U.S. Defense Secretary Frank C. Carlucci signed an agreement with Egypt on Tuesday for the Arab nation to help produce M-1A1 tanks, the most sophisticated in the U.S. arsenal.

After three years of negotiation, Egypt will become the first country apart from the United States to build a modified version of the tank, also known as the Abrams tank.Before signing the agreement, Carlucci met President Hosni Mubarak for an hour of "very friendly" talks, the defense secretary told reporters.

The meeting, also attended by Defense Minister Abdel-Halim Abu-Ghazala, centered on Middle East developments and bilateral military relations which were "progressing very well," Carlucci said.

Since 1984, the United States has given Egypt $1.3 billion a year in military aid.

After talking to Mubarak, Carlucci met seperately with Abu-Ghazala. The two ministers signed a memorandum of understanding to co-produce the 57-ton tanks armed with 120mm guns.