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                            ASSETS PURCHASE AGREEMENT

                          DATED AS OF OCTOBER 17, 1996,

                                      AMONG

                       CEPHALON PROPERTY MANAGEMENT, INC.

                                       AND

                                 CEPHALON, INC.

                                       AND

                          NORTH AMERICAN VACCINE, INC.







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<PAGE>


<TABLE>
<CAPTION>

                                TABLE OF CONTENTS
         <S>                                                                                                   <C>

                                                                                                               PAGE

         ARTICLE 1  -  PURCHASE AND SALE..........................................................................1
                  1.1      Agreement to Sell......................................................................1
                  1.2      Agreement to Purchase..................................................................3
                  1.3      The Purchase Price.....................................................................3
                           (a)      Purchase Price................................................................3
                           (b)      Payment of Purchase Price.  ..................................................3
                           (c)      Adjustments to Purchase Price.................................................3
                           (d)      Adjustment for Pre-Closing Inspection.........................................4
                           (e)      Injunctive Relief; Specific Performance.......................................4
                  1.4      Assumption of Liabilities..............................................................4

         ARTICLE 2  -  CLOSING, ITEMS TO BE DELIVERED, THIRD PARTY CONSENTS,
                  CHANGE IN NAME AND FURTHER ASSURANCES...........................................................5
                  2.1      Closing................................................................................5
                  2.2      Items to be Delivered at Closing.......................................................5
                  2.3      Third Party Consents...................................................................7
                  2.4      Further Assurances.....................................................................7

         ARTICLE 3  -  REPRESENTATIONS AND WARRANTIES.............................................................8
                  3.1      Representations and Warranties of the Seller...........................................8
                           (a)      Corporate Existence...........................................................8
                           (b)      Corporate Power; Authorization; Enforceable Obligations.......................8
                           (c)      Validity of Contemplated Transactions, etc....................................8
                           (d)      All Tangible Purchased Assets.................................................9
                           (e)      Title to Purchased Assets.....................................................9
                           (f)      Compliance with Law; Authorizations...........................................9
                           (g)      Litigation....................................................................9
                           (h)      Contracts and Commitments.....................................................9
                           (i)      Intellectual Property, Violations, etc.......................................11
                           (j)      Purchased Assets.............................................................11
                           (k)      Tax Returns..................................................................11
                           (l)      Insurance....................................................................11
                           (m)      Condition of Assets..........................................................11
                           (n)      FDA Matters..................................................................11
                           (o)      WARN ACT.....................................................................12
                           (p)      Environmental Matters........................................................12
                           (q)      No Other Warranties..........................................................13
                           (r)      Facilities Leases and Equipment Leases.......................................14
                           (s)      "Knowledge of the Seller and Cephalon".......................................14
                  3.2      Representations and Warranties of the Purchaser.......................................14
                           (a)      Corporate Existence..........................................................14
                           (b)      Corporate Power and Authorization............................................14
                           (c)      Validity of Contemplated Transactions, etc...................................14
                           (d)      Investigation and Evaluation.................................................15
                  3.3  Survival of Representations and Warranties................................................15


<PAGE>




         ARTICLE 4 - AGREEMENTS PENDING CLOSING..................................................................15
                  4.1      Agreements of the Seller Pending the Closing..........................................15
                  4.2      Agreements of the Purchaser Pending the Closing.......................................17
                  4.3      Access................................................................................17
                  4.4      Press Releases........................................................................17

         ARTICLE 5  -  CONDITIONS PRECEDENT TO THE CLOSING.......................................................18
                  5.1      Conditions Precedent to the Purchaser's Obligations...................................18
                           (a)      Representations, Warranties and Covenants of the Seller......................18
                           (b)      Injunctions, etc.............................................................18
                           (c)      Consents and Approvals.......................................................18
                           (d)      Destruction of the Purchased Assets..........................................18
                  5.2      Conditions Precedent to the Seller's  and Cephalon's Obligations......................19
                           (a)      Representations, Warranties and Covenants of the Purchaser...................19
                           (b)      Injunctions, etc.............................................................19
                           (c)      Consents and Approvals.......................................................19

         ARTICLE 6  -  POST-CLOSING MATTERS......................................................................19
                  6.1      Employee Arrangements.................................................................19
                  6.2      Discharge of Certain Liabilities......................................................19
                  6.3      Maintenance of Books and Records......................................................20
                  6.4      Restriction on Use of Name............................................................20
                  6.5      Sublicense............................................................................20

         ARTICLE 7  -  INDEMNIFICATION...........................................................................20
                  7.1      Indemnification Obligations...........................................................20
                  7.2      Method of Asserting Claims, Etc.......................................................21
                  7.3      Payment...............................................................................22

         ARTICLE 8  -  MISCELLANEOUS.............................................................................23
                  8.1      Termination...........................................................................23
                  8.2      Compliance with Bulk Sales Laws.......................................................23
                  8.3      Brokerage; Expenses; Etc..............................................................24
                  8.4      Contents of Agreement; Amendment; Parties in Interest, Assignment, Etc................24
                  8.5      Confidentiality.......................................................................24
                  8.6      Notices...............................................................................25
                  8.7      Maryland Law to Govern................................................................26
                  8.8      No Benefit to Others..................................................................26
                  8.9      Headings, Gender and "Person..........................................................26
                  8.10     Schedules and Exhibits................................................................26
                  8.11     Severability..........................................................................26
                  8.12     Counterparts..........................................................................26

</TABLE>

                                      -ii-
<PAGE>


                             INDEX OF DEFINED TERMS


         Assets.................................................  1
         Assumed Liabilities......................................4
         Authorization............................................9
         Beltsville Assets........................................1
         Cephalon.................................................1
         CGMP....................................................11
         Claim Notice............................................22
         Closing..................................................5
         Closing Date.............................................5
         Code.....................................................6
         Environmental Laws......................................13
         Equipment Leases.........................................2
         Excluded Assets..........................................2
         Facilities Leases........................................1
         FDA.....................................................11
         Hazardous Substances....................................13
         HSR......................................................9
         Leased Assets............................................2
         Notice Period...........................................22
         Purchased Assets.........................................1
         Purchase Price...........................................3
         Purchaser's Documents...................................14
         Seller...................................................1
         Seller's Documents.......................................8
         Tax.....................................................11
         Taxes...................................................11
         WARN Act................................................12






                                     -iii-
<PAGE>



                            ASSETS PURCHASE AGREEMENT


         This ASSETS  PURCHASE  AGREEMENT is made and entered into as of October
17,  1996,  by  and  among  CEPHALON  PROPERTY  MANAGEMENT,   INC.,  a  Delaware
corporation (the "SELLER"),  CEPHALON, INC., a Delaware corporation ("CEPHALON")
and NORTH AMERICAN VACCINE, INC., a Canadian corporation (the "PURCHASER"), with
reference to the following Preamble:

         The Seller  leases  certain  facilities  at 9000  Virginia  Manor Road,
         Suites  260,  270,  280  and  290,  Beltsville,   Maryland  20705  (the
         "FACILITIES")  and  the  Seller  and  Cephalon  have  acquired  certain
         equipment,  materials and other assets for the production of biological
         pharmaceutical  compounds at the Facilities (the "BELTSVILLE  ASSETS").
         The Purchaser desires to purchase and the Seller and Cephalon desire to
         sell the  Purchased  Assets  (hereinafter  defined) in exchange for the
         payment by the Purchaser of the Purchase  Price  (hereinafter  defined)
         and  the  assumption  by  the  Purchaser  of  the  Assumed  Liabilities
         (hereinafter  defined),  all on the terms and  conditions  described in
         this Agreement.

         NOW, THEREFORE,  in consideration of the Preamble and of the respective
covenants,  representations,  warranties and agreements  herein  contained,  and
intending  to be legally  bound  hereby,  the  parties  hereto  hereby  agree as
follows:


                          ARTICLE 1 - PURCHASE AND SALE

         1.1      AGREEMENT TO SELL.

                  (a) At the  Closing  hereunder  (as  defined  in  SECTION  2.1
hereof) and except as  otherwise  provided in this  SECTION  1.1, the Seller and
Cephalon, as applicable, shall grant, sell, convey, assign, transfer and deliver
to the  Purchaser,  upon  and  subject  to the  terms  and  conditions  of  this
Agreement,  all  right,  title and  interest  of the  Seller  and  Cephalon,  as
applicable,  in and to all  assets,  properties  and  rights of the  Seller  and
Cephalon,  as applicable,  described below (which assets,  properties and rights
are herein sometimes called the "PURCHASED ASSETS"):

                      (i) all of the  Seller's  rights  under the leases for the
         Facilities  dated March 20,  1992,  November  12, 1991 and December 28,
         1990, as each such Lease was assumed by the Seller on December 14, 1992
         and  amended on such date,  copies of which are as  attached  hereto as
         EXHIBIT A (collectively,  the "FACILITIES  LEASES")  including security
         deposits and all credits or refunds payable thereunder;

                      (ii)   all   equipment,   machinery,   furniture,   office
         furnishings,  leasehold improvements,  fixtures,  computer hardware and
         systems  (exclusive of data and software) and other  tangible  personal
         property located at the Facilities,  including without limitation those
         items specified in SCHEDULE  1.1(A)(II) hereto,  except for those items
         leased pursuant to the Equipment Leases (defined below) by Cephalon;


<PAGE>




                      (iii) all of Cephalon's  right,  title and interest in and
         to the Master Lease  Agreement dated as of February 1, 1994, as amended
         by and between Cephalon and General Electric Credit Corporation, copies
         of which are attached hereto as EXHIBIT B (the  "EQUIPMENT  LEASES") to
         the  extent  such  Equipment  Leases  relate  to the  assets  listed on
         SCHEDULE 1.1(A)(III) (the "Leased Assets");

                      (iv)  all  rights of the  Seller  and  Cephalon  under the
         contracts,  agreements,  leases, or arrangements  specified in SCHEDULE
         1.1(A)(IV);

                      (v)   all  prepaid  expenses,  refunds,  causes of action,
         rights of setoff and  recoupment  arising from or relating to the other
         Purchased Assets or the Leased Assets;

                      (vi)  all of the Seller's and Cephalon's right,  title and
         interest in and to all facility and construction drawings,  engineering
         reports and drawings,  facility  licenses and permits,  guaranties  and
         warranties  relating to the other Purchased Assets or the Leased Assets
         and all other  documentation and records  associated with the operation
         of the other Purchased Assets or the Leased Assets; and

                      (viii)all  office  and  other  supplies  and a copy of all
         validation   protocols,   validation   records   and  other   operating
         information  in the possession of the Seller or Cephalon and related to
         the use and maintenance of the Purchased Assets or the Leased Assets.

                  (b) Notwithstanding the foregoing,  the Purchased Assets shall
not include any of the following (the "EXCLUDED ASSETS"):

                      (i)   all lease agreements for real and personal  property
         (other than the  Facilities  Leases and the  Equipment  Leases) and all
         service agreements or executory  contracts related to the Facilities or
         the  Beltsville  Assets,  other  than  those  agreements  specified  in
         SCHEDULE 1.1(A)(IV);

                      (ii)  all cash on hand or in bank accounts;

                      (iii) the corporate seals,  certificates of incorporation,
         minute  books,  stock  books,  tax  returns,  books of account or other
         records having to do with corporate organization of the Seller;

                      (iv)  the rights which accrue or will accrue to the Seller
         under this Agreement;

                      (v)   the rights to the  Seller's  claims for any federal,
         state,  local,  or foreign  tax  refunds or any tax  attributes  of the
         Seller, including without limitation any net operating loss forwards;

                      (vi)  all raw  materials,  work-in-progress,  supplies and
         other inventories located at the Facilities;

                                       -2-

<PAGE>




                      (vii) all  right,  title and  interest  in and to the name
         "Cephalon"; and

                      (viii)any batch  records  or other  regulatory  files or
         notebooks  specifically  related to the  products  manufactured  by the
         Seller.

                  (c) The assets shall be sold, transferred,  assigned, conveyed
and delivered to the  Purchaser  free and clear of all liens,  claims,  charges,
options, pledges and encumbrances of any kind.

         1.2      AGREEMENT   TO  PURCHASE.   At  the  Closing   hereunder,  the
Purchaser shall purchase the Purchased Assets from the Seller and Cephalon, upon
and subject to the terms and conditions of this Agreement and in reliance on the
representations,  warranties and covenants of the Seller and Cephalon  contained
herein,  in exchange for the Purchase Price (defined in SECTION 1.3 hereof).  In
addition,  the Purchaser shall assume at the Closing and agree to pay, discharge
or perform,  as appropriate,  certain  liabilities and obligations of the Seller
and  Cephalon to the extent and as  provided  in SECTION 1.4 of this  Agreement.
Except as  specifically  provided in this  Agreement,  the  Purchaser  shall not
assume or be  responsible  for any  liabilities  or obligations of the Seller or
Cephalon.

         1.3      THE PURCHASE PRICE.

                  (a) PURCHASE PRICE.  The "PURCHASE  PRICE" shall be payable in
United  States  dollars  and shall be an amount  equal to  $24,863,973  less the
agreed value of the  liabilities  assumed by the  Purchaser  under the Equipment
Leases as set forth on Schedule 1.3(a) hereto.

                  (b)  PAYMENT OF  PURCHASE  PRICE.  On the  Closing  Date,  the
Purchaser shall pay to the Seller the Purchase  Price,  as adjusted  pursuant to
SECTIONS  1.3(C) and 1.3(D)  hereof,  payable by wire  transfer  of  immediately
available funds to such account as the Seller shall designate.

                  (c) ADJUSTMENTS TO PURCHASE PRICE. [*]



[*] Confidential information has been omitted and filed separately with the
    Commission.




                                       -3-

<PAGE>




 

                  (d) ADJUSTMENT OF PURCHASE  PRICE.  If, prior to the Closing,
the Purchaser and the Seller  determine  that the  representations  set forth in
SECTION 3.1(D) or SECTION  3.1(E) hereof are not true and correct,  the Purchase
Price shall be reduced by an amount equal to the Seller's  historical  cost,  as
set forth in SCHEDULES  1.1(A)(II)  and  1.1(A)(III)  hereto,  of the  Purchased
Assets that do not satisfy either of such representations.

                  (e) [*]




         1.4 ASSUMPTION OF LIABILITIES.  At the Closing  hereunder and except as
otherwise  specifically provided in this SECTION 1.4, the Purchaser shall assume
and  agree  to  pay,  discharge  or  perform,  as  appropriate,   the  following
liabilities   and   obligations   of  the  Seller  and  Cephalon  (the  "ASSUMED
LIABILITIES"):

             (a) all obligations of the Seller or Cephalon, as applicable, under
the  contracts,   agreements,  leases  or  arrangements  specified  in  Schedule
1.1(a)(iv) to be performed at or after the Closing Date;

             (b) all obligations of the Seller, if any, accruing at or after the
Closing Date under the Facilities Leases;

             (c) all obligations of Cephalon,  if any,  accruing at or after the
Closing Date under the Equipment  Leases to the extent the Purchaser has assumed
such Equipment Leases; and

             (d) sales and use tax liability  resulting from the sale or arising
after the sale of the Purchased  Assets  regardless of which party hereto may be
deemed by law to bear responsibility for payment of such taxes.

In no event,  however,  shall the  Purchaser  assume or incur any  liability  or
obligation  under  this  SECTION  1.4  or  otherwise  in  respect  of any of the
following:


[*] Confidential information has been omitted and filed separately with the
    Commission.

                                       -4-

<PAGE>




                 (i)   any  federal,   state  or  local  income  taxes  charged,
         assessed  or payable  by the  Seller  (or any member of any  affiliated
         group of which the Seller is a member),  including  without  limitation
         such  income  taxes  incident  to or  arising as a  consequence  of the
         negotiation  or  consummation  by the  Seller  (or  any  member  of any
         affiliated group of which the Seller is a member) of this Agreement and
         the transactions contemplated hereby;

                 (ii)  any  sales,  use,  excise,  franchise,  personal  or real
         property  taxes or any  similar  taxes,  fees or  governmental  charges
         attributable to events or periods prior to the Closing Date;

                 (iii) any  liability or  obligation  arising from or related to
         the  Excluded  Assets or any events,  acts or  omissions  by the Seller
         prior  to the  Closing  Date  (other  than  the  Assumed  Liabilities),
         including without limitation,  any liability or obligation arising from
         or related to the  environmental  condition of the Facilities  prior to
         the Closing Date; or

                 (iv)  any liability or  obligation  related to any employees of
         the Seller, or under any benefit arrangement of the Seller with respect
         thereto,  including without limitation, all liabilities for pay, wages,
         salaries,  unemployment compensation and insurance,  employee benefits,
         and contributions to employee benefit plans, however classified.


             ARTICLE 2 - CLOSING, ITEMS TO BE DELIVERED, THIRD PARTY
                 CONSENTS, CHANGE IN NAME AND FURTHER ASSURANCES

         2.1 CLOSING.  The consummation of the transactions  contemplated hereby
(the "CLOSING")  shall take place at 10:00 A.M., local time, on November 1, 1996
or the second  business day following the  satisfaction  or waiver of all of the
conditions  precedent of each of the parties hereto  required to be satisfied on
or prior to the Closing or on such other date as may be mutually  agreed upon in
writing by the  Purchaser  and the  Seller.  The date on which the  transactions
contemplated  herein are  consummated  is  sometimes  herein  referred to as the
"CLOSING  DATE." The Closing shall take place at the offices of Arnold & Porter,
Thurman Arnold Building, 555 12th Street, N.W., Washington, D.C. 20004.

         2.2 ITEMS TO BE DELIVERED AT  CLOSING.  At  the Closing  and subject to
the terms and conditions herein contained:

             (a) The Seller and Cephalon,  as  applicable,  shall deliver to the
Purchaser:

                 (i) such bills of sale,  assignments,  endorsements,  and other
         good  and  sufficient  instruments  and  documents  of  conveyance  and
         transfer as shall be necessary or appropriate to transfer and assign to
         the  Purchaser  all of the Seller's  and  Cephalon's  right,  title and
         interest in and to the Purchased Assets in form reasonably satisfactory
         to the Purchaser and its counsel;


                                       -5-

<PAGE>



                 (ii) an assignment of the Facilities Leases;

                 (iii) an  assignment  of the  Equipment  Leases  to the  extent
         provided in SECTION 1.1(A)(III);

                 (iv)  certificates  of good  standing  of the  Seller  from the
         Maryland  Department of Assessments  and Taxation and of the Seller and
         Cephalon from the Delaware  Secretary of State,  in each case dated not
         more than 30 days prior to the Closing;

                 (v) an affidavit of the Seller  certifying,  under penalties of
         perjury,  that the Seller is not a "foreign  person" within the meaning
         of section 1445 of the Internal  Revenue Code of 1986,  as amended (the
         "CODE");

                 (vi)  certificates  of the  President of each of the Seller and
         Cephalon and the Chief  Financial  Officer of Cephalon  certifying  the
         matters set forth in SECTION 5.1(A) hereof;

                 (vii) a legal  opinion of the Seller's and  Cephalon's  counsel
         regarding  the matters set forth in SCHEDULE  2.2(A)(VII),  in form and
         substance reasonably satisfactory to the Purchaser; and

                 (viii) such other  certificates,  instruments  and documents as
         are  required  to be  delivered  pursuant to this  Agreement  or as the
         Purchaser may reasonably require.

             (b) The Purchaser shall deliver to the Seller the following:

                 (i) the Purchase  Price as adjusted in accordance  with SECTION
         1.3 hereof;

                 (ii) an undertaking whereby the Purchaser will assume and agree
         to pay, discharge or perform, as appropriate,  the Seller's liabilities
         and  obligations to the extent and as provided in SECTION 1.4 hereof in
         form reasonably satisfactory to the Seller and its counsel;

                 (iii) an assumption of the Facilities Leases;

                 (iv)  an  assumption  of the  Equipment  Leases  to the  extent
         provided in SECTION 1.1(C)(III);

                 (v) a  certificate  of the  President  and the Chief  Financial
         Officer of the  Purchaser  certifying  the matters set forth in SECTION
         5.2(A) hereof; and

                 (vi) such other certificates,  instruments and documents as are
         required to be  delivered  pursuant to this  Agreement or as the Seller
         may reasonably require.


                                       -6-

<PAGE>



             (c) At or prior to the  Closing,  the  parties  hereto  shall  also
deliver to each  other the  agreements,  certificates  and other  documents  and
instruments referred to in ARTICLE 5 hereof.

         2.3 THIRD PARTY CONSENTS. To the extent that the Seller's or Cephalon's
rights under any  agreement,  contract,  commitment,  lease,  Authorization  (as
defined in SECTION 3.1(F) hereof) or other Purchased Asset to be assigned to the
Purchaser  hereunder may not be assigned  without the consent of another  person
which has not been obtained, this Agreement shall not constitute an agreement to
assign the same if an attempted  assignment would constitute a breach thereof or
be unlawful.  The Seller and  Cephalon  each shall use  commercially  reasonable
efforts to obtain  such  consents  on or before the  Closing  Date.  If any such
required  consent shall not be obtained or if any attempted  assignment would be
ineffective or would impair the Purchaser's  rights under the Purchased Asset in
question so that the  Purchaser  would not in effect  acquire the benefit of all
such rights,  the Purchaser,  at its sole and exclusive option,  may require the
Seller or Cephalon,  to the maximum extent  permitted by law and by the terms of
such Purchased Asset, to act after the Closing as the Purchaser's agent in order
to obtain for the Purchaser the benefits  thereunder and the Seller and Cephalon
shall cooperate, to the maximum extent permitted by law and the Purchased Asset,
with the Purchaser in any other reasonable  arrangement designed to provide such
benefits to the Purchaser.  The Purchaser will reimburse the Seller and Cephalon
for all reasonable  out-of-pocket expenses incurred after the Closing Date in so
acting in the capacity of the Purchaser's agent.

         2.4 FURTHER ASSURANCES. The Seller and Cephalon from time to time after
the Closing, at the Purchaser's request,  will execute,  acknowledge and deliver
to the Purchaser such other instruments of conveyance and transfer and will take
such other actions and execute and deliver such other documents,  certifications
and further  assurances as the Purchaser may reasonably  require in order (i) to
vest more effectively in the Purchaser any of the Purchased  Assets,  or (ii) to
put the Purchaser  more fully in possession of any of the Purchased  Assets,  or
(iii) to better  enable the  Purchaser to complete,  perform or discharge any of
the liabilities or obligations  assumed by the Purchaser at the Closing pursuant
to SECTION 1.4 hereof,  subject to payment by the  Purchaser  of all  reasonable
out-of-pocket expenses of the Seller and Cephalon in connection with this clause
(iii).  Each of the parties hereto will cooperate with the other and execute and
deliver to the other  parties  hereto such other  instruments  and documents and
take such other actions as may be reasonably  requested from time to time by any
other party hereto as necessary to carry out,  evidence and confirm the intended
purposes of this Agreement.

         2.5  POSSESSION  AND RISK OF LOSS.  Until the  Closing,  the Seller and
Cephalon  shall  bear all risk of loss of the  Purchased  Assets to be  conveyed
hereunder. From and after the Closing, the Purchased Assets shall be at the risk
of the  Purchaser.  At the  Closing,  the  Seller  and  Cephalon  shall  put the
Purchaser in full,  complete and quiet  possession  and  enjoyment of all of the
Purchased Assets and the Leased Assets.

         2.6  PRE-CLOSING  INSPECTION.  Not less than one week prior to the date
set for the Closing,  the Purchaser  shall have the  opportunity  to inspect the
Facilities,  the  Purchased  Assets  and the Leased  Assets  for the  purpose of
confirming  the  validity of the  representations  contained  in SECTION  3.1(D)
hereof and determining that the condition of the Purchased Assets and the Leased
Assets  satisfy the  representations  contained in the first sentence of SECTION
3.1(M) hereof

                                       -7-

<PAGE>



except for any latent defects or defects that are not reasonably detectable upon
inspection prior to the Closing Date.


                   ARTICLE 3 - REPRESENTATIONS AND WARRANTIES

         3.1  REPRESENTATIONS  AND  WARRANTIES  OF THE SELLER.  Cephalon and the
Seller,  jointly and severally  hereby represent and warrant to the Purchaser as
of the date hereof as follows:

              (a)  CORPORATE  EXISTENCE.  Each of the Seller and  Cephalon  is a
corporation duly organized, validly existing and in good standing under the laws
of the State of  Delaware.  Each of  Cephalon  and the Seller has the  corporate
power and  authority to conduct its business as now being  conducted and to own,
lease and operate the properties and assets now owned, leased and being operated
by it. The Seller is duly  qualified  or licensed to do business  and is in good
standing  as a foreign  corporation  in  Maryland.  No action  has been taken or
authorized by the Seller or Cephalon to liquidate or dissolve or to transfer any
assets in a manner  inconsistent  with the  Seller's or  Cephalon's  obligations
under this Agreement. The Seller is a wholly-owned subsidiary of Cephalon.

              (b) CORPORATE POWER; AUTHORIZATION;  ENFORCEABLE OBLIGATIONS. Each
of the Seller and Cephalon has the corporate power, authority and legal right to
execute, deliver and perform this Agreement and all other agreements,  documents
and instruments contemplated hereunder. The execution,  delivery and performance
of this  Agreement by each of the Seller and Cephalon have been duly  authorized
by all necessary  corporate and shareholder action. This Agreement has been, and
the other  agreements,  documents  and  instruments  required to be delivered by
either the Seller or  Cephalon in  accordance  with the  provisions  hereof (the
"SELLER'S  DOCUMENTS")  will be, duly  executed  and  delivered on behalf of the
Seller and  Cephalon,  as applicable  and this  Agreement  constitutes,  and the
Seller's Documents when executed and delivered will constitute, the legal, valid
and binding  obligations of the Seller and Cephalon,  respectively,  enforceable
against such party in accordance with their respective  terms,  except as may be
limited  by  bankruptcy  laws and other  similar  laws  affecting  the rights of
creditors generally and principles of equity.

              (c) VALIDITY OF  CONTEMPLATED  TRANSACTIONS,  ETC. The  execution,
delivery and  performance  of this Agreement by the Seller and Cephalon does not
and will not violate or result in the breach of any term, condition or provision
of, or require  the  consent  of any other  person  which has not been  obtained
under,  (i) any law,  ordinance,  or  governmental  rule or  regulation to which
either the Seller or  Cephalon  is  subject,  (ii) any  judgment,  order,  writ,
injunction,  decree  or  award  of any  court,  arbitrator  or  governmental  or
regulatory official,  body or authority which is applicable to either the Seller
or Cephalon,  (iii) the Certificate of  Incorporation or bylaws of the Seller or
Cephalon, (iv) any mortgage, indenture, agreement, lease, plan or Authorization,
to which the Seller or Cephalon is a party,  by which the Seller or Cephalon may
have  rights or by which any of the  Purchased  Assets  may be bound or (v) will
result in the creation or imposition of any lien, claim, charge,  restriction or
encumbrance of any kind in or with respect to the Purchased  Assets,  except (A)
as described on SCHEDULE 3.1(C) hereto, (B) the filing of premerger notification
and the expiration or early  termination  of the waiting period  required by the
Hart-Scott-Rodino  Antitrust  Improvements  Act of  1976  ("HSR"),  and  (C) the
delivery and recording

                                       -8-

<PAGE>



of title transfer documentation with various regulatory authorities with respect
to the transfer of title to the vehicle to be conveyed to the Purchaser.

              (d) ALL TANGIBLE PURCHASED ASSETS. Each of SCHEDULE 1.1(A)(II) and
SCHEDULE  1.1(A)(III) hereto sets forth an accurate list and summary description
of all tangible  Purchased  Assets and Leased Assets where the net book value of
an individual  item exceeds $5,000.  All of the Purchased  Assets and the Leased
Assets are located at the Facilities  other than the Purchased  Assets listed on
SCHEDULE 3.1(D), which are within the control of the Purchaser.

              (e) TITLE TO PURCHASED ASSETS. The Seller has good and valid legal
title to all of its assets included in the Purchased  Assets,  free and clear of
all mortgages, liens, pledges, security interests, charges, claims, restrictions
and other  encumbrances and defects of title except for liens,  imperfections of
title, easements and encumbrances that are (i) for current taxes not yet due and
payable or (ii) disclosed in any of the Schedules hereto.

              (f)  COMPLIANCE  WITH  LAW;  AUTHORIZATIONS.  To the  best  of the
Seller's and Cephalon's knowledge,  the Seller and Cephalon have complied in all
respects  with  each,  and  are not in  violation  of any,  law,  ordinance,  or
governmental  or regulatory  rule or regulation  (including  without  limitation
environmental  laws),  whether federal,  state,  local or foreign,  to which the
Seller's or Cephalon's  business,  operations,  assets or properties used at the
Facilities or included in the Purchased Assets or the Leased Assets are subject.
The Seller or Cephalon owns, holds,  possesses or lawfully uses in the operation
of the  Facilities  and use of the  Purchased  Assets and the Leased  Assets all
material  franchises,   licenses,  permits,  easements,   rights,  applications,
filings, registrations and other authorizations (each, an "AUTHORIZATION") which
are necessary for it to operate the Facilities and use the Purchased  Assets and
the Leased Assets. To the best of the Seller's and Cephalon's knowledge, neither
the Seller nor  Cephalon is in violation of or default in, nor has the Seller or
Cephalon  received any notice of any claim of default or violation  with respect
to, any such Authorization.

              (g)  LITIGATION.   No  litigation,   including  any   arbitration,
investigation  or  other  proceeding  of or  before  any  court,  arbitrator  or
governmental  or  regulatory  official,  body or authority is pending or, to the
best  knowledge  of the Seller and  Cephalon,  threatened  against the Seller or
Cephalon or which  relates to the  Purchased  Assets or the Leased  Assets which
would have a material adverse effect on the Facilities,  the Purchased Assets or
the Leased Assets.

              (h)  CONTRACTS  AND  COMMITMENTS.  Except as set forth on SCHEDULE
3.1(H)  hereto,  neither  the Seller nor  Cephalon  is a party to any written or
oral:

                   (i)  agreement,  contract or commitment for the employment of
         any person,  including any  consultant,  employed at the  Facilities in
         connection with the conduct of the Seller's business;

                   (ii) agreement,  contract, commitment or arrangement with any
         labor  union or  other  representative  of  employees  relating  to the
         Facilities or the Purchased Assets;


                                       -9-

<PAGE>



                   (iii) loan agreements and other debt  instruments that in any
         manner encumber any of the Purchased Assets;

                   (iv)  agreement,  contract  or  commitment  relating  to  the
         Facilities or the Purchased Assets not otherwise  required to be listed
         on  SCHEDULE  3.1(H)  hereto or not  required to be listed by virtue of
         another provision of this SECTION 3.1(H),  and continuing over a period
         of more than six months from the date hereof or exceeding  with respect
         to the Facilities or the Purchased Assets, $10,000 in value;

                   (v)  conditional  sale  agreement  or lease  under  which the
         Seller is either purchaser,  lessor or lessee relating to the Purchased
         Assets or any property at which Purchased Assets are located;

                   (vi)  commitment or agreement for any capital  expenditure or
         leasehold  improvement in excess of $25,000  relating to the Facilities
         or the Purchased Assets;

                   (vii)  agreement,  contract  or  commitment  relating  to the
         Facilities or the Purchased  Assets  limiting or restraining the Seller
         or Cephalon or any successor  thereto,  to the best of the Seller's and
         Cephalon's  knowledge,  from using or operating the Purchased Assets in
         any legal manner, nor, to the Seller's or Cephalon's knowledge,  is any
         employee  of the  Seller  engaged  in the use of the  Purchased  Assets
         subject to any such agreement, contract or commitment; and

                   (viii)  license,   franchise  or  distributorship   agreement
         relating to the Facilities or the Purchased Assets.

         Except as may be disclosed on SCHEDULE 3.1(H),  each of the agreements,
contracts,  commitments,  leases,  plans and other  instruments,  documents  and
undertakings  listed on SCHEDULE  3.1(H) under which the Purchaser is to acquire
rights or obligations  hereunder is valid and enforceable in accordance with its
terms,  except as may be  limited  by  bankruptcy  laws and other  similar  laws
affecting the rights of creditors generally and principles of equity; the Seller
and Cephalon are in compliance with the provisions  thereof;  neither the Seller
nor  Cephalon  is, and to the  Seller's or  Cephalon's  knowledge no other party
thereto is, in default in the  performance,  observance  or  fulfillment  of any
material  obligation,  covenant or condition contained therein, and no event has
occurred  which with or without the giving of notice or lapse of time,  or both,
would constitute a default  thereunder.  Except as set forth on SCHEDULE 3.1(H),
no written or oral  agreement,  contract  or  commitment  described  in SCHEDULE
3.1(H),  requires the consent of any party to its assignment in connection  with
the transactions contemplated hereby.

             (i) INTELLECTUAL PROPERTY,  VIOLATIONS, ETC. Subject to Section 2.3
above,  the  Purchased  Assets  include all licenses from  manufacturers  of the
Purchased  Assets  necessary  for the use of the  Purchased  Assets within their
respective  functional   specifications.   No  patent,   trademark,   tradename,
servicemark, copyright or trade secret is necessary for the configuration of the
Purchased  Assets or the  Leased  Assets as  currently  configured.  To the best
knowledge  of the  Seller,  the  Purchased  Assets  and  the  Leased  Assets  as
configured by the Seller do not infringe

                                      -10-

<PAGE>



upon or unlawfully or wrongfully use any patent, trademark,  tradename,  service
mark, copyright or trade secret owned or claimed by another.

             (j) PURCHASED  ASSETS.  Except as set forth in SCHEDULE  3.1(J) and
except for the  Excluded  Assets,  the  Purchased  Assets  include all  material
property owned by the Seller or to which Seller has rights  necessary to possess
and  utilize  the  Purchased  Assets by the  Purchaser  in the manner  presently
configured by the Seller.

             (k) TAX RETURNS.  All material federal,  state,  local,  foreign or
other governmental  income,  profit and franchise,  gross receipts,  sales, use,
intangibles,   inventory,  capital  stock,  ad  valorem,  transfer,  employment,
payroll,  withholding,  occupation,  property,  license, stamp and excise taxes,
customs duties or other taxes, fees, assessments or charges whatsoever, together
with any interest and any penalties, additions to tax or additional amounts with
respect  thereto  (collectively,  "TAXES"  or a "TAX")  due with  respect to the
Seller  or  Cephalon  which  could  result  in any  lien or  encumbrance  on the
Purchased Assets have been fully paid by the Seller or Cephalon.

             (l)  INSURANCE.  SCHEDULE  3.1(L)  hereto  lists  all  policies  of
insurance  covering any casualty to the  Facilities or the  Purchased  Assets in
force on the date of this Agreement.

             (m)  CONDITION  OF ASSETS.  Except as set forth in SCHEDULE  3.1(M)
hereto,  all of the  Purchased  Assets,  taken as a whole,  are, and each of the
Purchased Assets listed on SCHEDULE  1.1(A)(II) or included within the Equipment
Leases  that has a net book value  greater  than  $5,000  is, in good  operating
condition  and repair,  subject to normal  wear and tear,  and are usable in the
regular  and  ordinary  course of the  business  of the Seller and fit for their
intended  purposes.  No  regular,  ordinary  or  required  maintenance  has been
deferred  with  respect to any of the  Purchased  Assets or the  Leased  Assets,
except for annual  maintenance on the Purchased  Assets that would normally have
been  performed in August 1996,  which the Purchaser  acknowledges  has not been
performed  by the Seller for the mutual  convenience  of the  Purchaser  and the
Seller.

             (n) FDA MATTERS.  The Seller operates and uses the Purchased Assets
and the Leased Assets in accordance with 21 U.S.C.  Section 351(a)(2)(B) and the
regulations  promulgated  thereunder  by the Food and Drug  Administration  (the
"FDA")(such law and regulations being collectively referred to herein as "CGMP")
and will  continue  to do so through  the  Closing  Date.  SCHEDULE  3.1(N) also
includes  a  listing  of  all  written   inspection   reports  or  observations,
establishment  inspection  reports,  complaints,  warning  letters  or any other
similar  documentation  issued  to the  Seller  or  Cephalon  by the  FDA or any
comparable  foreign  regulatory  authority  that  relates  in  any  way  to  the
Facilities or the Purchased Assets, including without limitation,  all Form 483s
and EIRs (collectively,  "Inspection Reports"), as well as all responses thereto
and  resolutions  thereof  by the  Seller or  Cephalon.  The  Seller  previously
provided to the  Purchaser a true and complete  copy of each of the items listed
on SCHEDULE  3.1(N) hereto,  and to the Seller's and Cephalon's  knowledge there
are no  outstanding  or  unresolved  issues  under any such  Inspection  Report.
Neither the Seller nor Cephalon  makes any  representation  or warranty that the
Facilities will meet CGMP standards for the Purchaser's intended process.

             (o) WARN ACT.  At all times  from 90 days prior to the date of this
Agreement  through the Closing,  the Seller has  employed  fewer than 50 people,
including those employees

                                      -11-

<PAGE>



experiencing  an  "employment  loss" under the Worker  Adjustment and Retraining
Notification Act, 29 U.S.C.  Section 2101 ET SEQ. ("WARN ACT"), within such time
period.  The Seller is in full  compliance with the WARN Act and its obligations
thereunder.

             (p) ENVIRONMENTAL MATTERS.

                 (i)  CONDITION OF  FACILITIES.  Except as set forth on SCHEDULE
         3.1(P),  or as  expressly  authorized  by  an  effective  permit  or by
         applicable law, there have been no releases, discharges or emissions of
         any  Hazardous  Substances  into,  onto,  under or from the  Facilities
         during the Seller's  occupancy thereof or to the Seller's or Cephalon's
         knowledge at any other time;  and no Hazardous  Substances  have at any
         time been  disposed  of in any  amount  on, at or under the  Facilities
         during the Seller's  occupancy thereof or to the Seller's or Cephalon's
         knowledge at any other time.

                 (ii) USE OF FACILITIES.  Except as set forth on SCHEDULE 3.1(P)
         attached hereto or as expressly authorized by an effective permit or by
         applicable law, neither the Seller nor Cephalon has conducted,  engaged
         in or permitted others to conduct or engage in any business,  operation
         or activity on or at the  Facilities  involving  the use,  manufacture,
         treatment, storage or disposal of any Hazardous Substances.

                 (iii)  COMPLIANCE  WITH  ENVIRONMENTAL  LAWS.  The  Seller  and
         Cephalon  are  in  material  compliance  with  all  Environmental  Laws
         applicable  to the  Facilities  or the  Purchased  Assets or the Leased
         Assets. Without limiting the foregoing,  the Seller and Cephalon are in
         material  compliance with all laws,  rules,  ordinances and regulations
         applicable  to the  Facilities  or the  Purchased  Assets or the Leased
         Assets relating to (A) the release, discharge,  emission or disposal of
         Hazardous   Substances  or  other  wastes  to  air,   water,   land  or
         groundwater; (B) the use, manufacture, importing, handling, generation,
         treatment,  storage,  transportation,  disposal or other  management of
         Hazardous  Substances or other  wastes;  (C) the exposure of persons to
         toxic, hazardous, harmful or other controlled,  prohibited or regulated
         substances;  and (D) judicial and administrative  orders,  injunctions,
         judgments, declarations, directives, notices or demands with respect to
         the foregoing matters.

                 (iv) ENVIRONMENTAL AUTHORIZATIONS. SCHEDULE 3.1(O) sets forth a
         true and complete list of all environmental permits, authorizations and
         licenses under all applicable  United States  federal,  state and local
         laws, rules,  ordinances and regulations necessary for the operation of
         the Facilities and the Purchased Assets or the Leased Assets,  and such
         permits, authorizations and licenses are in full force and effect.

                 (v) NO  LITIGATION.  To the best  knowledge  of the  Seller and
         Cephalon,   there  is  no  pending  legal  action,  claim,  proceeding,
         investigation or controversy against the Seller or Cephalon relating to
         the  Facilities  or the  Purchased  Assets or the Leased  Assets by any
         third party (including any

                                      -12-

<PAGE>



         government or governmental agency or body) arising under or relating to
         any  matters  cognizable  under  Environmental  Laws nor does any valid
         basis for such a legal  action,  claim,  proceeding,  investigation  or
         controversy exist.

                 (vi) NOTICES OF ENVIRONMENTAL PROBLEMS.  Except as set forth on
         SCHEDULE 3.1(P),  neither the Seller nor Cephalon has received nor does
         the Seller or Cephalon reasonably expect to receive any notice, letter,
         citation, order, warning, complaint,  inquiry, claim or demand alleging
         or asserting that: (a) the Seller or Cephalon has violated, or is about
         to violate,  any Environmental Laws applicable to the Facilities or the
         Purchased Assets or the Leased Assets;  (b) there has been a release or
         there is a threat of a release of any  Hazardous  Substance at, from or
         onto any of the  Facilities;  (c) the Seller or  Cephalon  may be or is
         liable, in whole or in part, for the costs of cleaning up, remediating,
         removing or responding to a release or threat of a release of Hazardous
         Substances  at, from or onto any of the  Facilities  or, as a result of
         its operating of such  Facilities,  at, from or onto any other property
         wherever located;  or (d) the Facilities are subject to a lien in favor
         of any governmental entity for any liability,  costs or damages,  under
         Environmental  Laws,  arising from costs incurred by such  governmental
         entity.

         For purposes of this SECTION  3.1(P),  "ENVIRONMENTAL  LAWS" shall mean
all United States federal, state and local laws, regulations,  standards, rules,
ordinances,  policies and other binding governmental  requirements,  judicial or
administrative   orders  and  common  law  legal   obligations   pertaining   to
environmental concerns, or to employee and occupational health and safety, or to
public  health,   including   without   limitation  the  federal   Comprehensive
Environmental Response,  Compensation and Liability Act, 42 U.S.C. Sections 9601
ET SEQ., the federal Resource  Conservation and Recovery Act, 42 U.S.C. Sections
6901 ET SEQ., the federal Clean Water Act, 33 U.S.C.  Sections 1251 ET SEQ., the
federal Clean Air Act, 42 U.S.C.  Sections 7401 ET SEQ. and analogous  state and
local laws and "HAZARDOUS  SUBSTANCES" shall mean petroleum products and wastes,
asbestos,  radon,  PCBs, and those materials  designated or defined as hazardous
substances,   pollutants,   toxic  pollutants,   toxic   substances,   hazardous
pollutants, hazardous wastes, regulated substances or other similar terms in any
Environmental  Laws, or any other substance which by law or regulation  requires
special   handling  in  its   collection,   storage,   treatment,   disposal  or
transportation.

             (q) NO  OTHER  WARRANTIES.  In  connection  with  the  transactions
contemplated  hereby and the  Facilities  and the  Purchased  Assets,  except as
expressly set forth in this SECTION 3.1, THE SELLER MAKES NO  REPRESENTATIONS OR
WARRANTIES   WHATSOEVER,   WHETHER   EXPRESS  OR  IMPLIED   OR   STATUTORY,   OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE.

             (r) FACILITIES  LEASES AND EQUIPMENT  LEASES.  All of the documents
comprising the Equipment Leases and the Facilities Leases are listed in SCHEDULE
3.1(R) hereto, and the Seller has previously delivered to the Purchaser true and
complete copies thereof.  The Equipment Leases and the Facilities  Leases are in
full  force and  effect  and the Seller  and  Cephalon,  as  applicable,  are in
compliance  with their  respective  obligations  under the  provisions  thereof.
Neither  the  Seller  nor  Cephalon  is in  default,  and  to the  Seller's  and
Cephalon's knowledge, no other party is in material default, in the performance,
observance or fulfillment of any obligation,  covenant or condition contained in
any of the Equipment Leases or the Facilities Leases, and no

                                      -13-

<PAGE>



event has occurred which,  with or without the giving of notice or lapse of time
or both, would constitute a default thereunder.

             (s)  "KNOWLEDGE OF THE SELLER AND  CEPHALON".  For purposes of this
SECTION 3.1, "to the  Seller's  knowledge,"  "to  Cephalon's  knowledge,"  "best
knowledge  of the  Seller and  Cephalon"  or words of  similar  import  shall be
conclusively  deemed  to be only  that  knowledge  actually  possessed  by those
persons  identified  in  SCHEDULE  3.1(S),  who are  employees  of the Seller or
Cephalon and who have oversight  responsibility  at the  Facilities.  The Seller
shall not be  deemed  to have  actual  or  constructive  knowledge  of any fact,
circumstance  or  occurrence  known to any person other than as set forth in the
preceding sentence.

         3.2 REPRESENTATIONS  AND  WARRANTIES OF  THE PURCHASER.  The  Purchaser
represents and warrants to the Seller as follows:

             (a)  CORPORATE  EXISTENCE.  The  Purchaser  is a  corporation  duly
organized,  validly existing and in good standing under the laws of Canada.  The
Purchaser has the  corporate  power and authority to conduct its business as now
being  conducted  and to own,  lease and operate the  properties  and assets now
owned,  leased and being  operated by it. The  Purchaser  is duly  qualified  or
licensed to do business  and is in good  standing  as a foreign  corporation  in
Maryland.  No action has been taken or  authorized by the Purchaser to liquidate
or  dissolve  or to  transfer  any  assets  in a manner  inconsistent  with this
Agreement.

             (b)  CORPORATE  POWER  AND  AUTHORIZATION.  The  Purchaser  has the
corporate power, authority and legal right to execute,  deliver and perform this
Agreement.  The  execution,  delivery and  performance  of this Agreement by the
Purchaser have been duly  authorized by all necessary  corporate and shareholder
action.  This  Agreement  has been,  and the  other  agreements,  documents  and
instruments  required to be delivered by the  Purchaser in  accordance  with the
provisions  hereof (the  "PURCHASER'S  DOCUMENTS")  will be, duly  executed  and
delivered on behalf of the Purchaser  and this  Agreement  constitutes,  and the
Purchaser's  Documents when executed and delivered will  constitute,  the legal,
valid and binding obligations of the Purchaser enforceable against the Purchaser
in  accordance  with  their  respective  terms,  except  as  may be  limited  by
bankruptcy  laws and other  similar  laws  affecting  the  rights  of  creditors
generally and principles of equity.

             (c) VALIDITY OF  CONTEMPLATED  TRANSACTIONS,  ETC.  The  execution,
delivery and  performance  of this  Agreement by the Purchaser does not and will
not violate or result in the breach of any material term, condition or provision
of, or require  the  consent  of any other  person  which has not been  obtained
under, (i) any material law,  ordinance,  or governmental  rule or regulation to
which the Purchaser is subject,  (ii) any  judgment,  order,  writ,  injunction,
decree or award of any court, arbitrator or governmental or regulatory official,
body or  authority  which is  applicable  to the  Purchaser,  (iii) the  charter
documents of the Purchaser, or (iv) any material mortgage, indenture, agreement,
lease, plan or Authorization,  to which the Purchaser is a party or by which the
Purchaser is otherwise  bound,  except for the filing of premerger  notification
and the expiration or early termination of the waiting period required by HSR.

             (d) INVESTIGATION AND EVALUATION.  The Purchaser  acknowledges that
(i) the  Purchaser  and its  directors,  officers,  attorneys,  accountants  and
advisors have been given or will

                                      -14-

<PAGE>



be given prior to the Closing the opportunity to examine all books,  records and
other  information  with respect to the Seller,  the  Facilities,  the Purchased
Assets,  and the Assumed  Liabilities  made  available  to the  Purchaser  under
SECTION  4.3  hereof,  (ii) the  Purchaser  has taken  full  responsibility  for
determining the scope of its investigations of the Seller,  the Facilities,  the
Purchased Assets, and the Assumed Liabilities,  and for the manner in which such
investigations  have been  conducted,  (iii) the  Purchaser is fully  capable of
evaluating the adequacy and accuracy of the information and material obtained by
the Purchaser in the course of such  investigations,  (iv) the Purchaser has not
relied  on the  Seller  with  respect  to any  matter  in  connection  with  the
Purchaser's evaluation of the Seller, the Facilities,  the Purchased Assets, and
the Assumed  Liabilities,  other than the  representations and warranties of the
Seller  specifically set forth in SECTION 3.1 and other agreements of the Seller
set forth herein, and (v) the Seller is making no representations or warranties,
express or implied,  of any nature  whatever  with  respect to the  Seller,  the
Purchased Assets, and the Assumed  Liabilities,  other than the  representations
and warranties specifically set forth in SECTION 3.1 and elsewhere herein.

         3.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by each party in this ARTICLE 3 or in any  attachment,  Exhibit,
Schedule,  certificate,  document or list  delivered by any such party  pursuant
hereto or in connection with the transactions  contemplated hereby shall survive
the Closing.


                     ARTICLE 4 - AGREEMENTS PENDING CLOSING.

         4.1  AGREEMENTS  OF THE  SELLER  PENDING  THE  CLOSING.  The Seller and
Cephalon,  jointly and severally,  covenant and agree that,  pending the Closing
and except as otherwise agreed to in writing by the Purchaser:

              (a) other  than the  Seller's  reduction  and  termination  of its
production  activities at the Facilities in contemplation of SECTION 2.6 hereof,
the  business  of the  Seller  shall be  conducted  only in,  and the Seller and
Cephalon  shall  not take any  action  with  respect  to the  Facilities  or the
Purchased Assets or the Leased Assets except in, the ordinary course of business
and  substantially  in the  same  manner  as  carried  on as of the date of this
Agreement,  but in all events  Seller shall operate the  Facilities  and use the
Purchased Assets and the Leased Assets in accordance with CGMP;

              (b) the Seller and Cephalon will promptly  advise the Purchaser in
writing  of any  known  threat of or the  commencement  of any  dispute,  claim,
action, suit, proceeding,  arbitration or investigation against or involving the
Purchased  Assets or the Facilities,  when the amount claimed is $10,000 or more
in the aggregate or if such proceeding or  investigation is initiated by the FDA
or other regulatory  agency or of the occurrence of any development known to the
Seller or Cephalon  (exclusive of general economic factors affecting business in
general)  of a nature  that is or may be  materially  adverse  to the  business,
operations, properties, assets or prospects of the Seller or Cephalon;

              (c) the Seller and Cephalon will use their  reasonable  efforts to
conduct  their  business  in  such  a  manner  that  on  the  Closing  Date  the
representations  and  warranties  of the Seller and  Cephalon  contained in this
Agreement shall be true, except as specifically

                                      -15-

<PAGE>



contemplated  by this ARTICLE 4, as though such  representations  and warranties
were made on and as of such date. Furthermore,  the Seller and Cephalon will use
their  reasonable  efforts to cause all of the conditions to the  obligations of
the  Purchaser,  the Seller and Cephalon under this Agreement to be satisfied on
or prior to the Closing Date and shall make such filings,  take such actions and
cooperate  fully, at its expense,  with the Purchaser in securing the expiration
or  termination  of  the  waiting  period  required  under  HSR as  promptly  as
practicable;

              (d) the Seller and Cephalon shall use their reasonable efforts, to
the extent not  prohibited by the  foregoing  provisions of this SECTION 4.1, to
maintain  their  relationships  with  those  suppliers  and  vendors  subject to
agreements included in Schedule 1.1(a)(iv);

              (e) the Seller and Cephalon will maintain  themselves at all times
as corporations  duly  incorporated,  validly existing and in good standing,  as
applicable,  under  the  laws of the  State of  Delaware  and the  Seller  shall
maintain   itself  at  all  times  in  good  standing  under  the  laws  of  the
jurisdictions under which it is doing business as a foreign corporation;

              (f) the Seller and  Cephalon  will  continue to carry and maintain
all of its  existing  insurance  relating to the  Facilities  and the  Purchased
Assets and the Leased Assets;

              (g) the Seller and Cephalon will maintain the Purchased Assets and
the Leased Assets in good operating condition and repair,  usable in the regular
and ordinary course,  fit for the purposes  intended,  other than as provided in
SECTION 3.1(M) hereof;

              (h)  Neither  the Seller nor  Cephalon  shall  cause or permit any
amendment to, or any modification, cancellation, or renewal or extension of, any
of the  Facilities  Leases or the  Equipment  Leases  without the prior  written
consent of the Purchaser; and

              (i) the Seller shall  promptly  deliver to the  Purchaser  written
notice  of any  event or  development  that  would  (i)  render  any  statement,
representation  or  warranty  of  the  Seller  or  Cephalon  in  this  Agreement
(including  exceptions set forth in the schedules attached hereto) inaccurate or
incomplete in any material respect,  or (ii) constitute or result in a breach by
the Seller or  Cephalon  of, or a failure by the  Seller or  Cephalon  to comply
with,  any agreement or covenant in this  Agreement  applicable to the Seller or
Cephalon.

         4.2  AGREEMENTS  OF THE  PURCHASER  PENDING THE CLOSING.  The Purchaser
covenants and agrees that, pending the Closing and except as otherwise agreed to
in writing by the Seller:

              (a) the Purchaser  will not take any action that would result in a
breach of any of its representations and warranties hereunder.  Furthermore, the
Purchaser  shall  cooperate with the Seller and use reasonable  efforts to cause
all of the  conditions to the  obligations of the Purchaser and the Seller under
this  Agreement  to be  satisfied on or prior to the Closing Date and shall make
such  filings and take such actions as shall be  reasonably  necessary to obtain
expiration or early  termination  of the waiting  period  required by the HSR as
promptly as practicable;

              (b)  the  Purchaser  will  maintain  itself  at  all  times  as  a
corporation  duly  incorporated,  validly  existing  and in  good  standing,  as
applicable,  under the laws of the jurisdictions  under which it is incorporated
and doing business as a foreign corporation; and

                                      -16-

<PAGE>




              (c) the Purchaser  shall  promptly  deliver to the Seller  written
notice  of any  event or  development  that  would  (i)  render  any  statement,
representation  or  warranty  of the  Purchaser  in  this  Agreement  (including
exceptions set forth in the schedules  attached hereto) inaccurate or incomplete
in any  material  respect,  or (ii)  constitute  or  result  in a breach  by the
Purchaser  of, or a failure by the  Purchaser to comply with,  any  agreement or
covenant in this Agreement applicable to the Purchaser.

         4.3 ACCESS. Upon reasonable prior notice, the Seller and Cephalon shall
give to the  Purchaser's  officers,  employees,  counsel,  accountants and other
representatives  access  to and the right to  inspect,  during  normal  business
hours, the premises,  properties, assets, records, contracts and other documents
of the Seller and Cephalon  relating to the Facilities and the Purchased  Assets
and shall  permit them to consult  with the  officers,  employees,  accountants,
counsel and agents of the Seller for the purpose of making such investigation of
the  Facilities  and the Purchased  Assets,  as the Purchaser  shall  reasonably
desire  to make,  provided  that at any time  prior to  October  25,  1996  such
investigation  shall  not  unreasonably  interfere  with the  Seller's  business
operations.  At all times after  October 25, 1996 until the Closing  Date,  such
access shall be  unrestricted  access to inspect the  Facilities,  the Purchased
Assets and the Leased Assets. Furthermore, the Seller and Cephalon shall furnish
to the  Purchaser  such  documents  and  copies of  documents  and  records  and
information with respect to the Facilities and the Purchased  Assets  (including
without limitation all files and records concerning  regulatory  compliance) and
copies of any working papers  relating  thereto as the Purchaser shall from time
to time reasonably request and shall permit the Purchaser and its agents to make
such  physical  inventories  and  inspections  of the  Purchased  Assets  as the
Purchaser may reasonably request from time to time.

         4.4 PRESS  RELEASES.  Except as  required  by  applicable  law or stock
exchange  rule,  neither  the  Seller  nor the  Purchaser  shall make any public
statement or releases concerning this Agreement or the transactions contemplated
hereby except for such information as shall have been approved in writing by the
other party hereto, which approval shall not be unreasonably withheld.


                 ARTICLE 5 - CONDITIONS PRECEDENT TO THE CLOSING

         5.1 CONDITIONS   PRECEDENT  TO  THE   PURCHASER'S   OBLIGATIONS.   All
obligations of the Purchaser under this Agreement are subject to the fulfillment
or satisfaction, prior to or at the Closing, of each of the following conditions
precedent:

             (a)  REPRESENTATIONS,  WARRANTIES AND COVENANTS OF THE SELLER.  The
representations and warranties of the Seller and Cephalon herein contained shall
have been true and correct in all material  respects at the date of execution of
this Agreement and at the Closing;  the Seller and Cephalon shall have performed
in all material  respects all obligations and complied in all material  respects
with all  agreements,  undertakings,  covenants and conditions  required by this
Agreement  to be  performed  or  complied  with by it at or prior to the Closing
Date;  and the Seller and  Cephalon  shall have  delivered  to the  Purchaser  a
certificate  dated the Closing Date and signed by the  Presidents  of the Seller
and Cephalon and by the Chief Financial Officer of Cephalon to such effect.


                                      -17-

<PAGE>



             (b)  INJUNCTIONS,  ETC.  There shall not be any  judgment,  decree,
injunction,  ruling or order of any court, governmental department,  commission,
agency or  instrumentality  outstanding  against  the  Seller,  Cephalon  or the
Purchaser that prohibits or materially  restricts or delays  consummation of the
Closing.

             (c) CONSENTS  AND  APPROVALS.  The Seller and  Cephalon  shall have
obtained  the  consents  required  by the terms of the  contracts,  commitments,
agreements or  Authorizations  listed in SCHEDULE 5.1(C) to the extent that such
consent is required or necessary  under the  pertinent  debt,  lease,  contract,
commitment  or agreement or other  document or  instrument  or under  applicable
orders,  laws,  rules or regulations,  for the  consummation of the transactions
contemplated  hereby in the  manner  herein  provided.  The  required  statutory
waiting period under HSR shall have terminated.

             (d) DESTRUCTION OF THE PURCHASED ASSETS.  There shall have occurred
no  material  damage to or  destruction  or loss of  (whether  or not covered by
insurance) of any of the Purchased Assets or the Leased Assets.  In the event of
any damage,  destruction  or loss of any of the  Purchased  Assets or the Leased
Assets in a single  occurrence  with an  aggregate  net book  value in excess of
$25,000,  the Seller shall promptly  notify the Purchaser of such casualty.  The
Purchaser shall thereupon be entitled to, at its sole option and in its absolute
discretion,  (i) proceed to closing  hereunder with no reduction in the Purchase
Price,  in which event any and all proceeds of such  casualty,  if any, shall be
delivered  to or assigned  to the  Purchaser  at the  Closing,  (ii)  proceed to
closing  hereunder  with a  reduction  in the  Purchase  Price  at the  Seller's
historic cost of the damaged, destroyed or lost Purchased Assets (but not Leased
Assets or Purchased  Assets  damaged,  destroyed or lost by the  Purchaser)  (in
which  event  the  Seller  shall  retain  all  rights  to the  proceeds  of such
casualty). Notwithstanding the foregoing, if the casualty is of a magnitude that
renders  the  Facilities   "untenantable"  for  the  purposes  intended  by  the
Purchaser,  the  Purchaser  shall be  entitled,  at its sole  option  and in its
absolute  discretion,  to terminate this  Agreement,  in which event all parties
shall be relieved from any further liabilities or obligations  hereunder (except
for those  liabilities and obligations  that expressly  survive a termination of
this Agreement). As used in this subparagraph, "untenantable" shall refer to (x)
destruction of greater than 10% of the premises leased in the Facilities  Leases
or (y)  destruction of any portion of the Purchased  Assets or the Leased Assets
utilized for  manufacturing  and related  support  functions  which  renders the
Purchased Assets or the Leased Assets unfit for use to manufacture in accordance
with CGMP regulations.

         5.2 CONDITIONS  PRECEDENT TO THE SELLER'S AND  CEPHALON'S  OBLIGATIONS.
All  obligations  of the Seller and Cephalon under this Agreement are subject to
the  fulfillment  or  satisfaction,  prior to or at the Closing,  of each of the
following conditions precedent:

             (a) REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER. The
representations and warranties of the Purchaser herein contained shall have been
true and  correct in all  material  respects  at the date of  execution  of this
Agreement;  the  Purchaser  shall have  performed in all  material  respects all
obligations  and  complied  in  all  material   respects  with  all  agreements,
undertakings,  covenants  and  conditions  required  by  this  Agreement  to  be
performed  or  complied  with by it at or prior  to the  Closing  Date;  and the
Purchaser  shall have  delivered to the Seller a  certificate  dated the Closing
Date  and  signed  by the  President  and the  Chief  Financial  Officer  of the
Purchaser to such effect.

                                      -18-

<PAGE>




             (b)  INJUNCTIONS,  ETC.  There shall not be any  judgment,  decree,
injunction,  ruling or order of any court, governmental department,  commission,
agency or instrumentality  outstanding  against the Seller or the Purchaser that
prohibits or materially restricts or delays consummation of the Closing.

             (c) CONSENTS AND APPROVALS.  The required  statutory waiting period
under HSR shall have terminated.


                        ARTICLE 6 - POST-CLOSING MATTERS

         6.1 EMPLOYEE  ARRANGEMENTS.  The Seller acknowledges that the Purchaser
is not obligated to hire any employee of the Seller.  From and after the Closing
Date,  the Purchaser  may elect,  in its sole and absolute  discretion,  to hire
employees  of the  Seller  on such  terms  and  conditions  as it  desires.  The
Purchaser shall notify the Seller of the identity of employees of the Seller, if
any,  who accept an offer of  employment  with the  Purchaser  within six months
after the  Closing,  and the  Seller  will  furnish  to all of its other  former
employees  any  notices  and other  information  required  by the  Comprehensive
Omnibus Budget  Reconciliation  Act of 1985, as amended.  The Seller shall fully
comply with the  requirements of Part 6 of Title I of ERISA and Section 4980B of
the Code with respect to all of its employees and former employees.

         6.2 DISCHARGE OF CERTAIN LIABILITIES.  From and after the Closing Date,
the Purchaser shall pay and discharge all Assumed Liabilities in accordance with
their  respective  terms and the Purchaser shall indemnify and hold harmless the
Seller and the Seller's successors,  assigns and affiliates from and against any
and all damages, losses, deficiencies,  liabilities, costs and expenses incurred
or suffered by any such person that result  from,  relate to or arise out of any
and all Assumed Liabilities.

         6.3 MAINTENANCE OF BOOKS AND RECORDS. Each of the Seller,  Cephalon and
the Purchaser shall preserve until the fifth anniversary of the Closing Date all
records possessed or to be possessed by such party relating to the Facilities or
the Purchased  Assets prior to the Closing Date.  After the Closing Date,  where
there is a legitimate  purpose,  such party shall provide the other parties with
access,  upon prior  reasonable  written  request  specifying the need therefor,
during regular  business  hours, to (a) the officers and employees of such party
and (b) the books of account and records of such party,  but, in each case, only
to the extent  relating to the  Facilities or the Purchased  Assets prior to the
Closing  Date,  and the other parties and their  representatives  shall have the
right to make  copies of such books and  records;  provided,  however,  that the
foregoing  right of  access  shall  not be  exercisable  in such a manner  as to
interfere  unreasonably  with the normal  operations and business of such party;
and further,  provided,  that, as to so much of such  information as constitutes
trade secrets or confidential business information of such party, the requesting
party and its officers,  directors and representatives  will use due care to not
disclose  such  information  except (x) as required  by law,  (y) with the prior
written consent of such party, which consent shall not be unreasonably withheld,
or (z) where such  information  becomes  available to the public  generally,  or
becomes generally known to competitors of such party, through sources other than
the   requesting   party,   its   affiliates  or  its  officers,   directors  or
representatives.  Such records may  nevertheless be destroyed by a party if such
party  sends to the  other  parties  written  notice of its  intent  to  destroy
records, specifying with particularity the

                                      -19-

<PAGE>



contents  of the records to be  destroyed.  Such  records may then be  destroyed
after the 30th day after such notice is given unless  another  party  objects to
the  destruction  in which case the party  seeking to destroy the records  shall
deliver such records to the objecting party.

         6.4 RESTRICTION ON USE OF NAME. In no event shall the Purchaser use the
name  "Cephalon"  or any  variant  thereof  from and  after  the  Closing  Date;
provided, however, that this restriction shall not prevent any disclosure of the
transactions with Cephalon and the Seller contemplated hereby to the extent such
disclosure is permitted by SECTION 4.4 or 8.5 hereof.

         6.5  SUBLICENSE.  Subject to and upon  consummation of the purchase and
sale contemplated by this Agreement, the Purchaser hereby grants to the Seller a
non-exclusive,  non-transferable,  royalty-free,  perpetual  license  to use the
validation  protocols and copies of any records included in the Purchased Assets
retained by the Seller hereunder solely for purposes of establishing  regulatory
compliance and securing regulatory approval. Title to all copies of the licensed
documentation shall remain with the Purchaser.


                           ARTICLE 7 - INDEMNIFICATION

         7.1 INDEMNIFICATION OBLIGATIONS.

             (a) Cephalon and the Seller (each, an  "indemnifying  party") shall
jointly  and  severally  indemnify  and hold  harmless  the  Purchaser,  and the
Purchaser (another  "indemnifying  party") shall indemnify and hold harmless the
Seller,  from,  against  and  in  respect  of  any  and  all  damages,   losses,
deficiencies,  liabilities,  costs  and  expenses  (including  attorneys'  fees)
resulting from, relating to or arising out of any (i) representation or warranty
which  was not  true,  complete  and  correct  when  made by or on behalf of the
indemnifying  party in this  Agreement  or in any  certificate  delivered by one
party to the other pursuant hereto,  or (ii) breach of any agreement or covenant
on the part of such indemnifying party or parties hereunder.  Claims relating to
the  representations  contained in the first sentence of Section 3.1(m) shall be
limited to latent  defects or defects that are not  reasonably  detectable  upon
inspection.  Cephalon and the Seller shall not be liable under Section 7.1(a)(i)
above for any  misrepresentation  or breach of warranty as to which the Puchaser
had actual knowledge on the date such  representation  or warranty was made. For
purposes of the foregoing sentence, "knowledge" of the Purchaser shall be deemed
to mean the actual knowledge of the persons listed on Schedule 7.1(b) hereto.

             (b)  An   indemnified   party  shall  make  no  claim   against  an
indemnifying  party for  indemnification  under SECTION 7.1(A) with respect to a
misrepresentation or breach of warranty unless and until the aggregate amount of
all such claims against an indemnifying  party exceeds [*]


[*] Confidential information has been omitted and filed separately with the
    Commission.


                                      -20-

<PAGE>



             (c)  Cephalon  and the  Seller  shall  further  indemnify  and hold
harmless the Purchaser  from any and all damages,  costs and expenses  resulting
from,  relating  to or arising  out of  liabilities  of the Seller  that are not
Assumed  Liabilities.  Such  indemnification  under this clause (c) shall not be
subject to the limits of clause (b) as to aggregate amount of claims or the time
limitation for making such claims.

             (d) Each  indemnifying  party or parties  hereto will indemnify and
hold  harmless the  indemnified  party or parties  hereto  from,  against and in
respect  of any and  all  actions,  suits,  proceedings,  demands,  assessments,
judgments,  costs  (including  attorneys'  fees) and  legal  and other  expenses
incident to the enforcement of this ARTICLE 7.

             (e)  Other  than the  rights  of the  parties  to  obtain  specific
performance and injunctive relief relating to SECTIONS 1.3(E), 2.3, 2.4, 6.3 and
8.5 hereof,  the remedy  provided by this ARTICLE 7, subject to the  limitations
set forth herein shall be the parties'  exclusive remedy for the recovery of any
damages, losses, deficiencies,  liabilities,  costs and expenses resulting from,
relating  to or arising out of any (i)  misrepresentation  or breach of warranty
made by or on  behalf  of the  indemnifying  party in this  Agreement  or in any
certificate  delivered by one party to the other pursuant hereto, or (ii) breach
of any agreement or covenant on the part of such  indemnifying  party or parties
hereunder.  Notwithstanding  the  foregoing,  nothing  in this  Agreement  shall
restrict  the   Purchaser's   rights  or  remedies  for  fraud  or   intentional
misrepresentation in this Agreement by the Seller or Cephalon.

         7.2 METHOD OF ASSERTING  CLAIMS,  ETC.  All claims for  indemnification
under this ARTICLE 7 shall be asserted and resolved as follows:

             (a) In the  event  that any claim or  demand  for which the  Seller
would be liable to the Purchaser  hereunder is asserted  against or sought to be
collected by a third party,  the Purchaser  shall promptly  notify the Seller in
writing of such claim or demand,  specifying  the nature of such claim or demand
and the amount or the  estimated  amount  thereof to the  extent  then  feasible
(which  estimate  shall not be  conclusive  of the final amount of such claim or
demand) (the "CLAIM NOTICE").  The Seller shall have 30 days from its receipt of
the Claim Notice (the "NOTICE  PERIOD") to notify the  Purchaser  (i) whether or
not the Seller disputes its liability to the Purchaser hereunder with respect to
such claim or demand,  and (ii) if the Seller does not dispute  such  liability,
whether or not it desires, at its sole cost and expense, to defend the Purchaser
against  such  claim or  demand.  In the  event  that the  Seller  notifies  the
Purchaser  within  the  Notice  Period  that the Seller  does not  dispute  such
liability  and desires to defend  against such claim or demand,  then the Seller
shall  have  the  right  to  defend  the  claim.  If the  Purchaser  desires  to
participate in, but not control,  any such defense or settlement it may do so at
its sole cost and expense.  If the Seller disputes its liability with respect to
such  claim or demand or elects  not to defend  against  such  claim or  demand,
whether by not giving  timely notice as provided  above or  otherwise,  then the
Purchaser  shall have the right to defend  against such claim or demand (but the
Purchaser  shall not have any  obligation  to contest any such claim or demand),
and that portion thereof as to which such defense is unsuccessful, shall be

                                      -21-

<PAGE>



conclusively deemed to be a liability of the Seller hereunder  (subject,  if the
Seller has timely  disputed  liability,  to a  determination  that the  disputed
liability is covered by these indemnification provisions).

             (b) In the event that the Purchaser should have a claim against the
Seller  hereunder that does not involve a claim or demand being asserted against
or sought to be collected from it by a third party, the Purchaser shall promptly
send a Claim Notice with respect to such claim to the Seller. If the Seller does
not notify the Purchaser  within the Notice Period that its disputes such claim,
the amount of such claim shall be conclusively  deemed a liability of the Seller
hereunder.

             (c) All claims for  indemnification  made by the Seller  under this
Agreement shall be asserted and resolved under the procedures set forth above in
this SECTION 7.2 by substituting,  as appropriate,  "Purchaser" for "Seller" and
"Seller" for "Purchaser."

         7.3 PAYMENT.  In the  event  that any  party is  required  to make any
payment  under this  ARTICLE 7, such party shall  promptly  pay the  indemnified
party the amount so  determined  in cash. If there should be a dispute as to the
amount or manner of  determination  of any indemnity  obligation owed under this
ARTICLE 7, the party from which  indemnification  is due shall  nevertheless pay
when due such  portion,  if any,  of the  obligation  as shall not be subject to
dispute.  Upon the  payment  in full of any claim  the  party or  entity  making
payment shall be subrogated to the rights of the  indemnified  party against any
person, firm,  corporation or other entity with respect to the subject matter of
such claim.


                            ARTICLE 8 - MISCELLANEOUS

         8.1 TERMINATION.

             (a) Anything  herein or elsewhere to the contrary  notwithstanding,
this  Agreement may be terminated by written  notice of  termination at any time
before the Closing Date only as follows:

                 (i) by mutual consent of the Seller and the Purchaser;

                 (ii) by the Purchaser,  (A) at any time if the  representations
         and  warranties  of the Seller  contained  in SECTION  3.1 hereof  were
         incorrect in any material  respect when made or at any time thereafter,
         or (B) upon  written  notice  to the  Seller  given  at any time  after
         November 30, 1996 (or such later date as shall have been specified in a
         writing authorized on behalf of the Seller and the Purchaser) if all of
         the conditions  precedent set forth in SECTION 5.1 hereof have not been
         met; or

                 (iii) by the Seller, (A) at any time if the representations and
         warranties  of the  Purchaser  contained  in SECTION  3.2  hereof  were
         incorrect in any material  respect when made or at any time thereafter,
         or (B) upon  written  notice to the  Purchaser  given at any time after
         November 30, 1996 (or such later date as

                                      -22-

<PAGE>



         shall  have been  specified  in a writing  authorized  on behalf of the
         Seller and the Purchaser) if all of the conditions  precedent set forth
         in SECTION 5.2 hereof have not been met.

             (b) In the event of the termination and abandonment hereof pursuant
to  the  provisions  of  this  SECTION  8.1,  this  Agreement  (except  for  the
obligations  of the  confidentiality  provisions  of set  forth in  SECTION  8.5
hereof, which shall continue) shall become void and have no effect,  without any
liability  on the part of any of the parties or their  directors  or officers or
shareholders in respect of this Agreement, except that the termination shall not
relieve  a  breaching   party  from   liability   incurred  for  breach  of  any
representation, warranty, covenant or agreement giving rise to such termination.

         8.2  COMPLIANCE  WITH BULK SALES LAWS.  The  Purchaser,  the Seller and
Cephalon hereby waive compliance by the Purchaser,  the Seller and Cephalon with
the bulk sales law and any other similar laws in any applicable  jurisdiction in
respect  of the  transactions  contemplated  by this  Agreement.  The Seller and
Cephalon shall indemnify the Purchaser from, and hold it harmless  against,  any
liabilities,  losses,  damages,  costs and expenses (including  attorneys' fees)
resulting from or arising out of (i) the parties'  failure to comply with any of
such laws in respect of the transactions contemplated by this Agreement, or (ii)
any action  brought  or levy made as a result  thereof,  other than the  Assumed
Liabilities, on such terms as are expressly assumed by the Purchaser pursuant to
this Agreement.

         8.3 BROKERAGE; EXPENSES; ETC.

             (a) The parties hereto  represent and warrant that all negotiations
relative to this  Agreement  have been carried on by them  directly  without the
intervention of any person,  firm or corporation.  Each party will indemnify the
other and hold such other party harmless against and in respect of any claim for
brokerage,  finder's or other  commissions or fees relative to this Agreement or
the  transactions  contemplated  hereby made by any person,  firm or corporation
claiming through it.

             (b)  Except as  otherwise  expressly  provided  herein,  each party
hereto shall pay its own expenses,  including without limitation, the reasonable
fees and expenses of its counsel, incurred in connection with this Agreement and
the transactions contemplated hereby.

             (c) The  Purchaser  shall pay all  federal,  state and local sales,
documentary  and other transfer  taxes, if any, due as a result of the purchase,
sale or transfer of the Purchased Assets (excluding any income,  profit or gains
taxes payable by the Seller) in accordance  herewith  whether  imposed by law on
the Seller or the Purchaser,  and the Purchaser shall  indemnify,  reimburse and
hold  harmless the Seller in respect of the  liability for payment of or failure
to pay any such taxes or the filing of or failure to file any  reports  required
in connection therewith.

         8.4 CONTENTS OF AGREEMENT;  AMENDMENT; PARTIES IN INTEREST, ASSIGNMENT,
ETC. This  Agreement sets forth the entire  understanding  of the parties hereto
with  respect  to  the  subject  matter  hereof.  Any  previous   agreements  or
understandings  between the parties  regarding  the  subject  matter  hereof are
merged into and  superseded by this  Agreement.  This  Agreement may be amended,
modified or supplemented only by written instrument duly executed by each of the

                                      -23-

<PAGE>



parties hereto. All representations, warranties, covenants, terms and conditions
of this  Agreement  shall be  binding  upon and inure to the  benefit  of and be
enforceable  by the  respective  heirs,  legal  representatives,  successors and
permitted  assigns of the parties  hereto,  provided  that no party hereto shall
assign this Agreement or any right, benefit or obligation hereunder,  other than
to an affiliated  entity.  Any term or provision of this Agreement may be waived
at any time by the party entitled to the benefit thereof by a written instrument
duly executed by such party.

         8.5  CONFIDENTIALITY.  Each  party will hold in strict  confidence  all
confidential  information  obtained from the other party in connection  with the
transactions   contemplated  by  this  Agreement  and  will  not  disclose  such
confidential  information to any party (other than their  respective  employees,
consultants and advisors), nor use or permit such information to be used for any
purpose  other than in connection  with the  transactions  contemplated  hereby.
Notwithstanding  the foregoing,  confidential  information shall not include any
information  which (i) is in its  possession  prior to  disclosure  by the other
party hereto, (ii) was or becomes part of the public domain, except by breach of
the  disclosing  party's   confidentiality   obligations  hereunder,   (iii)  is
independently  developed by the  disclosing  party  without use of  confidential
information,  or (iv) is lawfully  received by the disclosing party from a third
party having a right to disclose such information to the disclosing  party. Each
party shall be  authorized  to disclose  confidential  information  of the other
where  disclosure is made pursuant to a court rule or order, or governmental law
or regulation,  provided that the disclosing  party gives the other party hereto
an opportunity to limit such disclosure.  If the transaction contemplated hereby
is not  consummated,  each party will,  promptly upon the other party's request,
deliver to such party all  confidential  information  in its possession and will
use all reasonable efforts to cause all copies and summaries or synopses thereof
to be returned or destroyed.  Such destruction  shall be confirmed in writing to
the other party.  Information regarding the Purchased Assets shall, at all times
prior to the  Closing  Date,  be deemed to be  confidential  information  of the
Seller,  and  shall,  at all  times  after  the  Closing  Date,  be deemed to be
confidential information of the Purchaser.  This Section 8.5 shall survive for a
period of two years following the date hereof.

         8.6 NOTICES. All notices,  consents or other communications required or
permitted  to be given  under this  Agreement  shall be in writing  and shall be
deemed to have been duly  given  when  delivered  personally,  delivery  charges
prepaid, or three business days after being sent by registered or certified mail
(return receipt  requested),  postage  prepaid,  or one business day after being
sent by a nationally  recognized  express courier  service,  postage or delivery
charges  prepaid,  to the parties at their  respective  addresses  stated below.
Notices  may  also be  given by  prepaid  telegram  or  facsimile  and  shall be
effective on the date  transmitted if confirmed  within 24 hours thereafter by a
signed original sent in the manner provided in the preceding sentence. Any party
may change its address  for notice and the address to which  copies must be sent
by giving notice of the new address to the other parties in accordance with this
SECTION 8.6.

                  If to the Purchaser, to:

                           North American Vaccine, Inc.
                           12103 Indian Creek Street
                           Beltsville, MD 20705
                           Attention:  Senior Vice President - 
                              Legal Affairs and General Counsel
                           FAX: (301) 419-0167

                                      -24-

<PAGE>




                  With a required copy to:

                           Arnold & Porter
                           555 12th Street, N.W.
                           Washington, DC 20004-1202
                           Attention: Althea L. Harlin, Esq.
                           FAX: (202) 942-5999

                  If to the Seller, to:

                           Cephalon Property Management, Inc.
                           145 Brandywine Parkway
                           West Chester, Pennsylvania 19380
                           Attention:  General Counsel
                           FAX:  (610) 344-0065


                  With a required copy to:

                           Morgan, Lewis & Bockius LLP
                           2000 One Logan Square
                           Philadelphia, PA 19103
                           Attention:  Michael J. Pedrick, Esq.
                           FAX:  (215) 963-5299

         8.7 MARYLAND  LAW TO GOVERN.  This  Agreement  shall be governed by and
interpreted  and enforced in accordance  with the laws of the State of Maryland,
without giving effect to conflicts of law principles.

         8.8 NO BENEFIT TO OTHERS. The  representations,  warranties,  covenants
and  agreements  contained  in this  Agreement  are for the sole  benefit of the
parties hereto and their respective  successors and assigns,  and they shall not
be construed as conferring any rights on any other persons.

         8.9 HEADINGS,  GENDER AND "PERSON." All section  headings  contained in
this Agreement are for convenience of reference only, do not form a part of this
Agreement and shall not affect in any way the meaning or  interpretation of this
Agreement.  Words used herein,  regardless of the number and gender specifically
used,  shall be deemed and  construed to include any other  number,  singular or
plural,  and any other gender,  masculine,  feminine,  or neuter, as the context
requires. Any reference to a "person" herein shall include an individual,  firm,
corporation,  partnership,  trust,  governmental authority or body, association,
unincorporated organization or any other entity.

         8.10  SCHEDULES  AND EXHIBITS.  All Exhibits and Schedules  referred to
herein  are  intended  to be and  hereby  are  specifically  made a part of this
Agreement.


                                      -25-

<PAGE>



         8.11 SEVERABILITY.  Any provision of this Agreement which is invalid or
unenforceable  in any  jurisdiction  shall be  ineffective to the extent of such
invalidity or unenforceability  without invalidating or rendering  unenforceable
the  remaining   provisions   hereof,  and  in  lieu  of  any  such  invalid  or
unenforceable  provision  there  shall be added a  provision  or  provisions  as
similar in terms to such invalid or unenforceable part as may be possible and be
valid, legal or enforceable and any such invalidity or  unenforceability  in any
jurisdiction shall not invalidate or render  unenforceable such provision in any
other jurisdiction.

         8.12  COUNTERPARTS.  This  Agreement  may be  executed in any number of
counterparts  and any party  hereto may  execute any such  counterpart,  each of
which when executed and  delivered  shall be deemed to be an original and all of
which  counterparts  taken  together  shall  constitute  but one  and  the  same
instrument.  This Agreement  shall become binding when one or more  counterparts
taken together  shall have been executed and delivered by the parties.  It shall
not be necessary in making proof of this Agreement or any counterpart  hereof to
produce or account for any of the other counterparts.

         IN  WITNESS  WHEREOF,  the  parties  hereto  have  duly  executed  this
Agreement on the date first written.

ATTEST:                             CEPHALON PROPERTY MANAGEMENT, INC.


By /s/ Barbara Schilberg            By /s/ J. Kevin Buchi
   ---------------------               --------------------------
As its Secretary                    As its Vice President


ATTEST:                             CEPHALON, INC.


By /s/ Barbara Schilberg            By /s/ J. Kevin Buchi
   ---------------------               --------------------------
As its Secretary                    As its Senior Vice President and
                                           Chief Financial Officer


ATTEST:                             NORTH AMERICAN VACCINE, INC.


/s/ Daniel J. Abdun-Nabi            By /s/ Sharon Mates
-------------------------              ---------------------------
As its Daniel J. Abdun-Nabi             As its Sharon Mates, Ph.D.
      Secretary                               President





                                     - 26 -