WARNER CHILCOTT PLC
10-Q, 1998-08-14
PHARMACEUTICAL PREPARATIONS
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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

            [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 1998

                                       OR

           [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

             For the transition period from _________ to __________

                       Commission file number: 005-52501

                     WARNER CHILCOTT PUBLIC LIMITED COMPANY
             (Exact name of registrant as specified in its charter)

                    Ireland                                  N/A
(State or other jurisdiction of incorporation          (I.R.S. Employer
                or organization)                      Identification No.)

                 Lincoln House, Lincoln Place, Dublin 2, Ireland
                    (Address of principal executive offices)

                                 353 1 662-4962
              (Registrant's telephone number, including area code)

      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

American Depositary Shares, representing Ordinary Shares, par value $.05 each;
Ordinary Shares, par value $.05 each; 12,366,808 Ordinary Shares outstanding at
June 30, 1998.


<PAGE>

                     WARNER CHILCOTT PUBLIC LIMITED COMPANY
                                Table of contents

                                                                        PAGE NO.

Part I - Financial Information

Item 1. Financial Statements (unaudited)

        Consolidated Balance Sheets as of June 30, 1998 and
            December 31, 1997                                               2-3

        Consolidated Statements of Operations for the Three Months
            and Six Months Ended June 30, 1998 and 1997                       4

        Consolidated Statements of Cash Flows for the Six Months
            Ended June 30, 1998 and 1997                                      5

        Notes to the Unaudited Consolidated Financial Statements            6-7

Item 2. Management's Discussion and Analysis of Financial Condition
            And Results of Operations                                       8-13

Item 3. Quantitative and Qualitative Disclosures About Market Risk           13

Part II - Other Information

Item 1. Legal Proceedings                                                    14

Item 4. Submission of Matters to a Vote of Security Holders                  14

Item 5. Other Information                                                  14-15

Item 6. Exhibits and Reports on Form 8-K                                   15-16

Signatures                                                                   17

<PAGE>

Part I - Financial Information

Item 1. Financial Statements

                     WARNER CHILCOTT PUBLIC LIMITED COMPANY
      Consolidated Balance Sheets as of June 30, 1998 and December 31, 1997
                                     Assets
                         (in thousands of U.S. dollars)

                                   (UNAUDITED)

                                                        June 30,    December 31,
                                                          1998          1997
                                                        --------      --------
ASSETS
  Current Assets:
    Cash and cash equivalents                           $ 47,215      $ 52,786
    Accounts receivable                                   12,385        14,599
    Inventories                                           17,818        16,175
    Prepaid expense and other assets                       7,183         7,399
                                                        --------      --------
      Total current assets                                84,601        90,959
                                                        --------      --------
    Fixed Assets:
      Property, plant and equipment (net)                  1,103         1,148
    Other Assets:
      Intangible assets                                   76,942        79,630
                                                        --------      --------
         Total assets                                   $162,646      $171,737
                                                        ========      ========


 See notes to unaudited consolidated financial statements.


                                        2

<PAGE>

                     WARNER CHILCOTT PUBLIC LIMITED COMPANY
      Consolidated Balance Sheets as of June 30, 1998 and December 31, 1997
                      Liabilities and Shareholders' Equity
                         (in thousands of U.S. dollars)

                                   (UNAUDITED)

                                                         June 30,   December 31,
                                                           1998         1997
                                                        ---------    ---------

LIABILITIES
  Current Liabilities:
    Short-term debt                                     $  19,712    $  14,511
    Accounts payable                                       13,735       11,417
    Accrued liabilities                                     4,532        7,994
    Due to Elan Corporation, plc and subsidiaries           5,583        5,267
                                                        ---------    ---------
      Total current liabilities                            43,562       39,189
                                                        ---------    ---------
  Other Liabilities:
    Long-term debt                                          8,466        7,902
                                                        ---------    ---------
      Total liabilities                                    52,028       47,091
                                                        ---------    ---------
SHAREHOLDERS' EQUITY
  Ordinary Shares, par value $.05 per share;
    50,000,000 shares authorized, 12,366,808 shares
    issued and outstanding at June 30, 1998 and
    December 31, 1997                                         618          618
  Deferred Shares, par value IR(pound)1 per share;
    30,000 shares authorized, 30,000 shares issued
    and outstanding at June 30, 1998 and
    December 31, 1997                                          45           45
  Additional paid-in capital                              208,962      208,962
  Shareholders' accumulated deficit:
    Accumulated deficit, beginning of period              (83,281)     (54,907)
    Current period loss                                   (14,337)     (28,374)
                                                        ---------    ---------
      Accumulated deficit, end of period                  (97,618)     (83,281)
                                                        ---------    ---------
    Deferred compensation                                  (1,389)      (1,698)
                                                        ---------    ---------
      Total shareholders' equity                          110,618      124,646
                                                        ---------    ---------
        Total liabilities and shareholders' equity      $ 162,646    $ 171,737
                                                        =========    =========

 See notes to unaudited consolidated financial statements.


                                        3

<PAGE>

                     WARNER CHILCOTT PUBLIC LIMITED COMPANY
               Consolidated Statements of Operations for the Three
                  and Six Months Ended June 30, 1998 and 1997
              (in thousands of U.S. dollars, except per share data)

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                              Three Months Ended June 30,   Six Months Ended June 30,
                                               -------------------------    ------------------------- 
                                                   1998          1997           1998          1997
                                               -----------    ----------    -----------    ---------- 
<S>                                            <C>            <C>           <C>            <C>       
REVENUES
   Branded product sales                       $     4,416    $    4,193    $     7,745    $    4,193
   Generic product sales                             8,022        16,421         18,560        35,456
                                               -----------    ----------    -----------    ---------- 
     Total revenues                                 12,438        20,614         26,305        39,649
                                               -----------    ----------    -----------    ---------- 
COSTS AND EXPENSES
   Cost of goods sold                                7,819        16,851         18,200        33,286
   Selling, general and administrative               9,393         3,962         18,119         7,215
   Depreciation and amortization                     1,404         1,598          2,808         2,650
   Research and development                            721         1,270          1,558         4,571
                                               -----------    ----------    -----------    ---------- 
     Total costs and expenses                       19,337        23,681         40,685        47,722
                                               -----------    ----------    -----------    ---------- 

OPERATING LOSS                                      (6,899)       (3,067)       (14,380)       (8,073)
                                               -----------    ----------    -----------    ---------- 

Interest income                                        679            30          1,405            64
Interest expense                                      (722)       (2,523)        (1,362)       (4,972)
                                               -----------    ----------    -----------    ---------- 
LOSS BEFORE INCOME TAXES                            (6,942)       (5,560)       (14,337)      (12,981)
                                               -----------    ----------    -----------    ---------- 

Income taxes                                          --            --             --            --
                                               -----------    ----------    -----------    ---------- 
NET LOSS                                       $    (6,942)   $   (5,560)   $   (14,337)   $  (12,981)
                                               ===========    ==========    ===========    ========== 

Net loss per ordinary share                    $     (0.56)   $    (0.97)   $     (1.16)   $    (2.48)
                                               -----------    ----------    -----------    ---------- 

Weighted average ordinary shares outstanding    12,366,808     5,706,978     12,366,808     5,235,771
                                               ===========    ==========    ===========    ========== 
</TABLE>

See notes to unaudited consolidated financial statements.


                                        4

<PAGE>

                     WARNER CHILCOTT PUBLIC LIMITED COMPANY
            Consolidated Statements of Cash Flows for the Six Months
                          Ended June 30, 1998 and 1997
                         (in thousands of U.S. dollars)

                                   (UNAUDITED)

                                                       Six Months Ended June 30,
                                                           1998          1997
                                                         --------      --------
CASH FLOWS FROM OPERATING ACTIVITIES:                               
  Net loss                                               $(14,337)     $(12,981)
  Adjustments to reconcile net loss to net cash                     
  provided by operating activities                                  
    Depreciation and amortization                           2,808         2,650
    Accretion of loan discount                                564         3,934
    Stock compensation expense                                309           464
    Loss on sale of fixed assets                             --              98
    Changes in assets and liabilities:                              
      Decrease (increase) in accounts receivable and                
       prepaid expense                                      2,430        (1,459)
      (Increase) decrease in inventories                   (1,643)        4,157
      (Decrease) increase in accounts payable and                   
       accrued liabilities                                   (828)       18,444
                                                         --------      --------
        Net cash (used) provided by operating activities  (10,697)       15,307
                                                         --------      --------
                                                                    
CASH FLOWS (USED IN) PROVIDED BY INVESTING ACTIVITIES:              
  Purchase of tangible fixed assets                           (75)         (454)
  Purchase of intangible fixed assets                        --         (12,225)
  Sale of tangible fixed assets                              --           1,168
                                                         --------      --------
    Net cash used in investing activities                     (75)      (11,511)
                                                         --------      --------
                                                                    
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:              
  Working capital facility proceeds (repayment)             5,201        (3,006)
                                                         --------      --------
    Net cash provided by (used in) financing activities     5,201        (3,006)
                                                         --------      --------
                                                                    
Net (decrease) increase in cash and cash equivalents       (5,571)          790
  Cash and cash equivalents, beginning of period           52,786         2,663
                                                         --------      --------
  Cash and cash equivalents, end of period               $ 47,215      $  3,453
                                                         --------      --------
                                                                  
 See notes to unaudited consolidated financial statements.


                                        5

<PAGE>

                     WARNER CHILCOTT PUBLIC LIMITED COMPANY
            Notes to the Unaudited Consolidated Financial Statements
                                  June 30, 1998

NOTE 1: BASIS OF PRESENTATION

The unaudited  financial  statements included herein have been prepared pursuant
to the rules and  regulations  of the  Securities  and Exchange  Commission  for
reporting on Form 10-Q.  Certain  information and footnote  disclosure  normally
included in the  financial  statements  prepared in  accordance  with  generally
accepted  accounting  principles have been condensed or omitted pursuant to such
rules and  regulations.  The statements  should be read in conjunction  with the
accounting policies and notes to consolidated  financial  statements included in
Warner  Chilcott Public Limited  Company's (the "Company" or "Warner  Chilcott")
1997 Annual Report on Form 20-F.

The  Company is an Irish  public  limited  company  with  operations  in Dublin,
Ireland and Rockaway,  NJ, USA. The Company's  financial  statements include the
financial  statements for Warner  Chilcott,  plc and all of its subsidiaries and
are prepared in U.S. dollars in conformity with United States generally accepted
accounting principles.

In the opinion of management,  the financial  statements reflect all adjustments
necessary  for a fair  statement  of the  operations  for  the  interim  periods
presented.

NOTE 2: INVENTORIES

Inventories  are  valued  at the  lower of cost or  market.  Cost is  determined
principally on the basis of first-in,  first-out or standards  that  approximate
average cost.

                                           June 30, 1998       December 31, 1997
                                           -------------       -----------------
                                              (in thousands of U.S. dollars)

     Raw materials                            $  2,960              $  3,687
     Finishing supplies                           --                       7
     Work in process                               979                   492
     Finished goods                             14,941                12,460
                                              --------              --------
                                                18,880                16,646
                                                                 
     Less:  Reserve for obsolescence             1,062                   471
                                              --------              --------
          Inventories                         $ 17,818              $ 16,175
                                              ========              ========

NOTE 3: EARNINGS PER SHARE                                       
                                                                 
The  Company  adopted the  provisions  of SFAS No.  128,  Earnings  Per Share on
December 31, 1997. This statement  requires that all prior-period net income per
ordinary share  calculations  be restated to conform with the provisions of this
Statement. Basic net income per ordinary share has been computed by dividing net
income  available to ordinary  shareholders  by the weighted  average  number of
ordinary shares outstanding  during the period.  Diluted net income per ordinary
share is computed by adjusting the weighted  average  number of ordinary  shares


                                       6
<PAGE>

outstanding  during the  period for all  potentially  dilutive  ordinary  shares
outstanding during the period and adjusting net income for any changes in income
or loss that would result from the conversion of such potential ordinary shares.
The per share  amount for the six months  ended June 30, 1997 was  retroactively
restated to give effect to SFAS No. 128.  Net loss and weighted  average  shares
outstanding used for computing diluted loss per share were the same as that used
for  computing  basic loss per share for the three and six months ended June 30,
1998 and  1997.  Stock  options  and  warrants  have not  been  included  in the
calculation since the inclusion of such shares would be antidilutive.

NOTE 4: COMPREHENSIVE INCOME

In June 1997, the Financial  Accounting  Standards Board (FASB) issued Statement
of  Financial  Accounting  Standards  (SFAS) No. 130,  "Reporting  Comprehensive
Income."  Comprehensive  income is defined as the total change in  shareholders'
equity during the period other than from transactions with shareholders. For the
Company, comprehensive income is comprised solely of net income (loss).

NOTE 5: CONTINGENCIES

The Company is  involved in various  legal  proceedings  of a nature  considered
normal to its business including patent litigation,  product liability and other
matters.  In the event of the adverse  outcome of these  proceedings,  resulting
liabilities  are either  covered by insurance,  established  reserves or, in the
opinion of management, would not have a material adverse effect on the financial
condition or results of operations of the Company.

NOTE 6: UNITED STATES FEDERAL INCOME TAXES

The Company  operates in Ireland and the United States and is subject to various
taxes on income in both  jurisdictions.  Warner  Chilcott's  wholly owned United
States subsidiary, Warner Chilcott, Inc., is a United States corporation and, as
such, is subject to United States taxation. The Company expects that some or all
of  the  net  operating  loss  carryforward  which  Warner  Chilcott,  Inc.  has
accumulated could be used to offset future taxable earnings.


                                       7
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

This report contains  forward-looking  statements  within the meaning of Section
21E of the Securities  Exchange Act of 1934, as amended,  and Section 27A of the
Securities Act of 1933, as amended,  and is subject to the safe harbors  created
by those sections.  These forward-looking  statements are subject to significant
risks and uncertainties,  including those identified in the section of this Form
10-Q  entitled  "Factors  That May  Affect  Future  Operating  Results",  in the
Company's 1997 Annual Report on Form 20-F filed with the Securities and Exchange
Commission on May 15, 1998 and in the Company's Final Prospectus for its initial
public  offering filed with the Securities and Exchange  Commission on August 8,
1997,  which may cause actual results to differ  materially from those discussed
in such forward-looking  statements.  The forward-looking statements within this
Form 10-Q are identified by words such as "believes", "anticipates",  "expects",
"intends", "may", "will" and other similar expressions. However theses words are
not the  exclusive  means of  identifying  such  statements.  In  addition,  any
statements that refer to expectations, projections or other characterizations of
future  events or  circumstances  are  forward-looking  statements.  The Company
undertakes  no  obligation  to release  publicly the results of any revisions to
these  forward-looking  statements  that  may  be  made  to  reflect  events  or
circumstances  occurring  subsequent  to the  filing  of this Form 10-Q with the
Securities  and  Exchange  Commission.  Readers are urged to review and consider
carefully the various  disclosures made by the Company in this report and in the
Company's  other reports filed with the Securities and Exchange  Commission that
attempt to advise  interested  parties of the risks and factors  that may affect
the Company's business.

Set forth below is the  discussion  of the  financial  condition  and results of
operations of the Company for the three and six months ended June 30, 1998. This
discussion  should  be read  in  conjunction  with  the  consolidated  unaudited
financial statements and the related notes, appearing in Item 1.

OVERVIEW

Warner Chilcott is engaged in the development,  marketing, sale and distribution
of  prescription  pharmaceutical  products in the United  States.  The Company's
current  focus is on branded  products  targeted for three  specialty  segments:
dermatology,  cardiology,  and women's health care. All of the Company's branded
products are promoted by the Company's  specialty sales force. Warner Chilcott's
current  portfolio of branded products includes  Vectrin(R),  an antibiotic used
most frequently for the treatment of acne, LoCholest(TM),  a lipid regulator for
the reduction of LDL cholesterol  levels,  and  NataFort(R),  a prenatal vitamin
designed to improve patient compliance by virtue of its smaller size relative to
competing  products.  Warner  Chilcott plans to add  additional  products to its
portfolio  of  branded  products  through  internal  development,   acquisition,
in-licensing,  collaboration  with other companies and co-promotion  agreements.
Warner  Chilcott  is also  pursuing  approval  of a number  of  complex  generic
pharmaceutical products.

HISTORY

The  Company  is an  Irish  public  limited  company  founded  in  1992  as Nale
Laboratories  Limited.  In March 1996 Nale acquired  certain  assets and assumed
certain  liabilities  (the  "Acquisition")  of Warner Chilcott  Laboratories,  a
division of Warner-Lambert  Company (the  "Division").  From 1987 to the date of
the  Acquisition,  the Division  engaged in the sale and distribution of generic


                                       8
<PAGE>

products for Warner-Lambert Company. Following the Acquisition, Nale changed its
name to Warner Chilcott Public Limited Company.

The  principal  purpose of the  Acquisition  was to  provide  the  Company  with
channels of distribution in the United States.  In addition,  the Company gained
an  established  reputation  in the  pharmaceutical  industry,  a  portfolio  of
existing products, and a functioning  organization.  The Company's customer base
includes all major national  wholesalers  and pharmacy  chains.  In addition,  a
telemarketing  organization  covers  almost 5,000  independent  pharmacies.  The
certain assets and  liabilities of the Division  acquired in the Acquisition are
now  organized in the United  States as Warner  Chilcott,  Inc., a  wholly-owned
subsidiary  of  Warner  Chilcott  Public  Limited  Company.   The  cost  of  the
Acquisition,  approximately  $145  million,  was  financed  through  the private
placement of senior subordinated debt and equity securities,  borrowings under a
working capital facility and cash on hand. Subsequently, 87% of the subordinated
notes were converted into ordinary shares.

The Company's revenues are currently generated in the United States and the U.S.
dollar is the  functional  currency of the Company.  Accordingly  the  Company's
exposure to currency  fluctuation is limited.  Product sourcing from vendors and
research and development  agreements are normally contracted in U.S. dollars. As
a company  operating in multiple  jurisdictions,  the Company will be subject to
taxation on its earnings in the jurisdictions in which it operates.  At present,
such jurisdictions include Ireland and the United States.

RESULTS OF OPERATIONS

Six Months Ended June 30, 1998 and 1997

Total  revenue for the six months  ended June 30, 1998  declined  33.7% to $26.3
million  from $39.6  million for the same period in 1997.  Branded  sales in the
period  increased  84.7% to $7.7  million  from $4.2  million in the prior year.
Branded  products  sold  throughout  the  1998  period   included:   Vectrin(R),
LoCholest(TM),   NataFort(R)   and  several  branded   products   acquired  from
Warner-Lambert  in June 1997.  Branded  sales in the 1997 period  included  only
Vectrin  and  LoCholest,  both of which were  launched  in the  second  calendar
quarter of 1997. Sales of non-differentiated  generic products during the period
declined  $16.9  million  to  $18.6  million  due  to the  out-licensing  of the
Company's  generic  minocycline  product to Barr  Laboratories  beginning in the
third quarter of 1997 and decreased emphasis on generic products in favor of the
Company's branded offerings.

Despite the decline in total revenue, an improved gross margin on sales produced
a 27.4%  increase  in gross  profit  dollars to $8.1  million  compared  to $6.4
million in 1997. Gross margin percentage  increased by 14.8 points to 30.8% from
16.0% for the six months  ended June 30,  1997.  The  improvement  in both gross
profit dollars and gross margin  percentage  reflect the shift in the mix of the
Company's revenues toward higher-margin branded products.

Selling,  general and  administrative  expenses  totaled  $18.1  million for the
period  compared  to $7.2  million  in  1997,  an  increase  of  151%.  The most
significant factors  contributing to the increase in the 1998 period versus 1997
were:  the  expansion  and  development  of the  company's  sales  force from 30
professionals  at June  30,  1997  to  over  175 at  June  30,  1998,  increased
promotional  spending in support of the launch of NataFort  beginning in January
1998 and increased  costs  associated  with the litigation of patent  challenges
related  to  the  Company's   ANDA  filings  for  nifedipine  CC  and  terazosin
hydrochloride.


                                       9
<PAGE>

Research and development  expense  declined from $4.6 million for the six months
ended June 30, 1997 to $1.6  million for the same period in 1998.  Research  and
development  expense includes both internal product  development efforts and the
costs of collaborations with development  partners.  During the 1997 period, the
company  made a number of  milestone  payments to product  development  partners
related to several  complex  generic  products.  In addition,  beginning in late
1997,  Warner  Chilcott  shifted  its  overall  product   development  focus  to
concentrate on lower cost internal projects.

The net result of the factors  outlined  above was that the Company's  operating
loss for the six months ended June 30, 1998 increased to $14.4 million from $8.1
million in 1997.  The  improvement  in gross  profit  dollars and  reduction  in
research and  development  costs were more than offset by the increased costs of
building the Company's sales force and promoting its branded products.

Interest  income  during the period  increased to $1.4 million from $0.1 million
due to the infusion of capital in connection  with the Company's  initial public
offering in August  1997.  Interest  expense  declined to $1.4 million from $5.0
million  in 1997  primarily  due to the  exchange  of $49.5  million  of  senior
subordinated discount notes for ordinary shares in June 1997.

The net loss for the six months ended June 30, 1998  increased by 10.4% to $14.3
million as compared  to a net loss of $13.0  million in the same period in 1997.
The loss per ordinary share for the period  decreased to ($1.16) on 12.4 million
shares from ($2.48) on 5.2 million shares.  The increase in the weighted average
ordinary  shares  outstanding  reflects  the  issuance  of  ordinary  shares  in
connection with the Company's initial public offering in August 1997 and related
financings.

Three months ended June 30, 1998 and 1997

Total  revenues for the quarter  ended June 30, 1998  declined to $12.4  million
from $20.6  million for the same period in 1997.  Sales of branded  products for
the 1998 quarter  increased  $0.2 million or 5.3% to $4.4 million  compared with
$4.2 million in 1997.  1998 second  quarter  revenues  include sales of Vectrin,
LoCholest,  NataFort and several branded products  acquired from  Warner-Lambert
Company 1997.  Sales of branded  products in the second quarter of 1997 included
only Vectrin and LoCholest, but were unusually high as the Company launched both
products during the quarter and benefited from the stocking of the trade.  Sales
of non-differentiated  generic products during the quarter declined $8.4 million
to $8.0 million due to the  out-licensing of the Company's  generic  minocycline
product  to Barr  Laboratories  beginning  in the  third  quarter  of  1997  and
decreased  emphasis  on  generic  products  in  favor of the  Company's  branded
offerings.

Despite the decline in total revenue, an improved gross margin on sales resulted
in gross  profit  dollars  increasing  22.7% to $4.6  million  compared  to $3.8
million in 1997. Gross margin percentage  increased by 18.8 points from 18.3% in
1997 to 37.1% for the quarter ended June 30, 1998. The improvement in both gross
profit  dollars  and gross  margin  percentage  reflect  the shift in the mix of
revenues toward higher-margin branded products.

Selling,  general  and  administrative  expenses  during the  quarter  rose $5.4
million  to $9.4  million,  an  increase  of 137%.  The  increase  reflects  the
expansion of the Company's sales force,  increased  promotional costs associated
with  NataFort  and higher  legal costs in  connection  with the  litigation  of
various patent challenges.


                                       10
<PAGE>

Research and  development  expenses  declined  $0.5 million due to the Company's
decision to focus on lower-cost internal product development projects during the
period.

The net result of the factors  outlined above was that Company's  operating loss
for the quarter  increased 125% to $6.9 million compared with the second quarter
of 1997.  The  improvement in gross profit dollars and reduction in research and
development  expenses  were more than offset by increased  costs of building and
maintaining the Company's sales force and other expenses.

Interest income in the quarter increased to $0.7 million due to the availability
of funds  for  investment  following  the  Company's  initial  public  offering.
Interest  expense  declined to $0.7 million from $2.5 million in 1997  primarily
due to the exchange of $49.5 million of senior  subordinated  discount notes for
ordinary shares in June 1997.

The net loss for the  quarter  ended June 30,  1998  increased  by 24.9% to $6.9
million as  compared  to a net loss of $5.6  million  for the second  quarter of
1997. The loss per ordinary  share for the quarter  decreased to ($0.56) on 12.4
million  shares from ($0.97) on 5.7 million  shares in 1997. The increase in the
weighted average ordinary shares  outstanding  reflects the issuance of ordinary
shares in connection  with the Company's  initial public offering in August 1997
and related financings.

FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS:

Following is a discussion of some the risks and historical facts which should be
considered when  evaluating the current and future results of the Company.  This
discussion is not intended to include all risks and historical  facts that could
produce adverse results.

Warner Chilcott has a history of operating  losses.  Operating  losses have been
posted  since the  formation of the Company in 1992.  As of June 30,  1998,  the
Company's accumulated deficit was $97.6 million. The Company has invested in the
corporate  infrastructure and sales organization needed to support the marketing
and product  development  activities that management  believes necessary for the
success of the Company.  However,  there can be no assurance  that these efforts
will be sufficient and, thus, future profitability is uncertain.

The future  capital needs and additional  funding  activities of the Company are
uncertain.  Warner Chilcott has experienced  negative cash flows from operations
and has  funded  its  activities  to date from the  issuance  of equity and debt
securities.  The  Company  has  expended,  and will  continue  to be required to
expend,  substantial funds for promotional  activities for products, to continue
research  and  development  of product  candidates,  to  in-license  and acquire
additional  products and to undertake sales and marketing efforts of its current
or future products. Although the Company may seek additional funding through the
public or  private  capital  markets,  there can be no  assurance  that any such
funding will be available to the Company.

Intense competition exists within the pharmaceutical  industry.  Many companies,
some with greater  financial,  marketing and development  capabilities  than the
Company, are engaged in developing,  marketing and selling products that compete
with the products offered by Warner Chilcott. Other products now in use or under
development  by others may be more effective or have fewer side effects than the
Company's  current or future  products.  The industry is  characterized by rapid
technological  change,  and  competitors may develop their products more rapidly
than the  Company.  Competitors  may  also be able to  complete  the  regulatory
process sooner and, therefore,  may begin to market their products in advance of
the Company's  products.  


                                       11
<PAGE>

There can be no  assurance  that  developments  by others  will not  render  any
product  or  technology  the  Company  produces  to  be  obsolete  or  otherwise
noncompetitive.

The clinical  development,  manufacture,  marketing  and sale of  pharmaceutical
products is subject to  extensive  federal,  state and local  regulation  in the
United States and similar  regulation outside the United States. FDA approval is
required  before most drug  products  can be  marketed.  FDA filings can be time
consuming and expensive  without  assurance that the results will be adequate to
justify approval. There can be substantial delays in the process,  including the
need to provide  additional  data.  There can be no assurance that approvals for
filings  already  made  by the  Company,  or to be made  in the  future,  can be
obtained in a timely manner, if at all, or that the regulatory  requirements for
any  such  proposed  products  can be met.  In  addition,  new  regulations  may
adversely affect the Company's operations or competitive position in the future.

The distribution  network for  pharmaceutical  products has in recent years been
subject  to  increasing  consolidation.  As a  result,  a  few  large  wholesale
distributors control a significant share of the market. In addition,  the number
of  independent  drug stores and small chains has  decreased as retail  pharmacy
consolidation  has  occurred.   Continued   consolidation  of  either  wholesale
distributors or retail pharmacies may adversely effect the Company's operations.

The  Company  depends on third  parties for the  manufacture  of its current and
future  products.  Currently  the Company  does not possess  the  facilities  or
resources needed for these activities.  The Company's  strategy for development,
commercialization  and manufacturing of certain of its products entails entering
into various arrangements with corporate collaborators, licensors and others. If
any of the  Company's  corporate  collaborators  were  unable to  satisfy  their
contractual  obligations  to the  Company,  there can be no  assurance  that the
Company  would  be able to  negotiate  similar  arrangements  with  other  third
parties.

Many of the principal  components of the Company's  products are available  only
from single source  suppliers.  There can be no assurance  that the Company will
establish or, if established, maintain good relationships with such suppliers or
that such suppliers  will continue to exist or be able to supply  ingredients in
conformity with regulatory requirements.

Warner Chilcott is engaged in the manufacture and marketing of products that may
give rise to the  development  of certain  legal  actions and  proceedings.  The
Company carries product liability  insurance and umbrella  liability  insurance.
There can be no  assurance  that this  coverage is  adequate to cover  potential
liability claims or that additional  insurance coverage will be available in the
future if the  Company  manufactures  and markets new  products.  The  Company's
financial  condition  and results of operations  could be  materially  adversely
affected by the unfavorable outcome of legal actions and proceedings.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 1998,  cash and cash  equivalents  amounted to $47.2  million.  This
balance is primarily  the result of the  infusion of capital from the  Company's
initial  public  offering  in  August  1997  and  related  financings   totaling
approximately  $74.6  million.  Proceeds  from  the IPO have  been  used to fund
ongoing working capital requirements. The Company's working capital, adjusted to
exclude cash and short-term debt balances, remained the same at June 30, 1998 as
compared  with  December  31,  1997.  Adjusted  working  capital on these  dates
amounted to $13.5 million.

On March 30, 1998, the Company entered into a $30 million senior secured working
capital agreement with a syndicate of banks led by PNC Business Credit to fund a
portion of its

                                       12
<PAGE>

investment in inventories and accounts receivable. At June 30, 1998, the Company
had $19.7 million  outstanding under this bank credit agreement,  an increase of
$5.2  million over the balance at December  31, 1997 of $14.5  million.  Working
capital  availability  is  contingent  upon the  balances of certain  inventory,
accounts  receivable  and other assets of Warner  Chilcott,  Inc., the Company's
wholly  owned United  States  operating  subsidiary.  Prior to March 30, 1998, a
syndicate  of banks led by BT  Commercial  Corporation  provided  the  Company's
working capital facility.

The Company posted a substantial loss for the six months ended June 30, 1998 and
losses may continue  throughout  1998 and beyond.  In addition,  the Company may
invest in additional working capital or make capital expenditures to support its
various  business  activities.   Management  believes  the  combination  of  the
Company's cash balances ($47.2 million at June 30, 1998) and availability  under
its working capital  facility  provide Warner Chilcott with access to sufficient
capital to meet its requirements  for at least the next 12 months.  There can be
no assurance,  however, that such funds will be sufficient.  Beyond such period,
and in the absence of the Company  generating cash from operations,  the Company
would need to raise  additional  funds.  The Company  expects that it would seek
additional  funding  through  public or  private  equity or debt  financings  or
through  collaborations.  To the extent the Company raises additional capital by
issuing equity  securities,  ownership  dilution to existing  shareholders  will
result and future  investors may be granted rights superior to those of existing
shareholders.  There  can  be no  assurance  that  additional  funding  will  be
available on acceptable terms, or at all.

INFLATION

Inflation had no material impact on Warner Chilcott's  operations during the six
months ended June 30, 1998.

YEAR 2000

The Company's primary  information  technology  systems are used in the finance,
administration,  billing,  distribution  and  selling  systems  operated  in the
Company's  U.S.  operating   subsidiary,   Warner  Chilcott,   Inc..  Since  the
acquisition  in March  1996,  the Company has had to put in place new systems to
replace  those  systems  previously  provided by  Warner-Lambert  Company to the
former  Division.  As a result,  the Company has put in place computer  systems,
which  have  been  recently  developed  by  their  vendors,  and  has  requested
certification from their vendors that these systems are Year 2000 compliant.

Since  April  1,  1998,  the  Company  has  been  contracting  out  warehousing,
distribution,  billing  and prime  vendor  charge back  services  to  Livingston
Healthcare  Services  Inc.,  a  specialist  provider of  distribution  and other
services to the pharmaceutical  industry. The Company is being kept appraised of
Livingston's  efforts to ensure that their systems are Year 2000 compliant.  The
Company  therefore  believes  that it has taken steps to minimize  any  material
adverse  consequences of Year 2000 problems,  although there can be no assurance
at this  time  that such  problems  may not  arise.  Costs  associated  with the
exercise are not expected to be material and will be expensed as incurred.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk
Not applicable.


                                       13
<PAGE>

Part II - Other Information
Item 1. Legal Proceedings

The  Company is  involved in  litigation  relating to claims  arising out of its
operations in the normal course of business, including product liability claims.

During April 1998, Abbott  Laboratories  filed a lawsuit against the Company for
alleged infringement of certain patents related to Warner Chilcott's ANDA filing
for terazosin  hydrochloride.  Abbott markets terazosin  hydrochloride under the
brand name Hytrin(R).  Management of the Company believes that the Abbott action
is without merit and is vigorously contesting it.

Other than outlined  above,  the Company is not party to any litigation or other
legal  proceedings  which the Company  believes could  reasonably be expected to
have a material adverse effect on the Company's business, results of operations,
or financial condition.

Item 4. Submission of Matters to a Vote of Security Holders

The Company's  Annual General Meeting of shareholders  was held on April 2, 1998
in Dublin, Ireland. Following are the matters brought to vote and the results:

                                                                        Broker
     Board of Director Elections       For       Against    Abstain    Non-votes
     ---------------------------    ---------    -------    -------    ---------
     Donald E. Panoz                5,731,972       0          0           0   
     Thomas G. Lynch                5,731,972       0          0           0   
     James H. Bloom                 5,731,972       0          0           0   
     Bruce L. Downey                5,731,972       0          0           0   
     Roger M. Boissonneault         5,731,972       0          0           0   

Proposals to authorize  the Board of  Directors to fix the  remuneration  of the
Auditors and approve the Directors' Report and Financial Statements for the year
ended  December 31, 1997 together  with the Auditor's  Report were approved with
5,731,972 votes for, no votes against, no abstentions and no broker non-votes.
                                                                      
In addition,  each of the following proposals were approved with 5,730,972 votes
for, 1000 votes against, no abstentions and no broker non-votes.

      (i)   to authorize  the Board of Directors to allot and issue shares up to
            an aggregate  nominal  amount equal to the  authorized  but unissued
            share capital of the Company;

      (ii)  to authorize the Board of Directors to allot equity  securities  for
            cash; and

      (iii) to authorize  the Board of Directors to  capitalize  any part of the
            amount  standing to the credit of the share  premium  account at the
            time of such  capitalization,  and to apply the  capitalized  sum in
            paying up in full  unissued  shares  for  distribution  to  Ordinary
            shareholders pro rata to their existing stockholdings.

Finally,  the proposal to adopt the amended 1997  Incentive  Share Option Scheme
was approved with 5,579,872 votes for, 152,100 votes against, no abstentions and
no broker non-votes.

Item 5. Other Information

Pursuant to newly adopted rules of the Securities and Exchange  Commission,  any
company  shareholder  who intends to present a proposal at the Company's  Annual
General  Meeting of  shareholders  in 1999  without  requesting  the  Company to
include such proposal in the Company's 


                                       14
<PAGE>

proxy  materials  should be aware that he must notify the Company not later than
January  25,  1999 of his  intention  to present the  proposal.  Otherwise,  the
Company  may  exercise  discretionary  voting with  respect to such  shareholder
proposal pursuant to authority  conferred on the Company by proxies delivered to
the Company in connection with the meeting.

Item 6. Exhibits and Reports on Form 8-K

a. Exhibits - The following exhibits are filed with this document:

Exhibit No.       Description
- - -----------       -----------
    10.1       Employment  agreement  between the Company and James G.  Andress,
               dated March 3, 1997

    10.2       Employment   agreement   between   the   Company   and  Roger  M.
               Boissonneault, dated March 3, 1997

    10.3       Employment  agreement  between the Company and Paul S. Herendeen,
               dated February 3, 1998

    10.4       Warrant  Certificate  agreement  between the Company and James G.
               Andress, dated October 31, 1996

    10.5       Warrant  Certificate  agreement  between the Company and James G.
               Andress, dated October 31, 1996

    10.6       Warrant  Certificate  agreement  between the Company and Roger M.
               Boissonneault, and dated October 31, 1996

    10.7       Warrant  Certificate  agreement  between the Company and Roger M.
               Boissonneault, and dated October 31, 1996

    10.8       Warrant  Certificate  agreement  between  the Company and Paul S.
               Herendeen, and dated February 3, 1998

    10.9       Revolving  Credit and security  Agreement,  dated March 30, 1998,
               among Warner Chilcott,  Inc. PNC Bank,  National  Association and
               the Lenders thereto

    10.10      Financial  Support  Undertaking,  dated March 30,  1998,  made by
               Warner  Chilcott  Public  Limited  Company  and  Warner  Chilcott
               (Bermuda) Limited in favor of PNC Bank, National Association

    10.11      Continuing  Limited  Non-Recourse  and  Collateralized  Guaranty,
               dated March 30, 1998, made by Warner Chilcott  (Bermuda)  Limited
               in favor of PNC Bank, National Association

    10.12      Trademark  Collateral  Assignment  and Security  Agreement,  from
               Warner Chilcott,  Inc. to PNC Bank, National  Association,  dated
               March 30, 1998


                                       15
<PAGE>

    10.13      Trademark  Collateral  Assignment  and Security  Agreement,  from
               Warner  Chilcott   (Bermuda)   Limited  to  PNC  Bank,   National
               Association, dated March 30, 1998

    27         Financial Data Schedule

b.  Reports on Form 8-K:

No report was filed during the three months ended June 30, 1998.


                                       16
<PAGE>

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                              WARNER CHILCOTT PUBLIC LIMITED COMPANY
                                            (Registrant)

August 14, 1998               /s/ Paul S. Herendeen
                              ---------------------
                              Paul S. Herendeen
                              Executive Vice President & Chief Financial Officer
                              (Principal Financial Officer)

August 14, 1998               /s/ David G. Kelly
                              ------------------
                              David G. Kelly
                              Group Vice President, Finance
                              (Principal Accounting Officer)


                                       17


                              EMPLOYMENT AGREEMENT

      EMPLOYMENT AGREEMENT (the "Agreement") dated as of March 3, 1997 by and
between WARNER CHILCOTT PUBLIC LIMITED COMPANY, a public limited company
organized under the laws of Ireland (the "Company"), and JAMES G. ANDRESS (the
"Executive").

                                R E C I T A L S :

      A. The Executive has been employed as a principal executive of the Company
and has made a unique contribution to the business of the Company.

      B. The Board of Directors of the Company believes that the continued
services of Executive would be of great value to the Company and is desirous of
retaining his services as contemplated hereby.

      C. The Executive desires to accept employment by the Company and to render
services to the Company, on the terms and subject to the conditions provided in
this Agreement.

                               A G R E E M E N T :

      The parties hereto agree as follows:

      1. Employment. The Company hereby agrees to employ and retain the
Executive, and the Executive agrees to be employed and retained by the Company,
to render services to the Company for the period, at the rate of compensation
and upon the other terms and conditions set forth herein. The Executive shall
devote his best efforts and his entire working time and attention to his
employment by the Company.

      2. Term. The term of the Executive's employment under this Agreement (the
"Employment Term") shall commence on the date hereof (the "Commencement Date"),
and shall continue until terminated as provided herein.

<PAGE>

                                      -2-


      3. Position and Duties.

      (a) Position. The Executive shall serve the Company as Chief Executive
Officer. During his executive employment hereunder, the Executive shall report
to the Board of Directors of the Company. During the Employment Term, the
Company shall include the Executive in any slate of nominees proposed by the
Company for election or reelection, as the case may be, to the Company's Board
of Directors. Upon termination of the Executive's employment under this
Agreement or the expiration of this Agreement, the Executive shall immediately
submit his resignation from the Board of Directors.

      (b) Duties. During the Employment Term, the Executive shall serve the
Company and its subsidiaries in such Chief Executive Officer's capacity with
such duties consistent therewith and shall perform such other services for the
Company and its subsidiaries consistent with the position of Chief Executive
Officer as may be assigned to him from time to time by the Company's Board of
Directors.

      4. Compensation and Reimbursement of Expenses.

      (a) Salary. For services rendered by the Executive under this Agreement,
the Company shall pay to the Executive as compensation during the Employment
Term a salary (the "Salary") initially equal to $300,000 per annum. The Salary
shall be subject to adjustment by the Board of Directors from time to time;
however, in no case shall the Executive's Salary be reduced below $300,000 per
annum. The Salary shall be payable at least in monthly installments on the
normal payroll cycle of the Company.

      (b) Reimbursement of Expenses. Consistent with established policies of the
Company as in effect from time to time, the Company shall pay or reimburse the
Executive for all reasonable travel, hotel, entertainment and other expenses
incurred by the Executive in performing his obligations under this Agreement.

      (c) Incentive Compensation. During the Employment Term, the Executive will
be eligible to participate in the Company's Incentive Share Option Scheme
adopted by the Board of Directors on June 28, 1996 (the "Incentive Compensation
Plan").

<PAGE>

                                      -3-


      5. Benefits.

      (a) Benefit Plans. The Executive shall also be entitled to participate, on
a basis comparable to other key executives of the Company, in any benefit plan
or program of the Company for which key executives are or shall become eligible,
including, without limitation, pension, 401(k), life and disability insurance
and stock benefits and/or plans, subject, in the case of tax-qualified benefit
plans and programs, to restrictions under applicable law. The Executive shall be
entitled, at his own expense, to continue his participation in any group
insurance plans after the termination of his employment with the Company, to the
extent required or permitted under applicable law.

      (b) Vacation. The Executive shall be entitled to vacation time with
compensation of 20 days per annum during the Employment Term. The Executive
shall also be entitled to all paid holidays given by the Company to its senior
executive officers.

      (c) No Reduction. There shall be no material reduction or diminution of
the benefits provided in this Section 5 (i) unless the Executive shall have
given his prior written consent to such reduction or diminution and an equitable
arrangement (embodied in an ongoing substitute or alternative benefit or plan)
has been made with respect to such benefit or plan or (ii) except, in the case
of Section 5(a), for across-the-board benefit reductions similarly affecting all
senior management personnel of the Company.

      (d) Warrants. On the Commencement Date, the Executive shall be issued (i)
warrants to purchase an aggregate of 400,000 Ordinary Shares of the Company at
an exercise price of $20.00 per share and (ii) warrants to purchase an aggregate
100,000 Ordinary Shares of the Company at an exercise price of $1.00 per share.
The specific terms of the warrants, including conditions to the Executive's
ability to exercise such warrants, are described in the Warrant Certificates,
each dated as of October 31, 1996, issued by the Company to the Executive.

      6. Termination. This Agreement is subject to termination as follows:

      (a) Death of the Executive. If the Executive dies, this Agreement shall
terminate effective as of the date of the Executive's death, and thereupon the
Executive's estate shall

<PAGE>

                                      -4-


be  entitled  solely to the  payments  and  benefits  set forth in Section  7(b)
hereof.

      (b) Disability. If the Executive has been unable to perform his
obligations hereunder for six consecutive months, or for at least 180 days
during any calendar year, due to Disability, the Company shall thereafter have
the right to terminate the Executive's employment hereunder upon at least 30
days' prior written notice to the Executive of the effective date of such
termination, and thereupon the Executive shall be entitled solely to the
payments and benefits set forth in Section 7(b) hereof.

      (c) Termination by the Company for Cause. The Company shall have the right
to terminate the Executive's employment hereunder for Cause (as hereafter
defined), and thereupon the Executive shall be entitled solely to the payments
and benefits set forth in Section 7(a) hereof. For purposes of this Agreement,
the term "Cause" shall mean any of the following: (i) conviction of the
Executive by a court of competent jurisdiction for commission of any felony,
(ii) the Executive's failure or refusal to perform substantially his duties with
the Company which failure or refusal continues for thirty days following the
Executive's receipt of written notice specifying the nature and manner of such
failure or refusal to perform, (iii) the Executive's willful misconduct or gross
negligence which is injurious to the Company or its reputation and goodwill, or
(iv) the Executive's breach of Section 8, 9 or 10 of this Agreement.

      (d) Resignation or Retirement. If the Executive resigns or retires, this
Agreement shall terminate as of the date of the Executive's resignation or
retirement, and thereupon the Executive shall be entitled solely to the payments
and benefits set forth in Section 7(a) hereof.

      (e) Termination by the Company other than for Cause. The Company shall
have the right, at its sole discretion, to terminate the Executive's employment
hereunder without Cause. Thereupon, the Executive shall be entitled solely to
the payments and benefits set forth in Section 7(b) hereof.

      7. Effect of Termination.

      (a) Cause or Resignation or Retirement. Upon the termination of this
Agreement by the Company for Cause or upon the resignation or retirement of the
Executive, the Company shall pay to the Executive (i) his Salary accrued through
the

<PAGE>

                                      -5-


effective date of termination, payable at the time such payment is otherwise due
and payable hereunder, and (ii) all other amounts and benefits to which the
Executive is entitled, including, without limitation, vacation pay and expense
reimbursement amounts accrued to the effective date of termination and amounts
and benefits owing under the terms of any benefit plan of the Company in which
the Executive participates (including the Incentive Compensation Plan), and the
Company and the Executive shall have no further obligation to each other under
this Agreement except as provided in Section 15 hereof.

      (b) Other Termination. Upon the termination of this Agreement pursuant to
Section 6(a), 6(b) or 6(e) hereof, the Company shall pay to the Executive an
amount equal to the Executive's then current Salary for a period of twelve
months (the "Severance Amount") plus all other amounts and benefits to which the
Executive is entitled, including, without limitation, expense reimbursement
amounts accrued to the effective date of termination and amounts and benefits
owing under the terms of any benefit plan of the Company in which the Executive
participates (including the Incentive Compensation Plan). The Severance Amount
shall be paid in a lump sum equal to the net present value of the Severance
Amount, determined by discounting the aggregate Severance Amount using a
discount rate equal to the yield on the date of such termination of United
States Treasury Securities having a maturity closest to one year from such date.

      (c) No Offset. The Company will not be permitted to offset any payment
payable to the Executive pursuant to Section 7(a) or 7(b) hereof against any
monetary obligations owed by the Executive to the Company, except that in the
event that the Executive breaches Section 8, 9 or 10 of this Agreement, the
Company shall have no obligation to make any payment otherwise payable under
Section 7(b) hereof.

      8. Non-Solicitation Agreement. The Executive covenants and agrees that
while employed by the Company and during any period for which the Executive
accepted or continues to accept payments under Section 7 above, the Executive
will not in any way, directly or indirectly, on the Executive's own behalf or on
behalf of or in conjunction with any other person, partnership, firm or
corporation, solicit, divert, take away, or attempt to take away any person,
partnership, firm or corporation (or the business or patronage) that has been a
customer of the Company or any of its affiliated entities. The Executive further
agrees that, for such period, the Executive will not in any way, directly or
indirectly, on the Executive's own behalf

<PAGE>

                                      -6-


or on behalf of or in conjunction with any person, partnership, firm or
corporation, solicit, entice, hire, employ or endeavor to employ any employee of
the Company or any of its affiliated entities.

      9. Agreement Not To Compete. The Executive covenants and agrees that he
will not, during the term of his employment with the Company, and so long as the
Executive has been paid or continues to accept any payments under Section 7
above, either directly or indirectly, as an employee, director, officer,
shareholder, partner, advisor, consultant or otherwise, engage in any commercial
activity or participate in any venture of any kind that competes with the
Company with respect to the development, marketing, testing, manufacture or
delivery of complex generic pharmaceutical products within the United States.

      Nothing stated in this Section 9 shall be deemed to preclude the Executive
from holding less than 5% of the outstanding capital stock of any corporation
required to file periodic reports with the Securities and Exchange Commission
under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended,
and the securities of which are listed on any securities exchange or quoted on
the Nasdaq National Market or traded on the over-the-counter market.

      The Executive acknowledges that the Company has expended substantial time
and expense in the research and development of processes, technology, techniques
and products which are unique to the Company or not generally known to others
and which could be unfairly taken or used by others in competition with the
Company. Accordingly, the Executive agrees that the restrictions contained in
this Agreement are reasonable.

      If the scope of the restrictions contained in this Section 9 is too broad
to permit enforcement of such restrictions to their full extent, then such
restrictions shall be construed or re-written (blue-lined) so as to be
enforceable to the maximum extent permitted by law, and the Executive hereby
consents, to the extent he may lawfully do so, to the judicial modification of
the scope of such restrictions in any proceeding brought to enforce such
restrictions. In the event of any breach by the Executive of this Section 9, the
Company may elect to institute and prosecute proceedings in any state or federal
court located in the State of New Jersey, either at law or in equity, to seek to
obtain specific performance of any part of this Agreement, to seek injunctive
relief against the Executive to temporarily or permanently enjoin the violation
of 

<PAGE>

                                      -7-


this Section 9 and/or to seek to recover any damages resulting from the breach
of this Section 9, and to recover attorneys' fees and costs in connection with
the institution and prosecution of such proceedings. In any such proceedings,
the Executive shall be entitled to seek to recover his attorneys' fees and costs
in connection with such proceedings. No remedy available to the Company for a
breach of this Section 9 is intended to be exclusive of any other remedy and all
remedies are cumulative. The Executive agrees that damages are not adequate to
compensate the Company for any breach by the Executive of this Agreement and
hereby waives the defense of an adequate remedy at law or any other remedy at
law and admits and concedes that there are none.

      10. Confidential Information. The Executive covenants and agrees not to at
any time use, divulge, furnish or make accessible to anyone other than the
Company, its affiliated entities, or its or their directors and officers, any
proprietary or confidential information ("Confidential Information") of the
Company or any of its affiliated entitles, including but not limited to
information regarding the development of the Company's products, or the
provision of the Company's services, or the Company's customer lists.

      Upon termination of his employment with the Company, the Executive agrees
to deliver to the Company all written materials that constitute Confidential
Information. Further, upon termination of his employment with the Company, the
Executive agrees to make available to any person designated by the Company all
information concerning pending or preceding transactions which may affect the
operation of the Company or any subsidiary of the Company about which the
Executive has knowledge. The obligations of the Executive contained in this
paragraph are in addition to the obligation of the Executive to return to the
Company, upon the termination of his employment, all property of the Company
then in his possession.

      11. Assignment of Intellectual Property Rights. The Executive shall
promptly disclose to the Company all inventions, discoveries, improvements,
designs, processes, techniques, equipment, trademarks or copyrightable matter
conceived or made by the Executive during the Executive's employment and related
to any aspect of the business of the Company, and the Executive hereby assigns
all of the Executive's interest therein, including the goodwill of the business
symbolized by any trademarks, to the Company. The Executive further agrees to
execute any applications, assignments or other instruments which the Company
shall deem necessary to obtain letters patent, 

<PAGE>

                                      -8-


trademark registration or copyright registration of the United States or any
foreign country or to otherwise protect the Company's interest therein. Nothing
contained in this provision shall apply to any invention for which no equipment,
supplies, facility or trade secrets information of the Company or any affiliated
entity of the Company was used and which was developed entirely on the
Executive's own time, and (a) which does not relate (1) to any aspect of the
business of the Company or any affiliated entity of the Company or (2) to the
actual or demonstrably anticipated research or development of the Company or any
affiliated entity of the Company, or (b) which does not result from any work
performed by the Executive for the Company or any affiliated entity of the
Company.

      12. Assistance in Litigation. During the Employment Term, the Executive
shall, upon reasonable notice, furnish such information and proper assistance to
the Company as may reasonably be required by the Company in connection with any
litigation in which it is, or may become, a party.

      13. Federal Income Tax Withholding. The Company shall withhold from any
benefits payable pursuant to this Agreement such Federal, State, City or other
taxes as may be required to be withheld pursuant to any law or governmental
regulations or ruling.

      14. Effect of Prior Agreements. This Agreement contains the entire
understanding between the parties hereto respecting the Executive's employment
by the Company and supersedes any prior employment agreement or arrangement
between the Company and the Executive.

      15. Indemnification. The Company shall indemnify and hold the Executive
harmless to the fullest extent legally permissible under New Jersey law, against
any and all expenses, liabilities and losses (including attorneys' fees,
judgments, fines and amounts paid in settlement) reasonably incurred or suffered
by him in connection with service as an officer of the Company or any other
service or function served by him on behalf of the Company or at the Company's
request; provided, that, the Executive shall not be entitled to indemnification
hereunder if the expenses, liabilities and losses referred to above resulted
from or relate to willful misconduct or gross negligence by the Executive. The
Company shall advance to the Executive the amount of his expenses incurred in
connection with any proceeding relating to any such service or function to the
fullest extent legally permissible under New Jersey law. The indemnification and
expense reimbursement obligations of the 

<PAGE>

                                      -9-


Company in this Section 15 will continue as to the Executive after he ceases to
be an officer of the Company and shall inure to the benefit of his heirs,
executors and adminstrators. The Company shall not, without the Executive's
written consent, cause or permit any amendment to the Company's governing
documents which would affect the Executive's rights to indemnification and
expense reimbursement thereunder.

      16. General Provisions.

      (a) Nonassignability. Neither this Agreement nor any right or interest
hereunder shall be assignable by the Executive, his beneficiaries, or legal
representatives without the Company's prior written consent.

      (b) Binding Agreement. This Agreement shall be binding upon, and inure to
the benefit of, the Executive and the Company and their respective heirs,
executors, administrators, successors and permitted assigns.

      (c) Amendment of Agreement. This Agreement may not be modified or amended
except by an instrument in writing signed by the parties hereto.

      (d) Waiver. No term or condition of this Agreement shall be deemed to have
been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel.

      (e) Severability. If, for any reason, any provision of this Agreement is
held invalid, such invalidity shall not affect any other provision of this
Agreement not held so invalid, and each such other provision shall to the full
extent consistent with law continue in full force and effect.

      (f) Notices. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid, if to
the Executive, addressed to James G. Andress, 1381 North Elm Tree Road, Lake
Forest, IL 60045; if to the Company, addressed to Warner Chilcott Public Limited
Company, Lincoln House, 4th Floor, Lincoln Place, Dublin 2, Ireland, facsimile:
011-353-1-662-4950 and directed to the attention of the president of the Company
with a copy to the secretary of the Company; or to such other address as either
party may have 

<PAGE>

                                      -10-


furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.

      (g) Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

      (h) Indulgences, Etc. Neither the failure nor any delay on the part of
either party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence.

      (i) Headings. The headings of paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.

      (j) GOVERNING LAW. THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF
NEW JERSEY, AND ITS VALIDITY, INTERPRETATION, PERFORMANCE, AND ENFORCEMENT SHALL
BE GOVERNED BY THE LAWS OF SAID STATE.

<PAGE>

                                      -11-


      IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer, and the Executive has signed this Agreement, all
as of the day and year first above written.

                                    WARNER CHILCOTT PUBLIC LIMITED COMPANY

                                    /s/Paul S. Herendeen
                                    --------------------------------------------
                                    Name:  Paul S. Herendeen
                                    Title: Director and Member of
                                           The Compensation Committee

                                    /s/James G. Andress
                                    --------------------------------------------
                                    James G. Andress



                              EMPLOYMENT AGREEMENT

      EMPLOYMENT AGREEMENT (the "Agreement") dated as of March 3, 1997 by and
between WARNER CHILCOTT PUBLIC LIMITED COMPANY, a public limited company
organized under the laws of Ireland (the "Company"), and ROGER M. BOISSONNEAULT
(the "Executive").

                                R E C I T A L S :

      A. The Executive has been employed as a principal executive of the Company
and has made a unique contribution to the business of the Company.

      B. The Board of Directors of the Company believes that the continued
services of Executive would be of great value to the Company and is desirous of
retaining his services as contemplated hereby.

      C.The Executive desires to accept employment by the Company and to render
services to the Company, on the terms and subject to the conditions provided in
this Agreement.

                               A G R E E M E N T :

      The parties hereto agree as follows:

      1. Employment. The Company hereby agrees to employ and retain the
Executive, and the Executive agrees to be employed and retained by the Company,
to render services to the Company for the period, at the rate of compensation
and upon the other terms and conditions set forth herein. The Executive shall
devote his best efforts and his entire working time and attention to his
employment by the Company.

      2. Term. The term of the Executive's employment under this Agreement (the
"Employment Term") shall commence on the date hereof (the "Commencement Date"),
and shall continue until terminated as provided herein.

<PAGE>

                                      -2-


      3. Position and Duties.

      (a) Position. The Executive shall serve the Company as President and Chief
Operating Officer. During his executive employment hereunder, the Executive
shall report to the Chief Executive Officer of the Company.

      (b) Duties. During the Employment Term, the Executive shall serve the
Company and its subsidiaries in such President and Chief Operating Officer
capacity with such duties consistent therewith and shall perform such other
services for the Company and its subsidiaries consistent with the position of a
President and Chief Operating Officer as may be assigned to him from time to
time by the Company.

      4. Compensation and Reimbursement of Expenses.

      (a) Salary. For services rendered by the Executive under this Agreement,
the Company shall pay to the Executive as compensation during the Employment
Term a salary (the "Salary") initially equal to $200,000 per annum. The Salary
shall be subject to adjustment by the Company from time to time; however, in no
case shall the Executive's Salary be reduced below $200,000 per annum. The
Salary shall be payable at least in monthly installments on the normal payroll
cycle of the Company.

      (b) Reimbursement of Expenses. Consistent with established policies of the
Company as in effect from time to time, the Company shall pay or reimburse the
Executive for all reasonable travel, hotel, entertainment and other expenses
incurred by the Executive in performing his obligations under this Agreement.

      (c) Incentive Compensation. During the Employment Term, the Executive will
be eligible to participate in the Company's Incentive Share Option Scheme
adopted by the Board of Directors on June 28, 1996 (the "Incentive Compensation
Plan"). For any calendar year during the Employment Term, the mid-point of the
range of possible bonuses for which the Executive would be eligible under the
Company's Incentive Compensation Plan shall be equal to 50% of the Executive's
then current salary. 

      5. Benefits.

      (a) Benefit Plans. The Executive shall also be entitled to participate, on
a basis comparable to other key 

<PAGE>

                                      -3-


executives of the Company, in any benefit plan or program of the Company for
which key executives are or shall become eligible, including, without
limitation, pension, 401(k), life and disability insurance and stock benefits
and/or plans, subject, in the case of tax-qualified benefit plans and programs,
to restrictions under applicable law. The Executive shall be entitled, at his
own expense, to continue his participation in any group insurance plans after
the termination of his employment with the Company, to the extent required or
permitted under applicable law.

      (b) Vacation. The Executive shall be entitled to vacation time with
compensation of 20 days per annum during the Employment Term. The Executive
shall also be entitled to all paid holidays given by the Company to its senior
executive officers.

      (c) No Reduction. There shall be no material reduction or diminution of
the benefits provided in this Section 5 (i) unless the Executive shall have
given his prior written consent to such reduction or diminution and an equitable
arrangement (embodied in an ongoing substitute or alternative benefit or plan)
has been made with respect to such benefit or plan or (ii) except, in the case
of Section 5(a), for across-the-board benefit reductions similarly affecting all
senior management personnel of the Company.

      (d) Warrants. On the Commencement Date, the Executive shall be issued (i)
warrants to purchase an aggregate 120,000 Ordinary Shares of the Company at an
exercise price of $20.00 per share and (ii) warrants to purchase an aggregate of
30,000 Ordinary Shares of the Company at an excise price of $1.00 per share. The
specific terms of the warrants, including conditions to the Executive's ability
to exercise such warrants, are described in the Warrant Certificates, each dated
as of October 31, 1996, issued by the Company to the Executive.

      6. Termination. This Agreement is subject to termination as follows:

      (a) Death of the Executive. If the Executive dies, this Agreement shall
terminate effective as of the date of the Executive's death, and thereupon the
Executive's estate shall be entitled solely to the payments and benefits set
forth in Section 7(b) hereof.

      (b) Disability. If the Executive has been unable to perform his
obligations hereunder for six consecutive months, or 

<PAGE>

                                      -4-


for at least 180 days during any calendar year, due to Disability, the Company
shall thereafter have the right to terminate the Executive's employment
hereunder upon at least 30 days' prior written notice to the Executive of the
effective date of such termination, and thereupon the Executive shall be
entitled solely to the payments and benefits set forth in Section 7(b) hereof.

      (c) Termination by the Company for Cause. The Company shall have the right
to terminate the Executive's employment hereunder for Cause (as hereafter
defined), and thereupon the Executive shall be entitled solely to the payments
and benefits set forth in Section 7(a) hereof. For purposes of this Agreement,
the term "Cause" shall mean any of the following: (i) conviction of the
Executive by a court of competent jurisdiction for commission of any felony,
(ii) the Executive's failure or refusal to perform substantially his duties with
the Company which failure or refusal continues for thirty days following the
Executive's receipt of written notice specifying the nature and manner of such
failure or refusal to perform, (iii) the Executive's willful misconduct or gross
negligence which is injurious to the Company or its reputation and goodwill, or
(iv) the Executive's breach of Section 8, 9 or 10 of this Agreement.

      (d) Resignation or Retirement. If the Executive resigns or retires, this
Agreement shall terminate as of the date of the Executive's resignation or
retirement, and thereupon the Executive shall be entitled solely to the payments
and benefits set forth in Section 7(a) hereof.

      (e) Termination by the Company other than for Cause. The Company shall
have the right, at its sole discretion, to terminate the Executive's employment
hereunder without Cause. Thereupon, the Executive shall be entitled solely to
the payments and benefits set forth in Section 7(b) hereof. 

      7. Effect of Termination.

      (a) Cause or Resignation or Retirement. Upon the termination of this
Agreement by the Company for Cause or upon the resignation or retirement of the
Executive, the Company shall pay to the Executive (i) his Salary accrued through
the effective date of termination, payable at the time such payment is otherwise
due and payable hereunder, and (ii) all other amounts and benefits to which the
Executive is entitled, including, without limitation, vacation pay and expense
reimbursement amounts accrued to the effective date of termination 

<PAGE>

                                      -5-


and amounts and benefits owing under the terms of any benefit plan of the
Company in which the Executive participates (including the Incentive
Compensation Plan), and the Company and the Executive shall have no further
obligation to each other under this Agreement except as provided in Section 15
hereof.

      (b) Other Termination. Upon the termination of this Agreement pursuant to
Section 6(a), 6(b) or 6(e) hereof, the Company shall pay to the Executive an
amount equal to the Executive's then current Salary for a period of eighteen
months (the "Severance Amount") plus all other amounts and benefits to which the
Executive is entitled, including, without limitation, expense reimbursement
amounts accrued to the effective date of termination and amounts and benefits
owing under the terms of any benefit plan of the Company in which the Executive
participates (including the Incentive Compensation Plan). The Severance Amount
shall be paid in a lump sum equal to the net present value of the Severance
Amount, determined by discounting the aggregate Severance Amount using a
discount rate equal to the yield on the date of such termination of United
States Treasury Securities having a maturity closest to one year from such date.

      (c) No Offset. The Company will not be permitted to offset any payment
payable to the Executive pursuant to Section 7(a) or 7(b) hereof against any
monetary obligations owed by the Executive to the Company, except that in the
event that the Executive breaches Section 8, 9 or 10 of this Agreement, the
Company shall have no obligation to make any payment otherwise payable under
Section 7(b) hereof.

      8. Non-Solicitation Agreement. The Executive covenants and agrees that
while employed by the Company and during any period for which the Executive
accepted or continues to accept payments under Section 7 above, the Executive
will not in any way, directly or indirectly, on the Executive's own behalf or on
behalf of or in conjunction with any other person, partnership, firm or
corporation, solicit, divert, take away, or attempt to take away any person,
partnership, firm or corporation (or the business or patronage) that has been a
customer of the Company or any of its affiliated entities. The Executive further
agrees that, for such period, the Executive will not in any way, directly or
indirectly, on the Executive's own behalf or on behalf of or in conjunction with
any person, partnership, firm or corporation, solicit, entice, hire, employ or
endeavor to employ any employee of the Company or any of its affiliated
entities.

<PAGE>

                                      -6-


      9. Agreement Not To Compete. The Executive covenants and agrees that he
will not, during the term of his employment with the Company, and so long as the
Executive has been paid or continues to accept any payments under Section 7
above, either directly or indirectly, as an employee, director, officer,
shareholder, partner, advisor, consultant or otherwise, engage in any commercial
activity or participate in any venture of any kind that competes with the
Company with respect to the development, marketing, testing, manufacture or
delivery of complex generic pharmaceutical products within the United States.

      Nothing stated in this Section 9 shall be deemed to preclude the Executive
from holding less than 5% of the outstanding capital stock of any corporation
required to file periodic reports with the Securities and Exchange Commission
under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended,
and the securities of which are listed on any securities exchange or quoted on
the Nasdaq National Market or traded on the over-the-counter market.

      The Executive acknowledges that the Company has expended substantial time
and expense in the research and development of processes, technology, techniques
and products which are unique to the Company or not generally known to others
and which could be unfairly taken or used by others in competition with the
Company. Accordingly, the Executive agrees that the restrictions contained in
this Agreement are reasonable.

      If the scope of the restrictions contained in this Section 9 is too broad
to permit enforcement of such restrictions to their full extent, then such
restrictions shall be construed or re-written (blue-lined) so as to be
enforceable to the maximum extent permitted by law, and the Executive hereby
consents, to the extent he may lawfully do so, to the judicial modification of
the scope of such restrictions in any proceeding brought to enforce such
restrictions. In the event of any breach by the Executive of this Section 9, the
Company may elect to institute and prosecute proceedings in any state or federal
court located in the State of New Jersey, either at law or in equity, to seek to
obtain specific performance of any part of this Agreement, to seek injunctive
relief against the Executive to temporarily or permanently enjoin the violation
of this Section 9 and/or to seek to recover any damages resulting from the
breach of this Section 9, and to recover attorneys' fees and costs in connection
with the institution and prosecution of such proceedings. In any such
proceedings, the Executive shall be entitled to seek to recover his attorneys'
fees

<PAGE>

                                      -7-


and costs in connection with such proceedings. No remedy available to the
Company for a breach of this Section 9 is intended to be exclusive of any other
remedy and all remedies are cumulative. The Executive agrees that damages are
not adequate to compensate the Company for any breach by the Executive of this
Agreement and hereby waives the defense of an adequate remedy at law or any
other remedy at law and admits and concedes that there are none.

      10. Confidential Information. The Executive covenants and agrees not to at
any time use, divulge, furnish or make accessible to anyone other than the
Company, its affiliated entities, or its or their directors and officers, any
proprietary or confidential information ("Confidential Information") of the
Company or any of its affiliated entitles, including but not limited to
information regarding the development of the Company's products, or the
provision of the Company's services, or the Company's customer lists.

      Upon termination of his employment with the Company, the Executive agrees
to deliver to the Company all written materials that constitute Confidential
Information. Further, upon termination of his employment with the Company, the
Executive agrees to make available to any person designated by the Company all
information concerning pending or preceding transactions which may affect the
operation of the Company or any subsidiary of the Company about which the
Executive has knowledge. The obligations of the Executive contained in this
paragraph are in addition to the obligation of the Executive to return to the
Company, upon the termination of his employment, all property of the Company
then in his possession.

      11. Assignment of Intellectual Property Rights. The Executive shall
promptly disclose to the Company all inventions, discoveries, improvements,
designs, processes, techniques, equipment, trademarks or copyrightable matter
conceived or made by the Executive during the Executive's employment and related
to any aspect of the business of the Company, and the Executive hereby assigns
all of the Executive's interest therein, including the goodwill of the business
symbolized by any trademarks, to the Company. The Executive further agrees to
execute any applications, assignments or other instruments which the Company
shall deem necessary to obtain letters patent, trademark registration or
copyright registration of the United States or any foreign country or to
otherwise protect the Company's interest therein. Nothing contained in this
provision shall apply to any invention for which no equipment, supplies,
facility or trade secrets information of the Company or any 

<PAGE>

                                      -8-


affiliated entity of the Company was used and which was developed entirely on
the Executive's own time, and (a) which does not relate (1) to any aspect of the
business of the Company or any affiliated entity of the Company or (2) to the
actual or demonstrably anticipated research or development of the Company or any
affiliated entity of the Company, or (b) which does not result from any work
performed by the Executive for the Company or any affiliated entity of the
Company.

      12. Assistance in Litigation. During the Employment Term, the Executive
shall, upon reasonable notice, furnish such information and proper assistance to
the Company as may reasonably be required by the Company in connection with any
litigation in which it is, or may become, a party. 

      13. Federal Income Tax Withholding. The Company shall withhold from any
benefits payable pursuant to this Agreement such Federal, State, City or other
taxes as may be required to be withheld pursuant to any law or governmental
regulations or ruling.

      14. Effect of Prior Agreements. This Agreement contains the entire
understanding between the parties hereto respecting the Executive's employment
by the Company and supersedes any prior employment agreement or arrangement
between the Company and the Executive.

      15. Indemnification. The Company shall indemnify and hold the Executive
harmless to the fullest extent legally permissible under New Jersey law, against
any and all expenses, liabilities and losses (including attorneys' fees,
judgments, fines and amounts paid in settlement) reasonably incurred or suffered
by him in connection with service as an officer of the Company or any other
service or function served by him on behalf of the Company or at the Company's
request; provided, that, the Executive shall not be entitled to indemnification
hereunder if the expenses, liabilities and losses referred to above resulted
from or relate to willful misconduct or gross negligence by the Executive. The
Company shall advance to the Executive the amount of his expenses incurred in
connection with any proceeding relating to any such service or function to the
fullest extent legally permissible under New Jersey law. The indemnification and
expense reimbursement obligations of the Company in this Section 15 will
continue as to the Executive after he ceases to be an officer of the Company and
shall inure to the benefit of his heirs, executors and adminstrators. The
Company shall not, without the Executive's written consent, cause or permit any
amendment to the Company's governing docu-

<PAGE>

                                      -9-


ments which would affect the Executive's rights to indemnification and expense
reimbursement thereunder.

      16. General Provisions.

      (a) Nonassignability. Neither this Agreement nor any right or interest
hereunder shall be assignable by the Executive, his beneficiaries, or legal
representatives without the Company's prior written consent.

      (b) Binding Agreement. This Agreement shall be binding upon, and inure to
the benefit of, the Executive and the Company and their respective heirs,
executors, administrators, successors and permitted assigns.

      (c) Amendment of Agreement. This Agreement may not be modified or amended
except by an instrument in writing signed by the parties hereto.

      (d) Waiver. No term or condition of this Agreement shall be deemed to have
been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel.

      (e) Severability. If, for any reason, any provision of this Agreement is
held invalid, such invalidity shall not affect any other provision of this
Agreement not held so invalid, and each such other provision shall to the full
extent consistent with law continue in full force and effect.

      (f) Notices. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid, if to
the Executive, addressed to Roger M. Boissonneault, 38 Jackie Drive, Long
Valley, New Jersey 07853; if to the Company, addressed to Warner Chilcott Public
Limited Company, Lincoln House, 4th Floor, Lincoln Place, Dublin 2, Ireland,
facsimile: 011-353-1-662-4950, and directed to the attention of the chief
executive officer of the Company with a copy to the secretary of the Company; or
to such other address as either party may have furnished to the other in writing
in accordance herewith, except that notice of change of address shall be
effective only upon receipt.

<PAGE>

                                      -10-


      (g) Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

      (h) Indulgences, Etc. Neither the failure nor any delay on the part of
either party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence.

      (i) Headings. The headings of paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.

      (j) GOVERNING LAW. THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF
NEW JERSEY, AND ITS VALIDITY, INTERPRETATION, PERFORMANCE, AND ENFORCEMENT SHALL
BE GOVERNED BY THE LAWS OF SAID STATE.

<PAGE>

                                      -11-


      IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer, and the Executive has signed this Agreement, all
as of the day and year first above written.

                                    WARNER CHILCOTT PUBLIC LIMITED COMPANY

                                    By: /s/James G. Andress
                                    --------------------------------------------
                                    Name: James G. Andress
                                    Title: Chief Executive Officer

                                    /s/Roger M. Boissonneault
                                    --------------------------------------------
                                    Roger M. Boissonneault



                              EMPLOYMENT AGREEMENT

      EMPLOYMENT AGREEMENT (the "Agreement") dated as of February 3, 1998 by and
between WARNER CHILCOTT PUBLIC LIMITED COMPANY, a public limited company
organized under the laws of Ireland (the "Company"), and PAUL S. HERENDEEN (the
"Executive").

                                R E C I T A L S :

      A. The Board of Directors of the Company believes that the services of the
Executive would be of great value to the Company and is desirous of retaining
his services as contemplated hereby.

      B. The Executive desires to accept employment by the Company and to render
services to the Company, on the terms and subject to the conditions provided in
this Agreement.

                               A G R E E M E N T :

      The parties hereto agree as follows:

      1. Employment. The Company hereby agrees to employ and retain the
Executive, and the Executive agrees to be employed and retained by the Company,
to render services to the Company for the Employment Term (as defined), at the
rate of compensation and upon the other terms and conditions set forth herein.
The Executive shall devote his best efforts and his entire working time and
attention to his employment by the Company.

      2. Term. The term of the Executive's employment under this Agreement (the
"Employment Term") shall commence on the date hereof (the "Commencement Date"),
and shall continue until terminated as provided herein.

      3. Position and Duties.

      (a) Position. The Executive shall serve the Company as Executive Vice
President and Chief Financial Officer. During his executive employment
hereunder, the Executive shall report 

<PAGE>

                                      -2-


to the Chief Executive Officer of the Company. During the Employment Term, the
Company shall include the Executive in any slate of nominees proposed by the
Company for election or reelection, as the case may be, to the Company's Board
of Directors.

      (b) Duties. During the Employment Term, the Executive shall serve the
Company and its subsidiaries in such Executive Vice President and Chief
Financial Officer capacity with such duties consistent therewith and shall
perform such other services for the Company and its subsidiaries consistent with
the position of Executive Vice President and Chief Financial Officer as may be
assigned to him from time to time by the Company.

      4. Compensation and Reimbursement of Expenses.

      (a) Salary. For services rendered by the Executive under this Agreement,
the Company shall pay to the Executive as compensation during the Employment
Term a salary (the "Salary") initially equal to $225,000 per annum. The Salary
shall be subject to adjustment by the Company from time to time; however, in no
case shall the Executive's Salary be reduced below $225,000 per annum. The
Salary shall be payable at least in monthly installments on the normal payroll
cycle of the Company.

      (b) Reimbursement of Expenses. Consistent with established policies of the
Company as in effect from time to time, the Company shall pay or reimburse the
Executive for all reasonable travel, hotel, entertainment and other expenses
incurred by the Executive in performing his obligations under this Agreement.

      (c) Incentive Compensation. During the Employment Term, the Executive will
be eligible to participate in the Company's Incentive Share Option Scheme, as
amended.

      (d) Bonus Compensation. During the Employment Term, the Executive will be
eligible to receive an annual bonus (the "Bonus"). The Bonus shall have an
annual target rate of fifty percent (50%) of the Salary. Such Bonus shall be
provided on such terms and in such amounts, if any, as the Company may deem
appropriate in its sole discretion.

      (e) Moving Expenses. The Company shall reimburse the Executive for
expenses incurred in connection with the relocation of the Executive's family to
New Jersey including rea-

<PAGE>

                                      -3-


sonable moving expenses, transaction costs and decorating expenses.

      5. Benefits.

      (a) Benefit Plans. The Executive shall also be entitled to participate, on
a basis comparable to other key executives of the Company, in any benefit plan,
incentive compensation plan or program of the Company for which key executives
are or shall become eligible, including, without limitation, pension, 401(k),
life and disability insurance and stock benefits and/or plans, subject, in the
case of tax-qualified benefit plans and programs, to restrictions under
applicable law. The Executive shall be entitled, at his own expense, to continue
his participation in any group insurance plans after the termination of his
employment with the Company, to the extent required or permitted under
applicable law.

      (b) Vacation. The Executive shall be entitled to vacation time with
compensation of 20 days per annum during the Employment Term. The Executive
shall also be entitled to all paid holidays given by the Company to its senior
executive officers.

      (c) No Reduction. There shall be no material reduction or diminution of
the benefits provided in this Section 5 (i) unless the Executive shall have
given his prior written consent to such reduction or diminution and an equitable
arrangement (embodied in an ongoing substitute or alternative benefit or plan)
has been made with respect to such benefit or plan or (ii) except, in the case
of Section 5(a), for across-the-board benefit reductions similarly affecting all
senior management personnel of the Company.

      (d) Warrants. On the Commencement Date, the Executive shall be issued (i)
warrants to purchase an aggregate of 200,000 Ordinary Shares of the Company at
an exercise price of $9.77 per share. The specific terms of the warrants,
including conditions to the Executive's ability to exercise such warrants, are
described in the Warrant Certificate, dated as of February 3, 1998, issued by
the Company to the Executive.

      6. Termination. This Agreement is subject to termination as follows:

      (a) Death of the Executive. If the Executive dies, this Agreement shall
terminate effective as of the date of the Executive's death, and thereupon the
Executive's estate shall be 

<PAGE>

                                      -4-


entitled solely to the payments and benefits set forth in Section 7(b) hereof.

      (b) Disability. If the Executive has been unable to perform his
obligations hereunder for six consecutive months, or for at least 180 days
during any calendar year, due to Disability, the Company shall thereafter have
the right to terminate the Executive's employment hereunder upon at least 30
days' prior written notice to the Executive of the effective date of such
termination, and thereupon the Executive shall be entitled solely to the
payments and benefits set forth in Section 7(b) hereof.

      (c) Termination by the Company for Cause. The Company shall have the right
to terminate the Executive's employment hereunder for Cause (as hereafter
defined), and thereupon the Executive shall be entitled solely to the payments
and benefits set forth in Section 7(a) hereof. For purposes of this Agreement,
the term "Cause" shall mean any of the following: (i) conviction of the
Executive by a court of competent jurisdiction for commission of any felony,
(ii) the Executive's failure or refusal to perform substantially his duties with
the Company which failure or refusal continues for thirty days following the
Executive's receipt of written notice specifying the nature and manner of such
failure or refusal to perform, (iii) the Executive's willful misconduct or gross
negligence which is injurious to the Company or its reputation and goodwill, or
(iv) the Executive's breach of Section 8, 9 or 10 of this Agreement.

      (d) Resignation or Retirement. If the Executive resigns or retires, this
Agreement shall terminate as of the date of the Executive's resignation or
retirement, and thereupon the Executive shall be entitled solely to the payments
and benefits set forth in Section 7(a) hereof.

      (e) Termination by the Company other than for Cause. The Company shall
have the right, at its sole discretion, to terminate the Executive's employment
hereunder without Cause. Thereupon, the Executive shall be entitled solely to
the payments and benefits set forth in Section 7(b) hereof.

      7. Effect of Termination.

      (a) Cause or Resignation or Retirement. Upon the termination of this
Agreement by the Company for Cause or upon the resignation or retirement of the
Executive, the Company shall pay to the Executive (i) his Salary accrued through
the 

<PAGE>

                                      -5-


effective date of termination, payable at the time such payment is otherwise due
and payable hereunder, and (ii) all other amounts and benefits to which the
Executive is entitled, including, without limitation, vacation pay and expense
reimbursement amounts accrued to the effective date of termination and amounts
and benefits owing under the terms of any benefit plan of the Company in which
the Executive participates, and the Company and the Executive shall have no
further obligation to each other under this Agreement except as provided in
Section 15 hereof.

      (b) Other Termination. Upon the termination of this Agreement pursuant to
Section 6(a), 6(b) or 6(e) hereof, the Company shall pay to the Executive an
amount equal to the Executive's then current Salary for a period of eighteen
months (the "Severance Amount") plus all other amounts and benefits to which the
Executive is entitled, including, without limitation, expense reimbursement
amounts accrued to the effective date of termination and amounts and benefits
owing under the terms of any benefit plan of the Company in which the Executive
participates. The Severance Amount shall be paid in a lump sum equal to the net
present value of the Severance Amount, determined by discounting the aggregate
Severance Amount using a discount rate equal to the yield on the date of such
termination of United States Treasury Securities having a maturity closest to
one year from such date.

      (c) No Offset. The Company will not be permitted to offset any payment
payable to the Executive pursuant to Section 7(a) or 7(b) hereof against any
monetary obligations owed by the Executive to the Company, except that in the
event that the Executive breaches Section 8, 9 or 10 of this Agreement, the
Company shall have no obligation to make any payment otherwise payable under
Section 7(b) hereof.

      8. Non-Solicitation Agreement. The Executive covenants and agrees that
while employed by the Company and during any period for which the Executive
accepted or continues to accept payments under Section 7 above, the Executive
will not in any way, directly or indirectly, on the Executive's own behalf or on
behalf of or in conjunction with any other person, partnership, firm or
corporation, solicit, divert, take away, or attempt to take away any person,
partnership, firm or corporation (or the business or patronage) that has been a
customer of the Company or any of its affiliated entities. The Executive further
agrees that, for such period, the Executive will not in any way, directly or
indirectly, on the Executive's own behalf or on behalf of or in conjunction with
any person, partnership, 

<PAGE>

                                      -6-


firm or corporation, solicit, entice, hire, employ or endeavor to employ any
employee of the Company or any of its affiliated entities.

      9. Agreement Not To Compete. The Executive covenants and agrees that he
will not, during the term of his employment with the Company, and so long as the
Executive has been paid or continues to accept any payments under Section 7
above, either directly or indirectly, as an employee, director, officer,
shareholder, partner, advisor, consultant or otherwise, engage in any commercial
activity or participate in any venture of any kind that competes with the
Company with respect to the development, marketing, testing, manufacture or
delivery of complex generic pharmaceutical products within the United States.

      Nothing stated in this Section 9 shall be deemed to preclude the Executive
from holding less than 5% of the outstanding capital stock of any corporation
required to file periodic reports with the Securities and Exchange Commission
under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended,
and the securities of which are listed on any securities exchange or quoted on
the Nasdaq National Market or traded on the over-the-counter market.

      The Executive acknowledges that the Company has expended substantial time
and expense in the research and development of processes, technology, techniques
and products which are unique to the Company or not generally known to others
and which could be unfairly taken or used by others in competition with the
Company. Accordingly, the Executive agrees that the restrictions contained in
this Agreement are reasonable.

      If the scope of the restrictions contained in this Section 9 is too broad
to permit enforcement of such restrictions to their full extent, then such
restrictions shall be construed or re-written (blue-lined) so as to be
enforceable to the maximum extent permitted by law, and the Executive hereby
consents, to the extent he may lawfully do so, to the judicial modification of
the scope of such restrictions in any proceeding brought to enforce such
restrictions. In the event of any breach by the Executive of this Section 9, the
Company may elect to institute and prosecute proceedings in any state or federal
court located in the State of New Jersey, either at law or in equity, to seek to
obtain specific performance of any part of this Agreement, to seek injunctive
relief against the Executive to temporarily or permanently enjoin the violation
of this Section 9 and/or to seek to recover any damages resulting 

<PAGE>

                                      -7-


from the breach of this Section 9, and to recover attorneys' fees and costs in
connection with the institution and prosecution of such proceedings. In any such
proceedings, the Executive shall be entitled to seek to recover his attorneys'
fees and costs in connection with such proceedings. No remedy available to the
Company for a breach of this Section 9 is intended to be exclusive of any other
remedy and all remedies are cumulative. The Executive agrees that damages are
not adequate to compensate the Company for any breach by the Executive of this
Agreement and hereby waives the defense of an adequate remedy at law or any
other remedy at law and admits and concedes that there are none.

      10. Confidential Information. The Executive covenants and agrees not to at
any time use, divulge, furnish or make accessible to anyone other than the
Company, its affiliated entities, or its or their directors and officers, any
proprietary or confidential information ("Confidential Information") of the
Company or any of its affiliated entities, including but not limited to
information regarding the development of the Company's products, or the
provision of the Company's services, or the Company's customer lists.

      Upon termination of his employment with the Company, the Executive agrees
to deliver to the Company all written materials that constitute Confidential
Information. Further, upon termination of his employment with the Company, the
Executive agrees to make available to any person designated by the Company all
information concerning pending or preceding transactions which may affect the
operation of the Company or any subsidiary of the Company about which the
Executive has knowledge. The obligations of the Executive contained in this
paragraph are in addition to the obligation of the Executive to return to the
Company, upon the termination of his employment, all property of the Company
then in his possession.

      11. Assignment of Intellectual Property Rights. The Executive shall
promptly disclose to the Company all inventions, discoveries, improvements,
designs, processes, techniques, equipment, trademarks or copyrightable matter
conceived or made by the Executive during the Executive's employment and related
to any aspect of the business of the Company, and the Executive hereby assigns
all of the Executive's interest therein, including the goodwill of the business
symbolized by any trademarks, to the Company. The Executive further agrees to
execute any applications, assignments or other instruments which the Company
shall deem necessary to obtain letters patent, trademark registration or
copyright registration of the United

<PAGE>

                                      -8-


States or any foreign country or to otherwise protect the Company's interest
therein. Nothing contained in this provision shall apply to any invention for
which no equipment, supplies, facility or trade secrets information of the
Company or any affiliated entity of the Company was used and which was developed
entirely on the Executive's own time, and (a) which does not relate (1) to any
aspect of the business of the Company or any affiliated entity of the Company or
(2) to the actual or demonstrably anticipated research or development of the
Company or any affiliated entity of the Company, or (b) which does not result
from any work performed by the Executive for the Company or any affiliated
entity of the Company.

      12. Assistance in Litigation. During the Employment Term, the Executive
shall, upon reasonable notice, furnish such information and proper assistance to
the Company as may reasonably be required by the Company in connection with any
litigation in which it is, or may become, a party.

      13. Federal Income Tax Withholding. The Company shall withhold from any
benefits payable pursuant to this Agreement such Federal, State, City or other
taxes as may be required to be withheld pursuant to any law or governmental
regulations or ruling.

      14. Effect of Prior Agreements. This Agreement contains the entire
understanding between the parties hereto respecting the Executive's employment
by the Company and supersedes any prior employment agreement or arrangement
between the Company and the Executive.

      15. Indemnification. The Company shall indemnify and hold the Executive
harmless to the fullest extent legally permissible under New Jersey law, against
any and all expenses, liabilities and losses (including attorneys' fees,
judgments, fines and amounts paid in settlement) reasonably incurred or suffered
by him in connection with service as an officer of the Company or any other
service or function served by him on behalf of the Company or at the Company's
request; provided, that, the Executive shall not be entitled to indemnification
hereunder if the expenses, liabilities and losses referred to above resulted
from or relate to willful misconduct or gross negligence by the Executive. The
Company shall advance to the Executive the amount of his expenses incurred in
connection with any proceeding relating to any such service or function to the
fullest extent legally permissible under New Jersey law. The indemnification and
expense reimbursement obligations of the Company in this Section 15 will
continue as to the Executive 

<PAGE>

                                      -9-


after he ceases to be an officer of the Company and shall inure to the benefit
of his heirs, executors and administrators. The Company shall not, without the
Executive's written consent, cause or permit any amendment to the Company's
governing documents which would affect the Executive's rights to indemnification
and expense reimbursement thereunder.

      16. General Provisions.

      (a) Nonassignability. Neither this Agreement nor any right or interest
hereunder shall be assignable by the Executive, his beneficiaries, or legal
representatives without the Company's prior written consent.

      (b) Binding Agreement. This Agreement shall be binding upon, and inure to
the benefit of, the Executive and the Company and their respective heirs,
executors, administrators, successors and permitted assigns.

      (c) Amendment of Agreement. This Agreement may not be modified or amended
except by an instrument in writing signed by the parties hereto.

      (d) Waiver. No term or condition of this Agreement shall be deemed to have
been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel.

      (e) Severability. If, for any reason, any provision of this Agreement is
held invalid, such invalidity shall not affect any other provision of this
Agreement not held so invalid, and each such other provision shall to the full
extent consistent with law continue in full force and effect.

      (f) Notices. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid, if to
the Executive, addressed to Paul S. Herendeen, 7 Maple Road, Chatham Township,
NJ 07928; if to the Company, addressed to Warner Chilcott, Inc., Rockaway
Corporate Center, 100 Enterprise Drive, Suite 280, Rockaway, NJ 07866,
facsimile: (973) 442-3224 and directed to the attention of the Chief Executive
Officer of the Company with a copy to the Secretary of the Company; or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except

<PAGE>

                                      -10-


that notice of change of address shall be effective only upon receipt.

      (g) Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

      (h) Indulgences, Etc. Neither the failure nor any delay on the part of
either party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence.

      (i) Headings. The headings of paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.

      (j) GOVERNING LAW. THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF
NEW JERSEY, AND ITS VALIDITY, INTERPRETATION, PERFORMANCE, AND ENFORCEMENT SHALL
BE GOVERNED BY THE LAWS OF SAID STATE.

<PAGE>

                                      -11-


      IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer, and the Executive has signed this Agreement, all
as of the day and year first above written.

                                    WARNER CHILCOTT PUBLIC LIMITED COMPANY

                                    /S/James G. Andress
                                    --------------------------------------------
                                    Chairman Of The Board and Chief Executive
                                    Officer

                                    /s/Paul S. Herendeen
                                    --------------------------------------------
                                    Paul S. Herendeen



      THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.

      THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO (X) THE DATE WHICH IS THREE YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY ANY
SUBSEQUENT CHANGE IN APPLICABLE LAW (THE "RESALE RESTRICTION TERMINATION DATE")
ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES
ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501
UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR
FOR THE ACCOUNT OF SUCH AN "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RIGHT
OF THE COMPANY IN ITS SOLE DISCRETION PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF OPINIONS OF

<PAGE>

                                      -2-


COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION REASONABLY ACCEPTABLE IN FORM
AND SUBSTANCE TO IT THAT SUCH REGISTRATION IS NOT REQUIRED. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.

<PAGE>

                                      -3-


Series C No. W02                                                100,000 Warrants

                     WARNER CHILCOTT PUBLIC LIMITED COMPANY

                               Warrant Certificate

      THIS CERTIFIES THAT for value received James G. Andress, or registered
assigns (the "Warrant Holder"), is the owner of the number of Warrants set forth
above, each of which entitles the owner thereof to purchase at any time on or
after the date hereof until the earlier of (i) 5 P.M. (New York time) on October
31, 2006 or (ii) the occurrence of a Termination Event (as defined) (the
"Expiration Date"), at the office of the Company, one fully paid and
nonassessable Ordinary Share, par value $.05 per share ("Ordinary Share"),
represented by one American Depositary Share ("ADS"), evidenced by American
Depository Receipts ("ADRs"), of WARNER CHILCOTT PUBLIC LIMITED COMPANY
(formerly named Nale Laboratories public limited company), a public limited
company organized and existing under the laws of Ireland (the "Company"), at the
purchase price and according to the schedule set forth in Section 2 hereof, upon
presentation and surrender of this Warrant Certificate with the Form of Election
to Purchase duly executed. The number of Warrants evidenced by this Warrant
Certificate (and the number of Ordinary Shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per share set forth
above, are the number and Purchase Price as of October 31, 1996, based on the
Ordinary Shares of the Company as constituted at such date.

      Section 1. Transfer, Split Up, Combination and Exchange of Warrant
Certificates; Mutilated, Destroyed, Lost or Stolen Warrant Certificates.

      This Warrant Certificate, with or without other Warrant Certificates, may
be transferred or exchanged for another Warrant Certificate or Warrant
Certificates, entitling the Warrant Holder to purchase a like number of Ordinary
Shares as this Warrant Certificate entitles such Warrant Holder to purchase. In
the event that the Warrant Holder desires to transfer, split up, combine or
exchange this Warrant Certificate, the Warrant Holder shall make such request in
writing delivered to the Company, and shall surrender this Warrant Certificate
to the Company. Thereupon the Company shall deliver to the person entitled
thereto a Warrant Certificate or Warrant Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax
or governmental 

<PAGE>

                                      -4-


charge that may be imposed in connection with any transfer, split up,
combination or exchange of this Warrant Certificate. Notwithstanding the
foregoing, the Company shall have no obligation to cause Warrants to be
transferred on its books to any person, unless the Warrant Holder shall 
furnish to the Company evidence of compliance with the Act, in accordance 
with the provisions of Section 14 hereof.

      Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of this Warrant
Certificate if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor to the Warrant Holder in lieu of the Warrant
Certificate so lost, stolen, destroyed or mutilated.

      Section 2. Exercise of Warrants; Purchase Price; Expiration of Warrants.
(a) The Warrant Holder may exercise the Warrants evidenced hereby, in whole or
in part, according to the following schedule:

      Exercisable number of Warrants = (N x Q x .0625) minus P

            Where:

            N =   total number of Warrants (subject to adjustment pursuant to
                  Section 5 hereof),

            Q =   the number of whole calendar quarters which have elapsed
                  from September 30, 1996, and

            P =   the number of Warrants (if any) previously exercised

Notwithstanding  the  foregoing,  the Board of Directors of the Company and/or a
committee  thereof may, at its absolute  discretion,  declare any Warrants to be
exercisable  in whole or in part as from any  date  earlier  than the date  upon
which  it  would  otherwise  become  exercisable.  Further,  as  described  more
completely in Section 7 hereof, upon a change of control, consolidation, sale or
merger of the Company, all outstanding Warrants shall become exercisable.

      (b) Warrants may be exercised in accordance with the foregoing paragraph
(a) upon surrender of this Warrant Certifi-

<PAGE>

                                      -5-


cate with the Form of Election to Purchase, duly executed, to the Company at the
address of the Company, at or prior to the Expiration Date, together with
payment of the Purchase Price (as defined) for each Ordinary Share as to which
the Warrants evidenced hereby are exercised.

      (c) The Warrants shall expire prior to October 31, 2006 in the following
cases (each being a "Termination Event"): (1) the death of the Warrant Holder in
which case the personal representative of the deceased Warrant Holder may at any
time or from time to time, but subject to the other provisions of this Warrant
Certificate and in no case later than one year after such death, exercise any
Warrants, but only to the extent that such Warrants were exercisable by the
Warrant Holder at the time of his death, and (2) the Warrant Holder ceases to be
employed by the Company by reason of resignation, dismissal, retirement,
disability or otherwise ("Separation") in which case the Warrant Holder may at
any time, but subject to the other provisions of this Warrant Certificate and in
no case later than thirty days after Separation, exercise any Warrants, but only
to the extent that such Warrants were exercisable by the Warrant Holder at the
date of Separation.

      (d) The purchase price for each Ordinary Share pursuant to the exercise of
Warrants evidenced hereby shall initially be $1.00 (the "Purchase Price") but
will be subject to adjustment as provided in Section 5 hereof and shall be
payable as provided in Section 2(e) hereof.

      (e) Upon receipt of this Warrant Certificate, with the Form of Election to
Purchase duly executed, accompanied by payment of the Purchase Price for the
Ordinary Shares to be purchased and an amount equal to any applicable transfer
tax in cash, or by certified check, bank draft or postal or express money order
payable to the order of the Company, the Company shall thereupon promptly (i)
requisition from any transfer agent of the Ordinary Shares of the Company,
certificates for the number of whole Ordinary Shares to be purchased and (ii)
promptly after receipt of such certificates cause the same to be delivered to or
upon the order of the Warrant Holder, registered in such name or names as may be
designated by such Warrant Holder, and, when appropriate, promptly deliver cash
to be paid in lieu of issuance of fractional Ordinary Shares to or upon the
order of the Warrant Holder.

      (f) In the event that the Warrant Holder shall exercise less than all the
Warrants evidenced hereby, a new Warrant Certificate evidencing Warrants
equivalent to the Warrants re-

<PAGE>

                                      -6-


maining unexercised shall be issued by the Company to the Warrant Holder or to
the Warrant Holder's duly authorized assigns, subject to the provisions of
Section 8 hereof.

      Section 3. Reservation and Availability of Ordinary Shares. The Company
covenants and agrees that it will cause to be reserved and kept available at all
times, free from preemptive rights and out of its authorized and available
Ordinary Shares (including treasury shares), the number of Ordinary Shares that
will be sufficient to permit the exercise in full of all outstanding Warrants
evidenced hereby.

      The Company further covenants and agrees to reserve sufficient ADSs under
the Deposit Agreement, dated as of October 17, 1994 (the "Deposit Agreement"),
among the Company, The Bank of New York, as Depositary, and holders from time to
time of ADRs issued thereunder to permit the deposit thereunder of Ordinary
Shares represented by all Warrants evidenced hereby and the issuance of ADSs
representing such Ordinary Shares. The Company will, upon request of the holder
of the Ordinary Shares issued upon exercise of the Warrants evidenced hereby,
deposit such Ordinary Shares on behalf of such holder pursuant to the terms of
the Deposit Agreement and deliver to the holder of such shares the appropriate
number of ADSs evidenced by ADRs.

      The Company further covenants and agrees that it will take all such action
as may be necessary to insure that all Ordinary Shares delivered upon exercise
of the Warrants evidenced hereby shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price) (i) be
duly and validly authorized and issued and fully paid and nonassessable shares,
and (ii) be issued in compliance with all applicable governmental laws and
regulations.

      The Company further covenants and agrees that it will pay when due and
payable any and all federal and state taxes and charges which may be payable in
respect of the initial issuance or delivery of any Ordinary Shares, ADSs
representing such Ordinary Shares or ADRs evidencing such ADSs, upon the
exercise of the Warrants evidenced hereby. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the transfer or delivery of this Warrant Certificate or the issuance or
delivery of certificates for Ordinary Shares in a name other than that of the
Warrant Holder or to issue or deliver any certificates for Ordinary Shares upon
the exercise of any Warrant evidenced hereby until any such tax shall have been
paid (any such tax 

<PAGE>

                                      -7-


being payable by the Warrant Holder at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.

      Section 4. Ordinary Shares Record Date. The Warrant Holder shall for all
purposes be deemed to have become the holder of record of any Ordinary Shares
issued upon exercise of Warrants evidenced hereby on, and the certificate
representing any such Ordinary Shares shall be dated, the date upon which this
Warrant Certificate was duly surrendered and payment of the Purchase Price (and
any applicable transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the Ordinary Share transfer
books of the Company are closed, the Warrant Holder shall be deemed to have
become the record holder of such Ordinary Shares on, and such certificate shall
be dated, the next succeeding business day on which the Ordinary Share transfer
books of the Company are open. Prior to the exercise of the Warrants evidenced
hereby, the Warrant Holder shall not be entitled to any rights of a shareholder
of the Company with respect to Ordinary Shares for which the Warrants evidenced
hereby are exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein or required by law.

      Section 5. Adjustment of Purchase Price, Number of Ordinary Shares and
Shares of Capital Stock Warrants Are Exercisable Into. The number and kind of
securities purchasable upon the exercise of each Warrant evidenced hereby and
the Purchase Price shall be subject to adjustment from time to time upon the
happening of certain events, as hereinafter defined.

      (a) Adjustment for Change in Capital Stock. In case the Company shall (i)
pay a dividend on its Ordinary Shares, whether of Ordinary Shares or capital
shares of any other class or make any other distribution of Ordinary Shares,
(ii) subdivide its outstanding Ordinary Shares into a greater number of shares
or (iii) combine its outstanding Ordinary Shares into a smaller number of
Ordinary Shares, the number of Ordinary Shares purchasable upon exercise of each
Warrant evidenced hereby immediately prior thereto shall be adjusted so that the
Warrant Holder shall be entitled to receive the number of Ordinary Shares which
the Warrant Holder would have owned or have been entitled to receive after the
happening of any of the events described above had such Warrant been exercised
immedi-

<PAGE>

                                      -8-


ately prior to the happening of such event or any record date with respect
thereto.

      An adjustment made pursuant to this Section 5(a) shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event. Such adjustment shall be made successively
whenever such a payment, subdivision or combination is made.

      (b) Adjustment for Other Distributions. In case the Company shall
distribute to all holders of its Ordinary Shares evidences of its indebtedness
(other than evidences of indebtedness, shares of stock or other securities which
are convertible into or exchangeable for, with or without payment of additional
consideration in cash or property, Ordinary Shares, either upon the occurrence
of a specified date or a specified event (in any case, "Convertible
Securities")), assets (excluding cash dividends or distributions payable out of
consolidated retained earnings and dividends or distributions referred to in
Section 5(a) or in Section 5(c)), shares of capital stock (other than Ordinary
Shares), or rights, options or warrants containing the right to subscribe for or
purchase debt securities, assets or securities of the Company (other than
Convertible Securities or Ordinary Shares) (collectively "Assets"), then in each
case the number of Ordinary Shares thereafter purchasable upon the exercise of
each Warrant evidenced hereby shall be determined by multiplying the number of
Ordinary Shares theretofore purchasable upon the exercise of each Warrant
evidenced hereby by a fraction, of which the numerator shall be the market price
per Ordinary Share (as defined in Section 5(f)) on the date of such
distribution, and the denominator of which shall be such market price per
Ordinary Share less the fair value as of such record date (as determined in good
faith by the Board of Directors of the Company) of the portion of the Assets
applicable to one Ordinary Share. Such adjustment shall be made whenever any
such distribution is made, and shall become effective on the date of
distribution retroactive to the record date for the determination of
shareholders entitled to receive such distribution. A reclassification of the
Ordinary Shares (other than a change in par value, from par value to no par
value or from no par value to par value) into Ordinary Shares and shares of any
other class of stock shall be deemed a distribution by the Company to the
holders of its Ordinary Shares of such shares of such other class of stock
within the meaning of this Section 5(b) and, if the outstanding Ordinary Shares
shall be changed into larger or smaller number of Ordinary Shares as a part of
such reclassification, such change shall be deemed a subdivision or combina-

<PAGE>

                                      -9-


tion, as the case may be, of the outstanding Ordinary Shares within the meaning
of Section 5(a).

      No adjustment shall be made pursuant to this Section 5(b) unless, on the
record date for such distribution, the market price per Ordinary Share exceeds
the fair market value of the Assets applicable to each outstanding Ordinary
Share. In the event, and each time, that the Company distributes Assets to all
holders of its Ordinary Shares and the market price per Ordinary Share on the
record date for such distribution is less than or equal to the fair market value
of the Assets applicable to each outstanding Ordinary Share on such date, the
Company shall either (i) distribute Assets to the Warrant Holder on the record
date for such distribution when such Assets are distributed to the holders of
Ordinary Shares as though all Warrants evidenced hereby had been exercised as of
such record date or (ii) deposit such Assets in trust with a trustee. If the
Company elects to distribute Assets to the Warrant Holder, the Company shall, on
the date Assets are distributed to holders of Ordinary Shares, distribute to
such Warrant Holder the Assets that it would have been entitled to receive on
such date if it had exercised the Warrants evidenced hereby immediately prior to
the record date for such distribution. If, however, the Company elects to
deposit the Assets due the Warrant Holder in trust, the Company shall, on the
date Assets are distributed to holders of Ordinary Shares, place in trust the
Assets that the Warrant Holder would have been entitled to receive on such date
if all of the Warrants evidenced hereby had been exercised immediately prior to
the record date for such distribution; and the Warrant Holder shall be entitled
upon exercise of the Warrants evidenced hereby to receive the Ordinary Shares
issuable upon exercise thereof, the Assets placed in trust in respect of such
Warrants, and the interest and dividends paid on such Assets since being placed
in trust. In the event any Warrants evidenced hereby have not been exercised
prior to the termination of the Expiration Date, any assets remaining in such
trust after distributions have been made in respect of Warrants exercised shall
be returned to the Company.

      (c) Adjustment for Issuance of Ordinary Shares. If at any time after the
date hereof the Company shall (except as hereinafter provided) issue or sell any
Ordinary Shares for consideration in an amount per Ordinary Share less than the
market price per Ordinary Share (as defined in Section 5(f)) in effect
immediately prior to the time of such issue or sale, then the number of Ordinary
Shares purchasable upon the exercise of each Warrant evidenced hereby shall be
adjusted to 

<PAGE>

                                      -10-


equal the product obtained by multiplying the number of Ordinary Shares for
which such Warrant is exercisable immediately prior to such issue or sale by a
fraction (A) the numerator of which shall be the number of Ordinary Shares
outstanding immediately after such issue or sale, and (B) the denominator of
which shall be the sum of (1) the number of Ordinary Shares outstanding
immediately prior to such issue or sale, and (2) the aggregate consideration
received from the issuance or sale of such additional Ordinary Shares divided by
the market price per Ordinary Share (as defined in Section 5(f)) in effect
immediately prior to the time of such issue or sale; provided, however, that no
adjustment shall be made pursuant to this Section 5(c) upon the issuance of
Ordinary Shares (i) in a bona fide public offering pursuant to a firm commitment
or best efforts underwriting, (ii) upon the issuance of up to 500,000 Ordinary
Shares, or ADSs representing such Ordinary Shares, of the Company pursuant to
any employee stock option, purchase or similar plan which may be established by
the Company from time to time providing for options, warrants or similar rights
to purchase Ordinary Shares, or ADSs representing such Ordinary Shares, of the
Company or (iii) upon the issuance of Ordinary Shares pursuant to (A) the
Agreement among the Company, Nale Laboratories Corporation and Bernard J. Berk,
(B) the warrants issued pursuant to the Warrant Agreement dated as of October
17, 1994 between the Company and Elan Corporation, plc, (C) the warrants issued
pursuant to the Warrant Agreement dated as of October 17, 1994 between the
Company and Montgomery Securities, (D) the warrants issued pursuant to the
Warrant Purchase Agreement dated as of March 28, 1996 by and between the Company
and Warner-Lambert Company or (E) the warrants to purchase in the aggregate
amount 170,000 Ordinary Shares, or ADSs representing such Ordinary Shares,
issued on June 28, 1996 to certain current and former directors of the Company.

      (d) Issuance of Warrants or Other Rights. In case the Company shall
distribute to all holders of its Ordinary Shares or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any warrants or other rights to subscribe for or
purchase any Ordinary Shares or any Convertible Securities, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and the
price per share for which Ordinary Shares are issuable upon the exercise of such
warrants or other rights or upon conversion or exchange of such Convertible
Securities plus the price paid to the Company to acquire such warrants, other
rights or Convertible Securities shall be less than the market price per
Ordinary Share (as defined in Section 5(f)) in effect immediately prior to the
time 

<PAGE>

                                      -11-


of such distribution, issue or sale, then the number of Ordinary Shares
purchasable upon the exercise of each Warrant evidenced hereby shall be adjusted
as provided in Section 5(c) on the basis that (A) the maximum number of Ordinary
Shares issuable pursuant to all such warrants or other rights or necessary to
give effect to the conversion or exchange of all such Convertible Securities
shall be deemed to be issued and outstanding, (B) the price per share for such
Ordinary Shares shall be deemed to be the lowest possible price per share in any
range of prices per share at which such Ordinary Shares are available to such
holders, and (C) the Company shall have received all of the consideration
payable therefor, if any, as of the date of the actual issuance of such warrants
or other rights; provided, however, that no adjustment shall be made pursuant to
this Section 5(d) upon the issuance of any warrants or options or other rights
to subscribe for up to 500,000 Ordinary Shares, or ADSs representing such
Ordinary Shares, of the Company, pursuant to any employee stock option, purchase
or similar plan which may be established by the Company from time to time. No
further adjustments of the number of Ordinary Shares for which any Warrant
evidenced hereby is exercisable shall be made upon the actual issue of such
Ordinary Shares or of such Convertible Securities upon exercise of such warrants
or other rights or upon the actual issue of such Ordinary Shares upon such
conversion or exchange of such Convertible Securities.

      (e) Adjustments for Issuance of Convertible Securities. In case the
Company shall distribute to all holders of its Ordinary Shares or shall in any
manner (whether directly or by assumption in a merger in which the Company is
the surviving corporation) issue or sell any Convertible Securities, whether or
not the rights to exchange or convert thereunder are immediately exercisable,
and the price per share for which Ordinary Shares are issuable upon such
conversion or exchange, plus the price paid to the Company to acquire such
Convertible Security, shall be less than the market price per Ordinary Share (as
defined in Section 5(f)), in effect immediately prior to the time of such
distribution, issue or sale, then the number of Ordinary Shares purchasable upon
the exercise of each Warrant evidenced hereby shall be adjusted as provided in
Section 5(c) on the basis that (i) the maximum number of Ordinary Shares
necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to be issued and outstanding, (ii) the price per
share of such Ordinary Shares shall be deemed to be the lowest possible price in
any range of prices at which such Ordinary Shares are available to such holders,
and (iii) the Company shall have received all of the consideration payable
therefor, if any, as of the date of actual issu-

<PAGE>

                                      -12-


ance of such Convertible Securities. No adjustment of the number of Ordinary
Shares for which any Warrant evidenced hereby is exercisable shall be made under
this Section 5(e) upon the issuance of any Convertible Securities which are
issued pursuant to the exercise of any warrants or other subscription or
purchase rights therefor if any such adjustment shall previously have been made
upon the issuance of such warrants or other rights pursuant to Section 5(d). No
further adjustments of the number of Ordinary Shares for which any such Warrant
evidenced hereby is exercisable shall be made upon the actual issue of such
Ordinary Shares upon conversion or exchange of such Convertible Securities and,
if any issue or sale of such Convertible Securities is made upon exercise of any
warrant or other right to subscribe for or to purchase any such Convertible
Securities for which adjustments have been or are to be made pursuant to other
provisions of this Section 5, no further adjustments shall be made by reason of
such issue or sale. For the purposes of this Section 5(e), the date as of which
the current market price of Ordinary Shares shall be computed shall be the
earliest of (a) the date on which the Company shall take a record of the holders
of its Ordinary Shares for the purpose of entitling them to receive any such
Convertible Securities or (b) the date of actual issuance of such Convertible
Securities.

      (f) Market Price. For the purpose of any computation under Sections 5(b),
5(c), 5(d), 5(e) and 8(b), the market price per Ordinary Share at any date shall
be the fair value thereof determined in the reasonable good faith judgment of
the Board of Directors of the Company; provided, however, that if the Ordinary
Shares, or ADSs representing such Ordinary Shares, are listed or admitted for
trading on any domestic national securities exchange or quoted in the
over-the-counter market or the National Association of Securities Dealers
Automated Quotation ("NASDAQ") National Market System, the market price per
Ordinary Share shall be the average of the daily closing prices for 20
consecutive trading days preceding the date of such computation. The closing
price for each day shall be the last reported sales price regular way or, in
case no such reported sale takes place on such day, the average of the closing
bid and asked prices regular way for such day, in each case on the principal
national securities exchange on which the Ordinary Shares or ADSs, as the case
may be, are listed or admitted to trading or, if not listed or admitted to
trading, the average of the last reported sales price or in case no such
reported sales take place on such day, the average of the closing bid and asked
prices of the Ordinary Shares in the over-the-counter market as reported by
NASDAQ or the NASDAQ National Market System or any comparable system or, if the
Ordinary Shares are not 

<PAGE>

                                      -13-


included for quotation in the over-the-counter market or the NASDAQ National
Market System or a comparable system, the average of the closing bid and asked
prices as furnished by two members of the National Association of Securities
Deals, Inc. selected from time to time by the Board of Directors of the Company
for that purpose.

      (g) When De Minimis Adjustment May Be Deferred. No adjustment in the
number of Ordinary Shares purchasable upon exercise of the Warrants evidenced
hereby shall be required unless such adjustment would require an increase or
decrease of at least one percent (1%) in the number of Ordinary Shares
purchasable upon the exercise of each such Warrant; provided, however, that any
adjustments which by reason of this paragraph (g) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations shall be made to the nearest one-thousandth of a share.

      (h) Adjustment in Purchase Price. Whenever the number of Ordinary Shares
purchasable upon the exercise of each Warrant evidenced hereby is adjusted as
herein provided, the Purchase Price payable upon exercise of each such Warrant
shall be adjusted by multiplying such Purchase Price immediately prior to such
adjustment by a fraction, of which the numerator shall be the number of Ordinary
Shares purchasable upon the exercise of each such Warrant immediately prior to
such adjustment, and of which the denominator shall be the number of Ordinary
Shares purchasable immediately thereafter.

      (i) When No Adjustment Required. No adjustment in the number of Ordinary
Shares purchasable upon the exercise of each Warrant evidenced hereby need be
made under Sections 5(b), 5(d) and 5(e) if the Company issues or distributes to
the Warrant Holder, the Assets, warrants or other rights or Convertible
Securities referred to in those paragraphs which the Warrant Holder would have
been entitled to receive had the Warrants evidenced hereby been exercised prior
to the happening of such event or the record date with respect thereto. No
adjustment need be made for a change in the par value or to no par value of the
Ordinary Shares; provided, however, that the Purchase Price shall at no time be
less than the par value of the Ordinary Shares of the Company, provided,
further, that the Company shall reduce the par value of its Ordinary Shares from
time to time as necessary so that such par value shall not be more than the
Purchase Price then in effect.

      (j) Ordinary Shares. For all purposes of this Warrant Certificate, the
term "Ordinary Shares" shall mean (i) the 

<PAGE>

                                      -14-


class of stock designated as the Ordinary Shares of the Company on October 31,
1996 or (ii) any other class of stock resulting from successive changes or
reclassifications of such shares consisting solely of changes in par value, or
from par value to no par value, or from no par value to par value. In the event
that at any time, as a result of an adjustment made pursuant to Section 5(a),
the Warrant Holder shall become entitled to purchase any securities of the
Company other than Ordinary Shares, thereafter the number of such other shares
so purchasable upon exercise of each Warrant evidenced hereby and the Purchase
Price of such shares shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Ordinary Shares contained in Sections 5(a) through 5(i) herein,
inclusive, this Section 5(j) and the provisions of Section 2 and Sections 5(m)
and 5(n) herein, with respect to the Ordinary Shares, shall apply on like terms
to any such other securities.

      (k) Expiration of Rights, Warrants or Convertible Securities. Upon the
expiration of any rights, warrants or Convertible Securities, if any thereof
shall not have been exercised, exchanged or converted, the Purchase Price and
the number of Ordinary Shares purchasable upon the exercise of each Warrant
evidenced hereby shall, upon such expiration, be readjusted and shall thereafter
be such as it would have been had it been originally adjusted (or had the
original adjustment not been required, as the case may be) as if (A) the only
Ordinary Shares so issued were the Ordinary Shares, if any, actually issued or
sold upon the exercise of such rights or warrants or conversion or exchange of
Convertible Securities and (B) such Ordinary Shares, if any, were issued or sold
for the consideration actually received by the Company upon such exercise,
conversion or exchange plus the aggregate consideration, if any, actually
received by the Company for the issuance, sale or grant of all of such rights,
warrants or Convertible Securities whether or not exercised, converted or
exchanged, as the case may be; provided, however, that no such readjustment
shall have the effect of increasing the Purchase Price or decreasing the number
of Ordinary Shares purchasable upon the exercise of each Warrant evidenced
hereby by an amount in excess of the amount of the adjustment initially made in
respect of the issuance, sale or grant or such rights, warrants or Convertible
Securities.

      (l) In the event of any issuance of securities by the Company for
consideration in whole or in part in other than cash, the Board of Directors of
the Company shall determine in 

<PAGE>

                                      -15-


good faith the value thereof which determination shall be conclusive and
binding.

      (m) Voluntary Adjustment by the Company. The Company may at its option, at
any time prior to the Expiration Date, reduce the then current Purchase Price to
any amount deemed appropriate by the Board of Directors of the Company;
provided, however, the Company may not in any case increase the Purchase Price
pursuant to this Section 5(m); provided, further, if the Company elects to
reduce the then current Purchase Price, such reduction shall remain in effect
for at least a 30 day period, after which time the Company may, at its option,
reinstate the Purchase Price in effect immediately prior to such reduction.

      (n) Statement on This Warrant Certificate. Irrespective of any adjustments
in the Purchase Price or the number or kind of shares purchasable upon the
exercise of the Warrants evidenced hereby, this Warrant Certificate and Warrant
Certificates hereafter issued may continue to express the same price and number
and kind of shares as are stated hereon.

      Section 6. Certification of Adjusted Purchase Price and Number of Shares
Issuable. Whenever the Purchase Price and the number of Ordinary Shares issuable
upon the exercise of each Warrant evidenced hereby are adjusted as provided in
Section 5, the Company shall (a) prepare a certificate signed by its Chief
Executive Officer or a Vice President or other executive officer setting forth
the Purchase Price as so adjusted, the number of Ordinary Shares issuable upon
the exercise of each Warrant evidenced hereby as so adjusted and a brief
statement of the method of calculation of the adjustment and the facts
accounting for the adjustment, (b) promptly file with each transfer agent for
the Ordinary Shares a copy of such certificate, and (c) mail a brief summary
thereof to the Warrant Holder.

      Section 7. Acceleration of Exercisability upon Sale of the Company or a
Change of Control. In the event that the Company undergoes a Sale (as defined)
or a Change of Control (as defined) prior to the Exiration Date, all of the
Warrants shall become fully exercisable.

      For purposes of this Section 7, "Change of Control" means and shall be
deemed to have occurred if any person (within the meaning of the Securities and
Exchange Act of 1934, as amended), other than the Company or a Related Party (as
defined), is or becomes the beneficial owner, directly or indi-

<PAGE>

                                      -16-


rectly, of voting securities representing 51% or more of the total voting power
of all then outstanding voting securities.

      For purposes of this Section 7, "Related Party" means: (a) a majority
owned subsidiary of the Company, (b) an employee or group of employees of the
Company, (c) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, (d) a corporation owned by the stockholders of the
Company in substantially the same proportion as their ownership of the voting
securities of the Company, and (e) each of Elan Corporation, plc, Dominion
Income Management Corp., Halisol SA, AIG Global Investment Corp., Goldman Sachs
& Co., Paribas Sante SA, Perrigo Company and Warner-Lambert Company.

      For purposes of this Section 7, a "Sale" means and shall be deemed to have
occurred if: (a) the Company completes a merger, consolidation, sale, transfer
or other disposition that effects a Change of Control, or (b) the Company enters
into a transaction or series of transactions to sell, transfer or otherwise
dispose of all or substantially all of its properties or assets.

      Section 8. Fractional Warrants and Fractional Shares. (a) The Company
shall not be required to issue fractions of Warrants or to distribute Warrant
Certificates which evidence fractional Warrants. In lieu of such fractional
Warrants, there shall be paid to the Warrant Holders with regard to which such
fractional Warrant would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Warrant. For purposes of
this Section 8(a), the current market value of a Warrant shall be the fair value
thereof determined in the reasonable good faith judgment of the Board of
Directors of the Company for the day immediately prior to the date on which such
fractional Warrant would have been otherwise issuable.

      (b) Notwithstanding an adjustment pursuant to Section 5 in the number of
Ordinary Shares covered by any Warrant evidenced hereby, the Company shall not
be required to issue fractions of Ordinary Shares upon exercise of the Warrants
evidenced hereby or to distribute certificates which evidence fractional
Ordinary Shares. In lieu of fractional Ordinary Shares, there shall be paid to
the Warrant Holder at the time this Warrant Certificate is exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of an Ordinary Share. For purposes of this Section 8(b), the current
market value of an Ordinary Share shall be deter-

<PAGE>

                                      -17-


mined in accordance with Section 5(f) as of the day immediately prior to the
date of such exercise.

      (c) The Warrant Holder by acceptance hereof, expressly waives such Warrant
Holder's right to receive any fractional Warrant evidenced hereby or any
fractional Ordinary Share upon exercise of a Warrants evidenced hereby.

      Section 9. Right of Action. All rights of action in respect of this
Warrant Certificate are vested in the respective Warrant Holders; and any
Warrant Holders may, in its own behalf and for its own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise in respect of, its right to exercise the Warrants
evidenced by this Warrant Certificate in the manner provided in this Warrant
Certificate.

      Section 10. Agreement of Warrant Certificate Holders. The Warrant Holder
by accepting same consents and agrees with the Company that:

            (a) registration of transfer of this Warrant Certificate may be made
      only on the registry books of the Company if surrendered at the address of
      the Company, duly endorsed, or accompanied by a proper instrument of
      transfer; and

            (b) the Company may deem and treat the person in whose name this
      Warrant Certificate is registered as the absolute owner thereof and of the
      Warrants evidenced hereby (notwithstanding any notations of ownership or
      writing on this Warrant Certificates made by anyone other than the
      Company) for all purposes whatsoever, and the Company shall not be
      affected by any notice to the contrary.

      Section 11. Issuance of New Warrant Certificate. Notwithstanding any of
the provisions of this Warrant Certificate, the Company may, at its option,
issue a new Warrant Certificate evidencing the Warrants evidenced hereby in such
form as may be approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of shares of
capital stock or other securities or property purchasable under this Warrant
Certificate made in accordance with the provisions of this Agreement.

      Section 12. Notice of Proposed Actions. In case the Company shall propose
(a) to pay any dividend payable in stock 

<PAGE>

                                      -18-


of any class to the holders of its Ordinary Shares or to make any other
distribution to the holders of its Ordinary Shares (other than a cash dividend)
or (b) to offer to the holders of its Ordinary Shares rights, options or
warrants to subscribe for or to purchase any additional Ordinary Shares or
shares of capital stock of any class or any other securities, rights or options,
or (c) to effect any reclassification of its Ordinary Shares (other than a
reclassification involving only the subdivision or combination of outstanding
Ordinary Shares), or (d) to effect any capital reorganization, or (e) to effect
any consolidation, merger or sale, transfer or other disposition of all or
substantially all of its property, assets or business, or (f) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to the Warrant Holder, a notice of such proposed action
in accordance with Section 13 hereof, which shall specify the date on which a
record is to be taken for the purposes of such stock dividend, distribution or
rights, options or warrants, or the date on which such reclassification,
reorganization, consolidation, merger, sale, transfer, disposition, liquidation,
dissolution, or winding up is to become effective and the date of participation
therein by the holders of Ordinary Shares, if any such date is to be fixed, and
such notice shall be so given at least 20 calendar days (or 10 calendar days in
any case specified in clause (a) or (b) above) prior to the applicable record
date, effective date or participation date described above.

      Section 13. Notices. Notices or demands authorized by this Agreement to be
given or made by the Warrant Holder to or on the Company shall be made in
writing by hand-delivery, next-day air courier, certified first-class mail,
return receipt requested, telex or facsimile to:

<PAGE>

                                      -19-


                           Warner Chilcott Public Limited Company
                           Lincoln House
                           Lincoln Place
                           Dublin 2, Ireland
                           Facsimile:  (353) 1-662-4950

                           Attention:  Corporate Secretary

Notices or demands authorized by this Agreement to be given or made by the
Company to the Warrant Holder shall be made in writing by hand-delivery,
next-day air courier, certified first-class mail, return receipt requested,
telex or facsimile to such holder at the address of the Warrant Holder as shown
on the registry books of the Company.

      Section 14. Registration under the Securities Act of 1933. The Warrant
Holder represents and warrants to the Company that it will not dispose of any
Warrants or Ordinary Shares issuable upon exercise of the Warrants evidenced
hereby except, (i) to a "qualified institutional buyer" as such term is defined
in Rule 144A under the Act, upon receipt by the Company of a transfer letter
certifying as to the prospective transferee's status as a qualified
institutional buyer, (ii) pursuant to an effective registration statement under
the Act and any applicable state or foreign securities laws or (iii) upon
receipt by the Company and, in the event of any disposition of ADRs evidencing
ADSs representing Ordinary Shares issued upon exercise of the Warrants evidenced
hereby, receipt by the depositary who is party to the Deposit Agreement (the
"Depositary"), of an opinion of counsel reasonably acceptable to the Company
and, if applicable, the Depositary, that such registration is not required.

      Section 15. Certificates To Bear Legends. Upon original issuance prior to
(i) the date which is three years after the later of the original issue date
thereof and the last date on which the Company or any affiliate of the Company
was the owner of the security (or any predecessor security) and (ii) such later
date, if any, as may be required by any subsequent change in applicable law,
each Ordinary Share or other security issued upon exercise of the Warrants
evidenced hereby shall bear a legend substantially to the following effect:

            THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
      OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
      NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
      REOFFERED, SOLD, 

<PAGE>

                                      -20-


      ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
      ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR
      NOT SUBJECT TO, REGISTRATION.

            THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
      OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO (X) THE DATE
      WHICH IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND
      THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE
      OWNER OF THIS SECURITY (OR ANY PREDECESSOR SECURITY) AND (Y) SUCH LATER
      DATE, IF ANY, AS MAY BE REQUIRED BY ANY SUBSEQUENT CHANGE IN APPLICABLE
      LAW (THE "RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO THE COMPANY,
      (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
      UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE
      FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT
      REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
      RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR
      FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
      THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
      OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING
      OF REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER
      AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
      ACT, SUBJECT TO THE RIGHT OF THE COMPANY IN ITS SOLE DISCRETION PRIOR TO
      ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO
      REQUIRE THE DELIVERY OF OPINIONS OF COUNSEL, CERTIFICATIONS AND/OR OTHER
      INFORMATION REASONABLY ACCEPTABLE IN FORM AND SUBSTANCE TO EACH OF THEM
      THAT SUCH REGISTRATION IS NOT REQUIRED. THIS LEGEND WILL BE REMOVED UPON
      THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

      Section 16. Modification of Agreement. The Company and the Warrant Holder
may amend or supplement any provision of this Warrant Certificate only by a
statement in writing signed by each of the Company and the Warrant Holder.

      Section 17. Successors. All provisions of this Warrant Certificate by or
for the benefit of the Company or the 

<PAGE>

                                      -21-


Warrant Holder shall bind and inure to the benefit of their respective
successors and assigns hereunder.

      Section 18. Benefits of this Agreement. Nothing in this Warrant
Certificate expressed or nothing that may be implied from any of the provisions
hereof is intended, or shall be construed, to confer upon, or give to, any
person or corporation other than the Company and the Warrant Holder any right,
remedy or claim under or by reason of this Warrant Certificate or of any
provision hereof; and all provisions in this Warrant Certificate contained shall
be for the sole and exclusive benefit of the Company and its successors and of
the Warrant Holder.

      Section 19. New York Contract. This Warrant Certificate shall be governed
in all respects by the laws of the State of New York, without giving effect to
principles of conflict of laws.

      Section 20. Descriptive Headings. Descriptive headings of the several
Sections of this Warrant Certificate are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.

<PAGE>

                                      -22-


      WITNESS the signature of the proper officer of the Company. Dated as of
October 31, 1996.

                                           WARNER CHILCOTT PUBLIC
                                              LIMITED COMPANY

                                           By __________________________________
                                           Name:
                                           Title:



      THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.

      THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO (X) THE DATE WHICH IS THREE YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY ANY
SUBSEQUENT CHANGE IN APPLICABLE LAW (THE "RESALE RESTRICTION TERMINATION DATE")
ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES
ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501
UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR
FOR THE ACCOUNT OF SUCH AN "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RIGHT
OF THE COMPANY IN ITS SOLE DISCRETION PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF OPINIONS 

<PAGE>

                                      -2-


OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION REASONABLY ACCEPTABLE IN
FORM AND SUBSTANCE TO IT THAT SUCH REGISTRATION IS NOT REQUIRED. THIS LEGEND
WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.

<PAGE>

                                      -3-


Series C No. W01                                                400,000 Warrants

                     WARNER CHILCOTT PUBLIC LIMITED COMPANY

                               Warrant Certificate

      THIS CERTIFIES THAT for value received James G. Andress, or registered
assigns (the "Warrant Holder"), is the owner of the number of Warrants set forth
above, each of which entitles the owner thereof to purchase at any time on or
after the date hereof until the earlier of (i) 5 P.M. (New York time) on October
31, 2006 or (ii) the occurrence of a Termination Event (as defined) (the
"Expiration Date"), at the office of the Company, one fully paid and
nonassessable Ordinary Share, par value $.05 per share ("Ordinary Share"),
represented by one American Depositary Share ("ADS"), evidenced by American
Depository Receipts ("ADRs"), of WARNER CHILCOTT PUBLIC LIMITED COMPANY
(formerly named Nale Laboratories public limited company), a public limited
company organized and existing under the laws of Ireland (the "Company"), at the
purchase price and according to the schedule set forth in Section 2 hereof, upon
presentation and surrender of this Warrant Certificate with the Form of Election
to Purchase duly executed. The number of Warrants evidenced by this Warrant
Certificate (and the number of Ordinary Shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per share set forth
above, are the number and Purchase Price as of October 31, 1996, based on the
Ordinary Shares of the Company as constituted at such date.

      Section 1. Transfer, Split Up, Combination and Exchange of Warrant
Certificates; Mutilated, Destroyed, Lost or Stolen Warrant Certificates.

      This Warrant Certificate, with or without other Warrant Certificates, may
be transferred or exchanged for another Warrant Certificate or Warrant
Certificates, entitling the Warrant Holder to purchase a like number of Ordinary
Shares as this Warrant Certificate entitles such Warrant Holder to purchase. In
the event that the Warrant Holder desires to transfer, split up, combine or
exchange this Warrant Certificate, the Warrant Holder shall make such request in
writing delivered to the Company, and shall surrender this Warrant Certificate
to the Company. Thereupon the Company shall deliver to the person entitled
thereto a Warrant Certificate or Warrant Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax
or governmental 

<PAGE>

                                      -4-


charge that may be imposed in connection with any transfer, split up,
combination or exchange of this Warrant Certificate. Notwithstanding the
foregoing, the Company shall have no obligation to cause Warrants to be
transferred on its books to any person, unless the Warrant Holder shall furnish
to the Company evidence of compliance with the Act, in accordance with the
provisions of Section 14 hereof.

      Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of this Warrant
Certificate if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor to the Warrant Holder in lieu of the Warrant
Certificate so lost, stolen, destroyed or mutilated.

      Section 2. Exercise of Warrants; Purchase Price; Expiration of Warrants.
(a) The Warrant Holder may exercise the Warrants evidenced hereby, in whole or
in part, according to the following schedule:

      Exercisable number of Warrants = (N x Q x .0625) minus P

            Where:

            N =   total number of Warrants (subject to adjustment pursuant to
                  Section 5 hereof),

            Q =   the number of whole calendar quarters which have elapsed
                  from September 30, 1996, and

            P =   the number of Warrants (if any) previously exercised

Notwithstanding the foregoing, the Board of Directors of the Company and/or a
committee thereof may, at its absolute discretion, declare any Warrants to be
exercisable in whole or in part as from any date earlier than the date upon
which it would otherwise become exercisable. Further, as described more
completely in Section 7 hereof, upon a change of control, consolidation, sale or
merger of the Company, all outstanding Warrants shall become exercisable.

      (b) Warrants may be exercised in accordance with the foregoing paragraph
(a) upon surrender of this Warrant Certifi-

<PAGE>

                                      -5-


cate with the Form of Election to Purchase, duly executed, to the Company at the
address of the Company, at or prior to the Expiration Date, together with
payment of the Purchase Price (as defined) for each Ordinary Share as to which
the Warrants evidenced hereby are exercised.

      (c) The Warrants shall expire prior to October 31, 2006 in the following
cases (each being a "Termination Event"): (1) the death of the Warrant Holder in
which case the personal representative of the deceased Warrant Holder may at any
time or from time to time, but subject to the other provisions of this Warrant
Certificate and in no case later than one year after such death, exercise any
Warrants, but only to the extent that such Warrants were exercisable by the
Warrant Holder at the time of his death, and (2) the Warrant Holder ceases to be
employed by the Company by reason of resignation, dismissal, retirement,
disability or otherwise ("Separation") in which case the Warrant Holder may at
any time, but subject to the other provisions of this Warrant Certificate and in
no case later than thirty days after Separation, exercise any Warrants, but only
to the extent that such Warrants were exercisable by the Warrant Holder at the
date of Separation.

      (d) The purchase price for each Ordinary Share pursuant to the exercise of
Warrants evidenced hereby shall initially be $20.00 (the "Purchase Price") but
will be subject to adjustment as provided in Section 5 hereof and shall be
payable as provided in Section 2(e) hereof.

      (e) Upon receipt of this Warrant Certificate, with the Form of Election to
Purchase duly executed, accompanied by payment of the Purchase Price for the
Ordinary Shares to be purchased and an amount equal to any applicable transfer
tax in cash, or by certified check, bank draft or postal or express money order
payable to the order of the Company, the Company shall thereupon promptly (i)
requisition from any transfer agent of the Ordinary Shares of the Company,
certificates for the number of whole Ordinary Shares to be purchased and (ii)
promptly after receipt of such certificates cause the same to be delivered to or
upon the order of the Warrant Holder, registered in such name or names as may be
designated by such Warrant Holder, and, when appropriate, promptly deliver cash
to be paid in lieu of issuance of fractional Ordinary Shares to or upon the
order of the Warrant Holder.

      (f) In the event that the Warrant Holder shall exercise less than all the
Warrants evidenced hereby, a new Warrant Certificate evidencing Warrants
equivalent to the Warrants re-

<PAGE>

                                      -6-


maining unexercised shall be issued by the Company to the Warrant Holder or to
the Warrant Holder's duly authorized assigns, subject to the provisions of
Section 8 hereof.

      Section 3. Reservation and Availability of Ordinary Shares. The Company
covenants and agrees that it will cause to be reserved and kept available at all
times, free from preemptive rights and out of its authorized and available
Ordinary Shares (including treasury shares), the number of Ordinary Shares that
will be sufficient to permit the exercise in full of all outstanding Warrants
evidenced hereby.

      The Company further covenants and agrees to reserve sufficient ADSs under
the Deposit Agreement, dated as of October 17, 1994 (the "Deposit Agreement"),
among the Company, The Bank of New York, as Depositary, and holders from time to
time of ADRs issued thereunder to permit the deposit thereunder of Ordinary
Shares represented by all Warrants evidenced hereby and the issuance of ADSs
representing such Ordinary Shares. The Company will, upon request of the holder
of the Ordinary Shares issued upon exercise of the Warrants evidenced hereby,
deposit such Ordinary Shares on behalf of such holder pursuant to the terms of
the Deposit Agreement and deliver to the holder of such shares the appropriate
number of ADSs evidenced by ADRs.

      The Company further covenants and agrees that it will take all such action
as may be necessary to insure that all Ordinary Shares delivered upon exercise
of the Warrants evidenced hereby shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price) (i) be
duly and validly authorized and issued and fully paid and nonassessable shares,
and (ii) be issued in compliance with all applicable governmental laws and
regulations.

      The Company further covenants and agrees that it will pay when due and
payable any and all federal and state taxes and charges which may be payable in
respect of the initial issuance or delivery of any Ordinary Shares, ADSs
representing such Ordinary Shares or ADRs evidencing such ADSs, upon the
exercise of the Warrants evidenced hereby. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the transfer or delivery of this Warrant Certificate or the issuance or
delivery of certificates for Ordinary Shares in a name other than that of the
Warrant Holder or to issue or deliver any certificates for Ordinary Shares upon
the exercise of any Warrant evidenced hereby until any such tax shall have been
paid (any such tax 

<PAGE>

                                      -7-


being payable by the Warrant Holder at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.

      Section 4. Ordinary Shares Record Date. The Warrant Holder shall for all
purposes be deemed to have become the holder of record of any Ordinary Shares
issued upon exercise of Warrants evidenced hereby on, and the certificate
representing any such Ordinary Shares shall be dated, the date upon which this
Warrant Certificate was duly surrendered and payment of the Purchase Price (and
any applicable transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the Ordinary Share transfer
books of the Company are closed, the Warrant Holder shall be deemed to have
become the record holder of such Ordinary Shares on, and such certificate shall
be dated, the next succeeding business day on which the Ordinary Share transfer
books of the Company are open. Prior to the exercise of the Warrants evidenced
hereby, the Warrant Holder shall not be entitled to any rights of a shareholder
of the Company with respect to Ordinary Shares for which the Warrants evidenced
hereby are exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein or required by law.

      Section 5. Adjustment of Purchase Price, Number of Ordinary Shares and
Shares of Capital Stock Warrants Are Exercisable Into. The number and kind of
securities purchasable upon the exercise of each Warrant evidenced hereby and
the Purchase Price shall be subject to adjustment from time to time upon the
happening of certain events, as hereinafter defined.

      (a) Adjustment for Change in Capital Stock. In case the Company shall (i)
pay a dividend on its Ordinary Shares, whether of Ordinary Shares or capital
shares of any other class or make any other distribution of Ordinary Shares,
(ii) subdivide its outstanding Ordinary Shares into a greater number of shares
or (iii) combine its outstanding Ordinary Shares into a smaller number of
Ordinary Shares, the number of Ordinary Shares purchasable upon exercise of each
Warrant evidenced hereby immediately prior thereto shall be adjusted so that the
Warrant Holder shall be entitled to receive the number of Ordinary Shares which
the Warrant Holder would have owned or have been entitled to receive after the
happening of any of the events described above had such Warrant been exercised
immedi-

<PAGE>

                                      -8-


ately prior to the happening of such event or any record date with respect
thereto.

      An adjustment made pursuant to this Section 5(a) shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event. Such adjustment shall be made successively
whenever such a payment, subdivision or combination is made.

      (b) Adjustment for Other Distributions. In case the Company shall
distribute to all holders of its Ordinary Shares evidences of its indebtedness
(other than evidences of indebtedness, shares of stock or other securities which
are convertible into or exchangeable for, with or without payment of additional
consideration in cash or property, Ordinary Shares, either upon the occurrence
of a specified date or a specified event (in any case, "Convertible
Securities")), assets (excluding cash dividends or distributions payable out of
consolidated retained earnings and dividends or distributions referred to in
Section 5(a) or in Section 5(c)), shares of capital stock (other than Ordinary
Shares), or rights, options or warrants containing the right to subscribe for or
purchase debt securities, assets or securities of the Company (other than
Convertible Securities or Ordinary Shares) (collectively "Assets"), then in each
case the number of Ordinary Shares thereafter purchasable upon the exercise of
each Warrant evidenced hereby shall be determined by multiplying the number of
Ordinary Shares theretofore purchasable upon the exercise of each Warrant
evidenced hereby by a fraction, of which the numerator shall be the market price
per Ordinary Share (as defined in Section 5(f)) on the date of such
distribution, and the denominator of which shall be such market price per
Ordinary Share less the fair value as of such record date (as determined in good
faith by the Board of Directors of the Company) of the portion of the Assets
applicable to one Ordinary Share. Such adjustment shall be made whenever any
such distribution is made, and shall become effective on the date of
distribution retroactive to the record date for the determination of
shareholders entitled to receive such distribution. A reclassification of the
Ordinary Shares (other than a change in par value, from par value to no par
value or from no par value to par value) into Ordinary Shares and shares of any
other class of stock shall be deemed a distribution by the Company to the
holders of its Ordinary Shares of such shares of such other class of stock
within the meaning of this Section 5(b) and, if the outstanding Ordinary Shares
shall be changed into larger or smaller number of Ordinary Shares as a part of
such reclassification, such change shall be deemed a subdivision or combina-

<PAGE>

                                      -9-


tion, as the case may be, of the outstanding Ordinary Shares within the meaning
of Section 5(a).

      No adjustment shall be made pursuant to this Section 5(b) unless, on the
record date for such distribution, the market price per Ordinary Share exceeds
the fair market value of the Assets applicable to each outstanding Ordinary
Share. In the event, and each time, that the Company distributes Assets to all
holders of its Ordinary Shares and the market price per Ordinary Share on the
record date for such distribution is less than or equal to the fair market value
of the Assets applicable to each outstanding Ordinary Share on such date, the
Company shall either (i) distribute Assets to the Warrant Holder on the record
date for such distribution when such Assets are distributed to the holders of
Ordinary Shares as though all Warrants evidenced hereby had been exercised as of
such record date or (ii) deposit such Assets in trust with a trustee. If the
Company elects to distribute Assets to the Warrant Holder, the Company shall, on
the date Assets are distributed to holders of Ordinary Shares, distribute to
such Warrant Holder the Assets that it would have been entitled to receive on
such date if it had exercised the Warrants evidenced hereby immediately prior to
the record date for such distribution. If, however, the Company elects to
deposit the Assets due the Warrant Holder in trust, the Company shall, on the
date Assets are distributed to holders of Ordinary Shares, place in trust the
Assets that the Warrant Holder would have been entitled to receive on such date
if all of the Warrants evidenced hereby had been exercised immediately prior to
the record date for such distribution; and the Warrant Holder shall be entitled
upon exercise of the Warrants evidenced hereby to receive the Ordinary Shares
issuable upon exercise thereof, the Assets placed in trust in respect of such
Warrants, and the interest and dividends paid on such Assets since being placed
in trust. In the event any Warrants evidenced hereby have not been exercised
prior to the termination of the Expiration Date, any assets remaining in such
trust after distributions have been made in respect of Warrants exercised shall
be returned to the Company.

      (c) Adjustment for Issuance of Ordinary Shares. If at any time after the
date hereof the Company shall (except as hereinafter provided) issue or sell any
Ordinary Shares for consideration in an amount per Ordinary Share less than the
market price per Ordinary Share (as defined in Section 5(f)) in effect
immediately prior to the time of such issue or sale, then the number of Ordinary
Shares purchasable upon the exercise of each Warrant evidenced hereby shall be
adjusted to 

<PAGE>

                                      -10-


equal the product obtained by multiplying the number of Ordinary Shares for
which such Warrant is exercisable immediately prior to such issue or sale by a
fraction (A) the numerator of which shall be the number of Ordinary Shares
outstanding immediately after such issue or sale, and (B) the denominator of
which shall be the sum of (1) the number of Ordinary Shares outstanding
immediately prior to such issue or sale, and (2) the aggregate consideration
received from the issuance or sale of such additional Ordinary Shares divided by
the market price per Ordinary Share (as defined in Section 5(f)) in effect
immediately prior to the time of such issue or sale; provided, however, that no
adjustment shall be made pursuant to this Section 5(c) upon the issuance of
Ordinary Shares (i) in a bona fide public offering pursuant to a firm commitment
or best efforts underwriting, (ii) upon the issuance of up to 500,000 Ordinary
Shares, or ADSs representing such Ordinary Shares, of the Company pursuant to
any employee stock option, purchase or similar plan which may be established by
the Company from time to time providing for options, warrants or similar rights
to purchase Ordinary Shares, or ADSs representing such Ordinary Shares, of the
Company or (iii) upon the issuance of Ordinary Shares pursuant to (A) the
Agreement among the Company, Nale Laboratories Corporation and Bernard J. Berk,
(B) the warrants issued pursuant to the Warrant Agreement dated as of October
17, 1994 between the Company and Elan Corporation, plc, (C) the warrants issued
pursuant to the Warrant Agreement dated as of October 17, 1994 between the
Company and Montgomery Securities, (D) the warrants issued pursuant to the
Warrant Purchase Agreement dated as of March 28, 1996 by and between the Company
and Warner-Lambert Company or (E) the warrants to purchase in the aggregate
amount 170,000 Ordinary Shares, or ADSs representing such Ordinary Shares,
issued on June 28, 1996 to certain current and former directors of the Company.

      (d) Issuance of Warrants or Other Rights. In case the Company shall
distribute to all holders of its Ordinary Shares or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any warrants or other rights to subscribe for or
purchase any Ordinary Shares or any Convertible Securities, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and the
price per share for which Ordinary Shares are issuable upon the exercise of such
warrants or other rights or upon conversion or exchange of such Convertible
Securities plus the price paid to the Company to acquire such warrants, other
rights or Convertible Securities shall be less than the market price per
Ordinary Share (as defined in Section 5(f)) in effect immediately prior to the
time 

<PAGE>

                                      -11-


of such distribution, issue or sale, then the number of Ordinary Shares
purchasable upon the exercise of each Warrant evidenced hereby shall be adjusted
as provided in Section 5(c) on the basis that (A) the maximum number of Ordinary
Shares issuable pursuant to all such warrants or other rights or necessary to
give effect to the conversion or exchange of all such Convertible Securities
shall be deemed to be issued and outstanding, (B) the price per share for such
Ordinary Shares shall be deemed to be the lowest possible price per share in any
range of prices per share at which such Ordinary Shares are available to such
holders, and (C) the Company shall have received all of the consideration
payable therefor, if any, as of the date of the actual issuance of such warrants
or other rights; provided, however, that no adjustment shall be made pursuant to
this Section 5(d) upon the issuance of any warrants or options or other rights
to subscribe for up to 500,000 Ordinary Shares, or ADSs representing such
Ordinary Shares, of the Company, pursuant to any employee stock option, purchase
or similar plan which may be established by the Company from time to time. No
further adjustments of the number of Ordinary Shares for which any Warrant
evidenced hereby is exercisable shall be made upon the actual issue of such
Ordinary Shares or of such Convertible Securities upon exercise of such warrants
or other rights or upon the actual issue of such Ordinary Shares upon such
conversion or exchange of such Convertible Securities.

      (e) Adjustments for Issuance of Convertible Securities. In case the
Company shall distribute to all holders of its Ordinary Shares or shall in any
manner (whether directly or by assumption in a merger in which the Company is
the surviving corporation) issue or sell any Convertible Securities, whether or
not the rights to exchange or convert thereunder are immediately exercisable,
and the price per share for which Ordinary Shares are issuable upon such
conversion or exchange, plus the price paid to the Company to acquire such
Convertible Security, shall be less than the market price per Ordinary Share (as
defined in Section 5(f)), in effect immediately prior to the time of such
distribution, issue or sale, then the number of Ordinary Shares purchasable upon
the exercise of each Warrant evidenced hereby shall be adjusted as provided in
Section 5(c) on the basis that (i) the maximum number of Ordinary Shares
necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to be issued and outstanding, (ii) the price per
share of such Ordinary Shares shall be deemed to be the lowest possible price in
any range of prices at which such Ordinary Shares are available to such holders,
and (iii) the Company shall have received all of the consideration payable
therefor, if any, as of the date of actual issu-

<PAGE>

                                      -12-


ance of such Convertible Securities. No adjustment of the number of Ordinary
Shares for which any Warrant evidenced hereby is exercisable shall be made under
this Section 5(e) upon the issuance of any Convertible Securities which are
issued pursuant to the exercise of any warrants or other subscription or
purchase rights therefor if any such adjustment shall previously have been made
upon the issuance of such warrants or other rights pursuant to Section 5(d). No
further adjustments of the number of Ordinary Shares for which any such Warrant
evidenced hereby is exercisable shall be made upon the actual issue of such
Ordinary Shares upon conversion or exchange of such Convertible Securities and,
if any issue or sale of such Convertible Securities is made upon exercise of any
warrant or other right to subscribe for or to purchase any such Convertible
Securities for which adjustments have been or are to be made pursuant to other
provisions of this Section 5, no further adjustments shall be made by reason of
such issue or sale. For the purposes of this Section 5(e), the date as of which
the current market price of Ordinary Shares shall be computed shall be the
earliest of (a) the date on which the Company shall take a record of the holders
of its Ordinary Shares for the purpose of entitling them to receive any such
Convertible Securities or (b) the date of actual issuance of such Convertible
Securities.

      (f) Market Price. For the purpose of any computation under Sections 5(b),
5(c), 5(d), 5(e) and 8(b), the market price per Ordinary Share at any date shall
be the fair value thereof determined in the reasonable good faith judgment of
the Board of Directors of the Company; provided, however, that if the Ordinary
Shares, or ADSs representing such Ordinary Shares, are listed or admitted for
trading on any domestic national securities exchange or quoted in the
over-the-counter market or the National Association of Securities Dealers
Automated Quotation ("NASDAQ") National Market System, the market price per
Ordinary Share shall be the average of the daily closing prices for 20
consecutive trading days preceding the date of such computation. The closing
price for each day shall be the last reported sales price regular way or, in
case no such reported sale takes place on such day, the average of the closing
bid and asked prices regular way for such day, in each case on the principal
national securities exchange on which the Ordinary Shares or ADSs, as the case
may be, are listed or admitted to trading or, if not listed or admitted to
trading, the average of the last reported sales price or in case no such
reported sales take place on such day, the average of the closing bid and asked
prices of the Ordinary Shares in the over-the-counter market as reported by
NASDAQ or the NASDAQ National Market System or any comparable system or, if the
Ordinary Shares are not 

<PAGE>

                                      -13-


included for quotation in the over-the-counter market or the NASDAQ National
Market System or a comparable system, the average of the closing bid and asked
prices as furnished by two members of the National Association of Securities
Deals, Inc. selected from time to time by the Board of Directors of the Company
for that purpose.

      (g) When De Minimis Adjustment May Be Deferred. No adjustment in the
number of Ordinary Shares purchasable upon exercise of the Warrants evidenced
hereby shall be required unless such adjustment would require an increase or
decrease of at least one percent (1%) in the number of Ordinary Shares
purchasable upon the exercise of each such Warrant; provided, however, that any
adjustments which by reason of this paragraph (g) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations shall be made to the nearest one-thousandth of a share.

      (h) Adjustment in Purchase Price. Whenever the number of Ordinary Shares
purchasable upon the exercise of each Warrant evidenced hereby is adjusted as
herein provided, the Purchase Price payable upon exercise of each such Warrant
shall be adjusted by multiplying such Purchase Price immediately prior to such
adjustment by a fraction, of which the numerator shall be the number of Ordinary
Shares purchasable upon the exercise of each such Warrant immediately prior to
such adjustment, and of which the denominator shall be the number of Ordinary
Shares purchasable immediately thereafter.

      (i) When No Adjustment Required. No adjustment in the number of Ordinary
Shares purchasable upon the exercise of each Warrant evidenced hereby need be
made under Sections 5(b), 5(d) and 5(e) if the Company issues or distributes to
the Warrant Holder, the Assets, warrants or other rights or Convertible
Securities referred to in those paragraphs which the Warrant Holder would have
been entitled to receive had the Warrants evidenced hereby been exercised prior
to the happening of such event or the record date with respect thereto. No
adjustment need be made for a change in the par value or to no par value of the
Ordinary Shares; provided, however, that the Purchase Price shall at no time be
less than the par value of the Ordinary Shares of the Company, provided,
further, that the Company shall reduce the par value of its Ordinary Shares from
time to time as necessary so that such par value shall not be more than the
Purchase Price then in effect.

      (j) Ordinary Shares. For all purposes of this Warrant Certificate, the
term "Ordinary Shares" shall mean (i) the 

<PAGE>

                                      -14-


class of stock designated as the Ordinary Shares of the Company on October 31,
1996 or (ii) any other class of stock resulting from successive changes or
reclassifications of such shares consisting solely of changes in par value, or
from par value to no par value, or from no par value to par value. In the event
that at any time, as a result of an adjustment made pursuant to Section 5(a),
the Warrant Holder shall become entitled to purchase any securities of the
Company other than Ordinary Shares, thereafter the number of such other shares
so purchasable upon exercise of each Warrant evidenced hereby and the Purchase
Price of such shares shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Ordinary Shares contained in Sections 5(a) through 5(i) herein,
inclusive, this Section 5(j) and the provisions of Section 2 and Sections 5(m)
and 5(n) herein, with respect to the Ordinary Shares, shall apply on like terms
to any such other securities.

      (k) Expiration of Rights, Warrants or Convertible Securities. Upon the
expiration of any rights, warrants or Convertible Securities, if any thereof
shall not have been exercised, exchanged or converted, the Purchase Price and
the number of Ordinary Shares purchasable upon the exercise of each Warrant
evidenced hereby shall, upon such expiration, be readjusted and shall thereafter
be such as it would have been had it been originally adjusted (or had the
original adjustment not been required, as the case may be) as if (A) the only
Ordinary Shares so issued were the Ordinary Shares, if any, actually issued or
sold upon the exercise of such rights or warrants or conversion or exchange of
Convertible Securities and (B) such Ordinary Shares, if any, were issued or sold
for the consideration actually received by the Company upon such exercise,
conversion or exchange plus the aggregate consideration, if any, actually
received by the Company for the issuance, sale or grant of all of such rights,
warrants or Convertible Securities whether or not exercised, converted or
exchanged, as the case may be; provided, however, that no such readjustment
shall have the effect of increasing the Purchase Price or decreasing the number
of Ordinary Shares purchasable upon the exercise of each Warrant evidenced
hereby by an amount in excess of the amount of the adjustment initially made in
respect of the issuance, sale or grant or such rights, warrants or Convertible
Securities.

      (l) In the event of any issuance of securities by the Company for
consideration in whole or in part in other than cash, the Board of Directors of
the Company shall determine in 

<PAGE>

                                      -15-


good faith the value thereof which determination shall be conclusive and
binding.

      (m) Voluntary Adjustment by the Company. The Company may at its option, at
any time prior to the Expiration Date, reduce the then current Purchase Price to
any amount deemed appropriate by the Board of Directors of the Company;
provided, however, the Company may not in any case increase the Purchase Price
pursuant to this Section 5(m); provided, further, if the Company elects to
reduce the then current Purchase Price, such reduction shall remain in effect
for at least a 30 day period, after which time the Company may, at its option,
reinstate the Purchase Price in effect immediately prior to such reduction.

      (n) Statement on This Warrant Certificate. Irrespective of any adjustments
in the Purchase Price or the number or kind of shares purchasable upon the
exercise of the Warrants evidenced hereby, this Warrant Certificate and Warrant
Certificates hereafter issued may continue to express the same price and number
and kind of shares as are stated hereon.

      Section 6. Certification of Adjusted Purchase Price and Number of Shares
Issuable. Whenever the Purchase Price and the number of Ordinary Shares issuable
upon the exercise of each Warrant evidenced hereby are adjusted as provided in
Section 5, the Company shall (a) prepare a certificate signed by its Chief
Executive Officer or a Vice President or other executive officer setting forth
the Purchase Price as so adjusted, the number of Ordinary Shares issuable upon
the exercise of each Warrant evidenced hereby as so adjusted and a brief
statement of the method of calculation of the adjustment and the facts
accounting for the adjustment, (b) promptly file with each transfer agent for
the Ordinary Shares a copy of such certificate, and (c) mail a brief summary
thereof to the Warrant Holder.

      Section 7. Acceleration of Exercisability upon Sale of the Company or a
Change of Control. In the event that the Company undergoes a Sale (as defined)
or a Change of Control (as defined) prior to the Exiration Date, all of the
Warrants shall become fully exercisable.

      For purposes of this Section 7, "Change of Control" means and shall be
deemed to have occurred if any person (within the meaning of the Securities and
Exchange Act of 1934, as amended), other than the Company or a Related Party (as
defined), is or becomes the beneficial owner, directly or indi-

<PAGE>

                                      -16-


rectly, of voting securities representing 51% or more of the total voting power
of all then outstanding voting securities.

      For purposes of this Section 7, "Related Party" means: (a) a majority
owned subsidiary of the Company, (b) an employee or group of employees of the
Company, (c) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, (d) a corporation owned by the stockholders of the
Company in substantially the same proportion as their ownership of the voting
securities of the Company, and (e) each of Elan Corporation, plc, Dominion
Income Management Corp., Halisol SA, AIG Global Investment Corp., Goldman Sachs
& Co., Paribas Sante SA, Perrigo Company and Warner-Lambert Company.

      For purposes of this Section 7, a "Sale" means and shall be deemed to have
occurred if: (a) the Company completes a merger, consolidation, sale, transfer
or other disposition that effects a Change of Control, or (b) the Company enters
into a transaction or series of transactions to sell, transfer or otherwise
dispose of all or substantially all of its properties or assets.

      Section 8. Fractional Warrants and Fractional Shares. (a) The Company
shall not be required to issue fractions of Warrants or to distribute Warrant
Certificates which evidence fractional Warrants. In lieu of such fractional
Warrants, there shall be paid to the Warrant Holders with regard to which such
fractional Warrant would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Warrant. For purposes of
this Section 8(a), the current market value of a Warrant shall be the fair value
thereof determined in the reasonable good faith judgment of the Board of
Directors of the Company for the day immediately prior to the date on which such
fractional Warrant would have been otherwise issuable.

      (b) Notwithstanding an adjustment pursuant to Section 5 in the number of
Ordinary Shares covered by any Warrant evidenced hereby, the Company shall not
be required to issue fractions of Ordinary Shares upon exercise of the Warrants
evidenced hereby or to distribute certificates which evidence fractional
Ordinary Shares. In lieu of fractional Ordinary Shares, there shall be paid to
the Warrant Holder at the time this Warrant Certificate is exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of an Ordinary Share. For purposes of this Section 8(b), the current
market value of an Ordinary Share shall be deter-

<PAGE>

                                      -17-


mined in accordance with Section 5(f) as of the day immediately prior to the
date of such exercise.

      (c) The Warrant Holder by acceptance hereof, expressly waives such Warrant
Holder's right to receive any fractional Warrant evidenced hereby or any
fractional Ordinary Share upon exercise of a Warrants evidenced hereby.

      Section 9. Right of Action. All rights of action in respect of this
Warrant Certificate are vested in the respective Warrant Holders; and any
Warrant Holders may, in its own behalf and for its own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise in respect of, its right to exercise the Warrants
evidenced by this Warrant Certificate in the manner provided in this Warrant
Certificate.

      Section 10. Agreement of Warrant Certificate Holders. The Warrant Holder
by accepting same consents and agrees with the Company that:

            (a) registration of transfer of this Warrant Certificate may be made
      only on the registry books of the Company if surrendered at the address of
      the Company, duly endorsed, or accompanied by a proper instrument of
      transfer; and

            (b) the Company may deem and treat the person in whose name this
      Warrant Certificate is registered as the absolute owner thereof and of the
      Warrants evidenced hereby (notwithstanding any notations of ownership or
      writing on this Warrant Certificates made by anyone other than the
      Company) for all purposes whatsoever, and the Company shall not be
      affected by any notice to the contrary.

      Section 11. Issuance of New Warrant Certificate. Notwithstanding any of
the provisions of this Warrant Certificate, the Company may, at its option,
issue a new Warrant Certificate evidencing the Warrants evidenced hereby in such
form as may be approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of shares of
capital stock or other securities or property purchasable under this Warrant
Certificate made in accordance with the provisions of this Agreement.

      Section 12. Notice of Proposed Actions. In case the Company shall propose
(a) to pay any dividend payable in stock 

<PAGE>

                                      -18-


of any class to the holders of its Ordinary Shares or to make any other
distribution to the holders of its Ordinary Shares (other than a cash dividend)
or (b) to offer to the holders of its Ordinary Shares rights, options or
warrants to subscribe for or to purchase any additional Ordinary Shares or
shares of capital stock of any class or any other securities, rights or options,
or (c) to effect any reclassification of its Ordinary Shares (other than a
reclassification involving only the subdivision or combination of outstanding
Ordinary Shares), or (d) to effect any capital reorganization, or (e) to effect
any consolidation, merger or sale, transfer or other disposition of all or
substantially all of its property, assets or business, or (f) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to the Warrant Holder, a notice of such proposed action
in accordance with Section 13 hereof, which shall specify the date on which a
record is to be taken for the purposes of such stock dividend, distribution or
rights, options or warrants, or the date on which such reclassification,
reorganization, consolidation, merger, sale, transfer, disposition, liquidation,
dissolution, or winding up is to become effective and the date of participation
therein by the holders of Ordinary Shares, if any such date is to be fixed, and
such notice shall be so given at least 20 calendar days (or 10 calendar days in
any case specified in clause (a) or (b) above) prior to the applicable record
date, effective date or participation date described above.

      Section 13. Notices. Notices or demands authorized by this Agreement to be
given or made by the Warrant Holder to or on the Company shall be made in
writing by hand-delivery, next-day air courier, certified first-class mail,
return receipt requested, telex or facsimile to:

<PAGE>

                                      -19-


                           Warner Chilcott Public Limited Company
                           Lincoln House
                           Lincoln Place
                           Dublin 2, Ireland
                           Facsimile:  (353) 1-662-4950

                           Attention:  Corporate Secretary

Notices or demands authorized by this Agreement to be given or made by the
Company to the Warrant Holder shall be made in writing by hand-delivery,
next-day air courier, certified first-class mail, return receipt requested,
telex or facsimile to such holder at the address of the Warrant Holder as shown
on the registry books of the Company.

      Section 14. Registration under the Securities Act of 1933. The Warrant
Holder represents and warrants to the Company that it will not dispose of any
Warrants or Ordinary Shares issuable upon exercise of the Warrants evidenced
hereby except, (i) to a "qualified institutional buyer" as such term is defined
in Rule 144A under the Act, upon receipt by the Company of a transfer letter
certifying as to the prospective transferee's status as a qualified
institutional buyer, (ii) pursuant to an effective registration statement under
the Act and any applicable state or foreign securities laws or (iii) upon
receipt by the Company and, in the event of any disposition of ADRs evidencing
ADSs representing Ordinary Shares issued upon exercise of the Warrants evidenced
hereby, receipt by the depositary who is party to the Deposit Agreement (the
"Depositary"), of an opinion of counsel reasonably acceptable to the Company
and, if applicable, the Depositary, that such registration is not required.

      Section 15. Certificates To Bear Legends. Upon original issuance prior to
(i) the date which is three years after the later of the original issue date
thereof and the last date on which the Company or any affiliate of the Company
was the owner of the security (or any predecessor security) and (ii) such later
date, if any, as may be required by any subsequent change in applicable law,
each Ordinary Share or other security issued upon exercise of the Warrants
evidenced hereby shall bear a legend substantially to the following effect:

            THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
      OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
      NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
      REOFFERED, SOLD, 

<PAGE>

                                      -20-


      ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
      ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR
      NOT SUBJECT TO, REGISTRATION.

            THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
      OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO (X) THE DATE
      WHICH IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND
      THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE
      OWNER OF THIS SECURITY (OR ANY PREDECESSOR SECURITY) AND (Y) SUCH LATER
      DATE, IF ANY, AS MAY BE REQUIRED BY ANY SUBSEQUENT CHANGE IN APPLICABLE
      LAW (THE "RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO THE COMPANY,
      (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
      UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE
      FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT
      REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
      RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR
      FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
      THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
      OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING
      OF REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER
      AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
      ACT, SUBJECT TO THE RIGHT OF THE COMPANY IN ITS SOLE DISCRETION PRIOR TO
      ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO
      REQUIRE THE DELIVERY OF OPINIONS OF COUNSEL, CERTIFICATIONS AND/OR OTHER
      INFORMATION REASONABLY ACCEPTABLE IN FORM AND SUBSTANCE TO EACH OF THEM
      THAT SUCH REGISTRATION IS NOT REQUIRED. THIS LEGEND WILL BE REMOVED UPON
      THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

      Section 16. Modification of Agreement. The Company and the Warrant Holder
may amend or supplement any provision of this Warrant Certificate only by a
statement in writing signed by each of the Company and the Warrant Holder.

      Section 17. Successors. All provisions of this Warrant Certificate by or
for the benefit of the Company or the 

<PAGE>

                                      -21-


Warrant Holder shall bind and inure to the benefit of their respective
successors and assigns hereunder.

      Section 18. Benefits of this Agreement. Nothing in this Warrant
Certificate expressed or nothing that may be implied from any of the provisions
hereof is intended, or shall be construed, to confer upon, or give to, any
person or corporation other than the Company and the Warrant Holder any right,
remedy or claim under or by reason of this Warrant Certificate or of any
provision hereof; and all provisions in this Warrant Certificate contained shall
be for the sole and exclusive benefit of the Company and its successors and of
the Warrant Holder.

      Section 19. New York Contract. This Warrant Certificate shall be governed
in all respects by the laws of the State of New York, without giving effect to
principles of conflict of laws.

      Section 20. Descriptive Headings. Descriptive headings of the several
Sections of this Warrant Certificate are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.

<PAGE>

                                      -22-


      WITNESS the signature of the proper officer of the Company. Dated as of
October 31, 1996.

                                        WARNER CHILCOTT PUBLIC
                                           LIMITED COMPANY

                                        By _____________________________________
                                        Name:
                                        Title:



      THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.

      THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO (X) THE DATE WHICH IS THREE YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY ANY
SUBSEQUENT CHANGE IN APPLICABLE LAW (THE "RESALE RESTRICTION TERMINATION DATE")
ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES
ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501
UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR
FOR THE ACCOUNT OF SUCH AN "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RIGHT
OF THE COMPANY IN ITS SOLE DISCRETION PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF OPINIONS OF

<PAGE>

                                      -2-


COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION REASONABLY ACCEPTABLE IN FORM
AND SUBSTANCE TO IT THAT SUCH REGISTRATION IS NOT REQUIRED. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.

<PAGE>

                                      -3-


Series C No. W04                                                 30,000 Warrants

                     WARNER CHILCOTT PUBLIC LIMITED COMPANY

                               Warrant Certificate

      THIS CERTIFIES THAT for value received Roger M. Boissonneault, or
registered assigns (the "Warrant Holder"), is the owner of the number of
Warrants set forth above, each of which entitles the owner thereof to purchase
at any time on or after the date hereof until the earlier of (i) 5 P.M. (New
York time) on October 31, 2006 or (ii) the occurrence of a Termination Event (as
defined) (the "Expiration Date"), at the office of the Company, one fully paid
and nonassessable Ordinary Share, par value $.05 per share ("Ordinary Share"),
represented by one American Depositary Share ("ADS"), evidenced by American
Depository Receipts ("ADRs"), of WARNER CHILCOTT PUBLIC LIMITED COMPANY
(formerly named Nale Laboratories public limited company), a public limited
company organized and existing under the laws of Ireland (the "Company"), at the
purchase price and according to the schedule set forth in Section 2 hereof, upon
presentation and surrender of this Warrant Certificate with the Form of Election
to Purchase duly executed. The number of Warrants evidenced by this Warrant
Certificate (and the number of Ordinary Shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per share set forth
above, are the number and Purchase Price as of October 31, 1996, based on the
Ordinary Shares of the Company as constituted at such date.

      Section 1. Transfer, Split Up, Combination and Exchange of Warrant
Certificates; Mutilated, Destroyed, Lost or Stolen Warrant Certificates.

      This Warrant Certificate, with or without other Warrant Certificates, may
be transferred or exchanged for another Warrant Certificate or Warrant
Certificates, entitling the Warrant Holder to purchase a like number of Ordinary
Shares as this Warrant Certificate entitles such Warrant Holder to purchase. In
the event that the Warrant Holder desires to transfer, split up, combine or
exchange this Warrant Certificate, the Warrant Holder shall make such request in
writing delivered to the Company, and shall surrender this Warrant Certificate
to the Company. Thereupon the Company shall deliver to the person entitled
thereto a Warrant Certificate or Warrant Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax
or governmental 

<PAGE>

                                      -4-


charge that may be imposed in connection with any transfer, split up,
combination or exchange of this Warrant Certificate. Notwithstanding the
foregoing, the Company shall have no obligation to cause Warrants to be
transferred on its books to any person, unless the Warrant Holder shall furnish
to the Company evidence of compliance with the Act, in accordance with the
provisions of Section 14 hereof.

      Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of this Warrant
Certificate if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor to the Warrant Holder in lieu of the Warrant
Certificate so lost, stolen, destroyed or mutilated.

      Section 2. Exercise of Warrants; Purchase Price; Expiration of Warrants.
(a) The Warrant Holder may exercise the Warrants evidenced hereby, in whole or
in part, according to the following schedule:

      Exercisable number of Warrants = (N x Q x .0625) minus P

            Where:

            N =   total number of Warrants (subject to adjustment pursuant to
                  Section 5 hereof),

            Q =   the number of whole calendar quarters which have elapsed
                  from September 30, 1996, and

            P =   the number of Warrants (if any) previously exercised

Notwithstanding the foregoing, the Board of Directors of the Company and/or a
committee thereof may, at its absolute discretion, declare any Warrants to be
exercisable in whole or in part as from any date earlier than the date upon
which it would otherwise become exercisable. Further, as described more
completely in Section 7 hereof, upon a change of control, consolidation, sale or
merger of the Company, all outstanding Warrants shall become exercisable.

      (b) Warrants may be exercised in accordance with the foregoing paragraph
(a) upon surrender of this Warrant Certifi-

<PAGE>

                                      -5-


cate with the Form of Election to Purchase, duly executed, to the Company at the
address of the Company, at or prior to the Expiration Date, together with
payment of the Purchase Price (as defined) for each Ordinary Share as to which
the Warrants evidenced hereby are exercised.

      (c) The Warrants shall expire prior to October 31, 2006 in the following
cases (each being a "Termination Event"): (1) the death of the Warrant Holder in
which case the personal representative of the deceased Warrant Holder may at any
time or from time to time, but subject to the other provisions of this Warrant
Certificate and in no case later than one year after such death, exercise any
Warrants, but only to the extent that such Warrants were exercisable by the
Warrant Holder at the time of his death, and (2) the Warrant Holder ceases to be
employed by the Company by reason of resignation, dismissal, retirement,
disability or otherwise ("Separation") in which case the Warrant Holder may at
any time, but subject to the other provisions of this Warrant Certificate and in
no case later than thirty days after Separation, exercise any Warrants, but only
to the extent that such Warrants were exercisable by the Warrant Holder at the
date of Separation.

      (d) The purchase price for each Ordinary Share pursuant to the exercise of
Warrants evidenced hereby shall initially be $1.00 (the "Purchase Price") but
will be subject to adjustment as provided in Section 5 hereof and shall be
payable as provided in Section 2(e) hereof.

      (e) Upon receipt of this Warrant Certificate, with the Form of Election to
Purchase duly executed, accompanied by payment of the Purchase Price for the
Ordinary Shares to be purchased and an amount equal to any applicable transfer
tax in cash, or by certified check, bank draft or postal or express money order
payable to the order of the Company, the Company shall thereupon promptly (i)
requisition from any transfer agent of the Ordinary Shares of the Company,
certificates for the number of whole Ordinary Shares to be purchased and (ii)
promptly after receipt of such certificates cause the same to be delivered to or
upon the order of the Warrant Holder, registered in such name or names as may be
designated by such Warrant Holder, and, when appropriate, promptly deliver cash
to be paid in lieu of issuance of fractional Ordinary Shares to or upon the
order of the Warrant Holder.

      (f) In the event that the Warrant Holder shall exercise less than all the
Warrants evidenced hereby, a new Warrant Certificate evidencing Warrants
equivalent to the Warrants re-

<PAGE>

                                      -6-


maining unexercised shall be issued by the Company to the Warrant Holder or to
the Warrant Holder's duly authorized assigns, subject to the provisions of
Section 8 hereof.

      Section 3. Reservation and Availability of Ordinary Shares. The Company
covenants and agrees that it will cause to be reserved and kept available at all
times, free from preemptive rights and out of its authorized and available
Ordinary Shares (including treasury shares), the number of Ordinary Shares that
will be sufficient to permit the exercise in full of all outstanding Warrants
evidenced hereby.

      The Company further covenants and agrees to reserve sufficient ADSs under
the Deposit Agreement, dated as of October 17, 1994 (the "Deposit Agreement"),
among the Company, The Bank of New York, as Depositary, and holders from time to
time of ADRs issued thereunder to permit the deposit thereunder of Ordinary
Shares represented by all Warrants evidenced hereby and the issuance of ADSs
representing such Ordinary Shares. The Company will, upon request of the holder
of the Ordinary Shares issued upon exercise of the Warrants evidenced hereby,
deposit such Ordinary Shares on behalf of such holder pursuant to the terms of
the Deposit Agreement and deliver to the holder of such shares the appropriate
number of ADSs evidenced by ADRs.

      The Company further covenants and agrees that it will take all such action
as may be necessary to insure that all Ordinary Shares delivered upon exercise
of the Warrants evidenced hereby shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price) (i) be
duly and validly authorized and issued and fully paid and nonassessable shares,
and (ii) be issued in compliance with all applicable governmental laws and
regulations.

      The Company further covenants and agrees that it will pay when due and
payable any and all federal and state taxes and charges which may be payable in
respect of the initial issuance or delivery of any Ordinary Shares, ADSs
representing such Ordinary Shares or ADRs evidencing such ADSs, upon the
exercise of the Warrants evidenced hereby. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the transfer or delivery of this Warrant Certificate or the issuance or
delivery of certificates for Ordinary Shares in a name other than that of the
Warrant Holder or to issue or deliver any certificates for Ordinary Shares upon
the exercise of any Warrant evidenced hereby until any such tax shall have been
paid (any such tax 

<PAGE>

                                      -7-


being payable by the Warrant Holder at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.

      Section 4. Ordinary Shares Record Date. The Warrant Holder shall for all
purposes be deemed to have become the holder of record of any Ordinary Shares
issued upon exercise of Warrants evidenced hereby on, and the certificate
representing any such Ordinary Shares shall be dated, the date upon which this
Warrant Certificate was duly surrendered and payment of the Purchase Price (and
any applicable transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the Ordinary Share transfer
books of the Company are closed, the Warrant Holder shall be deemed to have
become the record holder of such Ordinary Shares on, and such certificate shall
be dated, the next succeeding business day on which the Ordinary Share transfer
books of the Company are open. Prior to the exercise of the Warrants evidenced
hereby, the Warrant Holder shall not be entitled to any rights of a shareholder
of the Company with respect to Ordinary Shares for which the Warrants evidenced
hereby are exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein or required by law.

      Section 5. Adjustment of Purchase Price, Number of Ordinary Shares and
Shares of Capital Stock Warrants Are Exercisable Into. The number and kind of
securities purchasable upon the exercise of each Warrant evidenced hereby and
the Purchase Price shall be subject to adjustment from time to time upon the
happening of certain events, as hereinafter defined.

      (a) Adjustment for Change in Capital Stock. In case the Company shall (i)
pay a dividend on its Ordinary Shares, whether of Ordinary Shares or capital
shares of any other class or make any other distribution of Ordinary Shares,
(ii) subdivide its outstanding Ordinary Shares into a greater number of shares
or (iii) combine its outstanding Ordinary Shares into a smaller number of
Ordinary Shares, the number of Ordinary Shares purchasable upon exercise of each
Warrant evidenced hereby immediately prior thereto shall be adjusted so that the
Warrant Holder shall be entitled to receive the number of Ordinary Shares which
the Warrant Holder would have owned or have been entitled to receive after the
happening of any of the events described above had such Warrant been exercised
immedi-

<PAGE>

                                      -8-


ately prior to the happening of such event or any record date with respect
thereto.

      An adjustment made pursuant to this Section 5(a) shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event. Such adjustment shall be made successively
whenever such a payment, subdivision or combination is made.

      (b) Adjustment for Other Distributions. In case the Company shall
distribute to all holders of its Ordinary Shares evidences of its indebtedness
(other than evidences of indebtedness, shares of stock or other securities which
are convertible into or exchangeable for, with or without payment of additional
consideration in cash or property, Ordinary Shares, either upon the occurrence
of a specified date or a specified event (in any case, "Convertible
Securities")), assets (excluding cash dividends or distributions payable out of
consolidated retained earnings and dividends or distributions referred to in
Section 5(a) or in Section 5(c)), shares of capital stock (other than Ordinary
Shares), or rights, options or warrants containing the right to subscribe for or
purchase debt securities, assets or securities of the Company (other than
Convertible Securities or Ordinary Shares) (collectively "Assets"), then in each
case the number of Ordinary Shares thereafter purchasable upon the exercise of
each Warrant evidenced hereby shall be determined by multiplying the number of
Ordinary Shares theretofore purchasable upon the exercise of each Warrant
evidenced hereby by a fraction, of which the numerator shall be the market price
per Ordinary Share (as defined in Section 5(f)) on the date of such
distribution, and the denominator of which shall be such market price per
Ordinary Share less the fair value as of such record date (as determined in good
faith by the Board of Directors of the Company) of the portion of the Assets
applicable to one Ordinary Share. Such adjustment shall be made whenever any
such distribution is made, and shall become effective on the date of
distribution retroactive to the record date for the determination of
shareholders entitled to receive such distribution. A reclassification of the
Ordinary Shares (other than a change in par value, from par value to no par
value or from no par value to par value) into Ordinary Shares and shares of any
other class of stock shall be deemed a distribution by the Company to the
holders of its Ordinary Shares of such shares of such other class of stock
within the meaning of this Section 5(b) and, if the outstanding Ordinary Shares
shall be changed into larger or smaller number of Ordinary Shares as a part of
such reclassification, such change shall be deemed a subdivision or combina-

<PAGE>

                                      -9-


tion, as the case may be, of the outstanding Ordinary Shares within the meaning
of Section 5(a).

      No adjustment shall be made pursuant to this Section 5(b) unless, on the
record date for such distribution, the market price per Ordinary Share exceeds
the fair market value of the Assets applicable to each outstanding Ordinary
Share. In the event, and each time, that the Company distributes Assets to all
holders of its Ordinary Shares and the market price per Ordinary Share on the
record date for such distribution is less than or equal to the fair market value
of the Assets applicable to each outstanding Ordinary Share on such date, the
Company shall either (i) distribute Assets to the Warrant Holder on the record
date for such distribution when such Assets are distributed to the holders of
Ordinary Shares as though all Warrants evidenced hereby had been exercised as of
such record date or (ii) deposit such Assets in trust with a trustee. If the
Company elects to distribute Assets to the Warrant Holder, the Company shall, on
the date Assets are distributed to holders of Ordinary Shares, distribute to
such Warrant Holder the Assets that it would have been entitled to receive on
such date if it had exercised the Warrants evidenced hereby immediately prior to
the record date for such distribution. If, however, the Company elects to
deposit the Assets due the Warrant Holder in trust, the Company shall, on the
date Assets are distributed to holders of Ordinary Shares, place in trust the
Assets that the Warrant Holder would have been entitled to receive on such date
if all of the Warrants evidenced hereby had been exercised immediately prior to
the record date for such distribution; and the Warrant Holder shall be entitled
upon exercise of the Warrants evidenced hereby to receive the Ordinary Shares
issuable upon exercise thereof, the Assets placed in trust in respect of such
Warrants, and the interest and dividends paid on such Assets since being placed
in trust. In the event any Warrants evidenced hereby have not been exercised
prior to the termination of the Expiration Date, any assets remaining in such
trust after distributions have been made in respect of Warrants exercised shall
be returned to the Company.

      (c) Adjustment for Issuance of Ordinary Shares. If at any time after the
date hereof the Company shall (except as hereinafter provided) issue or sell any
Ordinary Shares for consideration in an amount per Ordinary Share less than the
market price per Ordinary Share (as defined in Section 5(f)) in effect
immediately prior to the time of such issue or sale, then the number of Ordinary
Shares purchasable upon the exercise of each Warrant evidenced hereby shall be
adjusted to

<PAGE>

                                      -10-


equal the product obtained by multiplying the number of Ordinary Shares for
which such Warrant is exercisable immediately prior to such issue or sale by a
fraction (A) the numerator of which shall be the number of Ordinary Shares
outstanding immediately after such issue or sale, and (B) the denominator of
which shall be the sum of (1) the number of Ordinary Shares outstanding
immediately prior to such issue or sale, and (2) the aggregate consideration
received from the issuance or sale of such additional Ordinary Shares divided by
the market price per Ordinary Share (as defined in Section 5(f)) in effect
immediately prior to the time of such issue or sale; provided, however, that no
adjustment shall be made pursuant to this Section 5(c) upon the issuance of
Ordinary Shares (i) in a bona fide public offering pursuant to a firm commitment
or best efforts underwriting, (ii) upon the issuance of up to 500,000 Ordinary
Shares, or ADSs representing such Ordinary Shares, of the Company pursuant to
any employee stock option, purchase or similar plan which may be established by
the Company from time to time providing for options, warrants or similar rights
to purchase Ordinary Shares, or ADSs representing such Ordinary Shares, of the
Company or (iii) upon the issuance of Ordinary Shares pursuant to (A) the
Agreement among the Company, Nale Laboratories Corporation and Bernard J. Berk,
(B) the warrants issued pursuant to the Warrant Agreement dated as of October
17, 1994 between the Company and Elan Corporation, plc, (C) the warrants issued
pursuant to the Warrant Agreement dated as of October 17, 1994 between the
Company and Montgomery Securities, (D) the warrants issued pursuant to the
Warrant Purchase Agreement dated as of March 28, 1996 by and between the Company
and Warner-Lambert Company or (E) the warrants to purchase in the aggregate
amount 170,000 Ordinary Shares, or ADSs representing such Ordinary Shares,
issued on June 28, 1996 to certain current and former directors of the Company.

      (d) Issuance of Warrants or Other Rights. In case the Company shall
distribute to all holders of its Ordinary Shares or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any warrants or other rights to subscribe for or
purchase any Ordinary Shares or any Convertible Securities, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and the
price per share for which Ordinary Shares are issuable upon the exercise of such
warrants or other rights or upon conversion or exchange of such Convertible
Securities plus the price paid to the Company to acquire such warrants, other
rights or Convertible Securities shall be less than the market price per
Ordinary Share (as defined in Section 5(f)) in effect immediately prior to the
time

<PAGE>

                                      -11-


of such distribution, issue or sale, then the number of Ordinary Shares
purchasable upon the exercise of each Warrant evidenced hereby shall be adjusted
as provided in Section 5(c) on the basis that (A) the maximum number of Ordinary
Shares issuable pursuant to all such warrants or other rights or necessary to
give effect to the conversion or exchange of all such Convertible Securities
shall be deemed to be issued and outstanding, (B) the price per share for such
Ordinary Shares shall be deemed to be the lowest possible price per share in any
range of prices per share at which such Ordinary Shares are available to such
holders, and (C) the Company shall have received all of the consideration
payable therefor, if any, as of the date of the actual issuance of such warrants
or other rights; provided, however, that no adjustment shall be made pursuant to
this Section 5(d) upon the issuance of any warrants or options or other rights
to subscribe for up to 500,000 Ordinary Shares, or ADSs representing such
Ordinary Shares, of the Company, pursuant to any employee stock option, purchase
or similar plan which may be established by the Company from time to time. No
further adjustments of the number of Ordinary Shares for which any Warrant
evidenced hereby is exercisable shall be made upon the actual issue of such
Ordinary Shares or of such Convertible Securities upon exercise of such warrants
or other rights or upon the actual issue of such Ordinary Shares upon such
conversion or exchange of such Convertible Securities.

      (e) Adjustments for Issuance of Convertible Securities. In case the
Company shall distribute to all holders of its Ordinary Shares or shall in any
manner (whether directly or by assumption in a merger in which the Company is
the surviving corporation) issue or sell any Convertible Securities, whether or
not the rights to exchange or convert thereunder are immediately exercisable,
and the price per share for which Ordinary Shares are issuable upon such
conversion or exchange, plus the price paid to the Company to acquire such
Convertible Security, shall be less than the market price per Ordinary Share (as
defined in Section 5(f)), in effect immediately prior to the time of such
distribution, issue or sale, then the number of Ordinary Shares purchasable upon
the exercise of each Warrant evidenced hereby shall be adjusted as provided in
Section 5(c) on the basis that (i) the maximum number of Ordinary Shares
necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to be issued and outstanding, (ii) the price per
share of such Ordinary Shares shall be deemed to be the lowest possible price in
any range of prices at which such Ordinary Shares are available to such holders,
and (iii) the Company shall have received all of the consideration payable
therefor, if any, as of the date of actual issu-

<PAGE>

                                      -12-


ance of such Convertible Securities. No adjustment of the number of Ordinary
Shares for which any Warrant evidenced hereby is exercisable shall be made under
this Section 5(e) upon the issuance of any Convertible Securities which are
issued pursuant to the exercise of any warrants or other subscription or
purchase rights therefor if any such adjustment shall previously have been made
upon the issuance of such warrants or other rights pursuant to Section 5(d). No
further adjustments of the number of Ordinary Shares for which any such Warrant
evidenced hereby is exercisable shall be made upon the actual issue of such
Ordinary Shares upon conversion or exchange of such Convertible Securities and,
if any issue or sale of such Convertible Securities is made upon exercise of any
warrant or other right to subscribe for or to purchase any such Convertible
Securities for which adjustments have been or are to be made pursuant to other
provisions of this Section 5, no further adjustments shall be made by reason of
such issue or sale. For the purposes of this Section 5(e), the date as of which
the current market price of Ordinary Shares shall be computed shall be the
earliest of (a) the date on which the Company shall take a record of the holders
of its Ordinary Shares for the purpose of entitling them to receive any such
Convertible Securities or (b) the date of actual issuance of such Convertible
Securities.

      (f) Market Price. For the purpose of any computation under Sections 5(b),
5(c), 5(d), 5(e) and 8(b), the market price per Ordinary Share at any date shall
be the fair value thereof determined in the reasonable good faith judgment of
the Board of Directors of the Company; provided, however, that if the Ordinary
Shares, or ADSs representing such Ordinary Shares, are listed or admitted for
trading on any domestic national securities exchange or quoted in the
over-the-counter market or the National Association of Securities Dealers
Automated Quotation ("NASDAQ") National Market System, the market price per
Ordinary Share shall be the average of the daily closing prices for 20
consecutive trading days preceding the date of such computation. The closing
price for each day shall be the last reported sales price regular way or, in
case no such reported sale takes place on such day, the average of the closing
bid and asked prices regular way for such day, in each case on the principal
national securities exchange on which the Ordinary Shares or ADSs, as the case
may be, are listed or admitted to trading or, if not listed or admitted to
trading, the average of the last reported sales price or in case no such
reported sales take place on such day, the average of the closing bid and asked
prices of the Ordinary Shares in the over-the-counter market as reported by
NASDAQ or the NASDAQ National Market System or any comparable system or, if the
Ordinary Shares are not 

<PAGE>

                                      -13-


included for quotation in the over-the-counter market or the NASDAQ National
Market System or a comparable system, the average of the closing bid and asked
prices as furnished by two members of the National Association of Securities
Deals, Inc. selected from time to time by the Board of Directors of the Company
for that purpose.

      (g) When De Minimis Adjustment May Be Deferred. No adjustment in the
number of Ordinary Shares purchasable upon exercise of the Warrants evidenced
hereby shall be required unless such adjustment would require an increase or
decrease of at least one percent (1%) in the number of Ordinary Shares
purchasable upon the exercise of each such Warrant; provided, however, that any
adjustments which by reason of this paragraph (g) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations shall be made to the nearest one-thousandth of a share.

      (h) Adjustment in Purchase Price. Whenever the number of Ordinary Shares
purchasable upon the exercise of each Warrant evidenced hereby is adjusted as
herein provided, the Purchase Price payable upon exercise of each such Warrant
shall be adjusted by multiplying such Purchase Price immediately prior to such
adjustment by a fraction, of which the numerator shall be the number of Ordinary
Shares purchasable upon the exercise of each such Warrant immediately prior to
such adjustment, and of which the denominator shall be the number of Ordinary
Shares purchasable immediately thereafter.

      (i) When No Adjustment Required. No adjustment in the number of Ordinary
Shares purchasable upon the exercise of each Warrant evidenced hereby need be
made under Sections 5(b), 5(d) and 5(e) if the Company issues or distributes to
the Warrant Holder, the Assets, warrants or other rights or Convertible
Securities referred to in those paragraphs which the Warrant Holder would have
been entitled to receive had the Warrants evidenced hereby been exercised prior
to the happening of such event or the record date with respect thereto. No
adjustment need be made for a change in the par value or to no par value of the
Ordinary Shares; provided, however, that the Purchase Price shall at no time be
less than the par value of the Ordinary Shares of the Company, provided,
further, that the Company shall reduce the par value of its Ordinary Shares from
time to time as necessary so that such par value shall not be more than the
Purchase Price then in effect.

      (j) Ordinary Shares. For all purposes of this Warrant Certificate, the
term "Ordinary Shares" shall mean (i) the 

<PAGE>

                                      -14-


class of stock designated as the Ordinary Shares of the Company on October 31,
1996 or (ii) any other class of stock resulting from successive changes or
reclassifications of such shares consisting solely of changes in par value, or
from par value to no par value, or from no par value to par value. In the event
that at any time, as a result of an adjustment made pursuant to Section 5(a),
the Warrant Holder shall become entitled to purchase any securities of the
Company other than Ordinary Shares, thereafter the number of such other shares
so purchasable upon exercise of each Warrant evidenced hereby and the Purchase
Price of such shares shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Ordinary Shares contained in Sections 5(a) through 5(i) herein,
inclusive, this Section 5(j) and the provisions of Section 2 and Sections 5(m)
and 5(n) herein, with respect to the Ordinary Shares, shall apply on like terms
to any such other securities.

      (k) Expiration of Rights, Warrants or Convertible Securities. Upon the
expiration of any rights, warrants or Convertible Securities, if any thereof
shall not have been exercised, exchanged or converted, the Purchase Price and
the number of Ordinary Shares purchasable upon the exercise of each Warrant
evidenced hereby shall, upon such expiration, be readjusted and shall thereafter
be such as it would have been had it been originally adjusted (or had the
original adjustment not been required, as the case may be) as if (A) the only
Ordinary Shares so issued were the Ordinary Shares, if any, actually issued or
sold upon the exercise of such rights or warrants or conversion or exchange of
Convertible Securities and (B) such Ordinary Shares, if any, were issued or sold
for the consideration actually received by the Company upon such exercise,
conversion or exchange plus the aggregate consideration, if any, actually
received by the Company for the issuance, sale or grant of all of such rights,
warrants or Convertible Securities whether or not exercised, converted or
exchanged, as the case may be; provided, however, that no such readjustment
shall have the effect of increasing the Purchase Price or decreasing the number
of Ordinary Shares purchasable upon the exercise of each Warrant evidenced
hereby by an amount in excess of the amount of the adjustment initially made in
respect of the issuance, sale or grant or such rights, warrants or Convertible
Securities.

      (l) In the event of any issuance of securities by the Company for
consideration in whole or in part in other than cash, the Board of Directors of
the Company shall determine in 

<PAGE>

                                      -15-


good faith the value thereof which determination shall be conclusive and
binding.

      (m) Voluntary Adjustment by the Company. The Company may at its option, at
any time prior to the Expiration Date, reduce the then current Purchase Price to
any amount deemed appropriate by the Board of Directors of the Company;
provided, however, the Company may not in any case increase the Purchase Price
pursuant to this Section 5(m); provided, further, if the Company elects to
reduce the then current Purchase Price, such reduction shall remain in effect
for at least a 30 day period, after which time the Company may, at its option,
reinstate the Purchase Price in effect immediately prior to such reduction.

      (n) Statement on This Warrant Certificate. Irrespective of any adjustments
in the Purchase Price or the number or kind of shares purchasable upon the
exercise of the Warrants evidenced hereby, this Warrant Certificate and Warrant
Certificates hereafter issued may continue to express the same price and number
and kind of shares as are stated hereon.

      Section 6. Certification of Adjusted Purchase Price and Number of Shares
Issuable. Whenever the Purchase Price and the number of Ordinary Shares issuable
upon the exercise of each Warrant evidenced hereby are adjusted as provided in
Section 5, the Company shall (a) prepare a certificate signed by its Chief
Executive Officer or a Vice President or other executive officer setting forth
the Purchase Price as so adjusted, the number of Ordinary Shares issuable upon
the exercise of each Warrant evidenced hereby as so adjusted and a brief
statement of the method of calculation of the adjustment and the facts
accounting for the adjustment, (b) promptly file with each transfer agent for
the Ordinary Shares a copy of such certificate, and (c) mail a brief summary
thereof to the Warrant Holder.

      Section 7. Acceleration of Exercisability upon Sale of the Company or a
Change of Control. In the event that the Company undergoes a Sale (as defined)
or a Change of Control (as defined) prior to the Exiration Date, all of the
Warrants shall become fully exercisable.

      For purposes of this Section 7, "Change of Control" means and shall be
deemed to have occurred if any person (within the meaning of the Securities and
Exchange Act of 1934, as amended), other than the Company or a Related Party (as
defined), is or becomes the beneficial owner, directly or in-

<PAGE>

                                      -16-


directly, of voting securities representing 51% or more of the total voting
power of all then outstanding voting securities.

      For purposes of this Section 7, "Related Party" means: (a) a majority
owned subsidiary of the Company, (b) an employee or group of employees of the
Company, (c) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, (d) a corporation owned by the stockholders of the
Company in substantially the same proportion as their ownership of the voting
securities of the Company, and (e) each of Elan Corporation, plc, Dominion
Income Management Corp., Halisol SA, AIG Global Investment Corp., Goldman Sachs
& Co., Paribas Sante SA, Perrigo Company and Warner-Lambert Company.

      For purposes of this Section 7, a "Sale" means and shall be deemed to have
occurred if: (a) the Company completes a merger, consolidation, sale, transfer
or other disposition that effects a Change of Control, or (b) the Company enters
into a transaction or series of transactions to sell, transfer or otherwise
dispose of all or substantially all of its properties or assets.

      Section 8. Fractional Warrants and Fractional Shares. (a) The Company
shall not be required to issue fractions of Warrants or to distribute Warrant
Certificates which evidence fractional Warrants. In lieu of such fractional
Warrants, there shall be paid to the Warrant Holders with regard to which such
fractional Warrant would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Warrant. For purposes of
this Section 8(a), the current market value of a Warrant shall be the fair value
thereof determined in the reasonable good faith judgment of the Board of
Directors of the Company for the day immediately prior to the date on which such
fractional Warrant would have been otherwise issuable.

      (b) Notwithstanding an adjustment pursuant to Section 5 in the number of
Ordinary Shares covered by any Warrant evidenced hereby, the Company shall not
be required to issue fractions of Ordinary Shares upon exercise of the Warrants
evidenced hereby or to distribute certificates which evidence fractional
Ordinary Shares. In lieu of fractional Ordinary Shares, there shall be paid to
the Warrant Holder at the time this Warrant Certificate is exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of an Ordinary Share. For purposes of this Section 8(b), the current
market value of an Ordinary Share shall be deter-

<PAGE>

                                      -17-


mined in accordance with Section 5(f) as of the day immediately prior to the
date of such exercise.

      (c) The Warrant Holder by acceptance hereof, expressly waives such Warrant
Holder's right to receive any fractional Warrant evidenced hereby or any
fractional Ordinary Share upon exercise of a Warrants evidenced hereby.

      Section 9. Right of Action. All rights of action in respect of this
Warrant Certificate are vested in the respective Warrant Holders; and any
Warrant Holders may, in its own behalf and for its own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise in respect of, its right to exercise the Warrants
evidenced by this Warrant Certificate in the manner provided in this Warrant
Certificate.

      Section 10. Agreement of Warrant Certificate Holders. The Warrant Holder
by accepting same consents and agrees with the Company that:

            (a) registration of transfer of this Warrant Certificate may be made
      only on the registry books of the Company if surrendered at the address of
      the Company, duly endorsed, or accompanied by a proper instrument of
      transfer; and

            (b) the Company may deem and treat the person in whose name this
      Warrant Certificate is registered as the absolute owner thereof and of the
      Warrants evidenced hereby (notwithstanding any notations of ownership or
      writing on this Warrant Certificates made by anyone other than the
      Company) for all purposes whatsoever, and the Company shall not be
      affected by any notice to the contrary.

      Section 11. Issuance of New Warrant Certificate. Notwithstanding any of
the provisions of this Warrant Certificate, the Company may, at its option,
issue a new Warrant Certificate evidencing the Warrants evidenced hereby in such
form as may be approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of shares of
capital stock or other securities or property purchasable under this Warrant
Certificate made in accordance with the provisions of this Agreement.

<PAGE>

                                      -18-


      Section 12. Notice of Proposed Actions. In case the Company shall propose
(a) to pay any dividend payable in stock of any class to the holders of its
Ordinary Shares or to make any other distribution to the holders of its Ordinary
Shares (other than a cash dividend) or (b) to offer to the holders of its
Ordinary Shares rights, options or warrants to subscribe for or to purchase any
additional Ordinary Shares or shares of capital stock of any class or any other
securities, rights or options, or (c) to effect any reclassification of its
Ordinary Shares (other than a reclassification involving only the subdivision or
combination of outstanding Ordinary Shares), or (d) to effect any capital
reorganization, or (e) to effect any consolidation, merger or sale, transfer or
other disposition of all or substantially all of its property, assets or
business, or (f) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to the Warrant Holder,
a notice of such proposed action in accordance with Section 13 hereof, which
shall specify the date on which a record is to be taken for the purposes of such
stock dividend, distribution or rights, options or warrants, or the date on
which such reclassification, reorganization, consolidation, merger, sale,
transfer, disposition, liquidation, dissolution, or winding up is to become
effective and the date of participation therein by the holders of Ordinary
Shares, if any such date is to be fixed, and such notice shall be so given at
least 20 calendar days (or 10 calendar days in any case specified in clause (a)
or (b) above) prior to the applicable record date, effective date or
participation date described above.

      Section 13. Notices. Notices or demands authorized by this Agreement to be
given or made by the Warrant Holder to or on the Company shall be made in
writing by hand-delivery, next-day air courier, certified first-class mail,
return receipt requested, telex or facsimile to:

<PAGE>

                                      -19-


                           Warner Chilcott Public Limited Company
                           Lincoln House
                           Lincoln Place
                           Dublin 2, Ireland
                           Facsimile:  (353) 1-662-4950

                           Attention:  Corporate Secretary

Notices or demands authorized by this Agreement to be given or made by the
Company to the Warrant Holder shall be made in writing by hand-delivery,
next-day air courier, certified first-class mail, return receipt requested,
telex or facsimile to such holder at the address of the Warrant Holder as shown
on the registry books of the Company.

      Section 14. Registration under the Securities Act of 1933. The Warrant
Holder represents and warrants to the Company that it will not dispose of any
Warrants or Ordinary Shares issuable upon exercise of the Warrants evidenced
hereby except, (i) to a "qualified institutional buyer" as such term is defined
in Rule 144A under the Act, upon receipt by the Company of a transfer letter
certifying as to the prospective transferee's status as a qualified
institutional buyer, (ii) pursuant to an effective registration statement under
the Act and any applicable state or foreign securities laws or (iii) upon
receipt by the Company and, in the event of any disposition of ADRs evidencing
ADSs representing Ordinary Shares issued upon exercise of the Warrants evidenced
hereby, receipt by the depositary who is party to the Deposit Agreement (the
"Depositary"), of an opinion of counsel reasonably acceptable to the Company
and, if applicable, the Depositary, that such registration is not required.

      Section 15. Certificates To Bear Legends. Upon original issuance prior to
(i) the date which is three years after the later of the original issue date
thereof and the last date on which the Company or any affiliate of the Company
was the owner of the security (or any predecessor security) and (ii) such later
date, if any, as may be required by any subsequent change in applicable law,
each Ordinary Share or other security issued upon exercise of the Warrants
evidenced hereby shall bear a legend substantially to the following effect:

            THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
      OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
      NEITHER THIS SECURITY NOR ANY INTEREST OR 

<PAGE>

                                      -20-


      PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
      PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
      REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
      REGISTRATION.

            THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
      OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO (X) THE DATE
      WHICH IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND
      THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE
      OWNER OF THIS SECURITY (OR ANY PREDECESSOR SECURITY) AND (Y) SUCH LATER
      DATE, IF ANY, AS MAY BE REQUIRED BY ANY SUBSEQUENT CHANGE IN APPLICABLE
      LAW (THE "RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO THE COMPANY,
      (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
      UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE
      FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT
      REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
      RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR
      FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
      THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
      OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING
      OF REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER
      AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
      ACT, SUBJECT TO THE RIGHT OF THE COMPANY IN ITS SOLE DISCRETION PRIOR TO
      ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO
      REQUIRE THE DELIVERY OF OPINIONS OF COUNSEL, CERTIFICATIONS AND/OR OTHER
      INFORMATION REASONABLY ACCEPTABLE IN FORM AND SUBSTANCE TO EACH OF THEM
      THAT SUCH REGISTRATION IS NOT REQUIRED. THIS LEGEND WILL BE REMOVED UPON
      THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

      Section 16. Modification of Agreement. The Company and the Warrant Holder
may amend or supplement any provision of this Warrant Certificate only by a
statement in writing signed by each of the Company and the Warrant Holder.

      Section 17. Successors. All provisions of this Warrant Certificate by or
for the benefit of the Company or the 

<PAGE>

                                      -21-


Warrant Holder shall bind and inure to the benefit of their respective
successors and assigns hereunder.

      Section 18. Benefits of this Agreement. Nothing in this Warrant
Certificate expressed or nothing that may be implied from any of the provisions
hereof is intended, or shall be construed, to confer upon, or give to, any
person or corporation other than the Company and the Warrant Holder any right,
remedy or claim under or by reason of this Warrant Certificate or of any
provision hereof; and all provisions in this Warrant Certificate contained shall
be for the sole and exclusive benefit of the Company and its successors and of
the Warrant Holder.

      Section 19. New York Contract. This Warrant Certificate shall be governed
in all respects by the laws of the State of New York, without giving effect to
principles of conflict of laws.

      Section 20. Descriptive Headings. Descriptive headings of the several
Sections of this Warrant Certificate are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.

<PAGE>

                                      -22-


      WITNESS the signature of the proper officer of the Company. Dated as of
October 31, 1996.

                                         WARNER CHILCOTT PUBLIC
                                            LIMITED COMPANY

                                         By ____________________________________
                                         Name:
                                         Title:



      THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.

      THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO (X) THE DATE WHICH IS THREE YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY ANY
SUBSEQUENT CHANGE IN APPLICABLE LAW (THE "RESALE RESTRICTION TERMINATION DATE")
ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES
ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501
UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR
FOR THE ACCOUNT OF SUCH AN "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RIGHT
OF THE COMPANY IN ITS SOLE DISCRETION PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF OPINIONS OF

<PAGE>

                                      -2-


COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION REASONABLY ACCEPTABLE IN FORM
AND SUBSTANCE TO IT THAT SUCH REGISTRATION IS NOT REQUIRED. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.

<PAGE>

                                      -3-


Series C No. W03                                                120,000 Warrants

                     WARNER CHILCOTT PUBLIC LIMITED COMPANY

                               Warrant Certificate

      THIS CERTIFIES THAT for value received Roger M. Boissonneault, or
registered assigns (the "Warrant Holder"), is the owner of the number of
Warrants set forth above, each of which entitles the owner thereof to purchase
at any time on or after the date hereof until the earlier of (i) 5 P.M. (New
York time) on October 31, 2006 or (ii) the occurrence of a Termination Event (as
defined) (the "Expiration Date"), at the office of the Company, one fully paid
and nonassessable Ordinary Share, par value $.05 per share ("Ordinary Share"),
represented by one American Depositary Share ("ADS"), evidenced by American
Depository Receipts ("ADRs"), of WARNER CHILCOTT PUBLIC LIMITED COMPANY
(formerly named Nale Laboratories public limited company), a public limited
company organized and existing under the laws of Ireland (the "Company"), at the
purchase price and according to the schedule set forth in Section 2 hereof, upon
presentation and surrender of this Warrant Certificate with the Form of Election
to Purchase duly executed. The number of Warrants evidenced by this Warrant
Certificate (and the number of Ordinary Shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per share set forth
above, are the number and Purchase Price as of October 31, 1996, based on the
Ordinary Shares of the Company as constituted at such date.

      Section 1. Transfer, Split Up, Combination and Exchange of Warrant
Certificates; Mutilated, Destroyed, Lost or Stolen Warrant Certificates.

      This Warrant Certificate, with or without other Warrant Certificates, may
be transferred or exchanged for another Warrant Certificate or Warrant
Certificates, entitling the Warrant Holder to purchase a like number of Ordinary
Shares as this Warrant Certificate entitles such Warrant Holder to purchase. In
the event that the Warrant Holder desires to transfer, split up, combine or
exchange this Warrant Certificate, the Warrant Holder shall make such request in
writing delivered to the Company, and shall surrender this Warrant Certificate
to the Company. Thereupon the Company shall deliver to the person entitled
thereto a Warrant Certificate or Warrant Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax
or governmental 

<PAGE>

                                      -4-


charge that may be imposed in connection with any transfer, split up,
combination or exchange of this Warrant Certificate. Notwithstanding the
foregoing, the Company shall have no obligation to cause Warrants to be
transferred on its books to any person, unless the Warrant Holder shall furnish
to the Company evidence of compliance with the Act, in accordance with the
provisions of Section 14 hereof.

      Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of this Warrant
Certificate if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor to the Warrant Holder in lieu of the Warrant
Certificate so lost, stolen, destroyed or mutilated.

      Section 2. Exercise of Warrants; Purchase Price; Expiration of Warrants.
(a) The Warrant Holder may exercise the Warrants evidenced hereby, in whole or
in part, according to the following schedule:

      Exercisable number of Warrants = (N x Q x .0625) minus P

            Where:

            N =   total number of Warrants (subject to adjustment pursuant to
                  Section 5 hereof),

            Q =   the number of whole calendar quarters which have elapsed
                  from September 30, 1996, and

            P =   the number of Warrants (if any) previously exercised

Notwithstanding the foregoing, the Board of Directors of the Company and/or a
committee thereof may, at its absolute discretion, declare any Warrants to be
exercisable in whole or in part as from any date earlier than the date upon
which it would otherwise become exercisable. Further, as described more
completely in Section 7 hereof, upon a change of control, consolidation, sale or
merger of the Company, all outstanding Warrants shall become exercisable.

      (b) Warrants may be exercised in accordance with the foregoing paragraph
(a) upon surrender of this Warrant Certifi-

<PAGE>

                                      -5-


cate with the Form of Election to Purchase, duly executed, to the Company at the
address of the Company, at or prior to the Expiration Date, together with
payment of the Purchase Price (as defined) for each Ordinary Share as to which
the Warrants evidenced hereby are exercised.

      (c) The Warrants shall expire prior to October 31, 2006 in the following
cases (each being a "Termination Event"): (1) the death of the Warrant Holder in
which case the personal representative of the deceased Warrant Holder may at any
time or from time to time, but subject to the other provisions of this Warrant
Certificate and in no case later than one year after such death, exercise any
Warrants, but only to the extent that such Warrants were exercisable by the
Warrant Holder at the time of his death, and (2) the Warrant Holder ceases to be
employed by the Company by reason of resignation, dismissal, retirement,
disability or otherwise ("Separation") in which case the Warrant Holder may at
any time, but subject to the other provisions of this Warrant Certificate and in
no case later than thirty days after Separation, exercise any Warrants, but only
to the extent that such Warrants were exercisable by the Warrant Holder at the
date of Separation.

      (d) The purchase price for each Ordinary Share pursuant to the exercise of
Warrants evidenced hereby shall initially be $20.00 (the "Purchase Price") but
will be subject to adjustment as provided in Section 5 hereof and shall be
payable as provided in Section 2(e) hereof.

      (e) Upon receipt of this Warrant Certificate, with the Form of Election to
Purchase duly executed, accompanied by payment of the Purchase Price for the
Ordinary Shares to be purchased and an amount equal to any applicable transfer
tax in cash, or by certified check, bank draft or postal or express money order
payable to the order of the Company, the Company shall thereupon promptly (i)
requisition from any transfer agent of the Ordinary Shares of the Company,
certificates for the number of whole Ordinary Shares to be purchased and (ii)
promptly after receipt of such certificates cause the same to be delivered to or
upon the order of the Warrant Holder, registered in such name or names as may be
designated by such Warrant Holder, and, when appropriate, promptly deliver cash
to be paid in lieu of issuance of fractional Ordinary Shares to or upon the
order of the Warrant Holder.

      (f) In the event that the Warrant Holder shall exercise less than all the
Warrants evidenced hereby, a new Warrant Certificate evidencing Warrants
equivalent to the Warrants re-

<PAGE>

                                      -6-


maining unexercised shall be issued by the Company to the Warrant Holder or to
the Warrant Holder's duly authorized assigns, subject to the provisions of
Section 8 hereof.

      Section 3. Reservation and Availability of Ordinary Shares. The Company
covenants and agrees that it will cause to be reserved and kept available at all
times, free from preemptive rights and out of its authorized and available
Ordinary Shares (including treasury shares), the number of Ordinary Shares that
will be sufficient to permit the exercise in full of all outstanding Warrants
evidenced hereby.

      The Company further covenants and agrees to reserve sufficient ADSs under
the Deposit Agreement, dated as of October 17, 1994 (the "Deposit Agreement"),
among the Company, The Bank of New York, as Depositary, and holders from time to
time of ADRs issued thereunder to permit the deposit thereunder of Ordinary
Shares represented by all Warrants evidenced hereby and the issuance of ADSs
representing such Ordinary Shares. The Company will, upon request of the holder
of the Ordinary Shares issued upon exercise of the Warrants evidenced hereby,
deposit such Ordinary Shares on behalf of such holder pursuant to the terms of
the Deposit Agreement and deliver to the holder of such shares the appropriate
number of ADSs evidenced by ADRs.

      The Company further covenants and agrees that it will take all such action
as may be necessary to insure that all Ordinary Shares delivered upon exercise
of the Warrants evidenced hereby shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price) (i) be
duly and validly authorized and issued and fully paid and nonassessable shares,
and (ii) be issued in compliance with all applicable governmental laws and
regulations.

      The Company further covenants and agrees that it will pay when due and
payable any and all federal and state taxes and charges which may be payable in
respect of the initial issuance or delivery of any Ordinary Shares, ADSs
representing such Ordinary Shares or ADRs evidencing such ADSs, upon the
exercise of the Warrants evidenced hereby. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the transfer or delivery of this Warrant Certificate or the issuance or
delivery of certificates for Ordinary Shares in a name other than that of the
Warrant Holder or to issue or deliver any certificates for Ordinary Shares upon
the exercise of any Warrant evidenced hereby until any such tax shall have been
paid (any such tax 

<PAGE>

                                      -7-


being payable by the Warrant Holder at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.

      Section 4. Ordinary Shares Record Date. The Warrant Holder shall for all
purposes be deemed to have become the holder of record of any Ordinary Shares
issued upon exercise of Warrants evidenced hereby on, and the certificate
representing any such Ordinary Shares shall be dated, the date upon which this
Warrant Certificate was duly surrendered and payment of the Purchase Price (and
any applicable transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the Ordinary Share transfer
books of the Company are closed, the Warrant Holder shall be deemed to have
become the record holder of such Ordinary Shares on, and such certificate shall
be dated, the next succeeding business day on which the Ordinary Share transfer
books of the Company are open. Prior to the exercise of the Warrants evidenced
hereby, the Warrant Holder shall not be entitled to any rights of a shareholder
of the Company with respect to Ordinary Shares for which the Warrants evidenced
hereby are exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein or required by law.

      Section 5. Adjustment of Purchase Price, Number of Ordinary Shares and
Shares of Capital Stock Warrants Are Exercisable Into. The number and kind of
securities purchasable upon the exercise of each Warrant evidenced hereby and
the Purchase Price shall be subject to adjustment from time to time upon the
happening of certain events, as hereinafter defined.

      (a) Adjustment for Change in Capital Stock. In case the Company shall (i)
pay a dividend on its Ordinary Shares, whether of Ordinary Shares or capital
shares of any other class or make any other distribution of Ordinary Shares,
(ii) subdivide its outstanding Ordinary Shares into a greater number of shares
or (iii) combine its outstanding Ordinary Shares into a smaller number of
Ordinary Shares, the number of Ordinary Shares purchasable upon exercise of each
Warrant evidenced hereby immediately prior thereto shall be adjusted so that the
Warrant Holder shall be entitled to receive the number of Ordinary Shares which
the Warrant Holder would have owned or have been entitled to receive after the
happening of any of the events described above had such Warrant been exercised
immedi-

<PAGE>

                                      -8-


ately prior to the happening of such event or any record date with respect
thereto.

      An adjustment made pursuant to this Section 5(a) shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event. Such adjustment shall be made successively
whenever such a payment, subdivision or combination is made.

      (b) Adjustment for Other Distributions. In case the Company shall
distribute to all holders of its Ordinary Shares evidences of its indebtedness
(other than evidences of indebtedness, shares of stock or other securities which
are convertible into or exchangeable for, with or without payment of additional
consideration in cash or property, Ordinary Shares, either upon the occurrence
of a specified date or a specified event (in any case, "Convertible
Securities")), assets (excluding cash dividends or distributions payable out of
consolidated retained earnings and dividends or distributions referred to in
Section 5(a) or in Section 5(c)), shares of capital stock (other than Ordinary
Shares), or rights, options or warrants containing the right to subscribe for or
purchase debt securities, assets or securities of the Company (other than
Convertible Securities or Ordinary Shares) (collectively "Assets"), then in each
case the number of Ordinary Shares thereafter purchasable upon the exercise of
each Warrant evidenced hereby shall be determined by multiplying the number of
Ordinary Shares theretofore purchasable upon the exercise of each Warrant
evidenced hereby by a fraction, of which the numerator shall be the market price
per Ordinary Share (as defined in Section 5(f)) on the date of such
distribution, and the denominator of which shall be such market price per
Ordinary Share less the fair value as of such record date (as determined in good
faith by the Board of Directors of the Company) of the portion of the Assets
applicable to one Ordinary Share. Such adjustment shall be made whenever any
such distribution is made, and shall become effective on the date of
distribution retroactive to the record date for the determination of
shareholders entitled to receive such distribution. A reclassification of the
Ordinary Shares (other than a change in par value, from par value to no par
value or from no par value to par value) into Ordinary Shares and shares of any
other class of stock shall be deemed a distribution by the Company to the
holders of its Ordinary Shares of such shares of such other class of stock
within the meaning of this Section 5(b) and, if the outstanding Ordinary Shares
shall be changed into larger or smaller number of Ordinary Shares as a part of
such reclassification, such change shall be deemed a subdivision or combina-

<PAGE>

                                      -9-


tion, as the case may be, of the outstanding Ordinary Shares within the meaning
of Section 5(a).

      No adjustment shall be made pursuant to this Section 5(b) unless, on the
record date for such distribution, the market price per Ordinary Share exceeds
the fair market value of the Assets applicable to each outstanding Ordinary
Share. In the event, and each time, that the Company distributes Assets to all
holders of its Ordinary Shares and the market price per Ordinary Share on the
record date for such distribution is less than or equal to the fair market value
of the Assets applicable to each outstanding Ordinary Share on such date, the
Company shall either (i) distribute Assets to the Warrant Holder on the record
date for such distribution when such Assets are distributed to the holders of
Ordinary Shares as though all Warrants evidenced hereby had been exercised as of
such record date or (ii) deposit such Assets in trust with a trustee. If the
Company elects to distribute Assets to the Warrant Holder, the Company shall, on
the date Assets are distributed to holders of Ordinary Shares, distribute to
such Warrant Holder the Assets that it would have been entitled to receive on
such date if it had exercised the Warrants evidenced hereby immediately prior to
the record date for such distribution. If, however, the Company elects to
deposit the Assets due the Warrant Holder in trust, the Company shall, on the
date Assets are distributed to holders of Ordinary Shares, place in trust the
Assets that the Warrant Holder would have been entitled to receive on such date
if all of the Warrants evidenced hereby had been exercised immediately prior to
the record date for such distribution; and the Warrant Holder shall be entitled
upon exercise of the Warrants evidenced hereby to receive the Ordinary Shares
issuable upon exercise thereof, the Assets placed in trust in respect of such
Warrants, and the interest and dividends paid on such Assets since being placed
in trust. In the event any Warrants evidenced hereby have not been exercised
prior to the termination of the Expiration Date, any assets remaining in such
trust after distributions have been made in respect of Warrants exercised shall
be returned to the Company.

      (c) Adjustment for Issuance of Ordinary Shares. If at any time after the
date hereof the Company shall (except as hereinafter provided) issue or sell any
Ordinary Shares for consideration in an amount per Ordinary Share less than the
market price per Ordinary Share (as defined in Section 5(f)) in effect
immediately prior to the time of such issue or sale, then the number of Ordinary
Shares purchasable upon the exercise of each Warrant evidenced hereby shall be
adjusted to 

<PAGE>

                                      -10-


equal the product obtained by multiplying the number of Ordinary Shares for
which such Warrant is exercisable immediately prior to such issue or sale by a
fraction (A) the numerator of which shall be the number of Ordinary Shares
outstanding immediately after such issue or sale, and (B) the denominator of
which shall be the sum of (1) the number of Ordinary Shares outstanding
immediately prior to such issue or sale, and (2) the aggregate consideration
received from the issuance or sale of such additional Ordinary Shares divided by
the market price per Ordinary Share (as defined in Section 5(f)) in effect
immediately prior to the time of such issue or sale; provided, however, that no
adjustment shall be made pursuant to this Section 5(c) upon the issuance of
Ordinary Shares (i) in a bona fide public offering pursuant to a firm commitment
or best efforts underwriting, (ii) upon the issuance of up to 500,000 Ordinary
Shares, or ADSs representing such Ordinary Shares, of the Company pursuant to
any employee stock option, purchase or similar plan which may be established by
the Company from time to time providing for options, warrants or similar rights
to purchase Ordinary Shares, or ADSs representing such Ordinary Shares, of the
Company or (iii) upon the issuance of Ordinary Shares pursuant to (A) the
Agreement among the Company, Nale Laboratories Corporation and Bernard J. Berk,
(B) the warrants issued pursuant to the Warrant Agreement dated as of October
17, 1994 between the Company and Elan Corporation, plc, (C) the warrants issued
pursuant to the Warrant Agreement dated as of October 17, 1994 between the
Company and Montgomery Securities, (D) the warrants issued pursuant to the
Warrant Purchase Agreement dated as of March 28, 1996 by and between the Company
and Warner-Lambert Company or (E) the warrants to purchase in the aggregate
amount 170,000 Ordinary Shares, or ADSs representing such Ordinary Shares,
issued on June 28, 1996 to certain current and former directors of the Company.

      (d) Issuance of Warrants or Other Rights. In case the Company shall
distribute to all holders of its Ordinary Shares or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any warrants or other rights to subscribe for or
purchase any Ordinary Shares or any Convertible Securities, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and the
price per share for which Ordinary Shares are issuable upon the exercise of such
warrants or other rights or upon conversion or exchange of such Convertible
Securities plus the price paid to the Company to acquire such warrants, other
rights or Convertible Securities shall be less than the market price per
Ordinary Share (as defined in Section 5(f)) in effect immediately prior to the
time

<PAGE>

                                      -11-


of such distribution, issue or sale, then the number of Ordinary Shares
purchasable upon the exercise of each Warrant evidenced hereby shall be adjusted
as provided in Section 5(c) on the basis that (A) the maximum number of Ordinary
Shares issuable pursuant to all such warrants or other rights or necessary to
give effect to the conversion or exchange of all such Convertible Securities
shall be deemed to be issued and outstanding, (B) the price per share for such
Ordinary Shares shall be deemed to be the lowest possible price per share in any
range of prices per share at which such Ordinary Shares are available to such
holders, and (C) the Company shall have received all of the consideration
payable therefor, if any, as of the date of the actual issuance of such warrants
or other rights; provided, however, that no adjustment shall be made pursuant to
this Section 5(d) upon the issuance of any warrants or options or other rights
to subscribe for up to 500,000 Ordinary Shares, or ADSs representing such
Ordinary Shares, of the Company, pursuant to any employee stock option, purchase
or similar plan which may be established by the Company from time to time. No
further adjustments of the number of Ordinary Shares for which any Warrant
evidenced hereby is exercisable shall be made upon the actual issue of such
Ordinary Shares or of such Convertible Securities upon exercise of such warrants
or other rights or upon the actual issue of such Ordinary Shares upon such
conversion or exchange of such Convertible Securities.

      (e) Adjustments for Issuance of Convertible Securities. In case the
Company shall distribute to all holders of its Ordinary Shares or shall in any
manner (whether directly or by assumption in a merger in which the Company is
the surviving corporation) issue or sell any Convertible Securities, whether or
not the rights to exchange or convert thereunder are immediately exercisable,
and the price per share for which Ordinary Shares are issuable upon such
conversion or exchange, plus the price paid to the Company to acquire such
Convertible Security, shall be less than the market price per Ordinary Share (as
defined in Section 5(f)), in effect immediately prior to the time of such
distribution, issue or sale, then the number of Ordinary Shares purchasable upon
the exercise of each Warrant evidenced hereby shall be adjusted as provided in
Section 5(c) on the basis that (i) the maximum number of Ordinary Shares
necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to be issued and outstanding, (ii) the price per
share of such Ordinary Shares shall be deemed to be the lowest possible price in
any range of prices at which such Ordinary Shares are available to such holders,
and (iii) the Company shall have received all of the consideration payable
therefor, if any, as of the date of actual issu-

<PAGE>

                                      -12-


ance of such Convertible Securities. No adjustment of the number of Ordinary
Shares for which any Warrant evidenced hereby is exercisable shall be made under
this Section 5(e) upon the issuance of any Convertible Securities which are
issued pursuant to the exercise of any warrants or other subscription or
purchase rights therefor if any such adjustment shall previously have been made
upon the issuance of such warrants or other rights pursuant to Section 5(d). No
further adjustments of the number of Ordinary Shares for which any such Warrant
evidenced hereby is exercisable shall be made upon the actual issue of such
Ordinary Shares upon conversion or exchange of such Convertible Securities and,
if any issue or sale of such Convertible Securities is made upon exercise of any
warrant or other right to subscribe for or to purchase any such Convertible
Securities for which adjustments have been or are to be made pursuant to other
provisions of this Section 5, no further adjustments shall be made by reason of
such issue or sale. For the purposes of this Section 5(e), the date as of which
the current market price of Ordinary Shares shall be computed shall be the
earliest of (a) the date on which the Company shall take a record of the holders
of its Ordinary Shares for the purpose of entitling them to receive any such
Convertible Securities or (b) the date of actual issuance of such Convertible
Securities.

      (f) Market Price. For the purpose of any computation under Sections 5(b),
5(c), 5(d), 5(e) and 8(b), the market price per Ordinary Share at any date shall
be the fair value thereof determined in the reasonable good faith judgment of
the Board of Directors of the Company; provided, however, that if the Ordinary
Shares, or ADSs representing such Ordinary Shares, are listed or admitted for
trading on any domestic national securities exchange or quoted in the
over-the-counter market or the National Association of Securities Dealers
Automated Quotation ("NASDAQ") National Market System, the market price per
Ordinary Share shall be the average of the daily closing prices for 20
consecutive trading days preceding the date of such computation. The closing
price for each day shall be the last reported sales price regular way or, in
case no such reported sale takes place on such day, the average of the closing
bid and asked prices regular way for such day, in each case on the principal
national securities exchange on which the Ordinary Shares or ADSs, as the case
may be, are listed or admitted to trading or, if not listed or admitted to
trading, the average of the last reported sales price or in case no such
reported sales take place on such day, the average of the closing bid and asked
prices of the Ordinary Shares in the over-the-counter market as reported by
NASDAQ or the NASDAQ National Market System or any comparable system or, if the
Ordinary Shares are not 

<PAGE>

                                      -13-


included for quotation in the over-the-counter market or the NASDAQ National
Market System or a comparable system, the average of the closing bid and asked
prices as furnished by two members of the National Association of Securities
Deals, Inc. selected from time to time by the Board of Directors of the Company
for that purpose.

      (g) When De Minimis Adjustment May Be Deferred. No adjustment in the
number of Ordinary Shares purchasable upon exercise of the Warrants evidenced
hereby shall be required unless such adjustment would require an increase or
decrease of at least one percent (1%) in the number of Ordinary Shares
purchasable upon the exercise of each such Warrant; provided, however, that any
adjustments which by reason of this paragraph (g) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations shall be made to the nearest one-thousandth of a share.

      (h) Adjustment in Purchase Price. Whenever the number of Ordinary Shares
purchasable upon the exercise of each Warrant evidenced hereby is adjusted as
herein provided, the Purchase Price payable upon exercise of each such Warrant
shall be adjusted by multiplying such Purchase Price immediately prior to such
adjustment by a fraction, of which the numerator shall be the number of Ordinary
Shares purchasable upon the exercise of each such Warrant immediately prior to
such adjustment, and of which the denominator shall be the number of Ordinary
Shares purchasable immediately thereafter.

      (i) When No Adjustment Required. No adjustment in the number of Ordinary
Shares purchasable upon the exercise of each Warrant evidenced hereby need be
made under Sections 5(b), 5(d) and 5(e) if the Company issues or distributes to
the Warrant Holder, the Assets, warrants or other rights or Convertible
Securities referred to in those paragraphs which the Warrant Holder would have
been entitled to receive had the Warrants evidenced hereby been exercised prior
to the happening of such event or the record date with respect thereto. No
adjustment need be made for a change in the par value or to no par value of the
Ordinary Shares; provided, however, that the Purchase Price shall at no time be
less than the par value of the Ordinary Shares of the Company, provided,
further, that the Company shall reduce the par value of its Ordinary Shares from
time to time as necessary so that such par value shall not be more than the
Purchase Price then in effect.

      (j) Ordinary Shares. For all purposes of this Warrant Certificate, the
term "Ordinary Shares" shall mean (i) the 

<PAGE>

                                      -14-


class of stock designated as the Ordinary Shares of the Company on October 31,
1996 or (ii) any other class of stock resulting from successive changes or
reclassifications of such shares consisting solely of changes in par value, or
from par value to no par value, or from no par value to par value. In the event
that at any time, as a result of an adjustment made pursuant to Section 5(a),
the Warrant Holder shall become entitled to purchase any securities of the
Company other than Ordinary Shares, thereafter the number of such other shares
so purchasable upon exercise of each Warrant evidenced hereby and the Purchase
Price of such shares shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Ordinary Shares contained in Sections 5(a) through 5(i) herein,
inclusive, this Section 5(j) and the provisions of Section 2 and Sections 5(m)
and 5(n) herein, with respect to the Ordinary Shares, shall apply on like terms
to any such other securities.

      (k) Expiration of Rights, Warrants or Convertible Securities. Upon the
expiration of any rights, warrants or Convertible Securities, if any thereof
shall not have been exercised, exchanged or converted, the Purchase Price and
the number of Ordinary Shares purchasable upon the exercise of each Warrant
evidenced hereby shall, upon such expiration, be readjusted and shall thereafter
be such as it would have been had it been originally adjusted (or had the
original adjustment not been required, as the case may be) as if (A) the only
Ordinary Shares so issued were the Ordinary Shares, if any, actually issued or
sold upon the exercise of such rights or warrants or conversion or exchange of
Convertible Securities and (B) such Ordinary Shares, if any, were issued or sold
for the consideration actually received by the Company upon such exercise,
conversion or exchange plus the aggregate consideration, if any, actually
received by the Company for the issuance, sale or grant of all of such rights,
warrants or Convertible Securities whether or not exercised, converted or
exchanged, as the case may be; provided, however, that no such readjustment
shall have the effect of increasing the Purchase Price or decreasing the number
of Ordinary Shares purchasable upon the exercise of each Warrant evidenced
hereby by an amount in excess of the amount of the adjustment initially made in
respect of the issuance, sale or grant or such rights, warrants or Convertible
Securities.

      (l) In the event of any issuance of securities by the Company for
consideration in whole or in part in other than cash, the Board of Directors of
the Company shall determine in 

<PAGE>

                                      -15-


good faith the value thereof which determination shall be conclusive and
binding.

      (m) Voluntary Adjustment by the Company. The Company may at its option, at
any time prior to the Expiration Date, reduce the then current Purchase Price to
any amount deemed appropriate by the Board of Directors of the Company;
provided, however, the Company may not in any case increase the Purchase Price
pursuant to this Section 5(m); provided, further, if the Company elects to
reduce the then current Purchase Price, such reduction shall remain in effect
for at least a 30 day period, after which time the Company may, at its option,
reinstate the Purchase Price in effect immediately prior to such reduction.

      (n) Statement on This Warrant Certificate. Irrespective of any adjustments
in the Purchase Price or the number or kind of shares purchasable upon the
exercise of the Warrants evidenced hereby, this Warrant Certificate and Warrant
Certificates hereafter issued may continue to express the same price and number
and kind of shares as are stated hereon.

      Section 6. Certification of Adjusted Purchase Price and Number of Shares
Issuable. Whenever the Purchase Price and the number of Ordinary Shares issuable
upon the exercise of each Warrant evidenced hereby are adjusted as provided in
Section 5, the Company shall (a) prepare a certificate signed by its Chief
Executive Officer or a Vice President or other executive officer setting forth
the Purchase Price as so adjusted, the number of Ordinary Shares issuable upon
the exercise of each Warrant evidenced hereby as so adjusted and a brief
statement of the method of calculation of the adjustment and the facts
accounting for the adjustment, (b) promptly file with each transfer agent for
the Ordinary Shares a copy of such certificate, and (c) mail a brief summary
thereof to the Warrant Holder.

      Section 7. Acceleration of Exercisability upon Sale of the Company or a
Change of Control. In the event that the Company undergoes a Sale (as defined)
or a Change of Control (as defined) prior to the Exiration Date, all of the
Warrants shall become fully exercisable.

      For purposes of this Section 7, "Change of Control" means and shall be
deemed to have occurred if any person (within the meaning of the Securities and
Exchange Act of 1934, as amended), other than the Company or a Related Party (as
defined), is or becomes the beneficial owner, directly or indi-

<PAGE>

                                      -16-


rectly, of voting securities representing 51% or more of the total voting power
of all then outstanding voting securities.

      For purposes of this Section 7, "Related Party" means: (a) a majority
owned subsidiary of the Company, (b) an employee or group of employees of the
Company, (c) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, (d) a corporation owned by the stockholders of the
Company in substantially the same proportion as their ownership of the voting
securities of the Company, and (e) each of Elan Corporation, plc, Dominion
Income Management Corp., Halisol SA, AIG Global Investment Corp., Goldman Sachs
& Co., Paribas Sante SA, Perrigo Company and Warner-Lambert Company.

      For purposes of this Section 7, a "Sale" means and shall be deemed to have
occurred if: (a) the Company completes a merger, consolidation, sale, transfer
or other disposition that effects a Change of Control, or (b) the Company enters
into a transaction or series of transactions to sell, transfer or otherwise
dispose of all or substantially all of its properties or assets.

      Section 8. Fractional Warrants and Fractional Shares. (a) The Company
shall not be required to issue fractions of Warrants or to distribute Warrant
Certificates which evidence fractional Warrants. In lieu of such fractional
Warrants, there shall be paid to the Warrant Holders with regard to which such
fractional Warrant would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Warrant. For purposes of
this Section 8(a), the current market value of a Warrant shall be the fair value
thereof determined in the reasonable good faith judgment of the Board of
Directors of the Company for the day immediately prior to the date on which such
fractional Warrant would have been otherwise issuable.

      (b) Notwithstanding an adjustment pursuant to Section 5 in the number of
Ordinary Shares covered by any Warrant evidenced hereby, the Company shall not
be required to issue fractions of Ordinary Shares upon exercise of the Warrants
evidenced hereby or to distribute certificates which evidence fractional
Ordinary Shares. In lieu of fractional Ordinary Shares, there shall be paid to
the Warrant Holder at the time this Warrant Certificate is exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of an Ordinary Share. For purposes of this Section 8(b), the current
market value of an Ordinary Share shall be deter-

<PAGE>

                                      -17-


mined in accordance with Section 5(f) as of the day immediately prior to the
date of such exercise.

      (c) The Warrant Holder by acceptance hereof, expressly waives such Warrant
Holder's right to receive any fractional Warrant evidenced hereby or any
fractional Ordinary Share upon exercise of a Warrants evidenced hereby.

      Section 9. Right of Action. All rights of action in respect of this
Warrant Certificate are vested in the respective Warrant Holders; and any
Warrant Holders may, in its own behalf and for its own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise in respect of, its right to exercise the Warrants
evidenced by this Warrant Certificate in the manner provided in this Warrant
Certificate.

      Section 10. Agreement of Warrant Certificate Holders. The Warrant Holder
by accepting same consents and agrees with the Company that:

            (a) registration of transfer of this Warrant Certificate may be made
      only on the registry books of the Company if surrendered at the address of
      the Company, duly endorsed, or accompanied by a proper instrument of
      transfer; and

            (b) the Company may deem and treat the person in whose name this
      Warrant Certificate is registered as the absolute owner thereof and of the
      Warrants evidenced hereby (notwithstanding any notations of ownership or
      writing on this Warrant Certificates made by anyone other than the
      Company) for all purposes whatsoever, and the Company shall not be
      affected by any notice to the contrary.

      Section 11. Issuance of New Warrant Certificate. Notwithstanding any of
the provisions of this Warrant Certificate, the Company may, at its option,
issue a new Warrant Certificate evidencing the Warrants evidenced hereby in such
form as may be approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of shares of
capital stock or other securities or property purchasable under this Warrant
Certificate made in accordance with the provisions of this Agreement.

<PAGE>

                                      -18-


      Section 12. Notice of Proposed Actions. In case the Company shall propose
(a) to pay any dividend payable in stock of any class to the holders of its
Ordinary Shares or to make any other distribution to the holders of its Ordinary
Shares (other than a cash dividend) or (b) to offer to the holders of its
Ordinary Shares rights, options or warrants to subscribe for or to purchase any
additional Ordinary Shares or shares of capital stock of any class or any other
securities, rights or options, or (c) to effect any reclassification of its
Ordinary Shares (other than a reclassification involving only the subdivision or
combination of outstanding Ordinary Shares), or (d) to effect any capital
reorganization, or (e) to effect any consolidation, merger or sale, transfer or
other disposition of all or substantially all of its property, assets or
business, or (f) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to the Warrant Holder,
a notice of such proposed action in accordance with Section 13 hereof, which
shall specify the date on which a record is to be taken for the purposes of such
stock dividend, distribution or rights, options or warrants, or the date on
which such reclassification, reorganization, consolidation, merger, sale,
transfer, disposition, liquidation, dissolution, or winding up is to become
effective and the date of participation therein by the holders of Ordinary
Shares, if any such date is to be fixed, and such notice shall be so given at
least 20 calendar days (or 10 calendar days in any case specified in clause (a)
or (b) above) prior to the applicable record date, effective date or
participation date described above.

      Section 13. Notices. Notices or demands authorized by this Agreement to be
given or made by the Warrant Holder to or on the Company shall be made in
writing by hand-delivery, next-day air courier, certified first-class mail,
return receipt requested, telex or facsimile to:

                                Warner Chilcott Public Limited Company
                                Lincoln House
                                Lincoln Place
                                Dublin 2, Ireland
                                Facsimile:  (353) 1-662-4950
                                Attention:  Corporate Secretary

Notices or demands authorized by this Agreement to be given or made by the
Company to the Warrant Holder shall be made in writing by hand-delivery,
next-day air courier, certified first-class mail, return receipt requested,
telex or facsimile 

<PAGE>

                                      -19-


to such holder at the address of the Warrant Holder as shown on the registry
books of the Company.

      Section 14. Registration under the Securities Act of 1933. The Warrant
Holder represents and warrants to the Company that it will not dispose of any
Warrants or Ordinary Shares issuable upon exercise of the Warrants evidenced
hereby except, (i) to a "qualified institutional buyer" as such term is defined
in Rule 144A under the Act, upon receipt by the Company of a transfer letter
certifying as to the prospective transferee's status as a qualified
institutional buyer, (ii) pursuant to an effective registration statement under
the Act and any applicable state or foreign securities laws or (iii) upon
receipt by the Company and, in the event of any disposition of ADRs evidencing
ADSs representing Ordinary Shares issued upon exercise of the Warrants evidenced
hereby, receipt by the depositary who is party to the Deposit Agreement (the
"Depositary"), of an opinion of counsel reasonably acceptable to the Company
and, if applicable, the Depositary, that such registration is not required.

      Section 15. Certificates To Bear Legends. Upon original issuance prior to
(i) the date which is three years after the later of the original issue date
thereof and the last date on which the Company or any affiliate of the Company
was the owner of the security (or any predecessor security) and (ii) such later
date, if any, as may be required by any subsequent change in applicable law,
each Ordinary Share or other security issued upon exercise of the Warrants
evidenced hereby shall bear a legend substantially to the following effect:

            THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
      OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
      NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
      REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
      DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION
      IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.

            THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
      OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO (X) THE DATE
      WHICH IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND
      THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE
      OWNER OF THIS 

<PAGE>

                                      -20-


      SECURITY (OR ANY PREDECESSOR SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS
      MAY BE REQUIRED BY ANY SUBSEQUENT CHANGE IN APPLICABLE LAW (THE "RESALE
      RESTRICTION TERMINATION DATE") ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
      REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
      SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
      PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY
      BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
      UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
      ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT
      THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
      OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING
      OF REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER
      AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
      ACT, SUBJECT TO THE RIGHT OF THE COMPANY IN ITS SOLE DISCRETION PRIOR TO
      ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO
      REQUIRE THE DELIVERY OF OPINIONS OF COUNSEL, CERTIFICATIONS AND/OR OTHER
      INFORMATION REASONABLY ACCEPTABLE IN FORM AND SUBSTANCE TO EACH OF THEM
      THAT SUCH REGISTRATION IS NOT REQUIRED. THIS LEGEND WILL BE REMOVED UPON
      THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

      Section 16. Modification of Agreement. The Company and the Warrant Holder
may amend or supplement any provision of this Warrant Certificate only by a
statement in writing signed by each of the Company and the Warrant Holder.

      Section 17. Successors. All provisions of this Warrant Certificate by or
for the benefit of the Company or the Warrant Holder shall bind and inure to the
benefit of their respective successors and assigns hereunder.

      Section 18. Benefits of this Agreement. Nothing in this Warrant
Certificate expressed or nothing that may be implied from any of the provisions
hereof is intended, or shall be construed, to confer upon, or give to, any
person or corporation other than the Company and the Warrant Holder any right,
remedy or claim under or by reason of this Warrant Certificate or of any
provision hereof; and all provisions in this Warrant Certificate contained shall
be for the sole and 

<PAGE>

                                      -21-


exclusive benefit of the Company and its successors and of the Warrant Holder.

      Section 19. New York Contract. This Warrant Certificate shall be governed
in all respects by the laws of the State of New York, without giving effect to
principles of conflict of laws.

      Section 20. Descriptive Headings. Descriptive headings of the several
Sections of this Warrant Certificate are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.

<PAGE>

                                      -22-


      WITNESS the signature of the proper officer of the Company. Dated as of
October 31, 1996.

                                        WARNER CHILCOTT PUBLIC
                                           LIMITED COMPANY

                                        By _____________________________________
                                        Name:
                                        Title:



      THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.

      THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO (X) THE DATE WHICH IS TWO YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY ANY
SUBSEQUENT CHANGE IN APPLICABLE LAW (THE "RESALE RESTRICTION TERMINATION DATE")
ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES
ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501
UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR
FOR THE ACCOUNT OF SUCH AN "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RIGHT
OF THE COMPANY IN ITS SOLE DISCRETION PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF OPINIONS OF

<PAGE>

                                      -2-


COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION REASONABLY ACCEPTABLE IN FORM
AND SUBSTANCE TO IT THAT SUCH REGISTRATION IS NOT REQUIRED. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.

<PAGE>

                                      -3-


Series C No. W05                                                200,000 Warrants

                     WARNER CHILCOTT PUBLIC LIMITED COMPANY

                               Warrant Certificate

      THIS CERTIFIES THAT for value received Paul S. Herendeen, or registered
assigns (the "Warrant Holder"), is the owner of the number of Warrants set forth
above, each of which entitles the owner thereof to purchase at any time on or
after the date hereof until the earlier of (i) 5 P.M. (New York time) on
February 3, 2008 or (ii) the occurrence of a Termination Event (as defined) (the
"Expiration Date"), at the office of the Company, one fully paid and
nonassessable Ordinary Share, par value $.05 per share ("Ordinary Share"),
represented by one American Depositary Share ("ADS"), evidenced by American
Depository Receipts ("ADRs"), of WARNER CHILCOTT PUBLIC LIMITED COMPANY
(formerly named Nale Laboratories public limited company), a public limited
company organized and existing under the laws of Ireland (the "Company"), at the
purchase price and according to the schedule set forth in Section 2 hereof, upon
presentation and surrender of this Warrant Certificate with the Form of Election
to Purchase duly executed. The number of Warrants evidenced by this Warrant
Certificate (and the number of Ordinary Shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per share set forth
above, are the number and Purchase Price as of February 3, 1998, based on the
Ordinary Shares of the Company as constituted at such date.

      Section 1. Transfer, Split Up, Combination and Exchange of Warrant
Certificates; Mutilated, Destroyed, Lost or Stolen Warrant Certificates.

      This Warrant Certificate, with or without other Warrant Certificates, may
be transferred or exchanged for another Warrant Certificate or Warrant
Certificates, entitling the Warrant Holder to purchase a like number of Ordinary
Shares as this Warrant Certificate entitles such Warrant Holder to purchase. In
the event that the Warrant Holder desires to transfer, split up, combine or
exchange this Warrant Certificate, the Warrant Holder shall make such request in
writing delivered to the Company, and shall surrender this Warrant Certificate
to the Company. Thereupon the Company shall deliver to the person entitled
thereto a Warrant Certificate or Warrant Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax
or governmental 

<PAGE>

                                      -4-


charge that may be imposed in connection with any transfer, split up,
combination or exchange of this Warrant Certificate. Notwithstanding the
foregoing, the Company shall have no obligation to cause Warrants to be
transferred on its books to any person, unless the Warrant Holder shall furnish
to the Company evidence of compliance with the Securities Act, in accordance
with the provisions of Section 14 hereof.

      Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of this Warrant
Certificate if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor to the Warrant Holder in lieu of the Warrant
Certificate so lost, stolen, destroyed or mutilated.

      Section 2. Exercise of Warrants; Purchase Price; Expiration of Warrants.
(a) The Warrant Holder may exercise the Warrants evidenced hereby, in whole or
in part, according to the following schedule:

      Exercisable number of Warrants = (N x Q x .0625) minus P

            Where:

            N =   total number of Warrants (subject to adjustment pursuant to
                  Section 5 hereof),

            Q =   the number of whole calendar quarters which have elapsed
                  from December 31, 1997, and

            P =   the number of Warrants (if any) previously exercised

Notwithstanding the foregoing, the Board of Directors of the Company and/or a
committee thereof may, at its absolute discretion, declare any Warrants to be
exercisable in whole or in part as from any date earlier than the date upon
which it would otherwise become exercisable. Further, as described more
completely in Section 7 hereof, upon a change of control, consolidation, sale or
merger of the Company, all outstanding Warrants shall become exercisable.

      (b) Warrants may be exercised in accordance with the foregoing paragraph
(a) upon surrender of this Warrant Certifi-

<PAGE>

                                      -5-


cate with the Form of Election to Purchase, duly executed, to the Company at the
address of the Company, at or prior to the Expiration Date, together with
payment of the Purchase Price (as defined) for each Ordinary Share as to which
the Warrants evidenced hereby are exercised.

      (c) The Warrants shall expire prior to February 3, 2008 in the following
cases (each being a "Termination Event"): (1) the death of the Warrant Holder in
which case the personal representative of the deceased Warrant Holder may at any
time or from time to time, but subject to the other provisions of this Warrant
Certificate and in no case later than one year after such death, exercise any
Warrants, but only to the extent that such Warrants were exercisable by the
Warrant Holder at the time of his death, and (2) the Warrant Holder ceases to be
employed by the Company by reason of resignation, dismissal, retirement,
disability or otherwise ("Separation") in which case the Warrant Holder may at
any time, but subject to the other provisions of this Warrant Certificate and in
no case later than thirty days after Separation, exercise any Warrants, but only
to the extent that such Warrants were exercisable by the Warrant Holder at the
date of Separation.

      (d) The purchase price for each Ordinary Share pursuant to the exercise of
Warrants evidenced hereby shall initially be $9.77 (the "Purchase Price") but
will be subject to adjustment as provided in Section 5 hereof and shall be
payable as provided in Section 2(e) hereof.

      (e) Upon receipt of this Warrant Certificate, with the Form of Election to
Purchase duly executed, accompanied by payment of the Purchase Price for the
Ordinary Shares to be purchased and an amount equal to any applicable transfer
tax in cash, or by certified check, bank draft or postal or express money order
payable to the order of the Company, the Company shall thereupon promptly (i)
requisition from any transfer agent of the Ordinary Shares of the Company,
certificates for the number of whole Ordinary Shares to be purchased and (ii)
promptly after receipt of such certificates cause the same to be delivered to or
upon the order of the Warrant Holder, registered in such name or names as may be
designated by such Warrant Holder, and, when appropriate, promptly deliver cash
to be paid in lieu of issuance of fractional Ordinary Shares to or upon the
order of the Warrant Holder.

      (f) In the event that the Warrant Holder shall exercise less than all the
Warrants evidenced hereby, a new Warrant Certificate evidencing Warrants
equivalent to the Warrants re-

<PAGE>

                                      -6-


maining unexercised shall be issued by the Company to the Warrant Holder or to
the Warrant Holder's duly authorized assigns, subject to the provisions of
Section 8 hereof.

      Section 3. Reservation and Availability of Ordinary Shares. The Company
covenants and agrees that it will cause to be reserved and kept available at all
times, free from preemptive rights and out of its authorized and available
Ordinary Shares (including treasury shares), the number of Ordinary Shares that
will be sufficient to permit the exercise in full of all outstanding Warrants
evidenced hereby.

      The Company further covenants and agrees to reserve sufficient ADSs under
the Deposit Agreement, dated as of June 16, 1997 (the "Deposit Agreement"),
among the Company, The Bank of New York, as Depositary, and holders from time to
time of ADRs issued thereunder to permit the deposit thereunder of Ordinary
Shares represented by all Warrants evidenced hereby and the issuance of ADSs
representing such Ordinary Shares. The Company will, upon request of the holder
of the Ordinary Shares issued upon exercise of the Warrants evidenced hereby,
deposit such Ordinary Shares on behalf of such holder pursuant to the terms of
the Deposit Agreement and deliver to the holder of such shares the appropriate
number of ADSs evidenced by ADRs.

      The Company further covenants and agrees that it will take all such action
as may be necessary to insure that all Ordinary Shares delivered upon exercise
of the Warrants evidenced hereby shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price) (i) be
duly and validly authorized and issued and fully paid and nonassessable shares,
and (ii) be issued in compliance with all applicable governmental laws and
regulations.

      The Company further covenants and agrees that it will pay when due and
payable any and all federal and state taxes and charges which may be payable in
respect of the initial issuance or delivery of any Ordinary Shares, ADSs
representing such Ordinary Shares or ADRs evidencing such ADSs, upon the
exercise of the Warrants evidenced hereby. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the transfer or delivery of this Warrant Certificate or the issuance or
delivery of certificates for Ordinary Shares in a name other than that of the
Warrant Holder or to issue or deliver any certificates for Ordinary Shares upon
the exercise of any Warrant evidenced hereby until any such tax shall have been
paid (any such tax being payable by the Warrant Holder at the time of surrender)

<PAGE>

                                      -7-


or until it has been established to the Company's satisfaction that no such tax
is due.

      Section 4. Ordinary Shares Record Date. The Warrant Holder shall for all
purposes be deemed to have become the holder of record of any Ordinary Shares
issued upon exercise of Warrants evidenced hereby on, and the certificate
representing any such Ordinary Shares shall be dated, the date upon which this
Warrant Certificate was duly surrendered and payment of the Purchase Price (and
any applicable transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the Ordinary Share transfer
books of the Company are closed, the Warrant Holder shall be deemed to have
become the record holder of such Ordinary Shares on, and such certificate shall
be dated, the next succeeding business day on which the Ordinary Share transfer
books of the Company are open. Prior to the exercise of the Warrants evidenced
hereby, the Warrant Holder shall not be entitled to any rights of a shareholder
of the Company with respect to Ordinary Shares for which the Warrants evidenced
hereby are exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein or required by law.

      Section 5. Adjustment of Purchase Price, Number of Ordinary Shares and
Shares of Capital Stock Warrants Are Exercisable Into. The number and kind of
securities purchasable upon the exercise of each Warrant evidenced hereby and
the Purchase Price shall be subject to adjustment from time to time upon the
happening of certain events, as hereinafter defined.

      (a) Adjustment for Change in Capital Stock. In case the Company shall (i)
pay a dividend on its Ordinary Shares, whether of Ordinary Shares or capital
shares of any other class or make any other distribution of Ordinary Shares,
(ii) subdivide its outstanding Ordinary Shares into a greater number of shares
or (iii) combine its outstanding Ordinary Shares into a smaller number of
Ordinary Shares, the number of Ordinary Shares purchasable upon exercise of each
Warrant evidenced hereby immediately prior thereto shall be adjusted so that the
Warrant Holder shall be entitled to receive the number of Ordinary Shares which
the Warrant Holder would have owned or have been entitled to receive after the
happening of any of the events described above had such Warrant been exercised
immedi-

<PAGE>

                                      -8-


ately prior to the happening of such event or any record date with respect
thereto.

      An adjustment made pursuant to this Section 5(a) shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event. Such adjustment shall be made successively
whenever such a payment, subdivision or combination is made.

      (b) Adjustment for Other Distributions. In case the Company shall
distribute to all holders of its Ordinary Shares evidences of its indebtedness
(other than evidences of indebtedness, shares of stock or other securities which
are convertible into or exchangeable for, with or without payment of additional
consideration in cash or property, Ordinary Shares, either upon the occurrence
of a specified date or a specified event (in any case, "Convertible
Securities")), assets (excluding cash dividends or distributions payable out of
consolidated retained earnings and dividends or distributions referred to in
Section 5(a) or in Section 5(c)), shares of capital stock (other than Ordinary
Shares), or rights, options or warrants containing the right to subscribe for or
purchase debt securities, assets or securities of the Company (other than
Convertible Securities or Ordinary Shares) (collectively "Assets"), then in each
case the number of Ordinary Shares thereafter purchasable upon the exercise of
each Warrant evidenced hereby shall be determined by multiplying the number of
Ordinary Shares theretofore purchasable upon the exercise of each Warrant
evidenced hereby by a fraction, of which the numerator shall be the market price
per Ordinary Share (as defined in Section 5(f)) on the date of such
distribution, and the denominator of which shall be such market price per
Ordinary Share less the fair value as of such record date (as determined in good
faith by the Board of Directors of the Company) of the portion of the Assets
applicable to one Ordinary Share. Such adjustment shall be made whenever any
such distribution is made, and shall become effective on the date of
distribution retroactive to the record date for the determination of
shareholders entitled to receive such distribution. A reclassification of the
Ordinary Shares (other than a change in par value, from par value to no par
value or from no par value to par value) into Ordinary Shares and shares of any
other class of stock shall be deemed a distribution by the Company to the
holders of its Ordinary Shares of such shares of such other class of stock
within the meaning of this Section 5(b) and, if the outstanding Ordinary Shares
shall be changed into larger or smaller number of Ordinary Shares as a part of
such reclassification, such change shall be deemed a subdivision or combina-

<PAGE>

                                      -9-


tion, as the case may be, of the outstanding Ordinary Shares within the meaning
of Section 5(a).

      No adjustment shall be made pursuant to this Section 5(b) unless, on the
record date for such distribution, the market price per Ordinary Share exceeds
the fair market value of the Assets applicable to each outstanding Ordinary
Share. In the event, and each time, that the Company distributes Assets to all
holders of its Ordinary Shares and the market price per Ordinary Share on the
record date for such distribution is less than or equal to the fair market value
of the Assets applicable to each outstanding Ordinary Share on such date, the
Company shall either (i) distribute Assets to the Warrant Holder on the record
date for such distribution when such Assets are distributed to the holders of
Ordinary Shares as though all Warrants evidenced hereby had been exercised as of
such record date or (ii) deposit such Assets in trust with a trustee. If the
Company elects to distribute Assets to the Warrant Holder, the Company shall, on
the date Assets are distributed to holders of Ordinary Shares, distribute to
such Warrant Holder the Assets that it would have been entitled to receive on
such date if it had exercised the Warrants evidenced hereby immediately prior to
the record date for such distribution. If, however, the Company elects to
deposit the Assets due the Warrant Holder in trust, the Company shall, on the
date Assets are distributed to holders of Ordinary Shares, place in trust the
Assets that the Warrant Holder would have been entitled to receive on such date
if all of the Warrants evidenced hereby had been exercised immediately prior to
the record date for such distribution; and the Warrant Holder shall be entitled
upon exercise of the Warrants evidenced hereby to receive the Ordinary Shares
issuable upon exercise thereof, the Assets placed in trust in respect of such
Warrants, and the interest and dividends paid on such Assets since being placed
in trust. In the event any Warrants evidenced hereby have not been exercised
prior to the termination of the Expiration Date, any assets remaining in such
trust after distributions have been made in respect of Warrants exercised shall
be returned to the Company.

      (c) Adjustment for Issuance of Ordinary Shares. If at any time after the
date hereof the Company shall (except as hereinafter provided) issue or sell any
Ordinary Shares for consideration in an amount per Ordinary Share less than the
market price per Ordinary Share (as defined in Section 5(f)) in effect
immediately prior to the time of such issue or sale, then the number of Ordinary
Shares purchasable upon the exercise of each Warrant evidenced hereby shall be
adjusted to 

<PAGE>

                                      -10-


equal the product obtained by multiplying the number of Ordinary Shares for
which such Warrant is exercisable immediately prior to such issue or sale by a
fraction (A) the numerator of which shall be the number of Ordinary Shares
outstanding immediately after such issue or sale, and (B) the denominator of
which shall be the sum of (1) the number of Ordinary Shares outstanding
immediately prior to such issue or sale, and (2) the aggregate consideration
received from the issuance or sale of such additional Ordinary Shares divided by
the market price per Ordinary Share (as defined in Section 5(f)) in effect
immediately prior to the time of such issue or sale; provided, however, that no
adjustment shall be made pursuant to this Section 5(c) upon the issuance of
Ordinary Shares (i) in a bona fide public offering pursuant to a firm commitment
or best efforts underwriting, (ii) upon the issuance of up to 1,500,000 Ordinary
Shares, or ADSs representing such Ordinary Shares, of the Company pursuant to
any employee stock option, purchase or similar plan which may be established by
the Company from time to time providing for options, warrants or similar rights
to purchase Ordinary Shares, or ADSs representing such Ordinary Shares, of the
Company or (iii) upon the issuance of Ordinary Shares pursuant to any warrants,
other rights or Convertible Securities outstanding as of the date hereof.

      (d) Issuance of Warrants or Other Rights. In case the Company shall
distribute to all holders of its Ordinary Shares or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any warrants or other rights to subscribe for or
purchase any Ordinary Shares or any Convertible Securities, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and the
price per share for which Ordinary Shares are issuable upon the exercise of such
warrants or other rights or upon conversion or exchange of such Convertible
Securities plus the price paid to the Company to acquire such warrants, other
rights or Convertible Securities shall be less than the market price per
Ordinary Share (as defined in Section 5(f)) in effect immediately prior to the
time of such distribution, issue or sale, then the number of Ordinary Shares
purchasable upon the exercise of each Warrant evidenced hereby shall be adjusted
as provided in Section 5(c) on the basis that (A) the maximum number of Ordinary
Shares issuable pursuant to all such warrants or other rights or necessary to
give effect to the conversion or exchange of all such Convertible Securities
shall be deemed to be issued and outstanding, (B) the price per share for such
Ordinary Shares shall be deemed to be the lowest possible price per share in any
range of prices per share at which such Ordinary Shares are available 

<PAGE>

                                      -11-


to such holders, and (C) the Company shall have received all of the
consideration payable therefor, if any, as of the date of the actual issuance of
such warrants or other rights; provided, however, that no adjustment shall be
made pursuant to this Section 5(d) upon the issuance of (i) any warrants or
options or other rights to subscribe for up to 1,500,000 Ordinary Shares, or
ADSs representing such Ordinary Shares, of the Company, pursuant to any employee
stock option, purchase or similar plan which may be established by the Company
from time to time or (ii) any warrants or options to purchase Ordinary Shares,
or ADSs representing such Ordinary Shares, which may be issued by the Company to
certain officers of the Company pursuant to any future employment agreements. No
further adjustments of the number of Ordinary Shares for which any Warrant
evidenced hereby is exercisable shall be made upon the actual issue of such
Ordinary Shares or of such Convertible Securities upon exercise of such warrants
or other rights or upon the actual issue of such Ordinary Shares upon such
conversion or exchange of such Convertible Securities.

      (e) Adjustments for Issuance of Convertible Securities. In case the
Company shall distribute to all holders of its Ordinary Shares or shall in any
manner (whether directly or by assumption in a merger in which the Company is
the surviving corporation) issue or sell any Convertible Securities, whether or
not the rights to exchange or convert thereunder are immediately exercisable,
and the price per share for which Ordinary Shares are issuable upon such
conversion or exchange, plus the price paid to the Company to acquire such
Convertible Security, shall be less than the market price per Ordinary Share (as
defined in Section 5(f)), in effect immediately prior to the time of such
distribution, issue or sale, then the number of Ordinary Shares purchasable upon
the exercise of each Warrant evidenced hereby shall be adjusted as provided in
Section 5(c) on the basis that (i) the maximum number of Ordinary Shares
necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to be issued and outstanding, (ii) the price per
share of such Ordinary Shares shall be deemed to be the lowest possible price in
any range of prices at which such Ordinary Shares are available to such holders,
and (iii) the Company shall have received all of the consideration payable
therefor, if any, as of the date of actual issuance of such Convertible
Securities. No adjustment of the number of Ordinary Shares for which any Warrant
evidenced hereby is exercisable shall be made under this Section 5(e) upon the
issuance of any Convertible Securities which are issued pursuant to the exercise
of any warrants or other subscription or purchase rights therefor if any such
adjustment shall previ-

<PAGE>

                                      -12-


ously have been made upon the issuance of such warrants or other rights pursuant
to Section 5(d). No further adjustments of the number of Ordinary Shares for
which any such Warrant evidenced hereby is exercisable shall be made upon the
actual issue of such Ordinary Shares upon conversion or exchange of such
Convertible Securities and, if any issue or sale of such Convertible Securities
is made upon exercise of any warrant or other right to subscribe for or to
purchase any such Convertible Securities for which adjustments have been or are
to be made pursuant to other provisions of this Section 5, no further
adjustments shall be made by reason of such issue or sale. For the purposes of
this Section 5(e), the date as of which the current market price of Ordinary
Shares shall be computed shall be the earliest of (a) the date on which the
Company shall take a record of the holders of its Ordinary Shares for the
purpose of entitling them to receive any such Convertible Securities or (b) the
date of actual issuance of such Convertible Securities.

      (f) Market Price. For the purpose of any computation under Sections 5(b),
5(c), 5(d), 5(e) and 8(b), the market price per Ordinary Share at any date shall
be the fair value thereof determined in the reasonable good faith judgment of
the Board of Directors of the Company; provided, however, that if the Ordinary
Shares, or ADSs representing such Ordinary Shares, are listed or admitted for
trading on any domestic national securities exchange or quoted in the
over-the-counter market or the National Association of Securities Dealers
Automated Quotation ("NASDAQ") National Market System, the market price per
Ordinary Share shall be the average of the daily closing prices for 20
consecutive trading days preceding the date of such computation. The closing
price for each day shall be the last reported sales price regular way or, in
case no such reported sale takes place on such day, the average of the closing
bid and asked prices regular way for such day, in each case on the principal
national securities exchange on which the Ordinary Shares or ADSs, as the case
may be, are listed or admitted to trading or, if not listed or admitted to
trading, the average of the last reported sales price or in case no such
reported sales take place on such day, the average of the closing bid and asked
prices of the Ordinary Shares in the over-the-counter market as reported by
NASDAQ or the NASDAQ National Market System or any comparable system or, if the
Ordinary Shares are not included for quotation in the over-the-counter market or
the NASDAQ National Market System or a comparable system, the average of the
closing bid and asked prices as furnished by two members of the National
Association of Securities Dealers, Inc. selected from time to time by the Board
of Directors of the Company for that purpose.

<PAGE>

                                      -13-


      (g) When De Minimis Adjustment May Be Deferred. No adjustment in the
number of Ordinary Shares purchasable upon exercise of the Warrants evidenced
hereby shall be required unless such adjustment would require an increase or
decrease of at least one percent (1%) in the number of Ordinary Shares
purchasable upon the exercise of each such Warrant; provided, however, that any
adjustments which by reason of this paragraph (g) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations shall be made to the nearest one-thousandth of a share.

      (h) Adjustment in Purchase Price. Whenever the number of Ordinary Shares
purchasable upon the exercise of each Warrant evidenced hereby is adjusted as
herein provided, the Purchase Price payable upon exercise of each such Warrant
shall be adjusted by multiplying such Purchase Price immediately prior to such
adjustment by a fraction, of which the numerator shall be the number of Ordinary
Shares purchasable upon the exercise of each such Warrant immediately prior to
such adjustment, and of which the denominator shall be the number of Ordinary
Shares purchasable immediately thereafter.

      (i) When No Adjustment Required. No adjustment in the number of Ordinary
Shares purchasable upon the exercise of each Warrant evidenced hereby need be
made under Sections 5(b), 5(d) and 5(e) if the Company issues or distributes to
the Warrant Holder, the Assets, warrants or other rights or Convertible
Securities referred to in those paragraphs which the Warrant Holder would have
been entitled to receive had the Warrants evidenced hereby been exercised prior
to the happening of such event or the record date with respect thereto. No
adjustment need be made for a change in the par value or to no par value of the
Ordinary Shares; provided, however, that the Purchase Price shall at no time be
less than the par value of the Ordinary Shares of the Company, provided,
further, that the Company shall reduce the par value of its Ordinary Shares from
time to time as necessary so that such par value shall not be more than the
Purchase Price then in effect.

      (j) Ordinary Shares. For all purposes of this Warrant Certificate, the
term "Ordinary Shares" shall mean (i) the class of stock designated as the
Ordinary Shares of the Company on February 3, 1998 or (ii) any other class of
stock resulting from successive changes or reclassifications of such shares
consisting solely of changes in par value, or from par value to no par value, or
from no par value to par value. In the event that at any time, as a result of an
adjustment made pursuant to Section 5(a), the Warrant Holder shall become
entitled to pur-

<PAGE>

                                      -14-


chase any securities of the Company other than Ordinary Shares, thereafter the
number of such other shares so purchasable upon exercise of each Warrant
evidenced hereby and the Purchase Price of such shares shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Ordinary Shares contained in
Sections 5(a) through 5(i) herein, inclusive, this Section 5(j) and the
provisions of Section 2 and Sections 5(m) and 5(n) herein, with respect to the
Ordinary Shares, shall apply on like terms to any such other securities.

      (k) Expiration of Rights, Warrants or Convertible Securities. Upon the
expiration of any rights, warrants or Convertible Securities, if any thereof
shall not have been exercised, exchanged or converted, the Purchase Price and
the number of Ordinary Shares purchasable upon the exercise of each Warrant
evidenced hereby shall, upon such expiration, be readjusted and shall thereafter
be such as it would have been had it been originally adjusted (or had the
original adjustment not been required, as the case may be) as if (A) the only
Ordinary Shares so issued were the Ordinary Shares, if any, actually issued or
sold upon the exercise of such rights or warrants or conversion or exchange of
Convertible Securities and (B) such Ordinary Shares, if any, were issued or sold
for the consideration actually received by the Company upon such exercise,
conversion or exchange plus the aggregate consideration, if any, actually
received by the Company for the issuance, sale or grant of all of such rights,
warrants or Convertible Securities whether or not exercised, converted or
exchanged, as the case may be; provided, however, that no such readjustment
shall have the effect of increasing the Purchase Price or decreasing the number
of Ordinary Shares purchasable upon the exercise of each Warrant evidenced
hereby by an amount in excess of the amount of the adjustment initially made in
respect of the issuance, sale or grant of such rights, warrants or Convertible
Securities.

      (l) In the event of any issuance of securities by the Company for
consideration in whole or in part in other than cash, the Board of Directors of
the Company shall determine in good faith the value thereof which determination
shall be conclusive and binding.

      (m) Voluntary Adjustment by the Company. The Company may at its option, at
any time prior to the Expiration Date, reduce the then current Purchase Price to
any amount deemed appropriate by the Board of Directors of the Company;
provided, however, the Company may not in any case increase the 

<PAGE>

                                      -15-


Purchase Price pursuant to this Section 5(m); provided, further, if the Company
elects to reduce the then current Purchase Price, such reduction shall remain in
effect for at least a 30 day period, after which time the Company may, at its
option, reinstate the Purchase Price in effect immediately prior to such
reduction.

      (n) Statement on This Warrant Certificate. Irrespective of any adjustments
in the Purchase Price or the number or kind of shares purchasable upon the
exercise of the Warrants evidenced hereby, this Warrant Certificate and Warrant
Certificates hereafter issued may continue to express the same price and number
and kind of shares as are stated hereon.

      Section 6. Certification of Adjusted Purchase Price and Number of Shares
Issuable. Whenever the Purchase Price and the number of Ordinary Shares issuable
upon the exercise of each Warrant evidenced hereby are adjusted as provided in
Section 5, the Company shall (a) prepare a certificate signed by its Chief
Executive Officer or a Vice President or other executive officer setting forth
the Purchase Price as so adjusted, the number of Ordinary Shares issuable upon
the exercise of each Warrant evidenced hereby as so adjusted and a brief
statement of the method of calculation of the adjustment and the facts
accounting for the adjustment, (b) promptly file with each transfer agent for
the Ordinary Shares a copy of such certificate, and (c) mail a brief summary
thereof to the Warrant Holder.

      Section 7. Acceleration of Exercisability upon Sale of the Company or a
Change of Control. In the event that the Company undergoes a Sale (as defined)
or a Change of Control (as defined) prior to the Exiration Date, all of the
Warrants shall become fully exercisable.

      For purposes of this Section 7, "Change of Control" means and shall be
deemed to have occurred if any person (within the meaning of the Securities and
Exchange Act of 1934, as amended), other than the Company or a Related Party (as
defined), is or becomes the beneficial owner, directly or indirectly, of voting
securities representing 51% or more of the total voting power of all then
outstanding voting securities.

      For purposes of this Section 7, "Related Party" means: (a) a majority
owned subsidiary of the Company, (b) an employee or group of employees of the
Company, (c) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, (d) a corporation owned by the stockhold-

<PAGE>

                                      -16-


ers of the Company in substantially the same proportion as their ownership of
the voting securities of the Company, and (e) each of Elan Corporation, plc,
Dominion Income Management Corp., Halisol SA, AIG Global Investment Corp.,
Goldman Sachs & Co., Paribas Sante SA, Perrigo Company and Warner-Lambert
Company.

      For purposes of this Section 7, a "Sale" means and shall be deemed to have
occurred if: (a) the Company completes a merger, consolidation, sale, transfer
or other disposition that effects a Change of Control, or (b) the Company enters
into a transaction or series of transactions to sell, transfer or otherwise
dispose of all or substantially all of its properties or assets.

      Section 8. Fractional Warrants and Fractional Shares. (a) The Company
shall not be required to issue fractions of Warrants or to distribute Warrant
Certificates which evidence fractional Warrants. In lieu of such fractional
Warrants, there shall be paid to the Warrant Holders with regard to which such
fractional Warrant would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Warrant. For purposes of
this Section 8(a), the current market value of a Warrant shall be the fair value
thereof determined in the reasonable good faith judgment of the Board of
Directors of the Company for the day immediately prior to the date on which such
fractional Warrant would have been otherwise issuable.

      (b) Notwithstanding an adjustment pursuant to Section 5 in the number of
Ordinary Shares covered by any Warrant evidenced hereby, the Company shall not
be required to issue fractions of Ordinary Shares upon exercise of the Warrants
evidenced hereby or to distribute certificates which evidence fractional
Ordinary Shares. In lieu of fractional Ordinary Shares, there shall be paid to
the Warrant Holder at the time this Warrant Certificate is exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of an Ordinary Share. For purposes of this Section 8(b), the current
market value of an Ordinary Share shall be determined in accordance with Section
5(f) as of the day immediately prior to the date of such exercise.

      (c) The Warrant Holder by acceptance hereof, expressly waives such Warrant
Holder's right to receive any fractional Warrant evidenced hereby or any
fractional Ordinary Share upon exercise of a Warrants evidenced hereby.

<PAGE>

                                      -17-


      Section 9. Right of Action. All rights of action in respect of this
Warrant Certificate are vested in the respective Warrant Holders; and any
Warrant Holders may, in its own behalf and for its own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise in respect of, its right to exercise the Warrants
evidenced by this Warrant Certificate in the manner provided in this Warrant
Certificate.

      Section 10. Agreement of Warrant Certificate Holders. The Warrant Holder
by accepting same consents and agrees with the Company that:

            (a) registration of transfer of this Warrant Certificate may be made
      only on the registry books of the Company if surrendered at the address of
      the Company, duly endorsed, or accompanied by a proper instrument of
      transfer; and

            (b) the Company may deem and treat the person in whose name this
      Warrant Certificate is registered as the absolute owner thereof and of the
      Warrants evidenced hereby (notwithstanding any notations of ownership or
      writing on this Warrant Certificates made by anyone other than the
      Company) for all purposes whatsoever, and the Company shall not be
      affected by any notice to the contrary.

      Section 11. Issuance of New Warrant Certificate. Notwithstanding any of
the provisions of this Warrant Certificate, the Company may, at its option,
issue a new Warrant Certificate evidencing the Warrants evidenced hereby in such
form as may be approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of shares of
capital stock or other securities or property purchasable under this Warrant
Certificate made in accordance with the provisions of this Agreement.

      Section 12. Notice of Proposed Actions. In case the Company shall propose
(a) to pay any dividend payable in stock of any class to the holders of its
Ordinary Shares or to make any other distribution to the holders of its Ordinary
Shares (other than a cash dividend) or (b) to offer to the holders of its
Ordinary Shares rights, options or warrants to subscribe for or to purchase any
additional Ordinary Shares or shares of capital stock of any class or any other
securities, rights or options, or (c) to effect any reclassification of its
Ordinary 

<PAGE>

                                      -18-


Shares (other than a reclassification involving only the subdivision or
combination of outstanding Ordinary Shares), or (d) to effect any capital
reorganization, or (e) to effect any consolidation, merger or sale, transfer or
other disposition of all or substantially all of its property, assets or
business, or (f) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to the Warrant Holder,
a notice of such proposed action in accordance with Section 13 hereof, which
shall specify the date on which a record is to be taken for the purposes of such
stock dividend, distribution or rights, options or warrants, or the date on
which such reclassification, reorganization, consolidation, merger, sale,
transfer, disposition, liquidation, dissolution, or winding up is to become
effective and the date of participation therein by the holders of Ordinary
Shares, if any such date is to be fixed, and such notice shall be so given at
least 20 calendar days (or 10 calendar days in any case specified in clause (a)
or (b) above) prior to the applicable record date, effective date or
participation date described above.

      Section 13. Notices. Notices or demands authorized by this Agreement to be
given or made by the Warrant Holder to or on the Company shall be made in
writing by hand-delivery, next-day air courier, certified first-class mail,
return receipt requested, telex or facsimile to:

                                Warner Chilcott Public Limited Company
                                Lincoln House
                                Lincoln Place
                                Dublin 2, Ireland
                                Facsimile:  (353) 1-662-4950
                                Attention:  Corporate Secretary

Notices or demands authorized by this Agreement to be given or made by the
Company to the Warrant Holder shall be made in writing by hand-delivery,
next-day air courier, certified first-class mail, return receipt requested,
telex or facsimile to such holder at the address of the Warrant Holder as shown
on the registry books of the Company.

      Section 14. Registration under the Securities Act of 1933. The Warrant
Holder represents and warrants to the Company that it will not dispose of any
Warrants or Ordinary Shares issuable upon exercise of the Warrants evidenced
hereby except, (i) to a "qualified institutional buyer" as such term is defined
in Rule 144A under the Act, upon receipt by the Company of a transfer letter
certifying as to the prospective 

<PAGE>

                                      -19-


transferee's status as a qualified institutional buyer, (ii) pursuant to an
effective registration statement under the Act and any applicable state or
foreign securities laws or (iii) upon receipt by the Company and, in the event
of any disposition of ADRs evidencing ADSs representing Ordinary Shares issued
upon exercise of the Warrants evidenced hereby, receipt by the depositary who is
party to the Deposit Agreement (the "Depositary"), of an opinion of counsel
reasonably acceptable to the Company and, if applicable, the Depositary, that
such registration is not required.

      Section 15. Certificates To Bear Legends. Upon original issuance prior to
(i) the date which is two years after the later of the original issue date
thereof and the last date on which the Company or any affiliate of the Company
was the owner of the security (or any predecessor security) and (ii) such later
date, if any, as may be required by any subsequent change in applicable law,
each Ordinary Share or other security issued upon exercise of the Warrants
evidenced hereby shall bear a legend substantially to the following effect:

            THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
      OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
      NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
      REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
      DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION
      IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.

            THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
      OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO (X) THE DATE
      WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND
      THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE
      OWNER OF THIS SECURITY (OR ANY PREDECESSOR SECURITY) AND (Y) SUCH LATER
      DATE, IF ANY, AS MAY BE REQUIRED BY ANY SUBSEQUENT CHANGE IN APPLICABLE
      LAW (THE "RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO THE COMPANY,
      (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
      UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE
      FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT
      REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN

<PAGE>

                                      -20-


      RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR
      FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
      THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
      OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING
      OF REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER
      AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
      ACT, SUBJECT TO THE RIGHT OF THE COMPANY IN ITS SOLE DISCRETION PRIOR TO
      ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO
      REQUIRE THE DELIVERY OF OPINIONS OF COUNSEL, CERTIFICATIONS AND/OR OTHER
      INFORMATION REASONABLY ACCEPTABLE IN FORM AND SUBSTANCE TO EACH OF THEM
      THAT SUCH REGISTRATION IS NOT REQUIRED. THIS LEGEND WILL BE REMOVED UPON
      THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

      Section 16. Modification of Agreement. The Company and the Warrant Holder
may amend or supplement any provision of this Warrant Certificate only by a
statement in writing signed by each of the Company and the Warrant Holder.

      Section 17. Successors. All provisions of this Warrant Certificate by or
for the benefit of the Company or the Warrant Holder shall bind and inure to the
benefit of their respective successors and assigns hereunder.

      Section 18. Benefits of this Agreement. Nothing in this Warrant
Certificate expressed or nothing that may be implied from any of the provisions
hereof is intended, or shall be construed, to confer upon, or give to, any
person or corporation other than the Company and the Warrant Holder any right,
remedy or claim under or by reason of this Warrant Certificate or of any
provision hereof; and all provisions in this Warrant Certificate contained shall
be for the sole and exclusive benefit of the Company and its successors and of
the Warrant Holder.

      Section 19. New York Contract. This Warrant Certificate shall be governed
in all respects by the laws of the State of New York, without giving effect to
principles of conflict of laws.

      Section 20. Descriptive Headings. Descriptive headings of the several
Sections of this Warrant Certificate are inserted for convenience only and shall
not control or 

<PAGE>

                                      -21-


affect the meaning or construction of any of the provisions hereof.

<PAGE>

                                      -22-


      WITNESS the signature of the proper officer of the Company. Dated as of
February 3, 1998.

                                    WARNER CHILCOTT PUBLIC
                                        LIMITED COMPANY

                                    /s/James G. Andress
                                    --------------------------------------------
                                    James G. Andress
                                    Chairman of the Board and Chief 
                                    Executive Officer



                     REVOLVING CREDIT AND SECURITY AGREEMENT

      Revolving Credit and Security  Agreement dated March 30, 1998 among WARNER
CHILCOTT,  INC., a corporation organized under the laws of the State of Delaware
("Borrower"), the financial institutions which are now or which hereafter become
a party hereto (collectively, the "Lenders" and individually a "Lender") and PNC
BANK, NATIONAL  ASSOCIATION,  a national banking association,  ("PNC"), as agent
for Lenders (PNC, in such capacity, the "Agent").

      IN  CONSIDERATION   of  the  mutual  covenants  and  undertakings   herein
contained, Borrower, Lenders and Agent hereby agree as follows:

I. DEFINITIONS.

      1.1.  Accounting  Terms.  As used  in this  Agreement,  the  Note,  or any
certificate,  report  or  other  document  made or  delivered  pursuant  to this
Agreement,  accounting  terms not  defined in Section 1.2 or  elsewhere  in this
Agreement and  accounting  terms partly defined in Section 1.2 to the extent not
defined,  shall have the respective meanings given to them under GAAP; provided,
however, whenever such accounting terms are used for the purposes of determining
compliance  with financial  covenants in this Agreement,  such accounting  terms
shall be  defined in  accordance  with GAAP as  applied  in  preparation  of the
audited  consolidated and consolidating  financial  statements of Warner PLC for
the fiscal year ended December 31, 1997.

      1.2.  General Terms.  For purposes of this  Agreement the following  terms
shall have the following meanings:

            "Advances" shall mean the Revolving Advances.

            "Advance  Rates" shall have the meaning set forth in Section  2.1(a)
      hereof.

            "Affiliate"  of any Person  shall mean (a) any Person  (other than a
      Subsidiary) which, directly or indirectly, is in control of, is controlled
      by, or is under common control with such Person,  or (b) any Person who is
      a director or officer (i) of such Person,  (ii) of any  Subsidiary of such
      Person or (iii) of any Person  described in clause (a) above. For purposes
      of this  definition,  control of a Person shall mean the power,  direct or
      indirect, (x) to vote 30% or more of the securities having ordinary voting
      power for the election of  directors  of such Person,  or (y) to direct or
      cause the  direction  of the  management  and  policies of such Person (it
      being  understood  that the  right to elect one  director  to the board of
      directors  of a Person  shall  not be  deemed to be the power to direct or
      cause the direction of the management and policies of such Person) whether
      by contract or otherwise.

            "Agent"  shall have the  meaning  set forth in the  preamble to this
      Agreement and shall include its successors and assigns.

            "Authority" shall have the meaning set forth in Section 4.19(d).

            "Base Rate" shall mean the base  commercial  lending  rate of PNC as
      publicly  announced  to be in effect  from  time to time,  such rate to be
      adjusted  automatically,  without  notice,  on the  effective  date of any
      change in such rate. This rate of interest is determined from time to time
      by PNC as a means of pricing  some loans to its  customers  and is neither
      tied to any  external  rate of interest  or index nor does it  necessarily
      reflect  the  lowest  rate  of  interest  actually  charged  by PNC to any
      particular class or category of customers of PNC.

            "Blocked  Accounts"  shall  have the  meaning  set forth in  Section
      4.15(h).

<PAGE>

            "Borrower"  shall have the meaning set forth in the preamble to this
      Agreement and shall extend to all permitted successors and assigns of such
      Persons.

            "Borrower's  Account"  shall have the  meaning  set forth in Section
      2.7.

            "BT Credit  Facility"  shall mean the credit  facility  between  the
      Borrower,   lenders  parties  thereto,  BT  Commercial   Corporation,   as
      Administrative Agent, and Bankers Trust Company, as Issuing Bank, dated as
      of April 26,1996, together with all related documents thereto,  including,
      without limitation,  any guarantee agreements, and security agreements, in
      each case as amended, supplemented or otherwise modified.

            "Business Day" shall mean with respect to Eurodollar Rate Loans, any
      day on which  commercial  banks are open for  domestic  and  international
      business, including dealings in Dollar deposits in London, England and New
      York, New York and with respect to all other matters, any day other than a
      day on which  commercial  banks in New York are  authorized or required by
      law to close.

            "Cash  Equivalents"  shall mean and be  defined  as those  items set
      forth in Section 7.4(a) through (d).

            "CERCLA"  shall  mean  the  Comprehensive   Environmental  Response,
      Compensation  and Liability Act of 1980,  as amended,  42 U.S.C.  "9601 et
      seq.

            "Change  of  Control"  shall  mean (a) the  occurrence  of any event
      (whether  in one or more  transactions)  which  results in a  transfer  of
      control of Borrower  to a Person who is not an  Original  Owner or (b) any
      merger  or   consolidation   of  or  with  Borrower  or  sale  of  all  or
      substantially  all of the property or assets of Borrower.  For purposes of
      this  definition,  "control of Borrower"  shall mean the power,  direct or
      indirect (x) to vote 50% or more of the securities  having ordinary voting
      power for the  election of directors of Borrower or (y) to direct or cause
      the  direction of the  management  and policies of Borrower by contract or
      otherwise.

            "Charges" shall mean all taxes,  charges,  fees, imposts,  levies or
      other assessments,  including,  without limitation,  all net income, gross
      income,  gross receipts,  sales, use, ad valorem,  value added,  transfer,
      franchise,   profits,  inventory,  capital  stock,  license,  withholding,
      payroll,  employment,  social security,  unemployment,  excise, severance,
      stamp,  occupation and property taxes, custom duties,  fees,  assessments,
      liens,  claims  and  charges  of any kind  whatsoever,  together  with any
      interest  and  any  penalties,  additions  to tax or  additional  amounts,
      imposed by any taxing or other authority,  domestic or foreign (including,
      without  limitation,  the  Pension  Benefit  Guaranty  Corporation  or any
      environmental agency or superfund),  upon the Collateral,  Borrower or any
      of its Affiliates.

            "Closing  Date"  shall mean March 30, 1998 or such other date as may
      be agreed to by the parties hereto.

            "Code" shall mean the Internal Revenue Code of 1986, as amended from
      time to time and the regulations promulgated thereunder.

            "Collateral" shall mean and include:

                  (a) all Receivables;

                  (b) all Equipment;

                  (c) all General Intangibles;

                  (d) all Inventory;

                  (e) the Leasehold Interests;

<PAGE>

                  (f) all of Borrower's right,  title and interest in and to (i)
            its respective goods and other property  including,  but not limited
            to, all merchandise  returned or rejected by Customers,  relating to
            or securing any of the Receivables; (ii) all of Borrower's rights as
            a consignor, a consignee,  an unpaid vendor,  mechanic,  artisan, or
            other  lienor,  including  stoppage  in  transit,  setoff,  detinue,
            replevin,  reclamation and repurchase;  (iii) all additional amounts
            due to Borrower from any Customer relating to the Receivables;  (iv)
            other property,  including  warranty  claims,  relating to any goods
            securing  this  Agreement;  (v) all of Borrower's  contract  rights,
            rights of payment  which have been  earned  under a contract  right,
            instruments,  documents,  chattel paper, warehouse receipts, deposit
            accounts,  money,  securities and investment  property to the extent
            assignable;  (vi) if and when  obtained  by  Borrower,  all real and
            personal  property  of  third  parties  in which  Borrower  has been
            granted a lien or security  interest as security  for the payment or
            enforcement  of  Receivables;  and (vii) any other  goods,  personal
            property or real  property now owned or hereafter  acquired in which
            Borrower  has  expressly  granted a security  interest or may in the
            future  grant a  security  interest  to Agent  hereunder,  or in any
            amendment  or  supplement  hereto  or  thereto,  or under  any other
            agreement between Agent and Borrower;

                  (g) all of Borrower's  ledger  sheets,  ledger  cards,  files,
            correspondence,   records,   books  of  account,   business  papers,
            computers,  computer  software (owned by Borrower or in which it has
            an interest), computer programs, tapes, disks and documents relating
            to (a), (b), (c), (d), (e) or (f) of this Paragraph; and

                  (h) all proceeds and products of (a),  (b), (c), (d), (e), and
            (f) in whatever form,  including,  but not limited to: cash, deposit
            accounts (whether or not comprised solely of proceeds), certificates
            of deposit,  insurance proceeds (including hazard,  flood and credit
            insurance),  negotiable  instruments  and other  instruments for the
            payment of money,  chattel paper,  security  agreements,  documents,
            eminent  domain  proceeds,  condemnation  proceeds  and  tort  claim
            proceeds.

            "Commitment  Percentage" of any Lender shall mean the percentage set
      forth below such Lender's name on the signature page hereof as same may be
      adjusted  upon any  assignment  by a Lender  pursuant  to Section  15.3(b)
      hereof.

            "Commitment  Transfer  Supplement" shall mean a document in the form
      of Exhibit  15.3  hereto,  properly  completed  and  otherwise in form and
      substance  satisfactory to Agent by which the Purchasing  Lender purchases
      and assumes a portion of the  obligation of Lenders to make Advances under
      this Agreement.

            "Consents"  shall  mean  all  filings  and  all  licenses,  permits,
      consents,   approvals,   authorizations,   qualifications  and  orders  of
      governmental  authorities  and other third  parties,  domestic or foreign,
      necessary to carry on Borrower's business,  including, without limitation,
      any  Consents  required  under  all  applicable  federal,  state  or other
      applicable law.

            "Controlled  Group" shall mean all members of a controlled  group of
      corporations  and all trades or businesses  (whether or not  incorporated)
      under common  control  which,  together  with  Borrower,  are treated as a
      single employer under Section 414 of the Code.

            "Customer" shall mean and include the account debtor with respect to
      any Receivable and/or the prospective purchaser of goods, services or both
      with  respect to any  contract  or  contract  right,  and/or any party who
      enters into or proposes  to enter into any  contract or other  arrangement
      with  Borrower,  pursuant to which  Borrower  is to deliver  any  personal
      property or perform any services.

            "Default"  shall mean an event  which,  with the giving of notice or
      passage of time or both, would constitute an Event of Default.

            "Default  Rate"  shall have the  meaning  set forth in  Section  3.1
      hereof.

            "Defaulting  Lender"  shall  have the  meaning  set forth in Section
      2.12(a) hereof.

<PAGE>

            "Depository  Accounts"  shall have the  meaning set forth in Section
      4.15(h) hereof.

            "Documents"  shall  have the  meaning  set forth in  Section  8.1(c)
      hereof.

            "Dollar"  and the sign "$" shall  mean  lawful  money of the  United
      States of America.

            "Domestic  Rate Loan"  shall mean any  Advance  that bears  interest
      based upon the Base Rate.

            "Early Termination Date" shall have the meaning set forth in Section
      13.1 hereof.

            "Eligible Inventory" shall mean and include Inventory excluding work
      in process, with respect to Borrower valued at the lower of cost or market
      value, determined on a first-in-first-out  basis, which is not, in Agent's
      opinion,  obsolete,  slow moving or unmerchantable and which Agent, in its
      reasonable discretion,  shall not deem ineligible Inventory, based on such
      reasonable  considerations as Agent may from time to time deem appropriate
      including,  without  limitation,  whether  the  Inventory  is subject to a
      perfected,  first priority security interest in favor of Agent and whether
      the  Inventory  conforms  to all  standards  imposed  by any  governmental
      agency, division or department thereof which has regulatory authority over
      such goods or the use or sale thereof.

            "Eligible  Receivables"  shall  mean and  include  with  respect  to
      Borrower,  each  Receivable of Borrower  arising in the ordinary course of
      such  Borrower's  business  and  which  Agent,  in its  reasonable  credit
      judgment,  shall  deem  to  be  an  Eligible  Receivable,  based  on  such
      reasonable considerations as Agent may from time to time deem appropriate.
      A  Receivable  shall not be deemed  eligible  unless  such  Receivable  is
      subject to Agent's first priority perfected security interest and no other
      Lien (other than Permitted  Encumbrances),  and is evidenced by an invoice
      or other  documentary  evidence  satisfactory  to Agent.  In addition,  no
      Receivable shall be an Eligible Receivable if:

            (a) it arises out of a sale made by Borrower to an  Affiliate of any
      Borrower or to a Person controlled by an Affiliate of Borrower;

            (b) it is due or  unpaid  more  than  ninety  (90)  days  after  the
      original invoice date;

            (c) twenty-five  percent (25%) or more of the Receivables  from such
      Customer are not deemed Eligible  Receivables  hereunder.  Such percentage
      may, in Agent's sole  discretion,  be increased or decreased  from time to
      time;

            (d) any  covenant,  representation  or  warranty  contained  in this
      Agreement with respect to such Receivable has been breached;

            (e) the  Customer  shall (i) apply  for,  suffer,  or consent to the
      appointment  of, or the taking of  possession  by, a receiver,  custodian,
      trustee or  liquidator  of itself or of all or a  substantial  part of its
      property  or call a meeting of its  creditors,  (ii) admit in writing  its
      inability,  or be generally unable, to pay its debts as they become due or
      cease operations of its present business,  (iii) make a general assignment
      for the benefit of  creditors,  (iv)  commence a voluntary  case under any
      state or federal  bankruptcy laws (as now or hereafter in effect),  (v) be
      adjudicated a bankrupt or insolvent,  (vi) file a petition seeking to take
      advantage  of any other law  providing  for the relief of  debtors,  (vii)
      acquiesce  to,  or fail to have  dismissed,  any  petition  which is filed
      against it in any involuntary  case under such bankruptcy  laws, or (viii)
      take any action for the purpose of effecting any of the foregoing;

            (f) the sale is to a Customer outside the continental  United States
      of America, unless the sale is on letter of credit, guaranty or acceptance
      terms, in each case acceptable to Agent in its reasonable discretion;

            (g) the sale to the Customer is on a bill-and-hold, guaranteed sale,
      sale-and-return,  sale on approval, consignment or any other repurchase or
      return basis or is evidenced by chattel paper;

<PAGE>

            (h) Agent believes,  in its reasonable judgment,  that collection of
      such  Receivable  is insecure or that such  Receivable  may not be paid by
      reason of the Customer's financial inability to pay;

            (i) the Customer is the United  States of America,  any state or any
      department,  agency or instrumentality of any of them, unless the Borrower
      assigns its right to payment of such  Receivable to Agent  pursuant to the
      Assignment of Claims Act of 1940, as amended (31 U.S.C.  Sub-Section  3727
      et seq. and 41 U.S.C.  Sub-Section  15 et seq.) or has otherwise  complied
      with other applicable statutes or ordinances;

            (j) the goods giving rise to such  Receivable  have not been shipped
      and delivered to and accepted by the Customer or the services  giving rise
      to such Receivable have not been performed by the Borrower and accepted by
      the Customer or the Receivable otherwise does not represent a final sale;

            (k) the Receivables of the Customer exceed a credit limit determined
      by Agent, in its sole  discretion,  to the extent such Receivable  exceeds
      such limit;

            (l) the  Receivable  is subject to any offset,  deduction,  defense,
      dispute,  or counterclaim,  the Customer is also a creditor or supplier of
      Borrower or the Receivable is contingent in any respect or for any reason;

            (m) the  Borrower has made any  agreement  with any Customer for any
      deduction  therefrom,  except  for  discounts  or  allowances  made in the
      ordinary course of business for prompt payment,  all of which discounts or
      allowances  are  reflected  in the  calculation  of the face value of each
      respective invoice related thereto;

            (n) shipment of the merchandise or the rendition of services has not
      been completed;

            (o) any return,  rejection or  repossession  of the  merchandise has
      occurred;

            (p) such Receivable is not payable to Borrower;

            (q) more than fifty  percent  (50%) in dollar value of the aggregate
      Receivables due from a Customer are past due; or

            (r)  such  Receivable  is not  otherwise  satisfactory  to  Agent as
      determined  in good faith by Agent in the exercise of its  discretion in a
      reasonable manner.

            "Environmental  Complaint"  shall  have  the  meaning  set  forth in
      Section 4.19(d) hereof.

            "Environmental  Laws"  shall  mean  all  federal,  state  and  local
      environmental,   land  use,  zoning,  health,  chemical  use,  safety  and
      sanitation  laws,  statutes,  ordinances  and codes as they  relate to the
      protection of the environment  including without limitation CERCLA,  RCRA,
      the Toxic  Substance  Control  Act, 15 U.S.C.  ss.2601,  et seq. and those
      governing  the  use,  storage,  treatment,   generation,   transportation,
      processing,  handling,  production or disposal of Hazardous Substances and
      the  rules,  regulations,  decisions,  orders  and  directives  of of  any
      Governmental Body implementing them.

            "Equipment"  shall mean and include as to Borrower all of Borrower's
      goods (other than Inventory)  whether now owned or hereafter  acquired and
      wherever located including, without limitation, all equipment,  machinery,
      apparatus, motor vehicles,  fittings,  furniture,  furnishings,  fixtures,
      parts,  accessories and all  replacements  and  substitutions  therefor or
      accessions thereto.

            "ERISA" shall mean the Employee  Retirement  Income  Security Act of
      1974,  as  amended  from  time  to  time  and the  rules  and  regulations
      promulgated thereunder.

            "Eurodollar  Rate Loan" shall mean an Advance at any time that bears
      interest based on the Eurodollar 

<PAGE>

      Rate.

            "Eurodollar  Rate" shall mean with  respect to any  Eurodollar  Rate
      Loan for any Interest  Period,  the interest rate per annum  determined by
      the  Agent by  dividing  (the  resulting  quotient  rounded  upward to the
      nearest  1/100th of 1% per annum) (i) the rate of interest  determined  by
      the Agent in accordance  with its usual  procedures  (which  determination
      shall be conclusive and binding upon the Borrower,  absent  manifest error
      on the part of the Agent) to be equal to the offered rates for deposits in
      Dollars for the  applicable  Interest  Period which appear on Page 3750 of
      the  TELERATE  rate  reporting  system  or  other  similar  system  as  of
      approximately 11:00 a.m., Greenwich Mean Time, two (2) Business Days prior
      to the first day of such Interest Period for an amount  comparable to such
      Eurodollar Rate Loan and having a borrowing date and a maturity comparable
      to such  Interest  Period by (ii) a number equal to 1.00 minus the Reserve
      Percentage.  The  Eurodollar  Rate may also be expressed by the  following
      formula:

      Eurodollar Rate =      Offered rate on TELERATE page 3750
                             --------------------------------------------
                                      1.00 - Reserve Percentage

      If more than one offered rate  appears on Page 3750 of the  TELERATE  rate
      reporting  system or similar system,  the rate will be the arithmetic mean
      of such offered rates.

            "Event of Default"  shall mean the  occurrence  of any of the events
      set forth in Article X hereof.

            "Financial  Support  Undertaking"  shall mean the Financial  Support
      Undertaking  in the form of Exhibit  1.2(a) given by Warner PLC and Warner
      Bermuda in favor of Agent.

            "Formula  Amount" shall have the meaning set forth in Section 2.1(a)
      hereof.

            "GAAP" shall mean generally  accepted  accounting  principles in the
      United States of America in effect from time to time.

            "General  Intangibles"  shall mean and include as to Borrower all of
      Borrower's  general  intangibles,  whether now owned or hereafter acquired
      including,  without  limitation,  all choses in action,  causes of action,
      corporate or other business records, inventions,  designs, patents, patent
      applications,  equipment formulations,  manufacturing procedures,  quality
      control procedures,  trademarks,  service marks, trade secrets,  goodwill,
      copyrights, design rights, registrations,  licenses, franchises,  customer
      lists, tax refunds, tax refund claims, computer programs, all claims under
      guaranties,  security  interests or other  security  held by or granted to
      Borrower to secure  payment of any of the  Receivables  by a Customer  all
      rights of indemnification  and all other intangible property of every kind
      and nature (other than Receivables).

            "Governmental  Body" shall mean any nation or government,  any state
      or other  political  subdivision  thereof  or any  entity  exercising  the
      legislative,  judicial,  regulatory  or  administrative  functions  of  or
      pertaining to a government.

            "Hazardous  Discharge"  shall have the  meaning set forth in Section
      4.19(d) hereof.

            "Hazardous  Substance" shall mean any flammable  explosives,  radon,
      radioactive  materials,   asbestos,  urea  formaldehyde  foam  insulation,
      polychlorinated  biphenyls,  petroleum  and petroleum  products,  methane,
      hazardous  materials,  wastes,  hazardous or toxic substances regulated by
      any applicable Environmental Law.

            "Indebtedness"  of a Person  at a  particular  date  shall  mean all
      obligations  of such  Person  which  in  accordance  with  GAAP  would  be
      classified  upon a balance sheet as liabilities  (except capital stock and
      surplus  earned or  otherwise)  and in any event,  without  limitation  by
      reason of  enumeration,  shall  include all  indebtedness,  debt and other
      similar monetary  obligations of such Person whether direct or guaranteed,
      and all  premiums,  if any, due at the required  prepayment  dates of such
      indebtedness,  and all  indebtedness  secured by a Lien on assets owned by
      such Person,  whether 

<PAGE>

      or not such  indebtedness  actually  shall have been  created,  assumed or
      incurred by such Person.  Any  indebtedness of such Person  resulting from
      the  acquisition by such Person of any assets subject to any Lien shall be
      deemed,  for the purposes  hereof,  to be the  equivalent of the creation,
      assumption and incurring of the indebtedness  secured thereby,  whether or
      not actually so created, assumed or incurred.

            "Indenture" shall mean a certain Indenture dated April 15, 1996 with
      respect to the issuance by the Borrower of $69,000,000 aggregate principal
      amount of its Senior Subordinated Discounted Notes Due 2001.

            "Interest  Period" shall mean the period provided for any Eurodollar
      Rate Loan pursuant to Section 2.2(b) hereof.

            "Inventory"  shall mean and include as to Borrower all of Borrower's
      now owned or hereafter  acquired  goods,  merchandise  and other  personal
      property,  wherever located, to be furnished under any contract of service
      or held for sale or lease,  all raw materials,  work in process,  finished
      goods and materials and supplies of any kind,  nature or description which
      are or might be used or consumed in Borrower's business or used in selling
      or furnishing such goods, merchandise and other personal property, and all
      documents of title or other documents representing them.

            "Inventory Advance Rate" shall have the meaning set forth in Section
      2.1(a)(y)(ii) hereof.

            "Leasehold Interests" shall mean all of each Borrower's right, title
      and  interest in and to the  premises  located at  Rockaway  80  Corporate
      Center. 100 Enterprise Drive, Suite 280, Rockaway, NJ.

            "Lender" and "Lenders" shall have the meaning  ascribed to such term
      in the  preamble to this  Agreement  and shall  include  each Person which
      becomes a transferee, successor or assign of any Lender.

            "Lien"   shall   mean  any   mortgage,   deed  of   trust,   pledge,
      hypothecation,  assignment,  security interest, lien (whether statutory or
      otherwise), Charge, claim or encumbrance, or preference, priority or other
      security agreement or preferential arrangement held or asserted in respect
      of  any  asset  of  any  kind  or  nature  whatsoever  including,  without
      limitation,  any conditional sale or other title retention agreement,  any
      lease  having  substantially  the  same  economic  effect  as  any  of the
      foregoing,  and the  filing  of,  or  agreement  to  give,  any  financing
      statement  under the  Uniform  Commercial  Code or  comparable  law of any
      jurisdiction.

            "Material  Adverse  Effect" shall mean a material  adverse effect on
      (a) the  condition,  operations,  assets,  business  or  prospects  of the
      applicable  Person  or  Persons,   (b)  Borrower's   ability  to  pay  the
      Obligations  in accordance  with the terms  thereof,  (c) the value of the
      Collateral, or Agent's Liens on the Collateral or the priority of any such
      Lien or (d) the practical  realization of the benefits of Agent's and each
      Lender's rights and remedies under this Agreement and the Other Documents.

            "Maximum Revolving Advance Amount" shall mean $30,000,000.

            "Monthly  Advances"  shall have the meaning set forth in Section 3.1
      hereof.

            "Multiemployer Plan" shall mean a "multiemployer plan" as defined in
      Sections 3(37) and 4001(a)(3) of ERISA.

            "Note" shall mean the Revolving Credit Note.

            "Obligations"  shall  mean  and  include  any and all of  Borrower's
      Indebtedness  and/or  liabilities  to Agent or Lenders or any  corporation
      that  directly  or  indirectly  controls or is  controlled  by or is under
      common  control  with  Agent or any  Lender  of  every  kind,  nature  and
      description,  direct or indirect,  secured or unsecured,  joint,  several,
      joint and  several,  absolute or  contingent,  due or to become  due,  now
      existing or hereafter  arising,  contractual  or tortious,  liquidated  or

<PAGE>

      unliquidated,  regardless of how such indebtedness or liabilities arise or
      by what agreement or instrument they may be evidenced or whether evidenced
      by any agreement or instrument, including, but not limited to, any and all
      of Borrower's  Indebtedness  and/or liabilities under this Agreement,  the
      Other Documents or under any other agreement  between Agent or Lenders and
      Borrower  and all  obligations  of Borrower to Agent or Lenders to perform
      acts or refrain from taking any action.

            "Original Owner" shall mean Warner PLC.

            "Other  Documents"  shall mean the Note, the  Questionnaire,  Warner
      Bermuda's  Guaranty,  the  Financial  Support  Undertaking,  the Trademark
      Assignment and any and all other  agreements,  instruments  and documents,
      including,  without limitation,  guaranties,  pledges, powers of attorney,
      consents, and all other writings heretofore,  now or hereafter executed by
      Borrower  or any  guarantor  and/or  delivered  to Agent or any  Lender in
      respect of the transactions contemplated by this Agreement.

            "Parent"  of any Person  shall mean a  corporation  or other  entity
      owning,  directly  or  indirectly  at least 50% of the  shares of stock or
      other ownership interests having ordinary voting power to elect a majority
      of the  directors  of the  Person,  or other  Persons  performing  similar
      functions for any such Person.

            "Participant"  shall mean each Person who shall be granted the right
      by any Lender to  participate  in any of the  Advances  and who shall have
      entered into a participation  agreement in form and substance satisfactory
      to such Lender.

            "Payment  Office" shall mean  initially Two Tower Center  Boulevard,
      East Brunswick, New Jersey 08816; thereafter,  such other office of Agent,
      if any, which it may designate by notice to Borrower and to each Lender to
      be the Payment Office.

            "PBGC" shall mean the Pension Benefit Guaranty Corporation.

            "Permitted  Encumbrances" shall mean (a) Liens in favor of Agent for
      the  benefit of Agent and  Lenders;  (b) Liens for taxes,  assessments  or
      other governmental charges not delinquent or being contested in good faith
      and by appropriate  proceedings  and with respect to which proper reserves
      have been taken by Borrower; provided, that, the Lien shall have no effect
      on the  priority of the Liens in favor of Agent or the value of the assets
      in which Agent has such a Lien and a stay of  enforcement of any such Lien
      shall be in  effect;  (c)  Liens  disclosed  in the  financial  statements
      referred  to in Section  5.5  hereof,  the  existence  of which  Agent has
      consented  to in writing;  (d)  deposits or pledges to secure  obligations
      under  worker's  compensation,  social  security or similar laws, or under
      unemployment  insurance;  (e) deposits or pledges to secure bids, tenders,
      contracts  (other  than  contracts  for the  payment  of  money),  leases,
      statutory  obligations,  surety and appeal bonds and other  obligations of
      like nature  arising in the ordinary  course of Borrower's  business;  (f)
      judgment Liens that have been stayed or bonded and  mechanics',  workers',
      materialmen's  or other  like  Liens  arising  in the  ordinary  course of
      Borrower's business with respect to obligations which are not due or which
      are being  contested in good faith by the Borrower;  (g) Liens placed upon
      fixed assets hereafter  acquired to secure a portion of the purchase price
      thereof,  provided  that (x) any such lien  shall not  encumber  any other
      property of the  Borrower  and (y) the  aggregate  amount of  Indebtedness
      secured by such Liens  incurred as a result of such  purchases  during any
      fiscal  year  shall not  exceed the  amount  provided  for in Section  7.6
      hereof;  (h)  licenses,  leases or subleases  granted to third Persons not
      interfering  in any material  respect with the business of the Borrower or
      any of its Subsidiaries; (i) easements, rights-of-way, restrictions, minor
      defects  or   irregularities   in  title  and  other  similar  charges  or
      encumbrances  not  interfering  in any material  respect with the ordinary
      conduct of the  business of the Borrower or any of its  Subsidiaries;  (j)
      Liens  arising  from  precautionary  UCC  financing  Statements  regarding
      operating leases permitted by this Agreement; (k) any interest or title of
      a  licensor,  lessor  or  sublessor  under  any  lease  permitted  by this
      Agreement;  and (l) Liens securing  outstanding  obligations not exceeding
      $250,000 in the  aggregate at any one time provided the same do not affect
      Borrower's Inventory or Receivables.

            "Person"   shall   mean   any   individual,   sole   proprietorship,
      partnership,  corporation,  business  trust,  joint stock company,  trust,
      unincorporated  organization,   association,  limited  liability  company,
      institution,   public  benefit  

<PAGE>

      corporation,  joint venture, entity or government (whether Federal, state,
      county,  city,  municipal or  otherwise,  including  any  instrumentality,
      division, agency, body or department thereof).

            "Plan"  shall mean any  employee  benefit plan within the meaning of
      Section 3(3) of ERISA,  maintained for employees of Borrower or any member
      of the  Controlled  Group or any such Plan to which Borrower or any member
      of the Controlled  Group is required to contribute on behalf of any of its
      employees.

            "Projections"  shall have the  meaning  set forth in Section  5.5(a)
      hereof.

            "Purchasing Lender" shall have the meaning set forth in Section 15.3
      hereof.

            "Questionnaire"    shall   mean   the   Documentation    Information
      Questionnaire and the responses thereto provided by Borrower and delivered
      to Agent.

            "RCRA" shall mean the Resource Conservation and Recovery Act of 1976
      42 U.S.C. ss.6901 et seq., as same may be amended from time to time.

            "Real  Property"  shall  mean all of  Borrower's  right,  title  and
      interest in and to the owned and leased premises  identifiedas Rockaway 80
      Corporate Center, 100 Enterprise Drive,  Suite 280,  Rockaway,  New Jersey
      07866.

            "Receivables"  shall  mean  and  include,  as to  Borrower,  all  of
      Borrower's  accounts,   contract  rights,   instruments  (including  those
      evidencing  indebtedness  owed to Borrower by its Affiliates),  documents,
      chattel  paper,  general  intangibles  relating  to  accounts,  drafts and
      acceptances,  and all other forms of obligations owing to Borrower arising
      out of or in  connection  with  the  sale or  lease  of  Inventory  or the
      rendition of services, all guarantees and other security therefor, whether
      secured or unsecured,  now existing or hereafter  created,  and whether or
      not specifically sold or assigned to Agent hereunder.

            "Receivables  Advance  Rate"  shall  have the  meaning  set forth in
      Section 2.1(a)(y)(i) hereof.

            "Releases"  shall have the  meaning  set forth in Section  5.7(c)(i)
      hereof.

            "Reportable  Event"  shall  mean a  reportable  event  described  in
      Section 4043(b) of ERISA or the regulations promulgated thereunder.

            "Required Lenders" shall mean Lenders holding at least sixty-six and
      two-thirds  percent  (66_%)  of  the  Advances  and,  if no  Advances  are
      outstanding,  shall mean Lenders holding sixty-six and two-thirds  percent
      (66_%) of the Commitment Percentages.

            "Reserve  Percentage" shall mean the maximum effective percentage in
      effect on any day as  prescribed  by the Board of Governors of the Federal
      Reserve System (or any successor) for determining the reserve requirements
      (including,  without  limitation,  supplemental,  marginal  and  emergency
      reserve requirements) with respect to euroccurency funding.

            "Revolving  Advances"  shall mean  Advances made pursuant to Section
      2.1(a) hereof.

            "Revolving  Credit Note" shall have the meaning set forth in Section
      2.1(a) hereof.

            "Revolving  Interest  Rate"  shall mean an  interest  rate per annum
      equal to (a) the sum of the Base Rate with respect to Domestic Rate Loans,
      and (b) the sum of the  Eurodollar  Rate  plus one and  three-quarters  (1
      3/4%) percent with respect to Eurodollar Rate Loans.

<PAGE>

            "Settlement  Date"  shall  mean  the  Closing  Date  and  thereafter
      Wednesday of each week unless such day is not a Business Day in which case
      it shall be the next succeeding Business Day.

            "Shareholders' Equity" shall mean, at a particular date, all amounts
      which would be included under shareholders' equity on the balance sheet of
      Borrower on a consolidated  basis determined in accordance with GAAP as at
      such date.

            "Subordinated  Debt  Payments"  shall  mean  and  include  all  cash
      actually  expended to make payments of principal and interest  pursuant to
      the Indenture.

            "Subsidiary"  shall  mean a  corporation  or other  entity  of whose
      shares of stock or other ownership  interests having ordinary voting power
      (other than stock or other ownership  interests  having such power only by
      reason of the  happening  of a  contingency)  to elect a  majority  of the
      directors  of  such  corporation,  or  other  Persons  performing  similar
      functions  for such entity,  are owned,  directly or  indirectly,  by such
      Person.

            "Term" shall have the meaning set forth in Section 13.1 hereof.

            "Termination  Event" shall mean (i) a Reportable  Event with respect
      to any Plan or Multiemployer  Plan; (ii) the withdrawal of Borrower or any
      member of the Controlled Group from a Plan or Multiemployer  Plan during a
      plan year in which such entity was a "substantial  employer" as defined in
      Section  4001(a)(2)  of ERISA;  (iii) the providing of notice of intent to
      terminate a Plan in a distress termination described in Section 4041(c) of
      ERISA; (iv) the institution by the PBGC of proceedings to terminate a Plan
      or  Multiemployer  Plan;  (v) any  event  or  condition  (a)  which  might
      constitute  grounds under Section 4042 of ERISA for the termination of, or
      the  appointment  of a trustee to  administer,  any Plan or  Multiemployer
      Plan,  or (b) that may  result  in  termination  of a  Multiemployer  Plan
      pursuant  to  Section  4041A of ERISA;  or (vi) the  partial  or  complete
      withdrawal  within the  meaning  of  Sections  4203 and 4205 of ERISA,  of
      Borrower or any member of the Controlled Group from a Multiemployer Plan.

            "Trademark   Assignment"   shall  mean  the   Trademark   Collateral
      Assignment  and  Security  Agreement in form  attached  hereto as Exhibits
      1.2(b1) and (b2).

            "Transactions"  shall  have the  meaning  set forth in  Section  5.5
      hereof.

            "Transferee"  shall have the  meaning  set forth in Section  16.3(b)
      hereof.

            "Undrawn  Availability"  at a  particular  date shall mean an amount
      equal to (a) the  lesser of (i) the  Formula  Amount  or (ii) the  Maximum
      Revolving Advance Amount,  minus (b) the sum of (i) the outstanding amount
      of  Advances  plus  (ii) all  amounts  due and owing to  Borrower's  trade
      creditors which are outstanding sixty (60) days beyond normal trade terms,
      all as determined by the Agent.

            "Warner Bermuda" shall mean Warner Chilcott  (Bermuda)  Limited,  an
      exempted company of the Commonwealth of Bermuda.

            "Warner  Bermuda's  Guaranty"  shall  mean  the  Continuing  Limited
      Non-Recourse  and  Collateralized  Guaranty  in form  attached  hereto  as
      Exhibit 1.2(c).

            "Warner PLC" shall mean Warner  Chilcott Public Limited  Company,  a
      public  limited  company  incorporated  under the laws of the  Republic of
      Ireland.

            "Week"  shall mean the time  period  commencing  with the opening of
      business on a Wednesday  and ending on the end of business  the  following
      Tuesday.

<PAGE>

      1.3.  Uniform  Commercial Code Terms. All terms used herein and defined in
the Uniform Commercial Code as adopted in the State of New Jersey shall have the
meaning given therein unless otherwise defined herein.

      1.4.  Certain Matters of  Construction.  The terms "herein",  "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular  section,  paragraph or subdivision.  Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context, terms
used  herein in the  singular  also  include  the  plural  and vice  versa.  All
references to statutes and related  regulations  shall include any amendments of
same and any successor statutes and regulations.  Unless otherwise provided, all
references  to  any  instruments  or  agreements  to  which  Agent  is a  party,
including,  without limitation,  references to any of the Other Documents, shall
include  any  and  all  modifications  or  amendments  thereto  and  any and all
extensions or renewals thereof.

II. ADVANCES, PAYMENTS.

      2.1.(a) Revolving Advances.  Subject to the terms and conditions set forth
in this Agreement,  each Lender,  severally and not jointly, will make Revolving
Advances to Borrower in aggregate amounts  outstanding at any time equal to such
Lender's  Commitment  Percentage  of the  lesser  of (x) the  Maximum  Revolving
Advance Amount or (y) an amount equal to the sum of:

            (i) up to 85%,  subject to the  provisions of Section  2.1(b) hereof
      ("Receivables Advance Rate"), of Eligible Receivables, plus

            (ii) up to the  lesser  of (A) 60%,  subject  to the  provisions  of
      Section  2.1(b) hereof  ("Inventory  Advance  Rate"),  of the value of the
      Eligible Inventory (the Receivables Advance Rate and the Inventory Advance
      Rate shall be referred to  collectively,  as the  "Advance  Rates") or (B)
      $15,000,000 in the aggregate at any one time, plus

            (iii) up to 95% of cash or Cash Equivalents  maintained at the Agent
      and in form and substance acceptable to the Agent, minus

            (iv) such reserves as Agent may reasonably deem proper and necessary
      from time to time.

      The amount  derived  from the sum of (x) Sections  2.1(a)(y)(i),  (ii) and
(iii) minus (y) Section 2.1  (a)(y)(iv)  at any time and from time to time shall
be  referred  to as the  "Formula  Amount".  The  Revolving  Advances  shall  be
evidenced by the secured promissory note ("Revolving Credit Note") substantially
in the form attached hereto as Exhibit 2.1(a).

      (b) Discretionary  Rights. The Advance Rates may be increased or decreased
by Agent at any time and from  time to time in the  exercise  of its  reasonable
discretion.   Borrower   acknowledges  that  decreasing  the  Advance  Rates  or
increasing the reserves may limit or restrict Advances requested by Borrower.

      2.2. Procedure for Revolving Advances Borrowing.

      (a)  Borrower  may notify  Agent prior to 11:00 a.m. on a Business  Day of
Borrower's request to incur, on that day, a Revolving Advance hereunder.  Should
any  amount  required  to be paid as  interest  hereunder,  or as fees or  other
charges under this Agreement or any other  agreement  with Agent or Lenders,  or
with respect to any other Obligation, become due, same shall be deemed a request
for a  Revolving  Advance  as of the date such  payment  is due,  in the  amount
required to pay in full such  interest,  fee,  charge or  Obligation  under this
Agreement or any other  agreement with Agent or Lenders,  and such request shall
be irrevocable.

      (b)  Notwithstanding  the  provisions of (a) above,  in the event Borrower
desires to obtain a Eurodollar  Rate Loan,  Borrowing  Agent shall give Agent at
least three (3) Business Days' prior written notice, specifying (i) the date

<PAGE>

of the  proposed  borrowing  (which shall be a Business  Day),  (ii) the type of
borrowing  and the  amount on the date of such  Advance  to be  borrowed,  which
amount shall be an integral  multiple of  $1,000,000,  and (iii) the duration of
the first Interest Period  therefor.  Interest Periods for Eurodollar Rate Loans
shall be for one, two or three months; provided, if an Interest Period would end
on a day  that is not a  Business  Day,  it  shall  end on the  next  succeeding
Business  Day unless  such day falls in the next  succeeding  calendar  month in
which case the Interest Period shall end on the next preceding  Business Day. No
Eurodollar  Rate Loan shall be made available to Borrower during the continuance
of a Default or an Event of Default.

      (c) Each Interest  Period of a Eurodollar  Rate Loan shall commence on the
date such  Eurodollar  Rate Loan is made and shall end on such date as  Borrower
may elect as set forth in (b)(iii)  above provided that the exact length of each
Interest  Period  shall be  determined  in  accordance  with the practice of the
interbank  market for offshore  Dollar deposits and no Interest Period shall end
after the last day of the Term.

      Borrower  shall  elect  the  initial  Interest  Period   applicable  to  a
Eurodollar  Rate Loan by its  notice of  borrowing  given to Agent  pursuant  to
Section 2.2(b) or by its notice of conversion given to Agent pursuant to Section
2.2(d)  hereof,  as the case may be.  Borrower  shall elect the duration of each
succeeding Interest Period by giving irrevocable written notice to Agent of such
duration not less than three (3) Business Days prior to the last day of the then
current  Interest Period  applicable to such Eurodollar Rate Loan. If Agent does
not receive timely notice of the Interest  Period elected by Borrower,  Borrower
shall be deemed to have  elected to convert to a Domestic  Rate Loan  subject to
Section 2.2(d) hereof.

      (d)  Provided  that  no  Event  of  Default  shall  have  occurred  and be
continuing,  Borrower may, on the last Business Day of the then current Interest
Period  applicable to any  outstanding  Eurodollar Rate Loan, or on any Business
Day with  respect to Domestic  Rate Loans,  convert any such loan into a loan of
another type in the same aggregate principal amount provided that any conversion
of a  Eurodollar  Rate Loan shall be made only on the last  Business  Day of the
then  current  Interest  Period  applicable  to such  Eurodollar  Rate Loan.  If
Borrower  desires  to  convert a loan,  Borrower  shall give Agent not less than
three (3) Business  Days' prior  written  notice to convert from a Domestic Rate
Loan to a Eurodollar Rate Loan or one (1) Business Day's prior written notice to
convert from a Eurodollar Rate Loan to a Domestic Rate Loan, specifying the date
of such  conversion,  the loans to be converted and if the  conversion is from a
Domestic Rate Loan to any other type of loan, the duration of the first Interest
Period therefor. After giving effect to each such conversion, there shall not be
outstanding more than four (4) Eurodollar Rate Loans, in the aggregate.

      (e) At its option and upon three (3) Business Days' prior written  notice,
Borrower  may prepay the  Eurodollar  Rate Loans in whole at any time or in part
from time to time, without premium or penalty,  but with accrued interest on the
principal  being prepaid to the date of such  repayment.  Borrower shall specify
the date of  prepayment  of  Advances  which are  Eurodollar  Rate Loans and the
amount of such prepayment. In the event that any prepayment of a Eurodollar Rate
Loan is required or permitted on a date other than the last  Business Day of the
then current Interest Period with respect thereto, such Borrower shall indemnify
Agent and Lenders therefor in accordance with Section 2.2(f) hereof.

      (f) Borrower shall  indemnify Agent and Lenders and hold Agent and Lenders
harmless  from and against any and all losses or expenses that Agent and Lenders
may sustain or incur as a consequence  of any  prepayment,  conversion of or any
default by  Borrower  in the  payment of the  principal  of or  interest  on any
Eurodollar  Rate Loan or failure by any  Borrower to complete a borrowing  of, a
prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof
has been given, including,  but not limited to, any interest payable by Agent or
Lenders to  lenders of funds  obtained  by it in order to make or  maintain  its
Eurodollar  Rate Loans  hereunder.  A certificate as to any  additional  amounts
payable pursuant to the foregoing  sentence  submitted by Agent or any Lender to
Borrower shall be conclusive absent manifest error.

      (g)  Notwithstanding  any other provision  hereof,  if any applicable law,
treaty,  regulation or directive, or any change therein or in the interpretation
or application  thereof,  shall make it unlawful for any Lender (for purposes of
this  subsection  (g), the term "Lender" shall include any Lender and the office
or branch where any Lender or any  corporation or bank  controlling  such Lender
makes or maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar
Rate Loans,  the obligation of Lenders to make  Eurodollar  Rate Loans hereunder
shall forthwith be canceled and Borrower shall, if any affected  Eurodollar Rate
Loans are then  outstanding,  promptly  upon request from Agent,  either pay all
such affected

<PAGE>

Eurodollar Rate Loans or convert such affected  Eurodollar Rate Loans into loans
of another type. If any such payment or conversion of any  Eurodollar  Rate Loan
is made on a day that is not the last day of the Interest  Period  applicable to
such Eurodollar Rate Loan, Borrower shall pay Agent, upon Agent's request,  such
amount or amounts as may be  necessary  to  compensate  Lenders  for any loss or
expense sustained or incurred by Lenders in respect of such Eurodollar Rate Loan
as a result of such payment or  conversion,  including  (but not limited to) any
interest  or other  amounts  payable by Lenders to lenders of funds  obtained by
Lenders in order to make or maintain such Eurodollar Rate Loan. A certificate as
to any additional  amounts payable pursuant to the foregoing  sentence submitted
by Lenders to Borrower shall be conclusive absent manifest error.

      2.3.  Disbursement  of Advance  Proceeds.  All Advances shall be disbursed
from whichever  office or other place Agent may designate from time to time and,
together  with any and all other  Obligations  of  Borrower to Agent or Lenders,
shall be  charged to  Borrower's  Account  on  Agent's  books.  During the Term,
Borrower may use the Revolving Advances by borrowing, prepaying and reborrowing,
all in accordance  with the terms and  conditions  hereof.  The proceeds of each
Revolving  Advance  requested  by Borrower or deemed to have been  requested  by
Borrower under Section 2.2(a) hereof shall, with respect to requested  Revolving
Advances to the extent Lenders make such Revolving  Advances,  be made available
to  Borrower  on the  day so  requested  by way of  credit  to  such  Borrower's
operating account at PNC, or such other bank as Borrower may designate following
notification  to  Agent,  in  immediately   available  federal  funds  or  other
immediately  available  funds or, with respect to Revolving  Advances  deemed to
have been  requested  by  Borrower,  be  disbursed to Agent to be applied to the
outstanding Obligations giving rise to such deemed request.

      2.4.  Maximum  Advances.  The  aggregate  balance  of  Revolving  Advances
outstanding  at any time shall not exceed  the lesser of (a)  Maximum  Revolving
Advance Amount or (b) the Formula Amount.

      2.5. Repayment of Advances.

      (a) The  Advances  shall be due and payable in full on the last day of the
Term subject to earlier prepayment as herein provided.

      (b)  Borrower  recognizes  that the amounts  evidenced  by checks,  notes,
drafts or any other items of payment  relating to and/or  proceeds of Collateral
may not be  collectible  by Agent  on the date  received.  In  consideration  of
Agent's agreement to conditionally  credit Borrower's Account as of the Business
Day on which Agent  receives  those items of payment,  Borrower  agrees that, in
computing  interest under this  Agreement,  all items of payment shall be deemed
applied by Agent on account of the  Obligations  one (1)  Business Day after the
Business  Day Agent  receives  such  payments  via wire  transfer or  electronic
depository check.  Agent is not, however,  required to credit Borrower's Account
for the amount of any item of payment which is unsatisfactory to Agent and Agent
may charge  Borrower's  Account  for the amount of any item of payment  which is
returned to Agent unpaid.

      (c)  All  payments  of  principal,  interest  and  other  amounts  payable
hereunder,  or under any of the related agreements shall be made to Agent at the
Payment Office not later than 1:00 P.M. (New York Time) on the due date therefor
in lawful money of the United  States of America in federal funds or other funds
immediately available to Agent. Agent shall have the right to effectuate payment
on any and all  Obligations  due and  owing  hereunder  by  charging  Borrower's
Account or by making Advances as provided in Section 2.2 hereof.

      (d) Borrower shall pay principal,  interest, and all other amounts payable
hereunder,  or under any related  agreement,  without any deduction  whatsoever,
including, but not limited to, any deduction for any setoff or counterclaim.

      2.6.  Repayment  of Excess  Advances.  The  aggregate  balance of Advances
outstanding  at any time in excess of the maximum  amount of Advances  permitted
hereunder  shall be  immediately  due and payable  without the  necessity of any
demand, at the Payment Office,  whether or not a Default or Event of Default has
occurred.

<PAGE>

      2.7.  Statement of Account.  Agent shall maintain,  in accordance with its
customary  procedures,  a loan  account  ("Borrower's  Account")  in the name of
Borrower in which shall be recorded  the date and amount of each Advance made by
Agent and the date and  amount of each  payment in  respect  thereof;  provided,
however, the failure by Agent to record the date and amount of any Advance shall
not  adversely  affect  Agent or any  Lender.  Each  month,  Agent shall send to
Borrower a statement showing the accounting for the Advances made, payments made
or  credited  in  respect  thereof,  and other  transactions  between  Agent and
Borrower,  during such month. The monthly statements shall be deemed correct and
binding upon Borrower in the absence of manifest  error and shall  constitute an
account  stated  between  Lenders and  Borrower  except and to the extent  Agent
receives a written statement of Borrower's  specific  exceptions  thereto within
thirty (30) days after such  statement is received by  Borrower.  The records of
Agent with  respect to the loan  account  shall be  conclusive  evidence  absent
manifest  error of the  amounts of  Advances  and other  charges  thereto and of
payments applicable thereto.

      2.8. Additional Payments.  Any sums expended by Agent or any Lender due to
Borrower's  failure  to  perform  or  comply  with its  obligations  under  this
Agreement  or any  Other  Document  including,  without  limitation,  Borrower's
obligations  under Sections 4.2, 4.4, 4.12,  4.13,  4.14 and 6.1 hereof,  may be
charged  to  Borrower's  Account  as  a  Revolving  Advance  and  added  to  the
Obligations.

      2.9. Manner of Borrowing and Payment.

      (a) Each borrowing of Revolving  Advances  shall be advanced  according to
the applicable Commitment Percentages of Lenders.

      (b) Each payment (including each prepayment) by Borrower on account of the
principal of and  interest on the  Revolving  Advances,  shall be applied to the
Revolving Advances pro rata according to the applicable  Commitment  Percentages
of  Lenders.  Except as  expressly  provided  herein,  all  payments  (including
prepayments)  to be made by Borrower on account of principal,  interest and fees
shall be made  without  set off or  counterclaim  and  shall be made to Agent on
behalf of the  Lenders to the Payment  Office,  in each case on or prior to 1:00
P.M., New York time, in Dollars and in immediately available funds.

      (c) (i)  Notwithstanding  anything to the  contrary  contained in Sections
2.9(a) and (b) hereof,  commencing  with the first  Business Day  following  the
Closing Date,  each  borrowing of Revolving  Advances shall be advanced by Agent
and each payment by Borrower on account of Revolving  Advances  shall be applied
first to those Revolving Advances advanced by Agent. On or before 1:00 P.M., New
York time, on each Settlement  Date  commencing  with the first  Settlement Date
following  the Closing Date,  Agent and Lenders  shall make certain  payments as
follows:  (I) if the aggregate  amount of new  Revolving  Advances made by Agent
during the preceding  Week (if any) exceeds the  aggregate  amount of repayments
applied to outstanding  Revolving Advances during such preceding Week, then each
Lender  shall  provide  Agent  with funds in an amount  equal to its  applicable
Commitment  Percentage of the difference between (w) such Revolving Advances and
(x) such  repayments and (II) if the aggregate  amount of repayments  applied to
outstanding  Revolving Advances during such Week exceeds the aggregate amount of
new  Revolving  Advances  made during such Week,  then Agent shall  provide each
Lender with funds in an amount equal to its applicable  Commitment Percentage of
the difference between (y) such repayments and (z) such Revolving Advances.

            (ii)  Each  Lender  shall  be  entitled  to  earn  interest  at  the
      applicable  Revolving  Interest Rate on outstanding  Advances which it has
      funded.

            (iii) Promptly following each Settlement Date, Agent shall submit to
      each Lender a certificate  with respect to payments  received and Advances
      made during the Week immediately preceding such Settlement Date.

      (d) If any Lender or Participant (a "benefitted Lender") shall at any time
receive any payment of all or part of its  Advances,  or  interest  thereon,  or
receive any Collateral in respect thereof (whether  voluntarily or involuntarily
or by set-off) in a greater  proportion  than any such payment to and Collateral
received by any other Lender, if any, in respect

<PAGE>

of  such  other  Lender's  Advances,  or  interest  thereon,  and  such  greater
proportionate  payment or  receipt  of  Collateral  is not  expressly  permitted
hereunder, such benefitted Lender shall purchase for cash from the other Lenders
a participation in such portion of each such other Lender's  Advances,  or shall
provide  such other  Lender  with the  benefits of any such  Collateral,  or the
proceeds thereof, as shall be necessary to cause such benefitted Lender to share
the excess payment or benefits of such Collateral or proceeds  ratably with each
of Lenders; provided, however, that if all or any portion of such excess payment
or benefits is thereafter  recovered from such benefitted Lender,  such purchase
shall be rescinded,  and the purchase price and benefits returned, to the extent
of such recovery,  but without interest.  Each Lender so purchasing a portion of
another Lender's Advances may exercise all rights of payment (including, without
limitation,  rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.

      (e) Unless  Agent shall have been  notified  by  telephone,  confirmed  in
writing,  by any Lender that such  Lender  will not make the amount  which would
constitute its  applicable  Commitment  Percentage of the Advances  available to
Agent,  Agent may (but shall not be obligated  to) assume that such Lender shall
make such amount available to Agent on the next Settlement Date and, in reliance
upon such assumption,  make available to Borrower a corresponding  amount. Agent
will promptly  notify  Borrower of its receipt of any such notice from a Lender.
If such amount is made  available to Agent on a date after such next  Settlement
Date, such Lender shall pay to Agent on demand an amount equal to the product of
(i) the daily average Federal Funds Rate (computed on the basis of a year of 360
days) during such period as quoted by Agent, times (ii) such amount, times (iii)
the number of days from and including such  Settlement Date to the date on which
such amount  becomes  immediately  available to Agent.  A  certificate  of Agent
submitted to any Lender with respect to any amounts  owing under this  paragraph
(e) shall be conclusive, in the absence of manifest error. If such amount is not
in fact made  available to Agent by such Lender  within three (3) Business  Days
after such Settlement  Date,  Agent shall be entitled to recover such an amount,
with interest  thereon at the rate per annum then  applicable to such  Revolving
Advances hereunder,  on demand from Borrower;  provided,  however,  that Agent's
right to such  recovery  shall  not  prejudice  or  otherwise  adversely  affect
Borrower's rights (if any) against such Lender.

      2.10. Mandatory Prepayments.

      (a) When Borrower sells or otherwise disposes of any Collateral other than
Inventory in the ordinary course of business,  Borrower shall repay the Advances
in an amount equal to the net proceeds of such sale (i.e.,  gross  proceeds less
the reasonable costs of such sales or other dispositions), such repayments to be
made promptly but in no event more than one (1) Business Day  following  receipt
of such net proceeds, and until the date of payment, such proceeds shall be held
in trust for Agent.  The foregoing  shall not be deemed to be implied consent to
any such sale  otherwise  prohibited by the terms and  conditions  hereof.  Such
repayments  shall  be  applied  to the  Advances  in such  order  as  Agent  may
determine,  subject to  Borrowers'  ability to  reborrow  Revolving  Advances in
accordance with the terms hereof.

      2.11.  Use of Proceeds.  Borrower  shall apply the proceeds of Advances to
(i) repay existing indebtedness owed under the BT Credit Facility, (ii) pay fees
and  expenses  relating  to this  transaction,  and (iii) to  provide  for their
working capital needs.

      2.12. Defaulting Lender.

      (a)  Notwithstanding  anything to the contrary  contained  herein,  in the
event any Lender (x) has refused  (which  refusal  constitutes  a breach by such
Lender of its obligations under this Agreement) to make available its portion of
any Advance or (y) notifies  either Agent or Borrower that it does not intend to
make  available  its  portion  of any  Advance  (if  the  actual  refusal  would
constitute  a breach by such  Lender of its  obligations  under this  Agreement)
(each, a "Lender Default"),  all rights and obligations hereunder of such Lender
(a  "Defaulting  Lender")  as to which a Lender  Default is in effect and of the
other parties  hereto shall be modified to the extent of the express  provisions
of this Section 2.12 while such Lender Default remains in effect.

      (b) Advances shall be incurred pro rata from Lenders (the  "Non-Defaulting
Lenders") which are not Defaulting Lenders based on their respective  Commitment
Percentages, and no Commitment Percentage of any Lender or

<PAGE>

any pro rata share of any  Advances  required to be advanced by any Lender shall
be increased as a result of such Lender Default.  Amounts received in respect of
principal  of any type of  Advances  shall be applied  to reduce the  applicable
Advances  of each  Lender pro rata  based on the  aggregate  of the  outstanding
Advances of that type of all Lenders at the time of such application;  provided,
that, such amount shall not be applied to any Advances of a Defaulting Lender at
any time when, and to the extent that,  the aggregate  amount of Advances of any
Non-Defaulting Lender exceeds such Non-Defaulting Lender's Commitment Percentage
of all Advances then outstanding.

      (c) A  Defaulting  Lender  shall not be entitled to give  instructions  to
Agent or to approve,  disapprove,  consent to or vote on any matters relating to
this  Agreement  and the Other  Documents.  All  amendments,  waivers  and other
modifications  of this  Agreement  and the Other  Documents  may be made without
regard to a Defaulting  Lender and, for purposes of the  definition of "Required
Lenders", a Defaulting Lender shall be deemed not to be a Lender and not to have
Advances outstanding.

      (d) Other than as expressly set forth in this Section 2.12, the rights and
obligations of a Defaulting Lender (including the obligation to indemnify Agent)
and the other  parties  hereto shall remain  unchanged.  Nothing in this Section
2.12 shall be deemed to release any Defaulting Lender from its obligations under
this  Agreement and the Other  Documents,  shall alter such  obligations,  shall
operate as a waiver of any default by such Defaulting Lender hereunder, or shall
prejudice  any rights which  Borrower,  Agent or any Lender may have against any
Defaulting  Lender  as a  result  of  any  default  by  such  Defaulting  Lender
hereunder.

      (e)  In  the  event  a  Defaulting  Lender   retroactively  cures  to  the
satisfaction  of Agent the breach  which  caused a Lender to become a Defaulting
Lender,  such Defaulting Lender shall no longer be a Defaulting Lender and shall
be treated as a Lender under this Agreement.

III. INTEREST AND FEES.

      3.1.  Interest.  Interest on  Advances  shall be payable in arrears on the
last day of each month with respect to Domestic  Rate Loans and, with respect to
Eurodollar  Rate Loans,  at the end of each Interest  Period or, for  Eurodollar
Rate Loans with an Interest Period in excess of three months,  at the earlier of
(a) each  three  months  on the  anniversary  date of the  commencement  of such
Eurodollar  Rate Loan or (b) the end of the Interest  Period.  Interest  charges
shall be computed on the actual principal amount of Advances  outstanding during
the month (the "Monthly  Advances") at a rate per annum equal to, the applicable
Revolving Interest Rate. Whenever, subsequent to the date of this Agreement, the
Base Rate is increased or decreased,  the  Revolving  Interest Rate for Domestic
Rate Loans shall be similarly changed without notice or demand of any kind by an
amount  equal to the amount of such change in the Base Rate during the time such
change or changes remain in effect.  The Eurodollar  Rate shall be adjusted with
respect to  Eurodollar  Rate Loans  without  notice or demand of any kind on the
effective  date of any change in the  Reserve  Percentage  as of such  effective
date.  Upon and after the  occurrence  of an Event of  Default,  and  during the
continuation thereof, (i) the Obligations other than Eurodollar Rate Loans shall
bear  interest at the Revolving  Interest Rate for Domestic  Loans plus two (2%)
percent  per annum and (ii)  Eurodollar  Rate Loans  shall bear  interest at the
Revolving  Interest Rate for Eurodollar Rate Loans plus three and three-quarters
(3 3/4%) percent per annum (as applicable, the "Default Rate").

      3.2.(a) Closing Fee. Upon the execution of this Agreement,  Borrower shall
pay to Agent a Closing Fee as set forth in the  commitment  letter issued by the
Agent in favor of the Borrower on February 11, 1998.

      (b) Facility  Fee. If, for any month  during the Term,  the average  daily
unpaid  balance  of the  Advances  for each day of such month does not equal the
Maximum  Revolving  Advance  Amount,  then  Borrower  shall pay to Agent for the
ratable benefit of Lenders a fee at a rate equal to three-eighths of one percent
(3/8%) per annum on the amount by which the  Maximum  Revolving  Advance  Amount
exceeds such average daily unpaid balance. Such fee shall be payable to Agent in
arrears on the last day of each month.

<PAGE>

      3.3.  Collateral  Monitoring Fee. Borrower shall pay to Agent on the first
day of each month a collateral  monitoring  fee in an amount equal to $1,500 per
month. In addition, the Borrower shall pay to Agent, for each person employed to
perform field examinations,  collateral analysis and/or other business analysis,
an amount equal to $600 per day for each person  performing such examinations or
analysis,  plus all costs and disbursements incurred by Agent in the performance
of such examinations or analysis.

      3.4.  Computation of Interest and Fees.  Interest and fees hereunder shall
be computed on the basis of a year of 360 days and for the actual number of days
elapsed.  If any payment to be made  hereunder  becomes due and payable on a day
other than a Business  Day, the due date  thereof  shall be extended to the next
succeeding  Business Day and interest  thereon shall be payable at the Revolving
Interest Rate for Domestic Rate Loans during such extension.

      3.5.  Maximum  Charges.  In no event  whatsoever  shall interest and other
charges charged  hereunder exceed the highest rate permissible under law. In the
event interest and other charges as computed  hereunder would  otherwise  exceed
the highest rate permitted  under law, such excess amount shall be first applied
to any unpaid  principal  balance  owed by Borrower,  and if the then  remaining
excess amount is greater than the previously unpaid principal  balance,  Lenders
shall promptly  refund such excess amount to Borrower and the provisions  hereof
shall be deemed amended to provide for such permissible rate.

      3.6.  Increased  Costs.  In the  event  that  after the date  hereof,  the
adoption  or  effectiveness  of  any  applicable  law,  treaty  or  governmental
regulation,  or any  change  therein  or in the  interpretation  or  application
thereof, or compliance by any Lender (for purposes of this Section 3.6, the term
"Lender"  shall  include  Agent  or any  Lender  and  any  corporation  or  bank
controlling  Agent or any  Lender)  and the office or branch  where Agent or any
Lender (as so defined)  makes or maintains  any  Eurodollar  Rate Loans with any
request or  directive  (whether or not having the force of law) from any central
bank or other financial, monetary or other authority, shall:

            (a)  subject  Agent or any Lender to any tax of any kind  whatsoever
      with respect to this  Agreement or any Other  Document or change the basis
      of  taxation  of  payments  to Agent or any  Lender  of  principal,  fees,
      interest  or any  other  amount  payable  hereunder  or  under  any  Other
      Documents  (except for changes in the rate of tax on the net income or net
      profits. or any franchise tax based on net income or net profits, of Agent
      or any Lender by the jurisdiction or any political  subdivisions' in which
      such Agent or Lender  maintains its principal  office or lending office or
      is incorporated);

            (b) impose, modify or hold applicable any reserve,  special deposit,
      assessment or similar  requirement  against assets held by, or deposits in
      or for the account of,  advances or loans by, or other credit extended by,
      any office of Agent or any Lender, including (without limitation) pursuant
      to Regulation D of the Board of Governors of the Federal  Reserve  System;
      or

            (c) impose on Agent or any Lender or the London interbank Eurodollar
      market any other  condition  with  respect to this  Agreement or any Other
      Document;

and the result of any of the  foregoing  is to increase the cost to Agent or any
Lender of making,  renewing or maintaining  its Advances  hereunder by an amount
that Agent or such Lender deems in its  reasonable  opinion to be material or to
reduce the amount of any payment  (whether of principal,  interest or otherwise)
in respect of any of the  Advances by an amount that Agent or such Lender  deems
in its  reasonable  opinion to be material,  then,  in any case  Borrower  shall
promptly pay Agent or such Lender,  upon its demand in writing,  such additional
amount as will compensate  Agent or such Lender for such additional cost or such
reduction,  as the case may be. Agent or such Lender shall certify the amount as
determined in good faith of such  additional cost or reduced amount to Borrower,
and such certification shall be conclusive absent manifest error.

      3.7.  Basis For  Determining  Interest Rate  Inadequate or Unfair.  In the
event that Agent or any Lender shall have determined that:

            (a) reasonable  means do not exist for  ascertaining  the Eurodollar
      Rate applicable pursuant to Section 

<PAGE>

      2.2 hereof for any Interest Period; or

            (b) Dollar  deposits  in the  relevant  amount and for the  relevant
      maturity are not available in the London interbank Eurodollar market, with
      respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate
      Loan,  or a proposed  conversion of a Domestic Rate Loan into a Eurodollar
      Rate Loan

then Agent shall give Borrower prompt written,  telephonic or telegraphic notice
of  such  determination.  If such  notice  is  given,  (i)  any  such  requested
Eurodollar  Rate Loan shall be made as a Domestic  Rate  Loan,  unless  Borrower
shall  notify  Agent no later  than  10:00  a.m.  (New York  City  time) two (2)
Business Days prior to the date of such proposed borrowing, that its request for
such  borrowing  shall be canceled or made as an  unaffected  type of Eurodollar
Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have
been converted to an affected type of Eurodollar Rate Loan shall be continued as
or converted into a Domestic Rate Loan,  or, if Borrower shall notify Agent,  no
later than 10:00 a.m.  (New York City time) two (2)  Business  Days prior to the
proposed  conversion,  shall be maintained  as an unaffected  type of Eurodollar
Rate Loan, and (iii) any  outstanding  affected  Eurodollar  Rate Loans shall be
converted  into a Domestic Rate Loan,  or, if Borrower  shall notify  Agent,  no
later than 10:00 a.m.  (New York City time) two (2)  Business  Days prior to the
last  Business  Day of the  then  current  Interest  Period  applicable  to such
affected  Eurodollar  Rate Loan,  shall be converted into an unaffected  type of
Eurodollar  Rate Loan,  on the last  Business Day of the then  current  Interest
Period for such  affected  Eurodollar  Rate  Loans.  Until such  notice has been
withdrawn,  Lenders  shall  have  no  obligation  to make  an  affected  type of
Eurodollar Rate Loan or maintain  outstanding affected Eurodollar Rate Loans and
Borrower  shall  not have the  right  to  convert  a  Domestic  Rate  Loan or an
unaffected type of Eurodollar Rate Loan into an affected type of Eurodollar Rate
Loan.

      3.8. Capital Adequacy.

      (a) In the event  that Agent or any Lender  shall have  determined  in its
reasonable  opinion  that any  applicable  law,  rule,  regulation  or guideline
regarding  capital  adequacy,  or  any  change  therein,  or any  change  in the
interpretation or administration thereof by any governmental authority,  central
bank or comparable  agency  charged with the  interpretation  or  administration
thereof, or compliance by Agent or any Lender (for purposes of this Section 3.8,
the term "Lender" shall include Agent or any Lender and any  corporation or bank
controlling  Agent or any  Lender)  and the office or branch  where Agent or any
Lender (as so defined)  makes or maintains  any  Eurodollar  Rate Loans with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority,  central bank or comparable  agency, has or would
have the effect of reducing the rate of return on Agent or any Lender's  capital
as a consequence of its obligations  hereunder to a level below that which Agent
or such Lender could have achieved but for such  adoption,  change or compliance
(taking into  consideration  Agent's and each Lender's  policies with respect to
capital  adequacy) by an amount  deemed by Agent or any Lender to be material in
its reasonable opinion,  then, from time to time, Borrower shall pay upon demand
to Agent or such Lender  such  additional  amount or amounts as will  compensate
Agent or such Lender for such reduction.  In determining such amount or amounts,
Agent or such Lender may use any reasonable  averaging or  attribution  methods.
The  protection  of this Section 3.8 shall be available to Agent and each Lender
regardless of any possible  contention of  invalidity  or  inapplicability  with
respect to the applicable law, regulation or condition.

      (b) A  certificate  of Agent or such Lender  setting  forth such amount or
amounts as determined in good faith as shall be necessary to compensate Agent or
such Lender with  respect to Section  3.8(a)  hereof when  delivered to Borrower
shall be conclusive absent manifest error.

IV. COLLATERAL AND GUARANTY: GENERAL TERMS

      4.1. Security Interest in the Collateral. To secure the prompt payment and
performance  to Agent  and  each  Lender  of the  Obligations,  Borrower  hereby
assigns,  pledges and grants to Agent for the  ratable  benefit of each Lender a
continuing security interest in and to all of the Collateral,  whether now owned
or existing or hereafter acquired or arising and wheresoever  located.  Borrower
shall mark its books and records as may be necessary or appropriate to evidence,
protect and perfect  Agent's  security  interest  and shall cause its  financial
statements to reflect such security interest.

<PAGE>

      4.2. Perfection of Security Interest.  Borrower shall take all action that
may be necessary or desirable,  or that Agent may reasonably  request,  so as at
all times to maintain the validity,  perfection,  enforceability and priority of
Agent's  security  interest  in the  Collateral  or to enable  Agent to protect,
exercise or enforce its rights hereunder and in the Collateral,  including,  but
not  limited to, (i)  immediately  discharging  all Liens  other than  Permitted
Encumbrances,  (ii)  obtaining  landlords' or  mortgagees'  lien waivers,  (iii)
delivering to Agent,  endorsed or accompanied by such  instruments of assignment
as Agent may  specify,  and  stamping  or  marking,  in such manner as Agent may
specify, any and all chattel paper, instruments,  letters of credits and advices
thereof  and  documents  evidencing  or forming a part of the  Collateral,  (iv)
entering into warehousing, lockbox and other custodial arrangements satisfactory
to Agent, and (v) executing and delivering financing statements,  instruments of
pledge, mortgages,  notices and assignments,  in each case in form and substance
satisfactory  to  Agent,  relating  to  the  creation,   validity,   perfection,
maintenance  or  continuation  of Agent's  security  interest  under the Uniform
Commercial  Code or other  applicable  law.  Agent is hereby  authorized to file
financing  statements  signed by Agent  instead of Borrower in  accordance  with
Section  9-402(2)  of  Uniform  Commercial  Code as  adopted in the State of New
Jersey.  All  charges,  expenses  and fees  Agent  may incur in doing any of the
foregoing,  and any local taxes relating thereto, shall be charged to Borrower's
Account  as a  Revolving  Advance  of a  Domestic  Rate  Loan  and  added to the
Obligations,  or, at  Agent's  option,  shall be paid to Agent  for the  ratable
benefit of Lenders promptly upon demand.

      4.3.  Disposition of  Collateral.  Borrower will safeguard and protect all
Collateral for Agent's general  account and make no disposition  thereof whether
by sale,  lease or  otherwise  except (a) the sale of  Inventory in the ordinary
course of business and (b) the  disposition or transfer of obsolete and worn-out
Equipment  in the ordinary  course of business  during any fiscal year having an
aggregate  fair market  value of not more than  $100,000  and only to the extent
that  the  proceeds  of any such  disposition  are used to  either  (i)  acquire
replacement  Equipment  which is  subject  to Agent's  first  priority  security
interest, or (ii) pay down outstanding Revolving Advances.

      4.4.  Preservation  of Collateral.  In addition to the rights and remedies
set forth in Section 11.1 hereof,  Agent: (a) may at any time take such steps as
Agent  deems  necessary  to protect  Agent's  interest  in and to  preserve  the
Collateral, including the hiring of such security guards or the placing of other
security protection  measures as Agent may deem appropriate;  (b) may employ and
maintain at any of Borrower's premises a custodian who shall have full authority
to do all acts necessary to protect Agent's interests in the Collateral; (c) may
lease  warehouse  facilities  to  which  Agent  may  move  all  or  part  of the
Collateral;  (d) may use Borrower's  owned or leased lifts,  hoists,  trucks and
other  facilities or equipment for handling or removing the Collateral;  and (e)
shall have, and is hereby  granted,  a right of ingress and egress to the places
where the  Collateral  is located,  and may proceed over and through  Borrower's
owned or leased  property.  Borrower shall  cooperate  fully with all of Agent's
efforts to preserve  the  Collateral  and will take such actions to preserve the
Collateral  as Agent may  direct.  All of Agent's  expenses  of  preserving  the
Collateral, including any expenses relating to the bonding of a custodian, shall
be charged to Borrower's  Account as a Revolving Advance of a Domestic Rate Loan
and added to the Obligations.

      4.5. Ownership of Collateral.  With respect to the Collateral, at the time
the Collateral becomes subject to Agent's security interest:  (a) Borrower shall
be the sole owner of and fully  authorized  and able to sell,  transfer,  pledge
and/or grant a first  priority  security  interest in each and every item of the
its respective  Collateral to Agent; and, except for Permitted  Encumbrances the
Collateral shall be free and clear of all Liens and encumbrances whatsoever; (b)
each  document and  agreement  executed by Borrower or delivered to Agent or any
Lender  in  connection  with this  Agreement  shall be true and  correct  in all
respects;  (c) all signatures and  endorsements  of Borrower that appear on such
documents and agreements  shall be genuine and Borrower shall have full capacity
to execute same; and (d) Borrower's  Equipment and Inventory shall be located as
set forth on Schedule 4.5 hereto and shall not be removed from such  location(s)
without the prior  written  consent of Agent  except with respect to the sale of
Inventory  in the  ordinary  course of  business  and  Equipment  to the  extent
permitted in Section 4.3 hereof.

      4.6.  Defense of Agent's  and  Lenders'  Interests.  Until (a) payment and
performance  in  full of all of the  Obligations  and  (b)  termination  of this
Agreement,  Agent's interests in the Collateral shall continue in full force and
effect.  During such period  Borrower shall not,  without  Agent's prior written
consent,  pledge,  sell (except Inventory in the ordinary course of business and
Equipment  to the extent  permitted in Section 4.3  hereof),  assign,  transfer,
create  or  suffer  to exist a

<PAGE>

Lien upon or encumber or allow or suffer to be  encumbered in any way except for
Permitted  Encumbrances,  any  part of the  Collateral.  Borrower  shall  defend
Agent's interests in the Collateral against any and all Persons  whatsoever.  At
any time following demand by Agent for payment of all  Obligations,  Agent shall
have the right to take  possession  of the  indicia  of the  Collateral  and the
Collateral in whatever physical form contained,  including  without  limitation:
labels, stationery,  documents,  instruments and advertising materials. If Agent
exercises this right to take possession of the Collateral,  Borrower shall, upon
demand,  assemble it in the best manner  possible and make it available to Agent
at a place  reasonably  convenient  to Agent.  In addition,  with respect to all
Collateral,  Agent  and  Lenders  shall be  entitled  to all of the  rights  and
remedies set forth herein and further provided by the Uniform Commercial Code or
other applicable law. Borrower shall, and Agent may, at its option, instruct all
suppliers, carriers, forwarders, warehouses or others receiving or holding cash,
checks,  Inventory,  documents  or  instruments  in which Agent holds a security
interest to deliver  same to Agent and/or  subject to Agent's  order and if they
shall come into Borrower's possession,  they, and each of them, shall be held by
Borrower in trust as Agent's trustee, and Borrower will immediately deliver them
to Agent in their original form together with any necessary endorsement.

      4.7. Books and Records. Borrower shall (a) keep proper books of record and
account in which full,  true and correct entries will be made of all dealings or
transactions  of or in relation to its business  and affairs;  (b) set up on its
books  accruals  with  respect to all taxes,  assessments,  charges,  levies and
claims;  and (c) on a  reasonably  current  basis set up on its books,  from its
earnings, allowances against doubtful Receivables,  advances and investments and
all  other  proper  accruals   (including   without   limitation  by  reason  of
enumeration,  accruals  for  premiums,  if any,  due on  required  payments  and
accruals for depreciation,  obsolescence, or amortization of properties),  which
should be set aside from such  earnings in  connection  with its  business.  All
determinations  pursuant to this subsection shall be made in accordance with, or
as required  by, GAAP  consistently  applied in the opinion of such  independent
public accountant as shall then be regularly engaged by Borrower.

      4.8.  Financial  Disclosure.  Borrower hereby  irrevocably  authorizes and
directs all accountants and auditors employed by Borrower at any time during the
Term to exhibit and deliver to Agent and each  Lender  copies of any  Borrower's
financial statements,  trial balances or other accounting records of any sort in
the  accountant's  or  auditor's  possession,  and to disclose to Agent and each
Lender any information such accountants may have concerning Borrower's financial
status  and  business  operations,  subject  in all  cases to the  policies  and
procedures of such  accountants  and auditors.  Borrower  hereby  authorizes all
federal,  state and  municipal  authorities  to furnish to Agent and each Lender
copies of reports or examinations relating to Borrower, whether made by Borrower
or otherwise;  however, Agent and Lender will attempt to obtain such information
or materials  directly  from Borrower  prior to obtaining  such  information  or
materials from such accountants or such authorities.

      4.9.  Compliance with Laws. Borrower shall comply in all material respects
with all acts, rules, regulations and orders of any legislative,  administrative
or judicial body or official applicable to its respective Collateral or any part
thereof or to the operation of Borrower's business the non-compliance with which
could reasonably be expected to have a Material Adverse Effect on Borrower.  The
assets of Borrower  at all times  shall be  maintained  in  accordance  with the
requirements of all insurance  carriers which provide  insurance with respect to
the assets of Borrower  so that such  insurance  shall  remain in full force and
effect.

      4.10.  Inspection  of  Premises.  At all  reasonable  times Agent and each
Lender shall have full access to and the right to audit, check, inspect and make
abstracts and copies from Borrower's books, records, audits,  correspondence and
all other papers  relating to the  Collateral  and the  operation of  Borrower's
business.  Agent, any Lender and their agents may enter upon Borrower's premises
after  providing  notice to the  Borrower  (or in the absence of notice  after a
Default or Event of Default has occurred) at any time during  business hours and
at any  other  reasonable  time,  and from  time to  time,  for the  purpose  of
inspecting  the Collateral  and any and all records  pertaining  thereto and the
operation of Borrower's business.

      4.11.  Insurance.  Borrower  shall  bear the full  risk of any loss of any
nature  whatsoever  with respect to the  Collateral.  At Borrower's own cost and
expense in amounts and with  carriers  acceptable to Agent,  Borrower  shall (a)
keep all its  insurable  properties  and  properties  in which  Borrower  has an
interest insured against the hazards of fire, flood,  sprinkler  leakage,  those
hazards covered by extended coverage  insurance and such other hazards,  and for
such  amounts,  as is customary in the case of companies  engaged in  businesses
similar to  Borrower's  including,  without  limitation,  business  

<PAGE>

interruption  insurance;  (b) maintain a bond in such amounts as is customary in
the case of companies engaged in businesses similar to Borrower insuring against
larceny,  embezzlement or other criminal  misappropriation of insured's officers
and  employees  who may either  singly or jointly  with  others at any time have
access to the assets or funds of Borrower either  directly or through  authority
to draw upon such funds or to direct  generally the  disposition of such assets;
(c) maintain public and product liability  insurance against claims for personal
injury,  death or property  damage  suffered by others;  (d)  maintain  all such
worker's  compensation or similar insurance as may be required under the laws of
any state or jurisdiction in which Borrower is engaged in business;  (e) furnish
Agent with (i) copies of all policies and  evidence of the  maintenance  of such
policies by the renewal  thereof at least thirty (30) days before any expiration
date,  and (ii)  appropriate  loss payable  endorsements  in form and  substance
satisfactory to Agent, naming Agent as a co-insured and lender loss payee as its
interests  may appear  with  respect to all  insurance  coverage  referred to in
clauses (a), and above, and providing (A) that all proceeds  thereunder shall be
payable to Agent,  (B) no such insurance shall be affected by any act or neglect
of the insured or owner of the property  described in such policy,  and (C) that
such policy and loss payable  clauses may not be caneled,  amended or terminated
unless at least thirty (30) days' prior written notice is given to Agent. In the
event of any loss thereunder,  the carriers named therein hereby are directed by
Agent  and the  Borrower  to make  payment  for such  loss to  Agent  and not to
Borrower and Agent jointly.  If any insurance losses are paid by check, draft or
other instrument  payable to Borrower and Agent jointly,  Agent may endorse such
Borrower's  name thereon and do such other things as Agent may deem advisable to
reduce the same to cash.  Agent is hereby  authorized  to adjust and  compromise
claims under insurance  coverage  referred to in clauses (a) and (b) above.  All
loss recoveries  received by Agent upon any such insurance may be applied to the
Obligations,  in such order as Agent in its sole discretion shall determine. Any
surplus  shall be paid by Agent  to  Borrower  or  applied  as may be  otherwise
required by law. Any deficiency  thereon shall be paid by Borrowers to Agent, on
demand.

      4.12.  Failure to Pay Insurance.  If Borrower fails to obtain insurance as
hereinabove  provided,  or to keep the same in force, Agent, if Agent so elects,
may obtain such  insurance  and pay the premium  therefor on behalf of Borrower,
and charge Borrower's Account therefor as a Revolving Advance of a Domestic Rate
Loan and such expenses so paid shall be part of the Obligations.

      4.13.  Payment  of  Taxes.   Borrower  will  pay,  when  due,  all  taxes,
assessments  and other Charges  lawfully levied or assessed upon Borrower or any
of the Collateral  including,  without  limitation,  real and personal  property
taxes,  assessments and charges and all franchise,  income,  employment,  social
security benefits,  withholding, and sales taxes. If any tax by any governmental
authority is or may be imposed on or as a result of any transaction contemplated
by this  Agreement  between  Borrower and Agent or any Lender which Agent or any
Lender may be required to withhold or pay or if any taxes, assessments, or other
Charges  remain unpaid after the date fixed for their  payment,  or if any claim
shall be made which,  in Agent's or any Lender's  reasonable  opinion,  would be
likely to create a valid Lien on the  Collateral,  Agent may  without  notice to
Borrower  pay the  taxes,  assessments  or other  Charges  and  Borrower  hereby
indemnifies and holds Agent and each Lender harmless in respect  thereof.  Agent
will not pay any taxes,  assessments  or Charges to the extent that Borrower has
contested or disputed  those  taxes,  assessments  or Charges in good faith,  by
expeditious  protest,  administrative  or judicial appeal or similar  proceeding
provided  that any  related  tax lien is  stayed  and  sufficient  reserves  are
established to the reasonable  satisfaction of Agent to protect Agent's security
interest in or Lien on the Collateral.  The amount of any payment by Agent under
this Section 4.13 shall be charged to Borrower's  Account as a Revolving Advance
and added to the  Obligations  and,  until  Borrower shall furnish Agent with an
indemnity therefor (or supply Agent with evidence satisfactory to Agent that due
provision  for the  payment  thereof  has been  made),  Agent  may hold  without
interest any balance  standing to  Borrower's  credit and Agent shall retain its
security interest in any and all Collateral held by Agent.

      4.14. Payment of Leasehold  Obligations.  Borrower shall at all times pay,
when and as due,  its rental  obligations  under all leases  under which it is a
tenant,  and shall otherwise  comply, in all material  respects,  with all other
terms of such  leases  and keep them in full force and  effect  and,  at Agent's
request will provide evidence of having done so.

      4.15. Receivables.

      (a) Nature of Receivables.  Each of the  Receivables  shall be a bona fide
and valid account

<PAGE>

representing a bona fide  indebtedness  incurred by the Customer  therein named,
for a  fixed  sum as  set  forth  in  the  invoice  relating  thereto  (provided
immaterial or  unintentional  invoice  errors shall not be deemed to be a breach
hereof)  with  respect to an absolute  sale or lease and  delivery of goods upon
stated terms of Borrower,  or work,  labor or services  theretofore  rendered by
Borrower as of the date each Receivable is created.  Same shall be due and owing
in accordance with the Borrower's standard terms of sale without dispute, setoff
or  counterclaim  except as may be stated on the accounts  receivable  schedules
delivered by Borrower to Agent.

      (b)  Solvency  of  Customers.  Each  Customer,  to the best of  Borrower's
knowledge, as of the date each Receivable is created, is and will be solvent and
able to pay all  Receivables on which the Customer is obligated in full when due
or with respect to such  Customers of Borrower who are not solvent  Borrower has
set up on its books and in its financial  records bad debt reserves  adequate to
cover such Receivables.

      (c) Locations of Borrower. Borrower's chief executive office is located at
Rockaway 80 Corporate Center,  100 Enterprise Drive,  Suite 280,  Rockaway,  New
Jersey 07866.  Until  written  notice is given to Agent by Borrower of any other
office at which Borrower keeps its records  pertaining to Receivables,  all such
records shall be kept at such executive office.

      (d)  Collection of  Receivables.  Until  Borrower's  authority to do so is
terminated  by Agent  (which  notice  Agent may give at any time  following  the
occurrence  of an  Event  of  Default  or a  Default  or when  Agent in its sole
discretion deems it to be in Lenders' best interest to do so), Borrower will, at
Borrower's sole cost and expense, but on Agent's behalf and for Agent's account,
collect as  Agent's  property  and in trust for Agent all  amounts  received  on
Receivables,  and shall not commingle such  collections with Borrower's funds or
use the same except to pay  Obligations.  Borrower  shall  deliver to Agent,  or
deposit in the  Blocked  Account,  in  original  form and on the date of receipt
thereof, all checks,  drafts, notes, money orders,  acceptances,  cash and other
evidences of Indebtedness.

      (e)  Notification  of Assignment of  Receivables.  At any time Agent shall
have the  right to send  notice  of the  assignment  of,  and  Agent's  security
interest in, the Receivables to any and all Customers or any third party holding
or otherwise concerned with any of the Collateral.  Thereafter, Agent shall have
the sole right to collect the Receivables, take possession of the Collateral, or
both.  Agent's  actual  collection  expenses,  including,  but not  limited  to,
stationery  and  postage,  telephone  and  telegraph,  secretarial  and clerical
expenses and the salaries of any collection  personnel used for collection,  may
be charged to Borrower's Account and added to the Obligations.

      (f) Power of Agent to Act on Borrower's Behalf. Agent shall have the right
to receive,  endorse, assign and/or deliver in the name of Agent or Borrower any
and all checks,  drafts and other  instruments for the payment of money relating
to the  Receivables,  and Borrower hereby waives notice of presentment,  protest
and non-payment of any instrument so endorsed. Borrower hereby constitutes Agent
or Agent's designee as Borrower's  attorney with power (i) to endorse Borrower's
name  upon  any  notes,  acceptances,  checks,  drafts,  money  orders  or other
evidences of payment or Collateral;  (ii) to sign Borrower's name on any invoice
or bill of lading relating to any of the Receivables,  drafts against Customers,
assignments and  verifications  of Receivables;  (iii) to send  verifications of
Receivables  to any  Customer;  (iv) to sign  Borrower's  name on all  financing
statements or any other documents or instruments deemed necessary or appropriate
by Agent to preserve, protect, or perfect Agent's interest in the Collateral and
to file same; (v) to demand payment of the Receivables;  (vi) to enforce payment
of the Receivables by legal  proceedings or otherwise;  (vii) to exercise all of
Borrower's rights and remedies with respect to the collection of the Receivables
and any other Collateral;  (viii) to settle, adjust, compromise, extend or renew
the  Receivables;  (ix) to settle,  adjust or compromise  any legal  proceedings
brought to collect Receivables; (x) to prepare, file and sign Borrower's name on
a proof of claim in bankruptcy or similar document against any Customer; (xi) to
prepare,  file and sign  Borrower's  name on any notice of Lien,  assignment  or
satisfaction of Lien or similar document in connection with the Receivables; and
(xii) to do all other acts and things necessary to carry out this Agreement. All
acts of said  attorney or designee are hereby  ratified and  approved,  and said
attorney or designee  shall not be liable for any acts of omission or commission
nor for any  error  of  judgment  or  mistake  of  fact or of law,  unless  done
maliiously or with gross (not mere) negligence; this power being coupled with an
interest is irrevocable while any of the Obligations remain unpaid.  Agent shall
have the right at any time to change the address for delivery of mail  addressed
to

<PAGE>

Borrower to such address as Agent may designate and to receive, open and dispose
of all mail addressed to Borrower.

      (g)  No  Liability.   Neither  Agent  nor  any  Lender  shall,  under  any
circumstances  or in any event  whatsoever,  have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Receivables or any instrument  received in payment thereof, or for
any damage  resulting  therefrom.  Agent  may,  without  notice or consent  from
Borrower,  sue  upon or  otherwise  collect,  extend  the  time of  payment  of,
compromise or settle for cash,  credit or upon any terms any of the  Receivables
or any other  securities,  instruments  or insurance  applicable  thereto and/or
release any obligor  thereof.  Agent is  authorized  and empowered to accept the
return of the goods represented by any of the Receivables,  without notice to or
consent by Borrower,  all without discharging or in any way affecting Borrower's
liability hereunder.

      (h) Establishment of a Lockbox Account,  Dominion Account. All proceeds of
Collateral  shall,  at the  direction of Agent,  be deposited by Borrower into a
lockbox  account,  dominion  account or such other "blocked  account"  ("Blocked
Accounts") as Agent may require pursuant to an arrangement with Agent. All funds
deposited in such "blocked  account"  shall  immediately  become the property of
Agent and Borrower  shall obtain the  agreement by such bank to waive any offset
rights against the funds so deposited.  Neither Agent nor any Lender assumes any
responsibility  for  such  "blocked  account"  arrangement,   including  without
limitation,  any claim of accord and  satisfaction  or release  with  respect to
deposits  accepted by the Agent thereunder.  Alternatively,  Agent may establish
depository  accounts  ("Depository  Accounts") in the name of the Agent,  at the
Agent for the deposit of such funds and Borrower  shall  deposit all proceeds of
Collateral or cause same to be deposited,  in kind, in such Depository  Accounts
of Agent in lieu of depositing same to the Blocked Accounts.

      (i)  Adjustments.  Borrower will not,  without Agent's consent which shall
not be  unreasonably  withheld,  compromise or adjust any material amount of the
Receivables  (or extend the time for  payment  thereof) or accept any returns of
merchandise or grant any  additional  discounts,  allowances or credits  thereon
except for those  compromises,  adjustments,  returns,  discounts,  credits  and
allowances as have been heretofore customary in the business of Borrower.

      4.16.  Inventory.  To the extent Inventory held for sale or lease has been
produced by Borrower, it has been and will be produced by Borrower in accordance
with the Federal Fair Labor  Standards Act of 1938,  as amended,  and all rules,
regulations and orders thereunder.

      4.17. Maintenance of Equipment.  The Equipment shall be maintained in good
operating  condition  and repair  (reasonable  wear and tear  excepted)  and all
necessary  replacements  of and repairs  thereto shall be made so that the value
and operating  efficiency of the Equipment  shall be maintained  and  preserved.
Borrower  shall  not use or  operate  the  Equipment  in  violation  of any law,
statute,  ordinance, code, rule or regulation.  Borrower shall have the right to
sell Equipment to the extent set forth in Section 4.3 hereof.

      4.18.  Exculpation  of  Liability.   Nothing  herein  contained  shall  be
construed to constitute  Agent or any Lender as Borrower's agent for any purpose
whatsoever,  nor shall  Agent or any  Lender be  responsible  or liable  for any
shortage, discrepancy, damage, loss or destruction of any part of the Collateral
wherever the same may be located and  regardless of the cause  thereof.  Neither
Agent  nor any  Lender,  whether  by  anything  herein or in any  assignment  or
otherwise,  assume any of Borrower's obligations under any contract or agreement
assigned  to Agent or such  Lender,  and neither  Agent nor any Lender  shall be
responsible  in any way for the  performance by Borrower of any of the terms and
conditions thereof.

      4.19.  Environmental  Matters.  (a)  Borrower  shall  ensure that the Real
Property remains in compliance with all applicable  Environmental Laws and shall
not place or permit to be placed any  Hazardous  Substances on any Real Property
except  as  not  prohibited  by  applicable  law  or  appropriate   governmental
authorities.

      (b) In the event Borrower obtains, gives or receives notice of any Release
or threat of Release of a reportable quantity of any Hazardous Substances at the
Real  Property  (any such event being  hereinafter  referred to as a  "Hazardous
Discharge")  or receives any notice of  violation,  request for  information  or
notification pursuant to any

<PAGE>

Environmental  Laws that it is  potentially  responsible  for  investigation  or
cleanup of  environmental  conditions  at the Real  Property,  demand  letter or
complaint, order, citation, or other written notice with regard to any Hazardous
Discharge or violation of  Environmental  Laws  affecting  the Real  Property or
Borrower's  interest  therein (any of the  foregoing is referred to herein as an
"Environmental   Complaint")  from  any  Person,   including  any  state  agency
responsible in whole or in part for environmental  matters in the state in which
the Real  Property  is  located or the United  States  Environmental  Protection
Agency  (any such person or entity  hereinafter  the  "Authority")  in each case
which would reasonably be expected to result in a Material Adverse Effect,  then
Borrower  shall,  within five (5) Business Days,  give written notice of same to
Agent detailing facts and  circumstances  of which Borrower is aware giving rise
to the Hazardous Discharge or Environmental Complaint. Such information is to be
provided to allow Agent to protect its  security  interest in the Real  Property
and is not intended to create nor shall it create any  obligation  upon Agent or
any Lender with respect thereto.

      (c)  Borrower  shall  promptly  forward  to Agent  copies of all  material
documents and reports concerning a Hazardous Discharge at the Real Property that
Borrower is required to file with any Governmental  Body under any Environmental
Laws.  Such  information  is to be  provided  solely to allow  Agent to  protect
Agent's security interest in the Real Property and the Collateral.

      (d) In the event of any Hazardous  Discharge or  Environmental  Complaint,
Borrower  shall  take  all  necessary   action  required  under  any  applicable
Environmental Laws to address any such effect. If Borrower shall fail to respond
promptly to any Hazardous Discharge or Environmental Complaint or Borrower shall
fail to comply  with any of the  requirements  of any  Environmental  Laws which
could  reasonably be expected to result in a Material  Adverse Effect,  Agent on
behalf of Lenders may, but without the obligation to do so, for the sole purpose
of protecting Agent's interest in Collateral: (A) give such notices or (B) enter
onto the Real  Property  (or  authorize  third  parties  to enter  onto the Real
Property)  and  take  such  actions  as  are  required   under  any   applicable
Environmental  Laws to deal with any such Hazardous  Discharge or  Environmental
Complaint.  All reasonable costs and expenses  incurred by Agent and Lenders (or
such third parties) in the exercise of any such rights,  including any such sums
paid  in  connection  with  any  judicial  or  administrative  investigation  or
proceedings,  fines and penalties,  together with interest thereon from the date
expended at the Default  Rate for  Domestic  Rate Loans  constituting  Revolving
Advances shall be paid upon demand by Borrower, and until paid shall be added to
and become a part of the  Obligations  secured by the Liens created by the terms
of this Agreement or any other agreement between Agent, any Lender and Borrower.

      (e) At such time as the Agent has  notice of any  Hazardous  Discharge  or
Environmental  Complaint  which  could  reasonably  be  expected  to result in a
Material  Adverse  Effect,  Agent may  request  Borrower  to provide  Agent,  at
Borrower's expense, with an environmental site assessment or environmental audit
report  prepared  by  an  environmental   engineering  firm  acceptable  in  the
reasonable opinion of Agent, to assess with a reasonable degree of certainty the
existence of a Hazardous  Discharge and the potential costs of taking  necessary
actions required by any applicable Environmental Laws with respect thereto.

      (f) Borrower shall defend and indemnify  Agent and Lenders and hold Agent,
Lenders and their respective employees,  agents, directors and officers harmless
from and against all loss, liability,  damage and expense,  claims, costs, fines
and penalties,  including  reasonable  attorney's fees,  suffered or incurred by
Agent or Lenders under any Environmental  Laws,  including,  without limitation,
the assertion of any Lien thereunder, with respect to any Hazardous Discharge or
the presence of any  Hazardous  Substances  affecting the Real  Property,  which
originates or emerges from the Real Property, including any loss of value of the
Real Property as a result of the foregoing in each case prior to the termination
of this Agreement except to the extent such loss, liability,  damage and expense
is  attributable  to any actions on the part of Agent or any Lender.  Borrower's
obligation and the  indemnifications  hereunder shall survive the termination of
this Agreement.

      (g) For purposes of Section 4.19 and 5.7, all  references to Real Property
shall be deemed to include all of Borrower's right, title and interest in and to
its leased premises.

      4.20.  Financing  Statements.  Except as respects the financing statements
filed by Agent and the  financing 

<PAGE>

statements described on Schedule 1.2, no financing statement covering any of the
Collateral or any proceeds thereof is on file in any public office.

      4.21. Guaranty.  Warner Bermuda shall execute and deliver to the Agent the
Warner Bermuda's Guaranty and the Trademark Assignment.

      4.22.  Support  of Warner PLC and  Warner  Bermuda.  Warner PLC and Warner
Bermuda  shall   execute  and  deliver  to  the  Agent  the  Financial   Support
Undertaking.

V. REPRESENTATIONS AND WARRANTIES.

      Borrower represents and warrants as follows:

      5.1.  Authority.  Borrower  has full power,  authority  and legal right to
enter  into  this  Agreement  and the Other  Documents  and to  perform  all its
respective  Obligations  hereunder and thereunder.  The execution,  delivery and
performance  of  this  Agreement  and of the  Other  Documents  (a)  are  within
Borrower's corporate powers, have been duly authorized, are not in contravention
of law or the terms of Borrower's bylaws,  certificate of incorporation or other
applicable  documents  relating  to  Borrower's  formation  or to the conduct of
Borrower's  business or, where such  contravention  with respect to the Borrower
could have a Material  Adverse Effect,  of any agreement or undertaking to which
Borrower is a party or by which  Borrower  is bound,  and (b) will not result in
the  creation  of any Lien,  except  Permitted  Encumbrances,  upon any asset of
Borrower or conflict  with nor result in any breach in any of the  provisions of
or constitute a default under the provisions of any charter document,  bylaw or,
where such breach with  respect to the  Borrower  could have a Material  Adverse
Effect,  any  agreement or  instrument,  to which  Borrower or its property is a
party or by which it may be bound.

      5.2. Formation and Qualification. (a) Borrower is duly incorporated and in
good  standing  under the laws of the state of Delaware  and is  qualified to do
business and is in good  standing in the states of New Jersey and New York which
constitute all states in which qualification and good standing are necessary for
Borrower to conduct its  business  and own its property and where the failure to
so qualify  could  reasonably be expected to have a Material  Adverse  Effect on
such Borrower.  Borrower has delivered to Agent true and complete  copies of its
certificate of  incorporation  and by-laws and will promptly notify Agent of any
amendment or changes thereto.

      (b) The Borrower has no Subsidiaries.

      5.3. Survival of Representations  and Warranties.  All representations and
warranties of Borrower contained in this Agreement and the Other Documents shall
be true at the time of  Borrower's  execution  of this  Agreement  and the Other
Documents,  and shall survive the execution,  delivery and acceptance thereof by
the parties  thereto and the closing of the  transactions  described  therein or
related thereto.

      5.4.  Tax  Returns.   Borrower's  federal  tax  identification  number  is
#223426958. Borrower has filed or properly extended all federal, state and local
tax returns and other  reports  each is required by law to file with  respect to
taxes and has paid all taxes,  assessments,  fees and other governmental charges
that are due and  payable.  Federal,  state  and local  income  tax  returns  of
Borrower  have  been  examined  and  reported  upon  by the  appropriate  taxing
authority or closed by  applicable  statute and  satisfied  for all fiscal years
prior to and including the fiscal year ending  December 31, 1997.  The provision
for taxes on the books of  Borrower  are  adequate  for all years not  closed by
applicable  statutes,  and for its current  fiscal  year,  and  Borrower  has no
knowledge of any deficiency or additional assessment in connection therewith not
provided for on its books.

      5.5. Financial Statements.

      (a) The income statement and cash flow projections of the Borrower and its
projected  balance  sheets as of the Closing  Date,  copies of which are annexed
hereto as Exhibit 5.5(a) (the "Projections") were prepared by the Chief

<PAGE>

Financial Officer of Borrower, are based on underlying assumptions which provide
a reasonable basis for the projections  contained therein and reflect Borrower's
judgment based on present circumstances of the most likely set of conditions and
course of action for the projected period.

      (b) The balance  sheet of the Borrower,  as of December 31, 1997,  and the
related  statements of income,  changes in stockholder's  equity, and changes in
cash  flow for the  period  ended on such  date  provided  by the  consolidating
schedules prepared in connection with Warner PLC's audited financial  statements
as of December 31, 1997,  accompanied  by reports  thereon  containing  opinions
without  qualification by independent  certified public  accountants,  copies of
which have been delivered to Agent,  have been prepared in accordance with GAAP,
consistently   applied   (except  for  changes  in  application  in  which  such
accountants  concur and present fairly the financial position of the Borrower at
such date and the results of their operations for such period).

      (c) The balance  sheet of the Borrower,  as of February 28, 1998,  and the
related  statements of income,  changes in shareholders  equity,  and changes in
cash  flow for the  period  ended on such  date  provided  by the  consolidating
schedules prepared in connection with Warner PLC's management prepared financial
statements as of February 28, 1998,  copies of which have been  delivered to the
Agent, have been prepared in accordance with GAAP,  consistently applied.  Since
February  28,  1998  there  has been no change in the  condition,  financial  or
otherwise,  of Borrower as shown on the  consolidating  balance sheet as of such
date and no change  in the  aggregate  value of  machinery,  equipment  and Real
Property owned by Borrower,  except changes in the ordinary  course of business,
none of which individually or in the aggregate has been materially adverse.

      5.6.  Corporate  Name.  Borrower has not been known by any other corporate
name in the past five  years and does not sell  Inventory  under any other  name
except  Warner  Chilcott  Laboratories,  nor has  Borrower  been  the  surviving
corporation of a merger or consolidation or acquired all or substantially all of
the  assets of any  Person  during  the  preceding  five (5) years  except  that
Borrower   acquired   the  Warner   Chilcott   Pharmaceuticals   Division   from
Warner-Lambert Company on March 28, 1996.

      5.7. O.S.H.A. and Environmental Compliance.

      (a) Borrower has duly complied with, and its facilities, business, assets,
property,  leaseholds  and Equipment are in compliance in all material  respects
with, the provisions of the Federal  Occupational Safety and Health Act, and all
other Environmental Laws; there have been no outstanding  citations,  notices or
orders of non-compliance issued to Borrower or relating to its business, assets,
property, leaseholds or Equipment under any such laws, rules or regulations.

      (b)  Borrower  has been  issued  all  required  federal,  state  and local
licenses, certificates or permits relating to all applicable Environmental Laws.

      (c) To the best  knowledge of Borrower,  (i) there are no visible signs of
releases,  spills,  discharges,  leaks or disposal  (collectively referred to as
"Releases") of Hazardous Substances at, upon, under or within any Real Property;
(ii) there are no underground storage tanks or polychlorinated  biphenyls on the
Real  Property;  (iii)  neither the Real  Property  nor any  premises  leased by
Borrower  has ever been used as a  treatment,  storage or  disposal  facility of
Hazardous  Substances;  and (iv) no Hazardous Substances are present on the Real
Property,  excepting  such  quantities  as are  handled in  accordance  with all
applicable  manufacturer's  instructions  and  governmental  regulations  and in
proper  storage  containers  and as  are  necessary  for  the  operation  of the
commercial business of Borrower.

      5.8. Solvency; No Litigation or Violation.

      (a) After giving  effect to the  Transactions,  Borrower  will be solvent,
able to pay its debts as they mature,  have capital  sufficient  to carry on its
business and all  businesses  in which it is about to engage,  and (i) as of the
Closing Date,  the fair present  saleable  value of its assets,  calculated on a
going  concern  basis,  is in excess of the amount of its  liabilities  and (ii)
subsequent  to  the  Closing  Date,  the  fair  saleable  value  of  its  assets
(calculated on a going concern basis)

<PAGE>

will be in excess of the amount of its liabilities.

      (b) Except as disclosed in Schedule 5.8(b), Borrower does not have (i) any
pending or threatened  litigation,  arbitration,  actions or  proceedings  which
involve the  possibility of having a Material  Adverse  Effect on Borrower,  and
(ii)  any  liabilities  nor  indebtedness  for  borrowed  money  other  than the
Obligations.

      (c) Borrower is not in violation of any applicable statute,  regulation or
ordinance in any respect  which could  reasonably be expected to have a Material
Adverse  Effect on  Borrower,  nor is Borrower in  violation of any order of any
court,  governmental  authority  or  arbitration  board or tribunal  which could
reasonably be expected to have a Material Adverse Effect.

      (d) The Borrower  does not maintain any Plan subject to Title IV of ERISA.
(i) No Plan has incurred any  "accumulated  funding  deficiency,"  as defined in
Section  302(a)(2)  of ERISA and  Section  412(a) of the  Code,  whether  or not
waived,  and  Borrower  and each  member  of the  Controlled  Group  has met all
applicable minimum funding requirements under Section 302 of ERISA in respect of
each Plan, (ii) each Plan which is intended to be a qualified plan under Section
401(a) of the Code as  currently in effect has been  determined  by the Internal
Revenue  Service to be qualified  under Section 401(a) of the Code and the trust
related  thereto is exempt from federal  income tax under Section  501(a) of the
Code, (iii) neither Borrower nor any member of the Controlled Group has incurred
any liability to the PBGC other than for the payment of premiums,  and there are
no premium  payments  which have become due which are  unpaid,  (iv) no Plan has
been terminated by the plan administrator  thereof nor by the PBGC, and there is
no occurrence which would cause the PBGC to institute proceedings under Title IV
of ERISA to  terminate  any Plan,  (v) at this time,  the  current  value of the
assets of each Plan exceeds the present value of the accrued  benefits and other
liabilities  of such Plan and neither  Borrower nor any member of the Controlled
Group  knows of any facts or  circumstances  which would  materially  change the
value of such assets and accrued benefits and other  liabilities,  (vi) Borrower
and each  member of the  Controlled  Group  are in  compliance  in all  material
respects with the  responsibilities,  obligations  and duties imposed on them by
ERISA  with  respect to any Plan,  (vii)  neither  Borrower  nor any member of a
Controlled  Group has incurred any  liability  for any excise tax arising  under
Section  4972 or 4980B of the Code,  and no fact exists which could give rise to
any such  liability,  (viii)  neither  Borrower nor any member of the Controlled
Group nor any  fiduciary  of, nor any  trustee  to, any Plan,  has  engaged in a
material  "prohibited  transaction  described  in  Section  406 of the  ERISA or
Section 4975 of the Code nor taken any action which would  constitute  or result
in a Termination  Event with respect to any such Plan which is subject to ERISA,
(ix) Borrower and each member of the Controlled Group has made all contributions
due and payable with respect to each Plan,  (x) there exists no event  described
in  Section  4043(b)  of ERISA,  for which the  thirty  (30) day  notice  period
contained in 29 CFR '2615.3 has not been waived,  (xi) neither  Borrower nor any
member of the Controlled Group has any fiduciary  responsibility for investments
with  respect  to any plan  existing  for the  benefit  of  persons  other  than
employees  or former  employees  of  Borrower  and any member of the  Controlled
Group,  and (xii) neither  Borrower nor any member of the  Controlled  Group has
withdrawn,  completely or partially,  from any Multiemployer Plan so as to incur
liability under the Multiemployer Pension Plan Amendments Act of 1980.

      5.9. Patents,  Trademarks,  Copyrights and Licenses.  All patents,  patent
applications,  trademarks,  trademark applications,  service marks, service mark
applications,  copyrights,  copyright applications,  design rights, trade names,
assumed names,  trade secrets and licenses owned or utilized by Borrower are set
forth on Schedule 5.9 hereto,  are valid and have been duly  registered or filed
with  all  appropriate  governmental  authorities  and  constitute  all  of  the
intellectual  property  rights  which are  necessary  for the  operation  of its
business;  there is no objection to or pending  challenge to the validity of any
such material  patent,  trademark,  copyright,  design right,  trade name, trade
secret or license and  Borrower  is not aware of any grounds for any  challenge,
except as set forth in Schedule  5.9 hereto.  Each patent,  patent  application,
patent license,  trademark,  trademark application,  trademark license,  service
mark,  service mark  application,  service mark  license,  copyright,  copyright
application  and  copyright  license  owned or held by  Borrower  and all  trade
secrets used by Borrower consist of original  material or property  developed by
Borrower or was lawfully  acquired by Borrower  from the proper and lawful owner
thereof.  Each of such items has been  maintained  so as to  preserve  the value
thereof from the date of creation or  acquisition  thereof.  With respect to all
software  used by Borrower,  Borrower is in  possession of all source and object
codes related to each piece of software or is the  beneficiary  of a source code
escrow  agreement,  each such  source  code  escrow  agreement  

<PAGE>

being listed on Schedule 5.9 hereto.

      5.10. Licenses and Permits. Borrower (a) is in compliance with and (b) has
procured and is now in possession of, all material  licenses or permits required
by any applicable  federal,  state, or local law or regulation for the operation
of its business in each jurisdiction wherein it is now conducting or proposes to
conduct business and where the failure to procure such licenses or permits could
have a Material Adverse Effect on Borrower.

      5.11.  Default of Indebtedness.  Borrower is not in default in the payment
of the  principal  of or interest on any  Indebtedness  or under any  instrument
wherein  the amount in dispute is in excess of $100,000  or  agreement  under or
subject to which any  Indebtedness  has been  issued  and no event has  occurred
under the provisions of any such  instrument or agreement  which with or without
the  lapse  of time or the  giving  of  notice,  or both,  constitutes  or would
constitute an event of default thereunder.

      5.12. No Default. Borrower is not in default in the payment or performance
of any of its  contractual  obligations  and no Default has occurred which could
reasonably be expected to have a Material Adverse Effect on Borrower.

      5.13. No Burdensome Restrictions.  No Borrower is party to any contract or
agreement  the  performance  of which  could have a Material  Adverse  Effect on
Borrower.  Borrower has not agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its property,  whether
now  owned  or  hereafter  acquired,  to be  subject  to a Lien  which  is not a
Permitted Encumbrance.

      5.14. No Labor  Disputes.  Borrower is not involved in any labor  dispute;
there are no strikes or walkouts or union  organization of Borrower's  employees
threatened or in existence  and no labor  contract is scheduled to expire during
the Term.

      5.15.  Margin  Regulations.  Borrower is not engaged,  nor will it engage,
principally or as one of its important activities,  in the business of extending
credit for the purpose of  "purchasing"  or "carrying" any "margin stock" within
the  respective  meanings  of each of the quoted  terms  under  Regulation  U or
Regulation G of the Board of Governors of the Federal  Reserve System as now and
from time to time  hereafter  in effect.  No part of the proceeds of any Advance
will be used for  "purchasing"  or  "carrying"  "margin  stock"  as  defined  in
Regulation U of such Board of Governors.

      5.16.  Investment  Company Act.  Borrower is not an  "investment  company"
registered  or required to be  registered  under the  Investment  Company Act of
1940, as amended, nor is it controlled by such a company.

      5.17.  Disclosure.  No representation or warranty made by Borrower in this
Agreement  or in any  financial  statement,  report,  certificate  or any  other
document  furnished  in  connection  herewith or  therewith  contains any untrue
statement of fact or omits to state any fact  necessary  to make the  statements
herein or therein  not  misleading.  There is no fact known to Borrower or which
reasonably should be known to Borrower which Borrower has not disclosed to Agent
in writing with respect to the transactions contemplated by this Agreement which
could reasonably be expected to have a Material Adverse Effect on Borrower.

      5.18.  Swaps.  Borrower  is not a party to, nor will it be a party to, any
swap agreement  whereby Borrower has agreed or will agree to swap interest rates
or currencies  unless same provides that damages upon  termination  following an
event of default  thereunder are payable on an unlimited "two-way basis" without
regard to fault on the part of either party.

      5.19.  Conflicting  Agreements.  No provision of any mortgage,  indenture,
contract, agreement,  judgment, decree or order binding on Borrower or affecting
the  Collateral  conflicts  with,  or requires any Consent which has not already
been  obtained  to,  or would in any way  prevent  the  execution,  delivery  or
performance of, the terms of this Agreement or the Other Documents.

      5.20.  Application of Certain Laws and  Regulations.  Neither Borrower nor
any Affiliate of Borrower is subject 

<PAGE>

to any  statute,  rule or  regulation  which  regulates  the  incurrence  of any
Indebtedness,  including without limitation, statutes or regulations relative to
common or interstate carriers or to the sale of electricity,  gas, steam, water,
telephone, telegraph or other public utility services.

      5.21. Business and Property of Borrower.  Upon and after the Closing Date,
Borrower  does not  propose to engage in any  business  other  than  developing,
manufacturing and/or marketing  pharmaceutical products and activities necessary
to  conduct  the  foregoing.  On the  Closing  Date,  Borrower  will own all the
property and possess all of the rights and Consents necessary for the conduct of
the business of Borrower.

VI. AFFIRMATIVE COVENANTS.

      Borrower  shall,  until payment in full of the Obligations and termination
of this Agreement:

      6.1.  Payment of Fees. Pay to Agent on demand all usual and customary fees
and expenses which Agent incurs in connection with (a) the forwarding of Advance
proceeds and (b) the  establishment  and maintenance of any Blocked  Accounts or
Depository  Accounts  as  provided  for in Section  4.15(h)  hereof.  Agent may,
without making demand, charge Borrower's Account for all such fees and expenses.

      6.2.  Conduct of Business and  Maintenance  of Existence  and Assets.  (a)
Conduct  continuously  and  operate  actively  its  business  according  to good
business practices and maintain all of its properties useful or necessary in its
business in good working order and condition  (reasonable wear and tear excepted
and  except  as  may be  disposed  of in  accordance  with  the  terms  of  this
Agreement),  including,  without limitation, all licenses, patents,  copyrights,
design  rights,  trade names,  trade secrets and trademarks and take all actions
necessary to enforce and protect the validity of any intellectual property right
or other right included in the Collateral; (b) keep in full force and effect its
existence  and comply in all  material  respects  with the laws and  regulations
governing  the  conduct  of  its  business  where  the  failure  to do so  could
reasonably be expected to have a Material  Adverse  Effect on Borrower;  and (c)
make all such  reports  and pay all such  franchise  and other taxes and license
fees and do all such  other  acts and  things  as may be  lawfully  required  to
maintain its rights,  licenses,  leases, powers and franchises under the laws of
the United States or any political subdivision thereof.

      6.3. Violations.  Promptly notify Agent in writing of any violation of any
law, statute, regulation or ordinance of any Governmental Body, or of any agency
thereof,  applicable  to Borrower  which could  reasonably be expected to have a
Material Adverse Effect on Borrower.

      6.4. Government  Receivables.  Take all steps necessary to protect Agent's
interest in the Collateral  under the Federal  Assignment of Claims Act or other
applicable   state  or  local  statutes  or  ordinances  and  deliver  to  Agent
appropriately  endorsed,  any  instrument  or chattel paper  connected  with any
Receivable  arising out of contracts between Borrower and the United States, any
state or any department, agency or instrumentality of any of them.

      6.5.   Shareholders'   Equity.   Maintain   during  each  fiscal  quarter,
Shareholders'  Equity of not less  than the  amount  set forth on the  following
schedule:

                   Period                         Minimum $MM
                   ------                         -----------
                                                
                   First Quarter 1998             50.0
                   Second Quarter 1998            45.0
                   Third Quarter 1998             41.0
                   Fourth Quarter 1998            39.0
                                                
                   First Quarter 1999             40.0
                   Second Quarter 1999            42.0

<PAGE>

                   Third Quarter 1999             46.0
                   Fourth Quarter 1999            51.0
                                                
                   First Quarter 2000             54.5
                   Second Quarter 2000            60.0
                   Third Quarter 2000             65.0
                   Fourth Quarter 2000            70.5
                                                
                   First Quarter 2001             74.0
                                              
As of February 28, 1998 Borrower's Shareholders' Equity was $56,051,000.

      6.6. Execution of Supplemental  Instruments.  Execute and deliver to Agent
from  time to time,  upon  demand,  such  supplemental  agreements,  statements,
assignments  and  transfers,  or  instructions  or  documents  relating  to  the
Collateral, and such other instruments as Agent may reasonably request, in order
that the full intent of this Agreement may be carried into effect.

      6.7. Payment of Indebtedness.  Pay,  discharge or otherwise  satisfy at or
before maturity (subject,  where applicable,  to specified grace periods and, in
the case of the trade payables, to normal payment practices) all its obligations
and liabilities of whatever  nature,  except when the failure to do so could not
reasonably be expected to have a Material  Adverse  Effect or when the amount or
validity  thereof is  currently  being  contested  in good faith by  appropriate
proceedings  and Borrower  shall have  provided  for such  reserves as Agent may
reasonably  deem proper and  necessary,  subject at all times to any  applicable
subordination arrangement in favor of Lenders.

      6.8.  Standards of Financial  Statements.  Cause all financial  statements
referred to in Sections 9.7, 9.8, 9.9,  9.10,  9.11 and 9.12 as to which GAAP is
applicable to be complete and correct in all material respects (subject,  in the
case of interim financial statements,  to normal year-end audit adjustments) and
to be  prepared  in  reasonable  detail  and in  accordance  with  GAAP  applied
consistently throughout the periods reflected therein (except as concurred in by
such  reporting  accountants  or  officer,  as the  case may be,  and  disclosed
therein).

VII. NEGATIVE COVENANTS.

      Borrower  shall not, until  satisfaction  in full of the  Obligations  and
termination of this Agreement:

      7.1. Merger, Consolidation, Acquisition and Sale of Assets.

      (a) Enter into any merger,  consolidation or other  reorganization with or
into any other Person or acquire all or a  substantial  portion of the assets or
stock of any Person or permit any other Person to consolidate with or merge with
it.

      (b) Sell, lease, transfer or otherwise dispose of any of its properties or
assets, except (i) in the ordinary course of its business (including pursuant to
license arrangements  entered into in the ordinary course of business),  (ii) as
permitted by Section 4.3 hereof,  or (iii) with the prior written consent of the
Agent which shall not be unreasonably  withheld,  the sale,  lease,  transfer or
other  disposition of properties or assets in the aggregate  amount of less than
$500,000 in any fiscal year.

      7.2.  Creation  of Liens.  Create or suffer to exist any Lien or  transfer
upon or against any of its property or assets now owned or  hereafter  acquired,
except Permitted Encumbrances.

      7.3.  Guarantees.  Become  liable  upon the  obligations  of any Person by
assumption, endorsement or guaranty thereof or otherwise (other than to Lenders)
except (i) guarantees in connection with indemnity programs for employees;  

<PAGE>

(ii)   guarantees   in   connection   with   indemnification   provided  in  the
organizational  documents of the Borrower; (iii) indemnifications and guarantees
granted by the Borrower in the ordinary  course of business  pursuant to supply,
distribution,  development and manufacturing  agreements in the aggregate amount
of less than $500,000.

      7.4.  Investments.  Purchase  or acquire  obligations  or stock of, or any
other interest in, any Person,  except (a)  obligations  issued or guaranteed by
the United States of America or any agency  thereof,  (b) commercial  paper with
maturities of not more than 180 days and a published rating of not less than A-1
or P-1 (or the equivalent rating), (c) certificates of time deposit and bankers'
acceptances  having  maturities  of  not  more  than  180  days  and  repurchase
agreements backed by United States government securities of a commercial bank if
(i) such bank has a combined  capital and surplus of at least  $500,000,000,  or
(ii)  its debt  obligations,  or those  of a  holding  company  of which it is a
Subsidiary, are rated not less than A (or the equivalent rating) by a nationally
recognized investment rating agency, and (d) U.S. money market funds that invest
solely in obligations issued or guaranteed by the United States of America or an
agency thereof.

      7.5.  Loans.  Make advances,  loans or extensions of credit to any Person,
including without limitation, any Parent, Subsidiary or Affiliate other than (i)
trade credit  extended on usual and  customary  terms in the ordinary  course of
business,  (ii) advances to employees  and agents to meet  expenses  incurred by
such  employees and agents in the ordinary  course of business,  (iii) loans and
advances to employees to assist with  relocation  and similar costs and expenses
no greater than  $250,000 at any time  outstanding,  (iv)  deposits  made in the
ordinary  course of  business  consistent  with  past  practices  to secure  the
performance of leases,  and (v) advances,  loans or extensions of credit granted
in the ordinary course of business pursuant to supply, distribution, development
and manufacturing agreements in the aggregate amount of less than $500,000.

      7.6. Capital Expenditures.  Contract for, purchase or make any expenditure
or commitments for fixed or capital assets (including capitalized leases) in any
fiscal year in an amount in excess of $1,000,000.

      7.7. Dividends.  Declare,  pay or make any dividend or distribution on any
shares of the common stock or preferred  stock of Borrower (other than dividends
or distributions  payable in its stock, or split-ups or reclassifications of its
stock) or apply any of its funds, property or assets to the purchase, redemption
or other  retirement  of any common or  preferred  stock,  or of any  options to
purchase  or acquire any such  shares of common or  preferred  stock of Borrower
except that so long as (a) a notice of termination with regard to this Agreement
shall  not be  outstanding,  (b) no Event  of  Default  or  Default  shall  have
occurred, and (c) the purpose for such purchase, redemption or dividend shall be
as set forth in writing to Agent at least ten (10) days prior to such  purchase,
redemption or dividend and such  purchase,  redemption or dividend shall in fact
be used for such purpose, Borrower shall be permitted to pay dividends to Parent
to pay interest accrued under the Indenture,  to the extent permitted  provided,
however,  that after giving effect to the payment of such dividends  there shall
not exist any Event of Default or Default.

      7.8.   Indebtedness.   Create,  incur,  assume  or  suffer  to  exist  any
Indebtedness  (exclusive of trade debt) except in respect of (i) Indebtedness to
Lenders;  (ii) Indebtedness  incurred for capital  expenditures  permitted under
Section 7.6 hereof;  (iii)  Indebtedness  due under the  Indenture  and (iv) any
other outstandingIndebtedness not to exceed $500,000 in the aggregate at any one
time

      7.9. Nature of Business.  Substantially  change the nature of the business
in which it is presently  engaged,  nor except as specifically  permitted hereby
purchase or invest, directly or indirectly, in any assets or property other than
in the ordinary  course of business for assets or property  which are useful in,
and are to be used in, its business as presently conducted.

      7.10.  Transactions  with  Affiliates.  Directly or indirectly,  purchase,
acquire or lease any property from, or sell,  transfer or lease any property to,
or otherwise  deal with,  any Affiliate,  except  transactions  disclosed in the
ordinary course of business, on an arm's-length basis on terms no less favorable
than  terms  which  could  have  been  obtainable  from a Person  other  than an
Affiliate except sales of products between Warner PLC and Borrower,  between any
of Warner PLC's Subsidiaries and the Borrower or between Barr Laboratories, Inc.
and the Borrower.

<PAGE>

      7.11.  Leases.  Enter as lessee into any new lease arrangement for real or
personal property (unless capitalized and permitted under Section 7.6 hereof) if
after giving effect thereto, aggregate annual rental payments for all new leased
property would exceed $500,000 in any one fiscal year.

      7.12. Subsidiaries.

      (a) Form any Subsidiary unless (i) such Subsidiary expressly joins in this
Agreement  as a  borrower  and  becomes  jointly  and  severally  liable for the
obligations of Borrower hereunder, under the Note, and under any other agreement
between  Borrower and Lenders and (ii) Agent shall have received all  documents,
including legal opinions, it may reasonably require to establish compliance with
each of the foregoing conditions.

      (b) Enter into any partnership, joint venture or similar arrangement.

      7.13.  Fiscal  Year and  Accounting  Changes.  Change its fiscal year from
December  31 or make  any  change  (i) in  accounting  treatment  and  reporting
practices  except as required by GAAP or (ii) in tax reporting  treatment except
as required by law.

      7.14.  Pledge of Credit.  Now or hereafter  pledge Agent's or any Lender's
credit on any purchases or for any purpose  whatsoever or use any portion of any
Advance in or for any business  other than  Borrower's  business as conducted on
the date of this Agreement.

      7.15.  Amendment of Articles of Incorporation,  Bylaws.  Without the prior
written  consent of the Agent which will not be  unreasonably  withheld,  amend,
modify  or waive any term or  provision  of its  Articles  of  Incorporation  or
By-Laws  unless  such  amendment,  modification  or waiver  (i) could not have a
Material Adverse Effect or (ii) is required by law.

      7.16. Compliance with ERISA. (i) (x) Maintain, or permit any member of the
Controlled Group to maintain,  or (y) become obligated to contribute,  or permit
any member of the Controlled  Group to become  obligated to  contribute,  to any
Plansubject  to Title IV of ERISA,  (ii)  engage,  or permit  any  member of the
Controlled Group to engage, in any material non-exempt "prohibited transaction",
as that term is defined in section  406 of ERISA and  Section  4975 of the Code,
(iii)  incur,  or permit  any  member  of the  Controlled  Group to  incur,  any
"accumulated  funding  deficiency",  as that term is defined  in Section  302 of
ERISA or Section 412 of the Code,  (iv)  terminate,  or permit any member of the
Controlled  Group to  terminate,  any Plan  where  such  event  could  result in
material  liability  of  Borrower or any member of the  Controlled  Group or the
imposition of a lien on the property of Borrower or any member of the Controlled
Group pursuant to Section 4068 of ERISA, (v) assume, or permit any member of the
Controlled  Group to assume,  any obligation to contribute to any  Multiemployer
Plan,  (vi) incur,  or permit any member of the Controlled  Group to incur,  any
withdrawal  liability to any  Multiemployer  Plan; (vii) fail promptly to notify
Agent of the  occurrence of any  Termination  Event,  (viii) fail to comply,  or
permit a  member  of the  Controlled  Group to fail to  comply  in all  material
respects, with the requirements of ERISA or the Code or other applicable laws in
respect of any Plan,  (ix) fail to meet, or permit any member of the  Controlled
Group to fail to meet, all minimum funding  requirements under ERISA or the Code
or postpone or delay or allow any member of the Controlled  Group to postpone or
delay any funding requirement with respect of any Plan.

      7.17. Prepayment of Indebtedness.  Except as permitted pursuant to Section
7.18 hereof, at any time, directly or indirectly, prepay any Indebtedness (other
than to  Lenders),  or  repurchase,  redeem,  retire or  otherwise  acquire  any
Indebtedness of Borrower.

      7.18. Subordinated Debt Payment. At any time, directly or indirectly, pay,
prepay, repurchase,  redeem, retire or otherwise acquire, or make any payment on
account of any principal of,  interest on or premium  payable in connection with
the  repayment  or  redemption  of the  Subordinated  Debt  Payment,  except  as
expressly  required  by the terms of the  Indenture  as in effect on the Closing
Date.

      7.19.  Other  Agreements.  Enter into any  material  amendment,  waiver or
modification of the Acquisition 

<PAGE>

Agreement or any related agreements.

VIII. CONDITIONS PRECEDENT.

      8.1. Conditions to Initial Advances.  The agreement of Lenders to make the
initial  Advances  requested  to be made on the  Closing  Date is subject to the
satisfaction,  or waiver by Lenders,  immediately  prior to or concurrently with
the making of such Advances, of the following conditions precedent:

            (a) Note.  Agent  shall have  received  the Note duly  executed  and
      delivered by an authorized officer of Borrower;

            (b) Filings, Registrations and Recordings. Each document (including,
      without  limitation,  any Uniform  Commercial  Code  financing  statement)
      required  by  this  Agreement,  any  related  agreement  or  under  law or
      reasonably  requested by the Agent to be filed,  registered or recorded in
      order to create,  in favor of Agent, a perfected  security  interest in or
      lien upon the  Collateral  shall have been properly  filed,  registered or
      recorded  in each  jurisdiction  in  which  the  filing,  registration  or
      recordation  thereof is so  required  or  requested,  and Agent shall have
      received an acknowledgment copy, or other evidence  satisfactory to it, of
      each such filing, registration or recordation and satisfactory evidence of
      the payment of any necessary fee, tax or expense relating thereto;

            (c) Corporate  Proceedings of Borrower.  Agent shall have received a
      copy of the resolutions in form and substance  reasonably  satisfactory to
      Agent,  of  the  Board  of  Directors  of  Borrower  authorizing  (i)  the
      execution,  delivery and  performance  of this  Agreement,  the Note,  any
      related agreements (collectively the "Documents") and (ii) the granting by
      Borrower of the  security  interests in and liens upon the  Collateral  in
      each case certified by the Secretary or an Assistant Secretary of Borrower
      as of the  Closing  Date;  and,  such  certificate  shall  state  that the
      resolutions thereby certified have not been amended,  modified, revoked or
      rescinded as of the date of such certificate;

            (d) Incumbency Certificates of Borrower. Agent shall have received a
      certificate of the Secretary or an Assistant Secretary of Borrower,  dated
      the Closing  Date, as to the  incumbency  and signature of the officers of
      Borrower  executing this Agreement,  any certificate or other documents to
      be  delivered  by it  pursuant  hereto,  together  with  evidence  of  the
      incumbency of such Secretary or Assistant Secretary;

            (e)  Certificates.  Agent shall have received a copy of the Articles
      or Certificate of Incorporation of Borrower,  and all amendments  thereto,
      certified by the Secretary of State or other  appropriate  official of its
      jurisdiction  of  incorporation  together  with  copies  of the  Bylaws of
      Borrower certified as accurate and complete by the Secretary of Borrower;

            (f) Good  Standing  Certificates.  Agent  shall have  received  good
      standing  certificates  for Borrower  dated not more than thirty (30) days
      prior to the  Closing  Date,  issued  by the  Secretary  of State or other
      appropriate official of Borrower's  jurisdiction of incorporation and each
      jurisdiction  where the conduct of Borrower's  business  activities or the
      ownership of its properties necessitates qualification;

            (g) Legal  Opinion.  Agent shall have  received the  executed  legal
      opinions of counsel to Borrower, Warner Bermuda and Warner PLC in form and
      substance satisfactory to Agent which shall cover such matters incident to
      the  transactions  contemplated by this  Agreement,  the Note, and related
      agreements as Agent may reasonably  require and Borrower hereby authorizes
      and directs such counsel to deliver such opinions to Agent and Lenders;

            (h) No Litigation.  (i) No litigation,  investigation  or proceeding
      before or by any  arbitrator or  Governmental  Body shall be continuing or
      threatened  against  Borrower or against  the  officers  or  directors  of
      Borrower  (A)  in  connection  with  the  Other  Documents  or  any of the
      transactions  contemplated thereby and which, in the reasonable opinion of
      Agent, is deemed material or (B) which could, in the reasonable opinion of
      Agent,  have a Material  Adverse  Effect;  

<PAGE>

      and (ii) no  injunction,  writ,  restraining  order or other  order of any
      nature  materially  adverse to Borrower or the conduct of its  business or
      inconsistent with the due consummation of the Transactions shall have been
      issued by any Governmental Body;

            (i) Financial Condition  Certificates.  Agent shall have received an
      executed  Financial  Condition  Certificate  in the form of Exhibit 8.1(i)
      hereto.

            (j) Collateral  Examination.  Agent shall have completed  Collateral
      examinations  and  received  appraisals,  the  results  of which  shall be
      satisfactory  in  form  and  substance  to  Lenders,  of the  Receivables,
      Inventory,  General  Intangibles,  Leasehold  Interest  and  Equipment  of
      Borrower and all books and records in connection therewith;

            (k) Fees.  Agent shall have  received  all fees payable to Agent and
      Lenders on or prior to the Closing Date pursuant to Article III hereof;

            (l) Guaranty, Financial Support Undertaking,  Other Documents. Agent
      shall have received the executed the Financial  Support  Undertaking,  and
      Warner  Bermuda's  Guaranty  and all  Other  Documents,  each in form  and
      substance satisfactory to Lenders;

            (m)  Insurance.  Agent  shall have  received  in form and  substance
      satisfactory to Agent,  certified copies of Borrower's  casualty insurance
      policies, together with loss payable endorsements on Agent's standard form
      of loss payee endorsement naming Agent as loss payee, and certified copies
      of Borrowers'  liability  insurance  policies,  together with endorsements
      naming Agent as a co-insured;

            (n)   Environmental   Reports.   Agent  shall  have   received   all
      environmental  studies and reports  prepared by independent  environmental
      engineering  firms with  respect to all Real  Property  owned or leased by
      Borrower;

            (o)  Payment   Instructions.   Agent  shall  have  received  written
      instructions  from Borrower  directing the  application of proceeds of the
      initial Advances made pursuant to this Agreement;

            (p)  Blocked  Accounts.  Agent  shall have  received  duly  executed
      agreements  establishing the Blocked Accounts or Depository  Accounts with
      Agent for the collection or servicing of the  Receivables  and proceeds of
      the Collateral;

            (q)  Consents.  Agent  shall  have  received  any and  all  Consents
      necessary to permit the effectuation of the  transactions  contemplated by
      this  Agreement and the Other  Documents;  and,  Agent shall have received
      such  Consents and waivers of such third  parties as might  assert  claims
      with  respect  to the  Collateral,  as Agent and its  counsel  shall  deem
      necessary;

            (r) No Material  Adverse Change.  (i) since February 28, 1998, there
      shall not have occurred any event, condition or state of facts which could
      reasonably  be  expected  to have a  Material  Adverse  Effect and (ii) no
      representations  made or  information  supplied  to Agent  shall have been
      proven to be inaccurate or misleading in any material respect;

            (s)  Leasehold  Agreements.  Agent  shall  have  received  landlord,
      mortgagee,  warehouseman  or other  agreements  satisfactory to Agent with
      respect to all premises leased by Borrower at which Inventory is located;

            (t) Indenture.  Agent shall have received  final executed  copies of
      the  Indenture  and related  documents  which shall contain such terms and
      provisions   including,    without   limitation,    subordination   terms,
      satisfactory to Agent;

            (u)  Contract  Review.   Agent  shall  have  reviewed  all  material
      contracts  of  Borrowers  including,  

<PAGE>

      without  limitation,  leases,  union contracts,  labor  contracts,  vendor
      supply contracts,  license agreements and  distributorship  agreements and
      such contracts and  agreements  shall be  satisfactory  in all respects to
      Agent;

            (v)  Closing  Certificate.  Agent  shall  have  received  a  closing
      certificate  signed by the Chief Financial Officer of Borrower dated as of
      the date hereof,  stating that (i) all  representations and warranties set
      forth in this  Agreement  and the Other  Documents are true and correct in
      all material respects on and as of such date (except  representations  and
      warranties  which  relate  solely  to  an  earlier  date  or  time,  which
      representations  shall be true and effective on and as of the  appropriate
      dates or times  referred  to  therein),  (ii)  Borrower is on such date in
      compliance  with all the terms and  provisions set forth in this Agreement
      and the Other  Documents  and (iii) on such  date no  Default  or Event of
      Default has occurred or is continuing;

            (w) Borrowing Base. Agent shall have received evidence from Borrower
      that the aggregate amount of Eligible  Receivables and Eligible  Inventory
      is  sufficient  in value and  amount to  support  Advances  in the  amount
      requested by Borrower on the Closing Date;

            (x)  Undrawn  Availability.  After  giving  effect  to  the  initial
      Advances hereunder,  Borrower shall have Undrawn  Availability of at least
      $3,000,000;

            (y) Other. All corporate and other  proceedings,  and all documents,
      instruments  and other legal matters in connection  with the  Transactions
      shall be  reasonably  satisfactory  in form and substance to Agent and its
      counsel.

      8.2.  Conditions  to Each  Advance.  The  agreement of Lenders to make any
Advance  requested to be made on any date (including,  without  limitation,  the
initial  Advance),  is subject to the  satisfaction of the following  conditions
precedent as of the date such Advance is made:

            (a) Representations and Warranties.  Each of the representations and
      warranties  made by  Borrower in or  pursuant  to this  Agreement  and any
      related agreements to which it is a party, and each of the representations
      and  warranties  contained  in any  certificate,  document or financial or
      other  statement  furnished at any time under or in  connection  with this
      Agreement  or any  related  agreement  shall  be true and  correct  in all
      material  respects  on and as of  such  date  as if made on and as of such
      date;

            (b) No Default.  No Event of Default or Default  shall have occurred
      and be  continuing on such date, or would exist after giving effect to the
      Advances  requested  to be made,  on such  date;  provided,  however  that
      Lenders,  in  their  sole  discretion,   may  continue  to  make  Advances
      notwithstanding  the  existence of an Event of Default or Default and that
      any  Advances  so made  shall not be deemed a waiver of any such  Event of
      Default or Default; and

            (c) Maximum  Advances.  In the case of any Advances  requested to be
      made, after giving effect thereto, the aggregate Advances shall not exceed
      the maximum amount of Advances permitted under Section 2.1 hereof.

            (d) Warner PLC and Warner  Bermuda  Cash  Balance.  Agent shall have
      received evidence that Warner PLC and Warner Bermuda maintain a balance of
      cash or Cash Equivalents on a consolidated  basis (exclusive of Borrower's
      accounts or other assets) of at least $15,000,000; and

Each  request  for  an  Advance  by  Borrower   hereunder  shall   constitute  a
representation  and warranty by Borrower as of the date of such Advance that the
conditions contained in this subsection shall have been satisfied.

IX. INFORMATION AS TO BORROWER.

      Borrower  shall,  until  satisfaction  in full of the  Obligations and the
termination of this Agreement:

<PAGE>

      9.1.  Disclosure of Material  Matters.  Promptly  upon  learning  thereof,
report to Agent all matters  materially  affecting the value,  enforceability or
collectibility of any portion of the Collateral  including,  without limitation,
Borrower's  reclamation  or  repossession  of, or the return to  Borrower  of, a
material amount of goods or claims or disputes asserted by any Customer or other
obligor.

      9.2. Schedules.  Deliver to Agent on or before the fifteenth (15th) day of
each  month as and for the  prior  month (a)  accounts  receivable  agings,  (b)
accounts payable schedules and (c) Inventory reports. In addition, Borrower will
deliver  to Agent at such  intervals  as Agent  may  require:  (i)  confirmatory
assignment  schedules,  (ii) copies of Customer's  invoices,  (iii)  evidence of
shipment  or  delivery,  and  (iv)  such  further  schedules,  documents  and/or
information  regarding the Collateral as Agent may reasonably require including,
without limitation, trial balances and test verifications.  Agent shall have the
right to confirm and verify all Receivables by any manner and through any medium
it  considers  advisable  and do whatever it may deem  reasonably  necessary  to
protect its interests hereunder. The items to be provided under this Section are
to be in form  satisfactory  to Agent and executed by Borrower and  delivered to
Agent from time to time solely for Agent's convenience in maintaining records of
the  Collateral,  and  Borrower's  failure to deliver any of such items to Agent
shall not affect, terminate, modify or otherwise limit Agent's Lien with respect
to the Collateral.

      9.3. Environmental Reports. Furnish Agent,  concurrently with the delivery
of the financial  statements  referred to in Sections 9.7 and 9.8 hereof, with a
certificate  signed by the  President  of Borrower  stating,  to the best of his
knowledge,  that  Borrower is in  compliance  in all material  respects with all
federal,  state and local laws relating to environmental  protection and control
and occupational  safety and health. To the extent Borrower is not in compliance
with the foregoing  laws, the certificate  shall set forth with  specificity all
areas of non-compliance and the proposed action Borrower will implement in order
to achieve full compliance.

      9.4. Litigation.  Promptly notify Agent in writing of any litigation, suit
or administrative  proceeding  affecting  Borrower,  whether or not the claim is
covered by insurance, and of any suit or administrative proceeding, which in any
such case could  reasonably  be  expected to have a Material  Adverse  Effect on
Borrower.

      9.5.  Material  Occurrences.  Promptly  notify  Agent in writing  upon the
occurrence  of (a) any Event of  Default  or  Default;  (b) any event of default
under the  Indenture;  (c) any event which with the giving of notice or lapse of
time, or both, would constitute an event of default under the Indenture; (d) any
event,  development or  circumstance  whereby any financial  statements or other
reports  furnished to Agent fail in any material  respect to present fairly,  in
accordance with GAAP consistently  applied, the financial condition or operating
results  of  Borrower  as of the date of such  statements;  (e) any  accumulated
retirement plan funding  deficiency which, if such deficiency  continued for two
plan years and was not corrected as provided in Section 4971 of the Code,  could
subject  Borrower  to a tax  imposed by Section  4971 of the Code;  (f) each and
every default by Borrower which might result in the acceleration of the maturity
of any  Indebtedness,  including  the names and addresses of the holders of such
Indebtedness  with respect to which there is a default  existing or with respect
to which the maturity has been or could be  accelerated,  and the amount of such
Indebtedness;  and (g) any other  development  in the  business  or  affairs  of
Borrower which could  reasonably be expected to have a Material  Adverse Effect;
in each case describing the nature thereof and the action  Borrower  proposes to
take with respect thereto.

      9.6.  Government  Receivables.  Notify  Agent  immediately  if  any of its
Receivables arise out of contracts  between Borrower and the United States,  any
state, or any department, agency or instrumentality of any of them.

      9.7. Annual Financial  Statements.  Furnish Agent, within ninety (90) days
after the end of each fiscal year of Borrower,  financial statements of Borrower
as provided  by the  consolidating  schedules  of the annual  audited  financial
statements of Warner PLC including, but not limited to, statements of income and
shareholders' equity and cash flow from the beginning of the current fiscal year
to the end of such  fiscal  year  and the  balance  sheet  as at the end of such
fiscal year, all prepared in accordance with GAAP applied on a basis  consistent
with prior  practices,  and in reasonable  detail and  satisfactory to Agent. In
addition,  the reports shall be accompanied by a certificate of Borrower's Chief
Financial Officer which shall state that, based on an examination  sufficient to
permit him to make an informed statement, no Default or Event of Default exists,
or, if such is not the case,  specifying  such Default or Event of Default,  its
nature, when it occurred,  whether 

<PAGE>

it is  continuing  and the steps being taken by  Borrower  with  respect to such
event, and such certificate shall have appended thereto  calculations  which set
forth  Borrower's  compliance with the  requirements or restrictions  imposed by
Sections 6.5, 7.6 and 7.11 hereof.

      9.8. Quarterly Financial Statements.  Furnish Agent within forty-five (45)
days  after  the end of each  fiscal  quarter,  an  unaudited  balance  sheet of
Borrower on a consolidated and consolidating  basis and unaudited  statements of
income and stockholders'  equity and cash flow of Borrower on a consolidated and
consolidating  basis reflecting  results of operations from the beginning of the
fiscal year to the end of such quarter and for such quarter, prepared on a basis
consistent  with prior  practices  and  complete  and  correct  in all  material
respects,  subject  to  normal  year  end  adjustments.  The  reports  shall  be
accompanied by a certificate  signed by the Chief Financial Officer of Borrower,
which shall state that, based on an examination sufficient to permit him to make
an informed statement, no Default or Event of Default exists, or, if such is not
the case,  specifying  such  Default or Event of Default,  its  nature,  when it
occurred,  whether it is  continuing  and the steps being taken by Borrower with
respect to such  default  and,  such  certificate  shall have  appended  thereto
calculations  which set forth  Borrower's  compliance  with the  requirements or
restrictions imposed by Sections 6.5, 7.6 and 7.11 hereof.

      9.9. Monthly Financial  Statements.  Furnish Agent within thirty (30) days
after  the end of each  month,  an  unaudited  balance  sheet of  Borrower  on a
consolidated  and  consolidating  basis and  unaudited  statements of income and
stockholders'   equity  and  cash  flow  of  Borrower  on  a  consolidated   and
consolidating  basis reflecting  results of operations from the beginning of the
fiscal  year to the end of such month and for such  month,  prepared  on a basis
consistent  with prior  practices  and  complete  and  correct  in all  material
respects,  subject  to  normal  year  end  adjustments.  The  reports  shall  be
accompanied by a certificate of Borrower's Chief Financial  Officer of Borrower,
which shall state that, based on an examination sufficient to permit him to make
an informed statement, no Default or Event of Default exists, or, if such is not
the case,  specifying  such  Default or Event of Default,  its  nature,  when it
occurred,  whether it is  continuing  and the steps being taken by Borrower with
respect  to such  event  and,  such  certificate  shall  have  appended  thereto
calculations  which set forth  Borrower's  compliance  with the  requirements or
restrictions imposed by Sections 6.5, 7.6 and 7.11 hereof.

      9.10. Other Reports.  Furnish Agent as soon as available, but in any event
within  ten (10)  days  after  the  issuance  thereof,  (i) with  copies of such
financial  statements,  reports  and  returns  as  Borrower  shall  send  to its
stockholders and (ii) copies of all notices sent pursuant to the Indenture.

      9.11.   Additional   Information.   Furnish  Agent  with  such  additional
information  as Agent  shall  reasonably  request  in order to  enable  Agent to
determine  whether  the terms,  covenants,  provisions  and  conditions  of this
Agreement and the Note have been complied  with by Borrower  including,  without
limitation and without the necessity of any request by Agent,  (a) copies of all
environmental  audits and reviews,  (b) at least thirty (30) days prior thereto,
notice  of  Borrower's  opening  of any new  office  or  place  of  business  or
Borrower's closing of any existing office or place of business, and (c) promptly
upon  Borrower's  learning  thereof,  notice of any labor  dispute  to which any
Borrower  may become a party,  any  strikes or  walkouts  relating to any of its
plants or other  facilities,  and the  expiration of any labor contract to which
Borrower is a party or by which Borrower is bound.

      9.12. Projected Operating Budget. Furnish Agent, no later than thirty (30)
days prior to the  beginning of each  Borrower's  fiscal years  commencing  with
fiscal year 1999, a month by month projected  operating  budget and cash flow of
Borrower  on a  consolidated  and  consolidating  basis  for  such  fiscal  year
(including an income  statement and cash flow for each month and a balance sheet
as at the end of the last month in each fiscal quarter),  such projections to be
accompanied by a certificate  signed by the President or Chief Financial Officer
of Borrower to the effect that such  projections have been prepared on the basis
of sound financial planning practice  consistent with past budgets and financial
statements and that such officer has no reason to question the reasonableness of
any material assumptions on which such projections were prepared.

      9.13.  Variances From Operating Budget.  Furnish Agent,  concurrently with
the  delivery  of the  financial  statements  referred to in Section 9.7 and 9.8
hereof,  a written  report  summarizing  all  material  variances  from  budgets
submitted  by Borrower  pursuant to Section  9.12  hereof and a  discussion  and
analysis by management with respect to such variances.

<PAGE>

      9.14. Notice of Suits, Adverse Events. Furnish Agent with prompt notice of
(i) any lapse or other  termination  of any  Consent  issued to  Borrower by any
Governmental  Body or any other  Person  that is material  to the  operation  of
Borrower's  business,  (ii) any  refusal by any  Governmental  Body or any other
Person to renew or extend any such Consent;  and (iii) copies of any periodic or
special reports filed by Borrower with any Governmental  Body or Person, if such
reports  indicate any material  change in the business,  operations,  affairs or
condition of Borrower,  or if copies  thereof are requested by Lender,  and (iv)
copies of any material  notices and other  communications  from any Governmental
Body or Person which specifically relate to Borrower.

      9.15.  ERISA Notices and Requests.  Furnish Agent with  immediate  written
notice in the event  that (i)  Borrower  or any member of the  Controlled  Group
knows or has reason to know that a Termination Event has occurred, together with
a written  statement  describing such Termination  Event and the action, if any,
which  Borrower  or member of the  Controlled  Group has taken,  is  taking,  or
proposes to take with  respect  thereto  and,  when known,  any action  taken or
threatened  by the Internal  Revenue  Service,  Department of Labor or PBGC with
respect  thereto,  (ii) Borrower or any member of the Controlled  Group knows or
has reason to know that a prohibited  transaction (as defined in Sections 406 of
ERISA and 4975 of the  Code)  has  occurred  together  with a written  statement
describing  such  transaction and the action which Borrower or any member of the
Controlled  Group has taken, is taking or proposes to take with respect thereto,
(iii) a funding  waiver request has been filed with respect to any Plan together
with all  communications  received by  Borrower or any member of the  Controlled
Group with  respect to such  request,  (iv) any  increase in the benefits of any
existing  Plan or the  establishment  of any new  Plan  or the  commencement  of
contributions  to any Plan to which  Borrower  or any  member of the  Controlled
Group was not previously contributing shall occur, (v) Borrower or any member of
the  Controlled  Group  shall  receive  from the PBGC a notice of  intention  to
terminate a Plan or to have a trustee  appointed to administer a Plan,  together
with copies of each such notice,  (vi) Borrower or any member of the  Controlled
Group shall receive any favorable or unfavorable  determination  letter from the
Internal  Revenue Service  regarding the  qualification  of a Plan under Section
401(a) of the Code, together with copies of each such letter;  (vii) Borrower or
any  member  of the  Controlled  Group  shall  receive  a notice  regarding  the
imposition  of withdrawal  liability,  together with copies of each such notice;
(viii)  Borrower  or any  member of the  Controlled  Group  shall  fail to makea
required installment or any other required payment under Section 412 of the Code
on or before the due date for such installment or payment;  (ix) Borrower or any
member of the  Controlled  Group  knows that (a) a  Multiemployer  Plan has been
terminated,  (b) the  administrator  or plan  sponsor  of a  Multiemployer  Plan
intends to terminate a  Multiemployer  Plan,  or (c) the PBGC has  instituted or
will  institute   proceedings  under  Section  4042  of  ERISA  to  terminate  a
Multiemployer Plan.

      9.16.  Additional  Documents.  Execute and deliver to Agent, upon request,
such  documents  and  agreements  as Agent  may,  from time to time,  reasonably
request to carry out the purposes, terms or conditions of this Agreement.

X. EVENTS OF DEFAULT.

      The occurrence of any one or more of the following events shall constitute
an "Event of Default":

      10.1.  failure  by  Borrower  to pay  any  principal  or  interest  on the
Obligations when due, whether at maturity or by reason of acceleration  pursuant
to the terms of this  Agreement  or by  notice of  intention  to  prepay,  or by
required  prepayment or failure to pay any other  liabilities  or make any other
payment, fee or charge provided for herein when due or in any Other Document;

      10.2.  any  representation  or warranty made or deemed made by Borrower in
this  Agreement  or any related  agreement  or in any  certificate,  document or
financial or other  statement  furnished at any time in  connection  herewith or
therewith  shall prove to have been  misleading  in any material  respect on the
date when made or deemed to have been made;

      10.3. failure by Borrower to (i) furnish financial information when due or
when requested, or (ii) permit the inspection of its books or records;

<PAGE>

      10.4.  issuance  of a notice  of Lien,  levy,  assessment,  injunction  or
attachment against a material portion of any Borrower's property;

      10.5.  except as otherwise  provided for in Sections 10.1 and 10.3 hereof,
failure or neglect of Borrower to perform,  keep or observe any term, provision,
condition,  covenant  herein  contained,  or contained in any other agreement or
arrangement,  now or hereafter  entered  into between  Borrower and Agent or any
Lender;

      10.6.  any  judgment or  judgments  are  rendered or judgment  liens filed
against  Borrower  for an  aggregate  amount in excess of $250,000  which within
thirty (30) days of such rendering or filing is not either satisfied,  stayed or
discharged of record;

      10.7.  Borrower shall (i) apply for,  consent to or suffer the appointment
of, or the taking of possession by, a receiver,  custodian,  trustee, liquidator
or similar  fiduciary of itself or of all or a substantial part of its property,
(ii) make a general  assignment  for the benefit of creditors,  (iii) commence a
voluntary case under any state or federal  bankruptcy  laws (as now or hereafter
in effect),  (iv) be  adjudicated a bankrupt or  insolvent,  (v) file a petition
seeking to take  advantage of any other law providing for the relief of debtors,
(vi)  acquiesce  to, or fail to have  dismissed,  within  thirty (30) days,  any
petition filed against it in any involuntary case under such bankruptcy laws, or
(vii) take any action for the purpose of effecting any of the foregoing;

      10.8.  Borrower  shall admit in writing  its  inability,  or be  generally
unable,  to pay its debts as they become due or cease  operations of its present
business;

      10.9.  Warner  PLC,  any  Subsidiary  of  Warner  PLC,  including  without
limitation  Warner  Bermuda,  or any Subsidiary of Borrower shall (i) apply for,
consent  to or suffer the  appointment  of, or the  taking of  possession  by, a
receiver,  custodian,  trustee,  liquidator or similar fiduciary of itself or of
all or a substantial part of its property,  (ii) admit in writing its inability,
or be generally  unable, to pay its debts as they become due or cease operations
of its  present  business,  (iii) make a general  assignment  for the benefit of
creditors,  (iv) commence a voluntary case under any state or federal bankruptcy
laws  (as  now or  hereafter  in  effect),  (v) be  adjudicated  a  bankrupt  or
insolvent,  (vi) file a  petition  seeking  to take  advantage  of any other law
providing  for the  relief  of  debtors,  (vii)  acquiesce  to,  or fail to have
dismissed,  within  thirty  (30)  days,  any  petition  filed  against it in any
involuntary  case under such bankruptcy  laws, or (viii) take any action for the
purpose of effecting any of the foregoing;

      10.10.  any  change in  Borrower's  condition  or  affairs  (financial  or
otherwise) which in Agent's reasonable opinion has a Material Adverse Effect;

      10.11.  any Lien  created  hereunder  or provided  for hereby or under any
related  agreement  for any reason  ceases to be or is not a valid and perfected
Lien having a first priority interest;

      10.12.  an event of  default  has  occurred  and been  declared  under the
Indenture  which  default  shall  not have  been  cured  or  waived  within  any
applicable grace period;;

      10.13. a default of the  obligations of Borrower under any other agreement
to which it is a party shall occur which  reasonably could be expected to have a
Material  Adverse  Effect on its condition,  affairs or prospects  (financial or
otherwise) which default is not cured within any applicable grace period and the
aggregate  principal amount of such Indebtedness with respect to which a default
or an event of default has occurred, or the maturity of which is permitted to be
accelerated, exceeds $100,000;

      10.14.  termination or breach of the Warner PLC's Support Agreement or the
Warner Bermuda's  Guaranty or similar agreement  executed and delivered to Agent
in  connection  with the  Obligations  of  Borrower,  or if Warner PLC or Warner
Bermuda  attempts to terminate,  challenges the validity of, or their  liability
under, any such document or similar agreement;

<PAGE>

      10.15. any Change of Control shall occur;

      10.16.  any material  provision of this Agreement  shall,  for any reason,
cease to be valid and binding on Borrower, or Borrower shall so claim in writing
to Agent;

      10.17. (i) any Governmental Body shall (A) revoke,  terminate,  suspend or
adversely  modify  any  license,  permit,  patent  trademark  or  trade  name of
Borrower,  the  continuation  of  which  is  material  to  the  continuation  of
Borrower's business, or (B) commence proceedings to suspend,  revoke,  terminate
or adversely modify any such license,  permit,  trademark,  trade name or patent
and such  proceedings  shall not be  dismissed or  discharged  within sixty (60)
days,  or (c)  schedule  or  conduct a hearing on the  renewal  of any  license,
permit,  trademark,  trade  name or patent  necessary  for the  continuation  of
Borrower's  business  and the staff of such  Governmental  Body  issues a report
recommending  the  termination,   revocation,  suspension  or  material  adverse
modification of such license, permit, trademark,  trade name or patent; (ii) any
agreement which is necessary or material to the operation of Borrower's business
shall be revoked or  terminated  and not replaced by a substitute  acceptable to
Agent within thirty (30) days after the date of such  revocation or termination,
and such  revocation or termination and  non-replacement  contemplated by clause
(i) or (ii)  of this  Section  10.17  would  reasonably  be  expected  to have a
Material Adverse Effect on Borrower;

      10.18.  any  portion  of the  Collateral  shall  be  seized  or taken by a
Governmental  Body,  or  Borrower  or the title and  rights of  Borrower  or any
Original  Owner  which is the owner of any  material  portion of the  Collateral
shall have become the subject matter of litigation  which might,  in the opinion
of Agent, upon final determination, result in impairment or loss of the security
provided by this Agreement or the Other Documents;

      10.19. the operations of Borrower's  facilities,  whether owned, leased or
operated by third parties,  are interrupted at any time for more than any period
of seven (7) consecutive  days, unless Borrower shall (i) be entitled to receive
for such period of  interruption,  proceeds of business  interruption  insurance
sufficient to assure that its per diem cash needs during such period is at least
equal to its average per diem cash needs for the consecutive  three month period
immediately  preceding  the initial date of  interruption  and (ii) receive such
proceeds in the amount  described in clause (i)  preceding not later than thirty
(30)  days  following  the  initial  date of any  such  interruption;  provided,
however,  that  notwithstanding  the  provisions of clauses (i) and (ii) of this
section,  an Event of Default  shall be deemed to have occurred if such Borrower
shall be receiving the proceeds of business interruption  insurance for a period
of thirty (30) consecutive days; or

      10.20.  an event or condition  specified  in Sections  7.16 or 9.15 hereof
shall occur or exist with  respect to any Plan and, as a result of such event or
condition,  together with all other such events or  conditions,  Borrower or any
member of the  Controlled  Group  shall  incur,  or in the  opinion  of Agent be
reasonably  likely to incur,  a liability to a Plan or the PBGC (or both) which,
in the  reasonable  judgment of Agent,  would have a Material  Adverse Effect on
Borrower.

XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.

      11.1. Rights and Remedies.  Upon the occurrence of (i) an Event of Default
pursuant to Section 10.7 all  Obligations  shall be immediately  due and payable
and this  Agreement  and the  obligation  of Lenders to make  Advances  shall be
deemed terminated;  and, (ii) any of the other Events of Default and at any time
thereafter  (such default not having  previously  been cured),  at the option of
Required  Lenders  all  Obligations  shall be  immediately  due and  payable and
Lenders  shall have the right to terminate  this  Agreement and to terminate the
obligation of Lenders to make Advances and (iii) a filing of a petition  against
Borrower in any involuntary case under any state or federal bankruptcy laws, the
obligation of Lenders to make Advances  hereunder shall be terminated other than
as may be  required  by an  appropriate  order of the  bankruptcy  court  having
jurisdiction over Borrower.  Upon the occurrence of any Event of Default,  Agent
shall have the right to exercise any and all other rights and remedies  provided
for herein,  under the Uniform  Commercial Code and at law or equity  generally,
including,  without  limitation,  the right to foreclose the security  interests
granted  herein and to realize upon any  Collateral  by any  available  judicial
procedure  and/or to take  possession  of and sell any or all of the  Collateral
with or without judicial process.  Agent may enter any of Borrower's premises or
other premises without legal process and without incurring 

<PAGE>

liability  to  Borrower  therefor,  and  Agent  may  thereupon,  or at any  time
thereafter,  in its discretion without notice or demand, take the Collateral and
remove the same to such place as Agent may deem  advisable and Agent may require
Borrower to make the Collateral  available to Agent at a convenient  place. With
or without  having the  Collateral at the time or place of sale,  Agent may sell
the Collateral,  or any part thereof,  at public or private sale, at any time or
place,  in one or more  sales,  at such  price or prices,  and upon such  terms,
either for cash, credit or future delivery, as Agent may elect. Excet as to that
part of the Collateral  which is perishable or threatens to decline  speedily in
value or is of a type customarily sold on a recognized market,  Agent shall give
Borrower reasonable  notification of such sale or sales, it being agreed that in
all events  written  notice  mailed to  Borrower at least five (5) days prior to
such sale or sales is reasonable  notification.  At any public sale Agent or any
Lender may bid for and become the purchaser,  and Agent, any Lender or any other
purchaser at any such sale thereafter  shall hold the Collateral sold absolutely
free  from any  claim or right of  whatsoever  kind,  including  any  equity  of
redemption and such right and equity are hereby expressly waived and released by
Borrower.  In connection with the exercise of the foregoing  remedies,  Agent is
granted  permission to use all of  Borrower's  trademarks,  trade styles,  trade
names, patents, patent applications,  licenses, franchises and other proprietary
rights  which are used in  connection  with (a)  Inventory  for the  purpose  of
disposing of such  Inventory and (b) Equipment for the purpose of completing the
manufacture  of  unfinished  goods.  The proceeds  realized from the sale of any
Collateral shall be applied as follows: first, to the reasonable costs, expenses
and  attorneys'  fees and  expenses  incurred  by Agent for  collection  and for
acquisition,  completion, protection, removal, storage, sale and delivery of the
Collateral;  second,  to interest due upon any of the  Obligations  and any fees
payable under this Agreement;  and, third, to the principal of the  Obligations.
If any deficiency shall arise, Borrower shall remain liable to Agent and Lenders
therefore.

      11.2.  Agent's  Discretion.  Agent  shall  have  the  right  in  its  sole
discretion to determine  which  rights,  Liens,  security  interests or remedies
Agent may at any time pursue, relinquish,  subordinate, or modify or to take any
other action with  respect  thereto and such  determination  will not in any way
modify or affect any of Agent's or Lenders' rights hereunder.

      11.3.  Setoff.  In addition to any other  rights which Agent or any Lender
may have  under  applicable  law,  upon the  occurrence  of an Event of  Default
hereunder, Agent and such Lender shall have a right to apply Borrower's property
held by Agent and such Lender to reduce the Obligations.

      11.4. Rights and Remedies not Exclusive.  The enumeration of the foregoing
rights and  remedies is not  intended to be  exhaustive  and the exercise of any
right or remedy  shall not  preclude the exercise of any other right or remedies
provided  for  herein  or  otherwise  provided  by law,  all of  which  shall be
cumulative and not alternative.

XII. WAIVERS AND JUDICIAL PROCEEDINGS.

      12.1.  Waiver of Notice.  Borrower  hereby waives notice of non-payment of
any of the  Receivables,  demand,  presentment,  protest and notice thereof with
respect to any and all instruments, notice of acceptance hereof, notice of loans
or advances made,  credit  extended,  Collateral  received or delivered,  or any
other action taken in reliance hereon,  and all other demands and notices of any
description, except such as are expressly provided for herein.

      12.2.  Delay.  No delay or  omission  on Agent's or any  Lender's  part in
exercising any right,  remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.

      12.3. Jury Waiver.  EACH PARTY TO THIS AGREEMENT  HEREBY  EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,  DEMAND,  ACTION OR CAUSE OF ACTION (A)
ARISING  UNDER THIS  AGREEMENT  OR ANY OTHER  INSTRUMENT,  DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION  HEREWITH,  OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR  INCIDENTAL  TO THE DEALINGS OF THE PARTIES  HERETO OR ANY OF THEM
WITH RESPECT TO THIS  AGREEMENT OR ANY OTHER  INSTRUMENT,  DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER  ARISING,  AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE  

<PAGE>

AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM,  DEMAND,  ACTION OR CAUSE OF
ACTION  SHALL BE DECIDED BY COURT  TRIAL  WITHOUT A JURY,  AND THAT ANY PARTY TO
THIS  AGREEMENT MAY FILE AN ORIGINAL  COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN  EVIDENCE  OF THE  CONSENTS  OF THE  PARTIES  HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

XIII. EFFECTIVE DATE AND TERMINATION.

      13.1. Term. This Agreement,  which shall inure to the benefit of and shall
be binding upon the  respective  successors  and permitted  assigns of Borrower,
Agent and each  Lender,  shall  become  effective  on the date  hereof and shall
continue  in full force and effect  until  March __,  2001 (the  "Term")  unless
sooner  terminated as herein provided.  Borrower may terminate this Agreement at
any time upon ninety (90) days' prior written notice upon payment in full of the
Obligations.  In the event the Obligations are prepaid in full prior to the last
day of the Term  (the date of such  prepayment  hereinafter  referred  to as the
"Early  Termination  Date"),  Borrowers  shall pay to Agent for the  benefit  of
Lenders an early termination fee in an amount equal to (x) $300,000 if the Early
Termination  Date occurs on or after the Closing Date to and  including the date
immediately  preceding  the  first  anniversary  of the  Closing  Date,  and (y)
$225,000 if the Early  Termination Date occurs on or after the first anniversary
of the Closing Date to and including the date  immediately  preceding the second
anniversary of the Closing Date.

      13.2.  Termination.  The  termination  of the  Agreement  shall not affect
Borrower's,  Agent's or any Lender's  rights,  or any of the Obligations  having
their  inception  prior  to the  effective  date  of such  termination,  and the
provisions  hereof shall continue to be fully operative  until all  transactions
entered  into,  rights or  interests  created  or  Obligations  have been  fully
disposed of, concluded or liquidated.  The security interests,  Liens and rights
granted  to Agent and  Lenders  hereunder  and the  financing  statements  filed
hereunder  shall  continue  in  full  force  and  effect,   notwithstanding  the
termination of this Agreement or the fact that Borrower's  Account may from time
to  time  be  temporarily  in a  zero  or  credit  position,  until  all  of the
Obligations  of  Borrower  have  been  paid  or  performed  in  full  after  the
termination of this  Agreement or Borrower has furnished  Agent and Lenders with
an  indemnification  satisfactory  to Agent and Lenders  with  respect  thereto.
Accordingly, Borrower waives any rights which it may have under Section 9-404(1)
of the Uniform  Commercial  Code to demand the filing of termination  statements
with  respect to the  Collateral,  and Agent  shall not be required to send such
termination  statements  to  Borrower,  or to file them with any filing  office,
unless and until this Agreement  shall have been  terminated in accordance  with
its terms and all Obligations  paid in full in immediately  available funds. All
representations,  warranties, covenants, waivers and agreements contained herein
shall survive  termination hereof until all Obligations are paid or performed in
full.

XIV. REGARDING AGENT.

      14.1.  Appointment.  Each Lender hereby designates PNC to act as Agent for
such Lender under this  Agreement  and the Other  Documents.  Each Lender hereby
irrevocably  authorizes  Agent to take  such  action  on its  behalf  under  the
provisions of this Agreement and the Other Documents and to exercise such powers
and to  perform  such  duties  hereunder  and  thereunder  as  are  specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal and  interest,  fees (except the fees set forth in Section
3.2(a) charges and collections  (without  giving effect to any collection  days)
received pursuant to this Agreement,  for the ratable benefit of Lenders.  Agent
may perform any of its duties  hereunder by or through its agents or  employees.
As to any  matters  not  expressly  provided  for by this  Agreement  (including
without  limitation,  collection  of the Note)  Agent  shall not be  required to
exercise any  discretion or take any action,  but shall be required to act or to
refrain  from acting (and shall be fully  protected  in so acting or  refraining
from  acting)  upon  the  instructions  of  the  Required   Lenders,   and  such
instructions  shall be  binding;  provided,  however,  that  Agent  shall not be
required  to take  any  action  which  exposes  Agent to  liability  or which is
contrary to this Agreement or the Other Documents or applicable law unless Agent
is  furnished  with an  indemnification  reasonably  satisfactory  to Agent with
respect thereto.

<PAGE>

      14.2.  Nature of Duties.  Agent  shall have no duties or  responsibilities
except those  expressly  set forth in this  Agreement  and the Other  Documents.
Neither Agent nor any of its officers,  directors,  employees or agents shall be
(i)  liable for any action  taken or  omitted  by them as such  hereunder  or in
connection  herewith,  unless  caused by their  gross (not mere)  negligence  or
willful  misconduct,  or  (ii)  responsible  in any  manner  for  any  recitals,
statements,  representations  or  warranties  made by  Borrower  or any  officer
thereof contained in this Agreement,  or in any of the Other Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection  with,  this Agreement or any of the
Other  Documents  or  for  the  value,  validity,  effectiveness,   genuineness,
enforceability  or sufficiency of this Agreement,  or any of the Other Documents
or for any failure of Borrower to perform its obligations hereunder. Agent shall
not be under any  obligation  to any Lender to ascertain or to inquire as to the
observance or performance  of any of the agreements  contained in, or conditions
of, this Agreement or any of the Other Documents,  or to inspect the properties,
books or records of  Borrower.  The duties of Agent as respects  the Advances to
Borrower shall be mechanical and administrative in nature;  Agent shall not have
by reason of this Agreement a fiduciary  relationship  in respect of any Lender;
and nothing in this Agreement,  expressed or implied, is intended to or shall be
so  construed  as to  impose  upon  Agent any  obligations  in  respect  of this
Agreement except as expressly set forth herein.

      14.3. Lack of Reliance on Agent and Resignation. Independently and without
reliance upon Agent or any other Lender, each Lender has made and shall continue
to make (i) its own  independent  investigation  of the financial  condition and
affairs of Borrower in  connection  with the making and the  continuance  of the
Advances  hereunder  and the taking or not  taking of any  action in  connection
herewith, and (ii) its own appraisal of the creditworthiness of Borrower.  Agent
shall have no duty or responsibility, either initially or on a continuing basis,
to provide any Lender with any credit or other information with respect thereto,
whether coming into its possession  before making of the Advances or at any time
or times  thereafter  except as shall be provided  by  Borrower  pursuant to the
terms  hereof.  Agent shall not be  responsible  to any Lender for any recitals,
statements,  information,   representations  or  warranties  herein  or  in  any
agreement,  document, certificate or a statement delivered in connection with or
for  the  execution,   effectiveness,   genuineness,  validity,  enforceability,
collectibility or sufficiency of this Agreement or any Other Document, or of the
financial  condition of Borrower,  or be required to make any inquiry concerning
either  the  performance  or  observance  of  any of the  terms,  provisions  or
conditions of this  Agreement,  the Note,  the Other  Documents or the financial
condition of Borrower, or the existence of any Event of Default or any Default.

      Agent may resign on sixty (60) days' written notice to each of Lenders and
Borrower and upon such resignation, the Required Lenders will promptly designate
a successor Agent  reasonably  satisfactory  to Borrower.  In the event that the
Required  Lenders are unable to designate a successor  agent within  thirty (30)
days of receipt of the notice set forth above,  the Agent shall so designate the
successor agent.

      Any such successor Agent shall succeed to the rights, powers and duties of
Agent,  and the term "Agent" shall mean such successor  agent effective upon its
appointment,  and the former Agent's rights, powers and duties as Agent shall be
terminated,  without any other or further act or deed on the part of such former
Agent.  After any Agent's  resignation as Agent,  the provisions of this Article
XIV shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement.

      14.4.  Certain Rights of Agent. If Agent shall request  instructions  from
Lenders  with  respect  to any  act or  action  (including  failure  to  act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain  from such act or taking such  action  unless and until Agent shall have
received  instructions  from the  Required  Lenders;  and Agent  shall not incur
liability  to any  Person by  reason  of so  refraining.  Without  limiting  the
foregoing,  Lenders shall not have any right of action whatsoever  against Agent
as a result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.

      14.5.  Reliance.  Agent  shall be  entitled  to rely,  and  shall be fully
protected in relying,  upon any note, writing,  resolution,  notice,  statement,
certificate,  telex, teletype or telecopier message,  cablegram,  order or other
document or  telephone  message  believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters  pertaining to this  Agreement and the Other  Documents and
its duties  hereunder,  

<PAGE>

upon  advice  of  counsel   selected  by  it.   Agent  may  employ   agents  and
attorneys-in-fact  and shall not be liable for the default or  misconduct of any
such agents or attorneys-in-fact selected by Agent with reasonable care.

      14.6.  Notice of Default.  Agent shall not be deemed to have  knowledge or
notice of the  occurrence of any Default or Event of Default  hereunder or under
the Other Documents,  unless Agent has received notice from a Lender or Borrower
referring to this Agreement or the Other  Documents,  describing such Default or
Event of Default and stating that such notice is a "notice of  default".  In the
event that Agent  receives  such a notice,  Agent shall give  notice  thereof to
Lenders.  Agent shall take such action with  respect to such Default or Event of
Default as shall be reasonably directed by the Required Lenders; provided, that,
unless and until Agent shall have received such directions, Agent may (but shall
not be obligated to) take such action, or refrain from taking such action,  with
respect to such  Default or Event of Default as it shall deem  advisable  in the
best interests of Lenders.

      14.7.  Indemnification.   To  the  extent  Agent  is  not  reimbursed  and
indemnified  by Borrower,  each Lender will  reimburse  and  indemnify  Agent in
proportion  to its  respective  portion of the Advances  (or, if no Advances are
outstanding,  according to its Commitment Percentage),  from and against any and
all liabilities,  obligations,  losses, damages, penalties,  actions, judgments,
suits,  costs,  expenses or disbursements of any kind or nature whatsoever which
may be imposed on,  incurred  by or asserted  against  Agent in  performing  its
duties hereunder,  or in any way relating to or arising out of this Agreement or
any Other Document;  provided that,  Lenders shall not be liable for any portion
of  such  liabilities,   obligations,   losses,  damages,  penalties,   actions,
judgments,  suits, costs, expenses or disbursements resulting from Agent's gross
(not mere) negligence or willful misconduct.

      14.8. Agent in its Individual Capacity.  With respect to the obligation of
Agent to lend under this Agreement,  the Advances made by it shall have the same
rights and powers hereunder as any other Lender and as if it were not performing
the duties as Agent specified herein;  and the term "Lender" or any similar term
shall,  unless the context  clearly  otherwise  indicates,  include Agent in its
individual  capacity as a Lender.  Agent may engage in business with Borrower as
if it were not performing the duties specified  herein,  and may accept fees and
other consideration from Borrower for services in connection with this Agreement
or otherwise without having to account for the same to Lenders.

      14.9.  Delivery  of  Documents.  To the extent  Agent  receives  financial
statements  required under Sections 9.7, 9.8, and 9.9 from Borrower  pursuant to
the terms of this  Agreement,  Agent will  promptly  furnish such  documents and
information to Lenders.

      14.10.   Borrower's   Undertaking  to  Agent.  Without  prejudice  to  its
respective  obligations to Lenders under the other provisions of this Agreement,
Borrower  hereby  undertakes  with  Agent to pay to Agent  from  time to time on
demand all  amounts  from time to time due and  payable by it for the account of
Agent or Lenders or any of them  pursuant  to this  Agreement  to the extent not
already  paid.  Any payment  made  pursuant  to any such demand  shall pro tanto
satisfy the relevant Borrower's  obligations to make payments for the account of
Lenders or the relevant one or more of them pursuant to this Agreement.

<PAGE>

XV. MISCELLANEOUS.

      15.1.  Governing Law. This Agreement shall be governed by and construed in
accordance  with the laws of the State of New Jersey  applied to contracts to be
performed wholly within the State of New Jersey. Any judicial proceeding brought
by or against Borrower with respect to any of the Obligations, this Agreement or
any related  agreement may be brought in any court of competent  jurisdiction in
the State of New  Jersey,  United  States of  America,  and,  by  execution  and
delivery of this Agreement,  Borrower  accepts for itself and in connection with
its properties, generally and unconditionally, the non-exclusive jurisdiction of
the  aforesaid  courts,  and  irrevocably  agrees  to be bound  by any  judgment
rendered  thereby in  connection  with this  Agreement.  Borrower  hereby waives
personal  service  of any and all  process  upon it and  consents  that all such
service of process may be made by  registered  mail (return  receipt  requested)
directed to  Borrower  at its  address set forth in Section  15.6 and service so
made shall be deemed  completed  five (5) days after the same shall have been so
deposited  in the mails of the United  States of America.  Nothing  herein shall
affect the right to serve process in any manner  permitted by law or shall limit
the right of Agent or any Lender to bring  proceedings  against  Borrower in the
courts of any other jurisdiction.  Borrower waives any objection to jurisdiction
and venue of any action  instituted  hereunder  and shall not assert any defense
based on lack of jurisdiction  or venue or based upon forum non conveniens.  Any
judicial proceeding by Borrower against Agent or any Lender involving,  directly
or  indirectly,  any matter or claim in any way  arising  out of,  related to or
connected with this Agreement or any related agreement, shall be brought only in
a federal  or state  court  located  in the  County of  Middlesex,  State of New
Jersey.

      15.2. Entire Understanding.  (a) This Agreement and the documents executed
concurrently herewith contain the entire understanding  between Borrower,  Agent
and each Lender and supersedes all prior agreements and understandings,  if any,
relating to the subject matter hereof. Any promises, representations, warranties
or guarantees not herein  contained and hereinafter made shall have no force and
effect  unless in  writing,  signed by  Borrower's,  Agent's  and each  Lender's
respective officers. Neither this Agreement nor any portion or provisions hereof
may be changed, modified, amended, waived, supplemented, discharged, canceled or
terminated orally or by any course of dealing, or in any manner other than by an
agreement in writing,  signed by the party to be charged.  Borrower acknowledges
that it has been  advised by counsel in  connection  with the  execution of this
Agreement and Other  Documents and is not relying upon oral  representations  or
statements inconsistent with the terms and provisions of this Agreement.

      (b) The  Required  Lenders,  Agent  with the  consent  in  writing  of the
Required  Lenders,  and Borrower may,  subject to the provisions of this Section
15.2 (b), from time to time enter into written  supplemental  agreements to this
Agreement  or the Other  Documents  executed by  Borrower  or others,  including
specifically  the Financial  Support  Undertaking,  for the purpose of adding or
deleting any provisions or otherwise changing,  varying or waiving in any manner
the  rights  of  Lenders,  Agent  or  Borrower  thereunder  or  the  conditions,
provisions or terms thereof of waiving any Event of Default thereunder, but only
to the extent specified in such written agreements;  provided,  however, that no
such supplemental agreement shall, without the consent of all Lenders:

            (i) increase the Commitment Percentage of any Lender.

            (ii) extend the  maturity of any Note or the due date for any amount
      payable  hereunder,  or  decrease  the rate of  interest or reduce any fee
      payable by Borrower to Lenders pursuant to this Agreement.

            (iii) alter the  definition of the term  Required  Lenders or alter,
      amend or modify this Section 16.2(b).

            (iv) release any Collateral  during any calendar year (other than in
      accordance  with the  provisions  of this  Agreement)  having an aggregate
      value in excess of $1,000,000.

            (v) change the rights and duties of Agent.

            (vi) permit any Revolving  Advance to be made if after giving effect
      thereto the total of

<PAGE>

      Advances  outstanding  hereunder  would exceed the Formula Amount for more
      than thirty (30)  consecutive  Business Days or exceed one hundred and ten
      percent (110%) of the Formula Amount.

            (vii)  increase the Advance  Rates above the Advance Rates in effect
      on the Closing Date.

            (viii) increase the Maximum Revolving Advance Amount.

            (ix) Modify the definitions  contained  herein of the terms Eligible
      Inventory and Eligible Receivables.

Any such supplemental  agreement shall apply equally to each Lender and shall be
binding  upon  Borrower,  Lenders  and  Agent  and  all  future  holders  of the
Obligations.  In the case of any waiver,  Borrower,  Agent and Lenders  shall be
restored to their former  positions and rights,  and any Event of Default waived
shall be  deemed  to be cured and not  continuing,  but no waiver of a  specific
Event of Default shall extend to any subsequent Event of Default (whether or not
the  subsequent  Event of Default is the same as the Event of Default  which was
waived), or impair any right consequent thereon.

      In the event that Agent requests the consent of a Lender  pursuant to this
Section  15.2 and such  Lender  shall not  respond  or reply to Agent in writing
within five (5) days of receipt of such request,  such Lender shall be deemed to
have consented to matter that was the subject of the request.  In the event that
Agent  requests  the consent of a Lender  pursuant to this Section 15.2 and such
consent is denied,  then PNC may, at its option,  require  such Lender to assign
its interest in the Advances to PNC or to another  Lender or to any other Person
designated by the Agent (the "Designated Lender"), for a price equal to the then
outstanding  principal  amount thereof plus accrued and unpaid interest and fees
due such  Lender,  which  interest  and fees shall be paid when  collected  from
Borrower.  In the event PNC elects to require any Lender to assign its  interest
to PNC or to the  Designated  Lender,  PNC will so notify such Lender in writing
within forty five (45) days following such Lender's denial, and such Lender will
assign its interest to PNC or the Designated  Lender no later than five (5) days
following  receipt of such notice pursuant to a Commitment  Transfer  Supplement
executed by such Lender,  PNC or the  Designated  Lender,  as  appropriate,  and
Agent.

      15.3. Successors and Assigns; Participations; New Lenders.

      (a) This  Agreement  shall be  binding  upon and inure to the  benefit  of
Borrower,  Agent,  each Lender,  all future holders of the Obligations and their
respective  successors  and  assigns,  except  that  Borrower  may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of Agent and each Lender.

      (b) Borrower acknowledges that in the regular course of commercial banking
business  one or more  Lenders  may at any  time  and  from  time  to time  sell
participating  interests in the Advances to other financial  institutions  (each
such transferee or purchaser of a participating interest, a "Transferee").  Each
Transferee  may exercise  all rights of payment  (including  without  limitation
rights of set-off)  with respect to the portion of such  Advances  held by it or
other  Obligations  payable  hereunder as fully as if such  Transferee  were the
direct holder thereof provided that Borrower shall not be required to pay to any
Transferee  more than the  amount  which it would have been  required  to pay to
Lender which  granted an interest in its Advances or other  Obligations  payable
hereunder  to such  Transferee  had such Lender  retained  such  interest in the
Advances hereunder or other Obligations  payable hereunder and in no event shall
Borrower be required to pay any such amount arising from the same  circumstances
and with respect to the same Advances or other Obligations  payable hereunder to
both such Lender and such Transferee. Borrower hereby grants to any Transferee a
continuing security interest in any deposits,  moneys or other property actually
or  constructively  held by such  Transferee  as security  for the  Transferee's
interest in the Advances.

      (c)  Any  Lender  may  with  the  consent  of  Agent  which  shall  not be
unreasonably withheld or delayed sell, assign or transfer all or any part of its
rights under this  Agreement and the Other  Documents to one or more  additional
banks or financial  institutions  and one or more additional  banks or financial
institutions may commit to make Advances hereunder (each a "Purchasing Lender"),
in  minimum  amounts  of not less  than  $5,000,000,  pursuant  to a  Commitment
Transfer Supplement, executed by a Purchasing Lender, the transferor Lender, and
Agent and  delivered  to Agent for  recording.  Upon such  execution,  delivery,
acceptance and recording,  from and after the transfer effective date determined
pursuant  to  such  Commitment  Transfer   Supplement,   (i)  Purchasing  Lender
thereunder  shall  be a  party  hereto  and,  to the  extent  provided  in  such
Commitment  Transfer  Supplement,  have the rights and  obligations  of a Lender
thereunder with a

<PAGE>

Commitment  Percentage  as set forth  therein,  and (ii) the  transferor  Lender
thereunder shall, to the extent provided in such Commitment Transfer Supplement,
be released from its obligations under this Agreement,  the Commitment  Transfer
Supplement  creating a  novation  for that  purpose.  Such  Commitment  Transfer
Supplement  shall be deemed to amend this  Agreement to the extent,  and only to
the extent,  necessary to reflect the addition of such Purchasing Lender and the
resulting adjustment of the Commitment  Percentages arising from the purchase by
such Purchasing Lender of all or a portion of the rights and obligations of such
transferor Lender under this Agreement and the Other Documents.  Borrower hereby
consent to the addition of such Purchasing  Lender and the resulting  adjustment
of the  Commitment  Percentages  arising  from the  purchase by such  Purchasing
Lender of all or a portion  of the  rights and  obligations  of such  transferor
Lender under this Agreement and the Other Documents.  Borrower shall execute and
deliver such further  documents  and do such further acts and things in order to
effectuate the foregoing

      (d) Agent shall maintain at its address a copy of each Commitment Transfer
Supplement  delivered to it and a register (the  "Register") for the recordation
of the names and  addresses  of the  Advances  owing to each Lender from time to
time.  The  entries  in the  Register  shall be  conclusive,  in the  absence of
manifest error, and Borrower, Agent and Lenders may treat each Person whose name
is recorded in the Register as the owner of the Advance recorded therein for the
purposes of this  Agreement.  The Register  shall be available for inspection by
Borrower  or any  Lender  at any  reasonable  time  and from  time to time  upon
reasonable  prior  notice.  Agent  shall  receive a fee in the  amount of $2,500
payable by the  applicable  Purchasing  Lender upon the  effective  date of each
transfer or assignment to such Purchasing Lender.

      (e)  Borrower  authorize  each  Lender to disclose  to any  Transferee  or
Purchasing  Lender and any prospective  Transferee or Purchasing  Lender any and
all financial  information in such Lender's possession concerning Borrower which
has been  delivered to such Lender by or on behalf of Borrower  pursuant to this
Agreement or in connection with such Lender's credit evaluation of Borrower.

      15.4.  Application  of  Payments.  Agent  shall  have the  continuing  and
exclusive  right to apply or reverse  and  re-apply  any payment and any and all
proceeds of  Collateral  to any portion of the  Obligations.  To the extent that
Borrower makes a payment or Agent or any Lender receives any payment or proceeds
of the Collateral for Borrower's  benefit,  which are subsequently  invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee,  debtor in possession,  receiver,  custodian or any other party under
any bankruptcy law,  common law or equitable  cause,  then, to such extent,  the
Obligations  or part  thereof  intended  to be  satisfied  shall be revived  and
continue as if such payment or proceeds  had not been  received by Agent or such
Lender.

      15.5.  Indemnity.  Borrower shall indemnify Agent, each Lender and each of
their respective officers, directors,  Affiliates, employees and agents from and
against  any and  all  liabilities,  obligations,  losses,  damages,  penalties,
actions,  judgments,  suits,  costs,  expenses and  disbursements of any kind or
nature  whatsoever   (including,   without   limitation,   reasonable  fees  and
disbursements  of  counsel)  which may be imposed on,  incurred  by, or asserted
against  Agent or any  Lender in any  litigation,  proceeding  or  investigation
instituted or conducted by any  governmental  agency or  instrumentality  or any
other Person with respect to any aspect of, or any transaction  contemplated by,
or  referred  to in, or any  matter  related  to,  this  Agreement  or the Other
Documents,  whether or not Agent or any Lender is a party thereto, except to the
extent that any of the foregoing  arises out of the gross  negligence or willful
misconduct of the party being indemnified.

      15.6.  Notice. Any notice or request hereunder may be given to Borrower or
to Agent or any Lender at their respective  addresses set forth below or at such
other address as may  hereafter be specified in a notice  designated as a notice
of change of address under this Section.  Any notice or request  hereunder shall
be given  by (a)  hand  delivery,  (b)  overnight  courier,  (c)  registered  or
certified mail, return receipt  requested,  (d) telex or telegram,  subsequently
confirmed by registered or certified mail, or (e) telecopy to the number set out
below (or such other number as may hereafter be specified in a notice designated
as a notice of change of address) with  electronic  confirmation of its receipt.
Any  notice  or other  communication  required  or  permitted  pursuant  to this
Agreement shall be deemed given (a) when personally  delivered to any officer of
the party to whom it is addressed,  (b) on the earlier of actual receipt thereof
or three (3) days  following  posting  thereof by certified or registered  mail,
postage  prepaid,  or (c) upon actual receipt  thereof when sent by a recognized
overnight  delivery  service or (d) upon  actual  receipt  thereof  when sent by
telecopier  to the number set forth below with  electronic  confirmation  

<PAGE>

of its  receipt,  in each case  addressed to each party at its address set forth
below or at such other  address as has been  furnished  in writing by a party to
the other by like notice:

      (A)      If to Agent or        PNC Bank, National Association
               PNC at:               Two Tower Center Boulevard
                                     East Brunswick, New Jersey 08816
                                     Attention:  Michelle Stanley-Nurse, VP
                                     Telephone: 732-220-4337
                                     Telecopier: 732-220-4399

               with a copy to:       Wilentz, Goldman & Spitzer
                                     90 Woodbridge Center Drive
                                     Woodbridge, New Jersey 07095
                                     Attention:  Stuart A. Hoberman, Esq.
                                     Telephone:  732-855-6052
                                     Telecopier: 732-855-6117

      (B) If to a Lender other than Agent,  as specified on the signature  pages
hereof

      (C)      If to Borrower at:    Warner Chilcott, Inc.
                                     Rockaway 80 Corporate Center
                                     100 Enterprise Drive, Suite 280
                                     Rockaway, New Jersey 07866
                                     Attention: Paul Herendeen, CFO
                                     Telephone: 973-442-3246
                                     Telecopier: 973-442-3283

               with a copy to:       Cahill Gordon & Reindel
                                     80 Pine Street
                                     New York, New York 10005
                                     Attention: William M. Hartnett, Esq.
                                     Telephone: 212-701-3000
                                     Telecopier: 212-269-5420

      15.7.  Survival.  The obligations of Borrowers under Sections 2.2(f), 3.6,
3.7, 3.8, 4.19(h), 14.7 and 15.5 shall survive termination of this Agreement and
the Other Documents and payment in full of the Obligations.

      15.8.  Severability.  If any  part  of  this  Agreement  is  contrary  to,
prohibited  by, or deemed invalid under  applicable  laws or  regulations,  such
provision  shall be  inapplicable  and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.

      15.9.  Expenses.  All costs and expenses  including,  without  limitation,
reasonable  attorneys'  fees (including the allocated costs of in house counsel)
and disbursements  incurred by Agent, Agent on behalf of Lenders and Lenders (a)
in all efforts made to enforce payment of any Obligation or effect collection of
any  Collateral,  or (b) in  connection  with the entering  into,  modification,
amendment,  administration  and enforcement of this Agreement or any consents or
waivers hereunder and all related agreements,  documents and instruments, or (c)
in instituting,  maintaining,  preserving,  enforcing and foreclosing on Agent's
security interest in or Lien on any of the Collateral,  whether through judicial
proceedings  or  otherwise,  or (d) in defending or  prosecuting  any actions or
proceedings  arising out of or relating to Agent's or any Lender's  transactions
with Borrower, or (e) in connection with any advice given to Agent or any Lender
with respect to its rights and obligations  under this Agreement and all related
agreements,  may be  charged  to  Borrower's  Account  and  shall be part of the
Obligations.

<PAGE>

      15.10.  Injunctive Relief. Borrower recognizes that, in the event Borrower
fails to perform,  observe or discharge any of its  obligations  or  liabilities
under this  Agreement,  any remedy at law may prove to be  inadequate  relief to
Lenders;  therefore, Agent, if Agent so requests, shall be entitled to temporary
and  permanent  injunctive  relief in any such case  without  the  necessity  of
proving that actual damages are not an adequate remedy.

      15.11.  Consequential Damages. Neither Agent nor any Lender, nor any agent
or  attorney  for any of them,  shall be liable to  Borrower  for  consequential
damages arising from any breach of contract, tort or other wrong relating to the
establishment, administration or collection of the Obligations.

      15.12.  Captions.  The captions at various  places in this  Agreement  are
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.

      15.13. Counterparts; Telecopied Signatures. This Agreement may be executed
in any number of and by different parties hereto on separate  counterparts,  all
of  which,  when so  executed,  shall  be  deemed  an  original,  but  all  such
counterparts  shall  constitute  one  and  the  same  agreement.  Any  signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.

      15.14.  Construction.  The  parties  acknowledge  that each  party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any  ambiguities  are to be resolved  against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.

      15.15.  Confidentiality;  Sharing Information.  (a) Agent, each Lender and
each Transferee shall hold all non-public  information  obtained by Agent,  such
Lender or such  Transferee  pursuant to the  requirements  of this  Agreement in
accordance  with  Agent's,   such  Lender's  and  such  Transferee's   customary
procedures  for handling  confidential  information  of this  nature;  provided,
however,  Agent,  each Lender and each Transferee may disclose such confidential
information  (a) to its examiners,  affiliates,  outside  auditors,  counsel and
other  professional  advisors,  (b) to Agent,  any Lender or to any  prospective
Transferees  and  Purchasing  Lenders,  and (c) as required or  requested by any
Governmental  Body or  representative  thereof  or  pursuant  to legal  process;
provided,  further that (i) unless specifically  prohibited by applicable law or
court order,  Agent,  each Lender and each Transferee shall use its best efforts
prior to disclosure  thereof,  to notify the Borrower of the applicable  request
for disclosure of such  non-public  information  (A) by a  Governmental  Body or
representative  thereof  (other  than any such  request  in  connection  with an
examination  of the  financial  condition  of a Lender or a  Transferee  by such
Governmental  Body) or (B) pursuant to legal  process and (ii) in no event shall
Agent,  any  Lender or any  Transferee  be  obligated  to return  any  materials
furnished by Borrower other than those  documents and  instruments in possession
of Agent or any Lender in order to perfect its Lien on the  Collateral  once the
Obligations have been paid in full and this Agreement has been terminated.

      (b)  Borrower  acknowledges  that  from time to time  financial  advisory,
investment  banking and other services may be offered or provided to Borrower or
one or more of its Affiliates  (in connection  with this Agreement or otherwise)
by any Lender or by one or more  Subsidiaries  or  Affiliates of such Lender and
Borrower hereby  authorizes  each Lender to share any  information  delivered to
such Lender by Borrower and its Subsidiaries  pursuant to this Agreement,  or in
connection with the decision of such Lender to enter into this Agreement, to any
such Subsidiary or Affiliate of such Lender,  it being  understood that any such
Subsidiary or Affiliate of any Lender receiving such information  shall be bound
by the  provision  of  Section  15.15  as if it were a  Lender  hereunder.  Such
authorization  shall  survive the  repayment  of the other  Obligations  and the
termination of the Loan Agreement.

      15.16. Publicity. Borrower and each Lender hereby authorizes Agent to make
appropriate  announcements  of the  financial  arrangement  entered  into  among
Borrower, Agent and Lenders, including, without limitation,  announcements which
are commonly  known as  tombstones,  in such  publications  and to such selected
parties as Agent shall in its sole and absolute discretion deem appropriate.

      Each of the parties has signed this Agreement as of the day and year first
above written.

<PAGE>

                                        WARNER CHILCOTT, INC.

ATTEST:

                                        /s/Roger M. Boissonneault
                                        -------------------------------------
                                        Name:  ROGER M. BOISSONNEAULT
/s/Paul S. Herendeen                    Title  President
- - -------------------------------
Name: PAUL S. HERENDEEN
Title: Executive Vice President/Secretary
[SEAL]

                                        PNC BANK, NATIONAL ASSOCIATION, 
                                        as Lender and as Agent

                                        /s/David L. Raphaels
                                        -------------------------------------
                                        Name:  DAVID L. RAPHAELS
                                        Title: Vice President
                                        Two Tower Center Boulevard
                                        East Brunswick, New Jersey 08816

                                        Commitment Percentage: 53.333%

                                        BANKAMERICA BUSINESS CREDIT INC.

                                        /s/Ernest Pelli
                                        -------------------------------------
                                        Name:  ERNEST PELLI
                                        Title: Vice President
                                        40 East 52nd Street/2nd Floor
                                        New York, New York 10022

                                        Commitment Percentage: 46.667%



                          FINANCIAL SUPPORT UNDERTAKING

      THIS FINANCIAL  SUPPORT  UNDERTAKING  (the  "Undertaking")  made by WARNER
CHILCOTT  PUBLIC  LIMITED  COMPANY  ("Warner  PLC"),  a public  limited  company
incorporated  under the laws of  Ireland,  having an office at 345 Park  Avenue,
Eighth Floor, New York, New York 10154, and by Warner Chilcott (Bermuda) Limited
("Warner Bermuda"),  an exempted company incorporated under the laws of Bermuda,
having an address at P. O. Box HM1022,  Hamilton  HMDX  Bermuda  (Warner PLC and
Warner  Bermuda shall  hereinafter be referred to  collectively  as "Warner") in
favor  of  PNC  BANK,  NATIONAL  ASSOCIATION,  a  national  banking  association
organized  under the laws of the United States,  having an office located at Two
Tower Center  Boulevard,  East  Brunswick,  New Jersey  08816,  as Agent for the
Lenders under the Loan Agreement (as such terms are hereinafter defined).

                              W I T N E S S E T H:

      WHEREAS,  pursuant to a certain  Revolving  Credit and Security  Agreement
dated of even date  herewith by and between  Warner  Chilcott,  Inc., a Delaware
corporation (the  "Borrower"),  PNC Bank,  National  Association and one or more
financial  institutions  named therein or which hereafter become a party thereto
(together with PNC Bank, National Association,  collectively, the "Lenders") and
PNC Bank, National  Association as the agent for the Lenders (PNC Bank, National
Association in such capacity,  the "Agent") (as such may be amended from time to
time, the "Loan  Agreement"),  the Lenders have agreed to make certain Revolving
Advances to the Borrower; and

      WHEREAS,  as a condition precedent to the making of the Revolving Advances
by the Lenders to the  Borrower,  Warner has agreed to  financially  support the
operations  of  the  Borrower  in  accordance   with  the   provisions  of  this
Undertaking; and

      WHEREAS,  the  Borrower  is a wholly  owned  subsidiary  of Warner PLC and
Warner  PLC  and  Warner  Bermuda  will  derive   benefits  from  the  financial
accommodations  being accorded the Borrower by the Lenders pursuant to the terms
of the Loan Agreement.

      NOW,  THEREFORE,  in  consideration of the premises and in order to induce
the Lenders to make and/or continue to make the Revolving Advances (as each such
term is defined in the Loan  Agreement),  and in  consideration of the Revolving
Advances made pursuant to the terms of the Loan  Agreement and Other  Documents,
and to enable  the  Revolving  Advances  to be  maintained  or  obtained  by the
Borrower  under the terms of the Loan  Agreement,  Warner hereby agrees with the
Lenders as follows:

            1. Warner shall,  on a consolidated  basis  (exclusive of Borrower's
      accounts), establish and maintain during the term of the Loan Agreement, a
      balance in an amount of not less than $15,000,000  consisting of unpledged
      and  unencumbered   cash  and  cash  equivalents  in  form  and  substance
      reasonably satisfactory to the Lenders. Warner will provide to the Lenders
      from time to time, at the request of the Lenders, evidence satisfactory to
      the  Lenders  that  such  balance  has  been   established  and  is  being
      maintained.

            2. Warner shall monitor the financial  condition of the Borrower and
      provide the  Borrower  with  sufficient  funds to ensure that the Borrower
      maintains,  at all times, Undrawn Availability as determined by the Agent,
      of not less than $1,500,000.  In the event that Agent determines that such
      Undrawn  Availability  is  less  than  $1,500,000  and so  advises  Warner
      pursuant to Section 9 hereof,  Warner  shall,  within five (5) days of the
      sending of notice,  provide the Borrower with sufficient funds to maintain
      Undrawn Availability of $1,500,000.

            3. In addition to and independent of its other obligations described
      herein,  including, but not limited to those set forth in paragraphs 1 and
      2 above,  in the event the Borrower  suffers  Cash Losses (as  hereinafter
      defined) based upon the Quarterly Financial  Statements to be delivered to
      the Lenders by the Borrower pursuant to Section 9.8 of the Loan Agreement,
      Warner shall, on a quarterly basis and within three (3) days of receipt of

<PAGE>

      notice from the Lenders,  provide the Borrower by wire  transfer with cash
      funds in an amount equal to: (a) Fifty  percent  (50%) of such Cash Losses
      with  respect to the first  $7,000,000  of actual  cumulative  Cash Losses
      incurred from the date hereof;  and (b) One Hundred  percent (100%) of all
      Cash  Losses  incurred  in  excess of  $7,000,000,  less  amounts  of cash
      provided by Warner to the Borrower during the applicable quarterly period.
      For the purposes hereof,  the term "Cash Losses" shall mean and be defined
      as  Borrower's  net losses (or income)  after  taxes,  plus  depreciation,
      amortization and non-cash interest  expense,  less all non-cash income and
      less all distributions permitted under the Loan Agreement.

            4. All cash funds provided by Warner  pursuant to clauses 2 and 3 of
      this  Agreement  shall be  contributed to the Borrower as either equity or
      subordinated  debt in form and substance  reasonably  satisfactory  to the
      Agent and shall be deposited in Borrower's  account at the Agent,  Account
      #8008995934.  All such cash funds provided by Warner pursuant to clauses 2
      and 3 of this Undertaking shall remain with Borrower and may not be repaid
      or otherwise  returned to Warner as long as the Loan Agreement  remains in
      effect and any Obligations of Borrower remain outstanding.

            5.  Warner PLC shall  provide to the Agent  within  thirty (30) days
      after  the end of each of  Warner  PLC's  fiscal  quarters,  Warner  PLC's
      financial  statements  in form and  substance  satisfactory  to the Agent,
      together with all documentation  submitted by Warner PLC to the Securities
      and Exchange Commission, including all Form 20Fs, as well as a Certificate
      by the Chief Financial  Officer of Warner  certifying as to all cash funds
      contributed by Warner to the Borrower,  as well as  specifically:  (a) all
      cash funds delivered to the Borrower  pursuant to the terms hereof and (b)
      all cash  funds  returned  to Warner by  Borrower  other than cash paid to
      Warner for goods and services provided.

            6.  The  failure  of  Warner  to  comply  with  any of the  terms or
      conditions  contained herein shall be deemed an Event of Default under the
      Loan Agreement.

            7. This  Undertaking is a continuing  Undertaking  and nothing shall
      terminate,  discharge or satisfy the liability of Warner  hereunder  until
      the Obligations of the Borrower have been satisfied in full.

            8. The Lenders  may,  in their  reasonable  discretion,  enforce the
      Obligations  of Warner as  contained  herein  and  exercise  any rights or
      remedies which the Lenders may have by law (such rights and remedies being
      cumulative  and  not  alternative  or  exclusive)   without   pursuing  or
      exhausting  any rights or remedy the Lenders may have against the Borrower
      or any other  person or entity for which the Lenders  have with respect to
      any  collateral  or any  guaranty or any or all of such  Obligations.  The
      Lenders  need not join the  Borrower  or any  other  person or entity as a
      party in any action  brought to enforce  the  provisions  hereof;  and the
      Lenders  may  exercise  any right or remedy  which  they have  under  this
      Undertaking  without regard to any actions or omissions of the Borrower or
      any other person or entity.

            9. All notices,  requests and other communications  pursuant to this
      Undertaking shall be in writing, to be either delivered by hand, overnight
      delivery,  or sent certified mail, return receipt requested,  addressed to
      the Agent at its  office  located  at Two  Tower  Center  Boulevard,  East
      Brunswick, New Jersey 08816, ATTENTION:  Business Credit Department, or to
      Warner at the address set forth on page 1 of this Undertaking,  or at such
      other  address as either may give notice to the other as herein  provided.
      Any notice,  request or  communication  hereunder  shall be deemed to have
      been given when delivered.  However, and notwithstanding any other term or
      provision contained herein to the contrary, Warner Bermuda hereby appoints
      Warner PLC as its Agent to receive all  service of process  arising out of
      any dispute relating to this Undertaking.

            10. Any capitalized term not otherwise defined herein shall have the
      meaning ascribed thereto in the Loan Agreement.

            11. This  Undertaking  shall be  construed  in  accordance  with and
      governed by the laws of the State of New Jersey.

<PAGE>

            12. This  Undertaking  shall be binding upon Warner,  as well as its
      successors  or assigns  and inure to the  benefit of the  Lenders  and the
      Lenders' successors and assigns.

            13. WARNER HEREBY  IRREVOCABLY  CONSENTS TO THE  JURISDICTION OF THE
      COURTS  OF THE  STATE  OF NEW  JERSEY  AND,  TO THE  EXTENT  PERMITTED  BY
      APPLICABLE LAW, OF ANY FEDERAL COURT LOCATED IN THE STATE OF NEW JERSEY IN
      CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE
      UNDERTAKINGS.  WARNER HEREBY  WAIVES THE DEFENSES OF FORUM NON  CONVENIENS
      AND IMPROPER VENUE.

            14.  WARNER  EXPRESSLY  WAIVES  THE  RIGHT  TO  TRIAL BY JURY IN ANY
      LITIGATION  RELATING  TO,  IN  CONNECTION  WITH,  OR  ARISING  OUT OF THIS
      UNDERTAKING OR ANY OTHER DOCUMENT  DELIVERED IN CONNECTION WITH ANY OF THE
      OBLIGATIONS.

      IN WITNESS WHEREOF,  has executed this Undertaking this 30th day of March,
1998.

ATTEST:   WARNER CHILCOTT PUBLIC LIMITED COMPANY

/s/Paul S. Herendeen                        /s/Roger M. Boissonneault
- - ------------------------------              ------------------------------------
PAUL S. HERENDEEN, EVP                      ROGER M. BOISSONNEAULT,  President
[SEAL]

                  WARNER CHILCOTT (BERMUDA) LIMITED

                  /s/Kevin Insley
                  ---------------------------------
                  KEVIN INSLEY, Vice  President



           CONTINUING LIMITED NON-RECOURSE AND COLLATERALIZED GUARANTY

      THIS LIMITED  CONTINUING  NON-RECOURSE  AND  COLLATERALIZED  GUARANTY (the
"Guaranty") made by WARNER CHILCOTT (BERMUDA) LIMITED ("Guarantor"), an exempted
company  incorporated under the laws of Bermuda,  in favor of PNC BANK, NATIONAL
ASSOCIATION,  a national  banking  association  organized  under the laws of the
United  States,  having an office  located at Two Tower Center  Boulevard,  East
Brunswick,  New Jersey 08816,  as Agent for the Lenders under the Loan Agreement
(as such terms are hereinafter defined).

                              W I T N E S S E T H:

      WHEREAS,  pursuant to a certain  Revolving  Credit and Security  Agreement
dated of even date  herewith by and between  Warner  Chilcott,  Inc., a Delaware
corporation (the  "Borrower"),  PNC Bank,  National  Association and one or more
financial  institutions  named therein or which hereafter become a party thereto
(together with PNC Bank, National Association,  collectively, the "Lenders") and
PNC Bank, National  Association as the agent for the Lenders (PNC Bank, National
Association in such capacity,  the "Agent") (as such may be amended from time to
time, the "Loan  Agreement"),  the Lenders have agreed to make certain Revolving
Advances to the Borrower; and

      WHEREAS,  as a condition precedent to the making of the Revolving Advances
by the  Lenders to the  Borrower,  the  Guarantor  has agreed to pledge  certain
trademarks  and  trademark  applications  pursuant  to  a  Trademark  Collateral
Assignment  and Security  Agreement  dated the date hereof,  as security for the
Lender's  repayment in full of all  Obligations  (as such term is defined in the
Loan Agreement) in accordance with the provisions of this Guaranty.

      NOW,  THEREFORE,  in  consideration of the premises and in order to induce
the Lenders to make and/or continue to make the Revolving Advances (as each such
term is defined in the Loan  Agreement),  the  Guarantor  hereby agrees with the
Lenders as follows:

            1. In consideration  of the Revolving  Advances made pursuant to the
      terms of the  Loan  Agreement  and  Other  Documents,  and to  enable  the
      Revolving  Advances to be maintained or obtained by the Borrower under the
      terms  of  the  Loan  Agreement,  the  Guarantor  hereby  irrevocably  and
      unconditionally  guarantees the full,  prompt and  unconditional  payment,
      when  due,   whether  by  acceleration  or  otherwise,   of  any  and  all
      liabilities,  indebtedness,  agreements or obligations of the Borrower, in
      connection with the Obligations  whether direct or indirect,  now existing
      or hereafter arising, contingent or absolute, joint or several, matured or
      unmatured,  together with interest  thereon and all attorneys' fees, costs
      and expenses of  collection  incurred by the Lenders in  enforcing  any of
      such indebtedness;  provided,  however,  that the Guarantor's  obligations
      hereunder  shall be limited  solely to any  proceeds  received by the Bank
      upon the  liquidation  of the  security  interest  granted in paragraph 12
      hereof (the "Obligations of the Borrower" or "Obligations").

            2.  This  Guaranty  shall  extend to and cover  every  extension  or
      renewal  of,  and every  obligation  accepted  in  substitution  for,  any
      Obligations of the Borrower,  which extensions,  renewals or substitutions
      are herein  consented  and agreed  to,  and the  Guarantor  shall be bound
      hereby irrespective of the existence, value or condition of any collateral
      the  Lenders  may at  any  time  hold  or the  validity,  irregularity  or
      enforceability of any instrument,  writing or arrangement  relating to any
      such  Obligations  of the Borrower or collateral and  irrespective  of any
      present or future law or order of any  government  (whether of right or in
      fact) or of any 

<PAGE>

      agency  thereof,  purporting  to  reduce,  amend or  otherwise  affect any
      Obligations  of the  Borrower  or to vary  the  terms  of  payment  of the
      Obligations.

            3. The Guarantor hereby warrants and represents as follows:

                  (a) The Guarantor has the legal  capacity to execute,  deliver
            and carry out the terms of this  Guaranty and all other  instruments
            and  documents  delivered  and to be delivered  by it in  connection
            herewith.

                  (b) This  Guaranty has been duly  executed and  delivered  and
            constitutes  the  valid  and  legally  binding   obligation  of  the
            Guarantor, enforceable in accordance with its terms.

                  (c) No consent or approval of any person or waiver of any lien
            or right of distraint  or similar  right,  and no consent,  license,
            approval  or  authorization   of  or  registration,   qualification,
            designation,  declaration or filing with any governmental  authority
            on the part of the  Guarantor  is  required in  connection  with the
            execution and delivery of this Guaranty.

                  (d) The  Guarantor  is not in  default  under  any  indenture,
            mortgage,  deed of trust,  agreement or other instrument to which it
            is a party or by which it is bound.  The Guarantor is not in default
            in any material respect under any applicable  statute,  rule, order,
            decree or regulation of any court,  arbitrator or governmental  body
            or agency having jurisdiction over the Guarantor.

                  (e) The  execution,  delivery  and  the  performance  of,  and
            compliance with, this Guaranty on the part of the Guarantor will not
            (with or  without  the  giving of notice or lapse of time,  or both)
            result in any violation of, or be in conflict  with, or constitute a
            default  under,  the terms of any contract,  note indenture or other
            agreement  to which the  Guarantor is a party,  or of any  judgment,
            decree, order, statute, rule or regulation to which the Guarantor is
            subject.

                  (f)  The  Guarantor  is  not  a  party  to  any  agreement  or
            instrument or subject to any  restrictions  materially and adversely
            affecting  the business,  properties  or financial  condition of the
            Guarantor.

                  (g) There are no outstanding judgments,  actions, proceedings,
            claims or  investigations  pending or threatened before any court or
            governmental  body which may  materially  and  adversely  affect the
            business, properties or financial condition of the Guarantor.

                  (h)  All  financial  statements  of the  Guarantor  previously
            supplied  to the  Lenders  are  true  and  correct  in all  material
            respects and present fairly the financial  position of the Guarantor
            as of the dates therein stated.

                  (i) The Guarantor has filed all tax returns which are required
            to be filed,  and has paid all taxes which have become due  pursuant
            to such returns or pursuant to any assessment received by it.

                  (j) Neither the financial statements referred to in subsection
            (h),  nor any  certificate,  statement,  report  or  other  document
            furnished to the Lenders by the Guarantor in connection  herewith or
            in connection with any  transaction  contemplated  hereby,  nor this
            Guaranty  contain any untrue  statement of material  fact or omit to
            state any material  fact  necessary in order to make the  statements
            contained therein not misleading.

                  (k) The  Guarantor  is  solvent  on the date  hereof.  For the
            purpose of this Guaranty,  the term  "solvent"  shall mean that: (i)
            the fair value of the Guarantor's property is in excess of the total
            amount of its debts; and (ii) the Guarantor is able to pay its debts
            as they mature.

<PAGE>

            4. The Guarantor covenants and agrees as follows:

                  (a)  The  Guarantor  shall,  upon  reasonable  request  of the
            Lenders and as soon as reasonably possible,  furnish, or cause to be
            furnished,   to  the  Lenders  such  other  financial  and  business
            information pertaining to the Guarantor as the Lenders may request.

                  (b) The Guarantor shall pay and discharge, as they become due,
            all taxes,  assessments,  debts,  claims and other  governmental  or
            non-governmental charges lawfully imposed upon, or incurred by it or
            its properties and assets, except taxes, assessments,  debts, claims
            and charges contested in good faith in appropriate proceedings.

                  (c) The  Guarantor  shall  promptly  notify the Lenders of any
            litigation,  actions, proceedings,  claims or investigations pending
            or threatened  against it which may materially and adversely  affect
            the financial condition of the Guarantor.

                  (d) The  Guarantor  shall  promptly  notify the Lenders of any
            material  and  adverse  change  in the  financial  condition  of the
            Guarantor,  or of the  existence of any default  hereunder or any of
            the documents delivered in connection with the Obligations.

            5. The Guarantor hereby waives notice of acceptance of this Guaranty
      and also  waives  diligence,  presentment,  demand,  protest and notice of
      dishonor of any obligations  evidenced by a note or otherwise,  and notice
      of any other kind whatsoever.

            6.  The  Guarantor  hereby  assents  to  all  terms  and  agreements
      heretofore or hereafter  made by the  Borrower,  or any other obligor with
      respect to the Revolving Advances, with the Lenders.

            7. The  Guarantor  hereby  consents and agrees that the Lenders may,
      without  prejudice to any claim  against the Guarantor  hereunder,  at any
      time, or from time to time, in the Lender's  reasonable  discretion and in
      accordance with the terms of the Loan Agreement, and without notice to the
      Guarantor: (a) renew, extend or change the time of payment and the manner,
      place  or  terms  of  payment  of any  Obligations  of the  Borrower;  (b)
      exchange, release or surrender all or any collateral which the Lenders may
      at any time hold as security for the  Obligations of the Borrower,  or the
      obligations of the Guarantor independently  hereunder;  (c) waive, release
      or  subordinate  any  security  interest,  in  whole  or in  part,  now or
      hereafter held as security for any of the Obligations of the Borrower,  or
      the obligations of the Guarantor  hereunder;  (d) sell and purchase by the
      Lenders any  collateral  in which the Lenders have a security  interest at
      any  public  or  private  sale or at any  broker's  board,  crediting  net
      proceeds upon any  obligation  secured  thereby;  (e) settle or compromise
      with the Borrower or with any other  obligor with respect to the Revolving
      Advances,  any Obligations of the Borrower; (f) subordinate the payment of
      any  Obligations  of the  Borrower or  obligations  of any other person or
      entity to the payment of any other debt which may be owing to the Lenders;
      or (g) apply any sums by  whomsoever  paid or  whosoever  realized  to any
      Obligations of the Borrower.

            8.  This  Guaranty  is  a  continuing  guaranty  and  nothing  shall
      terminate,  discharge or satisfy the liability of the Guarantor  hereunder
      until  the  earlier  to  occur  of (i)  the  satisfaction  in  full of the
      Obligations  of the  Borrower,  or (ii) the  liquidation  of the  security
      interest ganted in paragraph 12 hereof.

            9. The Lenders  may, in their  reasonable  discretion,  exercise any
      right or remedy which the Lenders have under this Guaranty or by law (such
      rights and remedies  being  cumulative  and not  alternative or exclusive)

<PAGE>

      without  pursuing  or  exhausting  any right or remedy  the  Lenders  have
      against the  Borrower  or any other  person or entity or which the Lenders
      have with respect to any collateral or any other guaranty of any or all of
      such  Obligations.  The  Lenders  need not join the  Borrower or any other
      person  or  entity  as a  party  in any  action  brought  to  enforce  the
      provisions  hereof; and the Lenders may exercise any right or remedy which
      it has under this Guaranty  without  regard to any actions or omissions of
      the Borrower or any other person or entity.

            10. No delay on the Lenders' part in exercising any right  hereunder
      or in taking any action to collect or enforce  payment of any  Obligations
      of the  Borrower,  either as against the  Borrower or any other  person or
      entity,  shall  operate  as a waiver  of any such  right or in any  manner
      prejudice the Lenders' rights against the Guarantor.

            11. The  Guarantor  agrees that,  if any of the  Obligations  of the
      Borrower are not satisfied  when due, the Guarantor  will,  without demand
      upon or notice to the Guarantor, forthwith satisfy such Obligations, or if
      the maturity of any  Obligations  of the  Borrower  hereby  guaranteed  is
      accelerated,  by  bankruptcy  or otherwise as against the  Borrower,  such
      maturity  shall  also  be  deemed  accelerated  for the  purposes  of this
      Guaranty and without demand upon or notice to the Guarantor,  and the Bank
      shall  collect  from the  Guarantor  the total amount  hereby  guaranteed,
      subject to the provisions of paragraph 12 hereof.

            12. As security for the performance of the  Guarantor's  obligations
      hereunder,  the  Guarantor:  (a)  has  assigned  to  the  Lenders  certain
      trademarks  and trademark  applications,  and has  executed,  on even date
      herewith,   a  certain  Trademark   Collateral   Assignment  and  Security
      Agreement;  and (b) grants the Bank a security  interest in and a right of
      setoff against all monies, deposits,  instruments or other property of any
      kind, without limitation, owned by the Guarantor or in which the Guarantor
      has a joint or contingent interest and which now or any time hereafter are
      in the  possession or control of the Bank or in transit by mail or carrier
      to or from the Bank or in  possession  of any third  person  acting on the
      Bank's  behalf  for  any  reason  whatsoever.  Notwithstanding  any  other
      provision of this Guaranty, the obligations of the Guarantor hereunder are
      non-recourse,  and the  Guarantor  shall not be liable for any  deficiency
      that may remain with  respect to the  Obligations  of the  Borrower  after
      liquidation of the security as set forth above.

            13. The  Guarantor  shall not exercise any rights they have acquired
      by way of subrogation  under this Guaranty or otherwise,  unless and until
      all of the  Obligations  of the  Borrower  have been paid in full.  If any
      payment is made to the  Guarantor  on account of such  subrogation  rights
      when any of the Obligations of the Borrower are not paid in full, each and
      every  amount so paid  will  forthwith  be  turned  over to the Bank to be
      credited and applied upon any of the  Obligations of the Borrower  whether
      matured or unmatured. Any and all present and future debts and obligations
      of the Borrower to the  Guarantor are hereby waived and postponed in favor
      of and subordinated to the full payment and performance of all Obligations
      of the Borrower to the Lenders.

            14. This Guaranty shall  continue to be effective or reinstated,  as
      the case may be, if at any time payment of any of the  Obligations  of the
      Borrower,  or any part thereof, is rescinded or must otherwise be returned
      by the  Bank  upon  the  insolvency  or  bankruptcy  of the  Borrower,  or
      otherwise, as though such payment had not been made.

            15. If the  Obligations  of the Borrower are also  guaranteed by any
      other person or entity,  by continuing  guaranty or by  endorsement of any
      note of the Borrower or otherwise,  the obligation of such other person or
      entity and the  Guarantor's  obligations  hereunder  shall be deemed to be
      several,  and the  release by the Lender of any such other  guarantor,  or
      settlement  with such other  guarantor or the  revocation or impairment of
      such guaranty,  shall not operate to prejudice the Lenders' rights against
      the Guarantor hereunder.

<PAGE>

            16.  No  waiver  of any  of the  Lenders'  rights  hereunder  and no
      modification or amendment of this Guaranty,  shall be deemed to be made by
      the Lenders unless the same shall be in writing,  duly signed on behalf of
      the Bank by a duly authorized officer, and each such waiver, if any, shall
      apply only with respect to the specific instance involved, and shall in no
      way impair the rights or the  obligations  of the Guarantor to the Lenders
      in any other respect at any other time.

            17. Notwithstanding anything herein to the contrary, until such time
      as the Obligations have  indefeasibly been repaid in full or this Guaranty
      is  terminated  pursuant to its terms,  the Guarantor  hereby  irrevocably
      waives and releases any and all legal and equitable rights to recover from
      the  Borrower (i) any sums paid by the  Guarantor  under the terms of this
      Guaranty  and/or  other   documents   delivered  in  connection  with  the
      Obligations including,  without limitation,  all rights of subrogation and
      all other  rights  that  would  result  in the  Guarantor  being  deemed a
      creditor of the Borrower under the Federal  Bankruptcy Code, and any other
      law, and (ii) any and all claims the Guarantor has or may have against the
      Borrower  which are not related to or arising from or in  connection  with
      this  Guaranty,  or  other  documents  delivered  in  connection  with the
      Obligations,  that do or would  result  in the  Guarantor  being  deemed a
      creditor of the Borrower  under the Federal  Bankruptcy  Code or any other
      law.

            18.  The  Lenders  shall  be  under  no  duty or  obligation  to the
      Guarantor  or anyone  else to, nor shall the  Lenders  have any  liability
      whatsoever  to the  Guarantor or anyone else for failing to: (i) preserve,
      protect  or  marshal  any  collateral  it may  hold  as  security  for the
      Obligations  of  the  Borrower,   or  the  obligations  of  the  Guarantor
      hereunder;  (ii)  preserve  or protect  the rights of the  Borrower or any
      other obligor with respect to the Obligations  against any person claiming
      an interest  in any  collateral  the Lenders may hold as security  for the
      Obligations  of  the  Borrower,   or  the  obligations  of  the  Guarantor
      hereunder;  (iii) realize upon any  collateral it may hold as security for
      the  Obligations  of the  Borrower,  or the  obligations  of the Guarantor
      hereunder;  in any  particular  order or manner or seek  repayment  of the
      Obligations from any particular source; or (iv) permit any substitution or
      exchange of all or any part of any  collateral it may hold as security for
      the  Obligations  of the  Borrower,  or the  obligations  of the Guarantor
      hereunder;  or release any part of any said collateral from any lien, even
      if that  substitution  or  release  would  leave  the  Lenders  adequately
      secured.

            19. All notices,  requests and other communications pursuant to this
      Guaranty shall be in writing,  to be either  delivered by hand,  overnight
      delivery,  or sent certified mail, return receipt requested,  addressed to
      the Agent at its  office  located  at Two  Tower  Center  Boulevard,  East
      Brunswick, New Jersey 08816, ATTENTION:  Commercial Finance Department, or
      to the Guarantor at the address set forth on page 1 of this  Guaranty,  or
      at such other  address  as either  may give  notice to the other as herein
      provided. Any notice,  request or communication  hereunder shall be deemed
      to have been given when delivered.

            20. The words  importing  the  singular  number mean and include the
      plural number and vice versa,  and words of the masculine  gender mean and
      include  correlative  words of the feminine  and/or neuter gender and vice
      versa.

            21. This Guaranty shall be construed in accordance with and governed
      by the laws of the State of New Jersey.

            22. This Guaranty  shall be binding upon the  Guarantor,  as well as
      its  successors or assigns and inure to the benefit of the Lenders and the
      Lenders' successors and assigns.

            23. THE GUARANTOR HEREBY IRREVOCABLY CONSENTS TO THE JURISDICTION OF

<PAGE>

      THE COURTS OF THE STATE OF NEW JERSEY  AND,  TO THE  EXTENT  PERMITTED  BY
      APPLICABLE LAW, OF ANY FEDERAL COURT LOCATED IN THE STATE OF NEW JERSEY IN
      CONNECTION  WITH ANY ACTION OR  PROCEEDING  ARISING  OUT OF OR RELATING TO
      THIS  GUARANTY.  THE  GUARANTOR  HEREBY  WAIVES THE  DEFENSES OF FORUM NON
      CONVENIENS AND IMPROPER VENUE.

            24. THE GUARANTOR EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY
      LITIGATION  RELATING  TO,  IN  CONNECTION  WITH,  OR  ARISING  OUT OF THIS
      GUARANTY OR ANY OTHER  DOCUMENT  DELIVERED IN  CONNECTION  WITH ANY OF THE
      OBLIGATIONS.

            25. This Guaranty  shall  terminate upon the earlier to occur of (a)
      the  satisfaction  in full of the  Obligations of the Borrower or, (b) the
      liquidation of the security interest granted in paragraph 12 hereof.

            26. This  Guaranty  shall also  terminate  and the security for such
      guaranty as set forth in Section 12 hereof  shall be released in the event
      that:

                  (a) The Guarantor transfers to a new entity the trademarks and
            trademark  applications  which  are  the  subject  of the  Trademark
            Collateral Assignment and Security Agreement; and

                  (b) The new entity  executes and delivers to the Agent for the
            Lenders  a  continuing   limited   non-recourse  and  collateralized
            guaranty as well as a trademark  collateral  assignment and security
            agreement in forms  substantially  the same as being executed on the
            date hereof by the Guarantor.

      IN WITNESS WHEREOF,  the Guarantor has executed this Guaranty this ___ day
of March, 1998.

                  WARNER CHILCOTT (BERMUDA) LIMITED

                  /s/Kevin Insley
                  ---------------------------------
                  KEVIN INSLEY, Vice President



             TRADEMARK COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT

      THIS TRADEMARK COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT is made on the
30th day of March,  1998 between WARNER CHILCOTT,  INC., a Delaware  corporation
having its  principal  office at Rockaway 80 Corporate  Center,  100  Enterprise
Drive,  Suite  280,  Rockaway,  New  Jersey  07866  ("Assignor"),  and PNC BANK,
NATIONAL ASSOCIATION,  having an office at Two Tower Center, East Brunswick, New
Jersey 08816,  as Agent for the Lenders under the Loan  Agreement (as such terms
are hereinafter defined).

      BACKGROUND. Assignor has executed and delivered its Revolving Credit Notes
(the  "Notes")  to  the  Lenders  in the  aggregate  principal  amount  of up to
$30,000,000,  pursuant to the terms of a certain  Revolving  Credit and Security
Agreement dated of even date herewith by and between the Assignor (also known as
the  "Borrower"),  PNC  Bank,  National  Association  and one or more  financial
institutions  named therein or which hereafter become a party thereto  (together
with PNC Bank, National Association,  collectively, the "Lenders") and PNC Bank,
National  Association as Agent for the Lenders (PNC Bank, National  Association,
in such  capacity,  the "Agent") (as such may be amended from time to time,  the
"Loan  Agreement").  In order to induce the  Lenders to execute  and deliver the
Loan  Agreement,  Assignor  has  agreed to  collaterally  assign to the  Lenders
certain  trademark  rights.  This Agreement is being executed  contemporaneously
with the Loan Agreement  under which the Lenders are being granted a lien on and
security interest in accounts receivable, inventory, equipment and certain other
assets ("Other Assets")  relating to products sold under the Trademarks (as such
term is defined in  paragraph  1) whereby  the  Lenders  shall have the right to
foreclose on the  Trademarks and the Other Assets in the event of the occurrence
and  continuance  of an Event of Default  (as such terms are defined in the Loan
Agreement),  in order that the Lenders or any subsequent owner of the Trademarks
may continue to use the Trademarks in  substantially  the same manner as used by
Assignor.

      NOW, THEREFORE,  in consideration of the premises,  Assignor hereby agrees
with the Lenders as follows:

            1. To secure the complete and timely satisfaction of all Obligations
      (as such term is defined in the Loan  Agreement),  Assignor hereby grants,
      assigns and conveys to the Lenders the Assignor's entire right,  title and
      interest in and to the trademark  applications  and  trademarks  listed in
      Schedule A hereto (as the same may be amended pursuant hereto from time to
      time),  including without limitation all renewals thereof, all proceeds of
      infringement  suits,  the  right  to sue  for  past,  present  and  future
      infringements and all rights  corresponding  thereto  throughout the world
      (all of the foregoing are collectively  called the "Trademarks"),  and the
      goodwill of the business to which each of the Trademarks relates.

            2. Assignor covenants and warrants that to the best of its knowledge
      (actual or constructive):

            (a)   The  Trademarks  are  subsisting  and have  not been  adjudged
                  invalid or unenforceable;

            (b)   Each of the Trademarks is valid and enforceable;

            (c)   No claim has been  made that the use of any of the  Trademarks
                  does or may violate the rights of any third person;

            (d)   Assignor  is the sole and  exclusive  owner of the  entire and
                  unencumbered  right,  title and interest in and to each of the
                  Trademarks,   free  and  clear  of  any  liens,   charges  and
                  encumbrances,    including   without    limitation    pledges,
                  assignments,   licenses,   registered   user   agreements  and
                  covenants by Assignor 

<PAGE>

                  not to sue third  persons,  other than the  assignment  to the
                  Lenders pursuant to this Agreement;

            (e)   Assignor  has  the  unqualified   right  to  enter  into  this
                  Agreement and perform its terms;

            (f)   Assignor has used,  and will  continue to use for the duration
                  of this Agreement,  proper statutory notice in connection with
                  its use of the Trademarks;

            (g)   Assignor has used,  and will  continue to use for the duration
                  of this  Agreement,  consistent  standards  of  quality in its
                  manufacture or use of products sold under the Trademarks; and

            (h)   Assignor  (along with its  predecessors  in interest) does not
                  own any other Trademarks and/or patents,  trade names, service
                  marks or other intangible assets which are registered with the
                  United States Patent and Trademark Office in Washington, D.C.

            3.  Assignor  hereby  grants to the  Lenders and its  employees  and
      agents upon  reasonable  notice the right to visit  Assignor's  facilities
      which maintain or store products sold under any of the Trademarks,  and to
      inspect  the  products  and  quality  control  records  relating  thereto.
      Assignor shall do any and all acts  reasonably  required by the Lenders to
      ensure Assignor's compliance with paragraph 2(g).

            4. Assignor  agrees that,  until all of the  Obligations  shall have
      been satisfied in full, it will not enter into any agreement (for example,
      a license  agreement)  which is inconsistent  with Assignor's  obligations
      under this  Agreement,  without the Lenders' prior written  consent,  such
      consent not to be unreasonably withheld.

            5. If,  before the  Obligations  shall have been  satisfied in full,
      Assignor   shall  obtain  rights  to  any  new   trademarks  or  trademark
      applications  the  provisions  of  paragraph 1 shall  automatically  apply
      thereto and Assignor shall give the Lenders prompt written notice thereof.

            6.  Assignor  authorizes  the  Lenders to modify this  Agreement  by
      amending  Schedule  A to  include  any  future  trademarks  and  trademark
      applications covered by paragraphs 1 and 5.

            7. Unless and until  there shall have  occurred an Event of Default,
      the Lenders hereby grant to Assignor the exclusive,  nontransferable right
      and license to use the Trademarks on and in connection  with products sold
      by Assignor,  for  Assignor's  own benefit and account and for none other.
      Assignor  agrees  not to sell or  assign  its  interest  in,  or grant any
      sublicense  under,  the license  granted to Assignor in this  paragraph 7,
      without the prior  written  consent of the Lenders which consent shall not
      be unreasonably withheld.

            8. If any Event of Default shall have occurred,  Assignor's  license
      under  the  Trademarks,  as set  forth in  paragraph  7,  shall  terminate
      forthwith, and the Lenders shall have, in addition to all other rights and
      remedies  given to them by this  Agreement and the Loan  Agreement,  those
      rights  and  remedies  allowed by law and the  rights  and  remedies  of a
      secured  party  under  the  Uniform  Commercial  Code  as  enacted  in any
      jurisdiction in which the Trademarks may be located and,  without limiting
      the  generality of the  foregoing,  the Lenders may  immediately,  without
      demand of  performance  and without other notice (except as set forth next
      below) or demand whatsoever to Assignor, all of which are hereby expressly
      waived,  and  without  advertisement,  sell at public or  private  sale or
      otherwise realize upon in a commercially  reasonable  manner,  all or from
      time to time any of the Trademarks, or any interest which the Assignor may
      have  therein,  and after  deducting  from the  proceeds  of sale or other
      disposition  of the  Trademarks  all  reasonable  expenses  (including all

<PAGE>

      reasonable  expenses for broker's fees and legal services),  may apply the
      residue of such proceeds to the payment of the Obligations.  Any remainder
      of the proceeds  after  payment in full of the  Obligations  shall be paid
      over to the  Assignor.  Notice  of any  sale or other  disposition  of the
      Trademarks  shall be given to Assignor at least five (5) Business Days (as
      such  term is  defined  in the  Loan  Agreement)  before  the  time of any
      intended public or private sale or other  disposition of the Trademarks is
      to be made, which notice Assignor hereby agrees shall be reasonable notice
      of such sale or other disposition.  At any such sale or other disposition,
      the  holder  of  any of  the  Notes  or the  Lenders  may,  to the  extent
      permissible  under  applicable law,  purchase the whole or any part of the
      Trademarks  sold,  free from any right or equity of redemption on the part
      of Assignor,  which right and equity of  redemption  are hereby waived and
      released.

            9. At such time as  Assignor  shall  completely  satisfy  all of the
      Obligations,  this Agreement shall terminate and the Lenders shall execute
      and deliver to Assignor at Assignor's  expense all deeds,  assignments and
      other  instruments  as may be  necessary  or proper to re-vest in Assignor
      full title to the Trademarks, subject to any disposition thereof which may
      have been made by the Lenders pursuant hereto.

            10. Any and all  reasonable  fees,  costs and expenses,  of whatever
      kind or nature,  including  reasonable  attorney  fees and legal  expenses
      incurred  by the  Lenders  in  connection  with  the  preparation  of this
      Agreement and all other documents  relating hereto and the consummation of
      this transaction,  the filing or recording of any documents (including all
      taxes in connection therewith) in public offices, the payment or discharge
      of any taxes,  counsel fees,  maintenance fees,  encumbrances or otherwise
      protecting,  maintaining  or preserving  the  Trademarks,  in defending or
      prosecuting  any actions or  proceedings  arising out of or related to the
      Trademarks,  or in the  enforcement by the Lenders of any of its rights or
      remedies  under this  Agreement,  the Loan Agreement or any Other Document
      (as such term is defined in the Loan Agreement) shall be borne and paid by
      Assignor  on demand by the Lenders and until so paid shall be added to the
      principal amount of the Obligations and shall bear interest at the Default
      Rate (as such term is defined in the Loan Agreement).

            11.  Assignor  shall  have  the  duty,  through  counsel  reasonably
      acceptable  to  the  Lenders,   to  prosecute   diligently  any  trademark
      applications of the Trademarks pending as of the date of this Agreement or
      thereafter  until the  Obligations  shall have been paid in full,  to make
      federal  application on registrable but unregistered  Trademarks,  to file
      and prosecute  opposition and  cancellation  proceedings and to do any and
      all acts which are  necessary  or  desirable  to preserve and maintain all
      rights in the  Trademarks.  Any expenses  incurred in connection  with the
      Trademarks shall be borne by Assignor.  The Assignor shall not abandon any
      Trademark  without the consent of the Lenders,  which consent shall not be
      unreasonably withheld.

            12.   Assignor   shall  have  the  right  to  bring  any  opposition
      proceedings,  cancellation  proceedings  or  lawsuit  in its  own  name to
      enforce or protect the  Trademarks,  in which  event the  Lenders  may, if
      necessary, be joined as a nominal party to such suit if Lenders shall have
      been satisfied  that they are not incurring any risk of liability  because
      of such  joinder.  Assignor  shall  promptly,  upon demand,  reimburse and
      indemnify Lenders for all damages, costs and expenses,  including attorney
      fees,  incurred by Lenders in the  fulfillment  of the  provisions of this
      paragraph  12. The  obligations  of the Assignor  under this  paragraph 12
      shall survive the termination of this Agreement.

            13.  In the  event of the  occurrence  of a  Default  or an Event of
      Default,  Assignor  hereby  authorizes  and  empowers the Lenders to make,
      constitute  and appoint any officer or agent of the Lenders as the Lenders
      may  select,  in its  sole  discretion,  as  Assignor's  true  and  lawful
      attorney-in-fact,  with  the  power  to  endorse  Assignor's  name  on all
      applications,  documents, papers and instruments necessary for the Lenders
      to use the Trademarks,  or to grant or issue any exclusive or nonexclusive
      license  under the  Trademarks to anyone 

<PAGE>

      else,  or  necessary  for Lenders to assign,  pledge,  convey or otherwise
      transfer  title in or dispose of the  Trademarks to anyone else.  Assignor
      hereby  ratifies all that such attorney  shall  lawfully do or cause to be
      done by virtue hereof. This power of attorney shall be irrevocable for the
      life of this Agreement.

            14.  If  Assignor  fails  to  comply  with  any of  its  obligations
      hereunder,  the Lenders may do so in  Assignor's  name or in the  Lenders'
      name, but at Assignor's  expense,  and Assignor hereby agrees to reimburse
      the  Lenders in full for all  expenses,  including  reasonable  attorney's
      fees, incurred by the Lenders in protecting, defending and maintaining the
      Trademarks.

            15. No course of dealing between  Assignor and the Lenders,  nor any
      failure  to  exercise,  nor any  delay in  exercising,  on the part of the
      Lenders,  any  right,  power or  privilege  hereunder  or  under  the Loan
      Agreement  shall  operate  as a waiver  thereof;  nor shall any  single or
      partial exercise of any right, power or privilege  hereunder or thereunder
      preclude  any other or further  exercise  thereof or the  exercise  of any
      other right, power or privilege.

            16. All of the  Lenders'  rights and  remedies  with  respect to the
      Trademarks, whether established hereby or by the Loan Agreement, or by any
      other  agreement(s)  or by law shall be  cumulative  and may be  exercised
      singly or concurrently.

            17. The  provisions  of this  Agreement  are  severable,  and if any
      clause or provision shall be held invalid and unenforceable in whole or in
      part in any jurisdiction,  then such invalidity or unenforceability  shall
      affect  only  such  clause  or  provision,   or  part  thereof,   in  such
      jurisdiction,  and shall not in any manner affect such clause or provision
      in any other  jurisdiction,  or any  other  clause  or  provision  of this
      Agreement in any jurisdiction.

            18.  This  Agreement  is subject to  modification  only by a writing
      signed by the parties, except as provided in paragraph 6.

            19. The  benefits and burdens of this  Agreement  shall inure to the
      benefit of and be binding upon the  respective  successors  and  permitted
      assigns of the parties.

            20. The validity and interpretation of this Agreement and the rights
      and  obligations of the parties shall be governed by the laws of the State
      of New Jersey.

            21. THE PARTIES HERETO AGREE TO THE  JURISDICTION OF THE FEDERAL AND
      STATE COURTS  LOCATED IN NEW JERSEY IN CONNECTION  WITH ANY MATTER ARISING
      HEREUNDER, INCLUDING THE COLLECTION AND ENFORCEMENT HEREOF.

            THE ASSIGNOR AND THE LENDERS EACH HEREBY IRREVOCABLY WAIVE ALL RIGHT
      TO TRIAL BY JURY IN ANY ACTION,  PROCEEDING OR COUNTERCLAIM ARISING OUT OF
      OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE ACTIONS OF
      THE LENDERS.  THIS WAIVER IS MADE  KNOWINGLY AND IN  CONSIDERATION  OF THE
      ADVANCES MADE UNDER THE LOAN AGREEMENT.

            22.  This  Agreement,  the Loan  Agreement  and the Other  Documents
      embody the entire agreement and understanding between the Assignor and the
      Lenders and supersedes all prior agreements and understandings relating to
      the subject matter hereof and thereof.

<PAGE>

      WITNESS the execution hereof under seal as of the day and year first above
written.

ATTEST:                                    WARNER CHILCOTT, INC.

/s/Paul S. Herendeen                       /s/Roger M. Boissonneault
- - ----------------------------------         -------------------------------------
PAUL S. HERENDEEN                          ROGER M. BOISSONNEAULT, President
Executive Vice President/Secretary
[SEAL]

                                           PNC BANK, NATIONAL ASSOCIATION
                                           As Agent

                                           /s/David L. Raphaels
                                           -------------------------------------
                                           DAVID L. RAPHAELS, Vice President



             TRADEMARK COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT

      THIS TRADEMARK COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT is made on the
30th day of March, 1998 between WARNER CHILCOTT (BERMUDA)  LIMITED,  an exempted
company incorporated under the laws of Bermuda having an address at P. O. Box HM
1022, Hamilton HMDX Bermuda  ("Assignor"),  and PNC BANK,  NATIONAL  ASSOCIATION
having an office at Two Tower Center, East Brunswick, New Jersey 08816, as Agent
for the  Lenders  under  the Loan  Agreement  (as  such  terms  are  hereinafter
defined).

      BACKGROUND.  Assignor has executed and delivered on even date herewith its
Continuing Limited Non-Recourse and Collateralized  Guaranty (the "Guaranty") to
the Lenders  guarantying  the Obligations of WARNER  CHILCOTT,  INC., a Delaware
corporation  (the  "Borrower"),  pursuant  to the terms of a  certain  Revolving
Credit and  Security  Agreement  dated of even date  herewith by and between the
Borrower, PNC Bank, National Association, and one or more financial institutions
named therein or which hereafter become a party thereto (together with PNC Bank,
National  Association,  collectively,  the  "Lenders")  and PNC  Bank,  National
Association as the agent for the Lenders (PNC Bank, National Association in such
capacity,  the  "Agent")  (as such may be amended  from time to time,  the "Loan
Agreement").  In order to induce the  Lenders to execute  and  deliver  the Loan
Agreement,  Assignor has agreed to  collaterally  assign to the Lenders  certain
trademark rights.  This Agreement is being executed  contemporaneously  with the
Loan Agreement  under which the Lenders are being granted a lien on and security
interest in accounts receivable,  inventory,  equipment and certain other assets
("Other Assets") relating to products sold under the Trademarks (as such term is
defined in paragraph 1) whereby the Lenders shall have the right to foreclose on
the  Trademarks  and  the  Other  Assets  in the  event  of the  occurrence  and
continuance  of an Event of  Default  (as such  terms  are  defined  in the Loan
Agreement),  in order that the Lenders or any subsequent owner of the Trademarks
may continue to use the Trademarks in  substantially  the same manner as used by
Assignor or Borrower.

      NOW, THEREFORE,  in consideration of the premises,  Assignor hereby agrees
with the Lenders as follows:

            1. To secure the complete and timely satisfaction of all Obligations
      (as such term is defined in the Loan Agreement) and the liabilities of the
      Assignor  pursuant to the Guaranty,  Assignor  hereby grants,  assigns and
      conveys to the Lenders the Assignor's entire right,  title and interest in
      and to the  trademark  applications  and  trademarks  listed in Schedule A
      hereto (as the same may be  amended  pursuant  hereto  from time to time),
      including  without  limitation  all  renewals  thereof,  all  proceeds  of
      infringement  suits,  the  right  to sue  for  past,  present  and  future
      infringements and all rights  corresponding  thereto  throughout the world
      (all of the foregoing are collectively  called the "Trademarks"),  and the
      goodwill of the business to which each of the Trademarks relates.

            2. Assignor covenants and warrants that to the best of its knowledge
      (actual or constructive):

            (a)   The  Trademarks  are  subsisting  and have  not been  adjudged
                  invalid or unenforceable;

            (b)   Each of the Trademarks is valid and enforceable;

            (c)   No claim has been  made that the use of any of the  Trademarks
                  does or may violate the rights of any third person;

<PAGE>

            (d)   Assignor  is the sole and  exclusive  owner of the  entire and
                  unencumbered  right,  title and interest in and to each of the
                  Trademarks,   free  and  clear  of  any  liens,   charges  and
                  encumbrances,    including   without    limitation    pledges,
                  assignments,   licenses,   registered   user   agreements  and
                  covenants by Assignor not to sue third persons, other than the
                  assignment to the Lenders pursuant to this Agreement;

            (e)   Assignor  has  the  unqualified   right  to  enter  into  this
                  Agreement and perform its terms;

            (f)   Assignor has used,  and will  continue to use for the duration
                  of this Agreement,  proper statutory notice in connection with
                  its use of the Trademarks;

            (g)   Assignor has used,  and will  continue to use for the duration
                  of this  Agreement,  consistent  standards  of  quality in its
                  manufacture or use of products sold under the Trademarks; and

            (h)   Assignor  (along with its  predecessors  in interest) does not
                  own any other Trademarks and/or patents,  trade names, service
                  marks or other intangible assets which are registered with the
                  United States Patent and Trademark Office in Washington, D.C.

            3.  Assignor  hereby  grants to the  Lenders and its  employees  and
      agents upon  reasonable  notice the right to visit  Assignor's  facilities
      which maintain or store products sold under any of the Trademarks,  and to
      inspect  the  products  and  quality  control  records  relating  thereto.
      Assignor shall do any and all acts  reasonably  required by the Lenders to
      ensure Assignor's compliance with paragraph 2(g).

            4. Assignor  agrees that,  until all of the  Obligations  shall have
      been satisfied in full, it will not enter into any agreement (for example,
      a license  agreement)  which is inconsistent  with Assignor's  obligations
      under this  Agreement,  without the Lenders' prior written  consent,  such
      consent not to be unreasonably withheld.

            5. If,  before the  Obligations  shall have been  satisfied in full,
      Assignor   shall  obtain  rights  to  any  new   trademarks  or  trademark
      applications  the  provisions  of  paragraph 1 shall  automatically  apply
      thereto and Assignor shall give the Lenders prompt written notice thereof.

            6.  Assignor  authorizes  the  Lenders to modify this  Agreement  by
      amending  Schedule  A to  include  any  future  trademarks  and  trademark
      applications covered by paragraphs 1 and 5.

            7. Unless and until  there shall have  occurred an Event of Default,
      the Lenders hereby grant to Assignor the exclusive,  nontransferable right
      and license to use the Trademarks on and in connection  with products sold
      by Assignor or Borrower,  for  Assignor's  own benefit and account and for
      none  other.  Assignor  agrees not to sell or assign its  interest  in, or
      grant any  sublicense  under,  the  license  granted to  Assignor  in this
      paragraph  7,  without  the prior  written  consent of the  Lenders  which
      consent shall not be unreasonably withheld.

            8. If any Event of Default shall have occurred,  Assignor's  license
      under  the  Trademarks,  as set  forth in  paragraph  7,  shall  terminate
      forthwith, and the Lenders shall have, in addition to all other rights and
      remedies  given to them by this  Agreement and the Loan  Agreement,  those
      rights  and  remedies  allowed by law and the  rights  and  remedies  of a
      secured  party  under  the  Uniform  Commercial  Code  as  enacted  in any
      jurisdiction in which the Trademarks may be located and,  without limiting
      the  generality of the  foregoing,  the Lenders may  immediately,  without
      demand of  performance  and without other notice (except as set forth next
      below) or demand whatsoever to Assignor, all of which are hereby expressly
      waived,  and  without  advertisement,  sell at public or  private  sale or
      otherwise realize upon in a commercially  reasonable  manner,  all

<PAGE>

      or from  time to time any of the  Trademarks,  or any  interest  which the
      Assignor may have therein,  and after  deducting from the proceeds of sale
      or other disposition of the Trademarks all reasonable  expenses (including
      all reasonable  expenses for broker's fees and legal services),  may apply
      the  residue  of such  proceeds  to the  payment of the  Obligations.  Any
      remainder of the proceeds after payment in full of the  Obligations  shall
      be paid over to the Assignor.  Notice of any sale or other  disposition of
      the Trademarks  shall be given to Assignor at least five (5) Business Days
      (as such term is  defined  in the Loan  Agreement)  before the time of any
      intended public or private sale or other  disposition of the Trademarks is
      to be made, which notice Assignor hereby agrees shall be reasonable notice
      of such sale or other disposition.  At any such sale or other disposition,
      the  Lenders  or the  holder  of any of the  notes  or  other  instruments
      evidencing the Obligations may, to the extent permissible under applicable
      law,  purchase the whole or any part of the Trademarks sold, free from any
      right or equity of  redemption  on the part of  Assignor,  which right and
      equity of redemption are hereby waived and released.

            9. At such time as  Borrower  shall  completely  satisfy  all of the
      Obligations,  this Agreement shall terminate and the Lenders shall execute
      and deliver to Assignor at Assignor's  expense all deeds,  assignments and
      other  instruments  as may be  necessary  or proper to re-vest in Assignor
      full title to the Trademarks, subject to any disposition thereof which may
      have been made by the Lenders pursuant hereto.

            10. Any and all  reasonable  fees,  costs and expenses,  of whatever
      kind or nature,  including  reasonable  attorney  fees and legal  expenses
      incurred  by the  Lenders  in  connection  with  the  preparation  of this
      Agreement and all other documents  relating hereto and the consummation of
      this transaction,  the filing or recording of any documents (including all
      taxes in connection therewith) in public offices, the payment or discharge
      of any taxes,  counsel fees,  maintenance fees,  encumbrances or otherwise
      protecting,  maintaining  or preserving  the  Trademarks,  in defending or
      prosecuting  any actions or  proceedings  arising out of or related to the
      Trademarks,  or in the  enforcement by the Lenders of any of its rights or
      remedies  under this  Agreement,  the Guaranty,  the Loan Agreement or any
      Other  Document (as such term is defined in the Loan  Agreement)  shall be
      borne and paid by  Assignor  on demand  by the  Lenders  and until so paid
      shall be added to the principal  amount of the  Obligations and shall bear
      interest  at the  Default  Rate  (as  such  term is  defined  in the  Loan
      Agreement).

            11.  Assignor  shall  have  the  duty,  through  counsel  reasonably
      acceptable  to  the  Lenders,   to  prosecute   diligently  any  trademark
      applications of the Trademarks pending as of the date of this Agreement or
      thereafter  until the  Obligations  shall have been paid in full,  to make
      federal  application on registrable but unregistered  Trademarks,  to file
      and prosecute  opposition and  cancellation  proceedings and to do any and
      all acts which are  necessary  or  desirable  to preserve and maintain all
      rights in the  Trademarks.  Any expenses  incurred in connection  with the
      Trademarks shall be borne by Assignor.  The Assignor shall not abandon any
      Trademark  without the consent of the Lenders,  which consent shall not be
      unreasonably withheld.

            12.   Assignor   shall  have  the  right  to  bring  any  opposition
      proceedings,  cancellation  proceedings  or  lawsuit  in its  own  name to
      enforce or protect the  Trademarks,  in which  event the  Lenders  may, if
      necessary, be joined as a nominal party to such suit if Lenders shall have
      been satisfied  that they are not incurring any risk of liability  because
      of such  joinder.  Assignor  shall  promptly,  upon demand,  reimburse and
      indemnify Lenders for all damages, costs and expenses,  including attorney
      fees,  incurred by Lenders in the  fulfillment  of the  provisions of this
      paragraph  12. The  obligations  of the Assignor  under this  paragraph 12
      shall survive the termination of this Agreement.

            13.  In the  event of the  occurrence  of a  Default  or an Event of
      Default under the Loan Agreement,  Assignor hereby authorizes and empowers
      the  Lenders to make,  constitute  and appoint any officer or agent of the
      Lenders as the Lenders may select,  in its sole discretion,  as Assignor's
      true and lawful  attorney-in-fact,  with the power to  endorse  Assignor's
      name on all applications,  documents, papers and instruments necessary for
      the Lenders to use the  Trademarks,  or to grant or issue any exclusive or
      nonexclusive license 

<PAGE>

      under the  Trademarks  to anyone else, or necessary for Lenders to assign,
      pledge, convey or otherwise transfer title in or dispose of the Trademarks
      to anyone else.  Assignor  hereby  ratifies all that such  attorney  shall
      lawfully do or cause to be done by virtue  hereof.  This power of attorney
      shall be irrevocable for the life of this Agreement.

            14.  If  Assignor  fails  to  comply  with  any of  its  obligations
      hereunder,  the Lenders may do so in  Assignor's  name or in the  Lenders'
      name, but at Assignor's  expense,  and Assignor hereby agrees to reimburse
      the  Lenders in full for all  expenses,  including  reasonable  attorney's
      fees, incurred by the Lenders in protecting, defending and maintaining the
      Trademarks.

            15. No course of dealing between  Assignor and the Lenders,  nor any
      failure  to  exercise,  nor any  delay in  exercising,  on the part of the
      Lenders,  any  right,  power or  privilege  hereunder  or  under  the Loan
      Agreement  shall  operate  as a waiver  thereof;  nor shall any  single or
      partial exercise of any right, power or privilege  hereunder or thereunder
      preclude  any other or further  exercise  thereof or the  exercise  of any
      other right, power or privilege.

            16. All of the  Lenders'  rights and  remedies  with  respect to the
      Trademarks,  whether  established  hereby  or  by  the  Guaranty  or  Loan
      Agreement,  or by any other agreement(s) or by law shall be cumulative and
      may be exercised singly or concurrently.

            17. The  provisions  of this  Agreement  are  severable,  and if any
      clause or provision shall be held invalid and unenforceable in whole or in
      part in any jurisdiction,  then such invalidity or unenforceability  shall
      affect  only  such  clause  or  provision,   or  part  thereof,   in  such
      jurisdiction,  and shall not in any manner affect such clause or provision
      in any other  jurisdiction,  or any  other  clause  or  provision  of this
      Agreement in any jurisdiction.

            18.  This  Agreement  is subject to  modification  only by a writing
      signed by the parties, except as provided in paragraph 6.

            19. The  benefits and burdens of this  Agreement  shall inure to the
      benefit of and be binding upon the  respective  successors  and  permitted
      assigns of the parties.

            20. The validity and interpretation of this Agreement and the rights
      and  obligations of the parties shall be governed by the laws of the State
      of New Jersey.

            21. THE PARTIES HERETO AGREE TO THE  JURISDICTION OF THE FEDERAL AND
      STATE COURTS  LOCATED IN NEW JERSEY IN CONNECTION  WITH ANY MATTER ARISING
      HEREUNDER, INCLUDING THE COLLECTION AND ENFORCEMENT HEREOF.

            THE ASSIGNOR AND THE LENDERS EACH HEREBY IRREVOCABLY WAIVE ALL RIGHT
      TO TRIAL BY JURY IN ANY ACTION,  PROCEEDING OR COUNTERCLAIM ARISING OUT OF
      OR RELATING TO THIS  AGREEMENT OR ANY OTHER LOAN  DOCUMENTS OR THE ACTIONS
      OF THE LENDERS.  THIS WAIVER IS MADE KNOWINGLY AND IN CONSIDERATION OF THE
      ADVANCES MADE UNDER THE LOAN AGREEMENT.

            22. This Agreement,  the Guaranty, the Other Documents and the other
      Loan Documents embody the entire agreement and  understanding  between the
      Assignor  and  the  Lenders  and  supersedes  all  prior   agreements  and
      understandings relating to the subject matter hereof and thereof.

<PAGE>

      WITNESS the execution hereof under seal as of the day and year first above
written.

                                         WARNER CHILCOTT (BERMUDA) LIMITED

                                         /s/Kevin Insley
                                         ---------------------------------------
                                         KEVIN INSLEY,    Vice President

- - -----------------------
[SEAL]

                                         PNC BANK, NATIONAL ASSOCIATION
                                         As Agent

                                         /s/David L. Raphaels
                                         ---------------------------------------
                                         DAVID L. RAPHAELS, Vice President


<TABLE> <S> <C>


<ARTICLE>                     5
<MULTIPLIER>                                   1,000
       
<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                              DEC-31-1998
<PERIOD-START>                                 JAN-01-1998
<PERIOD-END>                                   JUN-30-1998
<CASH>                                              47,215
<SECURITIES>                                             0
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                                    0          
                                              0          
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<NET-INCOME>                                       (14,337)  
<EPS-PRIMARY>                                        (1.16)     
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</TABLE>


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