Employment Agreement - Bio-Technology General Corp. and Dov Kanner


                              EMPLOYMENT AGREEMENT

            AGREEMENT made as of January 23, 2000, among BIO-TECHNOLOGY GENERAL
CORP., a Delaware corporation with an office at 70 Wood Avenue South, Iselin,
New Jersey 08830 ('BTG'), BIO-TECHNOLOGY GENERAL (ISRAEL) LTD., an Israeli
corporation and a wholly-owned subsidiary of BTG having an office at Kiryat
Weizmann, Rehovot, Israel 76326 ('BTG-ISRAEL' and, together with BTG, the
'Company') and Dov Kanner, residing at 1 Shkolnick Street, Rehovot 76209, Israel
(the 'Executive').

                              W I T N E S S E T H :

            WHEREAS, the Company desires that Executive be employed to serve in
a senior executive capacity with the Company, and Executive desires to be so
employed by the Company, upon the terms and conditions herein set forth.

            NOW, THEREFORE, in consideration of the premises and of the mutual
promises, representations and covenants herein contained, the parties hereto
agree as follows:

      1. EMPLOYMENT.

            The Company hereby employs Executive and Executive hereby accepts
such employment, subject to the terms and conditions herein set forth. Executive
shall hold the office of Senior Vice President of BTG and General Manager of
BTG-Israel reporting to the Chief Executive Officer of BTG.

      2. TERM.

            The initial term of employment under this Agreement shall begin on
the date hereof (the 'Employment Date') and shall continue for a period of two
(2) years from that date, subject to prior termination in accordance with the
terms hereof. Thereafter, this Agreement shall automatically be renewed for
successive two-year terms unless either party shall give the other ninety (90)
days prior written notice of its intent not to renew this Agreement.

      3. COMPENSATION.

            As compensation for the employment services to be rendered by
Executive hereunder, including all services as an officer or director of the
Company and any of its subsidiaries, the Company agrees to pay, or cause to be
paid, to Executive, and Executive agrees to accept, payable in equal
installments in accordance with Company practice, an initial annual salary of
$180,000.



Executive's annual salary hereunder for the remaining years of employment shall
be determined by the Board of Directors of BTG in its sole discretion. In
addition, Executive shall be entitled to bonuses from time to time in such
amounts as may be determined by the Board of Directors of BTG in its sole
discretion. Such bonus may be paid, in the sole discretion of the Board of
Directors, in cash, shares of BTG Common Stock, options to purchase shares of
BTG Common Stock or any combination thereof.

      4. EXPENSES.

            The Company shall pay or reimburse Executive, upon presentment of
suitable vouchers, for all reasonable business and travel expenses which may be
incurred or paid by Executive in connection with his employment hereunder,
including without limitation telephone and facsimile expenses at his home.
Executive shall comply with such restrictions and shall keep such records as the
Company may deem necessary, as set forth in its written policies.

      5. OTHER BENEFITS.

            Executive shall be entitled, as long as he remains an employee of
the Company, to such vacations (which shall be at least four weeks per annum)
and to participate in and receive any other benefits customarily provided by the
Company to its senior management personnel (including any profit sharing,
pension, short and long-term disability insurance, hospital, major medical
insurance and group life insurance plans in accordance with the terms of such
plans) and including stock option and/or stock purchase plans, all as determined
from time to time by the Board of Directors of BTG. Unused annual vacations may
not be carried over to other years without the consent of the Chief Executive
Officer of BTG; provided that Executive may carry over from year to year all
unused vacation accrued through December 31, 1999..

            BTG-Israel shall provide Executive with a company car and the other
benefits provided Israeli employees by BTG-Israel as long as Executive remains
an employee of the Company. In addition, as long as he remains an employee of
the Company, BTG-Israel shall reimburse to Executive all income taxes paid by
Executive in respect of BTG-Israel providing Executive with a company car and
reimbursing Executive for his telephone and facsimile expenses at his home. All
fringe benefits provided under Israeli law, such as Directors Insurance and
Keren Hishtalmut, shall be paid using 100% of Executive's salary for calculation
purposes after the date hereof.

      6. STOCK OPTIONS.

            (a) The Compensation and Stock Option Committee of the BTG Board of
Directors (the 'Committee') has approved the grant to Executive of a
non-qualified stock option to purchase 100,000 shares of BTG Common Stock (the
'Options'), at an exercise price per share equal to the fair market value of BTG
Common Stock on the date hereof, such Options to become exercisable as


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to 25,000 shares on the first anniversary date of this Agreement and as to an
additional 25,000 shares on each successive anniversary date of this Agreement.

            (b) Any future grant of stock options shall be subject to such terms
as the Committee in its sole discretion shall specify at the time of grant.

      7. DUTIES.

            (a) Executive shall be responsible for the overall management of
BTG-Israel, shall assist in acquisitions and commercial activities and perform
such other duties and functions as the Chief Executive Officer of BTG shall from
time to time determine and Executive shall comply in the performance of his
duties with the policies of, and be subject to, the direction of the Board of
Directors of BTG. If Executive shall be elected or appointed as a director of
BTG or BTG-Israel during the term of this Agreement, he will serve in such
capacity without further compensation. Executive shall, without further
compensation, serve as an executive officer and director of any other subsidiary
of the Company (collectively the 'subsidiary' or 'subsidiaries') specified by
the Chief Executive Officer of BTG and, in the performance of such duties,
Executive shall comply with the policies of the Board of Directors of each such
subsidiary.

            (b) Executive agrees to devote his entire working time, attention
and energies to the performance of the business of the Company and of any of its
subsidiaries by which he may be employed; and Executive shall not, directly or
indirectly, alone or as a member of any partnership or other organization, or as
an officer, director or employee of any other corporation, partnership or other
organization, be actively engaged in or concerned with any other duties or
pursuits which interfere with the performance of his duties hereunder, or which,
even if non-interfering, may be, in the reasonable determination of the Board of
Directors of BTG in its sole discretion, inimical, or contrary, to the best
interests of the Company, except those duties or pursuits specifically
authorized by the BTG Board of Directors.

            (c) All fees, compensation or commissions received by Executive
during the term of this Agreement for personal services (including, but not
limited to, commissions and compensation received as a fiduciary or a director,
and fees for lecturing and teaching) rendered at the request of the Company
shall be paid to the Company when received by Executive, except those fees that
the BTG Board of Directors determines may be kept by Executive. This provision
shall not be construed to prevent Executive from investing or trading in
nonconflicting investments as he sees fit for his own account, including real
estate, stocks, bonds, securities, commodities or other forms of investments.

      8. TERMINATION OF EMPLOYMENT; EFFECT OF TERMINATION.

            (a) Executive's employment hereunder may be terminated at any time
upon written notice from BTG to Executive:


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            (i) upon the determination by the Board of Directors of BTG that
      Executive's performance of his duties has not been fully satisfactory for
      any reason which would not constitute justifiable cause (as hereinafter
      defined) upon ninety (90) days' prior written notice to Executive; or

            (ii) upon the determination by the Board of Directors of BTG that
      there is justifiable cause (as hereinafter defined) for such termination
      upon ten (10) days' prior written notice to Executive.

            (b) Executive's employment shall terminate upon:

            (i) the death of Executive; or

            (ii) the 'disability' of Executive (as hereinafter defined pursuant
      to subsection (c) herein) pursuant to subsection (f) hereof.

            (c) For the purposes of this Agreement, the term 'disability' shall
mean the inability of Executive, due to illness, accident or any other physical
or mental incapacity, substantially to perform his duties in a normal manner for
a period of three (3) consecutive months or for a total of six (6) months
(whether or not consecutive) in any twelve (12) month period during the term of
this Agreement as reasonably determined by the Board of Directors of BTG after
examination of Executive by an independent physician reasonably acceptable to
Executive.

            (d) For the purposes hereof, the term 'justifiable cause' shall mean
and be limited to: any willful breach by Executive of the performance of any of
his duties pursuant to this Agreement; Executive's conviction (which, through
lapse of time or otherwise, is not subject to appeal) of any crime or offense
involving money or other property of the Company or its subsidiaries or which
constitutes a felony in the jurisdiction involved; Executive's performance of
any act or his failure to act, for which it is determined by independent counsel
retained by the Board (which may be counsel for the Company), after due inquiry
in which Executive is given the opportunity to be heard, that if he were
prosecuted and convicted, a crime or offense involving money or property of the
Company or its subsidiaries, or which would constitute a felony in the
jurisdiction involved, would have occurred; any unauthorized disclosure by
Executive to any person, firm or corporation other than the Company, its
subsidiaries and its and their directors, officers and employees, of any
confidential information or trade secret of the Company or any of its
subsidiaries; any attempt by Executive to secure any improper personal profit in
connection with the business of the Company or any of its subsidiaries; the
failure by Executive to devote his full time to the affairs of the Company and
its subsidiaries; Executive's pursuit of activities which in the reasonable
determination of the Board of Directors of BTG are inimical, or contrary, to the
best interests of the Company; the engaging by Executive in any business other
than the business of the Company and its subsidiaries which interferes with the
performance of his duties hereunder; or Executive's repeated and willful failure
to follow the instructions of the Board of Directors or the Chief Executive
Officer of BTG (other than instructions 


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which are illegal or improper) where such conduct shall not have ceased or
offense cured within 30 days following written warning from the Company. Upon
termination of Executive's employment for justifiable cause, this Agreement
shall terminate immediately and Executive shall not be entitled to any amounts
or benefits hereunder other than such portion of Executive's annual salary as
has been accrued through the date of his termination of employment and
reimbursement of expenses pursuant to Section 4 hereof.

            (e) If Executive shall die during the term of his employment
hereunder, this Agreement shall terminate immediately. In such event, the estate
of Executive shall thereupon be entitled to receive such portion of Executive's
annual salary as has been accrued through the date of his death and such bonus,
if any, as the Board of Directors of BTG in its sole discretion may determine to
award taking into account Executive's contributions to the Company prior to his
death. If Executive's death shall occur while he is on Company business, the
estate of Executive shall be entitled to receive, in addition to the other
amounts set forth in this subsection (e), an amount equal to one-half his then
annual salary.

            (f) Upon Executive's 'disability', the Company shall have the right
to terminate Executive's employment. Notwithstanding any inability to perform
his duties, Executive shall be entitled to receive his compensation as provided
herein until the termination of his employment for disability. Any termination
pursuant to this subsection (f) shall be effective on the date 30 days after
which Executive shall have received written notice of the Company's election to
terminate.

            (g) Notwithstanding any provision to the contrary contained herein,
in the event that Executive's employment is terminated by the Company at any
time for any reason other than justifiable cause, disability or death, or in the
event the Company shall fail to renew this Agreement at any time within two
years following the effective date of a Change in Control of BTG, the Company
shall pay to Executive as severance, in full satisfaction and in lieu of any and
all other payments due and owing to Executive under the terms of this Agreement
(other than any payments constituting reimbursement of expenses pursuant to
Section 4 hereof), an amount equal to the greater of (i) one year's salary plus
Executive's most recent bonus, if any, (ii) the product of one month's salary
plus 1/12 of Executive's most recently declared bonus multiplied by the number
of years Executive has been employed by the Company or (iii) the amounts
Executive is entitled to receive under applicable law, it being understood and
agreed that payments received by Executive pursuant to Directors Insurance and
similar programs in Israel shall reduce the amounts the Company is required to
pay Executive pursuant to this sentence. As used in this Agreement, a 'Change in
Control of BTG' shall be deemed to occur if (i) there shall be consummated (x)
any consolidation or merger of BTG in which BTG is not the continuing or
surviving corporation or pursuant to which shares of BTG's Common Stock would be
converted into cash, securities or other property, other than a merger of BTG in
which the holders of BTG Common Stock immediately prior to the merger have the
same proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (y) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all, or
substantially all, of the assets of BTG, or (ii) the stockholders of BTG shall


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approve any plan or proposal for liquidation or dissolution of BTG, or (iii) any
person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the 'Exchange Act')), shall become the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of
40% or more of BTG's outstanding Common Stock other than pursuant to a plan or
arrangement entered into by such person and BTG, or (iv) during any period of
two consecutive years, individuals who at the beginning of such period
constitute the entire Board of Directors of BTG shall cease for any reason to
constitute a majority thereof unless the election, or the nomination for
election by BTG's stockholders, of each new director was approved by a vote of
at least two- thirds of the directors then still in office who were directors at
the beginning of the period.

            (h) Executive may terminate his employment at any time upon 30 days'
prior written notice to the Company. Upon Executive's termination of his
employment hereunder, this Agreement (other than Sections 8, 10, 11, 12 and 13,
which shall survive) shall terminate immediately. In such event, Executive shall
be entitled to receive such portion of Executive's annual salary as has been
accrued to date. Executive shall be entitled to reimbursement of expenses
pursuant to Section 4 hereof and to participate in the Company's benefit plans
to the extent participation by former employees is required by law or permitted
by such plans, with the expense of such participation to be as specified in such
plans for former employees.

            (i) Upon termination of Executive's employment for any reason other
than justifiable cause (including termination by Executive), Executive shall be
entitled to all funds contributed by BTG-ISRAEL on his behalf for Directors
insurance' (subject to clause (g) above) and Keren Hishtalmut.

      9. REPRESENTATIONS AND AGREEMENTS OF EXECUTIVE.

            Executive represents and warrants that he is free to enter into this
Agreement and to perform the duties required hereunder, and that there are no
employment contracts or understandings, restrictive covenants or other
restrictions, whether written or oral, preventing the performance of his duties
hereunder or requiring him to perform employment, consulting, business related
or similar duties for any other person.

      10. NON-COMPETITION.

            (a) Executive agrees that during his employment by the Company and
for a period of one (1) year following the termination of Executive's employment
hereunder, other than by reason of the Company's election not to renew this
Agreement (the 'Non-Competitive Period'), Executive shall not, directly or
indirectly, as owner, partner, joint venturer, stockholder, employee, broker,
agent, principal, trustee, corporate officer, director, licensor, or in any
capacity whatsoever engage in, become financially interested in, be employed by,
render any consultation or business advice with respect to, or have any
connection with, any business engaged in the research, development, testing,
design, manufacture, sale, lease, marketing, utilization or exploitation of any
products or services 


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which are designed for the same purpose as, are similar to, or are otherwise
competitive with, products or services of the Company or any of its
subsidiaries, in any geographic area where, at the time of the termination of
his employment hereunder, the business of the Company or any of its subsidiaries
was being conducted or was proposed to be conducted in any manner whatsoever;
provided, however, that Executive may own any securities of any corporation
which is engaged in such business and is publicly owned and traded but in an
amount not to exceed at any one time one percent (1%) of any class of stock or
securities of such corporation. In addition, Executive shall not, directly or
indirectly, request or cause any collaborative partners, universities,
governmental agencies, contracting parties, suppliers or customers with whom the
Company or any of its subsidiaries has a business relationship to cancel or
terminate any such business relationship with the Company or any of its
subsidiaries or solicit, interfere with or entice from the Company any employee
(or former employee) of the Company.

            (b) If any portion of the restrictions set forth in this Section 10
should, for any reason whatsoever, be declared invalid by a court of competent
jurisdiction, the validity or enforceability of the remainder of such
restrictions shall not thereby be adversely affected.

            (c) Executive acknowledges that the Company conducts business on a
world-wide basis, that its sales and marketing prospects are for continued
expansion into world markets and that, therefore, the territorial and time
limitations set forth in this Section 10 are reasonable and properly required
for the adequate protection of the business of the Company and its subsidiaries.
In the event any such territorial or time limitation is deemed to be
unreasonable by a court of competent jurisdiction, Executive agrees to the
reduction of the territorial or time limitation to the area or period which such
court shall deem reasonable.

            (d) The existence of any claim or cause of action by Executive
against the Company or any subsidiary shall not constitute a defense to the
enforcement by the Company or any subsidiary of the foregoing restrictive
covenants, but such claim or cause of action shall be litigated separately.

      11. INVENTIONS AND DISCOVERIES.

            (a) Executive shall promptly and fully disclose to the Company, and
with all necessary detail for a complete understanding of the same, all
developments, know-how, discoveries, inventions, improvements, concepts, ideas,
writings, formulae, processes and methods of a financial or other nature
(whether copyrightable, patentable or otherwise) made, received, conceived,
acquired or written during working hours, or otherwise, by Executive (whether or
not at the request or upon the suggestion of the Company) during the period of
his employment with, or rendering of advisory or consulting services to, the
Company or any of its subsidiaries, solely or jointly with others, in or
relating to any activities of the Company or its subsidiaries known to him as a
consequence of his employment or the rendering of advisory and consulting
services hereunder (collectively the 'Subject Matter').


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            (b) Executive hereby assigns and transfers, and agrees to assign and
transfer, to the Company, all his rights, title and interest in and to the
Subject Matter, and Executive further agrees to deliver to the Company any and
all drawings, notes, specifications and data relating to the Subject Matter, and
to execute, acknowledge and deliver all such further papers, including
applications for copyrights or patents, as may be necessary to obtain copyrights
and patents for any thereof in any and all countries and to vest title thereto
to the Company. Executive shall assist the Company in obtaining such copyrights
or patents during the term of this Agreement, and any time thereafter on
reasonable notice and at mutually convenient times, and Executive agrees to
testify in any prosecution or litigation involving any of the Subject Matter;
provided, however, that Executive shall be compensated in a timely manner at the
rate of $100.00 per hour (with a minimum of $500 per day), plus out-of-pocket
expenses incurred in rendering such assistance or giving or preparing to give
such testimony if it is required after termination of his employment hereunder.

      12. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.

            (a) Executive shall not, during the term of this Agreement, or at
any time following termination of this Agreement, directly or indirectly,
disclose, permit to be known or make accessible (other than as is required in
the regular course of his duties or is required by law (in which case Executive
shall give the Company prior written notice of such required disclosure) or with
the prior written consent of the Board of Directors of BTG), to any person, firm
or corporation, any confidential information acquired by him during the course
of, or as an incident to, his employment or the rendering of his advisory or
consulting services hereunder, relating to the Company or any of its
subsidiaries, the directors of the Company or its subsidiaries, any client of
the Company or any of its subsidiaries, or any corporation, partnership or other
entity owned or controlled, directly or indirectly, by any of the foregoing, or
in which any of the foregoing has a beneficial interest, including, but not
limited to, the business affairs of each of the foregoing. Such confidential
information shall include, but shall not be limited to, proprietary technology,
trade secrets, patented processes, research and development data, know-how,
market studies and forecasts, competitive analyses, pricing policies, employee
lists, personnel policies, the substance of agreements with customers and
others, marketing or dealership arrangements, servicing and training programs
and arrangements, customer lists and any other documents embodying such
confidential information. This confidentiality obligation shall not apply to any
confidential information which thereafter becomes publicly available other than
pursuant to a breach of this Section 12(a) by Executive.

            (b) All information and documents relating to the Company and its
affiliates as hereinabove described (or other business affairs) shall be the
exclusive property of the Company, and Executive shall use commercially
reasonable best efforts to prevent any publication or disclosure thereof. Upon
termination of Executive's employment with the Company, all documents, records,
reports, writings and other similar documents containing confidential
information, including copies thereof, then in Executive's possession or control
shall be returned and left with the Company.


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      13. SPECIFIC PERFORMANCE.

            Executive agrees that if he breaches, or threatens to commit a
breach of, any of the provisions of Sections 10, 11 or 12 (the 'Restrictive
Covenants'), the Company shall have, in addition to, and not in lieu of, any
other rights and remedies available to the Company under law and in equity, the
right to have the Restrictive Covenants specifically enforced by any court of
competent jurisdiction, it being agreed that any breach or threatened breach of
the Restrictive Covenants would cause irreparable injury to the Company and that
money damages would not provide an adequate remedy to the Company.
Notwithstanding the foregoing, nothing herein shall constitute a waiver by
Executive of his right to contest whether a breach or threatened breach of any
Restrictive Covenant has occurred.

      14. AMENDMENT OR ALTERATION.

            No amendment or alteration of the terms of this Agreement shall be
valid unless made in writing and signed by both of the parties hereto.

      15. GOVERNING LAW.

            This Agreement shall be governed by the laws of the State of New
Jersey applicable to agreements made and to be performed therein.

      16. SEVERABILITY.

            The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect.

      17. NOTICES.

            Any notices required or permitted to be given hereunder shall be
sufficient if in writing, and if delivered by hand, or sent by certified mail,
return receipt requested, to the addresses set forth above or such other address
as either party may from time to time designate in writing to the other, and
shall be deemed given as of the date of the delivery or mailing.

      18. WAIVER OR BREACH.

            It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.


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      19. ENTIRE AGREEMENT AND BINDING EFFECT.

            This Agreement contains the entire agreement of the parties with
respect to the subject matter hereof, shall be binding upon and inure to the
benefit of the parties hereto and their respective legal representatives, heirs,
distributors, successors and assigns. Notwithstanding the foregoing, all prior
agreements between Executive and the Company relating to the confidentiality of
information, trade secrets, patents and stock options shall not be affected by
this Agreement.

      20. SURVIVAL.

            The termination of Executive's employment hereunder or the
expiration of this Agreement shall not affect the enforceability of Sections 8,
10, 11, 12 and 13 hereof.

      21. FURTHER ASSURANCES.

            The parties agree to execute and deliver all such further documents,
agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this Agreement.

      22. HEADINGS.

            The Section headings appearing in this Agreement are for the
purposes of easy reference and shall not be considered a part of this Agreement
or in any way modify, demand or affect its provisions.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


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            IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.


                                       BIO-TECHNOLOGY GENERAL CORP.


                                       By: /s/ Sim Fass
                                           -------------------------------------


                                       BIO-TECHNOLOGY GENERAL (ISRAEL) LTD.


                                       By: /s/ Sim Fass
                                           -------------------------------------


                                       /s/ Dov Kanner
                                       -----------------------------------------
                                       Dov Kanner


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