<PAGE>   1

                                                                     Exhibit 4.2

     CONFIDENTIAL TREATMENT

     Note: Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Commission under Rule 24b-2. The omitted
confidential material has been filed separately with the Commission. The
location of the omitted confidential information is indicated herein by
asterisks.


                               PURCHASE AGREEMENT

                                     between

                             BASF AKTIENGESELLSCHAFT
                               67056 LUDWIGSHAFEN
                                   ("Seller")

                                 on the one hand

                                       and

                               ABBOTT LABORATORIES
                                  ("Purchaser")

                                on the other hand



                                   DEFINITIONS

"ACCRUED TAXES" shall mean currently payable Tax liabilities and provisions for
deferred Tax liabilities;

"ACTIVE INGREDIENTS" shall mean active chemical substances intended for use in
Pharmaceutical Products and any intermediates of such active chemical
substances;

"ACTUAL KNOWLEDGE OF SELLER" shall have the meaning described in Section 14.3;

"AFFILIATES" shall mean any company or other entity which is an affiliated
company within the meaning of Sections 15 ET SEQ. Aktiengesetz (German Stock
Corporation Act);

"AGGREGATE PURCHASE PRICE" shall have the meaning as described in Section 8.1;

"ASSIGNMENTS" shall have the meaning as described in Section 12.1;

"BASF PHARMACEUTICAL BUSINESS" shall mean the business activities conducted by
Seller and its Affiliates within the BASF Pharmaceutical Field;

"BASF PHARMACEUTICAL FIELD" shall mean the research, development, importation,
use, registration, manufacture, distribution or sale of (a) BASF Pharmaceutical
Products and (b) Exclusive Active Ingredients and Mutual Active Ingredients but
excluding the BASF Pharmachemical Field;

"BASF PHARMACEUTICAL PRODUCTS" shall mean Pharmaceutical Products being
researched, developed, imported, used, registered, manufactured, distributed or
sold by Seller or any of its Affiliates, including the Companies, as of the date
of this Agreement or the Closing, including without limitation (a) the products
listed in Exhibit 13.27(a) and clinical compounds listed in Exhibit 13.27(b) and
(b) all line extensions and generic versions of the foregoing provided, however,
that BASF Pharmaceutical Products shall not include the finished pharmaceutical
products that are manufactured as of the date hereof at Knoll AG's production
facility in Uetersen, Germany;

<PAGE>   2

                                     Page 2


"BASF PHARMACHEMICAL BUSINESS" shall mean the business activities conducted by
Seller and its Affiliates within the BASF Pharmachemical Field;

"BASF PHARMACHEMICAL FIELD" shall mean the Pharmachemical Field but excluding
any Exclusive Active Ingredients;

"BEST KNOWLEDGE OF SELLER" shall have the meaning as described in Section 14.3;

"BPC" shall have the meaning as described in Section 1.1;

"BPC SUBSIDIARIES" shall have the meaning as described in Section 1.2;

"CASH" shall mean liquid funds and non-trade receivables from Affiliates;

"CLOSING CONDITIONS" shall have the meaning as described in Section 11.1.1;

"CLOSING NET ASSET VALUE" shall have the meaning as described in Section 9.1(b);

"CLOSING NET ASSET VALUE STATEMENT" shall have the meaning as described in
Section 10.1;

"COMPANIES" shall have the meaning as described in Section 13.1;

"CONVERSION EXCHANGE RATES" shall mean the local currency exchange rates in
effect on the second day prior to Closing, as reported on the Reuters screen at
approximately 9:00AM CST.;

"D2E7" shall mean the compound known as D2E7, and any Pharmaceutical Product
that includes D2E7 as an Active Ingredient;

"DAMAGES" shall have the meaning given to it in Sections 249 et seq. of the
German Civil Code;

"DISCONTINUED/EXCLUDED BUSINESSES" shall mean any or all of the businesses,
operations, personnel and assets of the Seller or any Affiliate of Seller,
including Knoll AG and the Companies (or any predecessor thereof), that prior to
the Closing Date were or are in the process of being (i) closed, wound-up or
otherwise terminated, (ii) ceased to be used in connection with such business or
operations, or (iii) sold or otherwise disposed of to any third person or
entity. Such Discontinued/Excluded Businesses shall include, without limitation,
(a) the Uetersen Business as well as any other businesses of Knoll AG other than
the Knoll Business, (b) the site, operations and businesses conducted at the
site in Nottingham, U.K., (c) the Generics Business as described in Exhibit A
hereto and (d) BASF Pharmachemikalien GmbH & Co. KG.

"DISCONTINUED/EXCLUDED BUSINESSES LIABILITIES" means, except as otherwise
expressly provided for in this Agreement, any and all obligations, liabilities
and expenses arising out of or associated with, or alleged to arise out of or be
associated with, the Discontinued/Excluded Businesses, including, without
limitation, any of the foregoing arising under any applicable environmental
laws, with respect to the employment or termination of employment of any
individual, or under or with respect to any employee benefit plan or program,
including pension, disability, post-retirement medical or severance or income
continuation plan;

"DISPUTED ITEM" shall have the meaning as described in Section 10.4;

"EMPLOYEES" shall mean all individuals who are employed by the Companies on the
Closing Date;

<PAGE>   3

                                     Page 3


"EXCLUSIVE ACTIVE INGREDIENTS" shall mean all Active Ingredients used in any
BASF Pharmaceutical Product other than the Mutual Active Ingredients. The
material Exclusive Active Ingredients are described on Exhibit 13.27(c);

"FINANCIAL DEBT" shall mean financial indebtedness and non-trade liabilities to
Affiliates;

"GROUP PENSION ARRANGEMENT" shall mean a pension plan or vehicle for the
financing and administration of pension promises which is used by the Seller and
its Affiliates in a particular country for providing pension benefits and in
which the Companies participate in connection with providing pension benefits to
their respective employees, except for the Seller U.S. Defined Benefit Plans;

"GROUP PENSION TRANSFER AMOUNT" shall have the meaning as described in Section
23.3;

"HOKURIKU SHARES" shall mean the shares in Hokuriku Seiyaku K. K., a stock
corporation organised under Japanese law, held by Transpharm GmbH and Lupharma
GmbH in the amounts and as described on Exhibit 2;

"INDIA SHARES" shall mean the shares in Knoll Pharmaceuticals LTD India, a stock
corporation organised under Indian law;

"INTERCOMPANY AGREEMENTS" shall mean the agreements listed in Exhibit 13.10
hereto;

"KNOLL AG" shall have the meaning as described in Section 3.1.1;

"KNOLL BUSINESS" shall have the meaning as described in Section 3.2;

"KNOLL BUSINESS EMPLOYEES" shall have the meaning as described in Section 29.3;

"MATERIAL ADVERSE EFFECT" shall mean any event, change, circumstance or effect
that, individually or in the aggregate, is, or could reasonably be expected to
be (a) materially adverse to the BASF Pharmaceutical Business, or the assets,
operations , results of operations, financial condition of the BASF
Pharmaceutical Business, taken as a whole, other than any event, change,
circumstance or effect relating (x) to the economy in general, or (y) in general
to the pharmaceutical industry and not specifically relating to the BASF
Pharmaceutical Business, or the transactions contemplated by this Agreement;

"MUTUAL ACTIVE INGREDIENTS" shall mean the Active Ingredients manufactured by
Seller or its Affiliates as of the date of this Agreement which are used in both
BASF Pharmaceutical Products and other Pharmaceutical Products of third parties
as described in Exhibit 13.27(c);

"OTHER FOREIGN SUBSIDIARIES" shall have the meaning as described in Section 2;

"PAKISTAN SHARES" shall mean the shares in Knoll Pharmaceuticals LTD Pakistan, a
stock corporation organised under Pakistan law;

"PARTNERSHIP" shall have the meaning as described in Section 4.1;

"PENSION ARRANGEMENT" shall mean a defined benefit pension promise which has
been made by any of the Companies on an individual, collective or local labor
law basis to one or more of their employees prior to Closing, including
pension-type indemnities provided upon retirement on a mandatory basis as, for
example in Austria, Italy and France, supplemental executive retirement
programs, defined benefit cash balance plans, seniority awards, disability
pension benefits, survivor

<PAGE>   4

                                     Page 4


pension benefits, early or accelerated retirement arrangements and
post-employment medical benefits, but excluding purely defined contribution
promises such as, for example, 401(k) plans;

"PENSION LIABILITIES" shall mean the liabilities under Pension Arrangements
pertaining to the BASF Pharmaceutical Business whether organized under either
internally or externally financed arrangements, which are transferred to and
assumed by Purchaser, but excluding the pension liabilities which are financed
via the BASF Pensionskasse VVaG. Such obligations shall be determined as of the
Closing valued as the Projected Benefit Obligation on an FAS 87, 106 or 112
basis, as applicable (or, if FAS 87, 106 or 112 is not applicable, using
accounting principles consistent with FAS 87, 106, or 112, as appropriate) using
the Projected Unit Credit Method (PUC) based on plan provisions as in effect at
Closing and applying the following economic assumptions for Pension Arrangements
in Germany, the USA and Japan:

<TABLE>
<CAPTION>
                                         ***         ***         ***         ***
                                         ---         ---         ---         ---
<S>                                      <C>         <C>         <C>         <C>
Germany ........................         ***         ***         ***         ***
U.S.A ..........................         ***         ***         ***         ***
Japan Hokuriku .................         ***         ***         ***         ***
</TABLE>


All other assumptions for Pension Arrangements in such countries and all
assumptions for Pension Arrangements in other countries shall be mutually agreed
upon by Purchaser and Seller within 45 days after the date of this Agreement. If
Purchaser and Seller have not agreed within said 45 day period on such
assumptions to be applied, then within an additional five days they shall
appoint a mutually acceptable actuary who shall establish those assumptions
prior to Closing; provided, however, that in establishing those assumptions the
actuary shall be limited to selecting on a plan by plan basis either the
assumptions proposed by Purchaser or the assumptions proposed by Seller. The
costs of the actuary shall be borne jointly by Seller and Purchaser.

"PHARMACEUTICAL FIELD" shall mean the research, development, importation, use,
registration, manufacture, distribution or sale of Pharmaceutical Products;

"PHARMACEUTICAL PRODUCTS" shall mean drug products in finished form for human or
animal use;

"PHARMACHEMICAL FIELD" shall mean (a) the research, development, importation,
use, registration, manufacture, distribution, physical or galenic processing or
sale of Active Ingredients and (b) custom manufacturing for third parties of
Pharmaceutical Products other than BASF Pharmaceutical Products not based upon
Mutual Active Ingredients;

"REFERENCE NET ASSET VALUE" shall have the meaning as described in Section
9.1(a);

"REMAINING PATENTS" shall have the meaning as described in Section 5.2;

"SEPARATE SALE AND TRANSFER CONTRACTS" shall have the meaning as described in
Section 7.1;

"SHARED SUBSTANCES" shall have the meaning as described in Section 5.3;

----------
*** Confidential information omitted pursuant to a request for confidential
    treatment filed separately with the Securities and Exchange Commission.

<PAGE>   5

                                     Page 5


"SHARED SUBSTANCE RELATED PATENTS" shall have the meaning as described in
Section 5.4;

"SHARES" shall have the meaning as described in Section 6.2;

"SHARES/INTERESTS VERWALTUNGS-GMBH/PARTNERSHIP" shall have the meaning as
described in Section 6.1;

"STRADDLE PERIOD" shall mean any taxable period beginning on or before and
ending after the Closing Date;

"STRUCTURE OPTION" shall have the meaning as described in Section 7 (A) 1;

"TAX" OR "TAXES" shall mean all taxes of any kind imposed by a federal, state,
local or foreign governmental authority, and any payments made to another party
pursuant to a tax sharing arrangement, indemnity or other similar arrangement,
including but not limited to those on, or measured by or referred to as income,
gross receipts, financial operation, sales, use, AD VALOREM, value added,
franchise, profits, license, withholding, payroll (including all contributions
or premiums pursuant to industry or governmental social security laws or
pursuant to other tax laws and regulations), employment, excise, severance,
stamp, occupation, premium, property, transfer or windfall profit taxes,
customs, duties or similar fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts imposed by such governmental authority with respect to such amounts;

"TAX ASSETS" shall mean all deferred tax assets valued according to U.S. GAAP
including, but not limited to, those resulting from loss carry forwards or
credit carry forwards, as far as they relate to the BASF Pharmaceutical Business
and are not used up by Seller prior to Closing;

"TRANSACTIONS" or "TRANSACTIONS" contemplated by this Agreement shall include
without limitation, the Demerger and the transactions contemplated by the
Demerger, the Merger, the transfer of the Shares and the transfer of the
Transferred Patents;

"TRANSFERRED PATENTS" shall have the meaning as described in Section 5.1;

"UETERSEN BUSINESS" shall mean the business activities conducted as of the date
hereof by Knoll AG at its production facility in Uetersen, Germany;

"U.S. EMPLOYEES" shall mean all individuals who are employed by the Companies on
the Closing Date in the United States;

"VERWALTUNGS-GMBH" shall have the meaning as described in Section 4.1.

<PAGE>   6

                                     Page 6


                                       I.
                        DESCRIPTION OF SHARES AND ASSETS


                                    SECTION 1
                                 US SUBSIDIARIES

1.1       BASF Pharma Corporation is a corporation validly existing under the
          laws of the State of Delaware with 1,000 issued shares with no par
          value (hereinafter referred to as "BPC"). All such issued shares are
          directly or indirectly owned by Seller as described in Exhibit 1.1.

1.2       BPC has direct or indirect legal ownership of the participations in
          the companies which are set forth in Exhibit 1.2 (hereinafter referred
          to as "BPC Subsidiaries").


                                    SECTION 2
                           OTHER FOREIGN SUBSIDIARIES

Seller has direct or indirect legal ownership of the participations in the
companies and other entities which are set forth in Exhibit 2 (hereinafter
referred to as "Other Foreign Subsidiaries").


                                    SECTION 3
                       KNOLL AG AND KNOLL DEUTSCHLAND GMBH

3.1

3.1.1     Knoll AG is a stock corporation under the laws of the Federal Republic
          of Germany registered in the Commercial Register of the local court
          Ludwigshafen under docket number HR B 4300 with a registered share
          capital of EUR 50,000,000.00 (hereinafter referred to as "Knoll AG")
          which is directly and indirectly held by Seller.

3.1.2     Knoll Deutschland GmbH is a limited liability company (Gesellschaft
          mit beschraenkter Haftung) under the laws of the Federal Republic of
          Germany registered in the Commercial Register of the local court
          Ludwigshafen under docket number HR 3767 with a registered share
          capital of DM 4,000,000.00 (hereinafter referred to as "Knoll GmbH")
          which is indirectly held by Seller.

3.2       Knoll AG and Knoll GmbH operate the BASF Pharmaceutical Business in
          Germany (such Business being the "Knoll Business").

3.3       Knoll AG also operates a business of manufacturing pharmaceutical
          substances in Uetersen.


                                    SECTION 4
                                 KNOLL BUSINESS

4.1       Knoll AG will form a limited partnership in the legal form of a GmbH &
          Co KG (hereinafter referred to as the "Partnership"). The sole general
          partner will be a GmbH with a fully paid up registered share capital
          of EUR 25,000.- (hereinafter referred to as "Ver-

<PAGE>   7

                                     Page 7

          waltungs-GmbH"). All capital interest in the Partnership and shares in
          the Verwaltungs GmbH will be held by Knoll AG.

4.2       Seller shall cause Knoll Deutschland GmbH to be merged into Knoll AG
          with economic effect as of January 1, 2001 (the "Merger"). Subject to
          the Merger becoming effective, Knoll AG will transfer the Knoll
          Business to the Partnership by way of a demerger (Ausgliederung) in
          the meaning of Section 123 para 3 no. 1 Conversion Act
          (Umwandlungsgesetz) with economic effect as of January 2, 2001 (the
          "Demerger"). Copies of the Merger agreement and the Demerger
          agreement, including the exhibits and attachments thereto, will be
          provided to Purchaser for its review and comment a reasonable period
          of time prior to the execution thereof (collectively, the
          "Merger/Demerger Agreements"). Neither this Agreement nor the
          transactions contemplated hereby shall release Seller from its
          liability under the Business Sale and Purchase Agreement dated April
          27, 2000 by and among Kanoldt Arzneimittel GmbH, Knoll AG and Abbott
          GmbH.

4.3       At the Closing, the Partnership will own as a result of the Demerger:

          a)   the shares in the companies set forth in Exhibit 4.2 (b); and

          b)   the other assets and liabilities including contracts of the Knoll
               Business.

4.4       If the Structure Option has been exercised by Seller pursuant to
          Section 7 (A), Seller shall not complete the transactions referred to
          in items 4.1 and 4.2 unless such transactions have already been
          commenced at the time of the exercise of the Structure Option and
          Purchaser requires Seller by notice in writing to complete those
          actions.


                                    SECTION 5
                           PATENTS, SHARED SUBSTANCES

5.1       Seller owns, or owns in part as described on Exhibit 5.1 patents and
          patent applications exclusively relating to the Pharmaceutical Field
          and/or the BASF Pharmaceutical Business (hereinafter referred to as
          "Transferred Patents") as listed in Exhibit 5.1, including, without
          limitation, all patents and patent applications relating to compounds
          and substances being researched or developed, or that have been
          researched or developed, at the Nottingham site which compounds and
          substances are described in Exhibit 5.1(a).

5.2       Seller owns certain other patents and patent applications as listed in
          Exhibit 5.2 which also relate but not exclusively relate to the
          Pharmaceutical Field and/or the BASF Pharmaceutical Business which are
          hereinafter referred to as "Remaining Patents".

5.3       The substances (Substanzen) collected in the "Compound Library" of
          Seller are physically available on the premises of both the
          Partnership or, if the Structure Option has been exercised by Seller
          pursuant to Section 7 (A), Knoll AG, and Seller in Ludwigshafen,
          Germany (and will hereinafter be referred to as "Shared Substances").

5.4       Patents and patent applications, whether owned by Seller or by
          Seller's Affiliates, which relate to any of the Shared Substances will
          hereinafter be referred to as "Shared Substance Related Patents".

<PAGE>   8
                                     Page 8


                                    SECTION 6
                                     SHARES

6.1       The shares in Knoll AG are hereinafter referred to as the "Knoll AG
          Shares", the shares in the Verwaltungs-GmbH and the interests in the
          Partnership are hereinafter jointly referred to as "Shares/Interests
          Verwaltungs-GmbH/Partnership".

6.2       "The Shares" shall mean (a) the shares or other equity interests or
          equity in BPC, in the Other Foreign Subsidiaries, in the
          Verwaltungs-GmbH and in the Partnership, or (b) in the event of the
          exercise of the Structure Option the shares or other equity in BPC, in
          the Other Foreign Subsidiaries and the Knoll AG Shares.


                                       II.
                     SALE, STRUCTURE OPTION, PURCHASE PRICE

                                    SECTION 7
                                      SALE

7.1       Seller hereby sells, or shall cause its Affiliates to sell, the Shares
          and the Transferred Patents to Purchaser or to entities designated by
          Purchaser, subject to the occurrence and fulfillment or waiver of all
          of the Closing Conditions and with commercial effect as amongst the
          parties as of the Closing except as otherwise provided in Section 7.4
          and Seller hereby agrees to transfer, or to cause its Affiliates to
          transfer, the Shares and the Transferred Patents by separate sale and
          transfer contracts (hereinafter referred to as "Separate Sale and
          Transfer Contracts") to Purchaser or to entities designated by
          Purchaser at and effective as of the Closing.

7.2       The Separate Sale and Transfer Contracts shall be entered into and
          completed at the Closing in accordance with Section 12.1, except for
          the sale of the Hokuriku Shares which shall be completed pursuant to
          Section 7.4 below.

7.3       Seller shall cause the businesses described in clauses (a) through (d)
          in the definition of "Discontinued/Excluded Businesses" to be
          transferred to Seller prior to the Closing and Purchaser shall upon
          Seller's request and at Seller's expense cause such transfer to be
          made or completed after the Closing as far as not made or completed
          prior thereto and shall hold such Discontinued/Excluded Businesses
          until completion of their transfer for the account of Seller.

7.4       As far as the Hokuriku Shares are concerned, Purchaser agrees to
          commence within 5 business days after the completion of the procedures
          set forth in Exhibit 7.4 a tender offer procedure as required under
          Japanese law for the acquisition of all outstanding shares in Hokuriku
          Seiyaku K. K. with the commitment that Purchaser shall be required to
          purchase all of the tendered shares in Hokuriku Seiyaku K. K.
          including the Hokuriku Shares tendered by Seller directly or
          indirectly and to complete such tender offer procedure within 21 to 60
          days after the commencement of such tender offer procedure (the
          "Hokuriku Tender Offer"). Seller agrees to (a) tender the Hokuriku
          Shares at the price per share offered by Purchaser in the course of
          such tender offer (the "Per Share Tender Price") and (b) provide such
          information and take such actions as may be necessary to enable
          Purchaser to comply

<PAGE>   9

                                     Page 9


          with applicable Japanese law. The Per Share Tender Price multiplied by
          the number of Hokuriku Shares tendered by Seller in the Hokuriku
          Tender Offer (such amount, converted from Yen to USD using the
          Conversion Exchange Rates, being the "Final BASF Tender Amount")
          together with Seller's pro rata portion of the Excess Hokuriku
          Payment, if any, shall determine the amount of the Aggregate Purchase
          Price that shall be allocated to the Hokuriku Shares.


                                  SECTION 7 (A)
                                STRUCTURE OPTION

7(A).1    Up to and through 10 working days prior to Closing, Seller shall have
          the option ("Structure Option") to choose to sell the shares in Knoll
          AG ("Knoll AG Shares") rather than the shares in the Verwaltungs-GmbH
          and the interests in the Partnership ("Shares/Interests
          Verwaltungs-GmbH/Partnership").

7(A).2    The Structure Option can be exercised whether or not the Demerger
          within the meaning of Section 4.2 has been commenced but may not be
          exercised if the Demerger has been completed.

7(A).3    In order to exercise the Structure Option, Seller shall communicate in
          writing to Purchaser that it has decided to make use of the Structure
          Option.

7(A).4    If the Structure Option is exercised, provisions in this Agreement
          intended to address issues associated with the termination and
          maintenance of the Partnership, including Sections 29 and 30, shall be
          of no further force and effect.


                                    SECTION 8
                                 PURCHASE PRICE

8.1       The aggregate purchase price for the Shares and Transferred Patents
          and the license granted in Section 25.1 below shall be USD
          6,900,000,000.00 (six billion nine hundred million United States
          Dollar) (hereinafter referred to as the "Aggregate Purchase Price"),
          and shall be allocated as set forth in Exhibit 8.1. To the extent
          permitted by law such allocation of the Aggregate Purchase Price shall
          be binding for Seller and Purchaser for all aspects including but not
          limited to tax filings. At the Closing, the Aggregate Purchase Price
          less (i) the Provisional Hokuriku Tender Amount (the "Provisional
          Non-Hokuriku Purchase Price") and (ii) any sums heldback pursuant to
          Section 12.5, shall be paid by transfer of immediately available funds
          and free of wire transfer charges and transfer taxes to such bank as
          Seller may specify in writing within 5 business days prior to the
          Closing.

8.2       The Aggregate Purchase Price shall be adjusted as provided for in
          Sections 9 and 10 below or as a result of a claim for indemnification
          pursuant to Sections 15, 18 and 21 below.

8.3       The "Provisional Hokuriku Tender Amount" shall mean an amount,
          denominated in USD using the Conversion Exchange Rate for Yen to USD,
          equal to (a) the number of Hokuriku Shares held by Seller, times (b)
          the average of the closing prices of the Hokuriku Shares on

<PAGE>   10

                                     Page 10


          the Tokyo Stock Exchange for the five trading days immediately prior
          to the fifth day prior to the Closing Date. If the Final BASF Tender
          Amount exceeds the Provisional Hokuriku Tender Amount (the "Hokuriku
          Overpayment"), an amount of the Provisional Non-Hokuriku Purchase
          Price equal to the Hokuriku Overpayment shall be refunded by Seller to
          Purchaser and the allocation to such other Shares (other than the
          Hokuriku Shares) or assets shall be reduced by the Hokuriku
          Overpayment in such manner as Purchaser and Seller shall mutually
          agree in good faith. If the Provisional Hokuriku Tender Amount exceeds
          the Final BASF Tender Amount (the "Hokuriku Underpayment") an amount
          equal to the Hokuriku Underpayment shall be refunded by Purchaser to
          Seller and allocated to such other Shares (other than the Hokuriku
          Shares) or assets of the Companies upon which Purchaser and Seller
          shall mutually agree in good faith. "Non Hokuriku Purchase Price"
          shall be equal to the Aggregate Purchase Price less the Final BASF
          Tender Amount, including any Excess Hokuriku Payments.


                                    SECTION 9
                     NON-HOKURIKU PURCHASE PRICE ADJUSTMENT

9.1       The Non-Hokuriku Purchase Price shall be adjusted as follows:

          a)   As of September 30, 2000, the net asset value of the BASF
               Pharmaceutical Business amounts to *** (such amount, net of the
               Hokuriku Reference Net Asset Value, being hereinafter referred to
               as "Reference Net Asset Value"). The Reference Net Asset Value
               has been determined on the basis of the unaudited proforma
               balance sheet contained in the attached Exhibit 9.1 (a) in item
               3.2 thereof taking into account adjustments, as shown in Exhibit
               9.1 (b) by the elimination of (i) Cash, Financial Debt, deferred
               Taxes and Accrued Taxes as shown in Exhibit 9.1 (a), (ii)
               deferrals shown in Exhibit 9.1 (a) as miscellaneous liabilities
               related to expenses of Seller allocated to the BASF
               Pharmaceutical Business; and (iii) other current assets as shown
               in Exhibit 9.1 (a) related to one-time payments of American Home
               Products to Seller with regard to a certain patent ("Enbrel").
               Notwithstanding anything to the contrary set forth in this
               Section 9.1, Exhibit 9.1 (a) or Exhibit 9.1 (b), Section 21.4
               shall govern to the exclusion of this Section 9.1 with respect to
               the calculations described therein.



          b)   If the net asset value of the BASF Pharmaceutical Business as of
               the Closing (net of the Hokuriku Closing Net Asset Value) as
               determined in accordance with the principles set forth in Section
               10 below and as shown on the Final Closing Net Asset Value
               Statement (hereinafter referred to as the ("Closing Net Asset
               Value") is less than the Reference Net Asset Value, Seller shall
               pay to Purchaser the amount by which the Closing Net Asset Value
               is less than the Reference Net Asset Value.

          c)   If the Closing Net Asset Value exceeds the Reference Net Asset
               Value, Purchaser shall pay to Seller in addition to the Aggregate
               Purchase Price the amount by which the Closing Net Asset Value
               exceeds the Reference Net Asset Value.

----------
*** Confidential information omitted pursuant to a request for confidential
    treatment filed separately with the Securities and Exchange Commission.

<PAGE>   11

                                     Page 11


9.2       The amount determined in accordance with Section 9.1 above shall be
          paid by Seller or Purchaser, as the case may be in USD, together with
          any accrued interest at a rate of six percent per annum as of the
          Closing within 5 working days after the Closing Net Asset Value
          Statement has become final in accordance with Section 10.5 hereof in
          immediately available funds free of wire transfer charges and transfer
          taxes to the bank account set forth in Section 8.1 above, if payment
          is to be made to Seller, and to Citibank, N.A., New York, New York
          (ABA #021000089) for credit to Abbott Laboratories *** if payment is
          to be made to Purchaser. Any credit to Purchaser shall be made in USD
          at the spot exchange rate in effect at two business days prior to the
          date of payment.


                                   SECTION 10
                     FINAL CLOSING NET ASSET VALUE STATEMENT

10.1      For the purpose of determining the amount of the purchase price
          adjustment, if any, pursuant to Section 9 above, Seller shall deliver
          to Purchaser as promptly as practicable (but in any event no more than
          45 days) after the Closing an audited consolidated balance sheet and
          statement of changes in shareholder's equity of the Companies as of
          the Closing (the "Closing Balance Sheet") and the Closing Net Asset
          Value Statement, each prepared by Seller and audited by Deloitte &
          Touche GmbH ("Seller's Auditors") (hereinafter referred to as "Closing
          Net Asset Value Statement") reflecting the Closing Net Asset Value,
          together with the report of Seller's Auditors thereon ("Auditor's
          Report"). The Closing Balance Sheet and the statement of changes in
          shareholder's equity included in the Auditor's Report shall be
          prepared in accordance with the Report Principles (as defined in
          Section 13.20) as of the Closing Date, and prepared and consolidated
          in a manner consistent with Exhibit 9.1(a). The Closing Net Asset
          Value Statement included in the Auditor's Report shall be prepared on
          the basis of, and derived from, the balance sheet contained in the
          Closing Balance Sheet, and adjusted in a manner consistent with
          Exhibit 9.1(b), and further adjusted in accordance with the principles
          set forth in Exhibit 10.1 hereto. The audit of the Closing Balance
          Sheet shall include a physical count and valuation of the Companies'
          inventory. The Auditor's Report shall provide at least as much detail
          by financial statement line item as is included in Exhibit 9.1(a).
          Intercompany Obligations shall be dealt with as provided in Section
          19. NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THIS SECTION
          10.1, EXHIBIT 7.4 SHALL GOVERN THE CALCULATION OF THE HOKURIKU NET
          ASSET VALUE DESCRIBED THEREIN.

10.2      To the extent to which the Closing Net Asset Value Statement arrives
          at a Closing Net Asset Value resulting in an adjustment of the
          Non-Hokuriku Purchase Price pursuant to Section 9, the Closing Net
          Asset Value Statement must also state how the amount by which the
          Non-Hokuriku Purchase Price, as so adjusted, should be allocated.

10.3      For the purpose of preparing and auditing the Closing Balance Sheet
          and Closing Net Asset Value Statement, Purchaser shall grant, or cause
          Companies to grant, Seller and Seller's auditors access to all
          relevant information and shall cause Purchaser's employees and the
          employees of the Companies to give Seller and its auditors all support
          and assistance reasonably requested by Seller free of charge.
          Purchaser and Purchaser's outside

----------
*** Confidential information omitted pursuant to a request for confidential
    treatment filed separately with the Securities and Exchange Commission.

<PAGE>   12

                                     Page 12


          accountants, Arthur Andersen, shall be permitted to observe all
          procedures with respect to the counting and valuation of inventories.

10.4      Purchaser shall have 30 days after receipt of the Closing Net Asset
          Value Statement during which it may review the Closing Net Asset Value
          Statement, and raise in writing and in reasonable detail any
          objections against specified items of the Closing Net Asset Value
          Statement, indicating precisely the higher or lower value which in
          Purchaser's opinion should be allocated to each item in dispute.
          During this period of time, Purchaser and its auditors shall be
          granted access to all relevant information produced by Seller or
          Seller's Auditors; provided, however, that the work papers of Seller's
          Auditors shall be made available only to Purchaser's Auditors. The
          objections raised by Purchaser pursuant to the preceding sentence must
          also specify how the amounts in dispute should be allocated in
          Purchaser's opinion. Any item in the Closing Net Asset Value Statement
          objected to by Purchaser shall hereinafter be referred to as "Disputed
          Item".

10.5      If and insofar as Purchaser does not raise objections to the Closing
          Net Asset Value Statement in accordance with Section 10.4 above, the
          Closing Net Asset Value arrived at in the Closing Net Asset Value
          Statement shall be final and binding upon the parties. To the extent
          to which the Net Asset Value arrived at in the Closing Net Asset Value
          Statement is final and binding upon the parties, the adjustment
          payment to be made by Purchaser or Seller according to Section 9.1
          shall be made forthwith.

10.6      The parties shall use their best efforts to resolve the Disputed Items
          within 15 working days following the receipt by Seller of Purchaser's
          objections pursuant to Section 10.4 above.

10.7      Any Disputed Items not resolved pursuant to Section 10.6 above shall
          be submitted by the parties to Ernst & Young for review. Should Ernst
          & Young become unavailable, the parties shall agree on another
          accounting firm of international standing. If they cannot reach
          agreement within 15 working days, such accounting firm shall be
          determined at the request of either party by the Institut der
          Wirtschaftsprufer e.V. Dusseldorf.

10.8      In rendering its decision, the accounting firm shall consider only the
          Disputed Items and, with respect to each such Disputed Item, shall
          stay within the range of the values allocated to it by the parties.
          The accounting firm shall deliver in writing to Seller and Purchaser
          as promptly as practicable its determination of the Disputed Items
          stating the reasons of its decision. The reasons shall specifically
          address the arguments brought forward by the parties with respect to
          each Disputed Item. Such determination shall be final and binding upon
          the parties absent manifest mathematical errors. The accounting firm
          shall allocate its fees to the parties in accordance with Sections 91
          et seq. of the German Civil Procedure (ZPO).

10.9      No later than 45 days after the Closing, as part of, and concurrently
          with, its preparation of the financial statements described in Section
          10.1, Seller shall prepare and Seller's Auditors shall audit and
          report on, in accordance with U.S. GAAP and the Securities Exchange
          Act of 1934 and the rules and regulations of the U.S. Securities and
          Exchange Commission thereunder (including Regulation S-X) (the "U.S.
          Securities Laws"), such financial statements of the BASF
          Pharmaceutical Business and the Companies as may be

<PAGE>   13

                                     Page 13


          required to be filed by Purchaser under Item 7 of Form 8-K under the
          U.S. Securities Laws (the "U.S. Financial Statements"). Seller and
          Seller's Auditors shall permit Purchaser and Purchaser's Auditors to
          have access to all information, including Seller's Auditor's work
          papers, as Purchaser may reasonably request in connection therewith;
          provided, however, that the work papers of Seller's Auditors shall be
          made available only to Purchaser's Auditors. The engagement of
          Seller's Auditors will be governed by a separate agreement between
          Purchaser and Seller's Auditors and be based on the General Conditions
          of Assignment for Wirtschaftsprufer and
          Wirtschaftsprufungsgesellschaften as of July 1, 2000 including a
          limitation of liabilities for all damages arising from or in
          connection with the engagement. All fees and expenses of Seller's
          Auditors incurred in connection with the preparation of the U.S.
          Financial Statements shall be paid by Purchaser. After the Closing,
          Seller shall permit Seller's Auditors, Purchaser and its
          representatives to have access, upon reasonable advance notice, to the
          assets, employees, books and records of Seller and its Affiliates and
          shall furnish, or cause to be furnished, to Seller's Auditors and
          Purchaser, such financial, tax and operating data and other available
          information with respect to the BASF Pharmaceutical Business as
          Seller's Auditors and Purchaser may from time to time request or
          otherwise require to prepare the U.S. Financial Statements. Seller
          shall provide such certifications, support and attestations, including
          certifications and attestations as to the accuracy of the financial
          information that forms the basis of the U.S. Financial Statements or
          that is otherwise provided to Seller's Auditors. Purchaser and
          Purchaser's outside accountants shall be entitled to observe and
          participate in Seller's and Seller's Auditors preparation and audit of
          the US Financial Statements.


                                      III.
                                     CLOSING

                                   SECTION 11
                                     CLOSING

11.1      The transactions set forth in this Agreement shall be consummated at
          the time, place and manner provided below (the "Closing"). The date of
          the Closing (the "Closing Date") shall be, unless otherwise agreed
          between the parties or terminated pursuant to Section 33, on the fifth
          working day after the Closing Conditions have been fulfilled, but not
          earlier than on March 2, 2001.

11.1.1    The obligation of Purchaser and Seller to effect the Closing shall be
          subject to the satisfaction of the following conditions (hereinafter
          referred to as the "General Closing Conditions" and, together with the
          Purchaser Conditions (as defined in Section 11.1.2), the "Closing
          Conditions"):

          a)   The transactions contemplated by this Agreement have been, or are
               treated as being, approved

               aa)  under the EU merger control rules;

               bb)  under the Hart-Scott-Rodino Antitrust Improvements Act of
                    1976 ("HSR Act") as amended, including, without limitation,
                    the expiration or early termination of any waiting period
                    applicable to the consummation of the purchase under the HSR
                    Act; and

<PAGE>   14
                                     Page 14


               cc)  under the Industrial Site Recovery Act implemented by the
                    New Jersey Department of Environmental Protection; and

          b)   Except if the Structure Option has been exercised by Seller
               pursuant to Section 7 (A), the Merger shall have been registered
               in the Commercial Register of Knoll GmbH and Knoll AG, and the
               Demerger shall have been registered in the Commercial Register of
               both Knoll AG and the Partnership;

          c)   No preliminary or permanent injunction or other order, decree or
               ruling issued by a court of competent jurisdiction or by a
               governmental authority shall be in effect that would prevent the
               consummation of the transactions contemplated by this Agreement
               in the United States of America or the European Union.



11.1.2.   The obligation of Purchaser to effect the Closing shall be subject to
          satisfaction of the following conditions ("Purchaser Conditions"):

          a)   The Representations of Seller made in Section 13 of this
               Agreement (other than the representation in the last sentence of
               Section 13.2) shall be true and correct on and as of the Closing
               Date as so made anew on and as of such date, unless such failure
               to be so true and correct would not have, or would not reasonably
               be expected to have, a Material Adverse Effect. Purchaser shall
               have received a certificate, dated the Closing Date, to such
               effect by an officer of Seller.

          b)   Seller shall have performed and complied in all material respects
               with all covenants, terms and agreements to be performed and
               complied with by it on or before the Closing Date, unless any
               failure to so perform or comply would not have, or would not
               reasonably be expected to have, a Material Adverse Effect.
               Purchaser shall have received a certificate, dated the Closing
               Date, to such effect by an officer of Seller.

          c)   Seller shall have obtained, or shall have caused the Companies to
               have obtained, all Material Agreement Consents (as defined in
               Section 13.21).

11.2      Each of the parties will inform the other promptly of the fulfillment
          of the Closing Conditions.

11.3      The Closing shall take place at the offices of Hengeler Mueller
          Weitzel Wirtz, Frankfurt am Main, Germany, or such other place as
          agreed upon by the parties.


                                   SECTION 12
                       ACTIONS TO BE TAKEN AT THE CLOSING

12.1      At the Closing, Seller and Purchaser shall deliver:

          a.   except if the Structure Option has been exercised by Seller
               pursuant to Section 7 (A) a notarial deed between Knoll AG and
               Purchaser or its designee on the transfer of title to the shares
               in Verwaltungs-GmbH;

<PAGE>   15

                                     Page 15


          b.   except if the Structure Option has been exercised by Seller
               pursuant to Section 7 (A) a duly executed agreement between Knoll
               AG and Purchaser or its designee on the transfer of the
               limitedccccc partnership interests in the Partnership;

          c.   except if the Structure Option has been exercised by Seller
               pursuant to Section 7 (A) an application for registration of the
               change of the limited partner of the Partnership in the
               commercial register duly executed by Knoll AG, Verwaltungs-GmbH
               and Purchaser or its designee;

          d.   duly executed assignments, in recordable form, of each of the
               Transferred Patents entered into by Seller and Purchaser or its
               designees (the "Assignments");

          e.   duly executed Separate Sales and Transfer Contracts

          f.   a duly executed license agreement relating to the Remaining
               Patents to be negotiated in good faith by Purchaser and Seller.

12.2      At the Closing, Seller shall deliver or cause to be delivered to
          Purchaser:

          a.   certificates representing the Shares sold pursuant to Section
               12.1 (e) above and, if the Structure Option is exercised by
               Seller pursuant to Section 7 (A), the Knoll AG Shares duly
               endorsed for transfer to Purchaser or its designees or such
               evidence of the transfer of such Shares as required by the
               applicable law of the jurisdictions of incorporation of the
               companies to which the shares relate;

          b.   except if the Structure Option has been exercised by Seller
               pursuant to Section 7 (A), executed copies of all Merger/Demerger
               documents, including, without limitation, all executed
               instruments of assignment and assumption and filings made in
               connection therewith; and

          c.   a duly executed assignment of (i) all Intellectual Property owned
               or licensed by Seller or any of its Affiliates that relates
               exclusively to the Pharmaceutical Field or the BASF
               Pharmaceutical Business, and (ii) all Intellectual Property
               relating to the compounds and substances described in Exhibit
               5.1(a).

12.3      At the Closing, Purchaser shall pay to Seller such portion of the
          Aggregate Purchase Price as is payable at Closing in accordance with
          Section 8.

12.4      The deliveries of the agreements and other documents set forth in
          Section 12.1, deliveries to be made by Seller pursuant to Section
          12.2, and the payment of the purchase price by Purchaser pursuant to
          Section 12.3 above shall all be made concurrently (Zug um Zug).

12.5      If and insofar as the transfer of any of the Shares and/or the
          Transferred Patents is prohibited due to a missing approval from
          antitrust authorities or governmental authorities other than those
          mentioned in Section 11.1.1(a), this shall not delay or prevent the
          Closing pursuant to Sections 12.1, 12.2 and 12.3 provided, however,
          that the portion of the Aggregate Purchase Price attributable to such
          Shares and/or Transferred Patents shall not be delivered and paid at
          Closing, but shall be held by Purchaser until such approval(s) have
          been obtained and such Shares and/or Transferred Patents shall have
          been transferred. The parties shall use their best efforts to obtain
          such approvals. All earnings from the relevant Companies shall be held
          for the account of Purchaser.The respective Shares or Transferred
          Patents shall be transferred without undue delay after the approval
          has

<PAGE>   16

                                     Page 16


          been obtained with commercial effect as amongst the parties as of the
          Closing and the respective portion of the Aggregate Purchase Price
          attributable to such Shares and/or Transferred Patents shall be paid
          simultaneously together with interest thereon for the period from the
          Closing Date to the receipt of payment at an interest rate of six
          percent per annum.


                                       IV.
                            REPRESENTATIONS OF SELLER

                                   SECTION 13
                            REPRESENTATIONS OF SELLER

Seller hereby absolutely and unconditionally represents and warrants in the form
of an independent guarantee to Purchaser that the following statements (the
"Representations") are true and accurate as of the date of this Agreement and as
of the Closing Date except as otherwise provided herein:

13.1      (a)  BPC, BPC Subsidiaries, Other Foreign Subsidiaries, the
               Partnership and Verwaltungs GmbH or, in the event of an exercise
               of the Structure Option pursuant to Section 7 (A), BPC, BPC
               Subsidiaries, Other Foreign Subsidiaries, Knoll Deutschland GmbH
               and Knoll AG, (together in either case, hereinafter referred to
               as the "Companies") are duly organized, validly existing and
               (where such concept applies) in good standing under the laws of
               the jurisdiction of their respective incorporation and each of
               them has the requisite corporate power and authority to own,
               operate or lease the properties that it purports to own, operate
               or lease and to carry on its businesses as they are now being
               conducted. Each of the Companies is duly qualified and in good
               standing to do business in each jurisdiction in which the nature
               of its business or the ownership or leasing of its properties
               makes such qualification necessary. Seller and each of its
               Affiliates (as applicable) including the Companies has all
               requisite corporate power and authority to enter into this
               Agreement and to consummate the Transactions contemplated hereby.

          (b)  The execution and delivery of this Agreement and the consummation
               of the Transactions contemplated hereby and thereby have been
               duly authorized by all necessary corporate action on the part of
               Seller and each of its Affiliates (as applicable), including the
               Companies, shareholder approval not being required by any of
               them. This Agreement and transaction documents provided for
               herein have been, or upon execution, shall have been, duly
               executed and delivered by Seller, its Affiliates (as applicable),
               including the Companies and constitutes a valid and binding
               agreement of each of them, enforceable against them in accordance
               with their terms.

13.2      Except for the manufacture of the Mutual Active Ingredients and
          certain of the Exclusive Active Ingredients pursuant to certain
          Intercompany Agreements (the "Intercompany Manufacturing Agreements"),
          Seller conducts the BASF Pharmaceutical Business only through the
          Companies, and neither Seller nor any of Seller's Affiliates
          (including the entities and operations listed in clauses (a)-(d) of
          the definition of Discontinued Excluded Businesses) other than the
          Companies owns, leases or uses, or has any interest in, any assets or
          properties, real or personal, tangible or intangible, including
          Intellectual Property, related to the BASF Pharmaceutical Business,
          other than (i) the manufacturing facilities operated in connection
          with the Intercompany Manufacturing Agreements, and (ii) the
          Transferred Patents and the Remaining Patents. Except as disclosed on
          Exhibits 1.1, 1.2, 2 and 4.2(b), Seller has no direct or indirect
          subsidiary corporations, and owns no interest, direct or indirect, in
          any other business enterprise, firm or corporation that, in each

<PAGE>   17

                                     Page 17


          case, is engaged in the BASF Pharmaceutical Business. Seller holds, as
          set forth in Exhibits 1.1, 1.2, 2 and 4.2(b), good and marketable
          title to the Shares (including all the issued and outstanding shares
          of the BPC Subsidiaries) and the Shares are free and clear of all
          liens, encumbrances, pledges, options, claims, charges and
          restrictions of any nature and, except as disclosed in Exhibit
          13.2(d), are free of other third party rights and can be freely
          disposed of by the respective assignors. Each respective assignor has
          the full right and power to transfer to Purchaser the Shares
          (including all the issued and outstanding shares of the BPC
          Subsidiaries) pursuant to this Agreement, without obtaining the
          consent of any third party except as set forth on Exhibit 13.2(d). No
          consent, approval, order or authorization of, or registration,
          declaration or filing with, any governmental entity is required by or
          with respect to Seller or the Companies in connection with the
          execution and delivery of this Agreement or the consummation of the
          transactions contemplated hereby, except the necessary consents and
          approvals described in Section 11.1.1 (a) ("Consents").

13.3      The authorized and issued share capital of each of the Companies is
          described, and is held by the persons and in the amounts as set forth
          in Sections 1 through 4 and the appertaining Exhibits and all shares
          of such share capital are duly authorized, validly issued,
          outstanding, fully paid and non-assessable. There are no outstanding
          contractual obligations of any of the Companies to repurchase, redeem
          or otherwise acquire or to issue, sell or otherwise dispose of any
          outstanding shares or capital of, or otherwise ownership interests in
          or any warrant, option or other security exercisable, for exchange
          for, or convertible into any shares of, any of the Companies, or to
          make any investment (in the form of a loan, capital contribution or
          otherwise) in any other entity. No bonds, debentures, notes or other
          indebtedness of any of the Companies having the right to vote on any
          matters on which stockholders may vote are issued or outstanding.

13.4      Except if the Structure Option has been exercised by Seller pursuant
          to Section 7 (A), as of the Closing, the Demerger set forth in Section
          4 above will have been duly authorized and implemented in accordance
          with governing law and will have resulted in the transfer to the
          Partnership of all assets and liabilities as described in Section 4.3
          above.

13.5      Except as set forth in Exhibit 13.5, the execution and delivery of
          this Agreement and the consummation of the transactions contemplated
          hereby, will not (i) conflict with or violate the articles of
          incorporation or bylaws or equivalent organizational documents of
          Seller, any of its Affiliates, or any of the Companies, (ii) subject
          to making the filings and obtaining the approvals identified in
          Section 11.1.1(a) and Exhibit 13.2(e) or such other filings and
          approvals the absence of which would not reasonably be expected to
          have a Material Adverse Effect and are necessary under other
          applicable merger, investment, drug or environmental control statutes,
          conflict with or violate any statute, rule, regulation or other legal
          requirement or temporary, preliminary or permanent order, judgment or
          decree or any memorandum of understanding with any governmental entity
          applicable to Seller, any of its Affiliates, as applicable, or any of
          the Companies or by which any property or asset of Seller, any of its
          Affiliates, as applicable, or any of the Companies is bound or
          affected, or (iii) result in any breach of or constitute a default (or
          an event which with notice or lapse of time or both would become a
          default) under, result in the loss of a benefit under, or give to
          others any right of purchase or sale, or any right of termination,
          amendment, acceleration, increased payments or cancellation of, or
          result in the creation of a lien on any property or asset of Seller,
          any of its Affiliates, as applicable, or any of the Companies pursuant
          to, any note, bond, mortgage, indenture, con-

<PAGE>   18

                                     Page 18


          tract, agreement, lease, license, permit, franchise, authorization or
          other instrument or obligation to which Seller, any of its Affiliates,
          as applicable, or any of the Companies is a party or by which Seller,
          any of its Affiliates, as applicable, or any of the Companies or any
          property or asset of Seller, any of its Affiliates, as applicable, or
          any of the Companies is bound or affected, except, in the case of
          clauses (ii) and (iii) for any such conflicts, violations, breaches,
          defaults, events, losses, rights, payments, cancellations,
          encumbrances or other occurrences that could not either (x) result in
          a default or event of default or accelerate or require that Seller,
          any of its Affiliates, as applicable, or any of the Companies pay
          prior to the scheduled maturity date or repurchase or offer to
          repurchase indebtedness owed to any person that is in excess of EUR
          10,000,000 or indebtedness in excess of EUR 30,000,000 in the
          aggregate, or (y) with respect to any other obligation, document or
          instrument, individually or in the aggregate, be reasonably expected
          to have a Material Adverse Effect.

13.6      As of the Closing, there exist no obligations of the Companies under
          any tax sharing agreements between the Companies and the Seller which
          will survive with effect after Closing , agreements of domination or
          profit and loss pooling agreements or agreements of a similar kind or
          effect between any of the Companies and Seller or any of Seller's
          Affiliates.

13.7.1    All Tax returns required to have been filed by or with respect to any
          of the Companies have been duly and timely filed, and all Taxes shown
          to be due on such Tax returns for which any of the Companies is liable
          have been timely paid. To the Best Knowledge of Seller, the Tax Assets
          represent valid reductions of Tax that will be available to the
          Purchaser or the Companies after the Closing.

13.7.2    All Tax assessments relating to any of the Companies with respect to
          Tax periods ending on or before the date of this Agreement have been
          timely paid or are being contested in good faith

13.7.3    Except for the ongoing audits listed in Exhibit 13.7.3, there is no
          action, suit or investigation, claim or assessment pending or to the
          Best Knowledge of Seller threatened with respect to Taxes of the
          Companies.

13.8      Except as disclosed in Exhibit 13.8, none of the Companies has
          received any written Tax ruling or entered into any written and
          legally binding agreement or is currently under negotiations to enter
          into any such agreements with any Tax authority which would affect the
          Tax situation of any of the Companies in any time period ending after
          the Closing.

13.9      a) Except for (i) the manufacturing facilities operated in connection
          with the Intercompany Manufacturing Agreements, and (ii) the
          Transferred Patents and the Remaining Patents, the assets, properties,
          rights and interests owned by the Companies, or which the Companies
          have valid, subsisting and enforceable rights to use constitute all of
          the assets, properties, rights and interests necessary to conduct the
          BASF Pharmaceutical Business in substantially the same manner as
          conducted by Seller and its Affiliates, including the Companies, prior
          to the date of this Agreement. The Companies have good and marketable
          title, or are otherwise legally entitled to use, all assets whether
          tangible or intangible, (except for (i) the manufacturing facilities
          operated in connection with the Intercompany Manufacturing Agreements,
          and (ii) the intellectual property rights as otherwise

<PAGE>   19

                                     Page 19


          addressed in Sections 13.15 through 13.17) which are used in, or are
          necessary for, the conduct of the BASF Pharmaceutical Business as
          currently conducted free and clear of material restrictions on, or
          conditions to, transfer or assignment, and of liens, pledges, charges,
          encumbrances, security interest, equities, claim, covenants,
          conditions and restrictions, except as set forth in Exhibit 13.9(a).

13.10     The Intercompany Agreements listed in Exhibit 13.10 are validly
          existing and binding on the parties thereto.

13.11.1   For purposes of this Section 13.11, the following terms have the
          definitions set forth below:

          a)   "ERISA Affiliate" means, with respect to any entity, trade or
               business, any other entity, trade or business that is a member of
               a group described in Section 414(b), (c), (m) or (o) of the
               Internal Revenue Code of 1986, as amended (hereinafter referred
               to as "Code"), or Section 4001(b)(1) of the Employee Retirement
               Income Security Act of 1974, as amended (hereinafter referred to
               as "ERISA"), that includes the first entity, trade or business,
               or that is a member of the same "controlled group" as the first
               entity, trade or business pursuant to Section 4001(a)(14) of
               ERISA.

          b)   An "Employee Benefit Plan" means any employee benefit plan,
               program, policy, practice, or other arrangement providing
               benefits to any current or former employee, officer or director
               of any of the Companies or any beneficiary or dependent thereof
               that is sponsored or maintained by the Seller, any of the
               Companies or any Affiliate of the Seller or any of the Companies
               or to which the Seller, any of the Companies or any Affiliate of
               Seller or any of the Companies contributes or is obligated to
               contribute, whether or not written or funded or unfunded,
               including without limitation any Pension Arrangement, disability,
               death benefit, hospitalization, medical or other employee welfare
               benefit plan or employee pension benefit plan (including any
               employee welfare benefit plan within the meaning of Section 3(1)
               of ERISA or any employee pension benefit plan within the meaning
               of Section 3(2) of ERISA whether or not such employee welfare
               benefit or employee pension benefit plan is subject to ERISA),
               and any bonus, incentive, deferred compensation, vacation, stock
               purchase, stock option, stock appreciation, severance, early
               retirement, seniority, employment, change of control or fringe
               benefit plan, program or agreement.

13.11.2   As of the Closing, Exhibit 13.11.2 includes a complete list of all
          Employee Benefit Plans which (i) represent Pension Arrangements, (ii)
          cover 100 or more Employees or former employees, (iii) represent an
          annual operating expense of USD 250,000 or more, or (iv) represent
          post- retirement obligations of which the market value or present
          value is USD 250,000 or more, none of which is a multiemployer plan
          subject to Title IV of ERISA. True and complete copies of all such
          Employee Benefit Plans, including, but not limited to, any trust
          instrument or insurance contract forming a part of any such Employee
          Benefit Plan, and all amendments thereto, have been provided or made
          available to Purchaser.

13.11.3   Each Employee Benefit Plan complies with all applicable local laws,
          including but not limited to the Code and ERISA, and any contract or
          labor, works council or collective bargaining agreement, and has been
          administered in accordance with its terms. All contributions, premiums
          and other payments due from Seller, the Companies or any of their

<PAGE>   20

                                     Page 20


          Affiliates to (or under) any Employee Benefit Plan through the date of
          this Agreement and as of the Closing have been fully paid or, to the
          extent not required to be paid on or before such date, have been
          provided for in accordance with Exhibit 13.20 (a) (the Report
          Principles). There are no liabilities arising out of or under any
          Employee Benefit Plan or other employee benefit plan sponsored,
          maintained or contributed to by Seller or any of its Affiliates or
          ERISA Affiliates, whether absolute, accrued, contingent or otherwise,
          that could become a liability of Purchaser and its Affiliates,
          including the Companies, upon or after the consummation of the
          transactions contemplated by this Agreement other than those
          liabilities (i) specifically assumed by Purchaser under Sections 22
          and 23 or accrued on the Closing Net Asset Value Statement, or (ii)
          which arise out of an event occurring after the Closing under an
          Employee Benefit Plan then maintained by any of the Companies.

13.11.4   Except as disclosed by Jeffrey Rosen of Wasserstein Perella & Co. Inc.
          to Steve Fussell, William Dempsey and Jeffrey Leiden of Purchaser on
          December 12, 2000 at the offices of Hengeler Mueller, Bockenheimer
          Landstrasse 51, 60325 Frankfurt am Main, neither the execution and
          delivery of this Agreement nor the consummation of the transactions
          contemplated hereby will, either alone or in conjunction with any
          other event, (i) result in any payment becoming due, or increase the
          amount or value of compensation or benefits due, any current or former
          Employee, including, without limitation, any severance payment or
          benefit; (ii) increase any benefits otherwise payable under any
          Employee Benefit Plan or (iii) result in the acceleration of the time
          of payment, funding or vesting of any such benefits.



13.12     Except as disclosed in Exhibit 13.12(a), there is no court,
          administrative or arbitration proceeding, litigation, action, suit,
          investigation or claim (including, but not limited to, product
          liability cases) that (a) would reasonably be expected to have a
          Material Adverse Effect, or (b) involves an amount in dispute,
          individually or in the aggregate, in excess of EUR 5,000,000 pending
          or, to the Best Knowledge of Seller, threatened in writing against any
          of the Companies or Seller with respect to the BASF Pharmaceutical
          Business. Neither any of the Companies nor Seller or any of its
          Affiliates (with respect to the BASF Pharmaceutical Business) is
          subject to, or bound by, any judgment, order, injunction or decree of
          any court, agency or instrumentality. Neither BASF (with respect to
          the BASF Pharmaceutical Business), nor any of the Companies have
          received any notice, citations or order from any government authority
          or from any professional or consumer body (a) asserting that any
          product is or may be defective or dangerous, or fails to meet any
          applicable standards promulgated by any governmental or regulatory
          authority or agency, (b) constituting any warning or similar notice,
          or (c) requesting that any of them recall any of its products or to
          inform the public or its customers of an adverse effect, or a defect
          or danger in any of their products or linked to their use and, to the
          Best Knowledge of Seller, no facts or conditions exist which could
          reasonably be expected to result in any of the foregoing.

13.13     By January 31, 2001 Seller shall deliver to Purchaser a complete and
          accurate list of all real property and leaseholds belonging to the
          Companies and material to the BASF Pharmaceutical Business, as well as
          all other facilities used or occupied by the Companies in connection
          with the BASF Pharmaceutical Business and shared with Seller, or any
          Affiliate of Seller other than one of the Companies (collectively, the
          "Real Property"). The Companies own, or have a valid leasehold or
          other valid interest in the Real

<PAGE>   21

                                     Page 21


          Property. None of the owned Real Property is subject to any lien
          against such Real Property or to any encumbrance other than minor
          imperfections of title, if any, none of which is substantial in
          amount, detracts from the value or impairs the use of the property
          subject thereto or which would reasonably be expected to have a
          Material Adverse Effect. All of the leased Real Property is subject to
          valid lease agreements that are in full force and effect in accordance
          with their terms, the Companies have the right to quiet enjoyment with
          respect to such leased Real Property, and there exists no material
          breach or default thereunder on part of any of the Companies or, to
          the Actual Knowledge of Seller, any other party thereto. The Companies
          are in sole possession of each parcel of Real Property and no portion
          of the leased Real Property has been sublet nor has any portion of the
          document creating such leasehold interest been assigned.

13.14     As of the date of this Agreement, Exhibit 13.14(a) lists all patents
          owned, and applications made for registration of such rights, by
          Seller or its Affiliates, including any of the Companies (excluding
          the Transferred Patents and the Remaining Patents listed in Exhibit
          5.1 and Exhibit 5.2) which relate to or are used in the BASF
          Pharmaceutical Business. Within 30 days of the date of this Agreement
          Seller shall furnish to Purchaser a list of all trademarks owned, and
          applications made for registration of such rights, by Seller or its
          Affiliates, including any of the Companies which relate to or are used
          in the BASF Pharmaceutical Business, which list shall be deemed part
          of Exhibit 13.14(a). Exhibit 13.14(b) lists all contracts, all of
          which are valid, binding and enforceable, under which Seller or its
          Affiliates, including any of the Companies is licensed or otherwise
          permitted to use any Intellectual Property right which is material to
          the BASF Pharmaceutical Business. Exhibit 13.14(a), Exhibit 13.14(b),
          Exhibit 5.1 and Exhibit 5.2 list all the patents and, upon delivery of
          the list referred to in the second sentence of this Section 13.14,
          trademarks, owned, and applications made for registration of such
          rights which are used in, or are necessary for, the conduct of the
          BASF Pharmaceutical Business as currently conducted. Exhibit 5.1 list
          all patents owned by Seller and its Affiliates relating to D2E7.

13.15.1   To the Best Knowledge of Seller, none of the Intellectual Property
          listed in Exhibit 13.14(a), Exhibit 13.14(b), Exhibit 5.1 and Exhibit
          5.2 has lapsed, has been abandoned or is subject to any pending
          opposition or cancellation proceeding before any registration
          authority in any jurisdiction, and no party thereto is in breach of
          any of the license agreements listed in Exhibit 13.14(b).

13.15.2   To the Best Knowledge of Seller no person is infringing on any of the
          intellectual property rights listed in any Exhibit to this Agreement
          or on any of the Transferred Patents.

13.15.3   (a) The Companies own, or, giving effect to the license of the patents
          contemplated by Section 13.14 will be licensed to use (in each case,
          free and clear of any liens or encumbrances whatsoever), all
          Intellectual Property used in or necessary for the conduct of the BASF
          Pharmaceutical Business as currently conducted; (b) to the Best
          Knowledge of Seller, no person is challenging, infringing on or
          otherwise violating any right of the Companies or Seller with respect
          to the BASF Pharmaceutical Business with respect to any Intellectual
          Property owned by or, to Seller's Actual Knowledge licensed to, the
          Companies or Seller with respect to the BASF Pharmaceutical Business
          and (c) neither the Companies nor Seller has received any written
          notice of any pending claim with respect to any Intellectual Property
          used by Seller or its Affiliates in connection with the BASF
          Pharmaceutical Business or the Companies and to the Best Knowledge of
          Seller no Intellectual Property owned or, to Seller's Actual Knowledge
          licensed by, Seller or its Affiliates in connection with the BASF
          Pharmaceutical Business or the Companies is

<PAGE>   22

                                     Page 22


          being used or enforced in a manner that would result in the
          abandonment, cancellation or unenforceability of such Intellectual
          Property.

          For purposes of this Agreement, "Intellectual Property" shall mean
          trademarks, service marks, brand names, certification marks, trade
          dress and other indications of origin, the goodwill associated with
          the foregoing and registrations in any jurisdiction of, and
          applications in any jurisdiction to register, the foregoing, including
          any extension, modification or renewal of any such registration or
          application; inventions, discoveries and ideas, whether patentable or
          not, in any jurisdiction; patents, applications for patents
          (including, without limitation, divisions, continuations, continued
          prosecution applications, continuations in part and renewal
          applications), and any renewals, extensions or reissues thereof, in
          any jurisdiction; know-how, trade secrets and confidential information
          and rights in any jurisdiction to limit the use or disclosure thereof
          by any person; writings and other works, whether copyrightable or not,
          in any jurisdiction; registrations or applications for registration of
          copyrights in any jurisdiction, and any renewals or extensions
          thereof; and any similar intellectual property or proprietary rights.

13.15.4   Except for the Remaining Patents, all Intellectual Property used in
          the BASF Pharmaceutical Business and developed, owned or held,
          directly or indirectly, by any officer, director, employee or
          contractor of any of the Companies or, with respect to the BASF
          Pharmaceutical Business, Seller or any of its Affiliates, has been or
          prior to or as of the Closing will have been, duly and effectively
          transferred to the Companies or Purchaser. Except to the extent
          accrued on the balance sheet included as Exhibit 9.1(a) or as will be
          accrued on the Closing Net Asset Value Statement, neither the
          Companies nor, with respect to the BASF Pharmaceutical Business,
          Seller or any of its Affiliates, has any liabilities or obligations
          outstanding at the Closing Date under any invention or similar
          agreement or otherwise to any officer, director, employee or
          contractor with respect to Intellectual Property.

13.16.1   With respect to products manufactured or distributed by the BASF
          Pharmaceutical Business which are already in the market as of the date
          of this Agreement, to the Best Knowledge of Seller, none of such
          products infringes on and, to the Best Knowledge of Seller, except as
          disclosed in Exhibit 13.16.1, no third party has asserted that any
          such products infringe on, any intellectual property rights of any
          other person .

13.16.2   With respect to the products listed in Exhibit 13.16.2 which are in
          development as of the date of this Agreement, to the Best Knowledge of
          Seller, no third party has asserted in writing that such products
          infringe on any intellectual property rights of such third party.
          Except for the opinions of counsel to Seller and/or its Affiliates
          (which shall be delivered to Purchaser prior to Closing), Seller has
          provided to Purchaser or its representatives all material information
          available to Seller relating to D2E7.

13.16.3   Except as expressly set forth in Sections 13.16.1, 13.16.2, 15.1 (II)
          and 15.1 (III), Seller (a) does not make any representation with
          respect to infringement of third party rights, and (b) does not assume
          any responsibility and liability with respect to infringement of third
          party rights, with respect to any products or product ideas or product
          proposals which, in each case, are under consideration for the BASF
          Pharmaceutical Business.

13.17     As of the Closing Date, all renewal fees shall have been paid and all
          other "administrative steps" shall have been taken which are required
          for the registration or maintenance of the intellectual property
          rights listed in Exhibit 13.14(a) and 13.14(b) to the extent they

<PAGE>   23

                                     Page 23


          are registered or eligible for registration and of the Transferred
          Patents and the Remaining Patents.

13.18.1   As of the Closing Date, and to Seller's Actual Knowledge as of the
          date of this Agreement, the Companies have obtained and hold all
          permits, licenses or approvals required by environmental laws and
          necessary to the conduct of the BASF Pharmaceutical Business in the
          manner in which it has routinely been conducted. The Companies are in
          compliance with such permits and other requirements of applicable
          environmental laws.

13.18.2   None of the Companies has received any written request for
          information, demand letter, administrative inquiry, or formal or
          informal complaint notices from any governmental authority or
          otherwise of violation of any environmental laws which has not been
          complied with or any condition that might require remediation.

13.18.3   To the Actual Knowledge of Seller, the Real Property referred to in
          Section 13.13 above does not contain any underground storage tanks,
          surface impoundments containing any hazardous substances,
          PCB-containing materials, or any exposed, friable asbestos-containing
          materials.

13.18.4   Except as disclosed in Exhibit 13.18.4, none of the Companies has
          received any written notice, claim, or request for information
          relating to any third-party waste disposal site alleging that any of
          them is or may be liable to any person or governmental authority as a
          result of a release or threatened release or any other form of
          disposal of hazardous materials generated by any of the Companies or
          any third party on behalf of any of the Companies.

13.18.5   The Companies and to Seller's Best Knowledge, any entity for which any
          of them may be responsible, are not subject to any Environmental
          Liabilities and, to the Best Knowledge of Seller, no facts,
          circumstances or conditions relating to, arising from, associated with
          or attributable to any real property currently or, to the Best
          Knowledge of Seller, formerly, owned, operated or leased by the
          Companies or any entity for which any of them may be responsible, or
          operations thereon would reasonably be expected to result in
          Environmental Liabilities. Seller has provided to Purchaser all
          Environmental Reports prepared or dated since January 1, 1995 and
          available to Seller and any of its Affiliates.

13.18.6   As used in this Agreement, "Environmental Liabilities" with respect to
          any person means any and all liabilities of or relating to such person
          or any of its subsidiaries (including any entity which is, in whole or
          in part, a predecessor of such person or any of such subsidiaries),
          whether vested or unvested, contingent or fixed, actual or potential,
          known or unknown, which arise under or relate to matters covered by
          environmental laws or with respect to hazardous materials. As used in
          this Agreement, "Environmental Report" means any report, study,
          assessment, audit, or other similar document that addresses any issue
          of noncompliance with, or liability under, any environmental law that
          may affect any of the Companies.

13.19     Except as set forth in Exhibit 13.19: (a) the Companies have obtained,
          and are in compliance with, all licenses, permits and other
          authorizations required by applicable law or government regulations in
          connection with their business as now conducted, (b) none of the
          Companies has received any written notice from any governmental
          authority of violation of any laws which has not been complied with,
          and (c) the BASF Pharmaceutical Business has been conducted and each
          of the Companies is currently in compliance with

<PAGE>   24

                                     Page 24


          all applicable laws (including without limitation, all laws relating
          to drug and pharmaceutical regulation, reporting, pharmacovigilance,
          sales and marketing, civil rights, occupational health and safety,
          antitrust, consumer protection, currency exchange, equal opportunity,
          and the Worker Adjustment Retraining Notification Act and similar
          state, local and foreign "plant closing" or reduction in force laws).

13.20     (a)  Seller has delivered to Purchaser prior to the execution of this
               Agreement the WEDIT Deloitte & Touche "Report on the draft Pro
               forma Financial Statements for the Pharmaceutical Business for
               the Periods ending December 31, 1999, June 30, 2000, and
               September 30, 2000" attached to this Agreement as Exhibit 9.1(a)
               and hereinafter referred to as the "Report". The Report has been
               prepared in accordance with the provisions of the German
               Commercial Code taking into account as far as permissible under
               the German Commercial Code, U.S. GAAP as described in more detail
               in Exhibit 13.20(a) (the "Report Principles").

          (b)  Each of the financial statements included in the Report
               (including the related notes and schedules) presents fairly, in
               all material respects, the consolidated financial position of the
               BASF Pharmaceutical Business and the Companies as of their
               respective dates or, as applicable, the consolidated results of
               operations, retained earnings or cash flows, as the case may be,
               of the BASF Pharmaceutical Business and the Companies for the
               periods set forth therein, in each case in accordance with the
               Report Principles consistently applied during the periods
               involved, except as may be noted therein. Except for inventories
               for which a reserve has been taken in preparation of the balance
               sheet included in Exhibit 9.1(a) or on the Closing Net Asset
               Value Statement, the inventories of the BASF Pharmaceutical
               Business and the Companies do not consist of, in any material
               amount, items that are obsolete or damaged, or of below standard
               quality. Such inventories are not (as of the date hereof) and
               will not be (as of the Closing Date) excessive, in any material
               respect, in kind or amount in light of the ordinary and normal
               course of business and reasonably anticipated needs of the BASF
               Pharmaceutical Business.

          (c)  To Seller's Actual Knowledge, the companies have no liabilities
               or obligations of any nature (whether accrued, absolute,
               contingent or otherwise) that would be required to be reflected
               on, or reserved against in, a consolidated balance sheet of the
               Companies or described or referred to in the notes thereto,
               prepared in accordance with the Report Principles consistently
               applied, except for (i) liabilities or obligations accrued on the
               September 30, 2000 balance sheet contained in the Report, and
               (ii) liabilities or obligations arising in the ordinary course of
               business (including trade indebtedness) since September 30, 2000.
               To Seller's Actual Knowledge, any liabilities for government or
               customer paybacks or rebate programs, customs liability or
               similar arrangements have either been paid or are accrued on the
               September 30, 2000 balance sheet contained in the Report.

          (d)  Prior to January 31, 2001 Seller shall deliver to Purchaser
               Exhibit 13.20 (d), which shall be a listing of all of the
               Companies' third party indebtedness for borrowed money
               outstanding, setting forth in each case the principal amount
               thereof. No payment defaults have occurred and are continuing
               under the agreements and instruments governing the terms of such
               indebtedness.

<PAGE>   25

                                     Page 25


          (e)  Since September 30, 2000 (i) except for the sale or transfer of
               the businesses described in clauses (a) through (d) in the
               definition "Discontinued/Excluded Businesses" (as defined above)
               the Companies have conducted their respective businesses, and
               Seller has conducted the BASF Pharmaceutical Business, only in,
               and have not engaged in any transaction other than in accordance
               with, the ordinary and usual course of such businesses, and (ii)
               there has not been any Material Adverse Effect.

13.21     Exhibit 13.21 and Exhibit 13.10, taken together, set forth a true and
          complete list of

          (i)  each contract pursuant to which any of the Companies is obligated
               to expend more than EUR 5,000,000 per annum and which is not
               terminable pursuant to its terms by the respective Company on not
               more than sixty (60) days' notice (without liability, premium or
               penalty), other than purchase orders in the ordinary course of
               business;

          (ii) each contract between any of the Companies and Seller or any of
               Seller's Affiliates, including the Intercompany Manufacturing
               Agreements;

         (iii) each loan or credit agreement, security agreement, guaranty,
               indenture, mortgage, pledge or other agreement or instrument
               evidencing indebtedness of any of the Companies in excess of EUR
               5,000,000 and that will continue in effect or with respect to
               which any of the Companies will have any liabilities following
               the Closing;

          (iv) any non-competition, restrictive covenant or other agreement that
               restricts any of the Companies from operating its business,
               including the BASF Pharmaceutical Business, or that would, after
               the Closing, to the Best Knowledge of Seller, limit or restrict
               Purchaser or any of its Affiliates (including the Companies) or
               any successor thereto, from engaging or competing in any line of
               business or in any geographic area anywhere in the world;

           (v) any material research and development agreement, sales and
               marketing agreement, or co-promotion agreement relating to the
               BASF Pharmaceutical Business not otherwise listed on Exhibit
               13.14 (b);

          (vi) joint venture agreement,

         (vii) agreement for the sale, disposition, transfer or closure of any
               facilities, businesses or operation of Seller relating to the
               BASF Pharmaceutical Business or of the Companies, and

        (viii) any other contract, agreement, commitment or undertaking which
               is otherwise material to the BASF Pharmaceutical Business taken
               as a whole (clauses (i) through (viii) collectively, the
               "Material Agreements"). Exhibit 13.21 sets forth a correct and
               complete list of Material Agreements pursuant to which consents
               or waivers are or may be required prior to consummation of the
               transactions contemplated by this Agreement (the consents and
               waivers disclosed on Exhibit 13.21 being the "Material Agreement
               Consents"). The Intercompany Agreements are adequate and
               sufficient to permit the Companies to conduct the BASF
               Pharmaceutical Business as previously conducted, without any
               interruption of supply of materials or services thereunder, and
               have been negotiated on terms comparable to or better than those
               that could be obtained from third parties under similar
               circumstances. None of the Companies are a party to, or otherwise
               bound by, any con-

<PAGE>   26

                                     Page 26


          tracts or agreements imposing off balance sheet commitments, including
          any foreign exchange or derivative contract.

13.22     Except as otherwise set forth in Exhibit 13.10, to the Best Knowledge
          of Seller, each of the Companies has performed all the obligations
          required to be performed by them under, and none of the Companies is
          in breach or default under, any Material Agreements. True and complete
          copies of all contracts listed in Exhibits 13.10, 13.14(b) and 13.21
          have been delivered to Purchaser, and there are no amendments to,
          modifications of or significant agreements of the parties relating to
          any thereof, which have not been disclosed to Purchaser. Neither
          Seller nor any of the Companies has received any written notice from
          any other party to any of the Material Agreements threatening the
          cancellation or termination thereof.

13.23     As of the date of this Agreement there is no labor strike or other
          work stoppage of employees of any of the Companies currently in
          effect, and to the Best Knowledge of Seller, none is threatened. None
          of the Companies is a party to any collective bargaining, works
          council, union contracts, or other agreements which create any
          obligation or restriction on the Companies or Purchaser in the USA
          with respect to the termination of any employee or employees, and, to
          the Best Knowledge of the Seller, there is no activity or proceeding
          by any union, works council or other labor organization to organize or
          seek to represent any Employees in the USA.

13.24     The Companies maintain insurance coverage with reputable insurers in
          such amounts and covering such risks as are in accordance with normal
          industry practice for companies engaged in businesses similar to that
          of the Companies (taking into account the cost and availability of
          such insurance).

13.25     No broker, investment banker, financial advisor or other person other
          than Wasserstein Perella & Co., Inc., the fees and expenses of which
          will be paid by Seller, is entitled to any broker's, finder's,
          financial advisor's or other similar fee or commission in connection
          with the transactions contemplated by this Agreement.

13.26     To the Best Knowledge of Seller neither any of the Companies, nor any
          of their respective Affiliates, officer, director, employee or agent
          (or any Person acting on behalf of any of the foregoing) has given or
          agreed to give (i) any gift or similar benefit of more than nominal
          value to any customer, supplier, governmental authority (including any
          governmental employee or official) or any other person who is or may
          be in a position to help, hinder or assist any of the Companies, the
          BASF Pharmaceutical Business or the person giving such gift or benefit
          in connection with any actual or proposed transaction relating to the
          BASF Pharmaceutical Business, which gifts or similar benefits would
          individually or in the aggregate subject the Companies, any of their
          respective Affiliates, officer, director, employee or agent to any
          fine, penalty, cost or expense or to any criminal sanctions, (ii)
          receipts from or payments to any governmental officials or employees,
          (iii) commercial bribes or kick-backs, (iv) political contributions,
          or (v) any receipts or disbursements in connection with any unlawful
          boycott and no such gift or benefit is required in connection with the
          operation of the Companies or the BASF Pharmaceutical Business to
          avoid any fine, penalty, cost, expense or Material Adverse Effect.

13.27     (a)  Seller shall deliver no later than 30 days after the date of this
               Agreement Exhibit 13.27 (a) that shall list all major
               Pharmaceutical Products currently marketed by Seller and its
               Affiliates and the Active Ingredients used therein.

<PAGE>   27

                                     Page 27


          (b)  Exhibit 13.27(b) lists all compounds of Seller and any of its
               Affiliates that are in clinical development;

          (c)  Exhibit 13.27(c) contains a true, accurate and correct list,
               separated by type, of all material Exclusive Active Ingredients
               and all Mutual Active Ingredients manufactured by Seller.

          (d)  Exhibit 13.27 (d) lists all BASF Pharmaceutical Products that are
               custom manufactured by Seller or any of its Affiliates (except
               the Companies) for third parties.

          (e)  As of the date hereof, to the Best Knowledge of Seller, there are
               no circumstances or facts concerning suppliers (including Seller,
               and its Affiliates as suppliers) of active ingredient, bulk
               product and finished product to the Companies that would
               reasonably be expected to have a Material Adverse Effect on the
               continued supply of such materials.

13.28     To the Actual Knowledge of the Seller, none of the data room files and
          records or the writings referred to in Section 14.2 contain an untrue
          statement of a material fact or omit to state a material fact
          necessary to make the statements and facts contained herein and
          therein, in the light of the circumstances in which they were or are
          made, false and materially misleading or materially misleading.
          Purchaser acknowledges that the opinions of counsel referred to in
          Section 13.16.2 have not been delivered to it or provided in the
          writings referred to in Section 14.2.



                                   SECTION 14
                         LIMITATIONS OF REPRESENTATIONS

14.1      Except as expressly set forth in Section 13 above, Seller does not
          make any express or implied representations under this Agreement. Any
          statutory warranties are hereby excluded to the extent permissible
          under mandatory law.

14.2      Any inaccuracy in any Representation made by Seller shall not trigger
          any rights of Purchaser under this Agreement to seek indemnity under
          Section 15.1(a) to the extent that such inaccuracy was disclosed prior
          to the date of this Agreement in a clear and comprehensible manner in
          any Exhibits to Section 13 of this Agreement, in the data room files
          and records made available to Purchaser on November 8, 9, 10 and 13,
          2000 (a full and complete copy of which has been provided to Purchaser
          prior to the date of this Agreement), or in a writing (provided such
          writing was delivered prior to the date, and in the context of this
          Agreement), in each case to one or more of the following individuals:
          Brian Smith, Honey Lynn Goldberg, Jeffrey Leiden, Steven Weger, James
          L. Tyree, Steve Lichter, Terrence Kearney, John Poulos, John Leonard,
          Daniel Norbeck, Arthur Higgins and William Dempsey; provided, however,
          that no Environmental Reports delivered to Purchaser after December
          13, 2000, or information contained therein, shall be deemed delivered,
          disclosed or made available prior to the date of this Agreement.

14.3      Wherever referred to in Section 13 above, "Actual Knowledge of Seller"
          means actual knowledge of any of Thorlef Spickschen, Ulrich Grau,
          Robert Kamen, Chris Schroder, Carter Eckert, Jurg Ambuhl, Markus
          Kramer, Fried-Walter Munstermann, Robert Anderson, John Conway,
          Andreas Biberbach, Joachim Scholz and the individuals listed on Ex-

<PAGE>   28

                                     Page 28


          hibit 24.3(d), and "Best Knowledge of Seller" means actual knowledge
          of the aforementioned individuals and such additional knowledge which
          any such person could reasonably have obtained upon due inquiry into
          the matter concerned.


                                   SECTION 15
                                 INDEMNIFICATION

15.1       (I) Seller shall indemnify and hold harmless the Purchaser and each
               of its Affiliates, (including the Companies) (each a member of
               the "Purchaser Group") from and against any and all Damages
               (including, without limitation, costs and expenses of litigation
               and reasonable attorneys' fees) arising out of or related to:

               a)   (i) The inaccuracy or breach of any of the Representations;
                    or (ii) any inaccuracy or breach of any Representation that
                    relates to any of the Companies in which the Seller
                    currently has less than a 100 % direct or indirect ownership
                    interest (each, a "Non-Wholly Owned Company"); provided,
                    however, that Seller's obligation to indemnify the Purchaser
                    pursuant to this subsection (a)(ii) for each inaccuracy or
                    breach shall be limited to (x) the liability associated with
                    such inaccuracy or breach multiplied by (y) the percentage
                    of the Seller's ownership interest in the Non-Wholly Owned
                    Company to which the inaccuracy or breach relates.

               b)   The failure to perform or the breach of any of the
                    covenants, obligations or other agreements of Seller
                    contained in this Agreement; or

               c)   Any Discontinued/Excluded Businesses or any Discontinued/
                    Excluded Businesses Liabilities.

          (II) Seller shall reimburse each member of the Purchaser Group
               for *** of all Excess D2E7 Royalties ("Seller D2E7 Payments").
               "Excess D2E7 Royalties" shall mean the aggregate of all royalties
               paid on a worldwide basis under D2E7 License Agreements and that
               are in excess of *** of the Annual Net Sales of D2E7. "Annual Net
               Sales of D2E7" shall mean the aggregate worldwide annual net
               sales of D2E7 up to a maximum of ***. "D2E7 License Agreements"
               shall mean license and sublicense agreements executed prior to or
               after the date of this Agreement covering patents or patent
               applications published on the date of this Agreement, including,
               without limitation, ***. Seller shall pay Seller D2E7 Payments to
               Purchaser within 30 days after the receipt by Seller of a
               statement from Purchaser that sets forth the amount of the Seller
               D2E7 Payments and the basis upon which the Excess D2E7 Royalties
               were calculated, which statements shall be issued by Purchaser on
               a quarterly basis.

         (III) Seller shall reimburse each member of the Purchaser Group for
               *** of any and all expenses, including attorneys fees, incurred
               in connection with the defense of any claim, action, complaint,
               cause of action or proceeding commenced or threatened, based
               upon, arising out of, or related to the allegation that the
               manufacture, use or sale of D2E7 by any member of the Purchaser
               Group infringes patents or patent applications published on the
               date of this Agreement, including, without limitation, *** ("D2E7
               Proceeding"). Purchaser shall have the right to control the
               defense and settlement of any D2E7 Proceeding. Purchaser shall
               keep Seller reasonably informed of all material developments and
               events relating to such D2E7 Proceeding, and Seller shall be
               entitled,

----------
*** Confidential information omitted pursuant to a request for confidential
    treatment filed separately with the Securities and Exchange Commission.

<PAGE>   29

                                     Page 29


          at its expense, to employ its own counsel and to participate in, but
          not control, any D2E7 Proceeding. Expenses payable pursuant to this
          Section 15.1 (III) shall be paid within 30 days of Seller's receipt of
          Purchaser's quarterly invoice therefor.

          Seller shall be entitled to audit annually, at Seller's expense, the
          calculation of amounts payable pursuant to Section 15.1 (II) and
          (III).

15.2      Unless expressly provided for otherwise in this Section 15 or in
          Section 16.2, Purchaser and the other members of the Purchaser Group
          shall be entitled to indemnification pursuant to Section 15.1 (a)
          above only if:

          a)   a claim for indemnification based on an individual breach or
               inaccuracy of a Representation exceeds the amount of *** (each,
               an "Individual Claim"); and

          b)   the total amount of all Individual Claims exceeds the amount of
               ***.

          For purposes of calculating amounts pursuant to this Section 15, all
          acts, occurrences, conduct or sets of facts that relate to the same
          subject matter (or, in the case of a breach of the Representation made
          in Section 13.11.2, all acts, occurences, conduct or sets of facts
          that relate to all breaches of such Representation) shall be
          considered aggregated as a single Individual Claim.

15.3      If the aforementioned threshold of *** is exceeded, Seller shall be
          liable for the entire claim amount that exceeds *** up to a maximum
          amount equal to *** of the Aggregate Purchase Price as adjusted
          pursuant to this Agreement.

15.4      The limitation of the liability of Seller set forth in Sections 15.2
          and 15.3 above shall not apply in case of a violation of any
          Representation made in Sections 13.1 through 13.4, Section 13.9 and
          Section 13.15.3(a). In this case, the liability of the Seller shall be
          limited to the amount of the Aggregate Purchase Price as adjusted
          pursuant to Section 9.

15.5      Any amounts owing or paid by Seller to Purchaser pursuant to Section
          15.1 shall be reduced or refunded if and to the extent Purchaser or
          any other member of the Purchaser Group has received or receives
          insurance proceeds under any policy of insurance.

15.6      If and to the extent to which specific provisions have been made in
          the Closing Net Asset Value Statement with respect to a matter which
          is the subject of a claim for indemnification pursuant to Section 15.1
          above, such claim for indemnification shall be reduced by the amount
          of such provision.

15.7      Any payment made by Seller to Purchaser or any other member of the
          Purchaser Group with respect to a claim of Purchaser pursuant to
          Section 15.1 above or Section 19 below is an adjustment of the
          Aggregate Purchase Price as allocated pursuant to this agreement.

----------
*** Confidential information omitted pursuant to a request for confidential
    treatment filed separately with the Securities and Exchange Commission.

<PAGE>   30

                                     Page 30


15.8      Except as set forth in Section 16.2, any claims of Purchaser or any
          other member of the Purchaser Group pursuant to Section 15.1(a) above
          are subject to the following survival periods (Verjahrungsfristen),
          unless Purchaser has notified Seller of a specific claim in writing
          before the expiration of the applicable survival period and has
          initiated arbitration proceedings in the subject matter within six
          months of such notification in which case the survival period for such
          claim shall be interrupted (unterbrochen):

          a)   claims pursuant to Sections 13.1 through 13.4, 13.9 and
               13.15.3(a) above, and claims pursuant to Sections 13.13 and 13.14
               which are based on a defect of title, shall be subject to a
               survival period of ***;

          b)   claims related to environmental issues pursuant to Section
               13.18.1 through 13.18.5 shall be subject to a survival period of
               ***; and

          c)   claims not based on a defect in title and related to intellectual
               property pursuant to Sections 13.14 through 13.17 shall be
               subject to a survival period of ***; and

          d)   all other claims shall be subject to a survival period of ***.

          All survival periods shall commence at the Closing.

15.9      The provisions of this Section 15 shall not apply to any indemnity
          under any provision of this Agreement other than pursuant to Section
          15.1, including indemnification with respect to Taxes set forth in
          Section 18, which shall be governed solely by Section 18.


                                   SECTION 16
                            EXCLUSION OF OTHER CLAIMS

16.1      Following the Closing, except for (a) Purchaser's right to adjust the
          Aggregate Purchase Price pursuant to Section 9 above, (b) claims for
          indemnification pursuant to Section 15 above, (c) claims pursuant to
          Section 16.2, (d) claims under the Tax indemnity in Section 18, (e)
          claims under Sections 19, 21, 22, 23 and 26 below, and (f) claims for
          specific performance of covenants and obligations of Seller under this
          Agreement, Purchaser and the other members of the Purchaser Group
          shall not be entitled to bring any claims against the Seller under
          this Agreement in connection with the condition of the BASF
          Pharmaceutical Business whether for reduction of the purchase price,
          rescission, damages or any other legal remedies regardless of their
          legal basis including breach of duty prior to contract (culpa in
          contrahendo) and tort. For the avoidance of doubt, this Section 16
          shall not limit a party's ability to bring other claims under any
          other agreement, including any Intercompany Agreement, executed by
          Seller or any Affiliate of Seller.

16.2      Claims based on fraud or intentional acts of Seller are not excluded
          from the immediately preceding paragraph, nor are any such claims
          subject to the limitations on indemnification contained in Section 15.

----------
*** Confidential information omitted pursuant to a request for confidential
    treatment filed separately with the Securities and Exchange Commission.

<PAGE>   31

                                     Page 31


                                       V.
                       COOPERATION, INDEMNITIES, CONTESTS

                                   SECTION 17
                                   COOPERATION

17.1      Each party hereto shall, and shall cause the Companies to, provide to
          the respective other party hereto such cooperation and information as
          any of them reasonably may request in filing any Tax return, mandatory
          Tax return or claim for refund or for the preparation of any audit and
          the Party requesting such cooperation shall reimburse the other Party
          for any reasonable out of pocket expenses incurred by such cooperating
          Party in complying with the request for cooperation. Such cooperation
          and information shall include providing copies of all relevant
          portions of relevant Tax returns and relevant records. Each party will
          retain and Purchaser will cause the Companies to retain all Tax
          returns and all material records and other documents relating to Tax
          matters of the Companies for any taxable period or a portion thereof
          ending on or before the Closing Date until the later of the expiration
          of the statute of limitations for the taxable periods to which the Tax
          returns and other documents relate or eight years following the due
          date for such Tax returns. Thereafter, the party holding such Tax
          returns or other documents may dispose of them, provided that such
          party shall give to the other party written notice and an opportunity
          to take custody thereof prior to disposing of them.

17.2      Seller or Purchaser, respectively, shall be responsible for the
          preparation and filing of all Tax returns related to the Companies for
          fiscal years, or other periods for which Tax returns are due, ending
          on or prior to the Closing Date, consistent with the past practice of
          Seller and its Affiliates in the normal course of business prior to
          Closing, as follows: Seller shall be responsible for those Companies
          for which Seller or any Seller Companies prepared and filed Tax
          returns prior to Closing, and Purchaser shall be responsible for those
          Companies for which such Company or any other Company prepared and
          filed Tax returns prior to Closing. Seller and Purchaser shall provide
          each other, for review and approval, with a copy of each such Tax
          return at least 3 weeks prior to the due date (including any extension
          thereof) for the filing of such return. Each party's approval may not
          be unreasonably withheld, and in no event shall this Section operate
          to cause any such return to be filed after the due date (including any
          extension thereof) for filing such return.

17.3      The Seller and its Affiliates, and the Purchaser and the Companies
          shall each have the duty to reasonably cooperate in the prosecution or
          defense of all lawsuits and claims involving the BASF Pharmaceutical
          Business for events occurring prior to Closing, and the party
          requesting such cooperation shall reimburse the other party for any
          reasonable expenses incurred by such cooperating party in complying
          with the request for cooperation. Notwithstanding the foregoing,
          neither party shall be obligated to take or omit to take any action in
          connection with a lawsuit or claim which the party, acting reasonably
          and in good faith does not believe to be in its best interest.

                                   SECTION 18
                                  TAX INDEMNITY

18.1      Seller shall indemnify Purchaser on an After-Tax Basis against any
          liability for Taxes including any reduction of any tax loss carry
          forward or tax credit carry forward included in the Closing Net Asset
          Value, relating to the Companies for any taxable period ending

<PAGE>   32

                                    Page 32

          on or before the Closing Date and any Pre-Closing Straddle Period if
          and to the extent such liability exceeds the liabilities or accruals
          taken into account by the Closing Net Asset Value Statement in
          accordance with Section 10.1 for Taxes relating to said period
          provided, however, that such obligation to indemnify shall be limited
          to the percentage of such liability which corresponds to the
          percentage of the direct or indirect ownership interest of Seller in
          the Companies sold hereunder. The foregoing obligation of Seller shall
          not apply if and to the extent to which the liability results from an
          adjustment for depreciation or accruals or from a write-up after
          previous depreciation or any other reallocation of deductible expenses
          made as regards a taxable period ending on or prior to the Closing
          Date or any Pre-Closing Straddle Period into a taxable period
          beginning after the Closing Date or in a Post-Closing Straddle Period
          and is compensated for by a Tax reduction in a taxable period
          beginning after the Closing Date or a Post-Closing Straddle Period
          that arises solely as a result of such adjustment; provided, however,
          that the net present value of such future Tax reduction shall be
          discounted at an interest rate of 6 percent p.a. "After-Tax Basis"
          shall mean grossing up of an indemnification payment under this
          Agreement for a Tax cost, if any, to the person receiving such payment
          arising from the receipt or accrual thereof, and in the case of
          indemnification payments under this agreement, reduced by the Tax
          benefit, if any, to the person receiving such payment resulting from
          its or a Company's incurring the Damages, loss, liability, damage or
          expense giving rise to such payment or the payment of any Taxes
          indemnified under Section 18. "Straddle Period" shall mean any taxable
          period beginning on or before and ending after the Closing Date.
          "Post-Closing Straddle Period" shall mean the portion of the Straddle
          Period beginning after the Closing Date. "Pre-Closing Straddle Period"
          shall mean the portion of the Straddle Period ending on the Closing
          Date.

18.2      Provided there are no amounts due from Seller to Purchaser under
          Section 18.1 hereof, Purchaser shall pay to Seller any Tax refund or
          credit received which relates to the Companies and is attributable to
          any taxable period that ends on or before the Closing Date or any
          Pre-Closing Straddle Period provided that such refund or credit has
          not been booked in the Closing Net Asset Value Statementor is not
          attributable to the use in such period of a loss, credit or other Tax
          item attributable to a taxable period beginning after the Closing Date
          or a Post-Closing Straddle Period.

18.3      For the purpose of Section 18.1 and 18.2, Taxes relating to the BASF
          Pharmaceuticals Business for -any Pre-Closing Straddle Period shall be
          computed as if this period were a separate business year and will not
          be affected by developments in the Post-Closing Straddle Period.
          Depreciations and similar items will be allocated to the Pre-Closing
          Straddle Period on the one hand and the rest of the Post-Closing
          Straddle Period on the other hand on a pro rata temporis basis. All
          other items of income, gain, loss, expense, deduction or credit of the
          Pre-Closing Straddle Period and the Post-Closing Straddle period shall
          be determined based on an interim closing of the books as of the close
          of business on the Closing Date. In case of a loss incurred in the
          Pre-Closing Straddle Period, the Tax loss carry forward shall be
          treated as a Tax Asset.

18.4      Any claim under this Section 18 shall be subject to a survival period
          expiring *** after the Tax assessment for the relevant Tax and
          the relevant period has become final.

18.5      Any payment made by Seller or by Purchaser pursuant to this Section 18
          is an adjustment of the Aggregate Purchase Price.

----------
*** Confidential information omitted pursuant to a request for confidential
    treatment filed separately with the Securities and Exchange Commission.
<PAGE>   33

                                     Page 33

                                   SECTION 19
             SETTLEMENT AND ELIMINATION OF INTERCOMPANY OBLIGATIONS

19.1         For purposes of this Agreement, the term (i) "BASF Intercompany
             Obligations" means all intercompany notes, cash advances,
             receivables and payables between any Seller Company, on the one
             hand, and any of the Companies, on the other hand, except for
             Intercompany Trade Accounts, (ii) "Intercompany Trade Accounts"
             shall mean trade payables and trade receivables arising from
             transactions between any of the Companies, on the one hand, and any
             of the Seller Companies, on the other hand, (iii) "Intracompany
             Trade Accounts" shall mean trade payables and trade receivables
             arising from transactions between any of the Companies, as shown on
             the books and records of the relevant Companies as of the Closing
             Date, and (iv) "Seller Company" means Seller or any of its
             Affiliates , other than any Companies.

19.2         Prior to the Closing, Seller shall cause all Intercompany Trade
             Accounts and Intracompany Trade Accounts, which are outstanding as
             of the month ending no more than 30 days prior to Closing to be
             settled and paid.

19.3         Effective as of the Closing, all BASF Intercompany Obligations due
             and payable as of the Closing Date or attributable to any period
             ending on or prior to the Closing Date shall, for all purposes of
             this Agreement, be netted as between the appropriate obligors and
             obligees and the resulting balances shall be settled as of the
             Closing in a manner reasonably satisfactory to Purchaser, with the
             result that as of and following the Closing, there shall be no
             further obligation or liability with respect to any BASF
             Intercompany Obligations as of the Closing Date.

19.4         Within 60 days following Closing, Purchaser and Seller shall
             determine and reconcile all remaining Intercompany Trade Accounts
             outstanding as of the Closing.

19.5         Effective as of the Closing, Seller shall not assert and hereby
             waives or agrees to cause to be waived, claims by Seller or any of
             its Affiliates against the Companies (a) relating to transfer
             pricing of supplies and/or services including but not limited to
             research and development activities provided prior to Closing or
             (b) arising out of German tax sharing agreements (Korperschaft- and
             Gewerbesteuerumlage) between the Seller and any of its Affiliates,
             on the one hand, and any of the Companies, on the other hand, in
             effect during the time prior to the Closing (clauses (a) and (b)
             collectively, "Non-Asserted Claims"). Purchaser shall cause the
             Companies to not assert, and to waive any Non-Asserted Claims of
             such Companies against the Seller or Affiliates of the Seller
             (other than the Companies) insofar as such claims relate to the
             time prior to the Closing. Nothing set forth in this Section 19.5
             shall affect, derogate, limit or otherwise prejudice Purchaser's
             rights under this Agreement, including, without limitation, Section
             18, or any other agreement entered into in connection with this
             Agreement, or any written Agreement between Seller or its
             Affiliates, and any of the Companies, that survives the Closing
             with respect to periods after the Closing.

<PAGE>   34

                                     Page 34

                                   SECTION 20
                           CERTAIN CONTEST PROVISIONS

20.1         After acquiring knowledge of any claim of a third party which may
             trigger a claim by Purchaser or any other member of the Purchaser's
             Group against Seller for indemnification pursuant to Section 15
             above or of any notice of administrative or judicial proceeding or
             proposed audit or Tax assessments relating to or affecting any of
             the Companies and with respect to which Purchaser or any other
             member of the Purchaser's Group intends to seek indemnification
             against Seller, Purchaser shall promptly give written notice
             thereof to Seller, provided, however, that any failure of
             Purchaser to so notify the Seller shall not relieve the Seller from
             any obligations hereunder to provide indemnification to the extent
             Seller is not materially prejudiced by such failure and in any
             event shall not relieve it from any liability which it may have
             otherwise than on account of Section 15. Such notice shall specify
             in reasonable detail the issue for such claim and shall include a
             copy of any relevant correspondence so far exchanged in this
             matter, if any. Within thirty (30) days of its receipt of such
             notice, Seller may elect to assume control over such administrative
             or judicial proceeding, audit or assessment or the defense of such
             claim, so long as Seller acknowledges in writing its obligation to
             indemnify Purchaser and/or any other member of the Purchaser's
             Group, as the case may be, in full with respect to such claims. If
             Seller so elects, Seller may so assume control and may employ
             counsel reasonably acceptable to the Purchaser, at the Seller's
             sole costs, expense and risk. As long as Seller is defending a
             claim in accordance with this Section 20.1, Purchaser shall provide
             or cause to be provided to Seller, any information reasonably
             requested by Seller relating to such claim, and Purchaser shall
             otherwise cooperate with and support Seller and its representatives
             in good faith in order to facilitate the effective contest of such
             claim, any reasonable out of pocket expenses expenses incurred by
             Purchaser in this regard to be paid by the Seller. Seller shall
             inform Purchaser of all developments and events relating to such
             claim and Purchaser shall be entitled, at its expense, to employ
             its own counsel and to attend and participate in , but not control,
             all conferences, meetings and proceedings relating to such claim.
             If Seller elects not to control such proceeding, audit or
             assessment or the defense of such claim, Seller shall be entitled,
             at its expense, to employ its own counsels, and to attend and
             participate in but not control all conferences, meetings and
             proceedings relating to such claim. After having given written
             notice to Purchaser of Seller's election to assume control of
             defense of any such claim, Seller shall, however, not be liable to
             Purchaser for any legal expenses subsequently incurred by Purchaser
             in connection with the defense as long as Seller assumes and
             conducts such defense in a timely and diligent manner.
             Notwithstanding the foregoing, this Section 20 shall not apply to
             Individual Claims unless and until all such claims exceed the
             amounts contained in Section 15.2. With respect to any third party
             claim for which indemnification is available ("Indemnified Claim")
             that is combined or joined with one or more claims which are not
             Indemnified Claims or with respect to an Indemnified Claim under
             which both the indemnified party and the indemnifying party may be
             liable, which either party desires to contest, control of such
             claim shall rest with the party having the larger amount in
             dispute, and the party in control may not settle or compromise any
             such claim without the prior written consent of the other party.

20.2         If Seller does not assume control of a defense of a specific claim
             in accordance with the provisions in Section 20.1, Purchaser shall
             have full control of such defense and such proceedings, including
             the right to settle, and Seller shall have no right to object to
             the results obtained by the Purchaser with respect to such claim.
             If requested by Purchaser,

<PAGE>   35

                                     Page 35

             Seller shall cooperate in good faith with Purchaser in order to
             contest effectively such claim. Seller shall be entitled, at its
             expense, to employ its own counsel and to attend and participate
             in, but not control, all conferences, meetings and proceedings
             relating to such claim.

20.3         If Seller does assume control of a defense of a claim in accordance
             with the provisions in Section 20.1, it may, without the prior
             consent of Purchaser, settle or compromise or consent to the entry
             of any judgment with respect to any litigation, or any
             investigation or proceeding by any governmental agency or body,
             commenced or threatened, on any claim whatsoever in respect of
             which indemnification could be sought: (i) under Sections 15 and
             18, but only if such settlement, compromise or consent satisfies
             the conditions described in clauses (i), (ii) and (iii) of Section
             26.4; or (ii) under Section 18, but only if such settlement,
             compromise or consent does not materially affect Taxes, (including
             by way establishing a precedent for Tax treatment of a Tax item of
             the Purchaser or any of the Companies in a taxable period beginning
             after the Closing Date or in a Post-Closing Straddle Period. If the
             Seller does not receive the written consent of the Purchaser which
             may not be unreasonably withheld Purchaser is deemed to have
             assumed control of the defense and the liability of Seller to
             indemnify the Purchaser is limited to the amount payable under the
             proposed settlement, compromise or consent. If any such proposed
             settlement compromise or consent does not satisfy all of the
             conditions in clause (i) of the preceding sentence or the condition
             in clause (ii) of the preceding sentence as applicable, the Seller
             must receive the written consent of the Purchaser prior to entering
             into same.

20.4         The provisions of this Section 20 shall not apply to
             Section 15.1(II) or 15.1(III).



                                       VI.
                                EMPLOYEE MATTERS

                                   SECTION 21
                            GENERAL EMPLOYEE MATTERS

21.1         Seller and its Affiliates shall be responsible for any and all
             payments, withholding and reporting obligations that arise on or
             after the Closing Date under terms of the Seller's stock option
             programs including payments, if any, which may be made by the
             Seller in its sole discretion, to settle option rights under the
             programs.

21.2         No employee or any other person (except the parties to this
             Agreement) shall be entitled to assert any claim against the
             Purchaser, its Affiliates or any of the Companies relating to the
             employment, compensation, employee benefits or benefit plans or
             programs based on or arising from any provisions of this Agreement.

21.3         Seller shall terminate, or cause to be terminated, prior to the
             Closing the participation of Employees in any stock purchase plan
             maintained by Seller or its Affiliates, and Seller and its
             Affiliates shall be responsible for any and all payments,
             withholding and reporting obligations that arise under the terms of
             any such stock purchase plan.

21.4        If the Pension Liabilities exceed the sum of (x) any cash, and the
            fair market value of the other assets as determined by mutual
            agreement of Purchaser and Seller, transferred to

<PAGE>   36

                                     Page 36

             pension arrangements of Purchaser pursuant to Section 23.3 as part
             of the Group Pension Transfer Amount, (y) any cash, and the fair
             market value of other assets as determined by mutual agreement of
             Purchaser and Seller transferred to the Purchaser U.S. Defined
             Benefit Plan as part of the U.S. Pension Transfer Amount (excluding
             any accruals or interest credited after the Closing Date), and (z)
             the pension obligations as reflected in the Closing Net Asset Value
             Statement (the sum of (x), (y) and (z) hereinafter referred to as
             the "Transferred Amounts"), Seller agrees to indemnify Purchaser
             for such excess amount (such excess hereinafter referred to as
             "Purchaser Pension Indemnification Amount"). Seller agrees to pay
             Purchaser in cash the Purchaser Pension Indemnification Amount as
             soon as practicable but not later than 30 days after the date of
             the actuarial determination which fixes the Pension Liabilities. If
             the Transferred Amounts exceed the Pension Liabilities, Purchaser
             agrees to indemnify Seller for such excess amount (such excess
             amount hereinafter referred to as "Seller Pension Indemnification
             Amount"). Purchaser agrees to pay Seller in cash the Seller Pension
             Indemnification Amount as soon as practicable but not later than 30
             days after the date of the actuarial determination which fixes the
             Pension Liabilities. Interest from the Closing Date to the date of
             payment, at a rate of 6% compounded annually, shall be paid along
             with the Purchaser Pension Indemnification Amount or Seller Pension
             Indemnification Amount, as applicable. Seller and Purchaser jointly
             shall provide Seller's and Purchaser's actuaries with all relevant
             plans and employee census information needed to calculate the
             Pension Liabilities within 45 days after Closing. The Pension
             Liabilities shall be determined by mutual agreement between Seller
             and Purchaser within 180 days after their actuaries' receipt of
             said information. If Seller and Purchaser cannot agree on the
             amount of the Pension Liabilities within said 180 period, the
             Seller and Purchaser shall appoint within five days a mutually
             acceptable actuary who shall review their calculations and within
             45 days after appointment, render a final and binding decision on
             the amount of the Pension Liabilities and who shall, in making such
             decision, be limited on a plan by plan basis to either the position
             of Seller or Purchaser. The cost of the actuary shall be borne
             jointly by Seller and Purchaser. In connection with the procedures
             referred to herein, Seller and Purchaser shall provide each other
             and the actuaries referred to herein access to the relevant
             business records and other relevant documents, and shall permit the
             other party to consult with its employees and the employees of its
             Affiliates.

21.5         The indemnifications provided for in Section 21.4 above are
             separate and apart from any other indemnification provision of this
             Agreement. Any payment made by Seller or by Purchaser pursuant to
             Section 21.4 shall be treated as an adjustment of the Aggregate
             Purchase Price.

                                   SECTION 22
                           US EMPLOYEE BENEFIT MATTERS

22.1         Seller and Purchaser agree that the transactions contemplated by
             this Agreement shall not constitute a severance of employment of
             any of the U.S. Employees. Purchaser agrees to continue, without
             interruption, the employment of the U.S. Employees. The Purchaser
             may, however, terminate any U.S. Employee at any time for any
             reason provided, however, Purchaser shall be responsible for any
             severance obligations incurred with respect to the termination of
             any U.S. Employee after the Closing.

22.2         Subject to the provisions of this Section 22, U.S. Employees shall
             be eligible to participate in and be subject to the provisions of
             all employee benefit plans, programs and policies of Purchaser and
             its Affiliates, other than Purchaser's defined benefit plans,
             qualified

<PAGE>   37

                                     Page 37

             or unqualified, on the same basis as similarly situated employees
             of the Purchaser and its Affiliates including any applicable
             severance pay plan or policy.

22.3         To the extent that service is relevant for purposes of determining
             participation, vesting or eligibility for benefits under any
             health, welfare, post-employment medical or life insurance plan, or
             any vacation or severance plan, program or policy established,
             maintained or contributed to by the Purchaser or any of its
             Affiliates, U.S. Employees shall receive credit under the terms of
             such employee benefit plan, program or arrangement for service with
             the Seller and its Affiliates prior to the Closing.

22.4         Effective as of the Closing, each U.S. Employee and their eligible
             dependents who was participating in the health and welfare benefit
             plans and programs of the Seller and its Affiliates shall become
             entitled to participate in the medical, dental, life insurance and
             other welfare benefit plans provided by Purchaser or its Affiliates
             to similarly situated employees. To the extent that any welfare
             benefit plan in which any U.S. Employee participates after the
             Closing Date (i) imposes any pre-existing condition limitation,
             such condition shall be waived, or (ii) has a deductible or
             requires a co-payment that is subject to maximum out-of-pocket
             limitation, each U.S. Employee will receive credit toward any such
             co-payments and deductibles under such welfare benefit plan of
             Purchaser or its Affiliates for any costs paid by the U.S. Employee
             under the applicable Seller welfare benefit plan or program during
             the portion of the relevant plan year or other period preceding the
             Closing under such welfare plan of Purchaser or its Affiliates.

22.5.1       Effective as of the Closing, U.S. Employees shall cease active
             participation in all qualified and non-qualified defined benefit
             pension arrangements maintained by the Sellers' BASF Corporation
             Affiliate (the "Seller U.S. Defined Benefit Plans"), and Seller
             shall take, or cause to be taken, all such action as may be
             necessary to effect such cessation of their participation under
             Seller U.S. Defined Benefit Plans as of the Closing. Purchaser
             will take, or cause to be taken, all action as may be necessary
             to cause such U.S. Employees who are participants in the BASF
             Corporation Salaried Employees' Pension Plan (the "Seller U.S.
             Qualified Defined Benefit Plan") to become participants in a
             defined benefit pension plan which meets the requirements for
             qualification under Section 401 (a) of the Code to be established
             by Purchaser or one of its Affiliates (the "Purchaser U.S.
             Defined Benefit Plan") as of the Closing and which provides each
             such U.S. Employee benefits which are substantially similar to
             those provided under the Seller U.S. Qualified Defined Benefit
             Plan as of the Closing. Each U.S. Employee who was a participant
             in the Seller U.S. Qualified Defined Benefit Plan on the Closing
             shall be granted credit for service with Seller and its
             Affiliates which was recognized under the terms of the Seller
             U.S. Qualified Defined Benefit Plan as of the Closing for
             purposes of participation, eligibility, vesting, retirement
             eligibility and, subject to the transfer of assets and
             liabilities contemplated by Section 22.5.2 below, benefit accrual
             under the Purchaser U.S. Defined Benefit Plan.

             Purchaser will take, or cause to be taken, all action necessary to
             cause (i) U.S. Employees and (ii) retirees who were employees of
             the Companies immediately prior to retirement (the "Retirees"),
             participating in the BASF Corporation Supplemental Executive
             Retirement Plan, the BASF Corporation Policy No. BCR 008 Retirement
             Supplement Plan, the Excess Retirement Plan of BASF Corporation or
             the Boots Company Supplemental Executive Retirement Plan
             (collectively, the "Seller U.S. Non-Qualified Defined Benefit
             Plan") to become participants in a non-qualified defined benefit
             plan to be established by Purchaser or one of its Affiliates (the
             "Purchaser U.S. Non-Qualified Defined Benefit

<PAGE>   38

                                     Page 38

             Plans") which shall (i) accept the Pension Liabilities with respect
             to such U.S. Employees or Retirees and (ii) provide such U.S.
             Employees and Retirees benefits which are substantially similar to
             the Pension Liabilities associated with such U.S. Employees and
             Retirees under the Seller U.S. Non-Qualified Defined Benefit Plans
             as of the Closing. Each U.S. Employee or Retiree who was a
             participant in the Seller U.S. Non-Qualified Defined Benefit Plans
             on the Closing shall be granted credit for service with Seller and
             its Affiliates which was recognized under the terms of the Seller
             U.S. Non-Qualified Defined Benefit Plans as of the Closing for
             purposes of participation, eligibility, vesting, retirement
             eligibility and, to the extent included in the Pension Liabilities,
             benefit accrual under the Purchaser U.S. Non-Qualified Defined
             Benefit Plan.

22.5.2       As soon as practicable after Closing, Seller shall cause the
             Seller U.S. Qualified Defined Benefit Plan to transfer to the
             Purchaser U.S. Defined Benefit Plan an amount (hereinafter
             referred to as the "U.S. Pension Transfer Amount") in cash, or in
             securities to be mutually agreed on by Seller and Purchaser, in
             respect of the Pension Liabilities determined with respect to the
             Seller U.S. Qualified Defined Benefit Plan. The U.S. Pension
             Transfer Amount will be a total amount of assets equal to the
             amount required to make the transfer compliant in all respects
             with requirements under Section 414(l) of the Code. Interest on
             the U.S. Pension Transfer Amount from the date the U.S. Pension
             Transfer Amount is determined to the date of transfer at a rate
             of 6% compounded annually shall be transferred along with the
             U.S. Pension Transfer Amount. The amount necessary to comply with
             Section 414(l) of the Code shall be determined using the
             actuarial assumptions provided in the attached Exhibit 22.5.2.

22.5.3       Prior to any transfer of assets and liabilities, Seller shall
             present an opinion of counsel reasonably satisfactory to Purchaser
             to the effect that the terms of the Seller U.S. Qualified Defined
             Benefit Plan meet in all material respects the requirements of
             Section 401(a) of the Code (or can be timely amended to meet such
             requirements) and other applicable laws, and Purchaser shall
             present an opinion of counsel reasonably satisfactory to Seller to
             the effect that the terms of Purchaser U.S. Defined Benefit Plan
             meets in all material respects the requirements of Section 401(a)
             of the Code (or can be timely amended to meet such requirements).

22.5.4       Seller and Purchaser jointly shall provide Seller's and
             Purchaser's actuaries all relevant documents and employee census
             information needed to calculate the U.S. Pension Transfer Amount
             within 45 days after Closing. The U.S. Pension Transfer Amount
             shall be determined by mutual agreement between Seller and
             Purchaser within 60 days after receipt of said information. If
             Seller and Purchaser cannot agree on the amount of the U.S.
             Pension Transfer Amount within said 60 day period, the Seller and
             Purchaser shall appoint within five days a mutually acceptable
             actuary who shall review their determinations and within 45 days
             after appointment, render a final binding decision on the amount
             of the U.S. Pension Transfer Amount and who shall, in making such
             decision, be limited to either the position of Seller or
             Purchaser. The cost of the actuary shall be borne by Seller and
             Purchaser. In connection with the procedures referred to herein,
             Seller and Purchaser shall provide each other and the actuaries
             referred to herein access to the relevant business records and
             other relevant documents and shall permit the other party to
             consult with its employees and the employees of its Affiliates.

22.5.5       In transferring the assets and liabilities from the Seller U.S.
             Qualified Defined Benefit Plan to Purchaser U.S. Defined Benefit
             Plan, Purchaser and its Affiliates and Seller and its Affiliates
             shall comply with all applicable requirements of Sections 411(d)
             (6), 414(l)

<PAGE>   39

                                     Page 39

             and 401(a)(12) of the Code. Purchaser and its Affiliates shall, in
             the administration of Purchaser U.S. Defined Benefit Plan, comply
             with Sections 411(d)(6), 414(l) and 401(a)(12) of the Code and
             regulations thereunder with regard to accrued benefits transferred
             from the Seller U.S. Qualified Defined Benefit Plan. Further, the
             Purchaser U.S. Defined Benefit Plan shall honor the provisions of
             the domestic relations orders that are contained in the personnel
             and pension files of the U.S. Employees which are delivered to
             Purchaser and which previously have been determined qualified by
             Seller pursuant to Section 206(d)(3) of ERISA and Section 414(p) of
             the Code, and shall administer such orders in accordance with the
             terms thereof. Notwithstanding anything to the contrary in this
             Section 22.5, Purchaser reserves the right to amend, modify or
             suspend the Purchaser U.S. Defined Benefit Plan at any time or from
             time to time or terminate such plan at any time.

22.5.6       In connection with the implementation of this Section 22.5,
             Purchaser and its Affiliates and Seller and its Affiliates shall
             cooperate in the exchange of information, the notification of
             affected employees and in the preparation of any documentation
             required to be filed with the IRS, DOL (U.S. Department of Labor),
             PBGC (U.S. Pension Benefit Guaranty Corporation) or any other
             applicable governmental agency.

22.5.7       Except with respect to the liabilities that have been actually
             transferred to the Purchaser pursuant to Section 22.5, on and after
             the date of this Agreement, Seller shall retain all liability for
             the administration, management and funding of Seller's U.S. Defined
             Benefit Plans, qualified and non-qualified, and Purchaser shall
             have no such liability with respect to those Plans.

22.6         As of the Closing Date, the U.S. Employees shall cease active
             participation in the Seller Employee Savings Plan (the "Seller U.S.
             Defined Contribution Plan") and Purchaser will take, or cause to be
             taken, all action as may be necessary to cause such U.S. Employees
             to become eligible to participate in a U.S. Qualified Defined
             Contribution Plan of Purchaser or one of its Affiliates (the
             "Purchaser U.S. Defined Contribution Plan") as of such Date, or as
             soon thereafter as is administratively practical, on the same basis
             as similarly situated employees of the Purchaser. Service of each
             U.S. Employee recognized under terms of the Seller's U.S. Defined
             Contribution Plan for periods prior to the Closing Date shall be
             credited to the U.S. Employee for all purposes (including
             eligibility and vesting) under the Purchaser U.S. Defined
             Contribution Plan.

             Seller shall advise participants in the Seller U.S. Defined
             Contribution Plan who are U.S. Employees of their right to elect to
             receive a rollover distribution of their individual nonforfeitable
             account balances and nonforfeitable accrued benefits, respectively,
             in accordance with the terms of such plan by reason of the
             transactions contemplated by this Agreement. Any U.S. Employees who
             are participants in the Seller U.S. Defined Contribution Plan shall
             be 100% vested in their accrued benefits and individual account
             balances under such Seller U.S. Defined Contribution Plan as of the
             Closing Date. Purchaser and Seller may agree to allow U.S.
             Employees who are participants in the Seller U.S. Defined
             Contribution Plan to elect direct rollover distributions from such
             Seller U.S. Defined Contribution Plan to the Purchaser U.S. Defined
             Contribution Plan in a directed rollover. Effective as of the
             Closing Date, Purchaser shall amend the Purchaser U.S. Defined
             Contribution Plan to the extent necessary to enable U.S. Employees
             who were participants in the Seller U.S. Defined Contribution Plan
             to elect rollover distributions, which may include any outstanding
             loan notes from such Seller U.S. Defined Contribution Plan in
             accordance with Section 402 of the Code. In order to rollover an
             out-

<PAGE>   40

                                     Page 40

             standing loan note, a U.S. Employee shall be required to execute
             (i) an acknowledgement that the Purchaser U.S. Defined Contribution
             Plan will be substituted for the applicable Seller U.S. Defined
             Contribution Plan as the obligee of the loan note, (ii) a payroll
             authorization form and (iii) any other forms deemed necessary by
             the plan administrator for the Purchaser U.S. Defined Contribution
             Plan. No other assets shall be transferred from any Seller U.S.
             Defined Contribution Plan to the Purchaser U.S. Defined
             Contribution Plan other than as specified herein. All directed
             rollovers between any Seller U.S. Defined Contribution Plan and any
             Purchaser U.S. Defined Contribution Plan will be in the form of
             cash and loan notes, as described herein.

                                   SECTION 23
                     NON-US EMPLOYEE PENSION BENEFIT MATTERS

23.1         Seller and Purchaser agree that the transaction contemplated by
             this Agreement shall not constitute a severance of employment of
             any of the Employees participating in a Group Pension Arrangement
             regardless of whether or not a transfer of Pension Liabilities will
             be made from a Group Pension Arrangement to a pension arrangement
             of the Purchaser.

23.2         To the extent that service is relevant for purposes of determining
             participation, vesting or eligibility for benefits under a
             Purchaser's pension arrangement in which an Employee may
             participate, the Employees shall receive credit under the terms of
             such pension arrangement for pensionable service they had under the
             Group Pension Arrangement. Seller shall use its best endeavours to
             allow Purchaser to continue the membership of the Employees in the
             Group Pension Arrangement for one year after Closing or, if
             shorter, such period which is admissible under the respective local
             law or plan rules. During the temporary period of participation the
             Purchaser shall make contributions or premiums to the Group Pension
             Arrangement at an equivalent rate as Seller makes for its similarly
             situated employees.

             In Germany, Purchaser may ask for approval to continue the
             membership of the relevant Employees in the BASF Pensionskasse VVaG
             for life, and in such event Seller shall use its best endeavours to
             assist Purchaser in securing such approval and assure that it will
             be granted. Purchaser shall then be required to accept the statutes
             and general policy conditions of the BASF Pensionskasse VVaG
             provided that the statutes and policy conditions are applied on a
             uniform and non-discriminatory basis as to the Seller's employees
             and employees of the Companies. In particular, Purchaser shall be
             required to pay as and when required the necessary contributions,
             at an equivalent rate as Seller contributes for its similarly
             situated employees, to fund the pension liabilities accruing after
             Closing, including any reasonable administration fee to which
             Seller and Purchaser shall mutually agree.

23.3         If a transfer of Pension Liabilities shall be made from a Group
             Pension Arrangement to a pension arrangement of the Purchaser,
             Seller and Purchaser agree to use their best endeavours to procure
             that any necessary approval of the appropriate regulatory authority
             is obtained as soon as reasonably practicable after the expiry of
             the Seller's participation period in the Group Pension Arrangement.
             If the Purchaser becomes responsible for meeting any Pension
             Liabilities accrued prior to Closing under a Group Pension
             Arrangement following transfer of such liabilities, Seller shall
             use its best endeavours to ensure that assets held in trust funds
             or insurance contracts in respect of such liabilities are
             transferred to suitable pension arrangements of the Purchaser.
             Seller will endeavour to ensure that such asset transfers shall be
             equivalent to such amount required under locally applicable

<PAGE>   41

                                     Page 41

             transfer law and regulations (the "Group Pension Transfer Amount").
             Interest on the Group Pension Transfer Amount from the Closing Date
             to the date of transfer at a rate of 6% compounded annually shall
             be transferred along with the Group Pension Transfer Amount.

             In the event that, during the period of temporary participation in
             a Group Pension Arrangement, a contribution or premium is paid in
             respect of Pension Liabilities that is subsequently assumed by the
             Purchaser, then Seller shall use its best endeavours to ensure that
             the amount of these premiums or contributions, including
             appropriate interest, is transferred to the Purchaser's pension
             arrangements, less reasonable deduction for administrative costs,
             as determined by mutual agreement of Seller and Purchaser. In the
             event any such transfer for post-Closing contributions or premiums,
             or interest thereon, cannot be made for any reason, Seller shall
             make a direct cash payment to Purchaser to reimburse Purchaser for
             any such amounts. Such payment will be within 30 days after
             Purchaser's notification to Seller.

23.4         Seller will permit no transfer of the Pension Liabilities and the
             assets related thereto from a Group Pension Arrangement unless
             Seller is satisfied as to the nature of the pension benefits which
             will be provided by Purchaser for the respective Employees.

23.5         In transferring Pension Liabilities from the Group Pension
             Arrangement to the pension arrangement of Purchaser, Seller and
             Purchaser shall comply with all applicable legal requirements.

23.6         If under local requirements the consent of an employee is required
             to a transfer of Pension Liabilities, such consent shall be sought
             by Seller and Purchaser.

                                      VII.
                   ADDITIONAL OBLIGATIONS PRIOR TO THE CLOSING

                                   SECTION 24
                      CONDUCT OF BUSINESS PRIOR TO CLOSING

24.1.1       Seller covenants that it will, or, subject to the restrictions
             established by applicable mandatory law, will cause the Companies
             to, conduct the BASF Pharmaceutical Business in the ordinary
             course of business and consistent with past practices for the
             period between the execution of this Agreement and the Closing
             and, to the extent consistent therewith, use their best efforts
             to preserve intact their assets, including Intellectual Property
             and Patents and current business organizations (except as
             provided in Section 4), use their best efforts to keep available
             the services of their key employees (without, however, any
             obligation to improve their employment terms) and preserve their
             relationships with those persons having business dealings with
             them.

24.1.2       Except as required by law, Seller shall not, and will not permit
             any of the Companies to, voluntarily take any action that would, or
             that could reasonably be expected to, result in any of the Closing
             Conditions not being satisfied.

24.1.3       (a) Upon the terms and subject to the conditions set forth in this
             Agreement, including Section 32.6 hereof, each of the parties will
             use their best efforts to take, or cause to be taken, all actions,
             and to do, or cause to be done, and to assist and cooperate with
             the other parties in doing, all things, necessary, proper or
             advisable to consummate and make

<PAGE>   42

                                     Page 42

             effective, in the most expeditious manner practicable and, if
             practicable, before March 31, 2001, the transactions contemplated
             hereby, including best efforts to (i) obtain all necessary actions
             or non-actions, waivers, consents and approvals from governmental
             entities and make all necessary registrations and filings
             (including filings with governmental entities) and take all
             reasonable steps as may be necessary to obtain an approval or
             waiver from, or to avoid an action or proceeding by, any
             governmental entity, (ii) obtain all necessary material consents,
             approvals or waivers from third parties, (iii) execute and deliver
             any additional instruments necessary to consummate the transactions
             contemplated by, and to fully carry out the purposes of, this
             Agreement, (iv) when the Structure Option is exercised by Seller,
             have the Demerger registered in the Commercial Register of both
             Knoll AG and the Partnership, and (v) with respect to the India
             Shares and the Pakistan Shares, use best efforts to effect their
             transfer to Purchaser by taking such actions as may be necessary
             under applicable law.

24.1.4       Seller and the Companies shall continue their course of action and
             strategies, as outlined to Purchaser in the presentations made on
             November 13, 2000, with respect to state and federal regulatory
             submissions affecting Synthroid.

24.1.5       Unless the Structure Option is exercised by Seller, Seller shall
             cause Knoll Deutschland GmbH to be merged into Knoll AG pursuant to
             Section 4.

24.2         During the period between the execution of this Agreement and the
             Closing, Seller shall not, and, subject to the restrictions
             established by applicable mandatory law, will procure that each of
             the Companies shall not, without the prior written consent of
             Purchaser such consent not to be unreasonably withheld, do any of
             the following unless expressly provided for in Section 24.3 or
             elsewhere in this Agreement:

             a)       sell, dispose of, pledge, license, assign or otherwise
                      encumber any of (i) the assets of the BASF Pharmaceutical
                      Business other than in the ordinary course of business
                      consistent with past practice or any of the Shares or (ii)
                      its Intellectual Property including without limitation the
                      patents and patent applications described in Section 15.1
                      (II);

             b)       authorize for issuance or issue any capital stock of the
                      Companies or securities or rights convertible into or
                      exchangeable for shares or securities or rights
                      convertible into or exchangeable for such shares or amend
                      their articles of association;

             c)       purchase or otherwise acquire or offer to purchase or
                      otherwise acquire any (i) shares or other participation in
                      a corporation, partnership or other entity by any of the
                      Companies, or (ii) other assets with the purchase price in
                      excess of EUR 500,000 other than in accordance with the
                      Companies' capital plan, a copy of which has been provided
                      to Purchaser;

             d)       enter into any collective bargaining or shop agreements
                      with respect to any of the Companies or, except for
                      increases required by applicable collective bargaining
                      agreements or shop agreements, grant any increase in the
                      rates of pay or benefits to, or enter into any new
                      Employee Benefit Plan or make any other change in the
                      employment terms for, any of their directors, officers and
                      employees in the BASF Pharmaceutical Business;

<PAGE>   43

                                     Page 43

             e)       enter into any contract or other arrangement which (i) may
                      result in a material change in the nature or scope of the
                      BASF Pharmaceutical Business, or (ii) if it existed on the
                      date hereof, would be required to be listed on Exhibit
                      13.13, 13.14 or 13.21, or amend or terminate any of the
                      agreements listed on Exhibit 13.13, 13.14 or 13.21;

             f)       abandon, or take or omit to take any action that may limit
                      the scope or value of, any of its assets, including
                      without limitation, any patent or patent application filed
                      by it or any of its Affiliates (including the Companies)
                      unless such abandonment, action or omission, individually
                      or in the aggregate would not reasonably be expected to
                      have a Material Adverse Effect;

             g)       except as otherwise expressly permitted by this Agreement
                      (i) initiate any action, suit, proceeding or submission
                      before any court or governmental authority; and (ii) enter
                      into any compromise or settlement of any litigation,
                      proceeding or governmental investigation relating to it or
                      its properties, operations or business, except for
                      settlements within applicable insurance coverage limits,
                      and settlements complying with the conditions of Section
                      20.3 or 26.4 and against which Seller shall indemnify
                      Purchaser;

             h)       lend any money or otherwise pledge its credit except in
                      the ordinary course of business consistent with past
                      practices;

             i)       materially increase the number of individuals employed by
                      the Companies;

             j)       take, and shall use its best efforts not to suffer or
                      permit, any action which would render untrue any of the
                      Representations of Seller contained herein;

             k)       accelerate orders or sales or offer any special terms,
                      discounts or purchase programs (including by providing
                      credit terms outside of ordinary and normal course);

             l)       materially change or diminish the nature, scope and level
                      of effort associated with research and development
                      activities (including protocols, clinical programs,
                      funding and expenditure levels), including, without
                      limitation, any of the foregoing associated with D2E7; or

             m)       enter into any nontrade, intercompany financing or loan
                      arrangement with any Company that is a non-wholly-owned
                      subsidiary or Affiliate of Seller.

24.3         During the period between the execution of this Agreement and the
             Closing, Seller shall have the right, but shall not be obligated,
             to take, or cause to be taken by the Companies, the following
             action:

             a)       pay off Financial Debt,

             b)       except as otherwise provided in Section 24.2(m) distribute
                      cash dividends or withdraw cash from Companies that are
                      wholly owned by Seller in other forms permissible under
                      applicable law e.g. by repurchase of shares or reduction
                      of capital,

<PAGE>   44

                                     Page 44

             c)       eliminate debt of the BASF Pharmaceutical Business in
                      forms other than payment of debt, e.g. waive debt owed to
                      Seller, or cause the BASF Pharmaceuticals Business to be
                      released  from debt owed to third party creditors,

             d)       cause the employees listed in Exhibit 24.3(f) to cease to
                      be employed by the  BASF Pharmaceutical Business,

             e)       transfer the Shares to any other wholly-owned Affiliate
                      of BASF.

24.4         Seller shall ensure that each of the Companies shall have adequate
             insurance coverage in line with past practice and custom with
             regard to coverage, terms and costs from the date of this Agreement
             until the Closing.

24.5         During the period between the execution of this Agreement and the
             Closing, Seller covenants that it will, and will cause the
             Companies to:

             a)       except with respect to competitively sensitive information
                      restricted by applicable merger control and antitrust
                      laws, permit Purchaser and its representatives to have
                      reasonable access, upon reasonable advance notice, to the
                      assets, employees, books and records of Seller and its
                      Affiliates, with respect to the BASF Pharmaceutical
                      Business and the Companies, and shall furnish, or cause to
                      be furnished, to Purchaser, such financial, tax,
                      regulatory, R&D, and operating data and other available
                      information with respect to the BASF Pharmaceutical
                      Business as Purchaser may from time to time reasonably
                      request or that may otherwise be reasonably required by
                      Purchaser, including such data and information as may be
                      necessary for Purchaser, Deloitte & Touche GmbH and
                      Purchaser's representatives to prepare the U.S. Financial
                      Statements and any pension calculations required to be
                      included therein;

             b)       permit Purchaser and its representatives to conduct
                      Phase I environmental  reviews at the Real Property.
                      Purchaser shall conduct any such reviews in a manner that
                      minimizes the disruption conduct of the ongoing business
                      at the site; and

             c)       make available to Purchaser for its inspection and copying
                      such documents and instruments for the purpose of
                      establishing that Seller owns the Companies in the manner
                      and in the percentages as set forth on the Exhibits
                      identified in Sections 13.1-13.4.

24.6         Seller will promptly advise Purchaser in writing if it obtains
             knowledge of (i) any Representation set forth in this Agreement
             becoming untrue or inaccurate in any respect, or (ii) a failure by
             it to comply with or satisfy any material covenant or agreement to
             be complied with or satisfied under this Agreement which, in either
             case would result in the failure of the condition described in
             Section 11.1.2.

24.7.        Purchaser shall as promptly as practicable after the date hereof,
             with such assistance from Seller as Purchaser may reasonably
             request, file for and use its best efforts to obtain all
             applicable (including Drug Enforcement Agency "DEA") governmental
             registrations and/or licenses regarding controlled substances
             that are required for Purchaser to conduct the BASF
             Pharmaceutical Business as currently conducted. In the event that
             all applicable DEA and other registrations and/or licenses
             regarding controlled substances required for Purchaser to conduct
             the BASF Pharmaceutical Business as currently conducted are

<PAGE>   45

                                     Page 45

             not in effect at the time of the Closing, Purchaser and Seller
             agree to cooperate and use all commercially reasonable efforts to
             obtain all DEA and other required registrations and/or licenses
             regarding controlled substances that Purchaser may require to
             conduct the BASF Pharmaceutical Business as currently conducted and
             to own and operate the Companies. Upon Purchaser's request, Seller
             shall apply to the DEA and other relevant government entities and
             regulatory agencies for permission for Purchaser to operate the
             BASF Pharmaceutical Business under Sellers' existing DEA and
             comparable controlled substance registrations and/or licenses from
             the Closing Date until Purchaser receives all required DEA and
             controlled substance registrations and/or licenses for the BASF
             Pharmaceutical Business.

24.8         After the Closing, Seller will exercise its ownership rights to
             cause Hokuriku (and such other Companies, if any, the Shares of
             which are not transferred at Closing pursuant to Section 12.5) to
             conduct their business only in the ordinary course consistent with
             past practice, and otherwise will exercise its ownership rights
             with respect to Hokuriku in a manner consistent with Section 24.
             Without limiting the generality of the foregoing, the business of
             such Companies shall be operated after the Closing for the account
             of Purchaser, and no dividends or distribution or other payments
             with respect to shares held in such Companies may be made or
             declared following the Closing.

24.9         Prior to Closing, the parties to this Agreement will negotiate in
             good faith any amendments to the Intercompany Agreements or new
             Intercompany Agreements (including a transition and support
             services agreement) as may be necessary to meet the reasonable
             needs of Purchaser, and otherwise to ensure that the BASF
             Pharmaceutical Business continues to be operated after the Closing
             in a manner consistent with the manner it was operated prior to the
             Closing including, without limitation, any amendments to the lease
             (the "Wyandotte Lease") of the real property located in Wyandotte,
             Michigan ("Wyandotte Property"). Without limiting the foregoing,
             the Wyandotte Lease will contain as of the Closing or will be
             amended to contain appropriate cross-indemnity provisions relating
             to Environmental Liabilities arising from the operations at the
             Wyandotte Property by Purchaser and Seller, respectively.
             Notwithstanding any provision in a given Intercompany Agreement,
             Purchaser may elect at any time for a period of five years from the
             Closing Date and upon 30 days prior written notice to Seller, to
             terminate any of the Intercompany Agreements in whole or in part.

24.10        At Closing, as far as practicable, or after the Closing, Seller
             shall, without further consideration, promptly execute and deliver,
             or cause to be executed and delivered, to Purchaser such deeds,
             assignments, bills of sale, Consents and other instruments in
             addition to those required by this Agreement, in form and substance
             satisfactory to Purchaser, and take all such other action, as
             Purchaser may reasonably deem necessary or desirable to implement
             any provision of this Agreement or to more effectively transfer,
             convey and assign to Purchaser good and marketable title to, and to
             put Purchaser in actual possession and operating control of the
             Shares, the Transferred Patents and the BASF Pharmaceutical
             Business, free and clear of all liens and encumbrances. Without
             limiting the generality of the foregoing, if any assets or rights,
             including any and all rights in Intellectual Property, that are to
             be held by or transferred to the Companies or licensed for the
             benefit of Purchaser in accordance with the terms of this
             Agreement, have not been so held, transferred or licensed as of the
             Closing, Seller shall, and shall cause its Affiliates to, as
             applicable, take such actions as are necessary to ensure that the
             title to such assets

<PAGE>   46

                                     Page 46

             and/or licenses to use such rights are so held, transferred or
             licensed without undue delay as soon as commercially practicable or
             lawfully possible.

             Within 60 days after the date of this Agreement, Seller will
             provide or make available to Purchaser true, correct and complete
             copies of all policies of insurance to which any of the Companies
             is a party or is a beneficiary or named insured.

             After the Closing, Seller will cooperate with Purchaser in ensuring
             the effective transfer to Purchaser of any trade names, corporate
             logos, the content of all websites of Seller that relate to the
             BASF Pharmaceutical Business and any registered domain names that
             relate to the BASF Pharmaceutical Business.

24.11        No later than the following dates Seller shall identify and
             represent inventory levels, in sufficient detail to enable
             Purchaser to understand inventory levels of the BASF Pharmaceutical
             Business as of the listed dates:

<TABLE>
<CAPTION>

 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
                            DELIVERY DATE                     INVENTORY DATE
 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
             <S>                                             <C>
             January 15, 2001                                November 30, 2000
 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
             January 31, 2001                                December 31, 2000
 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
             Each month end thereafter through Closing       Previous month
 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>

             Purchaser and Seller shall work cooperatively and Seller shall use
             and shall cause the Companies to use, their best efforts to reduce
             inventory levels below *** for periods after December 31, 2000
             through the Closing.

24.12        Prior to Closing Seller shall repay the intercompany loan payable
             to Hokuriku.

24.13        Seller shall cooperate with Purchaser prior to closing to allow to
             take such steps as are necessary to convert Knoll AG into a GmbH,
             effective no earlier than one day after the Closing Date.

                                      VIII.
                      ADDITIONAL OBLIGATIONS OF THE PARTIES

                                   SECTION 25
                  SHARED SUBSTANCES LIBRARY, PATENTS, LICENSES

25.1         With respect to the Remaining Patents, Seller hereby grants to
             Purchaser an irrevocable, exclusive, paid-up license for the life
             of the respective patent, with the right to grant sublicenses, in
             the Pharmaceutical Field and a corresponding exclusive license to
             make, use and sell the Exclusive Active Ingredients and a
             corresponding non exclusive license with respect to the Mutual
             Active Ingredients, which licenses shall be subject to the terms
             and conditions of a separate license agreement.

25.2         With respect to Shared Substances located on the premises of Seller
             or Seller's Affiliates, Seller upon request of Purchaser shall
             permit Purchaser or the Companies to screen such

- - - - - - - - - - - - -
***  Confidential information omitted pursuant to a request for confidential
     treatment filed separately with the Securities and Exchange Commission.

<PAGE>   47

                                     Page 47

             Shared Substances free of charge subject to the provisions of
             Section 25.4 below, and Seller hereby grants to Purchaser with
             respect to Seller's Shared Substance Patents an irrevocable,
             exclusive, paid-up license for the life of the respective patent
             with the right to grant sublicenses in the Pharmaceutical Field and
             the Pharmachemical Field. However, to the extent that physical
             inventories of Shared Substances which are located on the premises
             of Seller have been depleted, Seller shall not be obligated to
             reproduce any Shared Substances for the Purchaser which in its turn
             shall have the right to reproduce such Shared Substances.

25.3         With respect to Shared Substances located on the premises of the
             Partnership, Purchaser on request of Seller hereby permits Seller
             or Affiliates of Seller to screen such Shared Substances free of
             charge subject to the provisions of Section 25.4 below, solely for
             use outside both the Pharmaceutical Field and the Pharmachemical
             Field and hereby grants to Seller with respect to such Shared
             Substance Patents an irrevocable, paid-up, exclusive license for
             the life of the respective patent with the right to grant
             sublicenses outside the Pharmaceutical Field and the Pharmachemical
             Field. However, as far as Shared Substances which were located on
             the premises of the Partnership have been depleted, Purchaser shall
             not be obligated to reproduce any Shared Substances for the Seller
             which in its turn shall have the right to reproduce Shared
             Substances.

25.4         The right to screen Shared Substances shall not apply to (i) Shared
             Substances which are available in less than 100 mg quantity, (ii)
             Shared Substances being developed or sold commercially and closely
             related structures thereto, or (iii) Shared Substances which have
             been licensed to one or more third parties or are still subject to
             active evaluation and/or development by a party and/or a
             prospective or actual licensee of such party.

                                   SECTION 26
                             CONDUCT AND LITIGATION

26.1         Indemnification. Seller agrees to indemnify and hold harmless
             Purchaser and each of Purchaser's Affiliates and Subsidiaries,
             including the Companies, from and against:

                      (i) any and all loss, liability, damage and expense
             whatsoever arising from any pending and/or future claim, actions,
             complaints, causes of action, and/or governmental investigation or
             proceeding (collectively "action"), commenced or threatened, based
             upon, arising out of, or related to the Section 26 Conduct;

                      (ii)    any and all loss, liability, damage and expense
             whatsoever arising from or related to the Section 26 Litigation;

                      (iii)   any and all loss, liabilities, damage and expense
             whatsoever arising from or relating to the Insurance Litigation;
             and

                      (iv) any and all expense whatsoever (including the fees
             and disbursements of counsel and other professional advisors and
             experts chosen by Purchaser), reasonably incurred in responding to
             requests of Seller to assist or cooperate in the Section 26
             Litigation and/or the Insurance Litigation and/or any action under
             Section 26(a)(i) above, including costs and expenses of discovery,
             witness preparation or court testimony.

26.2         Actions against Parties; Notification. Purchaser shall give notice
             as promptly as reasonably practicable to Seller of any action
             commenced against it in respect of which indem-

<PAGE>   48

                                     Page 48

             nity may be sought under this Section 26, but failure to so notify
             Seller shall not relieve Seller from any liability hereunder to the
             extent Seller is not materially prejudiced as a result thereof and
             in any event shall not relieve it from any liability which it may
             have otherwise than on account of this Section 26. Subject to
             Section 26.3 below, Purchaser may, at its own option, participate
             in or assume control of the defense of any such action; provided,
             however, that counsel to the Purchaser shall not (except with the
             consent of Seller) also be counsel to the Seller. Seller shall
             indemnify Purchaser for all fees and costs incurred if Purchaser
             decides to assume control of the defense of any such action.

26.3         Control of Section 26 Litigation. Subject to Section 26.4 below and
             provided that Seller shall have first agreed in writing to assume
             responsibility for the action and acknowledged its indemnity
             obligation hereunder, Seller shall retain control over and continue
             the defense of the Section 26 Litigation, provided, however, that
             (i) Purchaser shall retain control over all dealings,
             communications and negotiations with and/or submissions to any
             regulatory body, including but not limited to the United States
             Food and Drug Administration and the Canadian Health Protection
             Bureau; and (ii) Purchaser shall retain control over all dealings,
             communications and negotiations with and/or submissions to any
             state department of public health or advisory committees, or to any
             state formulary, such as the Illinois formulary or equivalent.
             Seller and the Purchaser shall cooperate and take such measures as
             may be necessary to preserve the attorney-client and other
             privileges arising from any Section 26 Litigation.

26.4         Compromise or Settlement. Seller may, without the prior written
             consent of Purchaser, settle or compromise or consent to the entry
             of any judgment with respect to the Section 26 Litigation, the
             Insurance Litigation or any other action commenced against it in
             respect of which indemnification is sought under this Section 26,
             if such settlement, compromise or consent (i) includes an
             unconditional release of Purchaser and its Affiliates and
             Subsidiaries (including the Companies) from all liability arising
             out of such action, (ii) includes no express or implied statement
             as to or any admission of fault, culpability or a failure to act by
             or on behalf of Purchaser, its Affiliates, or its Subsidiaries, and
             (iii) provides for relief solely in the form of a liquidated
             monetary payment (which in the case of the Section 26 Litigation
             shall be paid fully by Seller). Seller may not, without the prior
             written consent of Purchaser (which may be withheld for any
             reason), settle or compromise or consent to the entry of any
             judgment with respect to the Section 26 Litigation or the Insurance
             Litigation, any other action, which provides for remedies other
             than the payment of a liquidated monetary sum, including, without
             limitation, any injunctive or declaratory relief, consent decree,
             assurance of voluntary compliance and/or any other directive, order
             or agreement issued by or entered with any other person or
             governmental authority.

26.5         Access. To the extent that Seller shall direct or control the
             defense or settlement of the Section 26 Litigation or any other
             action in respect of which indemnification is sought hereunder,
             Purchaser will give Seller and its counsel, during normal business
             hours, access to the relevant business records and other documents
             relating to the claim, and shall permit them to consult with
             employees and counsel of Purchaser; provided, however, that any
             expenses incurred by Purchaser, including reasonable disbursements
             and fees and disbursements of counsel incurred in connection such
             access and consultation, shall be at Seller's sole cost and expense
             and reimbursed by Seller as incurred. In connection with any claim
             hereunder which has been assumed by Seller, Seller shall keep
             Purchaser reasonably informed of the status thereof at all stages,
             including providing to Purchaser

<PAGE>   49

                                     Page 49

             copies of all pleadings and other material papers and
             correspondence in connection with any such claim.

26.6         Insurance Proceeds and Settlement Amounts. If and to the extent
             that Seller has agreed to prosecute, at its own expense and with
             its own counsel, the Insurance Litigation, and has performed its
             obligations under this Section 26, Seller shall be entitled to (i)
             any proceeds or recovery arising from or out of the Insurance
             Litigation, and (ii) IN RE SYNTHROID-Registered Trademark-
             MARKETING LITIGATION Settlement Amounts.

26.7         Certain Definitions. For purposes of this Agreement:

                      (i)     "Section 26 Litigation" shall mean (1) , IN RE
             SYNTHROID-Registered Trademark-MARKETING LITIGATION Lead Case
             No. 97 C 6017, MDL No. 1182, United States District Court for
             the Northern District of Illinois, including all consumer and/or
             third party payor opt-out claims and any claims by state
             Attorneys General, and any and all appeals therefrom; (2)
             Uwimana v. Boots, et al. (Quebec, Canada); Annibale v. Boots, et
             al. (Ontario, Canada); Tesluk v. Boots, et al. (Ontario,
             Canada); Malc-Barmherzig v. Boots, et al. (Ontario, Canada); and
             Aruliah v. Boots, et al. (British Columbia, Canada)
             (collectively "Canadian Litigation") and such other actions as
             are described in the Stipulation of Settlement and Compromise
             for MDL No. 1182 Master File Number 97 C 6017, and any and all
             appeals from the Canadian Litigation; and (3) IN RE BRAND NAME
             PRESCRIPTION DRUGS ANTITRUST LITIGATION, Lead Case No. 94 C 987,
             MDL No. 997, United States District Court for the Northern
             District of Illinois, and any and all appeals therefrom

                      (ii) "Section 26 Conduct" shall mean the conduct alleged,
             or conduct substantially similar to that alleged, in the Section 26
             Litigation;

                      (iii)   "Insurance Litigation" shall mean Knoll
             Pharmaceutical Co. v. Automobile Insurance Co. of Hartford, et
             al., Case No. 00 C 6733, pending in the United States District
             Court for the Northern District of Illinois, Eastern Division,
             involving defendants Automobile Insurance Co. of Hartford
             ("Automobile"), National Union Fire Insurance Co. of Pittsburgh,
             PA ("National Union"), and Royal Insurance Co. of America
             ("Royal"), or any insurance policy disputed in Case No. 00 C
             6733, including but not limited to (i) Automobile issued to Boots
             Pharmaceuticals, Inc. ("Boots") commercial general liability
             policy no. 048 ACM 5269323; (ii) Automobile issued to Boots
             commercial general liability policy no. 048 ACM 5602370; (iii)
             Automobile issued to Boots commercial general liability policy
             no. 048 ACM 5604447; (iv) Royal issued to Boots commercial
             general liability policy no. PST 13 45 30; (v) National Union
             issued to Boots commercial general liability policy no. GL
             381-00-97; (vi) National Union issued to Boots commercial general
             liability policy no. GL 381-10-54; and

                      (iv) "IN RE SYNTHROID-Registered Trademark- MARKETING
             LITIGATION Settlement Amounts" shall mean all settlement amounts
             and funds described in Judge Bucklo's August 4, 2000, Memorandum
             Order and Opinion, in MDL 1182, including but not limited to the
             consumer class fund, the third party payor class fund, and funds
             relating to plaintiff's payment of amounts to states' attorneys
             general and in cy pres remedies to the pharmacy industry

<PAGE>   50

                                     Page 50

                                   SECTION 27
                              NON-COMPETE COVENANT

27.1         For a period of *** effective from the Closing, or with respect to
             the restrictions contained in clause (b) in countries other than EU
             member countries the later of *** following the Closing, neither
             Seller nor any of its Affiliates shall, anywhere in the world,
             directly or indirectly (a) engage in the Pharmaceutical Field, (b)
             agree to develop, import, register, manufacture, distribute, supply
             or sell any BASF Pharmaceutical Products or any Active Ingredient
             used in any BASF Pharmaceutical Product for any third party, (c)
             otherwise assist any third party to compete with Purchaser, in the
             BASF Pharmaceutical Business or otherwise with respect to business
             or activities related to Exclusive Active Ingredients, or (d)
             acquire a participation in a company or other entity that competes
             in the BASF Pharmaceutical Field, or business or activities related
             to Exclusive Active Ingredients, except ownership of a less than
             *** equity interest in a publicly traded company solely for
             investment purposes. For a period of *** from the Closing, neither
             Seller nor its Affiliates shall directly or indirectly solicit any
             employees of the Companies to terminate his or her employment with
             any of the Companies or Purchaser.

27.2         However, the preceding paragraph shall not prevent Seller from (I)
             activities in the BASF Pharmachemical Field and (II) taking over by
             purchase of shares or assets or by way of a merger another business
             even if such business includes activities competing with Purchaser
             in the BASF Pharmaceutical Field, provided that (a) the gross sales
             with respect to competitive activity of such business in the year
             preceding the acquisition constitute less than *** of the total
             gross sales of such business, and (b) Seller, within 90 days from
             the completion of such acquisition, offers to Purchaser the right
             to purchase the activities taken over and which are competing with
             Purchaser or the Companies specifying the price (which shall be
             fair market value) and other reasonable terms and conditions of
             such offer (the "Seller Terms"). If Purchaser has not accepted the
             offer on Seller Terms or if Purchaser and Seller have not agreed to
             different terms, in each case within 90 days from the receipt of
             the offer, Seller shall use its best efforts to divest (by sale or
             IPO or otherwise) the activities in question within a period of ***
             from the date on which Seller had offered them for purchase to the
             Purchaser at a price equal to, or higher than, the price and at
             terms not more favorable to an acquiror than the ones previously
             offered to Purchaser. Seller may only sell the activities in
             question at a price lower than the price contained in the previous
             offer to Purchaser if Seller has again offered the activities in
             question to Purchaser at such lower price and Purchaser has not
             accepted such offer within 15 working days from receipt of the
             offer.

                                   SECTION 28
                               USE OF TRADE NAMES

28.1         Seller (a) may change the corporate names of the Companies insofar
             as this is necessary in order to eliminate from such corporate
             names references to "BASF" and shall use its best efforts to give
             Purchaser an opportunity to make proposals for the new corporate
             name to be chosen in connection with the elimination of such
             references, and (b) shall change the corporate names of all
             Affiliates of Seller (other than the Companies) to eliminate from
             such corporate names references to "Knoll." Seller shall use its
             best efforts to complete such changes prior to the Closing or as
             soon as possible thereafter. Purchaser shall assist Seller in
             making or completing the changes after the Closing to the extent
             they not have been completed by the time of the Closing.

- - - - - - - - - - - - -
***  Confidential information omitted pursuant to a request for confidential
     treatment filed separately with the Securities and Exchange Commission.

<PAGE>   51

                                     Page 51

28.2         As soon as commercially possible upon the consummation of the
             Closing but in no event longer than the later to occur of (x) 12
             months after the Closing, or (y) Purchaser's exhaustion and
             depletion of all inventories and stores of materials described
             below, Purchaser agrees to cause all of the Companies to cease
             making use of the trade names and product or service marks of
             Seller or any of its Affiliates containing "BASF" and to remove any
             reference to any such names or marks from all products, products
             promotions or advertising materials, business cards or any other
             items. Seller hereby grants Purchaser a non exclusive, worldwide,
             royalty free license to use such names for the period described in
             this Section 28.2.

28.3         As soon as commercially possible upon the consummation of the
             Closing but in no event longer than the later of (x) 12 months
             after the Closing, or (y) Seller's exhaustion and depletion of all
             inventories and stores of materials described below, Seller will
             and will cause its Affiliates, including, without limitation, Knoll
             AG, to cease making use of the trade names, trademarks and product
             or service marks of the BASF Pharmaceutical Business or any of the
             Companies, including "Knoll" and to remove any reference to any
             such names or marks from all products, product promotions or
             advertising materials, business cards or any other items. Purchaser
             hereby grants Seller a non-exclusive, worldwide, royalty free
             license to use such names for the period described in this Section
             28.3.

                                   SECTION 29
                 INDEMNITY AGAINST LIABILITIES OF KNOLL BUSINESS

29.1         Purchaser shall indemnify Seller and its Affiliates against any
             responsibility under Section 133 Conversion Act (Umwandlungsgesetz)
             for liabilities exclusively relating to the Knoll Business, other
             than liabilities against which Purchaser is indemnified by Seller
             pursuant to this Agreement, including Section 15 hereof. Seller
             shall indemnify Purchaser and its Affiliates against any
             responsibility under Section 133 Conversion Act (Umwandlungsgesetz)
             for all liabilities of Knoll AG except for those exclusively
             relating to the Knoll Business.

29.2         Seller shall ensure that no creditor of Knoll AG will request from
             the Partnership a security interest pursuant to Sections 133, 125
             and 22 Conversion Act.

29.3         Seller shall ensure that only those current employees of Knoll AG
             and Knoll Deutschland GmbH who work exclusively or mainly for the
             Knoll Business (the "Knoll Business Employees") will be transferred
             to the Partnership, and should any employee of the Seller Group or
             Knoll AG other than the Knoll Business Employees, be transferred to
             the Partnership by operation of law or as a result of an act or
             omission of a member of the Seller Group, Seller shall indemnify
             and hold the Partnership, Purchaser and its Affiliates harmless
             from any obligations or liabilities relating to such employees,
             including such employees' remuneration or severance claims.

29.4         Seller shall ensure that, at the Closing, the Partnership will,
             whether as a result of the Demerger or otherwise, not be liable for
             any Pension Liabilities other than those of the Knoll Business
             Employees.

<PAGE>   52

                                     Page 52

                                   SECTION 30
                      MAINTENANCE OF PARTNERSHIP STRUCTURE

30.1         Purchaser shall be obligated to continue the operation of the
             Partnership substantially as conducted as of the Closing Date by
             the Partnership in the Federal Republic of Germany in the legal
             form of the Partnership ***.

30.2         It is understood that the provision in Section 30.1 above does not
             prevent the Purchaser from (a) transferring any activities,
             personnel or assets of the Knoll Business or the Partnership to
             locations or entities domiciled outside the Federal Republic of
             Germany, or (b) transferring personnel of the Knoll Business or the
             Partnership to other locations within the Federal Republic of
             Germany.

30.3         If the laws in the Federal Republic of Germany concerning the Tax
             treatment of a partnership are changed in a way that maintenance of
             the legal form would have a Material Adverse Effect on the
             Partnership, Purchaser shall have the right to change the legal
             form of the Partnership as far as necessary to avoid that effect
             subject to prior written approval by Seller which approval shall
             not be unreasonably withheld.

30.4         In case of a sale of the Partnership or its business operation,
             Purchaser shall impose the obligations under this Section 30 on the
             acquirer.

                                   SECTION 31
                          CONFIDENTIALITY, PUBLICATION

31.1         The Parties hereto shall keep the content of this Agreement
             confidential except for reporting and disclosure requirements under
             statutory law, including reporting and disclosure requirements
             under the United States securities laws.

31.2         None of the Parties hereto will issue a press release on the
             transaction without the prior written consent of the other Party
             except as may be required by the reporting and disclosure
             requirements under the United States securities laws.

31.3         From and after the Closing, neither Seller nor any of its
             Affiliates or representatives shall use or disclose any non-public
             or proprietary information including any such information included
             in the Intellectual Property, exclusively relating to the BASF
             Pharmaceutical Business except to perform their obligations
             pursuant to this Agreement or the Intercompany Agreements. This
             Section 25.11 shall not apply to any such information that (i)
             through no fault of Seller becomes generally known in the relevant
             industry, or (ii) is received after the Closing from a third party
             free of any limitations on its use or disclosure. Seller may make
             any legally required disclosure of the such information, but Seller
             shall use its best efforts to notify Purchaser before making any
             such disclosure, and at Purchaser's expense to limit the amount of
             such information so disclosed and to protect its confidentiality to
             the extent reasonably practicable. Upon request by Purchaser,
             Seller shall permit Purchaser to have access to, with an
             opportunity to make copies of, such information and to deliver all
             of such information to Purchaser.

- - - - - - - - - - - - -
***  Confidential information omitted pursuant to a request for confidential
     treatment filed separately with the Securities and Exchange Commission.

<PAGE>   53

                                     Page 53

                                       IX.
                       MERGER CONTROL, RIGHT OF WITHDRAWAL

                                   SECTION 32
                                 MERGER CONTROL

32.1         Purchaser will promptly notify the European Commission of the
             merger provided for in this Agreement pursuant to the Merger
             Control Regulation.

32.2         Purchaser will promptly file, and Seller will promptly cause any of
             the Companies legally required to do so to file, for approval of
             the transaction contemplated by this Agreement in accordance with
             the Hart-Scott-Rodino Antitrust Improvements Act of 1976 as
             amended.

32.3         Seller and Purchaser shall promptly make all other filings legally
             required with any other antitrust authorities or other governmental
             authorities with respect to the transaction contemplated by this
             Agreement, including, without limitation, the filings described in
             Section 11.1.1(a).

32.4         No filing by a party hereunder shall be made without first having
             provided a draft of the notification to the respective other party.

32.5         In the event that meetings with officials of the European
             Commission, or the US Antitrust Authorities, or of any other
             antitrust governmental authorities become necessary,
             representatives of both Seller and Purchaser shall be entitled to
             attend such meetings. Seller and Purchaser shall, without undue
             delay (insofar as possible, in advance), exchange all information
             about their contacts with authorities referred to in the preceding
             sentence.

32.6         Seller and Purchaser shall, if necessary, provide such additional
             information, as may be required to respond to a second request for
             information, and shall take such action as may be reasonably
             necessary to obtain the approvals required by this Agreement as
             soon as possible.

                                   SECTION 33
                                   TERMINATION

33.1         This Agreement may be terminated at any time prior to the Closing.

             a)       by mutual written consent of Seller and Purchaser;

             b)       by either the Seller or Purchaser if:

                      (i)    the transactions contemplated by this Agreement
             are  prohibited by any of the antitrust authorities mentioned in
             Section 11.1 (a) above; or

                      (ii) the Closing Conditions have not been fulfilled on or
             prior to ***, provided, however, that such party shall not be
             entitled to the right to terminate which has caused the failure of
             the Closing Condition by breaching any of its obligations under
             this Agreement; provided further however that such date shall be
             extended to *** if by *** the approvals described in Section
             11.1(a) shall not have been obtained; or

- - - - - - - - - - - - -
***  Confidential information omitted pursuant to a request for confidential
     treatment filed separately with the Securities and Exchange Commission.

<PAGE>   54

                                     Page 54

             c)       by Purchaser if prior to the Closing Date there shall have
                      been a breach of any Representation, covenant or agreement
                      on the part of Seller contained in this Agreement, which
                      breach is (x)(i) incapable of being cured by Seller or is
                      not cured within 30 days of notice of such breach and (ii)
                      would cause a failure of a condition specified in Section
                      11.1.2. (a) or (b), or (y) constitutes an intentional and
                      material breach by Seller of any material covenant or
                      agreement of Seller contained in this Agreement that is
                      not cured within 30 days of notice of such breach; or

             d)       by Seller if prior to the Closing Date there shall have
                      been a breach of any Representation, covenant or agreement
                      on the part of Purchaser contained in this Agreement,
                      which breach constitutes an intentional and material
                      breach by Purchaser of any material covenant or agreement
                      of Purchaser contained in this Agreement that is not cured
                      within 30 days of notice of such breach.

33.2         Claims for breach of contract, if any, under this Agreement, of
             either party shall not be affected by a termination. In case of a
             termination, the parties are obligated to return all documents
             received from the respective other party, to keep secret all
             confidential information they have received in connection with the
             transaction and shall not use any such information for their own
             purposes. Seller's and Purchaser's legal counsel shall be exempt
             from the obligation to return such documents to the extent they are
             part of their files.

                                       X.

                                  MISCELLANEOUS

                                   SECTION 34
                                     NOTICES

All notices, statements and other communications to be given with respect to
this Agreement shall be in the English language and sent by registered mail, by
facsimile transmission or by messenger to the parties at the following addresses
or at such other addresses as shall be specified by the parties:

If to Seller:              BASF Aktiengesellschaft
                           Central Legal Department
                           67056 Ludwigshafen, Germany
                           Telefax: 49.621.60.20410

If to Purchaser:           Abbott Laboratories
                           One Abbott Park Road
                           Abbott Park, Illinois 60053-3500
                           Telephone: 847-937-6100
                           Attn: General Counsel

                                   SECTION 35
                         ENTIRE AGREEMENT, WRITTEN FORM

35.1         This Agreement (including the attached Exhibits) constitutes the
             entire agreement and supersedes all other prior agreements and
             undertakings both written and oral among the

<PAGE>   55

                                     Page 55

             parties. In the event of any translation of this Agreement, the
             English version shall govern.

35.2         In case any provision of the Separate Sale and Transfer Contracts
             is inconsistent with the provisions of this Agreement, the latter
             shall prevail and the parties hereto shall treat each other
             accordingly.

35.3         Any changes in this Agreement including, but not limited to, this
             clause shall only be valid if made in writing and executed by both
             Purchaser and Seller or, if necessary, in a stricter form.

                                   SECTION 36
                               ASSIGNMENT, SET-OFF

36.1         Neither Seller nor Purchaser may assign any rights or obligations
             under this Agreement to any third party without the consent of the
             respective other party except for Purchaser's right to have any of
             the Shares and Transferred Patents acquired by a designee.

36.2         Purchaser shall not be entitled to offset any claim it may have
             against Seller (whether under this Agreement or otherwise) against
             the claim of Seller for payment of the Aggregate Purchase Price
             pursuant to Section 8 above unless Purchaser's claim has become
             final (rechtskraftig) or is undisputed.

                                   SECTION 37
                           GOVERNING LAW, JURISDICTION

37.1         This Agreement shall be governed by and construed in accordance
             with the laws of the Federal Republic of Germany, other than
             Section 26 which shall be governed by the law of the State of
             Illinois, USA without regard to its choice of law rules.

37.2         Except as otherwise expressly stated elsewhere in this Agreement,
             all disputes arising out of or in connection with this Agreement,
             including any question regarding its existence, validity or
             termination, shall be referred to and finally resolved by
             arbitration in accordance with the Rules of the German Institute of
             Arbitration e.V. (DIS) without recourse to the ordinary courts of
             law, provided that the Chairman of the Arbitral Tribunal shall not
             be of the same nationality as that of any of the parties to a given
             dispute. The place of arbitration shall be Frankfurt; the language
             of the arbitration shall be English.

37.3         All disputes arising out of or in connection with Section 26 shall
             be referred to and finally resolved by the court having
             jurisdiction over the Section 26 Litigation or Insurance Litigation
             to which the dispute relates.

                                   SECTION 38
                                    EXPENSES

38.1         Except as specifically provided otherwise in this Agreement, each
             party shall bear its own expenses and fees (including attorneys',
             accountants', consultants' and advisors' fees) in connection with
             this Agreement or any of the transactions contemplated herein,
             including any merger control filing and filings with other
             governmental authorities made by such party.

<PAGE>   56

                                     Page 56

38.2         Fees and costs triggered by the implementation of this Agreement
             (other than the Merger and the Demerger), including but not limited
             to any notarial fees, any transfer or sales Tax (including value
             added Tax and stamp duties and property transfer Tax according to
             Section 5 para 3 Grunderwerbssteuergesetz), any registration or
             publication fees shall be borne by Purchaser.

                                   SECTION 39
                                  SEVERABILITY

Should any of the provisions of this Agreement be or become fully or partly
invalid or unenforceable, the remainder of the Agreement shall be valid or
enforceable. The invalid or unenforceable provision shall be replaced by a
provision which shall come as close as possible to the economic purpose of the
invalid provision. Any gaps in this Agreement shall be filled by a provision
which the parties as prudent businessmen would in good faith have agreed to, had
they considered the matter not covered by this Agreement.

<PAGE>   57

                                     Page 57

TABLE OF CROSS-REFERENCES FOR ADDITIONAL DEFINITIONS

"FINAL BASF TENDER AMOUNT" shall have the meaning as described in
Section 7.4;

"BASF INTERCOMPANY OBLIGATIONS" shall have the meaning described in
Section 19.1;

"CLOSING" shall have the meaning as described in Section 11.1;

"CLOSING DATE" shall have the meaning as described in Section 11.1;

"CLOSING FINANCIAL STATEMENTS" shall have the meaning as described in
Section 10.1;

"CODE" shall have the meaning described in Section 13.11.1(a);

"CONSENTS" shall have the meaning described in Section 13.2;

"DEA" shall have the meaning as described in Section 24.7;

"DEMERGER" shall have the meaning as described in Section 4.2;

"EMPLOYEE BENEFIT PLAN" shall have the meaning described in
Section 13.11.1(b);

"ENVIRONMENTAL LIABILITIES" shall have the meaning described in
Section 13.18.5;

"ENVIRONMENTAL REPORT" shall have the meaning described in Section 13.18.5;

"ERISA" shall have the meaning described in Section 13.11.1(a);

"ERISA AFFILIATE" shall have the meaning described in Section 13.11.1(a);

"GENERAL CLOSING CONDITIONS" shall have the meaning as described in
Section 11.1.1;

"HOKURIKU OVERPAYMENT" shall have the meaning as described in Section 8.3;

"HOKURIKU UNDERPAYMENT" shall have the meaning as described in Section 8.3;

"HOKURIKU TENDER OFFER" shall have the meaning as described in Section 7.4;

"HSR ACT" shall have the meaning as described in Section 11.1.1;

"INDEMNIFIED CLAIM" shall have the meaning as described in Section 20.1;

"INDIVIDUAL CLAIM" shall have the meaning described in Section 15.2(a);

"PROVISIONAL HOKURIKU TENDER AMOUNT" shall have the meaning described in
Section 8.3;

"INSURANCE LITIGATION" shall have the meaning as described in Section 26.7(iii);

"INTELLECTUAL PROPERTY" shall have the meaning as described in Section 13.15.3;

"INTERCOMPANY MANUFACTURING AGREEMENTS" shall have the meaning described in
Section 13.2;

<PAGE>   58

                                     Page 58

"INTERCOMPANY TRADE ACCOUNTS" shall have the meaning described in Section 19.1'

"INTRACOMPANY TRADE ACCOUNTS" shall have the meaning described in Section 19.1'

"MATERIAL AGREEMENTS" shall have the meaning described in Section 13.21;

"MATERIAL AGREEMENT CONSENT" shall have the meaning described in Section 13.21;

"MERGER" shall have the meaning as described in Section 4.2;

"MERGER/DEMERGER AGREEMENTS" shall have the meaning described in Section 4.2;

"NON-HOKURIKU PURCHASE PRICE" shall have the meaning described in Section 8.3;

"PER SHARE TENDER PRICE" shall have the meaning described in Section 7.4;

"PURCHASER CONDITIONS" shall have the meaning as described in Section 11.1.2;

"PURCHASER GROUP" shall have the meaning described in Section 15.1;

"PURCHASER U.S. DEFINED BENEFIT PLAN" shall have the meaning as described in
Section 22.5.1;

"PURCHASER U.S. DEFINED CONTRIBUTION PLAN" shall have the meaning as described
in Section 22.6.;

"REAL PROPERTY" shall have the meaning described in Section 13.13;

"REPORT" shall have the meaning described in Section 13.20(a);

"REPORT PRINCIPLES" shall have the meaning described in Section 13.20(a);

"REPRESENTATIONS" shall have the meaning as described in the introductory
paragraph of Section 13;

"SECTION 26 CONDUCT" shall have the meaning as described in Section 26.7(ii);

"SECTION 26 LITIGATION" shall have the meaning as described in Section 26.7(i);

"SELLER'S AUDITORS" shall have the meaning as described in Section 10.1;

"SELLER COMPANY" shall have the meaning described in Section 19.1;

"SELLER U.S. DEFINED BENEFIT PLANS" shall have the meaning as described in
Section 22.5.1;

"SELLER U.S. QUALIFIED DEFINED BENEFIT PLAN" shall have the meaning as described
in Section 22.5.1;

"SELLER U.S. DEFINED CONTRIBUTION PLAN" shall have the meaning as described in
Section 22.6;

"SHARED SUBSTANCES" shall have the meaning as described in Section 5.3;

"U.S. FINANCIAL STATEMENTS" shall have the meaning described in Section 10.9;

<PAGE>   59

                                     Page 59

"U.S. PENSION TRANSFER AMOUNT" shall have the meaning described in
Section 22.5.2;

"U.S. SECURITIES LAWS" shall have the meaning described in Section 10.9.


<PAGE>   60

                 LIST OF EXHIBITS TO THE PURCHASE AGREEMENT

<TABLE>
<CAPTION>

EXHIBIT NUMBER             EXHIBIT DESCRIPTION

<S>                        <C>
Exhibit A                  Description of Generics Business
Exhibit 1.1                Description of BASF Pharmaceutical Corporation
Exhibit 1.2                Description of BASF Pharmaceutical Corporation
                           subsidiaries
Exhibit 2                  Description of Other Foreign Subsidiaries
Exhibit 4.2(b)             List of Transferred Patents
Exhibit 5.1                List of Nottingham site compounds and substances
Exhibit 5.2                List of Remaining Patents
Exhibit 7.4                Description of Hokuriku Tender Offer
Exhibit 8.1                Allocation of Aggregate Purchase Price
Exhibit 9.1(a)             Unaudited Proforma Balance Sheet
Exhibit 9.1(b)             Reference Net Asset Value account adjustments
Exhibit 10.1               Closing Net Asset Value Statement adjustment
                           principles
Exhibit 13.2(d)            List of third party rights in the Shares
Exhibit 13.5               List if conflicts with the Purchase Agreement
Exhibit 13.7.3             List of ongoing tax audits with respect to the
                           Companies
Exhibit 13.8               Tax rulings with respect to the Companies
Exhibit 13.10              List of Intercompany Agreements
Exhibit 13.11.2            List of certain Employee Benefit Plans
Exhibit 13.12(a)           List of certain proceedings
Exhibit 13.14(a)           List of certain patents and patent applications
Exhibit 13.14(b)           List of certain license contracts
Exhibit 13.16.1            List of alleged infringement by certain products
Exhibit 13.16.2            List of alleged infringement by products in
                           development
Exhibit 13.18.4            List of written notices alleging hazardous material
                           releases
Exhibit 13.19              Compliance with laws
Exhibit 13.20(a)           Report Principles
Exhibit 13.21              List of certain agreements
Exhibit 13.27(a)           List of certain Pharmaceutical Products and Active
                           Ingredients
Exhibit 13.27(b)           List of certain compounds
Exhibit 13.27(c)           List of Exclusive and Mutual Active Ingredients
Exhibit 13.27(d)           List of certain BASF Pharmaceutical Products
Exhibit 22.5.2             Actuarial assumptions
Exhibit 24.3(f)            List of certain employees
</TABLE>

These exhibits are omitted as permitted under Item 601(b)(2) of Regulation S-K.
BASF agrees to furnish supplementally a copy of any omitted exhibit to the
Purchase Agreement.