managed by a board of at least three directors, natural or legal
persons (bodies corporate), who need not be shareholders, appointed by the
general meeting of shareholders for a maximum term of six years, and which may
be revoked by the latter at all times. If on a general meeting of shareholders
it has been determined that the company has only two shareholders, the board of
directors may be composed of two directors until the general meeting of
shareholders following the determination, which may be done by all means, that
there are more than two shareholders. In the case that the board of directors is
composed of two members, the provision - mentioned in article 15 of these
articles of association - pursuant to which the chairman of the board of
directors has a decisive vote has no effect.

In case a legal person is appointed director, it is obliged to appoint a
permanent representative-individual amongst its partners, managers, directors or
employees who will take care of the director's activities in the name and for
the account of the legal person

Regarding the appointment and the dismissal of the permanent representative the
same rules regarding the publication apply as if it would do this activities in
its own name and for its own account.

The directors can be re-elected.

The outgoing director remains in function as long as the general meeting does
not appoint a new director, for any reason whatsoever.

In case of an early vacancy within the board of directors, for any reason
whatsoever, the remaining directors are entitled to provisionally appoint a new
director until the general meeting appoints a new director. The appointment is
put on the agenda of the first coming general meeting.

The board of directors appoints a chairman from among its members. Failing
appointment or in the event of absence the chairmanship shall be assumed by the
oldest among the directors present.

<PAGE>

                                   ARTICLE 15
                    MEETINGS - DELIBERATIONS AND RESOLUTIONS

A meeting of the board of directors is called by the chairman, a managing
director or two directors, at least three days before the date of the meeting.

The notice is validly done by letter, air mail, fax or e-mail.

The director who attends the meeting or is represented there shall be considered
as having received due notice. A director can also waive his right to plead the
lack of notice or any irregularity in the notice, before or after the meeting
which he did not attend.

The meetings of the board of directors shall be held in Belgium or abroad, at
the place indicated in the notice.

Any director can, by means of a document carrying his signature (including a
digital signature as mentioned in article 1322 paragraph 2 of the Civil Code) of
which notice is give either in writing, by fax or e-mail or any other means of
communication mentioned in article 2281 of the Civil Code give power to another
member of the board to represent him at a specific meeting. A director can
represent more than one co-director and can cast, together with his own vote, as
many votes as he received powers.

Except in the event of force majeure the board of directors can only validly
deliberate and decide if at least fifty percent of its members are present or
represented. Should this condition not be met a new meeting must be called which
shall validly deliberate and decide on the items on the agenda of the previous
meeting if at least two directors are present or represented.

The board of directors can deliberate by way of telephone or video conference.

Every decision of the board shall be made by a simple majority of the votes of
the directors present or represented, and in the event of abstention of one or
more among them, by the majority of the other directors.

In the event of equality of votes the vote of the person chairing the meeting
will be decisive.

In exceptional cases when the urgent necessity and the interest of the company
require so, the decisions of the board of directors can be taken by unanimous
written agreement of the directors. This procedure can not be applied to
determine the annual accounts or the use of the authorised capital.

Without prejudice to the exceptions mentioned in the Company Code, a director,
who has directly or indirectly a financial interest conflicting with a decision
or transaction of the board of directors, must inform the other directors
thereof before the board of directors decide and the board of directors and the
company must comply Article 523 of the Company Code.

<PAGE>

The decisions of the board of directors are recorded in minutes which shall be
signed by the chairman, the secretary and the members who wish to do so. These
minutes shall be inserted in a special register. The powers are attached to the
minutes of the meeting for which they are granted.

Copies and extracts to be produced in court or elsewhere, shall be validly
signed by the chairman, the managing director or by two directors.

                                   ARTICLE 16
                       AUTHORITY OF THE BOARD OF DIRECTORS

Section 1 Generally

The board of directors shall have the broadest competence to perform all acts
which are necessary or useful for the realisation of the corporate purpose, with
the exception of those reserved to the general meeting by the law.

Section 2 Advisory committees

The board may nominate under its responsibility one or more advisory committees.
It will determine their composition and mission.

Section 3 Daily management

The board may delegate the daily management of the company, the management of
one or more branches of its activities or the execution of the decisions of the
board to one or more directors, managers or proxy holders, who need not be
shareholders.

The board, and, in respect of the daily management, the persons in charge of the
daily management may also delegate special powers to one or more persons of
their choice.

Section 4. Management committee

Pursuant to Article 524bis of the Company Code, the board of directors may
delegate his management competence to a management committee, provided that the
transfer of those management competence does not concern the transfer of the
general management of the company or does not involve the transfer of
competences which, according to other legal provisions, are reserved to the
board of directors.

The requirements regarding the designation of the members of the management
committee, their dismissal, their remuneration, the term of their appointment
and the procedure of the management committee shall be determined by the board
of directors.

The board of directors shall be charged with the control of the management
committee.

If a member of the management committee has a direct or indirect personal and
conflicting interest of financial nature in a decision or transaction within the
authority of the management committee,

<PAGE>

he must so notify the other members prior to a decision by the management
committee. Furthermore the provisions of Article 524ter of the Company Code must
be taken into consideration.

                                   ARTICLE 17
                          REPRESENTATION OF THE COMPANY

The company is validly represented towards third parties, before the courts and
in official deeds, including those for which the intervention of a civil servant
or a notary is required, by the chairman of the board of directors alone, by two
directors acting jointly and, within the limits of the daily management, by the
managing directors for the daily management alone.

Moreover, within the framework of their mandate, it is validly represented by
special proxyholders.

In addition, the company may be represented abroad by any person expressly
appointed for this purpose by the board of directors.

                                   ARTICLE 18
                              EXPENSES OF DIRECTORS

The normal and justified expenses and costs which the directors can claim as
having been made in the exercise of their function shall be compensated and be
charged to general costs.

                                   ARTICLE 19
                                     CONTROL

The control of the financial situation, the annual accounts and the regularity
of the transactions to be reported on in the annual accounts is conferred to one
or more statutory auditors. The statutory auditors are appointed by the general
meeting of shareholders from among the members, natural persons or bodies
corporate, of the Institute of Chartered Accountants. They have the title of
auditors. The statutory auditors shall be appointed for a renewable term of
three years. The general meeting can only dismiss them for legal reasons, at the
risk of liability for damages.

However, as long as the company can benefit from the exceptions provided in
Article 141, 2(degree) of the Company Code, every shareholder has, according to
Article 166 of the Company Code, the individual right of investigation and
control which are vested in a statutory auditor.

Nevertheless the general meeting of shareholders shall at all times have the
right to appoint an auditor, irrespective of legal criteria. In the event that
no auditor is appointed, every shareholder may appoint an accountant to
represent him. The remuneration of such accountant is payable by the company if
he is appointed with its approval, or if this remuneration is charged to it by
virtue of a judicial decision. In these cases the remarks of the accountant are
communicated to the company.

                  CHAPTER IV. GENERAL MEETINGS OF SHAREHOLDERS

<PAGE>

                                   ARTICLE 20
                                      DATE

The annual meeting shall be held on the third Tuesday of November at 10.00.

Should this day be a legal holiday, the meeting will take place on the next
working day.

If the procedure of written decision making mentioned in article 33 of these
articles of association is applied, the company needs to receive the letter
mentioning the agenda and the propositions of the decisions to be taken at the
latest on the day of the annual meeting as prescribed in these articles of
association, signed and approved by all shareholders.

Extraordinary or special general meetings of shareholders may be called each
time the company's interests requires so.

These general meetings of shareholders may be called by the board of directors
or by the statutory auditors and must be called at the request of the
shareholders representing one/fifth of the company's capital. The general
meetings of shareholders shall be held at the registered office of the company
or in any other place communicated in the notice or otherwise.

                                    ARTICLE 2
                                     NOTICES

The notices to convene a general meeting shall contain the agenda and is given
by registered letter sent to the holders of registered shares, the directors,
statutory auditors, the holders of registered bonds and warrants and the holders
of registered certificates issued in cooperation with the company, 15 days
before the meeting.

The persons who need to be called to a general meeting pursuant to the Company
Code and who attend the meeting or are represented thereon shall be considered
as having received due notice. The above mentioned persons can also waive their
right to plead lack of notice or any irregularity in the notice, before or after
a meeting which they did not attend.

                                   ARTICLE 22
                              DISPOSAL OF DOCUMENTS

Together with the notice, a copy of the documents which mandatory must be
provided pursuant to the Company Code is sent to the holders of registered
shares, the directors and (if applicable) the statutory auditors.

A copy of these documents is also immediately sent to the persons who have
fulfilled the formalities to be admitted to the meeting as described in the
articles of association at the latest seven days before the meeting. The persons
who have fulfilled these formalities after this date will receive a copy of
these documents on the general meeting.

<PAGE>

As of fifteen days before the general meeting and on submission of his financial
instrument, each holder of shares, bonds, warrants or holder of a certificate
issued in cooperation with the company can obtain a free copy of these documents
at the registered office of the company.

In case the procedure of written decision-making mentioned in article 33 of
these articles of association has been chosen, the board of directors will send
copy of the documents which need to be sent according to the Company Code to the
persons holding registered shares and to the statutory auditors together with
the aforementioned notice.

Every person holding warrants or certificates issued in co-operation with the
company can, upon production of his stock, obtain a free copy of these documents
as of fifteen days before the general shareholders' meeting.

                                   ARTICLE 23
                                DEPOSIT OF SHARES

To be admitted to the general meeting each owner of shares must, if this is
required in the notice, at least three days before the date set for the meeting
make known in written to the board of directors of his intention to participate
in the meeting, or else deposit his certificates for registered shares, at the
office or with an institution indicated thereto in the notice.

If the board of directors requires so in the notice, the holders of
dematerialised shares must within the same period dispose an acknowledgement of
non-disposability drafted by the accepted account holder or by the liquidation
institution at the place, indicated in the notice.

The holder of bonds, warrants and certificates which have been issued with the
collaboration of the company may attend the general meeting, but only with
advisory power, with obedience of the conditions of admission for the
shareholders.

For the application of this article, Saturdays, Sundays and legal holidays are
not considered to be working days.

                                   ARTICLE 24
                                 REPRESENTATION

Each shareholder may be represented at the general meeting of shareholders by a
proxyholder, who needs not to be a shareholder. The proxies need to be signed
(including a digital signature as provided for by article 1322, paragraph 2 of
the Civil Code).

The proxies may be given in writing, by telegram, e-mail or any other means
mentioned in article 2281 of the Civil Code and shall be deposited at the bureau
of the meeting. Moreover, the board of directors can demand that they are
deposited at a place indicated by it three working days before the general
shareholders' meeting.

For the purpose of this Article Saturdays, Sundays and legal holidays are not
considered to be working days.

<PAGE>

                                   ARTICLE 25
                                 ATTENDANCE LIST

The shareholders or their proxy holders are obliged, before being admitted to
the meeting, to sign the attendance list indicating the surname, first name(s)
and residence or the name and registered office of the shareholders and the
number of shares they represent.

                                   ARTICLE 26
                       COMPOSITION OF THE BUREAU - MINUTES

The general meetings of shareholders shall be chaired by the chairman of the
board of directors or, in the latter's absence, by his substitute or by a member
of the meeting appointed by the meeting. The chairman of the meeting appoints
the secretary. Should the number of persons attending allow this, the meeting
will appoint two vote counters upon proposal of the chairman. The minutes of the
general meetings of shareholders shall be signed by the members of the bureau
and the shareholders who wish to do so. These minutes shall be kept in a special
register.

                                   ARTICLE 27
                DUTY TO REPLY BY DIRECTORS AND STATUTORY AUDITORS

The directors reply to the questions submitted to them by the shareholders in
connection with their report or with the items on the agenda provided that the
communications of figures and facts will not prejudice seriously the company,
the shareholders or the employees of the company.

The statutory auditors reply to the questions submitted to them by the
shareholders in connection with their report.

                                   ARTICLE 28
                 ADJOURNMENT OF THE ANNUAL SHAREHOLDERS' MEETING

The board of directors has the right to adjourn the decision of the general
shareholders' meeting as mentioned in article 20 of these articles of
association regarding the approval of the annual accounts for three weeks. This
adjournment does not affect any other decision taken, except if the general
shareholders' meeting decides otherwise in this regard.

The board of directors needs to re-convoke the general shareholders' meeting,
with the same agenda, within a period of three weeks.

The formalities that need to be satisfied to attend the first meeting, including
the possible deposit of stocks or proxies remain valid for the second meeting.
New depositions will be allowed within the terms and under the same conditions
as mentioned in the articles of association.

The adjournment can only take place once. The second general shareholders'
meeting definitively decides about the adjourned items of the agenda.

<PAGE>

                                   ARTICLE 29
                       DELIBERATION - QUORUM REQUIREMENTS

No meeting can deliberate on items which are not included on the agenda, unless
all shares are present at the meeting and the decisions are taken by unanimous
votes.

The general meeting of shareholders can validly deliberate, irrespective of the
number of shares present or represented, except in the cases where the law
specifies a certain quorum of attendance.

                                   ARTICLE 30
                                  VOTING RIGHTS

Each share carries one vote.

The voting takes place by show of hands or by call-out of names unless the
general shareholders' meeting decides otherwise by simple majority of votes.

Each shareholder can also vote by letter by way of a form drafted by the board
of directors, containing the following mentions: (i) identification of the
shareholder, (ii) number of votes he is entitled to and (iii) for any decision
that needs to be taken by the general shareholders' meeting according to its
agenda the notion "yes", "no" or "abstention". The shareholder voting by letter
is obliged to satisfy the formalities necessary to be allowed to participate to
the general shareholders' meeting according to article 23 of these articles of
association.

                                   ARTICLE 31
                                    MAJORITY

Except in the cases provided for by law, the decisions are taken by the majority
of votes taking part at the voting, irrespective of the number of shares present
at the meeting. An abstention shall be considered as a negative vote.

                                   ARTICLE 32
                         EXTRAORDINARY GENERAL MEETINGS

In the event the meeting of shareholders must decide on:

- -a modification of the articles of association;

- -an increase or decrease of the company's capital;

- -the issuance of shares below par value;

- -the cancellation or restriction of the preferential subscription right;

- -the issuance of convertible bonds or warrants;

- -the dissolution of the company;

<PAGE>

The purpose of the decision to be taken must be specifically mentioned in the
notice for the meeting and at least fifty percent of the shares representing the
entire capital must be represented at the meeting. If this latter condition is
not met, a new meeting must be called, which shall validly decide on these
issues, irrespective of the number of shares represented.

The decisions on the above mentioned subjects shall only be validly taken at a
majority of three quarters of the votes participating in the voting. An
abstention shall be considered as a negative vote. This article is without
prejudice to the other requirements of majority provided for by the Company Code
in relation to the modification of the company's purpose, the purchase, pledging
or alienation by the company of its own shares, the transformation of the
company into a company with another legal form and the dissolution of the
company in the event its net assets amount to less than one quarter of the
capital as a result of its losses.

                                   ARTICLE 33
                             WRITTEN DECISION-MAKING

Except for the decisions that need to be taken before Notary Public, the
shareholders can decide unanimously and in writing on all issues for which the
general shareholders' meeting is competent.

For this purpose, the board of directors will send a letter, by mail, fax,
e-mail or any other means of communication to all shareholders and statutory
auditors, mentioning the agenda and the propositions of the decisions to be
taken, with request to the shareholders to approve the propositions and to send
the letter back to the seat of the company or any other place mentioned in the
letter, duly signed and within the term mentioned in the letter.

If the approval of all shareholders regarding the items of the agenda and
regarding the procedure in writing is not received within this period, the
decisions are deemed not to be taken.

The persons holding bonds or registered warrants, as well as the persons holding
registered certificates issued with co-operation of the company, have the right
to take note of the decisions take at the seat of the company.

                                   ARTICLE 34
                        COPIES AND EXTRACTS FROM MINUTES

Copies and/or extracts of the minutes of the general meetings to be supplied to
third parties are signed by the chairman of the board of directors, by a
managing director or by two directors. They must stipulate under their signature
their title.

CHAPTER V. ACCOUNTING YEAR - ANNUAL ACCOUNTS - DIVIDENDS - DISTRIBUTION OF
PROFITS

                                   ARTICLE 35
                ACCOUNTING YEAR - ANNUAL ACCOUNTS - ANNUAL REPORT

The accounting year starts on 1 July and shall end on 30 June of the following
year.

<PAGE>

At the end of each accounting year the board of directors draws up an inventory
and the annual accounts which consist of the balance sheet, the profit and loss
statement and the comments. These documents shall be drawn up in conformity with
the law and shall be filed with the National Bank of Belgium.

The annual accounts shall, in view of their publication, be validly signed by a
director or by a person in charge of the daily management or a person expressly
authorised for this purpose by the board of directors.

In addition the directors will draft each year a report according to Articles 95
and 96 of the Company Code. However, the directors are not required to draft an
annual report as long as the company meets the conditions set by Article 94 of
the Company Code

                                   ARTICLE 36
                             DISTRIBUTION OF PROFITS

From the net profits of the company at least five percent (5%) shall be set
aside each year to constitute the legal reserve. Such deduction shall no longer
be required as soon as this legal reserve reaches one tenth of the share
capital.

Upon proposal of the board of directors the general meeting shall decide on the
allocation of the balance of the net profits.

                                   ARTICLE 37
                                  DISTRIBUTION

The distribution of dividends decided by the general meeting takes place on the
dates and places determined by the latter or by the board of directors.

Dividends not collected become prescribed after five years.

                                   ARTICLE 38
                                INTERIM DIVIDENDS

The board of directors has the power to distribute an interim dividend on the
profits of the accounting year, subject to compliance with the provisions of
Article 618 of the Company Code.

                                   ARTICLE 39
                             PROHIBITED DISTRIBUTION

Any distribution of dividends made in violation of the law must be reimbursed by
the shareholder who received it, if the company proves that the shareholder knew
that the payment was in violation of the regulations or could not be ignorant
thereof in view of the circumstances.

<PAGE>

                     CHAPTER VI. DISSOLUTION AND LIQUIDATION

                                   ARTICLE 40
                                     LOSSES

a)       If, as a result of losses suffered, the net assets have decreased to
         less than fifty percent of the corporate capital, the general meeting
         must meet within a period of maximum two months following the date on
         which such loss is or should have been established by virtue of legal
         or statutory provisions, in order to, as the case may be, deliberate
         and decide on the dissolution of the company and possibly on other
         measures announced in the agenda, according to the formalities which
         apply for modifications of the articles of association. The board of
         directors justifies its proposals in a special report which shall be
         made available to the shareholders at the registered office of the
         company fifteen days before the general meeting.

b)       If, as a result of losses suffered, the net assets have decreased to
         less than one fourth of the share capital, the dissolution of the
         company may be pronounced when it is approved by one/fourth of the
         votes cast at the meeting.

c)       If the net assets have decreased below the legal minimum amount set out
         in Article 439 of the Company Code, each interested party may request
         the dissolution of the company before the court. If the case arises,
         the court may grant the company a period of time during which it must
         regularise its situation.

                                   ARTICLE 41
                           DISSOLUTION AND LIQUIDATION

If the company is dissolved one or more liquidators shall be appointed by the
general meeting. If no decision has been taken on this subject the directors are
legally considered to be the liquidators, not only for the purpose of receiving
notices and notifications, but also for actually liquidating the company, and
not only vis-a-vis third parties, but also vis-a-vis the shareholders. They
dispose of the powers set forth in Articles 186 and 187 of the Company Code,
without further authorization by the general meeting. However, the general
meeting may at all times restrict these powers by simple majority.

All assets of the company must be sold unless the general meeting decides
otherwise.

If not all the shares have been paid up to the same extent, the liquidators
restore the balance, either by making additional calls, or by making prior
payments.

                                   ARTICLE 42
                        JOINING OF ALL SHARES IN ONE HAND

The fact that all shares are joined in one single hand does not cause a judicial
dissolution or a dissolution in justice. If within one year no new shareholder
has entered the company or it is not validly transmitted in a limited liability
company or dissolved, the single shareholder is deemed severally liable for all
obligations of the company originated after the joining of all shares in his

<PAGE>

hand until a new shareholder has entered the company or until the announcement
of the transmission into a limited liability company or of its dissolution.

The fact that all shares are joined in one hand, as well as the identity of the
single shareholder need to be mentioned in the company file held at the
commercial court competent for the area where the company is located.

The single shareholder exercises the powers of the general shareholders'
meeting. He can transfer these powers. The decisions of the single shareholder
acting on behalf of the general shareholders meeting are mentioned in the
register kept at the seat of the company.

The agreements between the single shareholder and the company are inscribed in a
document that needs to be deposited together with the annual accounts, unless it
concerns current transactions taken place under normal circumstances.

                         CHAPTER VII. GENERAL PROVISIONS

                                   ARTICLE 43
                              ELECTION OF DOMICILE

Every director and liquidator of the company residing abroad is deemed, for the
duration of his function, to have elected domicile at the registered office of
the company where all communications, notifications and summonses can be validly
served.

The holders of registered shares must inform the company of any change of
address. Failing notification they are deemed having elected domicile at their
previous address.

                                   ARTICLE 44
                              DEMATERIALISED STOCKS

The provision in these articles of association regarding dematerialised stocks
will become applicable as soon as the Royal Decrees concerned become applicable.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>9
<FILENAME>y04700exv10w2.txt
<DESCRIPTION>LEASE
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.2

LEASE, dated September 27, 2004, between HARTZ MOUNTAIN INDUSTRIES, INC., a New
York corporation, having an office at 400 Plaza Drive, P.O. Box 1515, Secaucus,
New Jersey 07096-1515 ("Landlord"), and PHIBRO ANIMAL HEALTH CORPORATION, a New
York corporation, having an office at One Parker Plaza, 400 Kelby Street, 14th
Floor, Fort Lee, New Jersey 07024 ("Tenant").

                             ARTICLE 1 - DEFINITIONS

      1.01. As used in this Lease (including in all Exhibits and any Riders
attached hereto, all of which shall be deemed to be part of this Lease) the
following words and phrases shall have the meanings indicated:

      A. Advance Rent: $65,147.50.

      B. Additional Charges: All amounts that become payable by Tenant to
Landlord hereunder other than the Fixed Rent.

      C. Architect: As Landlord may designate.

      D. Base Year: Calendar year 2005.

      E. Broker: Newmark Real Estate of New Jersey LLC and Leonard Krupat
Associates.

      F. Building: The building or buildings now or hereafter located on the
Land and known as 65 Challenger Boulevard (aka Challenger Road), Ridgefield
Park, New Jersey.

      G. Building Fraction: a fraction the numerator of which is the Rentable
Floor Area of the Building (approximately 166,284 square feet) and the
denominator of which is the aggregate Rentable Floor Area of the buildings in
the Development. If the aggregate Rentable Floor Area of the buildings in the
Development shall be changed due to any construction Or alteration, the
denominator of the Building Fraction shall be increased or decreased to reflect
such change; provided however that for purposes of determining the Building
Fraction during the term of this Lease, the denominator shall not be less than
1,067,413.

      H. Business Days: All days except Saturdays, Sundays, days observed by the
federal or state government as legal holidays and such other holidays as shall
be designated as holidays by the applicable building service union employees'
service contract or by the applicable operating engineers' contract.

      I. Business Hours: 9:00 A.M. to 6:00 P.M.

      J. Calendar Year: Any twelve-month period commencing on a January 1.

      K. Commencement Date: The earlier of (a) the date on which both: (i) the
Demised Premises

<PAGE>

shall be Ready for Occupancy, and (ii) actual possession of the Demised Premises
shall have been delivered to Tenant by notice to Tenant, or (b) the date Tenant,
or anyone claiming under or through Tenant, first occupies the Demised Premises
or any part thereof for any purpose other than the performance of Tenant's Work.
It is contemplated that the Commencement Date shall occur on or before December
15, 2004.

      L. Common Areas: All areas, spaces and improvements in the Building and on
the Land which Landlord makes available from time to time for the common use and
benefit of the tenants and occupants of the Building and which are not
exclusively available for use by a single tenant or occupant, including, without
limitation, parking areas, roads, walkways, sidewalks, landscaped and planted
areas, community rooms, if any, the managing agent's office, if any, and public
rest rooms, if any.

      M. Demised Premises: The space that is or will be located on the third
(3rd) floor of the Building and that is indicated on the floor plan(s) attached
hereto as Exhibit A. Landlord and Tenant have agreed that for purposes of this
Lease, Demised Premises as set forth on Exhibit A contains 33,990 square feet of
Rentable Floor Area.

      N. Development: All Lands and improvements now existing or hereafter
constructed located in the area bounded by Overpeck Lake on the east; lands of
Bergen County Park Commission on the north; Interstate Route 95 on the west and
U.S. Route 46 on the south.

      O. Development Common Areas: The roads and bridges that from time to time
service and provide access to the Development for the common use of the tenants,
invitees, occupants of the Development, that are maintained by Landlord or its
related entities.

      P. Expiration Date: The date that is the day before the seventh (7th)
anniversary of the Fixed Rent Commencement Date if the Fixed Rent Commencement
Date is the first day of a month, or the seventh (7th) anniversary of the last
day of the month in which the Fixed Rent Commencement Date occurs if the Fixed
Rent Commencement Date is not the first day of a month. However, if the Term is
extended by Tenant's effective exercise of Tenant's right, if any, to extend the
Term, the "Expiration Date" shall be changed to the last day of the last
extended period as to which Tenant shall have effectively exercised its right to
extend the Term. For the purposes of this definition, the earlier termination of
this Lease shall not affect the "Expiration Date."

      Q. Fixed Rent: From the Fixed Rent Commencement Date through the day
before the fifth (5th) anniversary of the Fixed Rent Commencement Date if the
Fixed Rent Commencement Date is the first day of a month, or the fifth (5th)
anniversary of the last day of the month in which the Fixed Rent Commencement
Date occurs if the Fixed Rent Commencement Date is not the first day of a month,
an amount at the annual rate of $23.00 per square foot multiplied by the
Rentable Floor Area of the Demised Premises (i.e. $781,770.00 per annum); and
thereafter through the original Expiration Date at an amount at the annual rate
of $25.50 per square foot multiplied by the Rentable Floor Area of the Demised
Premises (i.e. $866,745.00 per annum).

      Q1. Fixed Rent Commencement Date: The date which is six (6) months
following the

                                       4
<PAGE>

Commencement Date.

      R. Intentionally Omitted.

      S. Guarantor: None.

      T. Insurance Requirements: Rules, regulations, orders and other
requirements of the applicable board of underwriters and/or the applicable fire
insurance rating organization and/or any other similar body performing the same
or similar functions and having jurisdiction or cognizance over the Land and
Building, whether now or hereafter in force.

      U. Land: The Land upon which the Building and Common Areas are located.
The Land is described on Exhibit B.

      V. Landlord's Work: The materials and work to be furnished, installed and
performed by Landlord in accordance with the provisions of Article 5.

      W. Legal Requirements: Laws and ordinances of all federal, state, city,
town, county, borough and village governments, and rules, regulations, orders
and directives of all departments, subdivisions, bureaus, agencies or offices
thereof, and of any other governmental, public or quasi-public authorities
having jurisdiction over the Land and Building, whether now or hereafter in
force, including, but not limited to, those pertaining to environmental matters.

      X. Mortgage: A mortgage and/or a deed of trust.

      Y. Mortgagee: A holder of a mortgage or a beneficiary of a deed of trust.

      Z. Operating Expenses: The sum of the following: (1) the cost and expense
(whether or not within the contemplation of the parties) for the repair,
replacement, maintenance, policing, insurance and operation of the Building and
Land (including the Parking Deck) and (2) the Building Fraction of the sum of
(a) the cost and expense for the repair, replacement, maintenance, policing,
insurance and operation of the Development Common Areas; (b) the real estate
taxes, if any, attributable to the Development Common Areas (the Real Estate
Taxes with respect to the Land and the Building being excluded from Operating
Expenses pursuant to subsection (xv) below, and being covered by Section 6.01 of
this Lease); and (3) the Parking Charges. The "Operating Expenses" shall,
include, without limitation, the following: (i) the cost for rent, casualty,
liability, boiler and fidelity insurance, (ii) if an independent managing agent
is employed by Landlord, the fees payable to such agent (provided the same are
competitive with the fees payable to independent managing agents of comparable
facilities in Bergen County), and (iii) costs and expenses incurred for legal,
accounting and other professional services (including, but not limited to, costs
and expenses for in-house or staff legal counselor outside counsel at rates not
to exceed the reasonable and customary charges for any such services as would be
imposed in an arms length third party agreement for such services. In all years
including the Base Year and subsequent to Base Year, if Landlord is itself
managing the Building and has not employed an independent third party for such
management, Landlord shall be entitled to 15% of the resulting total of all of
the foregoing items making up "Operating Expenses" for Landlord's home office
administration and overhead cost and expense. All items included in Operating
Expenses shall be determined in

                                       5
<PAGE>

accordance with generally accepted accounting principles consistently applied.

The items making up Operating Expenses shall not include the following:

      (i) Costs for which Landlord is specifically reimbursed by Tenant or any
other tenant (other than through operating expense provisions), or by insurance
carried pursuant to this Lease;

      (ii) Interest or principal on mortgages of the Land and Building or the
Development, if any, and costs relating to financing or refinancing, rents under
underlying leases or Superior Leases, and any ground rent, additional rent, or
other charges under underlying leases or Superior Leases, unless otherwise
includable in Operating Expenses (but not in duplication thereof);

      (iii) Rent concessions or expenditures for any tenant alteration,
renovation, decoration, redecoration or finish of any other tenant space in the
Building or in other buildings in the Development whether performed in
connection with the occupancy of such space by a new tenant or in connection
with a renewal of a lease for such space by the existing tenant thereof or the
relocation of a tenant or otherwise with respect to such tenancy;

      (iv) Leasing commissions, marketing and advertising costs related to
leasing space in the Building and all finder's fees and all other leasing
expenses incurred in procuring tenants, including without limitation, tenant
space preparation and relocation costs;

      (v) The cost of repairs, replacements or other work incurred by reason of
fire, casualty, or condemnation to the extent same is reimbursed by insurance
proceeds, provided that if any non-reimbursement is due to Landlord's failure to
pay the applicable insurance premiums or Landlord is otherwise at fault for such
non-reimbursement, then such non-reimbursed amounts shall not be included
Operating Expenses;

      (vi) Any cost or other sum, representing an amount paid to an affiliated
corporation, entity, or person which is in excess of the amount which would be
paid in the absence of such relationship;

      (vii) Costs and expenses for legal, accounting and other professional
services (including, but not limited to, costs and expenses for in-house or
staff legal counselor outside counsel) incurred in connection with any
negotiation of any lease in the Building, enforcement of lease provisions (other
than relating to Common Areas or Rules and Regulations) ort the collection of
rent, any relationships or disputes with any former tenants, prospective
tenants, or other lawful occupants of the Building, preparation of financial
statements for Mortgagees, preparation of Landlord's income tax returns (other
than in connection with Real Estate Taxes);

      (viii) Capital improvements by Landlord, except as follows: to the extent
any of the expenditures by Landlord making up Operating Expenses hereunder would
be classified as capital expenditure items pursuant to generally accepted
accounting principles then only an amount, per annum, equal to the cost of such
items amortized over the useful life of such item, as reasonably determined by
Landlord, together with interest thereon at the Prime Rate as announced in the
Wall Street Journal (or a successor index reasonably selected by Landlord),
shall be included annually in

                                       6
<PAGE>

Operating Expenses with respect to (1) the capital expenditures of Landlord for
the repair, replacement and/or restoration as appropriate to the Building and
Land in the ordinary course consistent with that of a first class office
building and uses ancillary thereto; (2) the capital expenditures of Landlord in
connection with any change in Legal Requirements enacted subsequent to the
Commencement Date; and/or (3) the capital expenditures of Landlord which reduce
any component of Operating Expenses, but to only to the extent of such
reduction; but excluding any capital expenditures for additions to the Building
to the extent such additions increase the Rentable Floor Area of the Building or
capital expenditures made from insurance or condemnation proceeds in connection
with the restoration of any casualty or condemnation of the Building;

      (ix) With respect to the Development Common Areas, capital expenditures
under generally accepted accounting principals with respect to office buildings
and retail premises in the Development occupied or offered for sale or lease
other than the Building;

      (x) Income and franchise taxes of Landlord or its affiliated entities
(other than the Building Share of any taxes imposed upon the property owner's
association pursuant to the Declaration)--including corporate, unincorporated
business, estate or inheritance tax or charges imposed upon or assessed against
Landlord, provided however, that nothing in this subsection (ix) shall be deemed
to limit the provisions of Section 6.0 I hereof (for the purposes hereof
"Declaration" shall mean that certain Reciprocal Construction, Operation and
Easement Agreement dated as of June 27, 1986, as amended and recorded in the
Office of the Bergen County Clerk in Deed Book 7019, page 360, as amended in
Deed Book 7411, page 459 and Deed Book 7545, page 862, as the same may be
hereafter further amended);

      (xi) Lease takeover or termination costs incurred by Landlord in
connection with any other lease in the Building, including any payments required
to be made in connection with the termination of such lease.

      (xii) Depreciation and amortization in connection with the Building or the
Building equipment, fixtures, or systems except as otherwise specifica11y
provided in subsection (viii);

      (xiii) The cost of electricity (including applicable taxes) and other
utilities furnished directly to leased areas of the Building or other areas of
the Building offered for lease (other than the Demised Premises) as measured by
meters, or if there be no meters, as determined by a reputable independent
electrical consultant mutually acceptable to Landlord and Tenant, and the cost
of other utilities furnished to such other leased areas of the Building or other
areas of the Building offered for lease (other than the Demised Premises) as
measured by meters or, if there be no meters, as determined by a reputable
independent consultant mutually acceptable to Landlord and Tenant;

      (xiv) Salaries, fringe benefits, administrative expenses and any other
compensation of personnel above the grade of vice president, property management
or equally held positions (if any such personnel perform services for premises
other than the Building, the salaries, fringe benefits, administrative expenses
and other compensation of such personnel shall be allocated pro rata between the
Building and such other premises);

                                       7
<PAGE>

      (xv) Real Estate Taxes with respect to the Land and the Building (which
are provided for in Section 6.01 hereof);

      (xvi) Bad debt or rent loss reserves; and

      (xvii) Any interest, fine, penalty or other late charge payable by
Landlord (other than if caused by the act of Tenant, or Tenant's agents or
invitees).

      AA. Parking Charges: The cost and expense of the repair, replacement,
striping, maintenance, policing, insurance, real estate taxes (without
duplication of Real Estate Taxes included in Operating Expenses under
subsection(b) of Section 1.01Z), utilities, and landscaping attributable to the
pro rata share of the parking deck(s) allocated to the Building. The pro rata
share shall be determined based upon the number of parking spaces allocated to
the Building divided by the total number of the parking spaces in the parking
deck(s). The parking charges shall include expenses attributable only to the
parking deck(s) and shall not include expenses attributable to any other
improvements.

      BB. Permitted Uses: Executive and general offices of a character
consistent with that of a first class office building.

      CC. Person: A natural person or persons, a partnership, a corporation, or
any other form of business or legal association or entity.

      DD. Ready for Occupancy: The condition of the Demised Premises when for
the first time either(a) the Landlord's Work shall have been substantially
completed and a temporary, permanent, or continuing Certificate of Occupancy
shall have been issued permitting use of the Demised Premises for the Permitted
Uses, or (b) the following have occurred: (1) the Landlord's Work shall have
been substantially completed to the extent required such that the non-completion
of any remaining Landlord's Work would not prevent the issuance of a temporary,
permanent or continuing Certificate of Occupancy, permitting the lawful
occupancy of the Demised Premises by Tenant upon completion of Tenant's Work by
Tenant. In the event Landlord delivers the Demised Premises to Tenant under a
temporary Certificate of Occupancy, Landlord shall diligently pursue the
completion of any remaining items of Landlord's Work required to be completed as
a condition of such temporary certificate of Occupancy. The Landlord's Work
shall be deemed substantially completed 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. Landlord shall use commercially
reasonable efforts to complete any Punchlist Item within thirty (30) days after
the Commencement Date (which time period may be extended to the extent any such
Punchlist item requires more than thirty (30) days to obtain materials or
installation, provided Landlord diligently pursues such materials or
installation).

      EE. Real Estate Taxes: The real estate taxes, assessments and special
assessments imposed upon the Building and Land by any federal, state, municipal
or other governments or governmental bodies or authorities, and any expenses
incurred by Landlord in contesting such taxes or assessments and/or the assessed
value of the Building and Land, which expenses shall be allocated to the period
of time to which such expenses relate. If at any time during the Term the
methods of taxation prevailing

                                       8
<PAGE>

on the date 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 such real estate taxes,
assessments and special assessments now imposed on real estate there shall be
levied, assessed or imposed (a) a tax, assessment, levy, imposition, license fee
or charge wholly or partially as a capital levy or otherwise on the rents
received therefrom, or (b) any other such additional or substitute real estate
tax, assessment, levy, imposition or charge, then all such taxes, assessments,
levies, impositions, fees or charges or the part thereof so measured or based
shall be deemed to be included within the term "Real Estate Taxes" for the
purposes hereof. Absent an alteration in the method of taxation as set forth
above, and except with respect to charges imposed in lieu of real estate taxes,
assessments and special assessments, "Real Estate Taxes" shall not be deemed to
include Landlord's personal and corporate income taxes, inheritance and estate
taxes, franchise, gift and transfer taxes.

      FF. Rent: The Fixed Rent and the Additional Charges.

      GG. Rentable Floor Area: As to the Demised Premises, the sum of the floor
area stated in square feet bounded by the exterior faces of the exterior walls,
or by the exterior or Common Area face of any wall between the Demised Premises
and any portion of the Common Areas, or by the center line of any wall between
the Demised Premises and space leased or available to be leased to a tenant or
occupant plus fifteen (15%). Any reference to Rentable Floor Area of a building
shall mean the floor area of all levels or stories of such building, excluding
any roof, except such portion thereof( other than cooling towers, elevator
penthouses, mechanical rooms, chimneys and staircases, entrances and exits) as
is permanently enclosed, and including any interior basement level or mezzanine
area not occupied or used by a tenant on a continuing or repetitive basis, and
any mechanical room, enclosed or interior truck dock, interior Common Areas, and
areas used by Landlord for storage, for housing meters and/or other equipment or
for other purposes. Any reference to the Rentable Floor Area is intended to
refer to the Rentable Floor Area of the entire area in question irrespective of
the person(s) who may be the owner(s) of all or any part thereof

      HH. Rules and Regulations: Rules and Regulations: The reasonable rules and
regulations that may be promulgated by Landlord from time to time, which may be
reasonably changed by Landlord from time to time. The Rules and Regulations now
in effect are attached hereto as Exhibit D.

      II. Security Deposit: $800,000.00 Letter of Credit, subject to the terms
and provisions of Article 8 hereof.

      JJ. Successor Landlord: As defined in Section 9.03.

      KK. Superior Lease: Any lease to which this Lease is, at the time referred
to, subject and subordinate. As of the date hereof, the Superior Lease is that
certain Lease of Second Redevelopment Parcel by and between the Village of
Ridgefield Park, as landlord and Landlord, as tenant, dated January 17, 1986, as
amended, as evidenced by a Memorandum of Lease dated February 9, 1999 and
recorded March 23, 1999 in the Bergen County Clerk's Office in Deed Book 8146,
page 581, as the same may be hereafter further amended.

      LL. Superior Lessor: The lessor of a Superior Lease or its successor in
interest, at the time

                                       9
<PAGE>

referred to.

      MM. Superior Mortgage: Any Mortgage to which this Lease is, at the time
referred to, subject and subordinate.

      NN. Superior Mortgagee: The Mortgagee of a Superior Mortgage at the time
referred to.

      OO. Tenant's Fraction: The Tenant's Fraction shall mean the fraction, the
numerator of which shall be the Rentable Floor Area of the Demised Premises and
the denominator of which shall be the Rentable Floor Area of the Building
(20.44%). If the size of the Demised Premises or the Building shall be changed
from the initial size thereof, due to any taking, any construction or alteration
work or otherwise, the Tenant's Fraction shall be changed to the fraction the
numerator of which shall be the Rentable Floor Area of the Demised Premises and
the denominator of which shall be the Rentable Floor Area of the Building. In
the event Landlord reasonably determines that Tenant's utilization of any item
of Operating Expenses exceeds the fraction referred to above, Tenant's Fraction
with respect to such item shall, at Landlord's option, mean the percentage of
any such item (but not less than the fraction referred to above) which Landlord
reasonably estimates as Tenant's proportionate share thereof.

      PP. Tenant's Property: As defined in Section 16.02.

      QQ. Tenant's Work: The facilities, materials and work which may be
undertaken by or for the account of Tenant (other than the Landlord's Work) to
equip, decorate and furnish the Demised Premises for Tenant's occupancy.

      RR. Term: The period commencing on the Commencement Date and ending at II
:59 p.m. of the Expiration Date, but in any event the Term shall end on the date
when this Lease is earlier terminated in accordance with the provisions of this
Lease.

      SS. Unavoidable Delays: A delay arising from or as a result of a strike,
lockout, or labor difficulty, explosion, sabotage, accident, riot or civil
commotion, act of war, fire or other catastrophe, Legal Requirement, or an act
of the other party, and any cause beyond the reasonable control of that party,
provided that the party asserting such Unavoidable Delay has exercised its
commercially reasonable efforts to minimize such delay.

                                       10
<PAGE>

                           ARTICLE 2 - DEMISE AND TERM

      2.01. Landlord hereby leases to Tenant, and Tenant hereby hires from
Landlord, the Demised Premises, for the Term. Within ten (10) days after request
by Landlord following the Commencement Date, the parties hereto shall enter into
an agreement in form and substance reasonably satisfactory to Landlord setting
forth the Commencement Date.

                                ARTICLE 3 - RENT

      3.01. Tenant shall pay the Fixed Rent in equal monthly installments in
advance on the first day of each and every calendar month during the Term
commencing on the Fixed Rent Commencement Date (except that Tenant shall pay,
upon the execution and delivery of this Lease by Tenant, the Advance Rent, to be
applied against the first installment or installments of Fixed Rent becoming due
under this Lease). If the Fixed Rent Commencement Date occurs on a day other
than the first day of a calendar month and/or the Lease is terminated on a date
other than the last day of a month (other than pursuant to Article 27 or 28
hereof), the Fixed Rent for any such partial calendar months of the Term shall
be prorated.

      3.02. The Rent shall be paid in lawful money of the United States to
Landlord at its office, or such other place, or Landlord's agent, as Landlord
shall (upon not less than fifteen (15) days prior written notice to Tenant)
designate. Tenant shall pay the Rent promptly when due without notice or demand
therefor and without any abatement, deduction or setoff for any reason
whatsoever, except as may be expressly provided in this Lease. If Tenant makes
any payment to Landlord by check, same shall be by check of Tenant and Landlord
shall not be required to accept the check of any other Person, and any check
received by Landlord shall be deemed received subject to collection. If any
check is mailed by Tenant, Tenant shall post such check in sufficient time prior
to the date when payment is due so that such check will be received by Landlord
on or before the date when payment is due. Tenant shall assume the risk of
lateness or failure of delivery of the mails, and no lateness or failure of the
mails will excuse Tenant from its obligation to have made the payment in
question when required under this Lease.

      3.03. No payment by Tenant or receipt or acceptance by Landlord of a
lesser amount than the correct Rent shall be deemed to be other than a payment
on account, nor shall any 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.

      3.04. If Tenant is in arrears in payment of Rent, Tenant waives Tenant's
right, if any, to designate the items to which any payments made by Tenant are
to be credited, and Landlord may apply any payments made by Tenant to such items
as Landlord sees fit, irrespective of, and notwithstanding any designation or
request by, Tenant, as to the items to which any such payments shall be
credited.

      3.05. In the event that any installment of Rent due hereunder shall be
overdue for more than five

                                       11
<PAGE>

(5) Business Days, a "Late Charge" equal to four percent (4%) or the maximum
rate permitted by law, whichever is less ("Late Payment Rate") for Rent so
overdue may be charged by Landlord for each month or part thereof that the same
remains overdue ("Late Payment Rate"). Provided Tenant is not otherwise in
default under this Lease beyond applicable notice and cure periods, Landlord
shall waive the Late Charge with respect to Tenant's first late payment of Rent
within any calendar year, provided further that Tenant pays such late Rent
within ten (10) days after written notice that same has not been paid. In the
event that any check tendered by Tenant to Landlord is returned for insufficient
funds, Tenant shall pay to Landlord, in addition to the charge imposed by the
preceding sentence, a fee of $50.00. Any such Late Charges if not previously
paid shall, at the option of the Landlord, be added to and become part of the
next succeeding Rent payment to be made hereunder.

                       ARTICLE 4 - USE OF DEMISED PREMISES

      4.01. Tenant shall use and occupy the Demised Premises for the Permitted
Uses, and Tenant shall not use or permit or suffer the use of the Demised
Premises or any part thereof for any other purpose.

      4.02. 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, Tenant shall duly procure
and thereafter maintain such license or permit, and submit the same to Landlord
for inspection. Tenant shall at all times comply with the terms and conditions
of each such license or permit. 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 any manner which (a) violates
the Certificate of Occupancy for the Demised Premises or for the Building; (b)
causes, or is liable to cause, injury to the Building or any equipment,
facilities or systems therein; (c) constitutes a violation of the Legal
Requirements or Insurance Requirements; (d) impairs, or tends to impair, the
character, reputation or appearance of the Building as a first-class office
building; (e) impairs, or tends to impair, the proper and economic maintenance,
operation and repair of the Building and/or its equipment, facilities or
systems; or (f) unreasonably annoys or inconveniences, or tends to unreasonably
annoy or inconvenience, other tenants or occupants of the Building.

      4.03. Tenant, its agents and employees shall, from and after the
Commencement Date, during the Term, be permitted access to the Building
twenty-four hours per day, seven days per week, subject however to any temporary
closure required due to emergency or to effect repairs or maintenance to the
Building in accordance with the terms of this Lease. Landlord shall in the event
of such temporary closure use reasonable efforts to minimize interference by
Landlord with Tenant's use of the Demised Premises or means of ingress or egress
to and from the Demised Premises.

                   ARTICLE 5 - PREPARATION OF DEMISED PREMISES

      5.01.(a) The Demised Premises shall be completed and prepared by Landlord
for Tenant's occupancy in the manner described in, and subject to the provisions
of, this Article 5. Except as expressly provided to the contrary in this Lease,
the taking of possession by Tenant of the Demised

                                       12
<PAGE>

Premises shall be conclusive evidence as against Tenant that the Demised
Premises and the Building were in good and satisfactory condition at the time
such possession was taken. Except as expressly provided to the contrary in this
Lease, Tenant is. leasing the Demised Premises "as is" on the date hereof,
subject to reasonable wear and tear. Tenant shall provide Landlord with written
notice of any claimed defects in workmanship or materials in Landlord's Work
(except for any defects in the Demised Premises or the Building which were not
known or reasonably discoverable by Tenant by observation or an inspection
["Latent Defects"]), and any items of work performed by Landlord of a minor or
insubstantial nature ("Punchlist Items") not later than thirty (30) days after
Tenant receives notice from Landlord that the Demised Premises are Ready for
Occupancy, and with respect to any Latent Defects, within thirty (30) days after
tenant becomes aware of such defect.

      (b) Tenant shall, upon execution hereof, provide Landlord with all
information Landlord needs to prepare working drawings for the construction of
Landlord's Work. Such information shall include, but not be limited to layout of
the Demised Premises, electrical, mechanical, plumbing & structural
requirements, materials & finishes. Within fifteen (15) days of Landlord's
receipt of all necessary information, Landlord shall deliver working drawings to
Tenant. Tenant shall, within five (5) days of its receipt of working drawings,
review and approve the working drawings by giving Landlord written notice
thereof. If Tenant does not respond within said five (5) day period, the working
drawings shall be deemed approved. If Tenant disapproves of the working
drawings, it shall specify in detail the reasons for its disapproval. If Tenant
makes changes in the working drawings which materially impact the Landlord's
ability to complete the Landlord's Work on time, the provisions of Section 5.02
shall apply. Within five (5) days after the working drawings are approved Or
deemed approved, Landlord shall submit to Tenant commercially reasonable prices
(or Landlord's commercially reasonable estimates if prices are not then
determined), for the construction of all items comprising Landlord's Work,
including those items in excess of Landlords' Work. Tenant shall, within two (2)
Business Days of its receipt of prices, review and approve the prices by giving
Landlord written notice thereof; upon approval of such prices by Tenant,
Landlord shall perform such Landlord's Work in a prompt and diligent manner. If
Tenant does not respond within said two (2) Business Day period, the prices
shall be deemed approved. If Tenant disapproves of any prices, the provisions of
Section 5.02 shall apply.

      (c) In the event that Landlord is unable to deliver to Tenant possession
of the Demised Premises Ready for Occupancy by December 31, 2004 (subject,
however, to Section 5.02 below), the Fixed Rent Commencement Date shall be
extended one day for each day occurring after such date through and including
the day immediately preceding the Commencement Date.

      (d) In the event that Landlord is unable to deliver to Tenant possession
of the Demised Premises Ready for Occupancy by March 31, 2005 (subject, however,
to Section 5.02 below), the Fixed Rent Commencement Date shall be extended two
(2) days for each day occurring after such date through and including the day
immediately preceding the Commencement Date.

      (e) In the event that Landlord is unable to deliver to Tenant possession
of the Demised Premises by May 1, 2005 (subject, however, to Section 5.02 below)
(the "Termination Deadline"), Tenant shall have the right to terminate this
Lease upon written notice given to Landlord not later than five (5) days
following the Termination Deadline, whereupon the Advance Rent and Security
Deposit shall be returned to Tenant and this Lease shall be of no further force
Or effect and the parties hereto shall have

                                       13
<PAGE>

no further liability to one another hereunder.

      5.02. If the substantial completion of the Landlord's Work shall be
delayed due to (a) any actor omission of Tenant (including, but not limited to,
for purposes of the Section 5.02, any of its employees, agents or contractors),
without limitation, [i] any delays due to changes in or additions to the
Landlord's Work requested or caused by Tenant, or [ii] any delays by Tenant in
the submission of plans, drawings, specifications or other information or in
approving any working drawings or estimates or in giving any authorizations or
approvals) which materially impact the Landlord's ability to complete the
Landlord's Work on time, or (b) any additional time needed for the completion of
the Landlord's Work by the inclusion in the Landlord's Work of any items
specified by Tenant that require long lead time for delivery or installation
which materially impact the Landlord's ability to complete the Landlord' s Work
on time, then the Demised Premises shall be deemed Ready for Occupancy on the
date when they would have been ready but for such delay(s). The Demised Premises
shall be conclusively presumed to be in satisfactory condition on the
Commencement Date except for the minor or insubstantial details of which Tenant
gives Landlord notice within thirty (30) days after the Commencement Date
specifying such details with reasonable particularity.

      5.03. Payment for Landlord's Work:

            (i) Payment for Landlord's Work: Upon substantial completion of
Landlord's Work, Tenant shall pay for the cost of all of Landlord's Work as
herein set forth within ten (10 days of notice or invoice. The cost of
Landlord's Work ("Landlord's Cost") shall be deemed to be the cost of labor,
materials, equipment and services necessary for the performance of Landlord's
Work, plus twelve (12%) percent.

            (ii) Tenants Credit Notwithstanding the foregoing, Tenant shall be
entitled to a credit of Fifteen and 00/100 Dollars ($15.00) multiplied by the
number of square feet of Rentable Floor Area Space of the Demised Premises (i.e.
33,990 X $15.00 = $509,850.00) (the "Credit") to reduce the amount payable by
Tenant to Landlord for Landlord's Cost of Landlord's Work.

      Landlord shall not be required to give or apply such credit unless this
Lease is in full force and effect, and provided further that Tenant is not in
default under this Lease (which has not been cured within any applicable notice
and cure period), and until Tenant has cured any defaults by it under the Lease
(within any applicable notice and cure period), if any. In the event the amount
of the Credit which Tenant is entitled to hereunder exceeds the amount of
Landlord's Cost, any remaining balance shall be credited against future
installments of Rent payable by Tenant under the Lease.

      5.04. Landlord reserves the right, at any time and from time to time, to
increase, reduce or change the number, type, size, location, elevation, nature
and use of any of the Common Areas and the Building and any other buildings and
other improvements on the Land, including, without limitation, the right to move
and/or remove same, provided same shall not unreasonably block Or interfere with
Tenant's means of ingress or egress to and from the Demised Premises and
provided any such changes are performed in a good workman-like manner.

                                       14
<PAGE>

                 ARTICLE 6 - TAX AND OPERATING EXPENSE PAYMENTS

      6.01. Tenant shall pay to Landlord, as hereinafter provided, Tenant's
Fraction of the Real Estate Taxes. Tenant's Fraction of the Real Estate Taxes
shall be the Real Estate Taxes in respect of the Building for the then current
Calendar Year in question, less the Real Estate Taxes attributable to the
Building for Base Year, multiplied by the Tenant's Fraction, plus the Real
Estate Taxes in respect of the Land for the then current Calendar Year in
question, less the Real Estate Taxes attributable to the Land for the Base Year,
multiplied by the Tenant's Fraction. If any portion of the Building shall be
exempt from all or any part of the Real Estate Taxes, then for the period of
time when such exemption is in effect, the Rentable Floor Area on such exempt
portion shall be excluded when making the above computations in respect of the
part of the Real Estate Taxes for which such portion shall be exempt. Landlord
shall estimate the annual amount of Tenant's Fraction of the Real Estate Taxes
(which estimate may be changed by Landlord at any time and from time to time,
but not more than once each Calendar Year), and Tenant shall pay to Landlord
1/12th of the amount so estimated on the first day of each month in advance.
Tenant shall also pay to Landlord within thirty (30) days after notice or
invoice from time to time the amount which, together with said monthly
installments, will be sufficient in Landlord's estimation to pay Tenant's
Fraction of any Real Estate Taxes. When the amount of any .item comprising Real
Estate Taxes is finally determined for a real estate fiscal tax year, Landlord
shall submit to Tenant a statement in reasonable detail of the same, and the
figures used for computing Tenant's Fraction of the same, and if Tenant's
Fraction so stated is more or less than the amount theretofore paid by Tenant
for such item based on Landlord's estimate, Tenant shall pay to Landlord the
deficiency within thirty (30) days after submission of such statement, or
Landlord shall, at its sole election, either refund to Tenant the excess or
apply same to future installments of Real Estate Taxes due hereunder. Any Real
Estate Taxes for a real estate fiscal tax year, a part of which is included
within the Term and a part of which is not so included, shall be apportioned on
the basis of the number of days in the real estate fiscal tax year included in
the Term, and the real estate fiscal tax year for any improvement assessment
will be deemed to be the one-year period commencing on the date when such
assessment is due, except that if any improvement assessment is payable in
installments, the real estate fiscal tax year for each installment will be
deemed to be the one-year period commencing on the date when such installment is
due. The above computations shall be made by Landlord in accordance with
generally accepted accounting principles, and the Rentable Floor Area referred
to will be based upon the average of the Rentable Floor Area in existence on the
rust day of each month during the period in question. In addition to the
foregoing, Tenant shall be responsible for any increase in Real Estate Taxes
attributable to assessments for improvements installed by or for the account of
Tenant (other than Landlord's Work) at the Demised Premises. If the Demised
Premises are not separately assessed, the amount of any such increase shall be
determined by reference to the records of the tax assessor.

      6.02. Tenant shall pay to Landlord, as hereinafter provided, Tenant's
Fraction of the Operating Expenses. Tenant's Fraction of the Operating Expenses
shall be the Operating Expenses for the Calendar Year in question, less the
Operating Expenses for the Base Year, multiplied by Tenant's Fraction. Landlord
shall estimate Tenants Fraction of the Operating Expenses for such Calendar Year
(which estimate may be reasonably changed by Landlord from time to time, but not
more than once each Calendar Year), and Tenant shall pay to Landlord 1/12th of
the amount so estimated on the first day of each month in advance. If at any
time Landlord changes its estimate of Tenant's Fraction of the Operating
Expenses for the then current Calendar Year or partial Calendar Year, Landlord
shall give

                                       15
<PAGE>

written notice to Tenant of such change and within thirty (30) days after such
notice Landlord and Tenant shall adjust for any overpayment or underpayment
during the prior months of the then Current Calendar Year or partial Calendar
Year. After the end of each Calendar Year, including any partial Calendar Year
at the beginning of the Term, and after the end of the Term, Landlord shall
submit to Tenant a statement in reasonable detail stating Tenant's Fraction of
the Operating Expenses for such Calendar Year, or partial Calendar Year in the
event the Term shall begin on a date other than a January 1st and/or end on a
date other than a December 31st, as the case may be, and stating the Operating
Expenses for the period in question and the figures used for computing Tenant's
Fraction, and if Tenant's Fraction so stated for such period is more or less
than the amount paid for such period, Tenant shall pay to Landlord the
deficiency within ten (10) days after submission of such statement, or Landlord
shall, at its sole election, within thirty (30) days either refund to Tenant the
excess or apply same to future installments of Operating Expenses due hereunder.
All computations shall be made in accordance with generally accepted accounting
principles.

      6.03. Landlord shall, within thirty (30) days after written request from
Tenant (given no later than one hundred twenty (120) days after the issuance of
the Landlord's statement of Real Estate Taxes or Operating Expenses pursuant to
Section 6.01 or 6.02 hereof which Tenant desires to review), provide Tenant with
such information as Tenant may reasonably request to permit Tenant to verify the
charges first appearing in such statement including, without limitation access
to and review of Landlord's relevant books, records and other financial
information. Each such statement given by Landlord pursuant to Section 6.01 or
Section 6.02 shall be conclusive and binding upon Tenant unless before the date
which is one hundred twenty (120) days after the receipt of such statement,
Tenant shall notify Landlord in writing that it disputes the correctness of the
statement, specifying the particular respects in which the statement is claimed
to be incorrect. If such dispute is not settled by agreement, either party may
submit the dispute to arbitration as provided in Article 36. Pending the
determination of such dispute by agreement or arbitration as aforesaid, Tenant
shall, within ten (10) days after receipt of such statement, pay the Additional
Charges in accordance with Landlord's statement, without prejudice to Tenant's
position. If the dispute shall be determined in Tenant's favor, Landlord shall
reimburse Tenant the amount of Tenant's overpayment resulting from compliance
with Landlord's statement, and if such overpayment is the result of an
overestimation by Landlord of any Additional Charge by more than seven percent
(7%), such overpayment shall be reimbursed to Tenant, within thirty (30) days
after such determination, together with interest thereon at the Prime Rate as
announced in the Wall Street Journal (or a successor index reasonably selected
by Landlord), or at Landlord's option, Landlord may apply same to the next
future installments of Real Estate Taxes due hereunder, with the balance of any
such overpayment by Tenant, if any, remaining after such credit to Tenant to be
refunded to Tenant within thirty (30) days of such determination.

                            ARTICLE 7 - COMMON AREAS

      7.01. So long as Tenant is not in default in the payment of Fixed Rent
under this Lease beyond any applicable notice or cure period, subject to the
provisions of Section 5.04, Landlord will operate, manage, equip, light, repair
and maintain, or cause to be operated, managed, equipped, lighted, repaired and
maintained, the Common Areas for their intended purposes.. Landlord reserves the
right, at any

                                       16
<PAGE>

time and from time to time, to construct within the Common Areas kiosks,
fountains, aquariums, planters, pools and sculptures, and to install vending
machines, telephone booths, benches and the like, provided same shall not
unreasonably block or interfere with Tenant's means of ingress or egress to and
from the Demised Premises.

      7.02. So long as Tenant is not in default in the payment of Fixed Rent
under this Lease beyond any applicable notice or cure period, Tenant and its
subtenants and concessionaires, and their respective officers, employees,
agents, customers and invitees, shall have the non-exclusive right, in common
with Landlord and all others to whom Landlord has granted or may hereafter grant
such right, but subject to the Rules and Regulations, to use the Common Areas.
Landlord reserves the right, at any time and from time to time, to close
temporarily all or any portions of the Common Areas when in Landlord's
reasonable judgment any such closing is necessary or desirable (a) to make
repairs or changes or to effect construction, (b) to prevent the acquisition of
public rights in such areas, (c) to discourage unauthorized parking, or (d) to
protect or preserve natural persons or property. Landlord may do such other acts
in and to the Common Areas as in its judgment may be desirable to improve or
maintain same. So long as this Lease remains in full force and effect, Landlord
shall provide Tenant, without charge (except as a component of Operating
Expenses), with thirty-four (34) reserved (in reasonable proximity to the
entrance of the Building) and one hundred two (102) unreserved parking spaces in
the Parking Deck serving the Building.

      7.03. Tenant agrees that it, any subtenant or licensee and their
respective officers, employees, contractors and agents will park their
automobiles and other vehicles only where and as permitted by Landlord. Tenant
will, if and when so requested by Landlord, furnish Landlord with the license
numbers of any vehicles of Tenant, any subtenant or licensee and their
respective officers, employees and agents.

                              ARTICLE 8 - SECURITY

      8.01. Tenant has deposited with Landlord the Security Deposit as security
for the full and faithful payment and performance by Tenant of Tenant's
obligations under this Lease. If Tenant defaults in the full and prompt payment
and performance of any of its obligations under this Lease, including, without
limitation, the payment of Rent, Landlord may use, apply or retain the whole or
any part of the Security Deposit to the extent required for the payment of any
Rent or any other sums as to which Tenant is in default or for any sum which
Landlord may expend or may be required to expend by reason of Tenant's default
in respect of any of Tenant's obligations under this Lease, inducting, without
limitation, any damages or deficiency in the reletting of the Demised Premises,
whether such damages or deficiency accrue before or after summary proceedings or
other re-entry by Landlord. If Landlord shall so use, apply or retain the whole
or any part of the security, Tenant shall within ten (10) days of demand
immediately deposit with Landlord a sum equal to the amount so used, applied and
retained, as security as aforesaid. If Tenant shall fully and faithfully pay and
perform all of Tenant's obligations under this Lease, the Security Deposit or
any balance thereof to which Tenant is entitled shall be returned or paid over
to Tenant within thirty (30) days after the date on which this Lease shall
expire, and after delivery to Landlord of entire possession of the Demised
Premises in accordance with the terms of this Lease. In the event of any sale or
leasing of the Land, Landlord shall transfer the security

                                       17
<PAGE>

to which Tenant is entitled to the vendee or lessee and Landlord shall thereupon
be released by Tenant from all liability for the return or payment thereof; and
Tenant shall look solely to the new landlord for the return or payment of the
same; and the provisions hereof shall apply to every transfer or assignment made
of the same to a new landlord. Tenant shall not assign or encumber or attempt to
assign or encumber the monies deposited herein as security, and neither Landlord
nor its successors or assigns shall be bound by any such assignment,
encumbrance, attempted assignment or attempted encumbrance.

      (b) In lieu of the cash security required by this Lease, Tenant shall
provide to Landlord an irrevocable Letter of Credit in the amount of the
Security Deposit in form and substance satisfactory to Landlord and issued by a
savings bank; a savings and loan association or a commercial bank, organized and
existing under the laws of the United States or any state thereof and having
offices in New York or New Jersey (with fifty (50) miles of the Demised
Premises) reasonably approved by Landlord and otherwise substantially in the
form of Exhibit F, annexed hereto and made a part hereof. Landlord shall have
the right, upon written notice to Tenant (except for Tenant's non-payment of
Rent or for Tenant's failure to comply with Article 8.03 for which no notice
shall be required), and regardless of the exercise of any other remedy the
Landlord may have by reason of a default, to draw upon said Letter of Credit to
cure any default of Tenant or for any purpose authorized by section 8.01(a) of
this Lease and if Landlord does so, Tenant shall, within ten (10) days after
demand, additionally fund the Letter of Credit with the amount so drawn so that
Landlord shall have the full deposit on hand at all times during the Term of the
Lease and for a period of thirty (30) days thereafter. If Tenant shall fully and
faithfully pay and perform all of Tenant's obligations under this Lease, the
Letter of Credit or any balance thereof to which Tenant is entitled shall be
returned to Tenant within thirty (30) days after the date on which this Lease
shall expire and Tenant has delivered to Landlord entire possession of the
Demised Premises in accordance with the terms of this Lease. In the event of a
sale of the Building or a lease of the Building subject to this Lease, Landlord
shall transfer the security to the vendee or lessee.

      (c) For purposes of the delivery of the Security Deposit contemporaneously
with the execution and delivery of this Lease, Landlord agrees to accept a
Letter of Credit Security Deposit from Wells Fargo Bank, N.A. (herein, the "LC
Bank") On a form (notwithstanding the form of Exhibit F) commercially reasonable
to both Landlord and the LC Bank..

Tenant shall use its best efforts to cause the LC Bank to issue the Letter of
Credit no later than October 4,2004. Failure to deliver the Letter of Credit
Security Deposit to Landlord by October 15, 2004 shall constitute an event of
default hereunder (without applicability of grace periods of notice to Tenant),
entitling Landlord to terminate this Lease and otherwise exercise its remedies
hereunder.

Tenant acknowledges that Landlord shall not be required to implement or commence
any portion or aspect of Landlord's Work until such time as such Letter of
Credit Security Deposit shall have been delivered to Landlord, and the dates set
forth in Sections 5.01 (c), (d) and (e) (i.e., December 31, 2004, March 31,2005
and May 1,2005, respectively and subject further to the provisions of Section
5.02 hereof) shall be extended one day for each day occurring between the date
of this Lease and the date the Letter of Credit Security Deposit shall have been
delivered to Landlord in accordance with the terms and provisions of this
Article 8.

                                       18
<PAGE>

      8.02. The Letter of Credit shall expire not earlier than thirty (30) days
after the Expiration Date of this Lease. Upon Landlord's prior consent, the
Letter of Credit may be of the type which is automatically renewed on an annual
basis (Annual Renewal Date), provided however, in such event Tenant shall
maintain the Letter of Credit and its renewals in full force and effect during
the entire Term of this Lease (including any renewals or extensions) and for a
period of thirty (30) days thereafter. The Letter of Credit will contain a
provision requiring the issuer thereof to give the beneficiary (Landlord) sixty
(60) days' advance written notice of its intention not to renew the Letter of
Credit on the next Annual Renewal Date.

      8.03. In the event Tenant shall fail to deliver to Landlord a substitute
Revocable Letter of Credit, in the amount stated above, on or before thirty (30)
days prior to the next Annual Renewal Date, said failure shall be deemed a
default under this Lease. Landlord may, in its discretion treat this the same as
a default in the payment of Rent or any other default and pursue the appropriate
remedy. In addition, and not in limitation, Landlord shall be permitted to draw
upon the Letter of Credit as in the case of any other default by Tenant under
the Lease.

      8.04. (a) Provided Tenant is not in default of its obligations under this
Lease (beyond any applicable notice and cure period and Tenant timely cures any
such default by the earlier to occur of the proposed reduction in such Security
Deposit and the expiration of such notice and cure period), Landlord shall
consent to a reduction of the Security Deposit in the amount of $100,000.00 on
the second (2nd) anniversary of the Commencement Date resulting in a total
Security Deposit of $700,000.00; such reduction shall be reflected by an
amendment or replacement of the Letter of Credit reducing the amount of the
Letter of Credit in the amount of $100,000.00 resulting in a Total Security
Deposit of $700,000.00. If such reduction is accomplished by a replacement of
the Letter of Credit with a new Letter of Credit, Landlord shall promptly return
the old Letter of Credit upon receipt of the new Letter of Credit in the form
and content required hereunder. In no event however shall the Letter of Credit
contain a provision for its automatic reduction;

      (b) Provided Tenant is not in default of its obligations under this
Lease(beyond any applicable notice and cure period and Tenant timely cures any
such default by the earlier to occur of the proposed reduction in such Security
Deposit and the expiration of such notice and cure period), Landlord shall
consent to a reduction of the Security Deposit in the amount of $100,000.00 on
the third (3rd) anniversary of the Commencement Date resulting in a total
Security Deposit of $600,000.00; such reduction shall be reflected by an
amendment or replacement of the Letter of Credit reducing the Letter of Credit
in the amount of $100,000.00 resulting in a total Security Deposit of
$600,000.00. If such reduction is accomplished by a replacement of the Letter of
Credit with a new Letter of Credit, Landlord shall promptly return the old
Letter of Credit upon receipt of the new Letter of Credit in the form and
content required hereunder. In no event however shall the Letter of Credit
contain a provision for its automatic reduction;

      (c) Provided Tenant is not in default of its obligations under this
Lease(beyond any applicable notice and cure period and Tenant timely cures any
such default by the earlier to occur of the proposed reduction in such Security
Deposit and the expiration of such notice and cure period), Landlord shall
consent to a reduction of the Security Deposit in the amount of $100,000.00 on
the fourth (4th) anniversary of the Commencement Date resulting in a total
Security Deposit of $500,000.00; such

                                       19
<PAGE>

reduction shall be reflected by an amendment or replacement of the Letter of
Credit reducing the Letter of Credit in the amount of $100,000.00 resulting in a
total Security Deposit of $500,000.00. If such reduction is accomplished by a
replacement of the Letter of Credit with a new Letter of Credit, Landlord shall
promptly return the old Letter of Credit upon receipt of the new Letter of
Credit in the form and content required hereunder. In no event however shall the
Letter of Credit contain a provision for its automatic reduction; and

      (d) Provided Tenant is not in default of its obligations under this
Lease(beyond any applicable notice and cure period and Tenant timely cures any
such default by the earlier to occur of the proposed reduction in such Security
Deposit and the expiration of such notice and cure period), Landlord shall
consent to a reduction of the Security Deposit in the amount of $200,000.00 on
the fifth (5th) anniversary of the Commencement Date resulting in a total
Security Deposit of $300,000.00; such reduction shall be reflected by an
amendment or replacement of the Letter of Credit reducing the Letter of Credit
in the amount of $200,000.00 resulting in a total Security Deposit of
$300,000.00. If such reduction is accomplished by a replacement of the Letter of
Credit with a new Letter of Credit, Landlord shall promptly return the old
Letter of Credit upon receipt of the new Letter of Credit in the form and
content required hereunder. In no event however shall the Letter of Credit
contain a provision for its automatic reduction.

                            ARTICLE 9 - SUBORDINATION

      9.01. This Lease, and all rights of Tenant hereunder, are and shall be
subject and subordinate to all ground 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 building and/or any of such leases, whether
or not such Mortgages or leases 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. The
provisions of this Section 9.01 shall be self-operative and no further
instrument of subordination shall be required. In confirmation of such
subordination, Tenant shall within ten (10) days after request execute,
acknowledge and deliver any instrument that Landlord, the lessor under any such
lease or the Mortgagee of any such Mortgage or any of their respective
successors in interest may reasonably request to evidence such subordination.

      9.02. If any act or omission of Landlord 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 (a) until it has given written notice of such act or omission to Landlord
and each Superior Mortgagee and each Superior Lessor whose name and address
shall previously have been furnished to Tenant in writing, and (b) 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 Superior
Mortgagee or Superior 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 Superior Mortgagee or Superior Lessor shall with due
diligence give Tenant notice of intention to, and commence and continue to,
remedy such act or omission.

                                       20
<PAGE>

      9.03. If any Superior Lessor or Superior Mortgagee 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 party so
succeeding to Landlord's rights ("Successor Landlord") and upon such 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 within ten (10) days of request execute and deliver any instrument
that such Successor Landlord may reasonably request to evidence such attornment.
Upon such attornment this Lease shall continue in full force and effect as a
direct lease between the Successor Landlord and Tenant upon all of the terms,
conditions and covenants as are set forth in this Lease 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 theretofore shall have accrued to Tenant against
Landlord; (c) be liable for the return of any Security Deposit, in whole or in
part, to the extent that same is not paid over to the Successor Landlord; or (d)
be bound by any previous modification of this Lease or by any previous
prepayment of more than one month's Fixed Rent or Additional Charges, unless
such modification or prepayment shall have been expressly approved in writing by
the Superior Lessor of the Superior Lease or the Mortgagee of the Superior
Mortgage through or by reason of which the Successor Landlord shall have
succeeded to the rights of Landlord under this Lease.

      9.04. If any then present or prospective Superior Mortgagee shall require
any modification(s) of this Lease, Tenant shall within ten (10) days of request
execute and deliver to Landlord such instruments effecting such modification(s)
as Landlord shall request, provided that such modification(s) do not adversely
affect in any material respect any of Tenant's rights or materially increase
Tenant's obligation under this Lease.

      9.05 Landlord shall request that its current and any future Superior
Lessor or Superior Mortgagee provide Tenant with a Non-Disturbance Subordination
and Attornment Agreement (herein referred to as an "SNDA") on said Superior
Lessor's or Superior Mortgagee's then standard form. The failure or refusal of
such Superior Lessor or Superior Mortgagee to provide such SNDA shall not effect
the Tenant's obligations under this Lease or be construed as a breach of this
Lease by Landlord or such Superior Mortgagee or Superior Lessor.

                          ARTICLE 10 - QUIET ENJOYMENT

      10.01. So long as Tenant pays all of the Rent and performs all of Tenant's
other obligations hereunder, Tenant shall peaceably and quietly have, hold and
enjoy the Demised Premises without hindrance, ejection or molestation by
Landlord or any person lawfully claiming through or under Landlord, subject,
nevertheless, to the provisions of this Lease and to Superior Leases and
Superior Mortgages.

                                       21
<PAGE>

               ARTICLE 11 - ASSIGNMENT, SUBLETTING AND MORTGAGING

      11.01. Tenant shall not, whether voluntarily, involuntarily, or by
operation of law or otherwise, (a) assign or otherwise transfer this Lease, or
offer or advertise to do so, (b) sublet the Demised Premises or any part
thereof, or offer or advertise to do so, Or allow the same to be used, occupied
or utilized by anyone other than Tenant, or (c) mortgage, pledge, encumber or
otherwise hypothecate this Lease in any manner whatsoever, without in each
instance obtaining the prior written consent of Landlord.

      Landlord agrees not to unreasonably withhold its consent to the subletting
of the Demised Premises or an assignment of this Lease. In determining
reasonableness, Landlord may take into consideration all relevant factors
surrounding the proposed sublease and assignment, including, without limitation,
the following: (i) The business reputation of the proposed assignee or subtenant
and its officers or directors in relation to the other tenants or occupants of
the Building or Development; (ii) the nature of the business and the proposed
use of the Demised Premises by the proposed assignee or subtenant in relation to
the other tenants or occupants of the Building or Development; (iii) whether the
proposed assignee or subtenant is then a tenant (or subsidiary, affiliate or
parent of a tenant) of other space in the Building or Development (in the event
Landlord or its affiliates have or reasonably anticipate having within two (2)
months of the date of the commencement of such proposed assignment or
subletting, a substantially equivalent sized space for a substantially
equivalent term available in a property in the Development owned or managed by
Landlord or any of its affiliates); (iv) the financial condition of the proposed
assignee or subtenant; (v) restrictions, if any, contained in leases or other
agreements affecting the Building and the Development; and (vi) the effect that
the proposed assignee's or subtenant's occupancy or use of the Demised Premises
would have upon the operation and maintenance of the Building and the
Development. In any event, at no time shall there he more than three (3)
subtenants of the Demised Premises permitted.

      In the event the Demised Premises are sublet or this Lease is assigned,
Tenant shall pay to Landlord as an Additional Charge the following amounts less
the actual reasonable expense incurred by Tenant in connection with such
assignment or subletting, as substantiated by Tenant, in writing, to Landlord's
reasonable satisfaction, including, without limitation, a reasonable brokerage
fee and reasonable legal fees including but not limited to the cost and expenses
for in-house or staff legal counsel or outside counsel at rates not to exceed
the reasonable and customary charges for any such legal services as would be
imposed in an arms length third party agreement for such services), as the case
maybe: (i) in the case of an assignment, an amount equal to fifty percent(50%)
of all sums and other consideration paid to Tenant by the assignee for or by
reason of such assignment, and (ii) in the case of a sublease, fifty percent
(50%) 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 Charges 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.

      So long as Tenant is not in default in the payment of Fixed Rent under
this Lease beyond any applicable notice or cure period, and provided Tenant
complies with the provisions of this Article 11, Landlord agrees that Landlord
shall notify Tenant of Landlord's approval or disapproval (specifying the basis
for disapproval) of any request for consent submitted to Landlord within fifteen
(15) Business

                                       22
<PAGE>

Days after receipt by Landlord of Tenant's request for such approval, together
with all supporting materials or information required under this Article 11. All
requests for approval shall be in writing and given in accordance. with Article
34 hereof.

      11.02. If at any time (a) the original Tenant named herein, (b) the then
Tenant, (c) any Guarantor, or (d) any Person owning a majority of the voting
stock of, or directly or indirectly controlling, the then Tenant shall be a
corporation or partnership or limited liability company, any transfer of voting
stock or partnership interest or membership interest resulting in the person(s)
who shall have owned a majority of such corporation's shares of voting stock or
the general partners' interest in such partnership, or membership interest as
the case may be, immediately before such transfer, ceasing to own a majority of
such shares of voting stock or general partner's interest or membership
interest, as the case may be, except as the result of transfers by inheritance,
shall be deemed to be an assii,,'l1ment of this Lease as to which Landlord's
consent shall have been required, and in any such event Tenant shall notify
Landlord. The provisions of this Section 11.02 shall not be applicable to any
corporation all the outstanding voting stock of which is listed on a national
securities exchange (as defined in the Securities Exchange Act of 1934, as
amended) or is traded in the over-the-counter market with quotations reported by
the National Association of Securities Dealers through its automated system for
reporting quotations, and shall not apply to transactions (a) with a corporation
or entity into or with which the then Tenant is merged or consolidated or to
which substantially all of the then Tenant's assets are transferred or (b) with
any entity or corporation which controls or is controlled by the then Tenant or
is under common control with the then Tenant (all such entities referred to in
(a) and (b) hereof collectively referred to as "Affiliates"), 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 (l) the net worth of Tenant immediately prior to such merger,
consolidation or transfer, or (2) the net worth of the original Tenant 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 the purposes of this Section, the words
"voting stock" shall refer to shares of stock or ownership regularly entitled to
vote for the election of directors of the corporation or management of such
entity. Landlord shall have the right at any time and from time to time during
the Term to inspect the stock Or ownership record books of the corporation or
entity to which the provisions of this Section 11.02 apply, and Tenant will
permit Landlord to review same at Tenant's offices, at reasonable times and upon
reasonable advance written notice.

      11.03 If this Lease is assigned, whether or not in violation of this
Lease, Landlord may collect rent from the assignee. If the Demised Premises or
any part thereof are sublet or used or occupied by anybody other than Tenant,
whether or not in violation of this Lease, Landlord may, after default by
Tenant, and expiration of Tenant's time to cure such default, collect rent from
the subtenant or occupant. In either event, Landlord may apply the net amount
collected to the Rent, but no such assignment, subletting, occupancy or
collection shall be deemed a waiver of any of the provisions of Section 11.01 or
Section 11.02, or the acceptance of the assignee, subtenant or occupant as
tenant, or a release of Tenant from the performance by Tenant of Tenant's
obligations under this Lease. The consent by Landlord to any assignment,
mortgaging, subletting or use or occupancy by others shall not in any way be
considered to relieve Tenant from obtaining the express written consent of
Landlord to any other or further assignment, mortgaging or subletting or use or
occupancy by others not expressly permitted by this Article 11. References in
this Lease to use or occupancy by others (that is, anyone

                                       23
<PAGE>

other than Tenant) shall not be construed as limited to subtenants and those
claiming under or through subtenants but shall be construed as including also
licensees and others claiming under or through Tenant, immediately or remotely.

      11.04. Any permitted assignment or transfer, whether made with Landlord's
consent pursuant to Section 11.01 or without Landlord's consent if permitted by
Section 11.02, 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
Tenant's obligations under this Lease and whereby the assignee shall agree that
all of the provisions in this Article 11 shall, notwithstanding such assignment
or transfer, continue to be binding upon it in respect to all future assignments
and transfers. Notwithstanding any assignment or transfer, whether or not in
violation of the provisions of this Lease, and notwithstanding the acceptance of
Rent by Landlord from an assignee, transferee, or any other party, the original
Tenant and any other person(s) who at any time was or were Tenant shall remain
fully liable for the payment of the Rent and for Tenant's other obligations
under this Lease.

      11.05. The liability of the original named Tenant and any other Person(s)
(including but not limited to any Guarantor) who at any time are or become
responsible for Tenant's obligations under this Lease shall not be discharged,
released or impaired by any agreement extending the time of, or modifying any of
the terms or obligations under this Lease, or by any waiver or failure of
Landlord to enforce, any of this Lease.

      11.06. The listing of any name other than that of Tenant, whether on the
doors of the Demised Premises or the Building directory, or otherwise, shall not
operate to vest any right or interest in this Lease or in the Demised Premises,
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 Demised Premises or to the use
or occupancy thereof by others. Notwithstanding anything contained in this Lease
to the contrary, Landlord shall have the absolute right to withhold its consent
to an assignment or subletting to a Person who is otherwise a tenant or occupant
of the Building, or of a building owned or managed by Landlord or its affiliated
entities in the Development (in the event Landlord or its affiliates have or
reasonably anticipate having within two (2) months of the date of the
commencement of such proposed assignment or subletting, a substantially
equivalent sized space for a substantially equivalent term available in a
property in the Development owned or managed by Landlord or any of its
affiliates).

      11.07. Without limiting any of the provisions of Article 27, if pursuant
to the Federal Bankruptcy Code (or any similar law hereafter enacted having the
same general purpose), Tenant is permitted to assign this Lease notwithstanding
the restrictions contained in this Lease, adequate assurance of future
performance by an assignee expressly permitted under such Code shall be deemed
to mean the deposit of cash security in an amount equal to the sum of one (1)
year's Fixed Rent plus an amount equal to the Additional Charges for the
Calendar Year preceding the year in which such assignment is intended to become
effective, which deposit shall be held by Landlord for the balance of the Term,
without interest, as security for the full performance of all of Tenant's
obligations under this Lease, to be held and applied in the manner specified for
security in Section 8.01.

      11.08. If Tenant shall propose to assign or in any manner transfer this
Lease or any interest

                                       24
<PAGE>

therein, or sublet the Demised Premises or any part or parts thereof, or grant
any concession or license or otherwise permit occupancy of all or any part of
the Demised Premises by any person, Tenant shall give notice thereof to
Landlord, together with a copy of the proposed instrument (or material terms)
that is to accomplish same and such financial and other information pertaining
to the proposed assignee, transferee, subtenant, concessionaire or licensee as
Landlord shall reasonably require. If Landlord consents to the subject
transaction (or if Landlord's consent is not required to same) if Tenant does
not consummate the subject transaction within one hundred twenty (120) days,
Tenant shall again be required to comply with the provisions of this Section
11.08 in connection with any such transaction as if the notice by Tenant
referred to above in this Section 11.08 had not been given. Notwithstanding
anything contained in this Lease to the contrary, Landlord shall not be
obligated to entertain or consider any request by Tenant to consent to any
proposed assignment of this Lease, or sublet of all or any part of the Demised
Premises unless each request by Tenant is accompanied by a non-refundable fee
payable to Landlord in the amount of One Thousand Dollars ($1,000.00) to cover
Landlord's administrative, legal, and other costs and expenses incurred in
processing each of Tenant's requests. Neither Tenant's payment nor Landlord's
acceptance of the foregoing fee shall be construed to impose any obligation
whatsoever upon Landlord to consent to Tenant's request.

      .

                        ARTICLE 12 - COMPLIANCE WITH LAWS

      12.01. Tenant shall, subject to the provisions of the last sentence of
this Section 12.01, comply with all Legal Requirements which shall, in respect
of the Demised Premises or the use and occupation thereof, or the abatement of
any nuisance in, on or about the Demised Premises, impose any violation, order
or duty on Landlord or Tenant; and Tenant shall pay all the costs, expenses,
fines, penalties and damages which may be imposed upon Landlord or any Superior
Lessor by reason of or arising out of Tenant's failure to fully and promptly
comply with and observe the provisions of this Section 12.01. However, Tenant
need not comply with any such law or requirement of any public authority so long
as Tenant shall be contesting the validity thereof, or the applicability thereof
to the Demised Premises, in accordance with Section 12.02. Any Legal
Requirements with respect to the Building (inclusive of the Demised Premises) or
the Common Areas which do not arise as the result of (i) Tenant's specific
manner of use of the Demised Premises (or its subtenants licensees, agents or
invitees) (in contradistinction to its general use of the Demised Premises for
the Permitted Uses), (ii) the business of Tenant (or its subtenants licensees,
agents or invitees) or (iii) Tenant's Work or any alterations or installations
of Tenant (or its subtenants licensees, agents or invitees) shall be performed
by Landlord and the cost thereof included in Operating Expenses, subject to the
provisions of sub-section (viii) thereof.

      12.02. Tenant may contest, by appropriate proceedings prosecuted
diligently and in good faith, the validity, or applicability to the Demised
Premises, of any Legal Requirement, provided that (a) Landlord shall not be
subject to criminal penalty or to prosecution for a crime, and neither the
Demised Premises nor any part thereof shall be subject to being condemned or
vacated, by reason of non-compliance or otherwise by reason of such contest; (b)
before the commencement of such contest, Tenant shall furnish to Landlord either
(i) the bond of a surety company reasonably satisfactory to Landlord, which bond
shall be, as to its provisions and form, reasonably satisfactory to Landlord,
and

                                       25
<PAGE>

shall be in an amount at least equal to 125% of the cost of such compliance (as
estimated by a reputable contractor designated by Landlord) and shall indemnify
Landlord against the cost thereof and against all liability for damages,
interest, penalties and expenses (including reasonable attorneys' fees and
expenses), resulting from or incurred in connection with such contest or
non-compliance, or (ii) other security in place of such bond reasonably
satisfactory to Landlord; (c) such non-compliance or contest shall not
constitute or result in any violation of any Superior Lease or Superior
Mortgage, or if any 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 the above, Landlord shall be deemed subject to prosecution for a crime if
Landlord, or its managing agent, or any officer, director, partner, shareholder
or employee of Landlord or its managing agent, as an individual, is charged with
a crime of any kind or degree whatsoever, whether by service of a summons or
otherwise, unless such charge is withdrawn before Landlord or its managing
agent, or such officer, director, partner, shareholder or employee of Landlord
or its managing agent (as the case may be) is required to plead or answer
thereto. Notwithstanding anything contained in this Lease to the contrary,
Tenant shall not file any Real Estate Tax Appeal with respect to the Land,
Building or the Demised Premises.

                      ARTICLE 13 - INSURANCE AND INDEMNITY

      13.01. Landlord shall maintain or cause to be maintained All Risk
insurance in respect of the Building and other improvements on the Land normally
covered by such insurance (except for the property Tenant is required to cover
with insurance under Section 13.02 and similar property of other tenants and
occupants of the Building or buildings and other improvements which are on land
neither owned by nor leased to Landlord) for the benefit of Landlord, any
Superior Lessors, any Superior Mortgagees and any other parties Landlord may at
any time and from time to time designate, as their interests may appear, but not
for the benefit of Tenant, and shall maintain rent insurance as required by any
Superior Lessor or any Superior Mortgagee. The All Risk insurance will be in the
amounts required by any Superior Lessor or any Superior Mortgagee but not less
than the amount sufficient to avoid the effect of the co-insurance provisions of
the applicable policy or policies, and, notwithstanding the foregoing, in
amounts, and with endorsements and deductibles, customarily maintained by
landlords' of comparable first class office buildings. Landlord may, but shall
not be required to also maintain any other forms and types of insurance which
Landlord deems commercially reasonable in respect of the Building and Land.
Landlord shall have the right to provide any insurance maintained or caused to
be maintained by it under blanket policies.

      13.02. Tenant shall maintain the following insurance: (a) commercial
general liability insurance in respect of the Demised Premises and the conduct
and operation of business therein, having a limit of liability not less than a
$5,000,000. per occurrence for bodily injury or property damage. coverage to
include but not be limited to premises/operations, completed operations,
contractual liability and product liability, (b) automobile liability insurance
covering all owned, hired and non-owned vehicles used by the Tenant in
connection with the premises and any loading or unloading of such vehicles, with
a limit of liability not less than $2,000,000 per accident and (c) worker's
compensation and employers liability insurance as required by statutes, but in
any event not less than

                                       26
<PAGE>

$500,000. for Employers Liability; (d) All Risk insurance in respect of loss or
damage to Tenant's stock in trade, fixtures, furniture, furnishings, removable
floor coverings, equipment, signs and all other property of Tenant in the
Demised Premises in an amount equal to the full replacement value thereof as
same might increase from time to time; and (e) such other insurance as Landlord
may reasonably require. Such insurance shall include coverage for property of
others in the care, custody and control of Tenant in amounts sufficient to cover
the replacement value of such property, to the extent of Tenant's liability
therefor. Landlord may at any time and from time to time (but not more than once
every five (5) years) require that the limits for the general liability
insurance to be maintained by Tenant be increased to the limits that new tenants
in the Building are required by Landlord to maintain. Tenant shall deliver to
Landlord and any additional insured(s) certificates for such fully paid-for
policies upon execution hereof. Tenant shall procure and pay for renewals of
such insurance from time to time before the expiration thereof, and Tenant shall
deliver to Landlord and any additional insured(s) certificates therefor at least
twenty (20) days before the expiration of any existing policy. Tenant shall,
upon ten (10) Business Day's prior written request provide Landlord with copies
of such insurance policies. Upon written request all such policies shall be
issued by companies acceptable to Landlord, having a Bests Rating of not less
than A, Class VII (or an S&P rating of A if requested by Landlord), and licensed
to do business in New Jersey, and all such policies shall contain a provision
whereby the same cannot be canceled unless Landlord and any additional
insured(s) are given at least thirty (30) days' prior written notice of such
cancellation. The policies and certificates of insurance (such certificates to
be on Acord form 27 or 28 their applicable equivalent as reasonable requested by
Landlord) to be obtained by Tenant pursuant to this Section 13.02 (other than
workers compensation insurance) shall name Landlord as an additional insured
and, at Landlord's request, shall also name any Superior Lessors or Superior
Mortgagees as additional insureds, and the following phrase must be typed on the
certificate of insurance: "Hartz Mountain Industries, Inc., and its respective
subsidiaries, affiliates, associates, joint ventures, and partnerships, and (if
Landlord has so requested) Superior Lessors and Superior Mortgagees are hereby
named as additional insureds as their interests may appear. It is intended for
this insurance to be primary and non-contributing." Tenant shall give Landlord
at least twenty (20) days' prior written notice that any such policy is being
canceled or replaced.

      13.03. Tenant shall not do, permit or suffer to be done any act, matter,
thing or failure to act in respect of the Demised Premises or use or occupy the
Demised Premises or conduct or operate Tenant's business in any manner
objectionable to any insurance company or companies whereby the fire insurance
or any other insurance then in effect in respect of the Land and Building or any
part thereof shall become void or suspended or whereby any premiums in respect
of insurance maintained by Landlord shall be higher than those which would
normally have been in effect for the occupancy contemplated under the Permitted
Uses. In case of a breach of the provisions of this Section 13.03, in addition
to all other rights and remedies of Landlord hereunder, Tenant shall (a)
indemnify Landlord and the Superior Lessors and hold Landlord and the Superior
Lessors harmless from and against any loss which would have been covered by
insurance which shall have become void or suspended because of such breach by
Tenant and (b) pay to Landlord any and all increases of premiums on any
insurance, including, without limitation, rent insurance, resulting from any
such breach.

      13.04. Tenant shall indemnify and hold harmless Landlord and all Superior
Lessors and its and their respective partners, joint venturers, directors,
officers, agents, servants and employees from and against any and all claims
arising from or in connection with (a) the conduct or management of the

                                       27
<PAGE>

Demised Premises or of any business therein, or any work or thing whatsoever
done, or any condition created (other than by Landlord) in the Demised Premises
during the Term or during the period of time, if any, prior to the Commencement
Date that Tenant may have been given access to the Demised Premises; (b) any
act, omission or negligence of Tenant or any of its subtenants or licensees or
its or their partners, joint venturers, directors, officers, agents, employees
or contractors; (c) any accident, injury or damage whatever (unless caused
solely by Landlord's negligence) occurring in the Demised Premises; and (d) any
breach or default by Tenant in the full and prompt payment and performance of
Tenant's obligations under this Lease; together with all costs, expenses and
liabilities incurred in or in connection with each such claim or action or
proceeding brought thereon, including, without limitation, all attorneys' fees
and expenses. In case any action or proceeding is brought against Landlord
and/or any Superior Lessor and/or its or their partners, joint venturers,
directors, officers, agents and/or employees by reason of any such claim,
Tenant, upon notice from Landlord or such Superior Lessor, shall resist and
defend such action or proceeding by counsel reasonably satisfactory to Landlord.

      Landlord shall indemnify and hold harmless Tenant and its partners,
directors, officers, agents, servants and employees from and against any and all
claims arising from any tortuous act or omission of Landlord, or negligence of
Landlord or its agents or partners, joint ventures, directors, officers, or
employees in the conduct or management of the Common Areas; together with all
costs, expenses and liabilities incurred in or in connection with each such
claim or action or proceeding brought thereon, including, without limitation,
reasonable attorneys' fees and expenses; provided however that in no event shall
Landlord or its agents or partners, joint ventures, directors, officers, or
employees be responsible or liable for (and the forgoing indemnity and hold
harmless excludes) any consequential or special damages. In the event any action
or proceeding is brought against Tenant and/or its directors, officers, agents
and/or employees by reason of any such claim, Landlord, upon notice from Tenant,
shall resist and defend such action or proceeding by counsel reasonably
satisfactory to Tenant. Counsel satisfactory to Landlord's insurance carrier
shall be deemed satisfactory to Tenant for purposes of this paragraph.

      13.05. Neither Landlord nor any Superior Lessor shall be liable or
responsible for, and Tenant hereby releases Landlord and each Superior Lessor
from, all liability and responsibility to Tenant and any person claiming by,
through or under Tenant, by way of subrogation or otherwise, for any injury,
loss or damage to any person or property in or around the Demised Premises or to
Tenant's business irrespective of the cause of such injury, loss or damage, and
Tenant shall require its insurers to include in all of Tenant's insurance
policies which could give rise to a right of subrogation against Landlord or any
Superior Lessor a clause or endorsement whereby the insurer waives any rights of
subrogation against Landlord and such Superior Lessors or permits the insured,
prior to any loss, to agree with a third party to waive any claim it may have
against said third party without invalidating the coverage under the insurance
policy. Landlord hereby releases Tenant from, all liability and responsibility
to and any person claiming by, through or under Landlord, byway of subrogation
with respect to matters covered by the All-Risk insurance policies carried by
Landlord pursuant to Section 13.01 hereof which could give rise to a right of
subrogation against Tenant and Landlord shall require its insurers to include in
Landlord's All Risk insurance policies carried pursuant to Section 13.01 hereof
which could give rise to a right of subrogation against Tenant a clause or
endorsement whereby the insurer waives any rights of subrogation against Tenant
or permits the insured, prior to any loss, to agree with a third party to waive
any claim it may have against said third party without invalidating the coverage
under the

                                       28
<PAGE>

insurance policy.

                       ARTICLE 14 - RULES AND REGULATIONS

      14.01. Tenant and its employees and agents shall faithfully observe and
comply with the Rules and Regulations and such reasonable changes therein
(whether by modification, elimination or addition) as Landlord at any time or
times hereafter may make and communicate to Tenant, which in Landlord's
judgment, shall be necessary for the reputation, safety, care or appearance of
the Land and Building, or the preservation of good order therein, or the
operation or maintenance of the Building or its equipment and fixtures, or the
Common Areas; provided, however, that in case of any conflict or inconsistency
between the provisions of this Lease and any of the Rules and Regulations, the
provisions of this Lease shall control. Landlord shall not discriminatorily
enforce any Rule or Regulation against Tenant, which Landlord is not enforcing,
to the extent applicable, against the other tenants in the Building. Nothing in
this Lease contained shall be construed to impose upon Landlord any duty or
obligation to enforce the Rules and Regulations against any other tenant or any
employees or agents of any other tenant, and Landlord shall not be liable to
Tenant for violation of the Rules and Regulations by any other tenant or its
employees, agents, invitees or licensees.

                            ARTICLE 15 - ALTERATIONS

      15.01. Tenant shall not make any structural alterations or additions to
the Demised Premises, or make any holes or cuts in the walls (other than
deminimus holes in the interior walls for the hanging of pictures in connection
with customary office decoration), ceilings, roofs, or floors thereof, or change
the exterior color or architectural treatment of the Demised Premises, or make
any non-structural alterations costing Seventy-Five Thousand Dollars
($75,000.00) or more in the aggregate (herein referred to as the "Threshold
Amount"), without On each occasion first obtaining the consent of Landlord;
which consent with respect to non-structural alterations costing less than the
Threshold Amount shall not be unreasonably withheld or delayed or conditioned.
In all events Tenant shall submit to Landlord plans and specifications for such
work at the time Landlord's consent is sought, or if no consent is required,
prior to commencement of such proposed alterations. Tenant shall pay to
Landlord, within twenty (20) days after invoice or notice, the reasonable cost
and expense of Landlord in (a) reviewing said plans and specifications and (b)
inspecting the alterations to determine whether the same are being performed in
accordance with the approved plans and specifications and all Legal Requirements
and Insurance Requirements, including, without limitation, the fees of any
architect or engineer employed by Landlord for such purpose. Before proceeding
with any permitted alteration which will cost more than $75,000 (exclusive of
the costs of decorating work and items constituting Tenant's Property), as
estimated by a reputable contractor reasonably approved by Landlord, Tenant
shall obtain and deriver to Landlord either (i) a performance bond and a labor
and materials payment bond (issued by a corporate surety licensed to do business
in New Jersey), each in an amount equal to 125% of such estimated cost and in
form satisfactory to Landlord, or (ii) such other security as shall be
satisfactory to Landlord. Tenant shall fully and promptly comply with and
observe the Rules and Regulations then in force in respect of the making of
alterations. Any review or approval by Landlord of any plans and/or
specifications with respect to any alterations is solely for Landlord's benefit,
and

                                       29
<PAGE>

without any representation or warranty whatsoever to Tenant in respect of the
adequacy, correctness or efficiency thereof or otherwise.

      15.02. Tenant shall obtain all necessary governmental permits and
certificates for the commencement and prosecution of permitted alterations and
for final approval thereof upon completion (other than with respect to Landlord'
s Work performed by Landlord or its contractors), and shall cause alterations to
be performed in compliance therewith and with all applicable Legal Requirements
and Insurance Requirements. Alterations shall be diligently performed in a good
and workmanlike manner, using new materials and equipment at least equal in
quality and class to the better of (a) the original installations of the
Building, or (b) the then standards for the Building established by Landlord.
Alterations shall be performed by contractors first approved by Landlord;
provided, however, that any alterations in or to the mechanical, electrical,
sanitary, heating, ventilating, air conditioning or other systems of the
Building shall be performed only by the contractor(s) reasonably designated by
Landlord. Alterations shall be made in such manner as not to unreasonably
interfere with or delay and as not to impose any additional expense upon
Landlord in the construction, maintenance, repair or operation of the Building;
and if any such additional expense shall be incurred by Landlord as a result of
Tenant's making of any alterations, Tenant shall pay any such additional expense
within ten (10) days of demand. Throughout the making of alterations, Tenant
shall carry, or cause to be carried, worker's compensation insurance in
statutory limits and general liability insurance, with completed operation
endorsement, for any occurrence in or about the Building, under which Landlord
and its managing agent and any Superior Lessor whose name and address shall
previously have been furnished to Tenant shall be named as parties insured, in
such limits as Landlord may reasonably require, with insurers reasonably
satisfactory to Landlord. Tenant shall furnish Landlord with reasonably
satisfactory evidence that such insurance is in effect at or before the
commencement of alterations and, on request, at reasonable intervals thereafter
during the making of alterations.

                  ARTICLE 16 - LANDLORD'S AND TENANT'S PROPERTY

      16.01 All fixtures, equipment, improvements and appurtenances attached to
or built into the Demised Premises at the commencement of or during the Term,
whether or not by or at the expense of Tenant, shall be and remain a part of the
Demised Premises, shall be deemed to be the property of Landlord and shall not
be removed by Tenant, except as provided in Section 16.02. Further, any
carpeting or other personal property in the Demised Premises on the Commencement
Date, unless installed and paid for by Tenant, shall be and shall remain
Landlord's property and shall not be removed by Tenant.

      16.02. All movable partitions, 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 structural damage to the Building and all furniture,
furnishings, and other movable personal property owned by Tenant and located in
the Demised Premises (collectively, "Tenant's Property") shall be and shall
remain the property of Tenant and may be removed by Tenant at any time during
the Term; provided that if any of the Tenant's Property is removed, Tenant shall
repair or pay the cost of repairing any damage to the Demised Premises, the

                                       30
<PAGE>

Building or the Common Areas resulting from the installation and/or removal
thereof. Any equipment or other property for which Landlord shall have granted
any allowance or credit to Tenant shall not be deemed to have been installed by
or for the account of Tenant without expense to Landlord, shall not be
considered as the Tenant's Property and shall be deemed the property of
Landlord.

      16.03. At or before the Expiration Date or the date of any earlier
termination of this Lease, or within fifteen (15) days after such an earlier
termination date, Tenant shall remove from the Demised Premises all of the
Tenant's Property (except such items thereof as Landlord shall have expressly
permitted to remain, which property shall become the property of Landlord if not
removed), and Tenant shall repair any damage to the Demised Premises, the
Building and the Common Areas resulting from any installation and/or removal of
the Tenant's Property. Any items of the Tenant's Property 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 Landlord, be
deemed to have been abandoned, and in such case such items may be retained by
Landlord as its property or disposed of by Landlord, without accountability, in
such manner as Landlord shall determine at Tenant's Expense. Tenant shall not be
required to remove any telecommunication and/or data cabling installed by, or on
behalf, of Tenant, in the Demised Premises during the Term; provided such
cabling is not in excess of the reasonable and customary cabling for general
office use and was installed as part of a permitted alteration pursuant to
Article 15 hereof.

                      ARTICLE 17 - REPAIRS AND MAINTENANCE

      17.01. Tenant shall, throughout the Term, take good care of the Demised
Premises, the fixtures and appurtenances therein. Tenant shall be responsible
for all repairs, interior and exterior, structural and nonstructural, ordinary
and extraordinary, in and to the Demised Premises, and the Building (including
the facilities and systems thereof) and the Common Areas the need for which
arises out of (a) the performance or existence of the Tenant's Work or
alterations, (b) the installation, use or operation of the Tenant's Property in
the Demised Premises, (c) the moving of the Tenant's Property in or out of the
Building, or (d) the act, omission, misuse or neglect of Tenant or any of its
subtenants or its or their employees, agents, contractors or invitees. Tenant
shall promptly replace all scratched, damaged or broken doors and glass in and
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 sanitary and electrical fixtures and equipment
therein. Tenant shall promptly make all repairs in or to the Demised Premises
for which Tenant is responsible, and any repairs required to be made by Tenant
to the mechanical, electrical, sanitary, heating, ventilating, air-conditioning
or other systems of the Building shall be performed only by contractor(s)
designated by Landlord. Any other repairs in or to the Building and the
facilities and systems thereof for which Tenant is responsible shall be
performed by Landlord, upon written notice to Tenant, at Tenant's expense; but
Landlord may, at its option, before commencing any such work or at any time
thereafter, require Tenant to furnish to Landlord such reasonable security, in
form (including, without limitation, a bond issued by a corporate surety
licensed to do business in New Jersey) and amount, as Landlord shall deem
reasonably necessary to assure the payment for such work by Tenant. Tenant shall
not permit or suffer the overloading of the floors of the Demised Premises
beyond 80 pounds per square foot.

                                       31
<PAGE>

      17.02. Landlord shall make all structural repairs and replacements to the
Building, including, the facilities and systems thereof, roof and roof membrane
and the exterior walls of the Building (except as hereinabove provided in
Section 17.01 and except for those repairs and maintenance for which Tenant is
responsible pursuant to any of the provisions of this Lease) and the cost
thereof shall be included in Operating Expenses, for which Tenant shall pay
Tenant's Fraction. Landlord shall keep and maintain the Common Areas in
accordance with Section 7.01 hereof and the cost thereof shall be included in
Operating Expenses, for which Tenant shall pay Tenant's Fraction.

      17.03. Except as otherwise expressly provided in this Lease, Landlord
shall have no liability to Tenant, nor shall Tenant's covenants and obligations
under this Lease be reduced or abated in any manner whatsoever, by reason of any
inconvenience, annoyance, interruption or injury to business arising from
Landlord's doing any repairs, maintenance, 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.

                          ARTICLE 18 - ELECTRIC ENERGY

      18.01. Tenant shall purchase the electric energy required by it in the
Demised Premises at its own expense on a direct-metered basis from the public
utility servicing the Building, and Landlord shall permit the risers, conduits
and feeders in the Building, to the extent available, suitable and safely
capable, to be used for the purpose of transmitting such electric energy to the
Demised Premises. Landlord shall not be liable for any failure, inadequacy or
defect in the character or supply of electric current furnished to the Demised
Premises. If Landlord is permitted by law to provide electric energy to the
Demised Premises by re-registering meters sub-metering or otherwise and to
collect any charges for electric energy, Landlord shall have the right to do so,
in which event Tenant shall pay to Landlord upon receipt of bills therefor
charges for electric energy provided the rates and charges for such electric
energy shall not be more than the rates Tenant would be charged for electric
energy if furnished directly to Tenant by the public utility which would
otherwise have furnished electric energy (provided however that in the event of
sub-metering, Tenant shall also pay to Landlord, as an Additional Charge, the
cost of meter reading). Landlord represents to Tenant that the electrical
installations servicing the Demised Premises is capable of furnishing six (6)
watts (demand load) per rentable square foot of the Demised Premises. The cost
of separately metering or sub-metering the Demised Premises shall be a component
of Landlord's Work and applied against the Credit.

      18.02. Tenant's use of electric energy in the Demised Premises shall not
at any time exceed the capacity of any of the electrical conductors and
equipment in or otherwise serving the Demised Premises. In order to insure that
such capacity is not exceeded and to avert possible adverse effect upon the
Building's electric service, Tenant shall not, without Landlord's prior consent
in each instance (which shall not be unreasonably withheld), connect any
fixtures, appliances or equipment to the Building's electric distribution system
or make any alteration or addition to the electric system of the Demised
Premises existing on the Commencement Date. Should Landlord grant such consent,
all additional risers or other equipment required therefor shall be provided by
Landlord and the cost thereof shall be paid by Tenant to Landlord within thirty
(30) days after notice or invoice.

                                       32
<PAGE>

               ARTICLE 19 - HEAT, VENTILATION AND AIR-CONDITIONING

      19.01. So long as Tenant is not in default in the payment of Fixed Rent
under this Lease beyond any applicable notice or cure period, Landlord shall
maintain and operate the heating, ventilating and air-conditioning systems
("HVAC") serving the Demised Premises, and shall furnish HVAC in the Demised
Premises as may be reasonably required (except as otherwise provided in this
Lease and except for any special requirements of Tenant arising tram its
particular use of the Demised Premises) for reasonably comfortable occupancy of
the Demised Premises, during Business Hours on Business Days within the limits
consistent with the standards typically maintained in comparable office
buildings situated within the Development and/or the Village of Ridgefield Park.
If Tenant shall require HVAC at any other time, Landlord shall furnish such
service for such times upon not less than six (6) hours advance notice from
Tenant, and Tenant shall pay to Landlord within ten (10) days of demand
Landlord's then established charges therefor. As of the date of this Lease,
Landlord's charge is thirty dollars ($30) per hour for overtime HVAC.

      19.02. The performance by Landlord of its obligation under Section 19.01
in respect of HVAC is conditioned on the connected electric load within the
Demised Premises not exceeding three and one-half (3 1/2) watts per usable
square foot in the Demised Premises and the occupancy of the Demised Premises
not exceeding one (I) person for each two hundred (200) square feet of Rentable
Floor Area. Use of the Demised Premises, or any part thereof, in a manner
exceeding the HVAC design conditions (including occupancy and connected
electrical load), or rearrangement of partitioning which interferes with normal
operation of the HVAC in the Demised Premises, or the use of computer or data
processing machines or other machines or equipment, may require changes in the
HVAC systems servicing the Demised Premises, in order to provide comfortable
occupancy. Such changes, so occasioned, shall be made by Tenant, at its expense,
as alterations in accordance with the provisions of Article 15, but only to the
extent permitted and upon the conditions set forth in Article 15.

                ARTICLE 20 - OTHER SERVICES; SERVICE INTERRUPTION

      20.01. So long as Tenant is not in default in the payment of Fixed Rent
under this Lease beyond any applicable notice or cure period, Landlord shall
provide elevator service to the Demised Premises during Business Hours on
Business Days, and Landlord shall have at least one (1) elevator subject to call
at all other times. The use of the elevators shall be subject to the Rules and
Regulations.

      20.02. So long as Tenant is not in default in the payment of Fixed Rent
under this Lease beyond any applicable notice or cure period, Landlord shall
cause the Demised Premises, including the exterior and the interior of the
windows thereof, to be cleaned in a manner standard to the Building and in
accordance with the standards set forth in Exhibit E. Tenant shall pay to
Landlord within fifteen (15) days after invoice or written 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
subtenants or its or their employees or visitors, (ii) use of portions of the
Demised Premises for preparation, serving, consumption of food or beverages,
training rooms, data processing or reproducing operations, private lavatories or
toilets or other special purposes requiring greater or more difficult cleaning
work than

                                       33
<PAGE>

office areas, (iii) interior glass partitions or unusual quantity of interior
glass surfaces, and (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 any refuse and rubbish of Tenant in excess of that ordinarily
accumulated in business office occupancy or at times other than Landlord's
standard cleaning times, and (c) the use of the Demised Premises by Tenant other
than during Business Hours on Business Days if such use results in additional
cleaning services.

      20.03. Landlord, its cleaning contractor and their employees shall have
access to the Demised Premises after 5:30 P.M. and before 8:00 A.M. and shall
have the right to use, without charge therefor, all light, power and water in
the Demised Premises reasonably required to clean the Demised Premises as
required under Section 20.02.

      20.04. So long as Tenant is not in default in the payment of Fixed Rent
under this Lease beyond any applicable notice or cure period, Landlord shall
furnish adequate hot and cold water to the Demised Premises for drinking,
lavatory and cleaning purposes. If Tenant uses water for any other purpose
Landlord may install and maintain, at Tenant's expense, meters to measure
Tenant's consumption of cold water air and/or hot water for such other purpose.
Tenant shall reimburse Landlord for the quantities of cold water and hot water
shown on such meters within fifteen (15) days after invoice or written demand.

      20.05. So long as Tenant is not in default in the payment of Fixed Rent
under this Lease beyond any applicable notice or cure period, and provided
Tenant is in occupancy of the Demised Premises under this Lease, Landlord shall
provide a full time security guard posted in the lobby of Building on duty
during Business Hours on Business Days.

      20.06. So long as Tenant is not in default in the payment of Fixed Rent
under this Lease beyond any applicable notice or cure period, and provided
Tenant and/or its Affiliates, collectively, are in occupancy of not less than
seventy-five (75%) percent of the Demised Premises under this Lease Landlord
shall, subject to the last sentence of this Section 20.06, maintain or cause to
be maintained during the Term a food service concession located within and
serving the Building on Business Days during normal breakfast and lunch periods,
serving limited breakfast and lunch fare, including, but not necessarily limited
to, hot and cold beverages, breakfast foods, sandwiches, salads, limited hot
entrees and the like. So long as Tenant is not in default in the payment of
Fixed Rent under this Lease beyond any applicable notice or cure period, and
provided Tenant and/or its Affiliates, collectively, are in occupancy of not
less than seventy-five (75%) percent of the Demised Premises under this Lease,
if for any reason the initial (or any successor or replacement) person(s) or
entity operating such food service concession shall cease operations at the
Building, Landlord agrees to diligently procure a replacement operator to resume
a food service concession providing the services set forth in the immediately
preceding sentence.

                      ARTICLE 21 - ACCESS, CHANGES AND NAME

      21.01. Except for the space within the inside surfaces of all walls, hung
ceilings; floors, windows and doors bounding the Demised Premises, all of the
Building, including, without limitation,

                                       34
<PAGE>

exterior Building walls, core corridor walls and doors and any core corridor
entrance, any terraces or roofs adjacent to the Demised Premises, 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 operating, maintenance, decoration and repair, are
reserved to Landlord. Landlord also reserves the right, to install, erect, use
and maintain pipes, ducts and conduits in and through the Demised Premises,
provided such work or installation is (i) is properly enclosed, (ii) does not
reduce the rentable square footage of the Demised Premises, and (iii) is
performed in a reasonably prompt manner so as to minimize any disturbance to
Tenant's business operations, after not less ten (10) days advance notice
(except that no notice shall be required in cases of emergency). Furthermore,
Landlord, at its expense, shall substantially restore the Demised Premises to
its condition immediately prior to Landlord's access to the Demised Premises.

      21.02. Landlord and its agents shall have the right to enter and/or pass
through the Demised Premises at any time or times, upon reasonable advance
notice (except that in an emergency advance notice shall not be required), (a)
to examine the Demised Premises and to show them to actual and prospective
Superior Lessors, Superior Mortgagees, or prospective purchasers of the
Building, and (b) to make such repairs, alterations, additions and improvements
in or to the Demised Premises and/or in or to the Building or its facilities and
equipment as Landlord is required or desires to make. Landlord shall be allowed
to take all materials into and upon the Demised Premises that may be required in
connection therewith, without any liability to Tenant and without any reduction
of Tenant's obligations hereunder. During the period of twelve (12) months prior
to the Expiration Date, Landlord and its agents may exhibit the Demised Premises
to prospective tenants.

      21.03. If at any time any windows of the Demised Premises are temporarily
darkened or obstructed by reason of any repairs, improvements, maintenance
and/or cleaning in or about the Building, or if any part of the Building or the
Common Areas, other than the Demised Premises, is temporarily or permanently
closed or inoperable, the same shall not be deemed a constructive eviction and
shall not result in any reduction or diminution of Tenant's obligations under
this Lease.

      21.04. [Intentionally Omitted].

      21.05. Landlord reserves the right, at any time and from time to time, to
make such changes, alterations, additions and improvements in or to the Building
and the fixtures and equipment thereof as Landlord shall deem necessary or
desirable.

      21.06. Landlord may adopt any name for the Building. Landlord reserves the
right to change the name and/or address of the Building at any time.

                  ARTICLE 22 - MECHANICS' LIENS AND OTHER LIENS

      22.01. Nothing contained in this Lease shall be deemed, construed or
interpreted to imply any consent or agreement on the part of Landlord to subject
Landlord's interest or estate to any liability under any mechanic's or other
lien law. If any mechanic's or other lien or any notice of intention to file

                                       35
<PAGE>

a lien is filed against the Land, or any part thereof, or the Demised Premises,
or any part thereof, for any work, labor, service or materials claimed to have
been performed or furnished for or on behalf of Tenant or anyone holding any
part of the Demised Premises through or under Tenant, Tenant shall cause the
same to be canceled and discharged of record by payment, bond or order of a
court of competent jurisdiction within fifteen (15) days after notice by
Landlord to Tenant.

                 ARTICLE 23 - NON-LIABILITY AND INDEMNIFICATION

      23.01. Neither Landlord nor any partner, joint venturer, director,
officer, agent, servant or employee of Landlord shall be liable to Tenant for
any loss, injury or damage to Tenant or to any other Person, or to its or their
property, irrespective of the cause of such injury, damage or loss, unless
caused by or resulting from the negligence of Landlord, its agents, servants or
employees in the operation or maintenance of the Land or Building without
contributory negligence on the part of Tenant or any of its subtenants or
licensees or its or their employees, agents or contractors. Provided, however
that nothing contained in the preceding sentence shall be construed as limiting
Landlord's or Tenant's obligations under Section 13.04 of this Lease. Further,
neither Landlord nor any partner, joint venturer, director, officer, agent,
servant or employee of Landlord shall be liable (a) for any such damage caused
by other tenants or Persons in, upon or about the Land or Building, or caused by
operations in construction of any private, public or quasi-public work; or (b)
even if negligent, for consequential damages arising out of any loss of use of
the Demised Premises or any equipment or facilities therein by Tenant or any
Person claiming through or under Tenant.

      23.02. Intentionally Omitted.

      23.03. Notwithstanding any provision to the contrary, Tenant shall look
solely to the estate and property of Landlord in and to the Land and Building
(or the proceeds received by Landlord on a sale of such estate and property but
not the proceeds of any financing or refinancing thereof) in the event of any
claim against Landlord arising out of or in connection with this Lease, the
relationship of Landlord and Tenant or Tenant's use of the Demised Premises or
the Common Areas, and Tenant agrees that the liability of Landlord arising out
of or in connection with this Lease, the relationship of Landlord and Tenant or
Tenant's use of the Demised Premises or the Common Areas shall be limited to
such estate and property of Landlord (or sale proceeds). No other properties or
assets of Landlord or any partner, joint venturer, director, officer, agent,
servant or employee of Landlord shall be subject to levy, execution or other
enforcement procedures for the satisfaction of any judgement (or other judicial
process) or for the satisfaction of any other remedy of Tenant arising out of,
or in connection with, this Lease, the relationship of Landlord and Tenant or
Tenant's use of the Demised Premises or the Common Areas and if Tenant shall
acquire a lien on or interest in any other properties or assets by judgment or
otherwise, Tenant shall within ten (10) days release such lien on or interest in
such other properties and assets by executing, acknowledging and delivering to
Landlord an instrument to that effect prepared by Landlord's attorneys. Tenant
hereby waives the right of specific performance and any other remedy allowed in
equity to the extent specific performance or such other remedy would cause
Landlord to incur liability for the payment of money to Tenant, Landlord's
liability for the payment of money being limited solely to the estate and
property of Landlord in and to the Land and Building (or the proceeds received
by Landlord on a sale of such estate and property but not the proceeds of any

                                       36
<PAGE>

financing or refinancing thereof) as provided in the first sentence of this
Section.

                       ARTICLE 24 - DAMAGE OR DESTRUCTION

      24.01. If the Building or the Demised Premises shall be partially or
totally damaged or destroyed by fire or other casualty (and if this Lease shall
not be terminated as in this Article 24 hereinafter provided), Landlord shall
repair the damage and restore and rebuild the Building and/or the Demised
Premises (except for the Tenant's Property) with reasonable dispatch after
notice to it of the damage or destruction and the collection of the insurance
proceeds attributable to such damage.

      24.02. Subject to the provisions of Section 24.05, if all or part of the
Demised Premises shall be damaged or destroyed or rendered completely or
partially untenantable on account of fire or other casualty, the Rent shall be
abated or reduced, as the case may be, in the proportion that the untenantable
area of the Demised Premises bears to the total area of the Demised Premises,
for the period from the date of the damage or destruction to (a) the date the
damage to the Demised Premises shall be substantially repaired, or (b) if the
Building and not the Demised Premises is so damaged or destroyed, the date on
which the Demised Premises shall be made tenantable; provided, however, should
Tenant reoccupy a portion of the Demised Premises during the period the repair
or restoration work is taking place and prior to the date that the Demised
Premises are substantially repaired or made tenantable the Rent allocable to
such reoccupied portion, based upon the proportion which the area of the
reoccupied portion of the Demised Premises bears to the total area of the
Demised Premises, shall be payable by Tenant from the date of such occupancy.

      24.03. If (a) the Building or the Demised Premises shall be totally
damaged or destroyed by fire or other casualty, or (b) the Building shall be so
damaged or destroyed by fire or other casualty (whether or not the Demised
Premises are damaged or destroyed) that its repair or restoration requires the
expenditure, as estimated by a reputable contractor or architect designated by
Landlord, of more than twenty percent (20%) (or ten percent [10%] if such
casualty occurs during the last two [2] years of the Term) of the full insurable
value of the Building immediately prior to the casualty, or (c) the Building
shall be damaged or destroyed by fire or other casualty (whether or not the
Demised Premises are damaged or destroyed) and either the loss shall not be
covered by Landlord's insurance or the net insurance proceeds (after deducting
all expenses in connection with obtaining such proceeds) shall, in the
estimation of a reputable contractor or architect designated by Landlord be
insufficient to pay for the repair or restoration work, then in either such case
Landlord may terminate this Lease by giving Tenant notice to such effect within
ninety (90) days after the date of the fire or other casualty which notice shall
be effective thirty (30) days thereafter, and, provided Tenant is not in default
of the payment of Rent, Landlord shall promptly return to Tenant the Security
Deposit and any Rent prepaid for the period subsequent to the date of such
casualty.

      24.04. Tenant shall not be entitled to terminate this Lease and 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 Building pursuant to this Article 24.
Landlord shall use its best efforts to make such repair or restoration promptly
and in such manner as not unreasonably to interfere with Tenant's use and
occupancy of the Demised Premises, but

                                       37
<PAGE>

Landlord shall not be required to do such repair or restoration work except
during Business Hours on Business Days.

      24.05. Notwithstanding any of the foregoing provisions of this Article 24,
if by reason of some act or omission on the part of Tenant or any of its
subtenants or its or their partners, directors, officers, servants, employees,
agents or contractors, either (a) Landlord or any Superior Lessor or any
Superior Mortgagee shall be unable to collect all of the insurance proceeds
(including, without limitation, rent insurance proceeds) applicable to damage or
destruction of the Demised Premises or the Building by fire or other casualty,
or (b) the Demised Premises or the Building shall be damaged or destroyed or
rendered completely or partially untenantable on account of fire or other
casualty, then, without prejudice to any other remedies which may be available
against Tenant, there shall be no abatement or reduction of the Rent. Further,
nothing contained in this Article 24 shall relieve Tenant from any liability
that may exist as a result of any damage or destruction by fire or other
casualty.

      24.06. Landlord will not carry insurance of any kind on the Tenant's
Property, and, except as provided by law or by reason of Landlord's breach of
any of its obligations hereunder, shall not be obligated to repair any damage to
or replace the Tenant's Property.

      24.07. The provisions of this Article 24 shall be deemed an express
agreement governing any case of damage or destruction of the Demised Premises
and/or Building by fire or other casualty, and any law providing for such a
contingency in the absence of an express agreement, now or hereafter in force,
shall have no application in such case.

24.08 In the event of (i) damage or destruction with respect to the Demised
Premises which prevents the use and occupancy of more than fifty (50%) of the
Demised Premises by Tenant, or (ii) damage or destruction with respect to the
Building the repair or restoration of which requires the expenditure, as
estimated by a reputable contractor or architect designated by Landlord, of more
than twenty-five percent (25%) of the full insurable value of the Building
immediately prior to the casualty, then in either of such events Landlord shall
and Tenant (provided such damage or destruction prevents the use and occupancy
of the Demised Premises by Tenant) shall have the right to request within thirty
(30) days after such event the Architect to determine the estimated time for
restoration. The Landlord shall cause the Architect to provide notice to
Landlord and Tenant of such determination (the "Architect's Notice") within
thirty (30) days after notice from Landlord or Tenant requesting such
determination.

      If the Architect determines that the restoration of referred to above is
estimated to take more than eighteen (18) months from the date of the casualty
(or more than six (6) months if such damage or destruction occurs in the last
year of the Term) (such applicable restoration period hereinafter referred to as
the "Applicable Restoration Period"), Landlord and Tenant shall each have the
right to terminate this Lease, upon thirty (30) days prior written notice to the
other, given within thirty (30) days of the Architect's Notice (provided,
however that Tenant's right to terminate shall be conditioned upon (i) Tenant
not being in monetary or material non-monetary default under this Lease beyond
any applicable notice and cure period (and in any event curing such default(s)
prior to termination) and (ii) Tenant being prevented from using and occupying
the Demised Premises or portion thereof affected for a period of not less than
eighteen (18) months as reasonably estimated by the Architect (or more than six
(6) months from the date of casualty if such damage or destruction occurs in the
last year of the Term)

                                       38
<PAGE>

and (iii) subject to nullification if Landlord completes such restoration prior
to the expiration of thirty days after receipt by Landlord of the notice of
termination);

      In the event this Lease is not terminated pursuant to the foregoing
paragraph and Landlord fails to substantially complete restoration of the
Building within the Applicable Restoration Period (subject to extension by
Landlord as the result of Unavoidable Delay), Tenant shall have the right, as
its sole remedy, to cancel and terminate this Lease; upon thirty (30) days prior
written notice to Landlord, given within thirty (30) days after the expiration
of the Applicable Restoration Period (provided, however that Tenant's right to
terminate shall be conditioned upon (i) Tenant not being in monetary or material
non-monetary default under this Lease beyond any applicable notice and cure
period (and in any event curing such default(s) prior to termination) and (ii)
Tenant being prevented from using and occupying the Demised Premises or portion
thereof affected for a period of not less than eighteen (18) months as
reasonably estimated by the Architect (or more than six (6) months from the date
of casualty if such damage or destruction occurs in the last year of the Term)
and (iii) subject to nullification if Landlord completes such restoration prior
to the expiration of thirty days after receipt by Landlord of the notice of
termination).

      In the event this Lease is terminated pursuant to this section 24.08,
Landlord shall, provided Tenant is not in default of the payment of Rent,
promptly return to Tenant the Security Deposit and any Rent prepaid for the
period subsequent to the date of such casualty. Landlord's right to terminate
the Lease pursuant to this Section 24.08 shall be in addition to and not in
limitation of Landlord's other rights pursuant to this Article 24. Nothing
contained herein shall be construed as limiting Landlord's right to collect the
full amount of the proceeds of rent insurance or business interruption
insurance.

                           ARTICLE 25 - EMINENT DOMAIN

      25.01 If the whole of the Demised Premises shall be taken by any public or
quasi-public authority under the power of condemnation, eminent domain or
expropriation, or in the event of conveyance of the whole of the Demised
Premises in lieu thereof, this Lease shall terminate as of the day possession
shall be taken by such authority. If 25% or less of the Rentable Floor Area of
the Demised Premises shall be so taken or conveyed, this Lease shall terminate
only in respect of the part so taken or conveyed as of the day possession shall
be taken by such authority. If more than 25% of the Rentable Floor Area of the
Demised Premises shall be so taken or conveyed, this Lease shall terminate only
in respect of the part so taken or conveyed as of the day possession shall be
taken by such authority, but either party shall have the right to terminate this
Lease upon notice given to the other party within 30 days after such taking
possession. If more than 25% of the Rentable Floor Area of the Building shall be
so taken or conveyed, Landlord may, by notice to Tenant, terminate this Lease as
of the day possession shall be taken. If so much of the parking facilities shall
be so taken or conveyed that the number of parking spaces necessary, in
Landlord's judgment, for the continued operation of the Building shall not be
available, Landlord shall, by notice to Tenant, terminate this Lease as of the
day possession shall be taken. If this Lease shall continue in effect as to any
portion of the Demised Premises not so taken or conveyed, the Rent shall be
computed as of the day possession shall be taken on the basis of the remaining
Rentable Floor Area of the Demised Premises. Except as specifically provided
herein, in the event of any such taking or conveyance there shall be no
reduction in Rent. If this Lease shall continue in effect, Landlord shall, at
its expense, but shall be obligated only to the

                                       39
<PAGE>

extent of the net award or other compensation (after deducting all expenses in
connection with obtaining same) available to Landlord for the improvements taken
or conveyed (excluding any award or other compensation for land or for the
unexpired portion of the term of any Superior Lease), make all necessary
alterations so as to constitute the remaining Building a complete architectural
and tenantable unit, except for the Tenant's Property, and Tenant shall make all
alterations or replacements to the Tenant's Property and decorations in the
Demised Premises. All awards and compensation for any taking or conveyance,
whether for the whole or a part of the Land or Building, the Demised Premised or
otherwise, shall be the property of Landlord, and Tenant hereby assigns to
Landlord all of Tennant's right, title and interest in and to any and all such
awards and compensation, including, without limitation, any award or
compensation for the value of the unexpired portion of the Term. Tenant shall be
entitled to claim, prove and receive in the condemnation proceeding such award
or compensation as may be allowed for the Tenant's Property and for loss of
business, good will, and depreciation or injury to and cost of removal of the
Tenant's Property, but only if such award or compensation shall be made by the
condemning authority in addition to, and shall not result in a reduction of, the
award or compensation made by it to Landlord.

      25.02. If the temporary use or occupancy of all or any part of the Demised
Premises shall be taken during the Term, Tenant shall be entitled, except as
hereinafter set forth, to receive that portion of the award or payment for such
taking which represents compensation for the use and occupancy of the Demised
Premises, for the taking of the 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 to be
responsible for all of its obligations hereunder insofar as such obligations are
not affected by such taking and shall continue to pay the Rent in full when due.
If the period of temporary use or occupancy shall extend beyond the Expiration
Date, that part of the award or payment which represents compensation for the
use and occupancy of the Demised Premises (or a part thereof) shall be divided
between Landlord and Tenant so that Tenant shall receive (except as otherwise
provided below) so much thereof as represents compensation for the period up to
and including the Expiration Date and Landlord shall receive so much thereof as
represents compensation for the period after the Expiration Date. All monies to
be paid to Tenant as, or as part of, an award or payment for temporary use and
occupancy for a period beyond the date to which the Rent has been paid shall be
received, held and applied by the first Superior Mortgagee (or if there is no
Superior Mortgagee, by Landlord as a trust fund) for payment of the Rent
becoming due hereunder.

                             ARTICLE 26 - SURRENDER

      26.01. On the Expiration Date, 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 "broom-clean" and in good
order, condition and repair, except for ordinary wear and tear and such damage
or destruction as Landlord is required to repair or restore under this Lease,
and Tenant shall remove all of Tenant's Property therefrom except as otherwise
expressly provided in this Lease.

      26.02. If Tenant remains in possession of the Demised Premises after the
expiration of the Term, Tenant shall be deemed to be occupying the Demised
Premises at the sufferance of Landlord

                                       40
<PAGE>

subject to all of the provisions of this Lease, except that the monthly Fixed
Rent shall be twice the Fixed Rent in effect during the last month of the Term.

      26.03. No act or thing done by Landlord or its agents shall be deemed an
acceptance of a surrender of the Demised Premises, and no agreement to accept
such surrender shall be valid unless in writing and signed by Landlord.

                      ARTICLE 27 - CONDITIONS OF LIMITATION

      27.01. This Lease is subject to the limitation that whenever Tenant or any
Guarantor (a) shall make an assignment for the benefit of creditors, or (b)
shall commence a voluntary case or have entered against it an order for relief
under any chapter of the Federal Bankruptcy Code (Title 11 of the United States
Code) or any similar order or decree under any federal or state law, now in
existence, or hereafter enacted having the same general purpose, and such order
or decree shall have not been stayed or vacated within 30 days after entry, or
(c) shall cause, suffer, permit or consent to the appointment of a receiver,
trustee, administrator, conservator, sequestrator, liquidator or similar
official in any federal, state or foreign judicial or nonjudicial proceeding, to
hold, administer and/or liquidate all or substantially all of its assets, and
such appointment shall not have been revoked, terminated, stayed or vacated and
such official discharged of his duties within 30 days of his appointment, then
Landlord, at any time after the occurrence of any such event, may give Tenant a
notice of intention to end the Term 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, whether or not the Term shall theretofore have commenced,
this Lease shall terminate with the same effect as if that day were the
expiration date of this Lease, but Tenant shall remain liable for damages as
provided in Article 29.

      27.02. This Lease is subject to the further limitations that: (a) if
Tenant shall default in the payment of any Rent, or (b) if Tenant shall, whether
by action or inaction, be in default of any of its obligations under this Lease
(other than a default in the payment of Rent) and such default shall continue
and not be remedied within fifteen (15) days after Landlord shall have given to
Tenant a notice specifying the same, or, in the case of a default which cannot
with due diligence be cured within a period of fifteen (15) days and the
continuance of which for the period required for cure will not subject Landlord
or any Superior Lessor to prosecution for a crime (as more particularly
described in the last sentence of Section 12.02) or termination of any Superior
Lease or foreclosure of any Superior Mortgage, if Tenant shall not, (i) within
said fifteen (15) day period advise Landlord of Tenant's intention to take all
steps necessary to remedy such default, (ii) duly commence within said fifteen
(15) day period, and thereafter diligently prosecute to completion all steps
necessary to remedy the default, and (iii) complete such remedy within a
reasonable time after the date of said notice by Landlord, or (c) if any event
shall occur or any contingency shall arise whereby this Lease 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 11, or
(d) if Tenant shall vacate or abandon the Demised Premises, then in any of said
cases Landlord may give to Tenant a notice of intention to end the Term 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, whether or not the
Term shall theretofore have commenced, this Lease shall terminate with the same
effect as if that day were the expiration date of this Lease, but Tenant shall
remain liable

                                       41
<PAGE>

for damages as provided in Article 29.

                        ARTICLE 28 - RE-ENTRY BY LANDLORD

      28.01. If this Lease shall terminate as provided in Article 27, Landlord
or Landlord's agents and employees may immediately or at any time thereafter
re-enter the Demised Premises, or any part thereof, either by summary dispossess
proceedings or by any suitable action or proceeding at law without being liable
to indictment, prosecution or damages therefor, and may repossess the same, and
may remove any Person therefrom, to the end that Landlord may have, hold and
enjoy the Demised Premises. The word "re-enter," as used herein, is not
restricted to its technical legal meaning. If this Lease is terminated under the
provisions of Article 27, or if Landlord shall re-enter the Demised Premises
under the provisions of this Article 28, or in the event of the termination of
this Lease, or of re-entry, by or under any summary dispossess or other
proceedings or action or any provision of law by reason of default hereunder on
the part of Tenant, Tenant shall thereupon pay to Landlord the Rent payable 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 29.

      28.02. 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 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.

      28.03. If this Lease shall terminate under the provisions of Article 27,
or if Landlord shall re-enter the Demised Premises under the provisions of this
Article 28, 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 monies, if any, paid by Tenant to Landlord, whether as
Advance Rent, security or otherwise, but such monies shall be credited by
Landlord against any 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 29 or pursuant to law.

                              ARTICLE 29 - DAMAGES

      29.01. If this Lease is terminated under the provisions of Article 27, or
if Landlord shall re-enter the Demised Premises under the provisions of Article
28, 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 as
Additional Charges to Landlord, at the election of Landlord, either or any
combination of such damages as Landlord may be entitled as a matter of Law, or
in equity or by contract, including but not limited to:

      sums equal to the Fixed Rent and the Additional Charges which would have
      been payable by

                                       42
<PAGE>

      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, without limitation, altering and preparing the Demised Premises
      for new tenants, brokers' commissions, legal fees, 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 period ending on the Expiration Date; 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 (b)
      to a credit in respect of any 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 shall be made of
      the rent received from such reletting and of the expenses of reletting; or

      If the Demised Premises or any part thereof should be re-let by Landlord
before presentation of proof of such damages to any court, commission or
tribunal, the amount of rent reserved upon such re-letting shall, prima facie,
be the fair and reasonable rental value for the Demised Premises, or part
thereof, so re-let during the term of the re-letting. Landlord shall not be
liable in any way whatsoever for its failure to re-let the Demised Premises or
any part thereof, or if the Demised Premises or any part thereof are re-let, for
its failure to collect the rent under such re-letting, and no such failure to
re-let or failure to collect rent shall release or affect Tenant's liability for
damages or otherwise under this Lease. Landlord shall use commercially
reasonable efforts to re-let the Demised Premises to mitigate Landlord's
damages. For the purposes hereof either of the following shall create an
irrebuttable presumption that Landlord has fulfilled such obligation: (a)
Landlord shall (i) include the availability of the Demised Premises in
Landlord's monthly listing to brokers (if any), commencing with the first such
report (if any) issued following Landlord's recovery of possession of the
Demised Premises, and ending upon re-leasing of the Demised Premises; and (ii)
include the availability of the Demised Premises in Landlord's periodic real
estate guide or website (if any), following Landlord's recovery of possession of
the Demised Premises, and ending upon re-leasing of the Demised Premises; and
(iii) shall hold an "Open House" for the Demised Premises within forty-five (45)
days of Landlord's recovery of possession of the Demised Premises; or (b)
Landlord may engage an independent commercial real estate broker to re-let the
Demised Premises, the cost and expense of which shall be an element of
Landlord's damages in addition to any other damages recoverable pursuant to
Section 29.01 hereof. Nothing contained herein shall require Landlord to re-let
the Demised Premises prior to or with any preference over the leasing of any
other similar premises of Landlord or any affiliate of Landlord, nor shall any
rental of such other premises reduce the damages which Landlord would be
entitled to recover from Tenant. In the event Tenant, on behalf of itself or any
and all persons claiming through or under Tenant, attempts to raise a defense or
assert any affirmative obligations on Landlord's part to mitigate such damages
or re-let the Demised Premises other than as provided herein, Tenant shall
reimburse Landlord for any costs and expenses incurred by Landlord as a result
of any such defense or assertion,

                                       43
<PAGE>

including but not limited to Landlord's attorneys' fees incurred in connection
therewith.

      29.02. Suit or suits for the recovery of such damages or, any installments
thereof, may be brought by Landlord at any time and 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 would have expired if it had not been
so terminated under the provisions of Article 27, 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 damages by reason of
the termination of this Lease or re-entry of 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, whether or not such amount be
greater than, equal to, or less than any of the sums referred to in Section
29.01.

      29.03. In addition, if this Lease is terminated under the provisions of
Article 27, or if Landlord shall re-enter the Demised Premises under the
provisions of Article 28, Tenant covenants that: (a) the Demised Premises then
shall be in the same condition as that in which Tenant has agreed to surrender
the same to Landlord at the Expiration Date; (b) Tenant shall have performed
prior to any such termination any obligation of Tenant contained in this Lease
for the making of any alteration or for restoring or rebuilding the Demised
Premises or the Building, or any part thereof; and (c) for the breach of any
covenant of Tenant set forth above in this Section 29.03, Landlord shall be
entitled immediately, without notice or other action by Landlord, to recover,
and Tenant shall pay, as and for liquidated damages therefor, the cost of
performing such covenant (as reasonably estimated by an independent contractor
selected by Landlord).

      29.04. In addition to any other remedies Landlord may have under this
Lease, and without reducing or adversely affecting any of Landlord's rights and
remedies under this Article 29, if any Rent or damages payable hereunder by
Tenant to Landlord are not paid as and when due, the same shall bear interest at
the Late Payment Rate or the maximum rate permitted by law, whichever is less,
from the due date thereof until paid, and the amounts of such interest shall be
Additional Charges hereunder.

      29.05. In addition to any remedies which Landlord may have under this
Lease, if there shall be a default hereunder by Tenant which shall not have been
remedied within the applicable grace period, Landlord shall not be obligated to
furnish to Tenant or the Demised Premises any HVAC services outside of Business
Hours or Business Days, or any extra or additional cleaning services; and the
discontinuance of any one or more such services shall be without liability by
Landlord to Tenant and shall not reduce, diminish or otherwise affect any of
Tenant's covenants and obligations under this Lease.

                        ARTICLE 30 - AFFIRMATIVE WAIVERS

      30.01. Tenant, on behalf of itself and any and all persons claiming
through or under Tenant, does hereby waive and surrender all right and privilege
which it, they or any of them might have under

                                       44
<PAGE>

or by reason of any present or future law, to redeem the Demised Premises or to
have a continuance of this Lease after being dispossessed or ejected from the
Demised Premises by process of law or under the terms of this Lease or after the
termination of this Lease as provided in this Lease.

      30.02. 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, and Tenant's use or occupancy of the
Demised Premises and use of the Common Area, including, without limitation, any
claim of injury or damage, and any emergency and other statutory remedy with
respect thereto. Tenant shall not interpose any counterclaim of any kind in any
action or proceeding commenced by Landlord to recover possession of the Demised
Premises.

                             ARTICLE 31 - NO WAIVERS

      31.01. 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. The receipt by Landlord of Fixed Rent or
Additional Charges with knowledge of breach by Tenant of any obligation of this
Lease shall not be deemed a waiver of such breach.

                      ARTICLE 32 - CURING TENANT'S DEFAULTS

      32.01. 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 fifteen (15) days from
the date Landlord gives Tenant notice of the default. Charges for any expenses
incurred by Landlord in connection with any such performance by it for the
account of Tenant, and charges reasonably incurred for all costs, expenses and
disbursements of every kind and nature whatsoever, including reasonable
attorneys' fees and expenses, involved in collecting or endeavoring to collect
the Rent or any part thereof or enforcing or endeavoring to enforce any rights
against Tenant or Tenant's obligations hereunder, 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 or in recovering
possession of the Demised Premises after default by Tenant or upon the
expiration of the Term or sooner termination of this Lease, and interest on all
sums advanced by Landlord under this Article at the Late Payment Rate or the
maximum rate permitted by law, whichever is less, shall be payable by Tenant and
may be invoiced by Landlord to Tenant monthly, or immediately, or at any time,
at Landlord's option, and such amounts shall be due and payable within ten (10)
days of demand.

                                       45
<PAGE>

                               ARTICLE 33 - BROKER

      33.01. Tenant and Landlord each represents to the other that no broker
except the Broker was instrumental in bringing about or consummating this Lease
and that they respectively had no conversations or negotiations with any broker
except the Broker concerning the leasing of the Demised Premises. Tenant and
Landlord each agrees to indemnify and hold harmless the other against and from
any claims by any Person claiming to have dealt with or on behalf of the
indemnifying party for any brokerage commissions and all costs, expenses and
liabilities in connection therewith, including, without limitation, reasonable
attorneys' fees and expenses, arising. out of any conversations or negotiations
had by the indemnifying party with any broker other than the Broker. Landlord
shall pay any brokerage commissions due the Broker pursuant to a separate
agreement between Landlord and the Broker.

                              ARTICLE 34 - NOTICES

      34.01. Any notice, statement, demand, consent, approval 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 Legal
Requirement, shall be in writing and shall be deemed to have been properly
given, rendered or made only if hand delivered (with an acknowledged written
receipt) or sent by United States registered or certified mail, return receipt
requested, or by a nationally recognized courier service, addressed to the other
party at the addresses hereinabove set forth (except that after the Commencement
Date, Tenant's address, unless Tenant shall give written notice to the contrary,
shall be the Building), and as to Landlord, to the attention of General Counsel
with a concurrent notice to the attention of Controller, and shall be deemed to
have been given, rendered or made, if by hand delivery, when so delivered, if by
United States postal mail, on the second Business Day after the day so mailed,
unless mailed outside the State of New Jersey, in which case it shall be deemed
to have been given, rendered or made on the third Business Day after the day so
mailed, and if by overnight delivery, on the date of delivery. Either party may,
by notice as aforesaid, designate a different address or addresses for notices,
statements, demands, consents, approvals or other communications intended for
it. In addition, upon and to the extent requested by Landlord in writing, copies
of notices shall be sent to the Superior Mortgagee.

                       ARTICLE 35 - ESTOPPEL CERTIFICATES

      35.01. Tenant and Landlord shall, at any time and from time to time, as
requested by the other, upon not less than ten (10) days' prior notice, execute
and deliver to the other or upon request of Landlord to a Superior Mortgagee or
Superior Lessor a statement certifying 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), certifying the
dates to which the Fixed Rent and Additional Charges have been paid, stating
whether or not, to the best knowledge of the party giving the statement, the
requesting party is in default in performance of any of its obligations under
this Lease, and, if so, specifying each such default of which the party giving
the statement shall have knowledge, and stating whether or not, to the best
knowledge of the party giving the statement, any

                                       46
<PAGE>

event has occurred which with the giving of notice or passage of time, or both,
would constitute such a default of the requesting party, and, if so, specifying
each such event; any such statement delivered pursuant hereto shall be deemed a
representation and warranty to be relied upon by the party requesting the
certificate and by others with whom such party may be dealing, regardless of
independent investigation. Tenant also shall include in any such statement such
other information concerning this Lease as Landlord may reasonably request.

                            ARTICLE 36 - ARBITRATION

      36.01. Landlord may at any time request arbitration, and Tenant may at any
time when not in default in the payment of any Rent request arbitration, of any
matter in dispute but only where arbitration is expressly provided for in this
Lease. The party requesting arbitration shall do so by giving notice to that
effect to the other party, specifying in said notice the nature of the dispute,
and said dispute shall be determined in Newark, New Jersey, by a single
arbitrator, in accordance with the rules then obtaining of the American
Arbitration Association (or any comparable organization designated by Landlord
and Tenant). The award in such arbitration may be enforced on the application of
either party by the order or judgment of a court of competent jurisdiction. The
fees and expenses of any arbitration shall be borne by the parties equally, but
each party shall bear the expense of its own attorneys and experts and the
additional expenses of presenting its own proof. If Tenant gives notice
requesting arbitration as provided in this Article, Tenant shall simultaneously
serve a duplicate of the notice on each Superior Mortgagee and Superior Lessor
whose name and address shall previously have been furnished to Tenant, and such
Superior Mortgagees and Superior Lessor shall have the right to participate in
such arbitration.

                        ARTICLE 37 - MEMORANDUM OF LEASE

      37.01. Tenant shall not record this Lease. However, at the request of
Landlord, Tenant shall within ten (10) days execute, acknowledge and deliver to
Landlord a memorandum of lease in respect of this Lease sufficient for
recording. Such memorandum shall not be deemed to change or otherwise affect any
of the obligations or provisions of this Lease. Whichever party records such
memorandum of Lease shall pay all recording costs and expenses, including any
taxes that are due upon such recording.

                      ARTICLE 38 - [Intentionally Omitted]

                           ARTICLE 39 - MISCELLANEOUS

      39.01. 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(s) which may be made between the parties concurrently with the
execution and delivery of this Lease. All understandings and agreements
heretofore had between

                                       47
<PAGE>

the parties are merged in this Lease and any other written agreement(s) made
concurrently herewith, which alone fully and completely express the agreement of
the parties and which are entered into after full investigation. Neither party
has relied upon any statement or representation not embodied in this Lease or in
any other written agreement(s) made concurrently herewith. The submission of
this Lease to Tenant does not constitute by Landlord a reservation of, or an
option to Tenant for, the Demised Premises, or an offer to lease on the terms
set forth herein and this Lease shall become effective as a lease agreement only
upon execution and delivery thereof by Landlord and Tenant.

      39.02. No agreement shall be effective to change, modify, waive, release,
discharge, terminate or effect an abandonment of this Lease, in whole or in
part, unless such 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, termination or effectuation of abandonment is
sought.

      39.03. If Tenant shall at any time request Landlord to sublet or let the
Demised Premises for Tenant's account, Landlord or its agent is authorized to
receive keys for such purposes without releasing Tenant from any of its
obligations under this Lease, and Tenant hereby releases Landlord of any
liability for loss or damage to any of the Tenant's Property in connection with
such subletting or letting.

      39.04. Except as otherwise expressly provided in this Lease, the
obligations under this Lease shall bind and benefit the successors and assigns
of the parties hereto with the same effect as if mentioned in each instance
where a party is named or referred to; provided, however, that (a) no violation
of the provisions of Article 11 shall operate to vest any rights in any
successor or assignee of Tenant and (b) the provisions of this Section 39.04
shall not be construed as modifying the conditions of limitation contained in
Article 27.

      39.05. Except for Tenant's obligations to pay Rent, the time for Landlord
or Tenant, as the case may be, to perform any of its respective obligations
hereunder shall be extended if and to the extent that the performance thereof
shall be prevented due to any Unavoidable Delay. Except as expressly provided to
the contrary, the obligations of Tenant hereunder shall not be affected,
impaired or excused, nor shall Landlord have any liability whatsoever to Tenant,
(a) because Landlord is unable to fulfill, or is delayed in fulfilling, any of
its obligations under this Lease due to any of the matters set forth in the
first sentence of this Section 39.05, or (b) because of any failure or defect in
the supply, quality or character of electricity, water or any other utility or
service furnished to the Demised Premises for any reason beyond Landlord's
reasonable control. Notwithstanding the foregoing in the event of an
interruption of any of the services provided by Landlord in Articles 18, 19 and
20, Landlord shall use commercially reasonable efforts to cause such services to
be restored in a reasonably prompt and diligent manner, and, in the event such
services are interrupted for a period in excess of five (5) consecutive days,
and Tenant's use of the Demised Premises is prevented thereby, Tenant shall be
entitled to a per diem abatement of Rent for each day thereafter Until the
services are so . restored, to the extent Landlord is entitled to collect the
proceeds of rent insurance with respect thereto.

      39.06. Any liability for payments hereunder (including, without
limitation, Additional Charges) shall survive the expiration of the Term or
earlier termination of this Lease.

                                       48
<PAGE>

      39.07. If Tenant shall request Landlord's consent and Landlord shall fail
or refuse to give such consent, Tenant shall not be entitled to any damages for
any withholding by Landlord of its consent; Tenant's sole remedy shall be an
action for specific performance or injunction, and such remedy shall be
available only in those cases where Landlord has expressly agreed in writing not
to unreasonably withhold or delay its consent or where as a matter of law
Landlord may not unreasonably withhold its consent.

      39.08. If an excavation shall be made upon land adjacent to or under the
Building, or shall be authorized to be made, Tenant shall afford to the Person
causing or authorized to cause such excavation, license to enter the Demised
Premises for the purpose of performing such work as said Person shall reasonably
deem necessary or desirable to preserve and protect the Building from injury or
damage and to support the same by proper foundations, without any claim for
damages Or liability against Landlord and without reducing or otherwise
affecting Tenant's obligations under this Lease provided (i) such entry shall be
at reasonable times, upon reasonable notice, and with minimal disturbance to
Tenant's business, (ii) such party shall name Tenant as an additional insured on
its general liability insurance policy, (iii) Tenant shall not be required to
incur any costs resulting from, or in connection with, the performance of such
work, (iv) such party shall indemnify and bold Tenant harmless from, and
against, any liability (except to the extent caused as a result of the
negligence or intentional wrongful act of Tenant or its agents, employees,
invitees or contractors) arising from such access and such work, and (vi) such
party shall restore the Demised Premises to its condition prior to such entry.

      39.09. Tenant shall not exercise its rights under Article 15 or any other
provision of this Lease in a manner which would violate Landlord's union
contracts or create any work stoppage, picketing, labor disruption or dispute or
any interference with the business of Landlord or any tenant or occupant of the
Building.

      39.10. Tenant shall give reasonably prompt notice to Landlord of (but in
no event later than five (5) days after Tenant first becomes aware of) (a) any
occurrence in or about the Demised Premises for which Landlord might be liable,
(b) any fire or other casualty in the Demised Premises, (c) any damage to or
defect in the Demised Premises, including the fixtures and equipment thereof,
for the repair of which Landlord might be responsible, and (d) any damage to or
defect in any part of the Building's sanitary, electrical, heating, ventilating,
air-conditioning, elevator or other systems located in or passing through the
Demised Premises or any part thereof.

      39.11. This Lease shall be governed by and construed in accordance with
the laws of the State of New Jersey. Tenant hereby irrevocably agrees that any
legal action or proceeding arising out of or relating to this Lease may be
brought in the Courts of the State of New Jersey, or the Federal District Court
for the District of New Jersey, as Landlord may elect. By execution and delivery
of this Lease, Tenant hereby irrevocably accepts and submits generally and
unconditionally for itself and with respect to its properties, to the
jurisdiction of any such court in any such action or proceeding, and hereby
waives in the case of any such action or proceeding brought in the courts of the
State of New Jersey, or Federal District Court for the District of New Jersey,
any defenses based on jurisdiction, venue or forum non conveniens. If any
provision of this Lease shall be invalid or unenforceable, the remainder of this
Lease shall not be affected and shall be enforced to the extent permitted by
law. The table of

                                       49
<PAGE>

contents, captions, headings and titles in this Lease are solely for convenience
of reference and shall not affect its interpretation. This Lease shall be
construed without regard to any presumption or other rule requiring construction
against the party causing this Lease to be drafted. If any words or phrases in
this Lease shall have been stricken out or otherwise eliminated, whether or not
any other words or phrases have been added, this Lease shall be construed as if
the words or phrases so stricken out or otherwise eliminated were never included
in this Lease and no implication or inference shall be drawn from the fact that
said words or phrases were so stricken out or otherwise eliminated. Each
covenant, agreement, obligation or other provision of this Lease on Tenant's
part to be performed, shall be deemed and construed as a separate and
independent covenant of Tenant, not dependent on any other provision of this
Lease. All terms and words used in this Lease, regardless of the number or
gender in which they are used, shall be deemed to include any other number and
any other gender as the context may require. Tenant specifically agrees to pay
all of Landlord's costs, reasonable charges and expenses, including attorneys'
fees, incurred in connection with any document review requested by Tenant
pursuant to Article 6 of this Lease and upon submission of bills therefor. In
the event Landlord permits Tenant to examine Landlord's books and records with
respect to any Additional Charge imposed under this Lease, such examination
shall be conducted at Tenant's sole cost and expense and shall be conditioned
upon Tenant retaining an independent accounting firm for such purposes which
shall not be compensated on any type of contingent fee basis with respect to
such examination. Wherever in this Lease or by law Landlord is authorized to
charge or recover costs and expenses for legal services or attorneys' fees, same
shall include, without limitation, the costs and expenses for in-house or staff
legal counsel or outside counsel at rates not to exceed the reasonable and
customary charges for any such services as would be imposed in an arms length
third party agreement for such services.

      39.12. Within thirty (30) days of each anniversary date of this Lease,
Tenant shall annually furnish to Landlord a copy of its then current audited
financial statement which shall be employed by Landlord for purposes of
financing the Premises and not distributed otherwise without prior authorization
of Tenant. Any material adverse change of Tenant's financial condition shall be
furnished to Landlord in writing forthwith and without request by Landlord for
same.

      39.13. Landlord and Tenant acknowledge that (i) Tenant has
contemporaneously herewith submitted to Landlord a form of Waiver and Consent by
Real Property Owner (herein, the "Consent") in favor of Wells Fargo Foothill,
Inc. ("Wells Fargo") which Tenant has requested that Landlord execute and
deliver to Wells Fargo, and (ii) Landlord has contemporaneously herewith
provided to Wells Fargo via Tenant, Landlord's comments to the Consent. So long
as Tenant is not in default in the payment of Fixed Rent under this Lease beyond
any applicable notice or cure period, Landlord agrees that it shall negotiate in
good faith with Wells Fargo the form of Consent and promptly execute and deliver
to Wells Fargo such Consent in form and substance reasonably satisfactory to
both Landlord and Wells Fargo.

      39.14. Landlord shall deliver the Demised Premises to Tenant on the
Commencement Date with Landlord's Work substantially completed, vacant,
"broom-clean", free of all hazardous materials (including, without limitation,
asbestos, asbestos containing materials, and polychlorinated biphenyls) in
excess of amounts permitted pursuant to applicable Legal Requirements, free of
all tenants and other parties with rights of occupancy, with all electrical,
mechanical, plumbing, and the HVAC servicing the Demised Premises in good
working order and condition, in substantial compliance with all applicable

                                       50
<PAGE>

laws, rules, regulations, ordinances, and codes (including, without limitation,
the Americans with Disabilities Act of 1990, as amended) to enable Tenant to
occupy the Demised Premises for the Permitted Uses. Landlord represents to
Tenant, (i) that to the best of its knowledge, no default exists, or would
exist, but for the giving of notice or passage of time, or both; under any
Superior Lease or Superior Mortgage, and (Ii) that this Lease and Tenant's use
of the Demised Premises for the Permitted' Uses does not require the prior
consent of any Superior Mortgagee or Superior Lessor, or if such consent is
required, that Landlord shall obtain same, and (iii) that Landlord has no
knowledge of any condemnation proceedings commenced, or to be commenced, against
all, or part of, the Building.

IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease as of the
day and year first above written.

                                             HARTZ MOUNTAIN INDUSTRIES, INC.
                                             ("Landlord")

                                         BY: /s/ Irwin A. Horwowitz
                                             -----------------------------------
                                             Irwin A. Horowitz
                                             Executive Vice President

      [Corporate Seal]

                                             PHIBRO ANIMAL HEALTH
                                             CORPORATION
                                             ("Tenant")

                                             BY:    /s/ David C. Storbeck
                                                    ----------------------------
                                             Name:  David C. Storbeck
      [Corporate Seal]                       Title: VP Finance & Treasure

    Copyright(C)Hartz Mountain Industries, Inc. 2004. All Rights Reserved. No
 portion of this document may be reproduced without the express written consent
                       of Hartz Mountain Industries, Inc.

                                       51
<PAGE>

RIDER TO LEASE DATED SEPTEMBER 27, 2004, BETWEEN HARTZ MOUNTAIN INDUSTRIES,
INC., AS LANDLORD AND PHIBRO ANIMAL HEALTH CORPORATION, AS TENANT.

      R1. If any of the provisions of this Rider shall conflict with any of the
provisions, printed or typewritten, of this Lease, such conflict shall resolve
in every instance in favor of the provisions of this Rider.

      R2. Extension of Term. Provided Tenant is in compliance with all of the
terms and conditions contained herein, and provided Tenant has not assigned this
Lease or sublet all or any portion of the Demised Premises (other than to a
permitted assignment or subletting to an Affiliate of Tenant) and is itself (or
its Affiliate) in occupation and conducting business in the whole of the Demised
Premises in accordance with the terms of this Lease, Tenant expressly
acknowledging and agreeing that the option rights contained herein are personal
to the original named Tenant, Tenant shall have one (I) option to extend the
Term of its lease of the Demised Premises, from the date upon which this Lease
would otherwise expire for one (1) separate extended period of five (5) years
(the "Extended Period"), upon the following terms and conditions:

      1. If Tenant elects to exercise said option, it shall do so by giving
notice of such election to Landlord on or before the date which is one (1) year
before the beginning of the Extended Period for which the Term is to be extended
by the exercise of such option. Tenant agrees that it shall have forever waived
its right to exercise such option if it shall fail for any reason whatsoever to
give such notice to Landlord by the time provided herein for the giving of such
notice, whether such failure is inadvertent or intentional, time being of the
essence as to the exercise of such option.

      2. If Tenant elects to exercise said option, the Term shall be
automatically extended for the Extended Period covered by the option so
exercised without execution of an extension or renewal lease. Within ten (10)
days after request of either party following the effective exercise of such
option, however, Landlord and Tenant shall execute, acknowledge and deliver to
each other duplicate originals of an instrument in recordable form confirming
that such option was effectively exercised.

      3. The Extended Period shall be upon the same terms and conditions as are
in effect immediately preceding the commencement of such Extended Period;
provided, however, that Tenant shall have no right or option to extend the Term
for any period of time beyond the expiration of the Extended Period and,
provided further, that in the Extended Period the Fixed Rent shall be as
follows:

            The Fixed Rent during the Extended Period shall be Fair Market Value
            ("FMV"). If the parties are unable to agree on the FMV within thirty
            (30) days of Tenant's exercise of its option, the parties shall
            choose a licensed Real Estate Appraiser who shall determine the FMV.
            The cost of said Real Estate Appraiser shall be borne equally by the
            parties. If the parties are unable to agree on a licensed Real
            Estate Appraiser within forty-five (45) days of Tenant's exercise of
            its option, each party shall select one Appraiser to appraise the
            FMV. All appraisals shall be rendered within thirty (30) days of
            appointment of the respective Appraiser appointed under

                                       52
<PAGE>

            this paragraph. If the difference between the two appraisals is 20%
            or less of the lower appraisal, then the

            FMV shall be the average of the two appraisals. If the difference
            between the two appraisals is greater than 20% of the lower
            appraisal, the two Appraisers shall select a third licensed Real
            Estate Appraiser to appraise the FMV. The FMV shall in such case be
            the average of the three appraisals. The cost of the third appraisal
            shall be borne equally by the parties.

Anything to the contrary contained herein notwithstanding, the Fixed Rent for
the Extended Period shall not be less than the Fixed Rent for the period
immediately preceding the Extended Period for which the Fixed Rent is being
calculated.

      4. Any termination, expiration, cancellation or surrender of this Lease
shall terminate any right or option for the Extended Period(s) not yet
exercised. .

      5. Landlord shall have the right, for thirty (30) days after receipt of
notice of Tenant's election to exercise any option to extend the Term, to reject
Tenant's election if Tenant gave such notice while Tenant was in default in the
performance of any of its obligations under the Lease, and. such rejection shall
automatically render Tenant's election to exercise such option null and void and
of no effect (unless such default is cured within any applicable notice and cure
period).

      6. The options provided herein to extend the Term of the Lease may not be
severed from the Lease or separately sold, assigned or otherwise transferred.

      R3. Tenant Expansion Option. (a) Provided Tenant is not in default of its
obligations under this Lease beyond any applicable notice or cure period, and
provided Tenant has not assigned this Lease (except to an Affiliate) and is
itself ( or its Affiliate) in occupation and conducting business in the Demised
Premises in accordance with the terms of this Lease, Tenant expressly
acknowledging and agreeing that the rights contained herein are personal to the
original named Tenant, (and any Affiliate), and Landlord agrees, that Tenant
shall have the option (the "Option"), to be exercised by written notice to
Landlord at any time prior to December 31,2004, to lease approximately 10,000
square feet of additional Rentable Floor Area located on the second (2nd) floor
of the Building ("Option Premises") as may be designated by Landlord at the same
rental rate, and upon all of the other terms and conditions provided for in this
Lease (including, without limitation, the perfoffi1ance by Landlord of
Landlord's Work in the Option Premises, and an additional credit to Tenant in
the sum of $15.00 per square foot of such additional Rentable Floor Area for the
performance of Landlord's Work therein, subject to the terms of Section 5.03(ii)
hereof) and a proportionate increase in the parking (reserved and unreserved)
provided pursuant to and utilizing the same ratios as utilized in Section 7.02,
and Landlord shall deliver and Tenant shall execute a lease amendment confirming
the Option Premises shall be incorporated into the Demised Premises, in
accordance with the terms of this Paragraph R3. Time is of the essence with
respect to Tenant's exercise of the Option.

      (b) If Tenant shall fail to notify Landlord in writing of its election to
enter into a modification to the Lease incorporating the Option Premises, on or
before December 31, 2004, then the right granted to

                                       53
<PAGE>

the tenant as set forth in this Paragraph R3 shall automatically terminate.
Tenant agrees that it shall have waived its right to exercise such right if it
shall fail for any reason whatsoever to give such notice to Landlord by the time
provided herein for the giving of such notice, whether such failure is
inadvertent or intentional, time being of the essence as to the exercise of such
right.

      (c) If Tenant shall not elect to lease the Option Premises On or before
December 31, 2004, then, Landlord may thereafter enter into a lease for such
Option Premises (or any other space on the 2nd floor) free of the restrictions
herein stated.

      (d) This Option granted to Tenant shall be a one-time right and in any
event shall become null and void upon the earlier to occur of (i) 11:59pm
December 31, 2004 if not exercised, (ii) the termination of this Lease.

      R4. Base Year Gross-Up. If the Building is not a least ninety percent
(90%) occupied during the Base Year, the Operating Expenses for the Base Year
will be adjusted to reflect ninety percent (90%) occupancy of the Building.

                                             HARTZ MOUNTAIN INDUSTRIES, INC.
                                             ("Landlord")

                                         BY: /s/ Irwin A. Horowitz
                                             -----------------------------------
                                             Irwin A. Horowitz
                                             Executive Vice President

      [Corporate Seal]

                                             PHIBRO ANIMAL HEALTH
                                             CORPORATION
                                             ("Tenant")

                                             BY:    /s/ David C. Storbeck
                                                    ----------------------------
                                             Name:  David C. Storbeck
      [Corporate Seal]                       Title: VP Finance & Treasurer

                                       54

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.25
<SEQUENCE>10
<FILENAME>y04700exv10w25.txt
<DESCRIPTION>CONSULTING AGREEMENT
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.25

                              CONSULTING AGREEMENT

This Consulting Agreement ("Agreement") is made and effective this 1st day of
November 2004, by and between Lifebio Ltd. (Consultancy) and Phibro Animal
Health Corporation, One Parker Plaza, 14th Floor, Fort Lee, NJ 07024
("Company").

NOW, THEREFORE, Consultancy and Company agree as follows:

1. ENGAGEMENT. Company hereby engages the Consultancy for the services of David
G. McBeath (Consultant) and Consultancy accept the engagement, to provide to
Company the following services: Consultant shall provide advice and assistance
in connection with strategic and operational issues related to its global
business.

2. TERM. Consultant shall provide services to Company pursuant to this Agreement
for a term commencing as of January 1, 2005 and ending June 30, 2005 unless
earlier terminated in accordance with Section 10 herein. The term of this
Agreement may be extended by mutual agreement of the parties.

3. PLACE OF WORK. Consultant shall render services at Consultant's location or
at such other places as may be mutually agreed as appropriate for the
performance of particular services.

4. TIME. Consultant's daily schedule and hours worked under this Agreement on a
given day shall generally be subject to Consultant's discretion, provided that
Consultant and Company anticipate that Consultant shall work ten (10) days per
month from January 1, 2005 through June 30, 2005. The Consultant will not be
expected to work weekends nor to work in the United States more than 5 days per
month. When the Consultant is at his Ayr location, the company will contact him
between the hours of 2:00 PM and 6:00 PM Consultant's local time. Company relies
upon Consultant to devote sufficient time as is reasonably necessary to fulfill
the spirit and purpose of this Agreement. Consultant further agrees to be
available for meetings at such times and at such locations as the Company may
reasonably require.

5. PAYMENT. Company shall pay Consultancy One Thousand ((pound)1,000.00) GBP per
day for the period January 1, 2005 through June 30, 2005. Payments shall be made
via direct transfer on the last working day of the month into the account
specified by Consultancy. Consultant shall be reimbursed for all reasonable out
of pocket expenses and business class travel, evidenced by a written receipt,
incurred in connection with the performance of services under this Agreement.
The Company will provide Consultant an Amex Credit Card to be used for expenses
incurred in this assignment. Expenses otherwise incurred shall be invoiced
monthly with payment to be direct deposit to the account specified by
Consultancy.

6. INTELLECTUAL PROPERTY. Consultant hereby assigns any and all rights, title
and interest, including, but not limited to, patents, copyrights, trade secrets
and any and all proprietary rights to any inventions, processes, creations,
plans, programs, or any other material developed in the course of performance of
services pursuant to this Agreement. All work performed hereunder and any and
all materials, products, inventions, processes, creations, plans, programs or
any other material developed or produced in the course of performance of service
pursuant to this Agreement shall be the property of the Company and all title
and interest therein shall vest in the Company. All such materials which would
qualify for copyright protection under US copyright laws shall be deemed to be
"works made for hire" under such copyright laws. Both parties acknowledge and
agree, however, that Consultant shall retain the right to use its knowledge,
experience, expertise and know-how for other projects for other clients
notwithstanding the provisions of this Agreement. Consultant agrees to give the
Company such assistance, at the Company's expense, as may be required to perfect
any assignment of rights described in this Section 6.

7. PUBLICATIONS. Consultant agrees that any proposed publication written or
prepared by Consultant as part of Consultant's services under the Agreement or
that relates to the work performed hereunder must be reviewed and approved in
writing by the Company prior to submission for publication.

8. CONFIDENTIALITY. As part of the performance of services hereunder, the
Company may disclose to Consultant certain Confidential Information.
"Confidential Information" for the purposes of this Agreement shall include
Company's proprietary and confidential information such as, but not limited to,
customer lists, business plans, marketing plans, financial information, designs,
drawing, specifications, models, software, source codes and object codes.

During the term of this Agreement, and thereafter for a period of two (2) years,
Consultant shall not, except as provided herein, without the prior written
consent of Company, disclose to anyone any Confidential Information.

The Confidential Information will be kept confidential by Consultant and will
not be used in any way detrimental to Company. The Confidential Information will
not be used other than in connection with the services provided hereunder.

This Agreement will be inoperative as to such portions of the Confidential
Information which (i) are or become generally available to the public through no
fault or action by Consultant, (ii) are or become available to Consultant on a
nonconfidential basis from a source, other than Company, provided that such
source is not prohibited from disclosing such portions to Consultant by a
contractual, legal or fiduciary obligation to Company, (iii) was in possession
of Consultant prior to its disclosure hereunder, or (iv) has been or is
independently acquired or developed by Consultant without violating any of the
Consultant's obligations under this Agreement and without the use of any
Confidential Information.

<PAGE>

Company acknowledges that Consultant may have confidential information from
other persons or entities and Consultant shall not be required nor expected to
reveal or utilize such confidential information in the performance of the
services hereunder.

9. NON-COMPETE. During the term of this Agreement, Consultant shall not directly
or indirectly, either for his own account, or as a partner, shareholder,
officer, director, employee, agent or otherwise; own, manage, operate, control,
be employed by, participate in, consult with, perform services for, or otherwise
be connected with any Medicated Feed Additive business the same as or similar to
the business conducted by the Company.

10. TERMINATION. This Agreement may be terminated by either party, for any
reason, upon thirty (30) days written notice to the other party.

      A. This Agreement may be terminated by Company:

            i.    Without notice, if Consultant is unable to provide the
                  consulting services by reason of temporary or permanent
                  illness, disability, incapacity or death.

            ii.   Without notice upon breach or default of any obligation of
                  Consultant pursuant to Section 8, Confidentiality, or Section
                  9, Non-Compete, of this Agreement.

            iii.  Upon breach or default by Consultant of any other material
                  obligation in this Agreement, which breach or default is not
                  cured within five (5) days of written notice from Company.

      B. Consultancy may terminate this Agreement:

            i.    Upon breach or default of any material obligation of Company,
                  which breach or default is not cured within five (5) days of
                  written notice from Consultancy.

            ii.   Without notice, if Company files protection under the federal
                  bankruptcy laws, or any bankruptcy petition or petition for
                  receiver is commenced by a third party against Company, any of
                  the foregoing of which remains undismissed for a period of
                  sixty (60) days.

11. ASSIGNMENT. Neither party shall assign or delegate this Agreement or any
rights, duties or obligations hereunder to any other person and/or entity
without prior express written approval to the other. Subject to the foregoing,
this Agreement shall inure to the benefit of and be binding upon the successors,
legal representatives and assignees of the parties hereto.

12. INDEPENDENT CONTRACTOR. Consultant is and throughout this Agreement shall be
an independent contractor and not an employee, partner or agent of Company.
Consultant shall not be entitled to nor receive any benefit normally provided to
Company's employees such as, but not limited to, vacation payment, retirement,
health care or sick pay. Company shall not be responsible for withholding income
or other taxes from the payments made to Consultant. Consultant shall be solely
responsible for filing all returns and paying any income, social security or
other tax levied upon or determined with respect to the payments made to
Consultant pursuant to this Agreement.

13. TOOLS AND SUPPLIES. The Company will provide the Consultant a laptop
computer and US mobile telephone. Consultancy shall be solely responsible for
procuring, paying for and maintaining any other tools or supplies necessary or
appropriate for the performance of Consultant's services hereunder.

14. CHANGES. Consultancy agrees to promptly inform the Company of any event or
change in circumstances, which could reasonable affect Consultant's ability to
perform hereunder in the manner contemplated by the parties.

15. REPRESENTATIONS. Consultancy warrants and represents that it has the full
right and authority to enter into this Agreement and that Consultant has no
obligations or commitments inconsistent with this Agreement and/or its
performance hereunder relating to Non-Competition, Confidentiality or
Intellectual Property. Consultant acknowledges that no institution or employer
with which Consultant is or was associated places any restriction upon
Consultant's consulting activities, which would affect Consultant's performance
under this Agreement.

16 NON-DISPARAGEMENT. Consultancy and Consultant agree that Consultant will not
disparage or assist, encourage or induce others to disparage Company or any of
its subsidiaries or affiliated entities. For the purposes of this Agreement, the
term "disparage" includes, without limitation, comments or statements, whether
written or oral or whether in connection with any judicial or administrative
proceeding or not, which would adversely affect in any manner (i) the conduct of
the business of Company or its affiliated entities (including, without
limitation, any business plans or prospects) or (ii) the business reputation of
Company or its affiliated entities. Consultant agrees to use his best efforts to
prevent others with whom Consultant has a personal or professional relationship
from disparaging Company as well. This obligation shall also survive the
termination of this Agreement.

<PAGE>

17 CONTROLLING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey.

18. HEADINGS. The headings in this Agreement are inserted for convenience only
and shall not be used to define, limit or describe the scope of this Agreement
or any of the obligations herein.

19. FINAL AGREEMENT. This Agreement constitutes the final understanding and
agreement between the parties with respect to the subject matter hereof and
supersedes all prior negotiations, understandings and agreements between the
parties, whether written or oral. This Agreement may be amended, supplemented or
changed only by an agreement in writing signed by both of the parties.

20. NOTICES. Any notice required to be given or otherwise given pursuant to this
Agreement shall be in writing and shall be hand delivered, mailed by certified
mail, return receipt requested or sent by recognized overnight courier service
as follows:

      If to Consultancy:  Mr. David G. McBeath
                          Carwinshoch,
                          Carrick Hills,
                          Ayr KA7 4LD, Scotland

      If to Company:      Daniel A. Welch
                          Phibro Animal Health Corporation
                          One Parker Plaza, 14th Floor
                          Fort Lee, NJ 07024

21. CONFLICT. In the event of any conflict, ambiguity or inconsistency between
this Agreement and any other document which may be annexed hereto, the terms of
this Agreement shall govern.

22. SEVERABILITY. If any term of this Agreement is held by a court of competent
jurisdiction to be invalid or unenforceable, then this Agreement, including all
of the remaining terms, will remain in full force and effect as if such invalid
or unenforceable term had never been included.

23. SURVIVAL OF PROVISIONS. Section 6, Intellectual Property, Section 8,
Confidentiality and Section 16, Non-Disparagement shall survive termination of
this Agreement and remain in full force and affect.

IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the
date first above written.

Phibro Animal Health Corporation

By: /s/ Daniel A. Welch                              /s/ David G. McBeath
    ---------------------------------                ---------------------------
     Daniel A. Welch                                      David G. McBeath
     Senior Vice President, Human Resources

<PAGE>

                              CONSULTING AGREEMENT

This Consulting Agreement ("Agreement") is made and effective this 13th day of
December 2004, by and between Lifebio Ltd. (Consultancy) and Phibro Animal
Health Corporation, One Parker Plaza, 14th Floor, Fort Lee, NJ 07024
("Company").

NOW, THEREFORE, Consultancy and Company agree as follows:

1. ENGAGEMENT. Company hereby engages the Consultancy for the services of David
G. McBeath (Consultant) and Consultancy accept the engagement, to provide to
Company the following services: Consultant shall provide advice and assistance
in connection with strategic and operational issues related to its global
business.

2. TERM. Consultant shall provide services to Company pursuant to this Agreement
for a term commencing as of July 1, 2005 and ending December 31, 2005 unless
earlier terminated in accordance with Section 10 herein. The term of this
Agreement may be extended by mutual agreement of the parties.

3. PLACE OF WORK. Consultant shall render services at Consultant's location or
at such other places as may be mutually agreed as appropriate for the
performance of particular services.

4. TIME. Consultant's daily schedule and hours worked under this Agreement on a
given day shall generally be subject to Consultant's discretion, provided that
Consultant and Company anticipate that Consultant shall work five (5) days per
month from July 1, 2005 through December 31, 2005. The Consultant will not be
expected to work weekends nor to work in the United States more than 5 days per
month. When the Consultant is at his Ayr location, the company will contact him
between the hours of 2:00 PM and 6:00 PM Consultant's local time. Company relies
upon Consultant to devote sufficient time as is reasonably necessary to fulfill
the spirit and purpose of this Agreement. Consultant further agrees to be
available for meetings at such times and at such locations as the Company may
reasonably require.

5. PAYMENT. Company shall pay Consultancy One Thousand ((pound)1,100.00) GBP per
day for the period July 1, 2005 through December 31, 2005. Payments shall be
made via direct transfer on the last working day of the month into the account
specified by Consultancy. Consultant shall be reimbursed for all reasonable out
of pocket expenses and business class travel, evidenced by a written receipt,
incurred in connection with the performance of services under this Agreement.
The Company will provide Consultant an Amex Credit Card to be used for expenses
incurred in this assignment. Expenses otherwise incurred shall be invoiced
monthly with payment to be direct deposit to the account specified by
Consultancy. Upon satisfactory completion of the assignment, the Company shall
pay the Consultant a completion bonus of Fifteen Thousand ((pound)15,000) GBP.

6. INTELLECTUAL PROPERTY. Consultant hereby assigns any and all rights, title
and interest, including, but not limited to, patents, copyrights, trade secrets
and any and all proprietary rights to any inventions, processes, creations,
plans, programs, or any other material developed in the course of performance of
services pursuant to this Agreement. All work performed hereunder and any and
all materials, products, inventions, processes, creations, plans, programs or
any other material developed or produced in the course of performance of service
pursuant to this Agreement shall be the property of the Company and all title
and interest therein shall vest in the Company. All such materials which would
qualify for copyright protection under US copyright laws shall be deemed to be
"works made for hire" under such copyright laws. Both parties acknowledge and
agree, however, that Consultant shall retain the right to use its knowledge,
experience, expertise and know-how for other projects for other clients
notwithstanding the provisions of this Agreement. Consultant agrees to give the
Company such assistance, at the Company's expense, as may be required to perfect
any assignment of rights described in this Section 6.

7. PUBLICATIONS. Consultant agrees that any proposed publication written or
prepared by Consultant as part of Consultant's services under the Agreement or
that relates to the work performed hereunder must be reviewed and approved in
writing by the Company prior to submission for publication.

8. CONFIDENTIALITY. As part of the performance of services hereunder, the
Company may disclose to Consultant certain Confidential Information.
"Confidential Information" for the purposes of this Agreement shall include
Company's proprietary and confidential information such as, but not limited to,
customer lists, business plans, marketing plans, financial information, designs,
drawing, specifications, models, software, source codes and object codes.

During the term of this Agreement, and thereafter for a period of two (2) years,
Consultant shall not, except as provided herein, without the prior written
consent of Company, disclose to anyone any Confidential Information.

The Confidential Information will be kept confidential by Consultant and will
not be used in any way detrimental to Company. The Confidential Information will
not be used other than in connection with the services provided hereunder. This
Agreement will be inoperative as to such portions of the Confidential
Information which (i) are or become generally available to the public through no
fault or action by Consultant, (ii) are or become available to Consultant on a
nonconfidential basis from a source, other than Company, provided that such
source is not prohibited from disclosing such portions to Consultant by a
contractual, legal or fiduciary obligation to Company, (iii) was in possession
of Consultant prior to its disclosure hereunder, or (iv) has been or is
independently acquired or developed by Consultant without violating any of the
Consultant's obligations under this Agreement and without the use of any
Confidential Information.

<PAGE>

Company acknowledges that Consultant may have confidential information from
other persons or entities and Consultant shall not be required nor expected to
reveal or utilize such confidential information in the performance of the
services hereunder.

9. NON-COMPETE. During the term of this Agreement, Consultant shall not directly
or indirectly, either for his own account, or as a partner, shareholder,
officer, director, employee, agent or otherwise; own, manage, operate, control,
be employed by, participate in, consult with, perform services for, or otherwise
be connected with any Medicated Feed Additive business the same as or similar to
the business conducted by the Company.

10. TERMINATION. This Agreement may be terminated by either party, for any
reason, upon thirty (30) days written notice to the other party.

      A. This Agreement may be terminated by Company:

            i.    Without notice, if Consultant is unable to provide the
                  consulting services by reason of temporary or permanent
                  illness, disability, incapacity or death.

            ii.   Without notice upon breach or default of any obligation of
                  Consultant pursuant to Section 8, Confidentiality, or
                  Section 9, Non-Compete, of this Agreement.

            iii.  Upon breach or default by Consultant of any other material
                  obligation in this Agreement, which breach or default is not
                  cured within five (5) days of written notice from Company.

      B. Consultancy may terminate this Agreement:

            i.    Upon breach or default of any material obligation of Company,
                  which breach or default is not cured within five (5) days of
                  written notice from Consultancy.

            ii.   Without notice, if Company files protection under the federal
                  bankruptcy laws, or any bankruptcy petition or petition for
                  receiver is commenced by a third party against Company, any of
                  the foregoing of which remains undismissed for a period of
                  sixty (60) days.

11. ASSIGNMENT. Neither party shall assign or delegate this Agreement or any
rights, duties or obligations hereunder to any other person and/or entity
without prior express written approval to the other. Subject to the foregoing,
this Agreement shall inure to the benefit of and be binding upon the successors,
legal representatives and assignees of the parties hereto.

12. INDEPENDENT CONTRACTOR. Consultant is and throughout this Agreement shall be
an independent contractor and not an employee, partner or agent of Company.
Consultant shall not be entitled to nor receive any benefit normally provided to
Company's employees such as, but not limited to, vacation payment, retirement,
health care or sick pay. Company shall not be responsible for withholding income
or other taxes from the payments made to Consultant. Consultant shall be solely
responsible for filing all returns and paying any income, social security or
other tax levied upon or determined with respect to the payments made to
Consultant pursuant to this Agreement.

13. TOOLS AND SUPPLIES. The Company will provide the Consultant a laptop
computer and US mobile telephone. Consultancy shall be solely responsible for
procuring, paying for and maintaining any other tools or supplies necessary or
appropriate for the performance of Consultant's services hereunder.

14. CHANGES. Consultancy agrees to promptly inform the Company of any event or
change in circumstances, which could reasonable affect Consultant's ability to
perform hereunder in the manner contemplated by the parties.

15. REPRESENTATIONS. Consultancy warrants and represents that it has the full
right and authority to enter into this Agreement and that Consultant has no
obligations or commitments inconsistent with this Agreement and/or its
performance hereunder relating to Non-Competition, Confidentiality or
Intellectual Property. Consultant acknowledges that no institution or employer
with which Consultant is or was associated places any restriction upon
Consultant's consulting activities, which would affect Consultant's performance
under this Agreement.

16. NON-DISPARAGEMENT. Consultancy and Consultant agree that Consultant will not
disparage or assist, encourage or induce others to disparage Company or any of
its subsidiaries or affiliated entities. For the purposes of this Agreement, the
term "disparage" includes, without limitation, comments or statements, whether
written or oral or whether in connection with any judicial or administrative
proceeding or not, which would adversely affect in any manner (i) the conduct of
the business of Company or its affiliated entities (including, without
limitation, any business plans or prospects) or (ii) the business reputation of
Company or its affiliated entities. Consultant agrees to use his best efforts to
prevent others with whom Consultant has a personal or professional relationship
from disparaging Company as well. This obligation shall also survive the
termination of this Agreement.

17. CONTROLLING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey.

<PAGE>

18. HEADINGS. The headings in this Agreement are inserted for convenience only
and shall not be used to define, limit or describe the scope of this Agreement
or any of the obligations herein.

19. FINAL AGREEMENT. This Agreement constitutes the final understanding and
agreement between the parties with respect to the subject matter hereof and
supersedes all prior negotiations, understandings and agreements between the
parties, whether written or oral. This Agreement may be amended, supplemented or
changed only by an agreement in writing signed by both of the parties.

20. NOTICES. Any notice required to be given or otherwise given pursuant to this
Agreement shall be in writing and shall be hand delivered, mailed by certified
mail, return receipt requested or sent by recognized overnight courier service
as follows:

      If to Consultancy: Mr. David G. McBeath
                         Carwinshoch,
                         Carrick Hills,
                         Ayr KA7 4LD, Scotland

      If to Company:     Daniel A. Welch
                         Phibro Animal Health Corporation
                         One Parker Plaza, 14th Floor
                         Fort Lee, NJ 07024

21. CONFLICT. In the event of any conflict, ambiguity or inconsistency between
this Agreement and any other document which may be annexed hereto, the terms of
this Agreement shall govern.

22. SEVERABILITY. If any term of this Agreement is held by a court of competent
jurisdiction to be invalid or unenforceable, then this Agreement, including all
of the remaining terms, will remain in full force and effect as if such invalid
or unenforceable term had never been included.

23. SURVIVAL OF PROVISIONS. Section 6, Intellectual Property, Section 8,
Confidentiality and Section 16, Non-Disparagement shall survive termination of
this Agreement and remain in full force and affect.

IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the
date first above written.

Phibro Animal Health Corporation

By: /s/ Daniel A. Welch                              /s/ David G. McBeath
    --------------------------------                 ---------------------------
     Daniel A. Welch                                      David G. McBeath
     Senior Vice President, Human Resources

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>11
<FILENAME>y04700exv12.txt
<DESCRIPTION>COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TEXT>
<PAGE>

                                                                      Exhibit 12

                        PHIBRO ANIMAL HEALTH CORPORATION
                COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                                                  3 MONTHS ENDED
                                                                   FISCAL YEARS ENDED JUNE 30,                     SEPTEMBER 30,
                                                     -------------------------------------------------------   --------   --------
                                                       2000       2001        2002        2003        2004       2003       2004
                                                     --------   --------    --------    --------    --------   --------   --------
<S>                                                  <C>        <C>         <C>         <C>         <C>        <C>        <C>
Pre-tax income (loss) income from continuing
  operations before loss from equity investments     $  1,934   $ (9,563)   $(10,121)   $  7,960    $ 25,048   $  2,392   $    783
Interest capitalized net of amortization of
  capitalized interest                                      -          -        (263)        (73)          -          -          -

Fixed Charges:
Interest expensed and capitalized and
  amortization of deferred debt issuance cost          14,520     17,919      18,347      17,561      20,724      4,234      5,837
Interest portion of rental expense                        473        592         671         740         814        185        203
                                                     --------   --------    --------    --------    --------   --------   --------
Total fixed charges                                    14,993     18,511      19,018      18,301      21,538      4,419      6,040

Total earnings                                       $ 16,927   $  8,948    $  8,634    $ 26,188    $ 46,586   $  6,811   $  6,823

Ratio of earnings to fixed charges                        1.1          -           -         1.4         2.2        1.5        1.1

Deficiency in earnings available to
  cover fixed charges                                       -     (9,563)    (10,384)          -           -          -          -
</TABLE>


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>12
<FILENAME>y04700exv21.txt
<DESCRIPTION>LIST OF SUBSIDIARIES
<TEXT>
<PAGE>
                                                                               .
                                                                               .
                                                                               .

                                                                      Exhibit 21

                              LIST OF SUBSIDIARIES

<TABLE>
<S>                                                                    <C>
Subsidiaries of Phibro Animal Health Corporation                       Jurisdiction of Organization

C P Chemicals, Inc.                                                    New Jersey
Ferro Metal and Chemical Corporation Limited                           U.K.
Koffolk (1949), Ltd.                                                   Israel
Odda Holdings AS                                                       Norway
Prince Agriproducts, Inc.                                              Delaware
Western Magnesium Corp.                                                California
Phibro Chemicals, Inc.                                                 New York
Phibrochem, Inc.                                                       New Jersey
Phibro Animal Health Holdings, Inc.                                    Delaware
PMC Quincy, Inc.                                                       Illinois

Subisidiaries of Phibro Animal Health Holdings, Inc.                   Jurisdiction of Organization

Phibro Animal Health U.S., Inc.                                        Delaware
Philibro Animal Health de Argentina S.R.L.                             Argentina
Phibro Animal Health Pty Limited                                       Australia
Phibro Animal Health Ltd                                               Canada
Philipp Brothers Animal Health Holdings, Inc. Chile Limitada           Chile
Phibro Animal Health de Costa Rica Ltda                                Costa Rica
Phibro Corporation Limited                                             Hong Kong/China
Phibro Japan Company Limited                                           Japan
Phibro Corporation (M) Sdn Bhd                                         Malaysia
PB Animal Health de Mexico S. de R.L. de C.V.                          Mexico
Phibro Animal Health (Proprietary) Limited                             South Africa
Philibro Animal Health de Venezuela S.R.L.                             Venezuela
PAH Management Company Limited                                         U.K.
Philipp Brothers Netherlands I B.V.                                    The Netherlands

Subsidiaries of Philipp Brothers Netherlands I B.V.                    Jurisdiction of Organization

Philipp Brothers Netherlands II B.V.                                   The Netherlands

Subsidiaries of Philipp Brothers Netherlands II B.V.                   Jurisdiction of Organization

Philipp Brothers Netherlands III B.V.                                  The Netherlands
Phibro Saude Animal International Ltda.                                Brazil

Subsidiaries of Philipp Brothers Netherlands III B.V.                  Jurisdiction of Organization
Phibro Animal Health SA                                                Belgium

Subsidiaries of C P Chemicals, Inc.                                    Jurisdiction of Organization

Phibro-Tech, Inc.                                                      Delaware

Subsidiaries of Phibro-Tech, Inc.                                      Jurisdiction of Organization

LC Holding S.A.                                                        France
</TABLE>

<PAGE>

<TABLE>
<S>                                                                    <C>
Subsidiaries of LC Holding S.A.                                        Jurisdiction of Organization

La Cornubia SA*                                                        France

Subsidiaries of Koffolk (1949) Ltd.                                    Jurisdiction of Organization

Koffimex Ltd.                                                          Israel
Planalquimica Industrial Ltda.                                         Brazil
Wychem Limited                                                         U.K.
Agrozan, Ltd.                                                          Israel

Subsidiaries of Ferro Metal and Chemical Corporation Limited           Jurisdiction of Organization

D.G. Bennett Chemicals Limited                                         U.K
Ferro Metal and Chemical Company Limited                               U.K.

Subsidiaries of Odda Holdings AS                                       Jurisdiction of Organization

Odda Smelteverk AS                                                     Norway

*In bankruptcy
</TABLE>


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>13
<FILENAME>y04700exv23w1.txt
<DESCRIPTION>CONSENT OF PRICEWATERHOUSECOOPERS LLP
<TEXT>
<PAGE>

                                                                    Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------

We hereby consent to the inclusion in this Registration Statement on Form S-4 of
our report dated September 27, 2004, relating to the consolidated financial
statements of Phibro Animal Health Corporation, which appears in such
Registration Statement. We also consent to the inclusion of our reports dated
January 10, 2004 relating to the consolidated financial statements of Philipp
Brothers Netherlands I B.V. and the financial statements of Phibro Animal Health
SA (Belgium), which appear in such Registration Statement. We also consent to
the references to us under the headings "Experts" and "Summary Historical and
Unaudited Consolidated Financial Data" in such Registration Statement.

PricewaterhouseCoopers LLP

Florham Park, NJ
January 14, 2005

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-25.1
<SEQUENCE>14
<FILENAME>y04700exv25w1.txt
<DESCRIPTION>FORM T-1
<TEXT>
<PAGE>
                                                                  CONFORMED COPY

                                                                    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)

                       HSBC BANK USA, NATIONAL ASSOCIATION
               (Exact name of trustee as specified in its charter)

        New York                                       20-1177241
        (Jurisdiction of incorporation                 (I.R.S. Employer
        or organization if not a U.S.                  Identification No.)
        national bank)

        452 Fifth Avenue, New York, NY                 10018-2706
        (212) 525-5600                                 (Zip Code)
        (Address of principal executive offices)

                             Warren L. Tischler, SVP
                                  HSBC Bank USA
                                452 Fifth Avenue
                          New York, New York 10018-2706
                               Tel: (212) 525-1311
            (Name, address and telephone number of agent for service)

                        PHIBRO ANIMAL HEALTH CORPORATION.

                      PHILLIP BROTHERS NETHERLANDS III B.V.

               (Exact name of obligor as specified in its charter)

        New York                                       13-1840497
        (State or other jurisdiction                   (I.R.S. Employer
        of incorporation or organization)              Identification No.)

        One Parker Plaza
        Fort Lee, New Jersey                           07024
        (Address of principal executive offices)       (Zip Code)



<PAGE>

                      PHILIPP BROTHERS NETHERLANDS III B.V.

        The Netherlands                                Not Applicable
        (State or other jurisdiction                   (I.R.S. Employer
        of incorporation or organization)              Identification No.)

        Rokin 55
        1012 KK Amsterdam
        The Netherlands
        (201) 944 -6020                                Not Applicable
        (Address of principal executive offices)       (Zip Code)


                        13% Senior secured Units due 2007
                         (Title of Indenture Securities)

<PAGE>

                                     General

Item 1. General Information.

            Furnish the following information as to the trustee:

      (a) Name and address of each examining or supervisory authority to which
      it is subject.

            Comptroller of the Currency, New York, NY.

            Federal Deposit Insurance Corporation, Washington, D.C.

            Board of Governors of the Federal Reserve System, Washington, D.C.

      (b) Whether it is authorized to exercise corporate trust powers.

                  Yes.

Item 2. Affiliations with Obligor.

            If the obligor is an affiliate of the trustee, describe each such
            affiliation.

                  None

Item 3-15. Not Applicable


<PAGE>

Item 16. List of Exhibits

<TABLE>
<CAPTION>
Exhibit
- -------
<S>                    <C>
T1A(i)                 (1) Copy of the Articles of Association of HSBC Bank USA,
                           National Association.

T1A(ii)                (1) Certificate of the Comptroller of the Currency dated
                           July 1, 2004 as to the authority of HSBC Bank USA,
                           National Association to commence business.

T1A(iii)                   Certificate of Fiduciary Powers dated August 18, 2004
                           for HSBC Bank USA, National Association

T1A(iv)                (1) Copy of the existing By-Laws of HSBC Bank USA,
                           National Association.

T1A(v)                     Not applicable.

T1A(vi)                    Consent of HSBC Bank USA, National
                       (2) Association required by Section 321(b) of the Trust
                           Indenture Act of 1939.

T1A(vii)                   Copy of the latest report of condition of the trustee
                           (September 30, 2004), published pursuant to law or
                           the requirement of its supervisory or examining
                           authority.

T1A(viii)                  Not applicable.

T1A(ix)                    Not applicable.
</TABLE>

(1)   Exhibits previously filed with the Securities and Exchange Commission
      with Registration No. 333-118523 and incorporated herein by reference
      thereto.

(2)   Exhibits previously filed with the Securities and Exchange Commission
      with Registration No. 333-113911 and incorporated herein by reference
      thereto.


<PAGE>

                                    SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
HSBC Bank USA, National Association a national banking association organized and
existing under the laws of the United States of America, 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 13th day of January, 2005.

                                        HSBC BANK USA, NATIONAL
                                        ASSOCIATION

                                        By:   /s/  Herawattee Alli
                                            ------------------------------------
                                                   Herawattee Alli
                                               Assistant Vice President


<PAGE>

                                                               EXHIBIT T1A (VII)

                                       Board of Governors of the Federal
                                       Reserve System
                                       OMB Number: 7100-0036
                                       Federal Deposit Insurance Corporation
                                       OMB Number: 3064-0052
                                       Office of the Comptroller of the Currency
                                       OMB Number: 1557-0081

FEDERAL FINANCIAL INSTITUTIONS
EXAMINATION COUNCIL                    Expires March 31, 2007

                                       Please refer to page i, Table of        1
                                       Contents, for the required
                                       disclosure of estimated burden.


CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES -- FFIEC 031


REPORT AT THE CLOSE OF BUSINESS SEPTEMBER 30, 2004      (20040630)
                                                      -------------
                                                       (RCRI  9999)


This report is required by law; 12            This report form is to be filed by
U.S.C. Section 324 (State member banks);      banks with branches and
12 U.S.C. Section 1817 (State nonmember       consolidated subsidiaries in U.S.
banks); and 12 U.S.C. Section 161             territories and possessions, Edge
(National banks).                             or Agreement subsidiaries, foreign
                                              branches, consolidated foreign
                                              subsidiaries, or International
                                              Banking Facilities.


NOTE: The Reports of Condition and            The Reports of Condition and
Income must be signed by an authorized        Income are to be prepared in
officer and the Report of Condition must      accordance with Federal regulatory
be attested to by not less than two           authority instructions.
directors (trustees) for State nonmember
banks and three directors for State           We, the undersigned directors
member and National Banks.                    (trustees), attest to the
                                              correctness of this Report of
                                              Condition (including the
I,  Joseph R. Simpson, Controller             supporting schedules) and declare
   ------------------------------             that it has been examined by us
  Name and Title of Officer Authorized        and to the best of our knowledge
           to Sign Report                     and belief has been prepared in
                                              conformance with the instructions
                                              issued by the appropriate Federal
                                              regulatory authority and is true
                                              and correct.


Of the named bank do hereby declare that
these Reports of Condition and Income            /s/ Sal H. Alfieri
(including the supporting schedules)           ---------------------------------
have been prepared in conformance with         Director (Trustee)
the instructions issued by the
appropriate Federal regulatory authority         /s/ Bernard J. Kennedy
and are true to the best of my knowledge       ---------------------------------
and believe.                                   Director (Trustee)


   /s/ Joseph R. Simpson                         /s/ Martin Glynn
- ---------------------------------------        ---------------------------------
Signature of Officer Authorized                Director (Trustee)
to Sign Report

         11/9/04
- ---------------------------------------
Date of Signature

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

SUBMISSION OF REPORTS

Each Bank must prepare its Reports of       For electronic filing assistance,
Condition and Income either:                contact EDS Call report Services,
                                            2150 N. Prospect Ave.,Milwaukee, WI
                                            53202, telephone (800) 255-1571.

(a)   in electronic form and then file      To fulfill the signature and
      the computer data file directly       attestation requirement for the
      with the banking agencies'            Reports of Condition and Income
      collection agent, Electronic Data     for this report date, attach this
      System Corporation (EDS), by modem    signature page to the hard-copy f
      or computer diskette; or              the completed report that the bank
                                            places in its files.

b)    in hard-copy (paper) form and
      arrange for another party to
      convert the paper report to
      automated for. That party (if
      other than EDS) must transmit the
      bank's computer data file to EDS.


FDIC Certificate Number     5 7 8 9 0

                            (RCRI 9030)

<TABLE>
<S>                                          <C>
http://WWW.BANKING.US.HSBC.COM               HSBC Bank USA, NATIONAL ASSOCIATION
                                             Legal Title of Bank (TEXT 9010)
 Primary Internet Web Address of Bank
 (Home Page), if any (TEXT 4087)             Wilmington
                                             -----------------------------------
 (Example:  www.examplebank.com)             City (TEXT 9130)

                                             DE                                    19801
                                             ---------------------------------------------------
                                             State Abbrev. (TEXT 9200)       ZIP Code (TEXT 9220)
</TABLE>
<PAGE>
   Board of Governors of the Federal Reserve System, Federal Deposit Insurance
             Corporation, Office of the Comptroller of the Currency

                                   REPORT OF CONDITION

Consolidated domestic subsidiaries

HSBC Bank USA, National Association                 of  Buffalo
- ----------------------------------------------------------------
  Name of Bank                                      City

in the state of New York, at the close of business September 30, 2004

<TABLE>
<CAPTION>
                                                                                           Thousands of dollars
<S>                                                                           <C>          <C>
ASSETS


Cash and balances due from depository institutions:

a.  Non-interest-bearing balances currency and coin                                           $  3,454,959
b.  Interest-bearing balances                                                                    2,076,244
   Held-to-maturity securities                                                                   3,741,506
   Available-for-sale securities                                                                14,349,537
   Federal funds sold and securities purchased under agreements to resell:

a. Federal funds sold in domestic offices                                                        1,150,000
b. Securities purchased under agreements to resell                                               5,038,148
                                                                                              ------------

Loans and lease financing receivables:

   Loans and leases held for sale                                                             $  1,320,163
                                                                                              ------------
   Loans and leases net of unearned income                                    $65,438,311
                                                                              -----------
   LESS: Allowance for loan and lease losses                                      339,332
                                                                              -----------
   Loans and lease, net of unearned income, allowance, and reserve                            $ 65,098,979
   Trading assets                                                                               15,031,627
   Premises and fixed assets                                                                       602,577
Other real estate owned                                                                             11,347
Investments in unconsolidated subsidiaries                                                         270,750
Customers' liability to this bank on acceptances outstanding                                        86,959
Intangible assets: Goodwill                                                                      2,094,740
Intangible assets: Other intangible assets                                                         378,843
Other assets                                                                                     3,748,120
Total assets                                                                                   118,454,499
                                                                                              ------------

LIABILITIES

Deposits:

   In domestic offices                                                                          52,730,085
                                                                                              ------------
   Non-interest-bearing                                                         7,637,394
                                                                              -----------
   Interest-bearing                                                            45,092,691
                                                                              -----------
In foreign offices                                                                              23,319,518
                                                                                              ------------
</TABLE>
<PAGE>
<TABLE>
<S>                                                                           <C>             <C>
   Non-interest-bearing                                                           340,118
   Interest-bearing                                                            22,979,400
                                                                              -----------
Federal funds purchased and securities sold under
agreements to repurchase:

 a. Federal funds purchased in domestic offices                                                    267,105
 b. Securities sold under agreements to repurchase                                               1,292,039

Trading Liabilities                                                                             10,368,929
Other borrowed money                                                                            15,443,222
Bank's liability on acceptances                                                                     86,959
Subordinated notes and debentures                                                                2,542,854
Other liabilities                                                                                3,260,926
                                                                                              ------------
Total liabilities                                                                              109,311,637
                                                                                              ------------
Minority Interests in consolidated Subsidiaries                                                        331
                                                                                              ------------
EQUITY CAPITAL

Perpetual preferred stock and related surplus                                                            0
Common Stock                                                                                         2,000
Surplus                                                                                          7,622,743
Retained earnings                                                                                1,560,994
Accumulated other comprehensive income                                                             -43,206

Other equity capital components                                                                          0

Total equity capital                                                                             9,142,531

Total liabilities, minority interests and equity capital                                       118,454,499
                                                                                              ------------
</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>15
<FILENAME>filename15.txt
<TEXT>
<PAGE>
                                                  January 14, 2005


Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C.  20549

                       Registration Statement on Form S-4
            of Phibro Animal Health Corporation and its Subsidiaries
          and Philipp Brothers Netherlands III B.V. and its Subsidiary
          ------------------------------------------------------------

Ladies and Gentlemen:

     Phibro Animal Health Corporation, a New York corporation ("PAHC"), and
Philipp Brothers Netherlands III B.V., a company organized under the laws of The
Netherlands ("PB III" and, together with PAHC, the "Company"), and certain of
PAHC's domestic subsidiaries (comprising C P Chemicals, Inc., a New Jersey
corporation, Phibro Chemicals, Inc., a New York corporation, Phibrochem, Inc., a
New Jersey corporation, Phibro-Tech, Inc., a Delaware corporation, Prince
Agriproducts, Inc., a Delaware corporation, Phibro Animal Health Holdings, Inc.,
a Delaware corporation, Phibro Animal Health U.S., Inc., a Delaware corporation,
and Western Magnesium Corp., a California corporation) and PB III's subsidiary,
Phibro Animal Health SA, a company organized under the laws of Belgium, are
herewith filing through the EDGAR system a Registration Statement on Form S-4,
together with exhibits, in connection with the Company's offer to exchange (the
"Exchange Offer") 127,491 Units consisting of $103,207,000 aggregate principal
amount of 13% Senior Secured Notes due 2007 of PAHC and $24,284,000 aggregate
principal amount of 13% Senior Secured Notes due 2007 of PB III, which Units are
being registered under the Securities Act of 1933, as amended, pursuant to such
Registration Statement, for 127,491 unregistered Units consisting of
$103,207,000 aggregate principal amount of 13% Senior Secured Notes due 2007 of
PAHC and $24,284,000 aggregate principal amount of 13% Senior Secured Notes due
2007 of PB III issued October 21, 2003 and December 21, 2004 under the same
Indenture.

                  The registration fee (the "Fee") for the Units is $15,006. The
Company previously wired $13,303.50, of such Fee to SEC's lock-box facility at
Mellon Bank, Pittsburgh, Pennsylvania, in connection with its Form S-4, SEC File
No. 333-112942, filed on February 18, 2004, which was withdrawn before being
declared effective. No securities were issued pursuant to such registration
statement. The remaining $1,703 of the Fee is being wired by the Company
concurrently herewith, to the SEC's lock-box facility.
<PAGE>
Securities and Exchange Commission
January 14, 2005
Page 2


     We hereby request that, to the extent possible, the Staff review the
Registration Statement on a priority basis or otherwise expedite the review
process.

     Please contact me (212-907-7370) or Richard Kaplan of this firm
(212-907-7376) with any questions or comments relating to the Registration
Statement or the Exchange Offer.


                                    Very truly yours,


                                    /s/ Lawrence M. Bell
                                    ---------------------


cc:   Phibro Animal Health Corporation
      Philipp Brothers Netherlands III B.V.
      Richard Kaplan, Esq.

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
