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					INFORMATION MEMORANDUM




               BAYER AKTIENGESELLSCHAFT
                     (incorporated in the Federal Republic of Germany)



            BAYER CAPITAL CORPORATION B.V.
                   (incorporated with limited liability in the Netherlands)



                        BAYER CORPORATION
               (a corporation organised under the laws of the State of Indiana,
                                  United States of America)



                                  BAYER LTD.
                       (incorporated with limited liability in Japan)



                                Programme for the
                           Issuance of Debt Instruments

    Application has been made to the Luxembourg Stock Exchange for debt instruments
(the ""Notes'') issued under the programme (the ""Programme'') described in this
Information Memorandum to be listed on the Luxembourg Stock Exchange during the
period of twelve months after the date hereof. However, Notes may also be issued under the
Programme which are listed on a stock exchange other than the Luxembourg Stock
Exchange or which are not listed on any stock exchange. The maximum aggregate
principal amount of Notes outstanding under the Programme will not exceed
Euro 8,000,000,000.


Arranger for the Programme                                               Co-Arranger

MORGAN STANLEY                                                   DEUTSCHE BANK
                                           Dealers
ABN AMRO                                             BANC OF AMERICA SECURITIES LIMITED
BAYERISCHE LANDESBANK                                            COMMERZBANK SECURITIES
CREDIT SUISSE FIRST BOSTON                                                    DEUTSCHE BANK
DRESDNER KLEINWORT WASSERSTEIN                             GOLDMAN SACHS INTERNATIONAL
HVB CORPORATES & MARKETS                                                          JP MORGAN
                                     MORGAN STANLEY



October 15, 2004
      Each of Bayer Aktiengesellschaft (together with its consolidated subsidiaries, the ‘‘Bayer Group’’ or
‘‘Bayer’’), Bayer Capital Corporation B.V., Bayer Corporation and Bayer Ltd. (each an ‘‘Issuer’’ and together,
the ‘‘Issuers’’) and Bayer Aktiengesellschaft in its capacity as Guarantor, as defined herein, (the ‘‘Guarantor’’)
jointly and severally accepts responsibility for the information contained in this document and confirms that to its
knowledge and belief the facts stated herein are accurate and that no material circumstances have been omitted.

      The Issuers have confirmed to the dealers set forth on the cover page (each a ‘‘Dealer’’ and together the
‘‘Dealers’’) that this Information Memorandum is accurate in all material respects and is not misleading; that any
opinions and intentions expressed herein are honestly held and based on reasonable assumptions; that there are no
other facts, the omission of which would make any statement, whether fact or opinion, in this Information
Memorandum misleading in any material respect; and that all reasonable enquiries have been made to ascertain
all facts and to verify the accuracy of all statements contained herein.

     No person has been authorized to give any information which is not contained in or not consistent with this
Information Memorandum or any other information supplied in connection with the Programme and, if given or
made, such information must not be relied upon as having been authorized by or on behalf of the Issuers or any of
the Dealers.

     This Information Memorandum should be read in conjunction with any amendment or supplement hereto
and with any other documents incorporated herein by reference and, in relation to any Series of Notes, together
with the relevant Pricing Supplement(s).

     This Information Memorandum is valid for one year following its date of issue and it and any amendment or
supplement hereto as well as any Pricing Supplement reflect the status as of their respective dates of issue. The
offering, sale or delivery of any Notes may not be taken as an implication that the information contained in such
documents is accurate and complete subsequent to their respective dates of issue or that there has been no adverse
change in the financial condition of the Issuers since such date or that any other information supplied in
connection with the Programme is accurate at any time subsequent to the date on which it is supplied or, if
different, the date indicated in the document containing the same.

     To the extent permitted by the laws of any relevant jurisdiction neither the Arrangers nor any Dealer accepts
any responsibility for the accuracy and completeness of the information contained in this Information
Memorandum or any amendment or supplement hereof, or any other document incorporated by reference nor for
the information contained in any Pricing Supplement.

    Neither this Information Memorandum nor any Pricing Supplement constitutes an offer or invitation by or
on behalf of the Issuers or the Dealers to any person to subscribe for or to purchase any Notes.

     The distribution of this Information Memorandum and any Pricing Supplement and the offering, sale and
delivery of Notes in certain jurisdictions may be restricted by law. Persons into whose possession this
Information Memorandum or any Pricing Supplement comes are required to inform themselves about and
observe any such restrictions. For a description of the restrictions applicable in the United States of America, the
United Kingdom, The Netherlands, Germany and Japan see ‘‘Selling Restrictions’’. In particular, the Notes have
not been and will not be registered under the United States Securities Act of 1933, as amended, and are subject to
tax law requirements of the United States of America; subject to certain exceptions, Notes may not be offered,
sold or delivered within the United States of America or to U.S. persons. This Information Memorandum may
only be communicated or caused to be communicated in circumstances in which section 21(1) of the Financial
Services and Markets Act 2000 (‘‘FSMA’’) does not apply.

     Neither this Information Memorandum nor any Pricing Supplement may be used for the purpose of
an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or
to any person to whom it is unlawful to make such an offer or solicitation.




                                                         2
                            DOCUMENTS INCORPORATED BY REFERENCE
   The following documents shall be deemed to be incorporated in, and to form part of, this Information
Memorandum:
     (1)   the most recently published (including, in the case of the Guarantor, both consolidated and
           unconsolidated) audited annual financial statements, of each of the Issuers and the Guarantor, and any
           interim financial statements (whether audited or unaudited) published subsequently to such annual
           financial statements, of the Guarantor and Bayer Corporation from time to time; and
     (2)   all amendments and supplements to this Information Memorandum prepared by each of the Issuers
           and the Guarantor from time to time,
save that any statement contained in this Information Memorandum or in any of the documents incorporated by
reference in, and forming part of, this Information Memorandum shall be deemed to be modified or superseded
for the purpose of this Information Memorandum to the extent that a statement contained in any document
subsequently incorporated by reference modifies or supersedes such statement.
     Each of the Issuers and the Guarantor has undertaken, in connection with the listing of the Notes on the
Luxembourg Stock Exchange, that if, while Notes of an Issuer are outstanding and listed on the Luxembourg
Stock Exchange, there shall occur any adverse change in the business or financial position of such Issuers or the
Guarantor or any change in the information set out under ‘‘Terms and Conditions of the Notes’’, that is material in
the context of issuance under the Programme which is not reflected in this Information Memorandum (or any of
the documents incorporated by reference in this Information Memorandum) such Issuer and/or the Guarantor, as
the case may be, will prepare or procure the preparation of an amendment or supplement to this Information
Memorandum or, as the case may be, publish a new Information Memorandum for use in connection with any
subsequent issue by such Issuer of Notes to be listed on the Luxembourg Stock Exchange. Each of the Issuers
will, at the specified offices of the Paying Agents, provide, free of charge, upon the oral or written request
therefor, a copy of this Information Memorandum (or any document incorporated by reference in this Information
Memorandum and, in particular, a copy of the most recently published audited annual financial statements of
each of the Issuers and the Guarantor, and of any interim financial statements of the Guarantor and Bayer
Corporation). Written or oral requests for such documents should be directed to the specified office of any Paying
Agent or the specified office of the Listing Agent in Luxembourg.




                                                        3
                                       TABLE OF CONTENTS

                                                                                                    Page

Summary of the Programme **************************************************************               5
Issue Procedures ************************************************************************            10
Terms and Conditions of the Notes — English Language Version********************************         12
Terms and Conditions of the Notes — German Language Version *******************************          37
Guarantee and Negative Pledge — English Language Version ***********************************         65
Guarantee and Negative Pledge — German Language Version **********************************           69
Form of Pricing Supplement **************************************************************            73
Use of Proceeds ************************************************************************             85
Bayer Aktiengesellschaft *****************************************************************           86
   Capitalisation of Bayer Aktiengesellschaft/Bayer Group **************************************     86
   General Information on Bayer Aktiengesellschaft *******************************************       86
   Scope of Operating Activities of Bayer Aktiengesellschaft************************************     88
   Recent Developments ******************************************************************            89
   Divestments, Joint Ventures and Acquisitions **********************************************       91
   Business Segments ********************************************************************            92
   Statement of Income ******************************************************************            99
   Dividend ****************************************************************************            100
   Cash Flow Statement ******************************************************************           100
   Balance Sheet ************************************************************************           101
   Risk Management*********************************************************************             102
   Legal Proceedings ********************************************************************           103
   Outlook *****************************************************************************            112
   Bayer Group Financial Statements *******************************************************         113
Bayer Capital Corporation B.V. ***********************************************************          116
   Capitalisation of Bayer Capital Corporation B.V. *******************************************     116
   General Information on Bayer Capital Corporation B.V. *************************************      116
   Financial Statements*******************************************************************          118
Bayer Corporation **********************************************************************            120
   Capitalisation of Bayer Corporation ******************************************************       120
   General Information on Bayer Corporation ************************************************        120
   Scope of Operating Activities of Bayer Corporation *****************************************     121
   Recent Developments ******************************************************************           121
   Businesses***************************************************************************            123
   Outlook *****************************************************************************            124
   Financial Statements*******************************************************************          125
Bayer Ltd. ****************************************************************************             129
   Capitalisation of Bayer Ltd. ************************************************************        129
   General Information on Bayer Ltd. ******************************************************         129
   Information on the Bayer Group Japan ***************************************************         130
   Scope of Operating Activities of Bayer in Japan ********************************************     131
   Recent Developments ******************************************************************           131
   Information on Bayer Ltd. Holding by Company and its Respective business groups **************   132
   Financial Statements*******************************************************************          135
   Risk Management*********************************************************************             137
   Outlook *****************************************************************************            137
Taxation ******************************************************************************             138
Selling Restrictions**********************************************************************          145
General Information *********************************************************************           150
Registered Offices of the Issuers ***********************************************************        153
Names and Addresses *******************************************************************             154




                                                  4
                                   SUMMARY OF THE PROGRAMME

     The following summary does not purport to be complete and is taken from and qualified in its entirety by the
remainder of this Information Memorandum and, in relation to the terms and conditions of any particular Tranche
of Notes, the applicable Pricing Supplement. Expressions defined in ‘‘Terms and Conditions of the Notes’’ below
shall have the same meaning in this Summary unless specified otherwise.

Issuers:                             Bayer Aktiengesellschaft (‘‘Bayer AG’’).

                                     Bayer Capital Corporation B.V. (‘‘Bayer Capital Corp’’).

                                     Bayer Corporation (‘‘Bayer Corporation’’).

                                     Bayer Ltd. (‘‘Bayer Japan’’).

Guarantor:                           Bayer AG (in respect of Notes issued by Bayer Capital Corp, Bayer
                                     Corporation and Bayer Japan) (in such capacity the ‘‘Guarantor’’).

Arranger:                            Morgan Stanley & Co. International Limited.

Co-Arranger:                         Deutsche Bank Aktiengesellschaft.

Dealers:                             ABN AMRO Bank N.V., Banc of America Securities Limited, Bayerische
                                     Hypo- und Vereinsbank AG, Bayerische Landesbank, Commerzbank
                                     Aktiengesellschaft, Credit Suisse First Boston (Europe) Limited, Deutsche
                                     Bank Aktiengesellschaft, Dresdner Bank Aktiengesellschaft, Goldman
                                     Sachs International, J.P. Morgan Securities Ltd., Morgan Stanley & Co.
                                     International Limited.

Fiscal Agent:                        Deutsche Bank AG London.

Paying Agent:                        Deutsche Bank AG London, Deutsche Bank Luxembourg S.A. and the
                                     other institutions, all as indicated in the applicable Pricing Supplement.

Luxembourg Listing Agent:            Kredietbank S.A. Luxembourgeoise, Luxembourg.

Regulatory Matters:                  Any issue of Notes denominated in a currency in respect of which
                                     particular laws, regulations, guidelines, restrictions and reporting
                                     requirements apply will only be issued in circumstances which comply
                                     with such laws, regulations, guidelines, restrictions and reporting
                                     requirements from time to time. Without prejudice to the generality of the
                                     foregoing:

                                     Each issue of Notes by the Issuer in respect of which the issue proceeds are
                                     accepted in the United Kingdom (including Notes denominated in Sterling)
                                     shall be made in accordance with all applicable laws, regulations and
                                     guidelines (as amended from time to time) of United Kingdom authorities
                                     and relevant in the context of the issue of Notes, and the Issuer shall submit
                                     (or procure the submission on its behalf of) such reports or information as
                                     may from time to time be required for compliance with such laws,
                                     regulations and guidelines. The Issuer shall ensure that such Notes have the
                                     maturities and denominations as required by such laws, regulations and
                                     guidelines.

                                     The Issuer shall ensure that Notes denominated or payable in Yen (‘‘Yen
                                     Notes’’) will only be issued in compliance with applicable Japanese laws,
                                     regulations, guidelines and policies. The Issuer or its designated agent shall
                                     submit such reports or information as may be required from time to time
                                     by applicable laws, regulations and guidelines promulgated by Japanese
                                     authorities in the case of Yen Notes. Each Dealer agrees to provide any
                                     necessary information relating to Yen Notes to the Issuer (which shall not
                                     include the names of clients) so that the Issuer may make any required
                                     reports to the competent authority of Japan for itself or through its
                                     designated agent.

                                                       5
Programme Amount:         Up to euro 8,000,000,000 (or its equivalent in other currencies) outstanding
                          at any time. The Issuer may increase the amount of the Programme in
                          accordance with the terms of the Dealership Agreement from time to time.
Distribution:             Notes may be distributed by way of public or private placements and, in
                          each case, on a syndicated or non-syndicated basis. The method of
                          distribution of each Tranche will be stated in the relevant Pricing
                          Supplement.
Method of Issue:          Notes will be issued on a continuous basis in Tranches (each a
                          ‘‘Tranche’’), each Tranche consisting of Notes which are identical in all
                          respects. One or more Tranches, which are expressed to be consolidated
                          and forming a single series and identical in all respects, but having
                          different issue dates, interest commencement dates, issue prices and dates
                          for first interest payments may form a Series (‘‘Series’’) of Notes. Further
                          Notes may be issued as part of existing Series. The specific terms of each
                          Tranche (which will be supplemented, where necessary, with supplemental
                          terms and conditions) will be set forth in the applicable Pricing
                          Supplement.
Issue Price:              Notes may be issued at an issue price which is at par or at a discount to, or
                          premium over, par, as stated in the relevant Pricing Supplement. Partly-
                          paid Notes may be issued, the Issue Price of which will be payable in two
                          or more instalments.
Specified Currencies:      Subject to any applicable legal or regulatory restrictions, and requirements
                          of relevant central banks, Notes may be issued in euro, any other currency
                          of any member state of the European Union, Australian Dollars, Canadian
                          Dollars, Israeli Shekel, Japanese Yen, New Zealand Dollars, Norwegian
                          Kroner, South African Rand, Swiss Francs, U.S. Dollars or any other
                          currency agreed by the Issuer and the relevant Dealer(s).
Denominations of Notes:   Notes will be issued in such denominations as may be agreed between the
                          Issuer and the relevant Dealer and as indicated in the applicable Pricing
                          Supplement save that the minimum denomination of the Notes will be such
                          as may be allowed or required from time to time by the relevant central
                          bank (or equivalent body) or any laws or regulations applicable to the
                          relevant Specified Currency. In the case of Notes issued by Bayer
                          Corporation with a maturity (at issue) of 183 days or less, the minimum
                          denomination of such Notes must be U.S. $500,000.
                          The following legend will appear on all Global Notes and Definitive Notes,
                          coupons, talons and receipts in bearer form with a maturity of more than
                          183 days: ‘‘Any United States person (as defined in the Internal Revenue
                          Code of the United States) who holds this obligation will be subject to
                          limitations under the United States income tax laws, including the
                          limitations provided in Sections 165 (j) and 1287 (a) of the Internal
                          Revenue Code.’’
                          The following legend will appear on all Global Notes and Definitive Notes,
                          coupons, talons and receipts in bearer form with a maturity at issuance of
                          183 days or less: ‘‘By accepting this obligation, the holder represents and
                          warrants that it is not a United States person (other than an exempt
                          recipient described in Section 6049 (b)(4) of the Internal Revenue Code of
                          the United States and the regulations thereunder) and that it is not acting
                          for or on behalf of a United States person (other than an exempt recipient
                          described in Section 6049 (b)(4) of the Internal Revenue Code and the
                          regulations thereunder).
Maturities:               Such maturities as may be agreed between the Issuer and the relevant
                          Dealer and as indicated in the applicable Pricing Supplement, subject to
                          such minimum or maximum maturities as may be allowed or required from
                          time to time by the relevant central bank (or equivalent body) or any laws

                                            6
                        or regulations applicable to the relevant Issuer or the relevant Specified
                        Currency.
                        Unless otherwise permitted by then current laws and regulations, Notes in
                        respect of which the issue proceeds are to be accepted by the Issuer in the
                        United Kingdom will have a minimum denomination of £100,000 (or its
                        equivalent in other currencies), unless such Notes may not be redeemed
                        until on or after the first anniversary of their date of issue.
Form of Notes:          Notes may be issued in bearer form only.
                        Notes to which U.S. Treasury Regulation § 1.163-5(c)(2)(i)(C) (the
                        ‘‘TEFRA C Rules’’) applies (‘‘TEFRA C Notes’’) will be represented
                        either initially by a temporary global note in bearer form, without interest
                        coupons, in an initial principal amount equal to the aggregate principal
                        amount of such Notes (‘‘Temporary Global Note’’) or permanently by a
                        permanent global Note in bearer form, without interest coupons, in a
                        principal amount equal to the aggregate principal amount of such Notes
                        (‘‘Permanent Global Note’’). Any Temporary Global Note will be
                        exchanged for either definitive Notes in bearer form (‘‘Definitive Notes’’)
                        or in part for Definitive Notes and in the other part for one or more
                        collective Notes in bearer form (‘‘Collective Notes’’).
                        Notes to which U.S. Treasury Regulation § 1.163-5(c)(2)(i)(D) (the
                        ‘‘TEFRA D Rules’’) applies (‘‘TEFRA D Notes’’) will always be
                        represented initially by a Temporary Global Note which will be exchanged
                        either for Notes represented by one or more Permanent Global Note(s) or
                        Definitive Notes or in part for Definitive Notes and in the other part for one
                        or more Collective Notes, in each case not earlier than 40 days and not
                        later than 180 days after the completion of distribution of the Notes
                        comprising the relevant Tranche upon certification of non U.S.-beneficial
                        ownership in the form available from time to time at the specified office of
                        the Fiscal Agent; provided, however, that after the date that is 40 days after
                        the Temporary Global Note is issued, upon 90 days prior written notice and
                        in compliance with the procedures described under ‘‘Terms and
                        Conditions of the Notes’’ (§ 1 (c)) Definitive Notes with, where
                        applicable, receipts, interest coupons and talons attached will be issued and
                        delivered in full exchange for a Temporary Global Note, Permanent Global
                        Note or a Collective Note to the Clearing System for the accounts of the
                        holders of interest in such Temporary Global Note, Permanent Global Note
                        or such Collective Note. All Notes issued by Bayer Corporation shall
                        comply with the TEFRA D Rules.
                        Notes to which neither the TEFRA C Rules nor the TEFRA D Rules apply
                        will be represented either initially by a Temporary Global Note or
                        permanently by a Permanent Global Note. Any Temporary Global Note
                        will be exchanged for either Definitive Notes or in part for Definitive Notes
                        and in the other part for one or more Collective Notes.
                        Permanent Global Notes other than TEFRA D Notes will not be exchanged
                        for Definitive Notes or Collective Notes. Notes issued by Bayer
                        Corporation will be represented initially by a Temporary Global Note and
                        will be able to be exchanged in full for Definitive Notes. Collective Notes
                        will not be issued in exchange for any Notes issued by Bayer Corporation.
Description of Notes:   Notes may be either interest bearing at fixed or variable rates or non-
                        interest bearing, with principal repayable at a fixed amount or by reference
                        to a formula as may be agreed between the Issuer and the relevant
                        Dealer(s) as specified in the applicable Pricing Supplement.
Fixed Rate Notes:       Notes for which the interest rate is fixed will be payable on such basis as
                        may be agreed between the Issuer and the relevant Dealer(s), as specified
                        in the applicable Pricing Supplement.

                                          7
Floating Rate Notes:              Notes for which the interest rate is variable will bear interest on such basis
                                  as may be agreed between the Issuer and the relevant Dealer(s), as
                                  indicated in the applicable Pricing Supplement. The Margin, if any,
                                  relating to such floating rate will be agreed between the Issuer and the
                                  relevant Dealer(s) for each Series of Floating Rate Notes (‘‘FRN’’).
                                  Interest periods for FRNs will be one, two, three, six or twelve month(s) or
                                  such other period(s) as may be agreed between the Issuer and the relevant
                                  Dealer(s), as indicated in the applicable Pricing Supplement.
Index Linked Notes:               Payments of principal in respect of Index Linked Redemption Amount
                                  Notes or of interest in respect of Index Linked Interest Notes (together
                                  ‘‘Index Linked Notes’’) will be calculated by reference to such index
                                  and/or formula as the Issuer and the relevant Dealer(s) may agree as
                                  indicated in the applicable Pricing Supplement. Each issue of Index Linked
                                  Notes will be made in compliance with all applicable legal and/or
                                  regulatory requirements.
Other provisions in relation to
Floating Rate Notes and Index
Linked Interest Notes:            FRNs and Index Linked Interest Notes may also have a maximum interest
                                  rate, a minimum interest rate or both.
                                  FRNs and Index Linked Interest Notes in respect of each Interest Period, as
                                  selected prior to issue by the Issuer and the relevant Dealer(s), will be
                                  payable on such Interest Payment Dates specified in, or determined
                                  pursuant to, the applicable Pricing Supplement and will be calculated as
                                  indicated in the applicable Pricing Supplement.
Dual Currency Notes:              Payments (whether in respect of principal or interest and whether at
                                  maturity or otherwise) in respect of Dual Currency Notes will be made in
                                  such currencies, and based on such rates of exchange, as the Issuer and the
                                  relevant Dealer(s) may agree, as indicated in the applicable Pricing
                                  Supplement.
Zero Coupon Notes:                Zero Coupon Notes will be offered and sold either at a discount to their
                                  principal amount or on an accumulated basis, in each case without periodic
                                  payments of interest.
Other Notes:                      Notes may be of any other type of security which the Issuer and the
                                  relevant Dealer(s) may agree. The terms governing any such Notes will be
                                  specified in the applicable Pricing Supplement.
Redemption:                       The applicable Pricing Supplement will indicate either that the Notes
                                  cannot be redeemed prior to their stated maturity (except for taxation
                                  reasons or upon the occurrence of an Event of Default) or that such Notes
                                  will be redeemable at the option of the Issuer and/or the Holders upon
                                  giving notice within the notice period (if any) indicated in the applicable
                                  Pricing Supplement to the Holders or the Issuer, as the case may be, on a
                                  date or dates specified prior to such stated maturity and at a price or prices
                                  and on such terms as indicated in the applicable Pricing Supplement. Early
                                  redemption for taxation reasons will be permitted as provided in § 5 of the
                                  Terms and Conditions of the Notes.
                                  Unless otherwise permitted by then current laws and regulations, Notes
                                  (including Notes denominated in Sterling) in respect of which the issue
                                  proceeds are to be accepted by the Issuer in the United Kingdom will have
                                  a minimum redemption amount of £100,000 (or its equivalent in other
                                  currencies), unless such Notes may not be redeemed until on or after the
                                  first anniversary of their date of issue.
Taxation:                         Principal and interest shall be payable without deduction or withholding
                                  for or on account of any present or future taxes, duties or governmental
                                  charges of any nature whatsoever imposed, levied or collected by or on

                                                    8
                            behalf of the country where the relevant Issuer is resident and, in the case
                            of payments under the Guarantee, the Federal Republic of Germany, or by
                            or on behalf of any political subdivision or authority therein having power
                            to tax (together ‘‘Withholding Taxes’’), unless such deduction or
                            withholding is required by law. In such event, the Issuer will, subject to the
                            exceptions set out in the Terms and Conditions, pay such additional
                            amounts as shall be necessary in order that the net amounts received by the
                            Holders of the Notes after such withholding or deduction shall equal the
                            respective amounts of principal and interest which would otherwise have
                            been receivable in respect of the Notes in the absence of such withholding
                            or deduction.
Status of the Notes:        The Notes will constitute unsecured and unsubordinated obligations of the
                            Issuer ranking pari passu among themselves and pari passu with all other
                            unsecured and unsubordinated obligations of the Issuer.
Guarantee:                  Notes issued by Bayer Capital Corp, Bayer Corporation and Bayer Japan
                            will have the benefit of a Guarantee (the ‘‘Guarantee’’) given by
                            Bayer AG. The Guarantee constitutes an unsecured and unsubordinated
                            obligation of the Guarantor ranking pari passu with all other unsecured
                            and unsubordinated obligations of the Guarantor.
Negative Pledge:            The Notes will contain a negative pledge provision as set out in the Terms
                            and Conditions of the Notes.
Events of Default:          The Notes will provide for events of default entitling Holders to demand
                            immediate redemption of the Notes. See § 9 of ‘‘Terms and Conditions of
                            the Notes — Events of Default’’.
Listing:                    Application has been made to list Notes to be issued under the Programme
                            on the Luxembourg Stock Exchange. The Programme provides that Notes
                            may be listed on other or further stock exchanges including, but not limited
                            to, the Frankfurt Stock Exchange, as may be agreed between the Issuer and
                            the relevant Dealer(s) in relation to each issue. Notes may further be issued
                            under the Programme which will not be listed on any stock exchange.
Selling Restrictions:       There will be specific restrictions on the offer and sale of Notes and the
                            distribution of offering materials in Germany, the Netherlands, the United
                            States of America, the United Kingdom and Japan, and such other
                            restrictions as may be required under applicable law in connection with the
                            offering and sale of a particular Tranche of Notes. Each Tranche of Notes
                            denominated in a currency in respect of which particular laws, guidelines,
                            regulations, restrictions or reporting requirements apply will only be issued
                            in circumstances which comply with such laws, guidelines, regulations,
                            restrictions or reporting requirements from time to time. See ‘‘Selling
                            Restrictions’’.
Process Agent:              Each of Bayer Capital Corp, Bayer Corporation and Bayer Japan has
                            appointed Bayer AG to act as its agent for service of process in any
                            proceedings arising out of the Notes brought, or to be brought, in any court
                            in the Federal Republic of Germany.
Governing Law:              German law.
Jurisdiction:               Non-exclusive place of jurisdiction for any legal proceedings arising under
                            the Notes is Frankfurt am Main.
Clearance and Settlement:   Notes will be accepted for clearing through one or more Clearing Systems
                            as specified in the applicable Pricing Supplement. These systems will
                            include those operated by Clearstream Banking AG, Frankfurt am Main,
                                                                 ee
                            (‘‘CBF’’), Clearstream Banking, soci´ t´ anonyme, Luxembourg, (‘‘CBL’’)
                            and Euroclear Bank S.A./N.V., as operator of the Euroclear System
                            (‘‘Euroclear’’).

                                              9
                                             ISSUE PROCEDURES
General
     The relevant Issuer and the relevant Dealer(s) will agree on the terms and conditions applicable to each
particular Tranche of Notes (the ‘‘Conditions’’). The Conditions will be constituted by the Terms and Conditions
of the Notes set forth below (the ‘‘Terms and Conditions’’) as completed, modified, supplemented or replaced
by the provisions of the Pricing Supplement (the ‘‘Pricing Supplement’’). The Pricing Supplement relating to
each Tranche of Notes will specify:
     — whether the Conditions are to be Long-Form Conditions or Integrated Conditions (each as described
       below); and
     — whether the Conditions will be in the German language or the English language or both (and, if both,
       whether the German language version or the English language version is controlling).
          As to whether Long-Form Conditions or Integrated Conditions will apply, the Issuers anticipate that:
     — Long-Form Conditions will generally be used for Notes sold on a non-syndicated basis and which are
       not publicly offered.
     — Integrated Conditions will generally be used for Notes sold and distributed on a syndicated basis.
       Integrated Conditions will be required where the Notes are to be publicly offered, in whole or in part, or
       are to be distributed, in whole or in part, to non-professional investors.
     As to the controlling language of the respective Conditions, the Issuers anticipate that, in general, subject to
any stock exchange or legal requirements applicable from time to time, and unless otherwise agreed between the
relevant Issuer and the relevant Dealer:
     — in the case of Notes sold and distributed on a syndicated basis, German will be the controlling language.
     — in the case of Notes publicly offered, in whole or in part, in the Federal Republic of Germany
       (‘‘Germany’’), or distributed, in whole or in part, to non-professional investors in Germany, German
       will be the controlling language. If, in the event of such public offer or distribution to non-professional
       investors, however, English is chosen as the controlling language, a German language translation of the
       Conditions will be available from the principal offices of the Fiscal Agent and Bayer AG, as specified on
       the back cover of this Information Memorandum.

Long-Form Conditions
     If the Pricing Supplement specifies that Long-Form Conditions are to apply to the Notes, the provisions of
the applicable Pricing Supplement and the Terms and Conditions, taken together, shall constitute the Conditions.
Such Conditions will be constituted as follows:
     — the blanks in the provisions of the Terms and Conditions which are applicable to the Notes will be
       deemed to be completed by the information contained in the Pricing Supplement as if such information
       were inserted in the blanks of such provisions;
     — the Terms and Conditions will be modified, supplemented or replaced by the text of any provisions of the
       Pricing Supplement modifying, supplementing or replacing, in whole or in part, the provisions of the
       Terms and Conditions;
     — alternative or optional provisions of the Terms and Conditions as to which the corresponding provisions
       of the Pricing Supplement are not completed or are deleted will be deemed to be deleted from the
       Conditions; and
     — all instructions and explanatory notes set out in square brackets in the Terms and Conditions and any
       footnotes and explanatory text in the Pricing Supplement will be deemed to be deleted from the
       Conditions.
     Where Long-Form Conditions apply, each global note representing the Notes of the relevant Series will have
the Pricing Supplement and the Terms and Conditions attached. If Definitive Notes are delivered in respect of the
Notes of such Series, they will have endorsed thereon either (i) the Pricing Supplement and the Terms and
Conditions in full, (ii) the Pricing Supplement and the Terms and Conditions in a form simplified by the deletion
of non-applicable provisions, or (iii) Integrated Conditions, as the relevant Issuer may determine.

                                                         10
Integrated Conditions
     If the Pricing Supplement specifies that Integrated Conditions are to apply to the Notes, the Conditions in
respect of such Notes will be constituted as follows:
    — all of the blanks in all applicable provisions of the Terms and Conditions will be completed according to
      the information contained in the Pricing Supplement and all non-applicable provisions of the Terms and
      Conditions (including the instructions and explanatory notes set out in square brackets) will be deleted;
      and/or
    — the Terms and Conditions will be otherwise modified, supplemented or replaced, in whole or in part,
      according to the information set forth in the Pricing Supplement.
     Where Integrated Conditions apply, the Integrated Conditions alone will constitute the Conditions. The
Integrated Conditions will be attached to each global note representing Notes of the relevant Series and will be
endorsed on any Definitive Notes exchanged for any such global note.




                                                      11
                              TERMS AND CONDITIONS OF THE NOTES
                                     English Language Version
    The Terms and Conditions of the Notes (the ‘‘Terms and Conditions’’) are set forth below in two Parts:
     PART I sets out the basic terms (the ‘‘Basic Terms’’) comprising the Terms and Conditions that apply to
Series of Notes which are represented by global Notes.
    PART II (the ‘‘Supplement’’) sets forth those provisions that apply in the case of collective Notes and/or
definitive Notes which are supplemental to the provisions of the Basic Terms set out in PART I.
    The Basic Terms and the Supplement thereto together constitute the Terms and Conditions.
     This Series of Notes is issued pursuant to the Amended and Restated Fiscal Agency Agreement dated
October 15, 2004 (the ‘‘Agency Agreement’’) between Bayer Aktiengesellschaft (‘‘Bayer AG’’), Bayer Capital
Corporation B.V. (‘‘Bayer Capital Corp’’), Bayer Corporation (‘‘Bayer Corporation’’), Bayer Ltd. (‘‘Bayer
Japan’’) (each an ‘‘Issuer’’ and together the ‘‘Issuers’’) and Deutsche Bank AG London as fiscal agent (the
‘‘Fiscal Agent’’, which expression shall include any successor fiscal agent thereunder) and the other parties
named therein. Copies of the Agency Agreement may be obtained free of charge at the specified office of the
Fiscal Agent, at the specified office of any Paying Agent and at the head office of each of the Issuers.
     [In the case of Long-Form Conditions — if the Terms and Conditions and the Pricing Supplement are
to be attached to the Notes — insert:
     The provisions of these Terms and Conditions apply to the Notes as completed, modified, supplemented or
replaced, in whole or in part, by the terms of the pricing supplement which is attached hereto (the ‘‘Pricing
Supplement’’). The blanks in the provisions of these Terms and Conditions which are applicable to the Notes
shall be deemed to be completed by the information contained in the Pricing Supplement as if such information
were inserted in the blanks of such provisions; any provisions of the Pricing Supplement modifying,
supplementing or replacing, in whole or in part, the provisions of these Terms and Conditions shall be deemed to
so modify, supplement or replace the provisions of these Terms and Conditions; alternative or optional provisions
of these Terms and Conditions as to which the corresponding provisions are not completed or are deleted in the
Pricing Supplement shall be deemed to be deleted from these Terms and Conditions; and all provisions of these
Terms and Conditions which are inapplicable to the Notes (including instructions, explanatory notes and text set
out in square brackets) shall be deemed to be deleted from these Terms and Conditions, as required to give effect
to the terms of the Pricing Supplement. Copies of the Pricing Supplement may be obtained free of charge at the
specified office of the Fiscal Agent and at the specified office of any Paying Agent provided that, in the case of
Notes which are not listed on any stock exchange, copies of the relevant Pricing Supplement will only be
available to Holders of such Notes.]




                                                       12
                         PART I — TERMS AND CONDITIONS OF NOTES
                                           §1
                    CURRENCY, DENOMINATION, FORM, CERTAIN DEFINITIONS
(1) Currency; Denomination. This Series of Notes (the ‘‘Notes’’) of [Bayer AG] [Bayer Capital Corporation
    B.V.] [Bayer Corporation] [Bayer Ltd.] (the ‘‘Issuer’’) is being issued in [insert Specified Currency] (the
    ‘‘Specified Currency’’) in the aggregate principal amount of [insert aggregate principal amount] (in
    words: [insert aggregate principal amount in words]) in denominations of [insert Specified
    Denominations] (the ‘‘Specified Denominations’’).
(2) Form.     The Notes are being issued in bearer form.
    [In the case of Notes which are represented by a Permanent Global Note insert:
(3) Permanent Global Note. The Notes are represented by a permanent global note (the ‘‘Permanent Global
    Note’’) without coupons. The Permanent Global Note shall be signed manually by [in the case of Notes
    issued by Bayer AG or Bayer Corporation insert: two authorized signatories] [in the case of Notes
    issued by Bayer Capital Corp or Bayer Japan insert: one authorized signatory] of the Issuer and shall be
    authenticated by or on behalf of the Fiscal Agent. Definitive Notes and interest coupons will not be issued.]
   [In the case of Notes issued by Bayer Corporation or Notes which are initially represented by a
Temporary Global Note insert:
(3) Temporary Global Note — Exchange.
    (a)     The Notes are initially represented by a temporary global note (the ‘‘Temporary Global Note’’)
            without coupons. The Temporary Global Note will be exchangeable for Notes in Specified
            Denominations represented by a permanent global note (the ‘‘Permanent Global Note’’) without
            coupons. The Temporary Global Note and the Permanent Global Note shall each be signed manually
            by [in the case of Notes issued by Bayer AG or Bayer Corporation insert: two authorized
            signatories] [in the case of Notes issued by Bayer Capital Corp or Bayer Japan insert: one
            authorized signatory] of the Issuer and shall each be authenticated by or on behalf of the Fiscal Agent.
            [in the case of Notes issued by other than Bayer Corporation insert: Definitive Notes and interest
            coupons will not be issued.]
    (b)     The Temporary Global Note shall be exchanged for the Permanent Global Note on a date (the
            ‘‘Exchange Date’’) not later than 180 days after the date of issue of the Temporary Global Note. The
            Exchange Date for such exchange will not be earlier than 40 days after the date of issue of the
            Temporary Global Note. Such exchange shall only be made upon delivery of certifications to the effect
            that the beneficial owner or owners of the Notes represented by the Temporary Global Note is not a
            U.S. person (other than certain financial institutions or certain persons holding Notes through such
            financial institutions). Payment of interest on Notes represented by a Temporary Global Note will be
            made only after delivery of such certifications. A separate certification shall be required in respect of
            each such payment of interest. Any such certification received on or after the 40th day after the date of
            issue of the Temporary Global Note will be treated as a request to exchange such Temporary Global
            Note pursuant to subparagraph (b) of this § 1(3). Any securities delivered in exchange for the
            Temporary Global Note shall be delivered only outside of the United States (as defined in § 4 (3)).]
    [In the case of Notes issued by Bayer Corporation insert:
    (c)     After the date that is 40 days after the Temporary Global Note is issued, upon 90 days written notice
            (which period shall not be deemed to expire until at least 30 days after the Exchange Date) from the
            Clearing System, acting on instructions from any Holder, Definitive Notes with, where applicable,
            receipts, interest coupons and talons attached, will be issued and delivered in full exchange for the
            Temporary Global Note or the Permanent Global Note. Any Definitive Note delivered in exchange for
            a Temporary Global Note or a Permanent Global Note shall be delivered only outside of the United
            States (as defined in § 4 (3)).]
    [in the case of Notes issued by other than Bayer Corporation insert:
(4) Clearing System. Each Permanent Global Note will be kept in custody by or on behalf of the Clearing
    System until all obligations of the Issuer under the Notes have been satisfied. ‘‘Clearing System’’ means [if
    more than one Clearing System insert: each of] the following: [Clearstream Banking AG, Frankfurt am
                                                      ee
    Main (‘‘CBF’’)] [Clearstream Banking, soci´ t´ anonyme, Luxembourg, (‘‘CBL’’)] [Euroclear Bank
    S.A./N.V., as operator of the Euroclear System (‘‘Euroclear’’)] [,] [and] [specify other Clearing System].]

                                                         13
(5) Holder of Notes. ‘‘Holder’’ means any holder of a proportionate co-ownership or other beneficial interest
    or right in the Notes.


                                          §2
STATUS; NEGATIVE PLEDGE [in the case of Notes issued by Bayer Corporation, Bayer Capital Corp
                       or Bayer Japan insert: ; GUARANTEE]
(1) Status. The obligations under the Notes constitute unsecured and unsubordinated obligations of the Issuer
    ranking pari passu among themselves and pari passu with all other present or future unsecured and
    unsubordinated obligations of the Issuer except for any obligations preferred by law.
(2) Negative Pledge.
     [in the case of Notes issued by Bayer AG, Bayer Capital Corp or Bayer Japan insert: The Issuer
     undertakes, as long as Notes are outstanding but only up to the time all amounts of principal and interest
     have been provided to the Fiscal Agent, not to provide after the Issue Date any security interest (‘‘Lien’’)
     upon its domestic assets for other Security Issues (as defined below) without at the same time letting the
     Holders share pari passu in such Lien; provided, however, that this Undertaking shall not be applicable in
     the event the Issuer shall create, assume or suffer to exist Liens of the following character:
     (a)   any Lien existing on property at the time of the acquisition thereof by the Issuer;
     (b)   any Lien to secure any debt incurred prior to, at the time of, or within 12 months after the acquisition
           of property by the Issuer for the purpose of financing all or any part of the purchase price thereof and
           any Lien to the extent that it secures debt which is in excess of such purchase price and for the
           payment of which recourse may be had only against such property;
     (c)   any Lien to secure any debt incurred prior to, at the time of, or within 12 months after the completion
           of the construction, alteration, repair or improvement of property of the Issuer for the purpose of
           financing all or any part of the cost thereof and any Lien to the extent that it secures debt which is in
           excess of such cost and for the payment of which recourse may be had only against such property;
     (d)   any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole
           or in part of any Lien referred to in clauses (a) through (c) above, so long as the principal amount of
           debt so secured does not exceed the principal amount secured at the time of extension, renewal or
           replacement (except that, where an additional principal amount of debt is incurred to provide funds for
           the completion of a specific project, the additional principal amount and any related financial costs,
           may be secured by the Lien as well) and the Lien is limited to the same property subject to the Lien so
           extended, renewed or replaced (plus improvements on the property);
     (e)   any Lien arising by operation of law;
     (f)   any Lien arising from or related to a disposal or lease-out of assets to any person whose core business
           is the leasing business (Leasinggesellschaften) not to exceed in the aggregate Euro one billion per year
           or the equivalent in other currencies (as from the Issue Date); and
     (g)   any Lien securing indebtedness the amount of which (when aggregated with the amount of any other
           indebtedness which has the benefit of a Lien not allowed under the preceding sub-paragraphs) does
           not exceed Euro 250,000,000 or its equivalent in other currencies at any time.
     In respect of asset-backed securitizations originated by the Issuer, the expressions ‘‘assets’’ and ‘‘Security
Issue’’ as used in the first sentence of this subparagraph (2) do not include assets and Security Issues of the Issuer
for as long as the assets backing such securitizations do in aggregate not exceed Euro 2,000,000,000.
      ‘‘Security Issue’’ shall mean any obligation for the payment of borrowed money represented by bonds,
notes, debentures or any similar securities [in the case of Notes issued by Bayer Japan insert: which (A) are by
their terms payable, or may be required to be paid in, or by reference to, any currency other than Japanese Yen
and (B) more than 50 per cent of the aggregate principal amount whereof is initially distributed outside Japan by
or with the authorisation of the Issuer and the Guarantor] which are quoted, listed or traded on any stock
exchange or over-the-counter securities market or which are otherwise publicly traded or intended to be publicly
traded, having an original maturity of more than one year.]
     [in the case of Notes issued by Bayer Corporation insert: The Issuer undertakes, as long as Notes are
outstanding but only up to the time all amounts of principal and interest have been provided to the Fiscal Agent,
not to provide after the Issue Date any security interest (‘‘Lien’’) upon its domestic assets for other Security

                                                         14
Issues (as defined below), without at the same time letting the Holders share pari passu in such Lien for so long
as any such other Security Issue shall be so secured; provided, however, that this undertaking shall not be
applicable in the event the Issuer shall create, assume or suffer to exist Liens of the following character:
     (a)   any Lien existing on property at the time of the acquisition thereof by the Issuer, or any Lien existing
           on property owned or leased by a corporation at the time it became a subsidiary of the Issuer;
     (b)   any Lien to secure debt incurred prior to, at the time of, or within 12 months after the acquisition of
           property by the Issuer for the purpose of financing all or any part of the purchase price thereof and any
           Lien to the extent that it secures debt which is in excess of such purchase price and for the payment of
           which recourse may be had only against such property;
     (c)   any Lien to secure any debt incurred prior to, at the time of, or within 12 months after the completion
           of the construction, alteration, repair or improvement of property of the Issuer for the purpose of
           financing all or any part of the cost thereof and any Lien to the extent that it secures debt which is in
           excess of such cost and for the payment of which recourse may be had only against such property;
     (d)   any Lien in favour of the United States of America or any State thereof or any other country, or any
           agency, instrumentality or political subdivision of any of the foregoing, to secure partial, progress,
           advance or other payments or performance pursuant to the provisions of any contract or statute, or any
           Liens securing industrial development, pollution control or similar revenue bonds;
     (e)   any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole
           or in part of any Lien referred to in clauses (a) through (d) above, so long as the principal amount of
           debt so secured does not exceed the principal amount secured at the time of extension, renewal or
           replacement (except that, where an additional principal amount of debt is incurred to provide funds for
           the completion of a specific project, the additional principal amount and any related financial costs,
           may be secured by the Lien as well) and the Lien is limited to the same property subject to the Lien so
           extended, renewed or replaced (plus improvement on the property);
     (f)   any Lien arising by operation of law;
     (g)   any Lien arising from or related to a disposal or lease-out of assets to any person whose core business
           is the leasing business (Leasinggesellschaften) not to exceed in the aggregate Euro one billion per year
           or the equivalent in other currencies (as from the Issue Date);
     (h)   any Lien arising from or related to the Bayer Corporation Sale-Leaseback Transaction (as defined
           below); and
     (i)   any Lien securing indebtedness the amount of which (when aggregated with the amount of any other
           indebtedness which has the benefit of a Lien not allowed under the preceding sub-paragraphs) does
           not exceed Euro 250,000,000 or its equivalent in other currencies at any time.
     In respect of asset-backed securitizations originated by the Issuer, the expressions ‘‘assets’’ and ‘‘Security
Issue’’ as used in the first sentence of this subparagraph (2) do not include assets and Security Issues of the Issuer
for as long as the assets backing such securitizations do in aggregate not exceed Euro 2,000,000,000.
     For the purposes of this § 2, ‘‘Security Issue’’ shall mean any obligation for the payment of borrowed
money represented by bonds, notes, debentures or any similar securities which are quoted, listed or traded on any
stock exchange or over-the-counter securities market or which are otherwise publicly traded or intended to be
publicly traded, having an original maturity of more than one year.
      For the purposes of this § 2, ‘‘Bayer Corporation Sale-Leaseback Transaction’’ shall mean a series of sale
and leaseback transactions pursuant to which Bayer Corporation has sold about USD 590,000,000 of chemical
manufacturing equipment owned by it and currently in service at its facility in Baytown, Texas to an owner
trustee on behalf of certain institutional investors, and thereafter leased such equipment from such owner trustee,
on behalf of such institutional investors.]
[in the case of Notes issued by Bayer Corporation, Bayer Capital Corp or Bayer Japan also insert:
(3) Guarantee and Negative Pledge of the Guarantor. Bayer AG (the ‘‘Guarantor’’) has given its
    unconditional and irrevocable guarantee (the ‘‘Guarantee’’) dated October 17, 2003 for the due and
    punctual payment of principal of, and interest on, and any other amounts payable under any Note.
     The Guarantor has further undertaken in a negative pledge (the ‘‘Negative Pledge’’), as long as Notes are
outstanding but only up to the time all amounts of principal and interest have been provided to the Fiscal Agent,

                                                         15
not to provide after the Issue Date any security interest (‘‘Lien’’) upon its domestic assets for other Security
Issues (as defined below) without at the same time letting the Holders share pari passu in such Lien; provided,
however, that this undertaking shall not be applicable in the event the Guarantor shall create, assume or suffer to
exist Liens of the following character:
     (a)   any Lien existing on property at the time of the acquisition thereof by the Guarantor;
     (b)   any Lien to secure any debt incurred prior to, at the time of, or within 12 months after the acquisition
           of property by the Guarantor for the purpose of financing all or any part of the purchase price thereof
           and any Lien to the extent that it secures debt which is in excess of such purchase price and for the
           payment of which recourse may be had only against such property;
     (c)   any Lien to secure any debt incurred prior to, at the time of, or within 12 months after the completion
           of the construction, alteration, repair or improvement of property of the Guarantor for the purpose of
           financing all or any part of the cost thereof and any Lien to the extent that it secures debt which is in
           excess of such cost and for the payment of which recourse may be had only against such property;
     (d)   any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole
           or in part of any Lien referred to in clauses (a) through (c) above, so long as the principal amount of
           debt so secured does not exceed the principal amount secured at the time of extension, renewal or
           replacement (except that, where an additional principal amount of debt is incurred to provide funds for
           the completion of a specific project, the additional principal amount and any related financial costs,
           may be secured by the Lien as well) and the Lien is limited to the same property subject to the Lien so
           extended, renewed or replaced (plus improvement on the property);
     (e)   any Lien arising by operation of law;
     (f)   any Lien arising from or related to a disposal or lease-out of assets to any person whose core business
           is the leasing business (Leasinggesellschaften) not to exceed in the aggregate Euro one billion per year
           or the equivalent in other currencies (as from the Issue Date); and
     (g)   any Lien securing indebtedness the amount of which (when aggregated with the amount of any other
           indebtedness which has the benefit of a Lien not allowed under the preceding sub-paragraphs) does
           not exceed Euro 250,000,000 or its equivalent in other currencies at any time.
     In respect of asset-backed securitizations originated by the Guarantor, the expressions ‘‘assets’’ and
‘‘Security Issue’’ as used in the first sentence of the second paragraph of this subparagraph (3) do not include
assets and Security Issues of the Guarantor for as long as the assets backing such securitizations do in aggregate
not exceed Euro 2,000,000,000.
     ‘‘Security Issue’’ shall mean any obligation for the payment of borrowed money represented by bonds,
notes, debentures or any similar securities which are quoted, listed or traded on any stock exchange or over-the-
counter securities market or which are otherwise publicly traded or intended to be publicly traded, having an
original maturity of more than one year.
     The Guarantee and Negative Pledge constitute a contract for the benefit of the Holders from time to time as
third party beneficiaries in accordance with § 328 subparagraph 1 BGB (German Civil Code), giving rise to the
right of each Holder to require performance of the Guarantee and the Negative Pledge directly from the Guarantor
and to enforce the Guarantee and the Negative Pledge directly against the Guarantor.]


                                                   §3
                                        [INTEREST] [INDEXATION]
[In the case of Fixed Rate Notes insert:
(1) Rate of Interest and Interest Payment Dates. The Notes shall bear interest on their principal amount at the
    rate of [insert Rate of Interest] per cent. per annum from (and including) [insert Interest Commencement
    Date] to (but excluding) the Maturity Date (as defined in § 5 (1)). Interest shall be payable in arrears on
    [insert Fixed Interest Date or Dates] in each year (each such date, an Interest Payment Date). The first
    payment of interest shall be made on [insert First Interest Payment Date] [if First Interest Payment Date
    is not first anniversary of Interest Commencement Date insert: and will amount to [insert Initial
    Broken Amount for smallest Specified Denomination] for a Note in a denomination of [insert smallest
    Specified Denomination] and [insert further Initial Broken Amount(s) for further Specified
    Denominations] for a Note in a denomination of [insert further Specified Denominations]]. [If the

                                                        16
     Maturity Date is not a Fixed Interest Date insert: Interest in respect of the period from [insert Fixed
     Interest Date preceding the Maturity Date] (inclusive) to the Maturity Date (exclusive) will amount to
     [insert Final Broken Amount for smallest Specified Denomination] for a Note in a denomination of
     [insert smallest Specified Denomination] and [insert further Final Broken Amount(s) for further
     Specified Denominations] for a Note in a denomination of [insert further Specified Denominations].]
(2) Accrual of Interest. The Notes shall cease to bear interest as from the beginning of the day on which they
    are due for redemption. If the Issuer shall fail to redeem the Notes when due, interest shall continue to
    accrue on the outstanding principal amount of the Notes beyond the due date until the actual redemption of
    the Notes at the default rate of interest established by law(1).
(3) Calculation of Interest for Partial Periods. If interest is required to be calculated for a period of less than a
    full year, such interest shall be calculated on the basis of the Day Count Fraction (as defined below).]

[In the case of Floating Rate Notes insert:
(1) Interest Payment Dates.
     (a)    The Notes shall bear interest on their principal amount from [insert Interest Commencement Date]
            (inclusive) (the ‘‘Interest Commencement Date’’) to the first Interest Payment Date (exclusive) and
            thereafter from each Interest Payment Date (inclusive) to the next following Interest Payment Date
            (exclusive). Interest on the Notes shall be payable on each Interest Payment Date.
     (b)    ‘‘Interest Payment Date’’ means
            [(i)     in the case of Specified Interest Payment Dates insert: each [insert Specified Interest
                     Payment Dates].]
            [(ii) in the case of Specified Interest Periods insert: each date which (except as otherwise provided
                  in these Terms and Conditions) falls [insert number] [weeks] [months] [insert other specified
                  periods] after the preceding Interest Payment Date or, in the case of the first Interest Payment
                  Date, after the Interest Commencement Date.]
     (c)    If any Interest Payment Date would otherwise fall on a day which is not a Business Day (as defined
            below), it shall be:
            [(i)     if Modified Following Business Day Convention insert: postponed to the next day which is a
                     Business Day unless it would thereby fall into the next calendar month, in which event the
                     payment date shall be the immediately preceding Business Day.]
            [(ii)    if FRN Convention insert: postponed to the next day which is a Business Day unless it would
                     thereby fall into the next calendar month, in which event the payment date shall be the
                     immediately preceding Business Day, and in the event of interest, each subsequent Interest
                     Payment Date shall be the day that numerically corresponds to the preceding Interest Payment
                     Date in the calendar month that falls [insert number][months] [insert other specified
                     periods] after the preceding Interest Payment Date or, in the case of the first Interest Payment
                     Date for the Notes, the Issue Date, except that (a) if there is not any such numerically
                     corresponding day in the calendar month in which the relevant Interest Payment Date should
                     occur, then the Interest Payment Date will be the last day that is a Business Day in that month,
                     (b) if the relevant Interest Payment Date would otherwise fall on a day that is not a Business
                     Day, then the Interest Payment Date will be the first following day that is a Business Day
                     unless that day falls in the next calendar month, in which case the Interest Payment Date will
                     be the first preceding day that is a Business Day, and (c) if the preceding applicable Interest
                     Payment Date occurred on the last day in a calendar month that was a Business Day, then all
                     subsequent applicable Interest Payment Dates prior to the Maturity Date (as defined in §5(1))
                     will be the last day that is a Business Day in the month that falls [insert number] [months]
                     [insert other specified periods] after the preceding applicable Interest Payment Date.]
            [(iii)   if Following Business Day Convention insert: postponed to the next day which is a Business
                     Day.]
            [(iv)    if Preceding Business Day Convention insert: the immediately preceding Business Day.]

(1) The default rate of interest established by law is five percentage points above the basic rate of interest published by Deutsche
    Bundesbank from time to time, §§ 288(1), 247 German Civil Code.


                                                                17
           In the case of a date for payment of principal [in the case of Notes issued on an unadjusted basis
           insert: or interest] is postponed as provided above, the Holders shall not be entitled to further interest
           or other payment in respect of such delay.
           For these purposes, ‘‘Business Day’’ means any day which is both a day (other than a Saturday or a
           Sunday) on which (i) commercial banks and foreign exchange markets settle payments in the relevant
           place of presentation (if applicable), and (ii) [if the Specified Currency is euro insert: the Trans-
           European Automated Real-time Gross Settlement Express Transfer system (TARGET) is open.] [if
           the Specified Currency is not euro insert: commercial banks and foreign exchange markets settle
           payments in [insert all relevant financial centres].
(2) Rate of Interest. [if Screen Rate Determination insert: The rate of interest (the ‘‘Rate of Interest’’) for
    each Interest Period (as defined below) will, except as provided below, be the offered quotation (expressed
    as a percentage rate per annum) for deposits in the Specified Currency for that Interest Period which appears
    on the Screen Page as of 11:00 a.m. ([Brussels] [London] time) on the Interest Determination Date (as
    defined below) [if Margin insert: [plus] [minus] the Margin (as defined below)], all as determined by the
    Calculation Agent.
    ‘‘Interest Period’’ means each [one] [three] [six] [twelve] month [insert other period] period from (and
    including) the Interest Commencement Date to (but excluding) the first Interest Payment Date and from (and
    including) each Interest Payment Date to (but excluding) the following Interest Payment Date.
    ‘‘Interest Determination Date’’ means the [second] [insert other applicable number of days] [TARGET]
    [London] [insert other relevant location] Business Day prior to the commencement of the relevant Interest
    Period. [in case of a TARGET Business Day insert: ‘‘TARGET Business Day’’ means a day which is a
    day on which TARGET is open.] [in case of a non-TARGET Business Day insert: ‘‘[London] [insert
    other relevant location] Business Day’’ means a day which is a day (other than a Saturday or Sunday) on
    which commercial banks are open for business (including dealings in foreign exchange and foreign
    currency) in [London] [insert other relevant location].]
    [If Margin insert: ‘‘Margin’’ means [        (     ] per cent. per annum.]
    ‘‘Screen Page’’ means [insert relevant Screen Page].
    [If another basis for determining any reference rate is agreed upon, full details thereof will be set forth
    herein and in the applicable Pricing Supplement.]
    If the Screen Page is not available or if no such quotation appears at such time, the Calculation Agent shall
    request each of the Reference Banks (as defined below) to provide the Calculation Agent with its offered
    quotation (expressed as a percentage rate per annum) for deposits in the Specified Currency for the relevant
    Interest Period to leading banks in the [Euro-zone] [London] interbank market at approximately 11.00 a.m.
    ([Brussels] [London] time) on the Interest Determination Date. If two or more of the Reference Banks
    provide the Calculation Agent with such offered quotations, the Rate of Interest for such Interest Period shall
    be the arithmetic mean (rounded if necessary to the nearest one [if the Reference Rate is EURIBOR
    insert: thousandth of a percentage point, with 0.0005] [if the Reference Rate is not EURIBOR insert:
    hundred-thousandth of a percentage point, with 0.000005] being rounded upwards) of such offered
    quotations [if Margin insert: [plus] [minus] the Margin], all as determined by the Calculation Agent.
    If on any Interest Determination Date only one or none of the Reference Banks provides the Calculation
    Agent with such offered quotations as provided in the preceding paragraph, the Rate of Interest for the
    relevant Interest Period shall be the rate per annum which the Calculation Agent determines as being the
    arithmetic mean (rounded if necessary to the nearest one [if the Reference Rate is EURIBOR insert:
    thousandth of a percentage point, with 0.0005] [if the Reference Rate is not EURIBOR insert: hundred-
    thousandth of a percentage point, with 0.000005] being rounded upwards) of the rates, as communicated to
    (and at the request of) the Calculation Agent by the Reference Banks or any two or more of them, at which
    such banks were offered, as at 11.00 a.m. ([Brussels] [London] time) on the relevant Interest Determination
    Date, deposits in the Specified Currency for the relevant Interest Period by leading banks in the [Euro-zone]
    [London] interbank market [if Margin insert: [plus] [minus] the Margin] or, if fewer than two of the
    Reference Banks provide the Calculation Agent with such offered rates, the offered rate for deposits in the
    Specified Currency for the relevant Interest Period, or the arithmetic mean (rounded as provided above) of
    the offered rates for deposits in the Specified Currency for the relevant Interest Period, at which, on the
    relevant Interest Determination Date, any one or more banks (which bank or banks is or are in the opinion of
    the Calculation Agent and the Issuer suitable for such purpose) inform(s) the Calculation Agent it is or they

                                                        18
     are quoting to leading banks in the [Euro-zone] [London] interbank market (or, as the case may be, the
     quotations of such bank or banks to the Calculation Agent) [if Margin insert: [plus] [minus] the Margin]. If
     the Rate of Interest cannot be determined in accordance with the foregoing provisions of this paragraph, the
     Rate of Interest shall be the offered quotation or the arithmetic mean of the offered quotations on the Screen
     Page, as described above, on the last day preceding the Interest Determination Date on which such
     quotations were offered [if Margin insert: [plus] [minus] the Margin] (though substituting, where a
     different Margin is to be applied to the relevant Interest Period from that which applied to the last preceding
     Interest Period, the Margin relating to the relevant Interest Period in place of the Margin relating to that last
     preceding Interest Period)].
     ‘‘Reference Banks’’ means [if no other Reference Banks are specified in the Pricing Supplement,
     insert: those offices of four of such banks whose offered rates were used to determine such quotation when
     such quotation last appeared on the Screen Page] [if other Reference Banks are specified in the Pricing
     Supplement, insert names here].
     [As used herein, ‘‘Euro-zone’’ means the region comprised of member states of the European Union that
     adopted the single currency in accordance with the Treaty establishing the European Community (signed in
     Rome on March 25, 1957), as amended by the Single European Act 1986, the Treaty on European Union
     (signed in Maastricht on February 7, 1992) and the Amsterdam Treaty (signed on October 2, 1997), as
     amended.]
     [If Reference Rate is other than EURIBOR or LIBOR, insert relevant details in lieu of the provisions
     of this subparagraph (2)]
     [If ISDA Determination applies insert the relevant provisions and attach the 2000 ISDA Definitions
     published by the International Swap and Derivatives Association]
     [If other method of determination applies, insert relevant details in lieu of the provisions of this
     subparagraph (2)]
     [If Minimum and/or Maximum Rate of Interest applies insert:
(3) [Minimum] [and] [Maximum] Rate of Interest.
     [If Minimum Rate of Interest applies insert: If the Rate of Interest in respect of any Interest Period
     determined in accordance with the above provisions is less than [insert Minimum Rate of Interest], the
     Rate of Interest for such Interest Period shall be [insert Minimum Rate of Interest].]
     [If Maximum Rate of Interest applies insert: If the Rate of Interest in respect of any Interest Period
     determined in accordance with the above provisions is greater than [insert Maximum Rate of Interest], the
     Rate of Interest for such Interest Period shall be [insert Maximum Rate of Interest].]]
[(4)] Interest Amount. The Calculation Agent will, on or as soon as practicable after each time at which the Rate
      of Interest is to be determined, determine the Rate of Interest and calculate the amount of interest (the
      ‘‘Interest Amount’’) payable on the Notes for the relevant Interest Period. Each Interest Amount shall be
      calculated by applying the Rate of Interest and the Day Count Fraction (as defined below) to the aggregate
      principal amount of the Notes and rounding the resultant figure to the nearest unit of the Specified Currency,
      with 0.5 of such unit being rounded upwards.
[(5)] Notification of Rate of Interest and Interest Amount. The Calculation Agent will cause the Rate of Interest,
      each Interest Amount for each Interest Period, each Interest Period and the relevant Interest Payment Date to
      be notified to the Issuer [in the case of Notes issued by Bayer Corporation, Bayer Capital Corp or Bayer
      Japan insert: , the Guarantor] and to the Holders in accordance with § 12 as soon as possible after their
      determination, but in no event later than the fourth [TARGET] [London] [insert other relevant location]
      Business Day (as defined in § 3 (2)) thereafter and, if required by the rules of any stock exchange on which
      the Notes are from time to time listed, to such stock exchange as soon as possible after their determination,
      but in no event later than the first day of the relevant Interest Period. Each Interest Amount and Interest
      Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by
      way of adjustment) without notice in the event of an extension or shortening of the Interest Period. Any such
      amendment will be promptly notified to any stock exchange on which the Notes are then listed and to the
      Holders in accordance with § 12.
[(6)] Determinations Binding. All certificates, communications, opinions, determinations, calculations,
      quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this § 3 by
      the Calculation Agent shall (in the absence of manifest error) be binding on the Issuer, [in the case of Notes

                                                         19
     issued by Bayer Corporation, Bayer Capital Corp or Bayer Japan insert: the Guarantor,] the Fiscal
     Agent [, the Paying Agents] and the Holders.
[(7)] Accrual of Interest. The Notes shall cease to bear interest from the beginning of the day they are due for
      redemption. If the Issuer shall fail to redeem the Notes when due, interest shall continue to accrue on the
      outstanding principal amount of the Notes beyond the due date until actual redemption of the Notes. The
      applicable Rate of Interest will be the default rate of interest established by law(1). ]

[In the case of Zero Coupon Notes insert:
(1) No Periodic Payments of Interest. There will not be any periodic payments of interest on the Notes.
(2) Accrual of Interest. If the Issuer shall fail to redeem the Notes when due, interest shall accrue on the
    outstanding principal amount of the Notes as from the due date to the date of actual redemption at the
    default rate of interest established by law(1).]
     [In the case of Index Linked Notes, Credit Linked Notes and Equity Linked Notes relating to interest,
     set forth applicable provisions herein and in the applicable Pricing Supplement. The same applies in
     the case of Dual Currency Notes and Partly Paid Notes.]
[(()] Day Count Fraction. ‘‘Day Count Fraction’’ means, in respect of the calculation of an amount of interest
      on any Note for any period of time (the ‘‘Calculation Period’’):
     [if Actual/Actual (ISMA Rule 251) insert: the number of days in the Calculation Period divided by (x) in
     the case of Notes where interest is scheduled to be paid only by means of regular annual payments, the
     number of days in the Interest Period or (y) in the case of Notes where interest is scheduled to be paid other
     than only by means of regular annual payments, the product of the number of days in the Interest Period and
     the number of Interest Payment Dates that would occur in one calendar year assuming interest was to be
     payable in respect of the whole of that year.]
     [if Actual/365 (Fixed) insert: the actual number of days in the Calculation Period divided by 365.]
     [if Actual/360 insert: the actual number of days in the Calculation Period divided by 360.]
     [if 30/360, 360/360 or Bond Basis insert: the number of days in the Calculation Period divided by 360, the
     number of days to be calculated on the basis of a year of 360 days with 12 30-day months (unless (A) the
     last day of the Calculation Period is the 31st day of a month but the first day of the Calculation Period is a
     day other than the 30th or 31st day of a month, in which case the month that includes that last day shall not
     be considered to be shortened to a 30-day month, or (B) the last day of the Calculation Period is the last day
     of the month of February in which case the month of February shall not be considered to be lengthened to a
     30-day month).]
     [if 30E/360 or Eurobond Basis: the number of days in the Calculation Period divided by 360 (the number
     of days to be calculated on the basis of a year of 360 days with 12 30-day months, without regard to the date
     of the first day or last day of the Calculation Period unless, in the case of the final Calculation Period, the
     Maturity Date is the last day of the month of February, in which case the month of February shall not be
     considered to be lengthened to a 30-day month).]


                                                            §4
                                                         PAYMENTS
(1) [(a)] Payment of Principal. Payment of principal in respect of Notes shall be made, subject to
          subparagraph (2) below, to the Clearing System or (if applicable) to its order for credit to the accounts
          of the relevant account holders of the Clearing System upon presentation and (except in the case of
          partial payment) surrender of the Global Note representing the Notes at the time of payment at the
          specified office of the Fiscal Agent outside the United States.
     [In the case of Notes other than Zero Coupon Notes insert:
     (b)    Payment of Interest. Payment of interest on Notes shall be made, subject to subparagraph (2), to the
            Clearing System or (if applicable) to its order for credit to the relevant account holders of the Clearing
            System.

(1) The default rate of interest established by law is five percentage points above the basic rate of interest published by Deutsche
    Bundesbank from time to time, §§ 288(1), 247 German Civil Code.


                                                                20
    [In the case of interest payable on a Temporary Global Note insert: Payment of interest on Notes
    represented by the Temporary Global Note shall be made, subject to subparagraph (2), to the Clearing
    System or (if applicable) to its order for credit to the relevant account holders of the Clearing System, upon
    due certification as provided in § 1 (3) (b).]]

(2) Manner of Payment. Subject to applicable fiscal and other laws and regulations, payments of amounts due
    in respect of the Notes shall be made in the freely negotiable and convertible currency which on the
    respective due date is the currency of the country of the Specified Currency. No payments shall be made
    either by check mailed to an address inside the United States or by transfer to an account maintained in the
    United States.

(3) United States. For purposes of [in the case of TEFRA D Notes insert: § 1 (3) and] subparagraph (1) of
    this § 4, ‘‘United States’’ means the United States of America (including the States thereof and the District
    of Columbia) and its possessions (including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa,
    Wake Island and Northern Mariana Islands).

(4) Discharge. The Issuer [in the case of Notes issued by Bayer Corporation, Bayer Capital Corp or
    Bayer Japan insert: or, as the case may be, the Guarantor] shall be discharged by payment to, or to the
    order of, the Clearing System.

(5) Payment Business Day. If the date for payment of any amount in respect of any Note is not a Payment
    Business Day then the Holder shall not be entitled to payment until the next such day in the relevant place
    and shall not be entitled to further interest or other payment in respect of such delay.

    For these purposes, ‘‘Payment Business Day’’ means any day which is [in the case of Notes not
    denominated in Euro insert: a day (other than a Saturday or a Sunday) on which commercial banks and
    foreign exchange markets settle payments in [insert all relevant financial centres]] [in the case of Notes
    denominated in Euro insert: a day (other than a Saturday or a Sunday) on which all relevant parts of the
    Trans-European Automated Real-time Gross Settlement Express Transfer System (TARGET) and the
    relevant Clearing System are operational to forward the relevant payment].

(6) References to Principal and Interest. Reference in these Terms and Conditions to principal in respect of
    the Notes shall be deemed to include, as applicable: the Final Redemption Amount of the Notes; the Early
    Redemption Amount of the Notes; [if redeemable at option of Issuer for other than taxation reasons
    insert: the Call Redemption Amount of the Notes;] [if redeemable at option of the Holder insert: the Put
    Redemption Amount of the Notes;] [in the case of Zero Coupon Notes insert: the Amortised Face Amount
    of the Notes;] [in the case of Instalment Notes insert: the Instalment Amount(s) of the Notes;] and any
    premium and any other amounts which may be payable under or in respect of the Notes. Reference in these
    Terms and Conditions to interest in respect of the Notes shall be deemed to include, as applicable, any
    Additional Amounts which may be payable under § 7.

(7) Deposit of Principal and Interest. The Issuer may deposit with the Amtsgericht in Frankfurt am Main
    principal or interest not claimed by Holders within twelve months after the Maturity Date, even though such
    Holders may not be in default of acceptance of payment. If and to the extent that the deposit is effected and
    the right of withdrawal is waived, the respective claims of such Holders against the Issuer shall cease.


                                                      §5
                                                  REDEMPTION

(1) Redemption at Maturity.

    [In the case of Notes other than Instalment Notes insert: Unless previously redeemed in whole or in part
    or purchased and cancelled, the Notes shall be redeemed at their Final Redemption Amount on [in the case
    of a specified Maturity Date insert such Maturity Date] [in the case of a Redemption Month insert: the
    Interest Payment Date falling in [insert Redemption Month]] (the ‘‘Maturity Date’’). The Final
    Redemption Amount in respect of each Note shall be [if the Notes are redeemed at their principal
    amount insert: its principal amount] [otherwise insert: its Final Redemption Amount per Specified
    Denomination].]

                                                       21
    [In the case of Instalment Notes insert: Unless previously redeemed in whole or in part or purchased and
    cancelled, the Notes shall be redeemed at the Instalment Date(s) and in the Instalment Amount(s) set forth
    below:
          Instalment Date(s)                                                       Instalment Amount(s)
          insert Instalment Date(s)                                             insert Instalment Amount(s)

          [            ]******************************************                     [          ]
          [            ]******************************************                     [          ]
(2) Early Redemption for Reasons of Taxation. If as a result of any Tax Law Change (as hereinafter defined)
    the Issuer [in the case of Notes issued by Bayer Corporation, Bayer Capital Corp or Bayer Japan
    insert: and/or the Guarantor] is required to pay Additional Amounts (as defined in § 7 herein) [in the case
    of Notes other than Zero Coupon Notes insert: on the next succeeding Interest Payment Date (as defined
    in § 3 (1))] [in the case of Zero Coupon Notes insert: at maturity or upon the sale or exchange of any
    Note,] and this obligation cannot be avoided by the use of reasonable measures available to the Issuer [in the
    case of Notes issued by Bayer Corporation, Bayer Capital Corp or Bayer Japan insert: and/or the
    Guarantor], the Notes may be redeemed, in whole but not in part, at the option of the Issuer [in the case of
    Notes issued by Bayer Corporation, Bayer Capital Corp or Bayer Japan insert: and/or the Guarantor],
    upon not more than 60 days’ nor less than 30 days’ prior notice of redemption given to the Fiscal Agent and,
    in accordance with § 12 to the Holders, at their Early Redemption Amount (as defined below), together with
    interest (if any) accrued to the date fixed for redemption. A ‘‘Tax Law Change’’ is (i) any change in, or
    amendment to, the laws or regulations of [in the case of Notes issued by Bayer AG insert: the Federal
    Republic of Germany] [in the case of Notes issued by Bayer Capital Corp insert: the Netherlands or the
    Federal Republic of Germany] [in the case of Notes issued by Bayer Corporation insert: the United
    States of America] [in the case of Notes issued by Bayer Japan insert: Japan or the Federal Republic of
    Germany] or any political subdivision or taxing authority thereof or therein affecting taxation or the
    obligation to pay duties of any kind, (ii) any change in, or amendment to, an official interpretation,
    administrative guidance or application of such laws or regulations, (iii) any action and/or decision which
    shall have been taken by any taxing authority, or any court of competent jurisdiction of [in the case of Notes
    issued or guaranteed by Bayer AG insert: the Federal Republic of Germany] [in the case of Notes issued
    by Bayer Capital Corp insert: or the Netherlands] [in the case of Notes issued by Bayer Corporation
    insert: the United States of America] [in the case of Notes issued by Bayer Japan insert: or Japan] or any
    political subdivision or taxing authority thereof or therein, whether or not such action was taken or brought
    with respect to the Issuer [in the case of Notes issued by Bayer Corporation, BayerCapital Corp or
    Bayer Japan insert: or the Guarantor], or (iv) any change, amendment, application, interpretation or
    execution of the laws of [in the case of Notes issued or guaranteed by Bayer AG insert: the Federal
    Republic of Germany] [in the case of Notes issued by Bayer Capital Corp insert: or the Netherlands] [in
    the case of Notes issued by Bayer Corporation insert: the United States of America] [in the case of Notes
    issued by Bayer Japan insert: or Japan] (or any regulations or ruling promulgated thereunder), which
    change, amendment, action, application, interpretation or execution is officially proposed and would have
    effect on or after the date on which the last tranche of this series of Notes was issued.
    However, no such notice of redemption may be given (i) earlier than 90 days prior to the earliest date on
    which the Issuer [in the case of Notes issued by Bayer Corporation, Bayer Capital Corp or Bayer Japan
    insert: and/or the Guarantor] would be obligated to pay such Additional Amounts were a payment in respect
    of the Notes then due, or (ii) if at the time such notice is given, such obligation to pay such Additional
    Amounts or make such deduction or withholding does not remain in effect. [In the case of Floating Rate
    Notes insert: The date fixed for redemption must be an Interest Payment Date.]
    Any such notice shall be given in accordance with § 12. It shall be irrevocable, must specify the date fixed
    for redemption and must set forth a statement in summary form of the facts constituting the basis for the
    right of the Issuer [in the case of Notes issued by Bayer Corporation, Bayer Capital Corp or Bayer
    Japan insert: and/or the Guarantor] so to redeem.
    [If Notes are subject to Early Redemption at the Option of the Issuer insert:
(3) Early Redemption at the Option of the Issuer.
    (a)       The Issuer may, upon notice given in accordance with clause (b), redeem all or some only of the Notes
              within the Call Redemption Period(s) at the Call Redemption Amount(s) set forth below together with
              accrued interest, if any, to (but excluding) the last day of the Call Redemption Period. [If Minimum
              Redemption Amount or Higher Redemption Amount applies insert: Any such redemption must

                                                         22
           be of a principal amount equal to [at least [insert Minimum Redemption Amount]] [insert Higher
           Redemption Amount].]
           Call Redemption Period(s)                                              Call Redemption Amount(s)
           [insert Call Redemption Period(s)]                                 [insert Call Redemption Amount(s)]
                                  [specify formula for calculating the Redemption Amount]
           [           ] **********************************                             [           ]
           [           ] **********************************                             [           ]
           [If Notes are subject to Early Redemption at the Option of the Holder insert: The Issuer may not
           exercise such option in respect of any Note which is the subject of the prior exercise by the Holder
           thereof of its option to require the redemption of such Note under subparagraph (4) of this § 5.]
     (b)   Notice of redemption shall be given by the Issuer to the Holders of the Notes in accordance with § 12.
           Such notice shall specify:
           (i)     the Series of Notes subject to redemption;
           (ii)    whether such Series is to be redeemed in whole or in part only and, if in part only, the aggregate
                   principal amount of the Notes which are to be redeemed;
           (iii)   the Call Redemption Period, which shall begin not less than [insert Minimum Notice to
                   Holders] nor more than [insert Maximum Notice to Holders] days after the date on which
                   notice is given by the Issuer to the Holders; and
           (iv)    the Call Redemption Amount at which such Notes are to be redeemed.
     (c)   In the case of a partial redemption of Notes, Notes to be redeemed shall be selected in accordance
           with the rules of the relevant Clearing System.]

[If the Notes are subject to Early Redemption at the Option of a Holder insert:
[(4)] Early Redemption at the Option of a Holder.
     (a)   The Issuer shall, at the option of the Holder of any Note, redeem such Note within the Put Redemption
           Period(s) at the Put Redemption Amount(s) set forth below together with accrued interest, if any, to
           (but excluding) the last day of the Put Redemption Period.
           Put Redemption Period(s)                                               Put Redemption Amount(s)
           [insert Put Redemption Period(s)]                                  [insert Put Redemption Amount(s)]
                                 [specify formula for calculating the Redemption Amount]
           [           ]***********************************                             [           ]
           [           ]***********************************                             [           ]
           The Holder may not exercise such option in respect of any Note which is the subject of the prior
           exercise by the Issuer of its option to redeem such Note under this § 5.
     (b)   In order to exercise such option, the Holder must, not less than [insert Minimum Notice to Issuer]
           nor more than [insert Maximum Notice to Issuer] days before the Put Redemption Period begins on
           which such redemption is required to be made as specified in the Put Notice (as defined below),
           submit during normal business hours at the specified office of the Fiscal Agent a duly completed early
           redemption notice (Put Notice) in the form available from the specified office of the Fiscal Agent. No
           option so exercised may be revoked or withdrawn.]

[In the case of Notes other than Zero Coupon Notes insert:
[(5)] Early Redemption Amount.
     For purposes of subparagraph (2) of this § 5 and § 9, the Early Redemption Amount of a Note shall be its
     Final Redemption Amount.]

[In the case of Zero Coupon Notes insert:
[(5)] Early Redemption Amount.
     (a)   For purposes of subparagraph (2) of this § 5 and § 9, the Early Redemption Amount of a Note shall be
           equal to the Amortised Face Amount of the Note.

                                                            23
    (b)   [In the case of accrued interest being added, insert: The Amortised Face Amount of a Note shall be
          an amount equal to the sum of:
          (i)    [insert Reference Price] (the ‘‘Reference Price’’), and
          (ii)   the product of [insert Amortisation Yield] (the ‘‘Amortisation Yield’’) (compounded
                 annually) and the Reference Price from (and including) [insert Issue Date] to (but excluding)
                 the date fixed for redemption or (as the case may be) the date upon which the Notes become due
                 and payable.]
          [In the case of unaccrued interest being deducted, insert:
          The Amortised Face Amount of a Note shall be the principal amount thereof adjusted for interest from
          (and including) the Maturity Date to (but excluding) the date of final repayment by the Amortisation
          Yield, being [insert Amortisation Yield]. Such calculation shall be made on the assumption of an
          annual capitalisation of accrued interest.]
          Where such calculation is to be made for a period which is not a whole number of years, the
          calculation in respect of the period of less than a full year (the ‘‘Calculation Period’’) shall be made
          on the basis of the Day Count Fraction (as defined in § 3).
    (c)   If the Issuer fails to pay the Early Redemption Amount when due, the Amortised Face Amount of a
          Note shall be calculated as provided herein, except that references in subparagraph (b)(ii) above to the
          date fixed for redemption or the date on which such Note becomes due and repayable shall refer to the
          earlier of (i) the date on which upon due presentation and surrender of the relevant Note (if required),
          payment is made, and (ii) the fourteenth day after notice has been given by the Fiscal Agent in
          accordance with § 12 that the funds required for redemption have been provided to the Fiscal Agent.]
[In the case of Index Linked Notes, Credit Linked Notes or Equity Linked Notes relating to principal,
insert full details herein and in the applicable Pricing Supplement. The same applies in the case of Dual
Currency Notes and Partly Paid Notes.]


                                                     §6
                                                   AGENTS
(1) Appointment; Specified Offices. The initial Fiscal Agent [[,] [and] Paying Agent[s]] [and the Calculation
    Agent] and [its] [their] [respective] initial specified office[s] [is] [are]:

    Fiscal Agent:              Deutsche Bank AG
                               London Winchester House
                               1 Great Winchester Street
                               London EC2N 2DB
    Paying Agent:              Deutsche Bank Luxembourg S.A.
                               2, boulevard Konrad Adenauer
                               L-1115 Luxembourg
                               [insert other Paying Agents and specified offices]
    [If the Fiscal Agent is to be appointed as Calculation Agent insert: The Fiscal Agent shall also act as
    Calculation Agent.]
    [If a Calculation Agent other than the Fiscal Agent is to be appointed insert: The Calculation Agent and
    its initial specified office shall be:
    Calculation Agent: [insert name and specified office]]
    The Fiscal Agent [[,] [and] the Paying Agent[s]] [and the Calculation Agent] reserve[s] the right at any time
    to change [its] [their] respective specified office[s] to some other specified office[s] in the same city.
(2) Variation or Termination of Appointment. The Issuer reserves the right at any time to vary or terminate the
    appointment of the Fiscal Agent [or any Paying Agent] [or the Calculation Agent] and to appoint another
    Fiscal Agent [or additional or other Paying Agents] [or another Calculation Agent]. The Issuer shall at all
    times maintain (i) a Fiscal Agent [in the case of Notes listed on a stock exchange insert: [,] and (ii) so
    long as the Notes are listed on the [name of Stock Exchange], a Paying Agent (which may be the Fiscal
    Agent) with a specified office in [location of Stock Exchange] and/or in such other place as may be

                                                       24
      required by the rules of such stock exchange] [in the case of payments in U.S. dollars insert: [,] [and]
      [(iii)] if payments at or through the offices of all Paying Agents outside the United States (as defined in § 4
      hereof) become illegal or are effectively precluded because of the imposition of exchange controls or similar
      restrictions on the full payment or receipt of such amounts in United States dollars, a Paying Agent with a
      specified office in New York City] [if any Calculation Agent is to be appointed insert: [,] [and] [(iv)] a
      Calculation Agent [if Calculation Agent is required to maintain a Specified Office in a Required
      Location insert: with a specified office located in [insert Required Location]].] Any variation,
      termination, appointment or change shall only take effect (other than in the case of insolvency, when it shall
      be of immediate effect) after not less than 30 nor more than 45 days’ prior notice thereof shall have been
      given to the Holders in accordance with § 12.
(3) Agents of the Issuer. The Fiscal Agent [[,] [and] the Paying Agent[s]] [and the Calculation Agent] act[s]
    solely as agent[s] of the Issuer and do[es] not have any obligations towards or relationship of agency or trust
    to any Holder.


                                                      §7
                                                   TAXATION
     Principal and interest shall be payable without deduction or withholding for or on account of any present or
future taxes, duties or governmental charges of any nature whatsoever imposed, levied or collected by or on
behalf of the Federal Republic of Germany [in the case of Notes issued by Bayer Capital Corp, Bayer
Corporation or Bayer Japan insert, as appropriate: or [the Netherlands] [the United States of America]
[Japan]] or by or on behalf of any political subdivision or authority thereof having power to tax (together
‘‘Withholding Taxes’’), unless such deduction or withholding is required by law. In such event, the Issuer shall
pay such additional amounts of principal and interest as may be necessary in order that the net amounts received
by the Holders after such deduction or withholding shall equal the respective amounts of principal and interest
which would have been receivable had no such deduction or withholding been required. No such additional
amounts shall, however, be payable on account of any taxes, duties or governmental charges which:

[in the case of Notes issued by Bayer AG, Bayer Capital Corp or Bayer Corporation insert:
(a) are payable otherwise than by withholding or deduction from payments made by the Issuer to the Holder, or
(b) would not be imposed but for the presentation by the Holder of a Note for payment on a date more than
    15 days after the date on which such payment became due and payable or the date on which payment thereof
    is duly provided for, whichever occurs later; or
(c) are deducted or withheld by a Paying Agent from a payment if the payment could have been made by
    another Paying Agent without such deduction or withholding; or
(d) would not have been imposed or withheld if such Holder had not presented those Notes for payment in
    [Germany/the United States/the Netherlands], as the case may be, unless such Holder was required to
    present the Notes for payment in [Germany/the United States/the Netherlands], as the case may be, and it
    could not have been presented for payment anywhere else; or
(e) are deducted or withheld pursuant to (i) any European Union Directive or Regulation concerning the taxation
    of savings, or (ii) any international treaty or understanding relating to such taxation and to which the Federal
    Republic of Germany [the Netherlands] [and/or the United States] or the European Union is a party/are
    parties or (iii) any provision of law implementing, or complying with, or introduced to conform with, such
    Directive, Regulation, treaty or understanding; or
(f)   would not have been imposed or withheld if such Holder had provided information or satisfied other
      applicable certification or reporting requirements concerning the nationality, residence or identity of the
      Holder, made a declaration of non residence or other similar claim for exemption or presented any
      applicable form or certificate, upon the making or presentation of which that Holder would have been able to
      avoid such Withholding Taxes.][; or]

[in the case of Notes issued by Bayer Japan insert:
(a) are payable by or on behalf of a Holder who is a non-resident of Japan or a non-Japanese corporation and is
    liable for the Withholding Taxes in respect of such Note by reason of its having some connection with Japan
    other than the mere holding of such Note; or

                                                         25
(b) are payable by or on behalf of a Holder who would otherwise be exempt from any such withholding or
    deduction but who fails to comply with any applicable requirement to provide Exemption Information (as
    defined below) or to submit a Claim for Exemption (as defined below) to the Paying Agent to whom the
    relevant Note is presented, or whose Exemption Information is not duly communicated through the
    Participant (as defined below) and the relevant international clearing organisation to such Paying Agent; or
(c) are payable by or on behalf of a Holder who is for Japanese tax purposes treated as a resident of Japan or a
    Japanese corporation (except for (A) a Designated Financial Institution (as defined below) who complies
    with the requirement to provide Exemption Information or to submit a Claim for Exemption and (B) a
    resident of Japan or a Japanese corporation who duly notifies the relevant Paying Agent of its status as
    exempt from Withholding Taxes to be withheld or deducted by the Issuer by reason of such resident of Japan
    or Japanese corporation receiving interest on the relevant Note through a payment handling agent in Japan
    appointed by it); or
(d) are deducted or withheld pursuant to (i) any European Union Directive or Regulation pursuant to the
    taxation of Savings, or (ii) any international treaty or understanding relating to such taxation and to which
    the Federal Republic of Germany [the Netherlands] [and/or the United States of America] or the European
    Union is a party/are parties or (iii) any provision of law implementing, or complying with, or introduced to
    conform with, such Directive, Regulation, treaty or understanding; or
(e) are payable more than 15 days after the Relevant Date, except to the extent that the relevant Holder would
    have been entitled to the additional amount to be paid as above by the Issuer on presenting the Note for
    payment at the expiry of such 15-day period.
    As used herein, the ‘‘Relevant Date’’ means the date on which such payment first becomes due, except that,
    if the amount of the moneys payable has not been received by the Fiscal Agent on or prior to such due date,
    it means the date on which, the full amount of such moneys having been so received, notice to that effect
    shall have been duly given to the Holders in accordance with § 12.
    For the purpose of sub-paragraphs (b) and (c) above:
    (i)    where a Note is held through a certain participant of an international clearing organisation or a certain
           financial intermediary (each, a ‘‘Participant’’), in order to receive payments free of withholding or
           deduction by the Issuer for or on account of Withholding Taxes, if the relevant Holder is (A) a non
           resident of Japan or a non-Japanese corporation or (B) a Japanese financial institution falling under
           certain categories prescribed by the Special Taxation Measures Law (Law No. 26 of 1957) and the
           cabinet order (No. 362) of 17th December 1997 thereunder (together with the ministerial regulation
           thereunder, the ‘‘Law’’) (a ‘‘Designated Financial Institution’’), all in accordance with the Law,
           such Holder shall, at the time of entrusting a Participant with the custody of the relevant Note, provide
           certain information prescribed by the Law to enable the Participant to establish that such Noteholder is
           exempted from the requirement for Withholding Taxes to be withheld or deducted (the ‘‘Exemption
           Information’’) and advise the Participant if the Holder ceases to be so exempted; and
    (ii)   where a Note is not held by a Participant, in order to receive payments free of withholding or
           deduction by the Issuer for, or on account of Withholding Taxes, if the relevant Holder is (A) a non
           resident of Japan or a non-Japanese corporation or (B) a Designated Financial Institution, all in
           accordance with the Law, such Holder shall on or prior to each time on which it receives interest,
           submit to the relevant Paying Agent a claim for exemption from withholding tax (Hikazei Tekiyo
           Shinkokusho) (a ‘‘Claim for Exemption’’) in the form obtainable from the Paying Agent stating, inter
           alia, the name and address of the Holder, the title of the Notes, the relevant Interest Payment Date, the
           amount of interest and the fact that the Holder is qualified to submit the Claim for Exemption, together
           with documentary evidence regarding its identity and residence.
     Any reference in this Note or the guarantee referred to in the Note to principal or interest shall be deemed
also to refer to any additional amount to be paid as above by the Issuer which may be payable under this § 7.]

[in the case of Notes issued by Bayer AG or Bayer Capital Corp insert:
(g) are payable by reason of the Holder having, or having had, some personal or business connection with the
    [in the case of Notes issued by Bayer AG, insert: Federal Republic of Germany] [in the case of Notes
    issued by Bayer Capital Corp insert: the Netherlands or being a (deemed) resident of the Netherlands or is
    treated for tax purposes as a resident of the Netherlands or has elected to be taxed as a resident of the
    Netherlands or the Holder having a (deemed) permanent establishment in the Netherlands] or another

                                                        26
      member state of the European Union and not merely by reason of the fact that payments in respect of the
      Notes are, or for purposes of taxation are deemed to be, derived from sources in, or are secured in, [in the
      case of Notes issued by Bayer AG, insert: the Federal Republic of Germany] [in the case of Notes issued
      by Bayer Capital Corp insert: the Netherlands].]

      [in the case of Notes issued by Bayer Corporation insert:
(g) are payable by reason of (i) the existence of any present or former connection between the Holder (or
    between a fiduciary, settlor, beneficiary, shareholder or member of such holder, if such Holder is an estate, a
    trust, corporation or partnership) and the United States, including, without limitation such Holder (or such
    fiduciary, settlor beneficiary or shareholder or member) being or having been a citizen or resident of the
    United States or treated as a resident thereof, or being or having been engaged in a trade or business therein,
    present therein, or having or having had a permanent establishment therein, or (ii) such Holder’s present or
    former status as a personal holding company, a foreign personal holding company, or a controlled foreign
    corporation, a private foundation or other tax exempt organisation, in each case with respect to the United
    States or as a corporation which accumulates earnings to avoid United States federal income tax; or
(h) would not be imposed but for the failure of the Holder to comply with information or other reporting
    requirements concerning his nationality, residence, identity and/or his connections with the United States, if
    such compliance is required by law in the United States or by regulation of the competent United States tax
    authorities; or
(i)   are payable by reason of the Holder (i) presently or formerly holding, actually or constructively, 10 per cent
      or more of the total combined voting power of all classes of stock of the Issuer entitled to vote, (ii) being a
      controlled foreign corporation related to the Issuer through actual or constructive ownership; or
      (iii) receiving interest that is received by a bank on an extension of credit pursuant to a loan agreement
      entered into in the ordinary course of its trade or business; or
(j)   are payable by reason of any estate, inheritance, gift, sales transfer, personal property or any similar tax,
      assessment or other governmental charge;
(k) except as provided in the applicable Pricing Supplement, are taxes imposed on interest described in
    section 871(h)(4)(A) of the United States Internal Revenue Code of 1986, as amended, and the regulations
    thereunder; or
(l)   are payable by reason of any combination of (a) to (j) above;
nor shall additional amounts be paid with respect to any payment of principal or interest on a Note to any person
or entity who is a fiduciary or partnership or other than the sole beneficial owner of such payment to the extent a
beneficiary or settlor with respect to such fiduciary, a member of such partnership or a beneficial owner would not
have been entitled to the additional amounts had such beneficiary settlor, member or beneficial owner been the
holder of such Note.]


                                                   §8
                                           PRESENTATION PERIOD
     The presentation period provided in § 801 subparagraph 1, sentence 1 BGB (German Civil Code) is reduced
to ten years for the Notes.


                                                    §9
                                             EVENTS OF DEFAULT
(1) Events of Default. Each Holder shall be entitled to declare his Notes due and demand immediate
    redemption thereof at the Early Redemption Amount (as described in § 5), together with accrued interest (if
    any) to the date of repayment, in the event that
      (a)   the Issuer [in the case of Notes issued by Bayer Corporation, Bayer Capital Corp or Bayer Japan
            insert: or the Guarantor] is in default for a continuous period of 30 days in the payment of interest on
            the Notes after the same shall become due and payable, or
      (b)   the Issuer [in the case of Notes issued by Bayer Corporation, Bayer Capital Corp or Bayer Japan
            insert: or the Guarantor] is in default for a continuous period of 30 days after written notice from the

                                                         27
            Fiscal Agent that the Fiscal Agent has received notice thereof from a Holder requesting performance
            or observance of any other material obligation of these Conditions, or
      (c)   a decree or order for relief is entered by a court having jurisdiction in the premises in respect to the
            Issuer in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or
            hereafter in effect, or a receiver, liquidator, assignee, custodian, trustee, sequestrator or other similar
            official of the Issuer [in the case of Notes issued by Bayer Corporation, Bayer Capital Corp or
            Bayer Japan insert: or the Guarantor] or for any substantial part of the property of the Issuer [in the
            case of Notes issued by Bayer Corporation, Bayer Capital Corp or Bayer Japan insert: or of the
            Guarantor] is ordered, or the winding up or liquidation of the affairs of the Issuer [in the case of
            Notes issued by Bayer Corporation, Bayer Capital Corp or Bayer Japan insert: or of the
            Guarantor] is ordered and any such decree or order continues unstayed and in effect for a period of
            90 consecutive days, or
      (d)   the Issuer [in the case of Notes issued by Bayer Corporation, Bayer Capital Corp or Bayer Japan
            insert: or the Guarantor] (i) commences a voluntary case under any applicable bankruptcy, insolvency
            or other similar law now or hereafter in effect, or (ii) consents to the entry of an order for relief in an
            involuntary case under any such law or consents to the appointment of or taking possession by a
            receiver, liquidator, assignee, custodian, trustee, sequestrator or other similar official of the Issuer [in
            the case of Notes issued by Bayer Corporation, Bayer Capital Corp or Bayer Japan insert: or the
            Guarantor] or for any substantial part of the property of the Issuer [in the case of Notes issued by
            Bayer Corporation, Bayer Capital Corp or Bayer Japan insert: or the Guarantor], or (iii) makes a
            general assignment for the benefit of creditors, or (iv) fails generally to pay its debts as they become
            due, or (v) takes any corporate action in furtherance of any of the foregoing, or
      (e)   [in the case of Notes issued by Bayer Corporation, Bayer Capital Corp or Bayer Japan insert:
            the Guarantee ceases to be legally valid and binding or the Guarantor fails to fulfil its obligations
            under the Guarantee.]
            The right to declare Notes due shall terminate if the situation giving rise to it has been cured before
            the right is exercised.
(2)    Notice. Any notice, including any notice declaring Notes due, in accordance with subparagraph (1) shall
       be made by means of a written declaration in the German or English language delivered by hand or
       registered mail to the specified office of the Fiscal Agent together with proof that such Holder at the time of
       such notice is a holder of the relevant Notes by means of a certificate of his Custodian (as defined in
       § 13 [(4)]) or in other appropriate manner.


                                                          § 10
                                                     SUBSTITUTION
(1) Substitution. The Issuer may, without the consent of the Holders, if no payment of principal of or interest
    on any of the Notes is in default, at any time substitute for the Issuer [in the case of Notes issued by Bayer
    Corporation, Bayer Capital Corp or Bayer Japan insert: the Guarantor or] any other company more than
    90 per cent of the voting share or other equity interests of which are directly or indirectly owned by [in the
    case of Notes issued by Bayer Corporation, Bayer Capital Corp or Bayer Japan insert: the Guarantor]
    [in the case of Notes issued by Bayer AG insert: the Issuer] as principal debtor in respect of all obligations
    arising from or in connection with the Notes (the ‘‘Substitute Debtor’’) provided that:
      (a)   the Substitute Debtor assumes all obligations of the Issuer in respect of the Notes;
      (b)   the Issuer and the Substitute Debtor have obtained all necessary authorisations and may transfer to the
            Fiscal Agent in the currency required hereunder and without being obligated to deduct or withhold any
            taxes or other duties of whatever nature levied by the country in which the Substitute Debtor or the
            Issuer has its domicile or tax residence, all amounts required for the fulfilment of the payment
            obligations arising under the Notes;
      (c)   the Substitute Debtor has agreed to indemnify and hold harmless each Holder against any tax, duty,
            assessment or governmental charge imposed on such Holder in respect of such substitution;
      [in the case of Notes issued by Bayer AG insert:
      (d)   the Issuer irrevocably and unconditionally guarantees in favour of each Holder the payment of all
            sums payable by the Substitute Debtor (other than Bayer Corporation) in respect of the Notes on terms

                                                          28
              equivalent to the terms of the guarantee of the Issuer dated October 17, 2003 in respect of Notes
              issued by Bayer Corporation, Bayer Capital Corp or Bayer Japan under the Programme; and]
       [in the case of Notes issued by Bayer Corporation, Bayer Capital Corp or Bayer Japan insert:
       (d)    the Guarantor irrevocably and unconditionally guarantees in favour of each Holder the payment of all
              sums payable by the Substitute Debtor in respect of the Notes on terms equivalent to the terms of the
              Guarantee; and]
       (e)    there shall have been delivered to the Fiscal Agent an opinion or opinions of lawyers of recognised
              standing to the effect that subparagraphs (a), (b), (c) and (d) above have been satisfied.
(2) Notice.      Notice of any such substitution shall be published in accordance with § 12.
(3) Change of References. In the event of any such substitution, any reference in these Terms and Conditions
    to the Issuer shall from then on be deemed to refer to the Substitute Debtor and any reference to the country
    in which the Issuer is domiciled or resident for taxation purposes shall from then on be deemed to refer to
    the country of domicile or residence for taxation purposes of the Substitute Debtor.
       Furthermore, in the event of such substitution the following shall apply:
      [(a)]   in § 7 and § 5 (2) an alternative reference to [in the case of Notes issued by Bayer AG insert: the
              Federal Republic of Germany] [in the case of Notes issued by Bayer Capital Corp, Bayer
              Corporation or Bayer Japan insert: [the Netherlands] [the United States] [Japan]] shall be deemed
              to have been included in addition to the reference according to the preceding sentence to the country
              of domicile or residence for taxation purposes of the Substitute Debtor[.] [in the case of Notes issued
              by Bayer AG insert: ; and
       (b)    in § 9 (1) (a) to (e) an alternative reference to the Issuer in its capacity as Guarantor shall be deemed to
              have been included in addition to the reference to the Substitute Debtor.]


                                               § 11
                           FURTHER ISSUES, PURCHASES AND CANCELLATION
(1)     Further Issues. The Issuer may from time to time, without the consent of the Holders, issue further Notes
        having the same terms and conditions as the Notes in all respects (or in all respects except for the issue
        date, interest commencement date and/or issue price) so as to form a single Series with the Notes.
(2)     Purchases. The Issuer may at any time purchase Notes in the open market or otherwise and at any price.
        Notes purchased by the Issuer may, at the option of the Issuer, be held, resold or surrendered to the Fiscal
        Agent for cancellation. If purchases are made by public tender, tenders for such Notes must be made
        available to all Holders of such Notes alike.
(3)     Cancellation.    All Notes redeemed in full shall be cancelled forthwith and may not be reissued or resold.


                                                          § 12
                                                        NOTICES

[In the case of Notes which are listed on a Stock Exchange insert:
(1) Publication. As long as the rules of the stock exchange on which the Notes are listed require, all notices
    concerning the Notes shall be published in one leading daily newspaper having general circulation in
    [Germany] [Luxembourg] [the United Kingdom] [specify other location]. [This] [These] newspaper[s] [is]
                                o
    [are] expected to be the [B¨ rsen-Zeitung] [Luxemburger Wort] [Tageblatt] [Financial Times] [insert other
    applicable newspaper having general circulation]. Any notice so given will be deemed to have been
    validly given on the third day following the date of such publication (or, if published more than once, on the
    third day following the date of the first such publication).]
[(2)] Notification to Clearing System. [In the case of Notes which are unlisted insert: The Issuer shall deliver
      all notices concerning the Notes to the Clearing System for communication by the Clearing System to the
      Holders. Any such notice shall be deemed to have been given to the Holders on the seventh day after the day
      on which the said notice was given to the Clearing System.] [In the case of Notes which are listed on the
      Luxembourg Stock Exchange insert: So long as any Notes are listed on the Luxembourg Stock Exchange,
      subparagraph (1) shall apply. In the case of notices regarding the Rate of Interest or, if the Rules of the

                                                            29
     Luxembourg Stock Exchange so permit, the Issuer may deliver the relevant notice to the Clearing System for
     communication by the Clearing System to the Holders, in lieu of publication in the newspapers set forth in
     subparagraph (1) above; any such notice shall be deemed to have been given to the Holders on the seventh
     day after the day on which the said notice was given to the Clearing System.] [In the case of Notes which
     are listed on a Stock Exchange other than the Luxembourg Stock Exchange insert: The Issuer may, in
     lieu of publication in the newspapers set forth in subparagraph (1) above, deliver the relevant notice to the
     Clearing System, for communication by the Clearing System to the Holders, provided that, the rules of the
     stock exchange on which the Notes are listed permit such form of notice. Any such notice shall be deemed
     to have been given to the Holders on the seventh day after the day on which the said notice was given to the
     Clearing System.]


                                             § 13
                   APPLICABLE LAW, PLACE OF JURISDICTION AND ENFORCEMENT

(1) Applicable Law. The Notes, as to form and content, and all rights and obligations of the Holders and the
    Issuers, shall be governed by German law.

(2) Submission to Jurisdiction. The District Court (Landgericht) in Frankfurt am Main shall have non-
    exclusive jurisdiction for any action or other legal proceedings (‘‘Proceedings’’) arising out of or in
    connection with the Notes.

[in the case of Notes issued by Bayer Capital Corp, Bayer Corporation or Bayer Japan insert:

(3) Appointment of Authorized Agent. For any legal disputes or other proceedings before German courts, the
    Issuer appoints Bayer AG, [insert address] as its authorized agent for service of process in Germany.]

[(4)] Enforcement. Any Holder of Notes may in any proceeding against the Issuer, or to which such Holder and
      the Issuer are parties, protect and enforce in his own name his rights arising under such Notes on the basis of
      (i) a statement issued by the Custodian (as defined below) with whom such Holder maintains a securities
      account in respect of the Notes (a) stating the full name and address of the Holder, (b) specifying the
      aggregate principal amount of Notes credited to such securities account on the date of such statement and
      (c) confirming that the Custodian has given written notice to the Clearing System containing the information
      pursuant to (a) and (b) and (ii) a copy of the Note in global form certified as being a true copy by a duly
      authorized officer of the Clearing System or a depository of the Clearing System, without the need for
      production in such proceedings of the actual records or the global note representing the Notes. For purposes
      of the foregoing, ‘‘Custodian’’ means any bank or other financial institution of recognised standing
      authorized to engage in securities custody business with which the Holder maintains a securities account in
      respect of the Notes and includes the Clearing System. Each Holder may, without prejudice to the foregoing,
      protect and enforce his rights under these Notes also in any other way which is admitted in the country of the
      Proceedings.


                                                      § 14
                                                   LANGUAGE

[If the Conditions are to be in the German language with an English language translation insert:

     These Terms and Conditions are written in the German language and provided with an English language
translation. The German text shall be controlling and binding. The English language translation is provided for
convenience only.]

[If the Conditions are to be in the English language with a German language translation insert:

     These Terms and Conditions are written in the English language and provided with a German language
translation. The English text shall be controlling and binding. The German language translation is provided for
convenience only.]




                                                         30
[If the Conditions are to be in the English language only insert:
    These Terms and Conditions are written in the English language only.]

[In the case of Notes which are to be publicly offered, in whole or in part, in Germany or distributed, in
whole or in part, to nonprofessional investors in Germany with English language Conditions insert:
                    ¨                                                                          a
    Eine deutsche Ubersetzung der Emissionsbedingungen wird bei der bezeichneten Gesch¨ ftsstelle der
                                                 a
Emissionsstelle [sowie bei der bezeichneten Gesch¨ ftsstelle [der] [einer jeden] Zahlstelle] zur kostenlosen
Ausgabe bereitgehalten.]




                                                    31
                          PART II — DEFINITIVE NOTES IN BEARER FORM

     If the applicable Pricing Supplement provides for the issue of definitive Notes the Terms and Conditions of
Notes set out in Part I shall be supplemented, to the extent specified below, subject to all of the terms of the
applicable Pricing Supplement.

[§ 1 (3)(a) (CURRENCY, DENOMINATION, FORM, CERTAIN DEFINITIONS — Temporary Global
Note — Exchange) to be replaced by:

(a) The Notes are initially represented by a temporary global note (the ‘‘Temporary Global Note’’) without
    coupons. The Temporary Global Note will be exchangeable for [if Temporary Global Note is
    exchangeable for Definitive Notes only insert: individual Notes in the Specified Denominations in
    definitive form (‘‘Definitive Notes’’) [if the Notes are issued with Coupons, Talons and/or Receipts
    insert: with attached [interest coupons (‘‘Coupons’’)] [and talons (‘‘Talons’’) for further Coupons] [and]
    payment receipts (‘‘Receipts’’) in respect of the instalments of principal payable]]] [if Temporary Global
    Note is exchangeable for Definitive Notes and Collective Notes insert: in part, individual Notes in the
    Specified Denominations in definitive form (‘‘Definitive Notes’’) [if the Notes are issued with Coupons,
    Talons and/or Receipts insert: with attached [interest coupons (‘‘Coupons’’)] [and talons (‘‘Talons’’) for
    further Coupons] [and] [payment receipts (‘‘Receipts’’) in respect of the instalments of principal payable]]
    and in the other part, one or more collective Notes (each, a ‘‘Collective Note’’) [if the Notes are issued
    with Coupons insert: with attached global interest coupons (‘‘Global Interest Coupons’’)]; the right of
    Holders to require delivery of Definitive Notes in exchange for Notes which are represented by a Collective
    Note shall be governed by § 9a (3), first sentence Depotgesetz (German Securities Custody Act)]. The
    Temporary Global Note [if Temporary Global Note is exchangeable for Definitive Notes and Collective
    Notes insert: and any Collective Note [if the Notes are issued with Coupons insert: and any Global
    Interest Coupon]] shall be signed manually by [in case of Notes issued by Bayer AG or Bayer
    Corporation insert: two authorized signatories] [in case of Notes issued by Bayer Capital Corp or Bayer
    Japan insert: one authorized signatory] of the Issuer and the Temporary Global Note [and any Collective
    Note] shall be authenticated by or on behalf of the Fiscal Agent. Definitive Notes [if the Notes are issued
    with Coupons, Talons and/or Receipts insert: and [Coupons] [and] [,] [Talons] [and Receipts]] shall be
    signed in facsimile by two authorized signatories of the Issuer and the Definitive Notes shall be
    authenticated by or on behalf of the Fiscal Agent.]

[(i) in the case of Notes other than TEFRA D Notes, replace § 1 (3)(b) (CURRENCY, DENOMINATION,
FORM, CERTAIN DEFINITIONS — Temporary Global Note — Exchange) by:

(b) The Temporary Global Note shall be exchanged for Notes in the form provided in Clause (a) above on a date
    (the ‘‘Exchange Date’’) not later than 180 days after the date of issue of the Temporary Global Note.]

[(ii) in the case of TEFRA D Notes, replace § 1 (3)(b) (CURRENCY, DENOMINATION, FORM,
CERTAIN DEFINITIONS — Temporary Global Note — Exchange) by:

(b) The Temporary Global Note shall be exchanged for Notes in the form provided in Clause (a) above on a date
    (the ‘‘Exchange Date’’) not later than 180 days after the date of issue of the Temporary Global Note. The
    Exchange Date for such exchange will not be earlier than 40 days after the date of issue of the Temporary
    Global Note. Such exchange shall only be made upon delivery of certifications to the effect that the
    beneficial owner or owners of the Notes represented by the Temporary Global Note is not a U.S. person
    (other than certain financial institutions or certain persons holding Notes through such financial institutions).
    Payment of interest on Notes represented by a Temporary Global Note will be made only after delivery of
    such certifications. Any such certification received on or after the 40th day after the date of issue of the
    Temporary Global Note will be treated as a request to exchange such Temporary Global Note pursuant to
    subparagraph (b) of this § 1 (3). Any securities delivered in exchange for the Temporary Global Note shall
    be delivered only outside of the United States (as defined in § 4 (3)).]

(c) After the date that is 40 days after the Temporary Global Note is issued, upon 90 days written notice (which
    period shall not be deemed to expire until at least 30 days after the Exchange Date) from the Clearing
    System, acting on instructions from any Holder, Definitive Notes with, where applicable, receipts, interest
    coupons and talons attached, will be issued and delivered in full exchange for the Temporary Global Note or
    the Permanent Global Note. Any Definitive Note delivered in exchange for a Temporary Global Note or a
    Permanent Global Note shall be delivered only outside of the United States (as defined in § 4 (3)).

                                                        32
[§ 1 (4) and (5) (CURRENCY, DENOMINATION, FORM, CERTAIN DEFINITIONS — Clearing
System/ Holder of Notes) to be replaced by:
(4) Clearing System. ‘‘Clearing System’’ as used herein means [if more than one Clearing System insert:
    each of] the following: [Clearstream Banking AG, Frankfurt am Main, (‘‘CBF’’)] [Clearstream Banking,
        ee
    soci´ t´ anonyme, Luxembourg, (‘‘CBL’’)] [Euroclear Bank S.A./N.V., as operator of the Euroclear System
    (‘‘Euroclear’’)] [,] [and] [specify other Clearing System].
(5) Holder of Notes. ‘‘Holder’’ as used herein means, in respect of Notes deposited with any Clearing System
    or other central securities depositary, any holder of a proportionate co-ownership or other beneficial interest
    or right in the Notes so deposited and otherwise in the case of Definitive Notes the bearer of a Definitive
    Note.
(6) References to Notes. References herein to the ‘‘Notes’’ include (unless the context otherwise requires)
    references to any global note representing the Notes and any Definitive Notes [if the Notes are issued with
    Coupons, Talons and/or Receipts insert: and the [Coupons] [,] [and] [Global Interest Coupons] [,] [and]
    [Talons] [and Receipts] appertaining thereto].]

[In the case of Fixed Rate Notes replace § 3 (2) (INTEREST-INDEXATION — Accrual of Interest) by:
(2) Accrual of Interest. The Notes shall cease to bear interest from the beginning of the day on which they are
    due for redemption. If the Issuer shall fail to redeem the Notes when due, interest shall continue to accrue on
    the outstanding principal amount of the Notes beyond the due date until the actual redemption of the Notes,
    but not beyond the fourteenth day after notice has been given by the Fiscal Agent in accordance with § 12
    that the funds required for redemption have been provided to the Fiscal Agent. The applicable Rate of
    Interest will be the default rate of interest established by law(1).]

[In the case of Floating Rate Notes replace § 3 [(7)] (INTEREST-INDEXATION — Accrual of Interest) by:
[(7)] Accrual of Interest. The Notes shall cease to bear interest from the beginning of the day on which they are
      due for redemption. If the Issuer shall fail to redeem the Notes when due, interest shall continue to accrue on
      the outstanding principal amount of the Notes beyond the due date until the actual redemption of the Notes,
      but not beyond the fourteenth day after notice has been given by the Fiscal Agent in accordance with § 12
      that the funds required for redemption have been provided to the Fiscal Agent. The applicable Rate of
      Interest will be the default rate of interest established by law(1).]

[In the case of Zero Coupon Notes replace § 3 (2) (INTEREST-INDEXATION — Accrual of Interest)
by:
(2) Accrual of Interest. If the Issuer shall fail to redeem the Notes when due, interest shall accrue on the
    outstanding principal amount of the Notes as from the due date to the date of actual redemption at the
    default rate of interest established by law(1), but not beyond the fourteenth day after notice has been given by
    the Fiscal Agent in accordance with § 12 that the funds required for redemption have been provided to the
    Fiscal Agent.]

[§ 4 (1)[(a)] (PAYMENTS — Payment of Principal) to be replaced by:
(1) [(a)] Payment of Principal. Payment of principal in respect of Notes shall be made, subject to
          subparagraph (2) below, against presentation and (except in the case of partial payment) surrender of
          the relevant Note at the specified office of the Fiscal Agent outside the United States or at the specified
          office of any other Paying Agent outside the United States.]
[In the case of Instalment Notes insert: Payment of Instalment Amounts in respect of an Instalment Note with
     Receipts will be made against presentation of the Note together with the relevant Receipt and surrender of
     such Receipt and, in the case of the final Instalment Amount, surrender of the Note at the specified office of
     the Fiscal Agent outside the United States or at the specified office of any other Paying Agent outside the
     United States. Receipts are not documents of title and, if separated from the Note to which they relate, shall
     not represent any obligation of the Issuer. Accordingly, the presentation of an Instalment Note without the
     relevant Receipt or the presentation of a Receipt without the Note to which it pertains shall not entitle the
     Holder to any payment in respect of the relevant Instalment Amount.]

(1) The default rate of interest established by law is five percentage points above the basic rate of interest published by Deutsche
    Bundesbank from time to time, §§ 288(1), 247 German Civil Code.


                                                                33
[In the case of Notes other than Zero Coupon Notes replace § 4 (1)(b) (PAYMENTS — Payment of Interest)
by:
(b) Payment of Interest. Payment of interest on Notes shall be made, subject to subparagraph (2) below,
    against presentation and surrender of the relevant Coupons or, in the case of Notes in respect of which
    Coupons have not been issued or in the case of interest due otherwise than on a scheduled date for the
    payment of interest, against presentation of the relevant Notes, at the specified office of the Fiscal Agent
    outside the United States or at the specified office of any other Paying Agent outside the United States.]
[In the case of TEFRA D Notes insert: Payment of interest on Notes represented by a Temporary Global Note
     shall be made, subject to subparagraph (2), to the Clearing System or to its order for credit to the relevant
     account holders of the Clearing System, upon due certification as provided in § 1 (3)(b).]

[In the case of Notes with Coupons, Talons and/or Receipts insert as § 4 (1)(c) (PAYMENTS — Surrender
of [Coupons] [,] [and] [Talons] [and Receipts]):
(c) Surrender of [Coupons] [,] [and] [Talons] [and Receipts]. Each Note initially delivered with [Coupons]
    [or] [Talons] [or Receipts] attached thereto must be presented and, except in the case of partial payment of
    the redemption amount, surrendered for final redemption together with all unmatured [Coupons] [,] [and]
    [Talons] [and Receipts] relating thereto, failing which [In the case of Fixed Rate Notes insert: the amount
    of any missing unmatured Coupons shall be deducted from the amount otherwise payable on such final
    redemption [,] [and] [.]] [In the case of Floating Rate Notes insert: all unmatured Coupons relating to such
    Notes (whether or not surrendered therewith) shall become void and no payment shall be made thereafter in
    respect of them [,] [and] [.]] [In the case of Notes initially delivered with Talons insert: all unmatured
    Talons (whether or not surrendered therewith) shall become void and no exchange for Coupons shall be
    made thereafter in respect of them [and] [.]] [In the case of Notes initially delivered with Receipts insert:
    all Receipts relating to such Notes in respect of payment of an Instalment Amount which (but for such
    redemption) would have fallen due on a date after such due date for redemption (whether or not surrendered
    therewith) shall become void and no payment shall be made thereafter in respect to them.]
[In the case of Fixed Rate Notes initially delivered with Coupons insert: If the Notes should be issued with a
     Maturity Date and an interest rate or rates such that, on the presentation for payment of any such Note
     without any unmatured Coupons attached thereto or surrendered therewith, the amount required to be
     deducted in accordance with the foregoing would be greater than the redemption amount otherwise due for
     payment, then, upon the due date for redemption of any such Note, such unmatured Coupons (whether or not
     attached) shall become void (and no payment shall be made in respect thereof) as shall be required so that
     the amount required to be deducted in accordance with the foregoing would not be greater than the
     redemption amount otherwise due for payment. Where the application of the preceding sentence requires
     some but not all of the unmatured Coupons relating to a Note to become void, the relevant Paying Agent
     shall determine which unmatured Coupons are to become void, and shall select for such purpose Coupons
     maturing on later dates in preference to Coupons maturing on earlier dates.]
[In the case of Notes initially delivered with Talons insert: On or after the Interest Payment Date on which the
     final Coupon in any Coupon sheet matures, the Talon comprised in the Coupon sheet may be surrendered at
     the specified office of any Paying Agent, in exchange for a further Coupon sheet (including any appropriate
     further Talon). Each Talon shall, for the purpose of these Terms and Conditions, be deemed to mature on the
     Interest Payment Date on which the final Coupon in the relative Coupon sheet matures.]

[§ 4 (2) (PAYMENTS — Manner of Payment) to be replaced by:
(2) Manner of Payment. Subject to applicable fiscal and other laws and regulations, payments of amounts due
    in respect of the Notes shall be made in the freely negotiable and convertible currency which on the
    respective due date is the currency in the country of the Specified Currency
[In the case of payments in a currency other than euro or U.S. dollars insert: by check payable in such
     currency drawn on a bank in the principal financial centre of the country of the Specified Currency or, at the
     option of the payee, by transfer to an account denominated in such currency maintained by the payee with a
     bank in such financial centre.]
[In the case of payments in euro insert: in cash or by euro check drawn on, or, at the option of the payee, by
     transfer to a euro account maintained by the payee with, a bank in a principal financial centre of a country
     which has become a participating member state in the European Economic and Monetary Union]

                                                       34
[In the case of payments in U.S. dollars insert: by U.S. dollar check drawn on a bank in New York City or, at
     the option of the payee, by transfer to a U.S. dollar account maintained by the payee at a bank outside the
     United States.]
    No payments shall be made either by check mailed to an address inside the United States or by transfer to an
account maintained in the United States.]

[§ 4 (3) (PAYMENTS — United States) to be replaced by:
(3) United States. For purposes of [in the case of TEFRA D Notes insert: § 1 (3) and subparagraph (1) [in
    the case of payments in U.S. dollars insert: and (2)] of this § 4, ‘‘United States’’ means the United States
    of America (including the States thereof and the District of Columbia) and its possessions (including Puerto
    Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and Northern Mariana Islands).]

[§ 4 (4) (PAYMENTS — Discharge) to be replaced by:
(4) Discharge. In the case of any Notes held through any Clearing System, the Issuer [in the case of Notes
    issued by Bayer Corporation, Bayer Capital Corp or Bayer Japan insert: or, as the case may be, the
    Guarantor] shall be discharged by payment to, or to the order of, the Clearing System.]

[§ 5 [(3)](b)(ii) (REDEMPTION — Early Redemption at the Option of the Issuer) to be replaced by:
      (ii)   whether such Series is to be redeemed in whole or in part only and, if in part only, the aggregate
             principal amount of the Notes and the serial numbers of the Notes which are to be redeemed;]

[§ 5 [(3)](c) (REDEMPTION — Early Redemption at the Option of the Issuer) to be replaced by:
(c) In the case of a partial redemption of Notes, Notes to be redeemed shall be drawn by lot or identified in such
    other manner as the Fiscal Agent may in its sole discretion deem appropriate and fair.]

[§ 5 [(4)](b) (REDEMPTION — Early Redemption at the Option of a Holder) to be replaced by:
(b) In order to exercise such option, the Holder must, not less than [insert Minimum Notice to Issuer] days
    before the Put Redemption Date on which such redemption is required to be made as specified in the Put
    Notice (as defined below), submit during normal business hours at the specified office of the Fiscal Agent or
    any other Paying Agent a duly completed early redemption notice (‘‘Put Notice’’) in the form available from
    the specified office of the Fiscal Agent or any of the other Paying Agents and deposit the relevant Note at
    such office with the Put Notice. No option so exercised or Note so deposited may be revoked or withdrawn.]

[Insert after § 6(2) (AGENTS — Variation or Termination of Appointment):
     In the event that any European Union Directive on the taxation of savings implementing the conclusions of
the ECOFIN Council meeting of 26-27 November 2000 or any law implementing or complying with, or
introduced in order to conform to, such Directive is introduced, the Issuer shall at all times maintain a Paying
Agent in a Member State of the European Union that will not be obliged to deduct or withhold tax pursuant to
any such Directive or law, to the extent this is possible in a Member State of the European Union.]

[Insert the following after § 7 (TAXATION) subclause (e) and reletter remaining subparagraphs
accordingly:
(f)   would not be payable if the Notes had been kept in safe custody with, and the payments had been collected
      by, a banking institution; or]

[§ 8 (PRESENTATION PERIOD) to be replaced by:


                                                      §8
                          PRESENTATION PERIOD, REPLACEMENT OF NOTES
                       [If the Notes are issued with Coupons insert: AND COUPONS]
     The presentation period provided in § 801 subparagraph 1, sentence 1 BGB (German Civil Code) is reduced
to ten years for the Notes. [If the Notes are issued with Coupons insert: The presentation period for the
Coupons shall, in accordance with § 801 subparagraph 2 BGB (German Civil Code), be four years, beginning
with the end of the calendar year in which the relevant Coupon falls due.] Should any Note [if the Notes are

                                                       35
issued with Coupons insert: or Coupon] be lost, stolen, mutilated, defaced or destroyed, it may be replaced at
the specified office of the Fiscal Agent, subject to relevant stock exchange requirements and all applicable laws,
upon payment by the claimant of such costs and expenses as may be incurred in connection therewith and on such
terms as to evidence, security and indemnity and otherwise as the Issuer may reasonably require. Mutilated or
defaced Notes [if the Notes are issued with Coupons insert: or Coupons] must be surrendered before
replacements will be issued.]

[If the Notes are issued with Coupons replace § 11 (3) (FURTHER ISSUES, PURCHASES AND
CANCELLATION — Cancellation) by:
(3) Cancellation. All Notes redeemed in full shall be cancelled forthwith together with all unmatured Coupons
    surrendered therewith or attached thereto and may not be reissued or resold.]

[§ 12 (NOTICES) to be replaced in its entirety by the following:


                                                     § [12]
                                                    NOTICES
     All notices concerning the Notes shall be published in one leading daily newspaper having general
circulation in [Germany] [Luxembourg] [the United Kingdom] [specify other location]. [This] [These]
                                             o
newspaper[s] [is] [are] expected to be the [B¨ rsen-Zeitung] [Luxemburger Wort] [Financial Times] [insert other
applicable newspaper having general circulation]. Any notice so given will be deemed to have been validly
given on the third day following the date of such publication (or, if published more than once, on the third day
following the date of the first such publication).]

[§ 13[(4)] (APPLICABLE LAW, PLACE OF JURISDICTION AND ENFORCEMENT — Enforcement) to
be replaced by:
[(4)] Enforcement. The Holder of any Notes held through a Clearing System may in any proceedings against the
      Issuer, or to which such Holder and the Issuer are parties, protect and enforce in his own name his rights
      arising under such Notes on the basis of (i) a statement issued by the Custodian with whom such Holder
      maintains a securities account in respect of the Notes (a) stating the full name and address of the Holder,
      (b) specifying the aggregate principal amount of Notes credited to such securities account on the date of
      such statement and (c) confirming that the Custodian has given written notice to the Clearing System
      containing the information pursuant to (a) and (b) and (ii) a copy of the Note in global or definitive form
      certified as being a true copy by a duly authorized officer of the Clearing System or a depository of the
      Clearing System, without the need for production in such proceedings of the actual records or the Temporary
      Global Note or Definitive Note [if the Temporary Global Note is exchangeable for Definitive Notes and
      Collective Notes insert: or Collective Note]. For purposes of the foregoing, ‘‘Custodian’’ means any bank
      or other financial institution of recognised standing authorized to engage in securities custody business with
      which the Holder maintains a securities account in respect of the Notes and includes the Clearing System.
      Each Holder may, without prejudice to the foregoing, protect and enforce his rights under these Notes also
      in any other way which is admitted in the country of the Proceedings.]




                                                        36
                            TERMS AND CONDITIONS OF THE NOTES
                                   German Language Version
                       (DEUTSCHE FASSUNG DER EMISSIONSBEDINGUNGEN)

                                                                                                  u
    Die Emissionsbedingungen (die ‘‘Emissionsbedingungen’’) sind nachfolgend in zwei Teilen aufgef¨ hrt:

                 a
    TEIL I enth¨ lt die Grundbedingungen (die ‘‘Grundbedingungen’’), die die Emissionsbedingungen
umfassen, die auf Serien von Schuldverschreibungen Anwendung finden, die durch auf den Inhaber lautende
Globalurkunden verbrieft sind.

                                  a
     TEIL II (der ‘‘Zusatz’’) enth¨ lt die Bestimmungen, die im Fall von Schuldverschreibungen, die durch auf den
                                                                                a
Inhaber lautende Sammelurkunden und/oder Einzelurkunden verbrieft sind erg¨ nzend zu den Grundbedingungen
des TEIL I Anwendung finden.

                                        o
    Die Grundbedingungen und der dazugeh¨ rige Zusatz bilden zusammen die Emissionsbedingungen.

                                                           a
    Diese Serie von Schuldverschreibungen wird gem¨ ß einem Amended and Restated Fiscal Agency
Agreement vom 15. Oktober 2004 (das ‘‘Agency Agreement’’) zwischen Bayer Aktiengesellschaft (‘‘Bayer
AG’’), Bayer Capital Corporation B.V. (‘‘Bayer Capital Corp’’), Bayer Corporation (‘‘Bayer Corporation’’)
oder Bayer Ltd. (‘‘Bayer Japan’’) (jeweils eine ‘‘Emittentin’’ und zusammen die ‘‘Emittentinnen’’) und
Deutsche Bank AG London als Emissionsstelle (die ‘‘Emissionsstelle’’, wobei dieser Begriff jeden Nachfolger
                        a
der Emissionsstelle gem¨ ß dem Agency Agreement einschließt) und den anderen darin genannten Parteien
                                                                                   a
begeben. Kopien des Agency Agreement sind kostenlos bei der bezeichneten Gesch¨ ftsstelle der Emissionsstelle
                              a                                                                          a
und bei der bezeichneten Gesch¨ ftsstelle einer jeden Zahlstelle sowie am Sitz einer jeden Emittentin erh¨ ltlich.

[Im Falle von nicht-konsolidierten Bedingungen — wobei die Emissionsbedingungen und das
                                   ¨               ¨
Konditionenblatt der Urkunde beizufugen sind — einfugen:

                                                                 u
     Die Bestimmungen dieser Emissionsbedingungen gelten f¨ r diese Schuldverschreibungen so, wie sie durch
                          u                                                             a        a            a
die Angaben des beigef¨ gten Konditionenblattes (das ‘‘Konditionenblatt’’) vervollst¨ ndigt, ge¨ ndert, erg¨ nzt
oder ganz oder teilweise ersetzt werden. Die Leerstellen in den auf die Schuldverschreibungen anwendbaren
Bestimmungen dieser Emissionsbedingungen gelten als durch die im Konditionenblatt enthaltenen Angaben
      u                                                                                                u
ausgef¨ llt, als ob die Leerstellen in den betreffenden Bestimmungen durch diese Angaben ausgef¨ llt w¨ ren; a
                                   ¨              a                  a
sofern das Konditionenblatt die Anderung, Erg¨ nzung oder (vollst¨ ndige oder teilweise) Ersetzung bestimmter
Bestimmungen dieser Emissionsbedingungen vorsieht, gelten die betreffenden Bestimmungen als entsprechend
  a            a                                    a
ge¨ ndert, erg¨ nzt oder ersetzt; alternative oder w¨ hlbare Bestimmungen dieser Emissionsbedingungen, deren
                                                        u
Entsprechungen im Konditionenblatt nicht ausgef¨ llt oder die gestrichen sind, gelten als aus diesen
                                       a
Emissionsbedingungen gestrichen; s¨ mtliche auf die Schuldverschreibungen nicht anwendbaren Bestimmungen
dieser Emissionsbedingungen (einschließlich der Anweisungen, Anmerkungen und der Texte in eckigen
Klammern) gelten als aus diesen Emissionsbedingungen gestrichen, soweit dies erforderlich ist, um den
Bestimmungen des Konditionenblattes Geltung zu verschaffen. Kopien des Konditionenblattes sind kostenlos bei
                           a                                                               a
der bezeichneten Gesch¨ ftsstelle der Emissionsstelle und bei der bezeichneten Gesch¨ ftsstelle einer jeden
                a                            o
Zahlstelle erh¨ ltlich; bei nicht an einer B¨ rse notierten Schuldverschreibungen sind Kopien des betreffenden
                                                u        a                                        a
Konditionenblattes allerdings ausschließlich f¨ r die Gl¨ ubiger solcher Schuldverschreibungen erh¨ ltlich.]




                                                       37
            TEIL I — EMISSIONSBEDINGUNGEN DER SCHULDVERSCHREIBUNGEN
                                       §1
                   ¨         ¨
                WAHRUNG, STUCKELUNG, FORM, BEGRIFFSBESTIMMUNGEN
      a          u
(1) W¨ hrung; St¨ ckelung. Diese Serie der Schuldverschreibungen (die ‘‘Schuldverschreibungen’’) der
    [Bayer AG] [Bayer Capital Corporation B.V.] [Bayer Corporation] [Bayer Ltd.] (die ‘‘Emittentin’’) wird in
                     a            ¨                               a
    [festgelegte W¨ hrung einfugen] (die ‘‘festgelegte W¨ hrung’’) im Gesamtnennbetrag von
                             ¨                                                       ¨           u
    [Gesamtnennbetrag einfugen] (in Worten: [Gesamtnennbetrag in Worten einfugen]) in St¨ ckelungen
                       ¨              ¨                           ¨
    von [festgelegte Stuckelungen einfugen] (die ‘‘festgelegten Stuckelungen’’) begeben.
(2) Form. Die Schuldverschreibungen lauten auf den Inhaber.
                                                                                               ¨
    [Im Falle von Schuldverschreibungen, die durch eine Dauerglobalurkunde verbrieft sind, einfugen:
(3) Dauerglobalurkunde. Die Schuldverschreibungen sind durch eine Dauerglobalurkunde (die
                                                                                      a               a
    ‘‘Dauerglobalurkunde’’) ohne Zinsscheine verbrieft. Die Dauerglobalurkunde tr¨ gt die eigenh¨ ndigen
    Unterschriften [im Fall von durch Bayer AG oder Bayer Corporation begebenen
                                 ¨                           a         a
    Schuldverschreibungen, einfugen: zweier ordnungsgem¨ ß bevollm¨ chtigter Vertreter] [im Fall von durch
    Bayer Capital Corp oder Bayer Japan begebenen Schuldverschreibungen, einfugen: eines         ¨
                 a         a
    ordnungsgem¨ ß bevollm¨ chtigten Vertreters] der Emittentin und ist von der Emissionsstelle oder in deren
    Namen mit einer Kontrollunterschrift versehen. [im Fall von Schuldverschreibungen, die nicht von Bayer
                                        ¨
    Corporation begeben werden, einfugen: Einzelurkunden und Zinsscheine werden nicht ausgegeben.]]
    [Im Falle von Schuldverschreibungen, die durch Bayer Corporation begeben werden oder im Falle
                                       a                      a
    von Schuldverschreibungen, die anf¨ nglich durch eine vorl¨ ufige Globalurkunde verbrieft sind,
        ¨
    einfugen:
        a
(3) Vorl¨ ufige Globalurkunde — Austausch.
    (a)                                        a                     a                                a
          Die Schuldverschreibungen sind anf¨ nglich durch eine vorl¨ ufige Globalurkunde (die ‘‘vorl¨ ufige
                                                                       a
          Globalurkunde’’) ohne Zinsscheine verbrieft. Die vorl¨ ufige Globalurkunde wird gegen
                                                        u
          Schuldverschreibungen in den festgelegten St¨ ckelungen, die durch eine Dauerglobalurkunde (die
          ‘‘Dauerglobalurkunde’’) ohne Zinsscheine verbrieft sind, ausgetauscht. Die vorl¨ ufige       a
                                                                              a
          Globalurkunde und die Dauerglobalurkunde tragen jeweils die eigenh¨ ndigen Unterschriften [im Fall
          von durch Bayer AG oder Bayer Corporation begebenen Schuldverschreibungen, einfugen:         ¨
                               a          a
          zweier ordnungsgem¨ ß bevollm¨ chtigter Vertreter] [im Fall von durch Bayer Capital Corp oder
                                                                ¨                         a        a
          Bayer Japan begebenen Schuldverschreibungen, einfugen: eines ordnungsgem¨ ß bevollm¨ chtigten
          Vertreters] der Emittentin und sind jeweils von der Emissionsstelle oder in deren Namen mit einer
          Kontrollunterschrift versehen. [im Fall von Schuldverschreibungen, die nicht von Bayer
                                                  ¨
          Corporation begeben werden, einfugen: Einzelurkunden und Zinsscheine werden nicht
          ausgegeben.]
    (b)             a
          Die vorl¨ ufige Globalurkunde wird an einem Tag (der ‘‘Austauschtag’’) gegen die
          Dauerglobalurkunde ausgetauscht, der nicht mehr als 180 Tage nach dem Tag der Ausgabe der
              a                                               u
          vorl¨ ufigen Globalurkunde liegt. Der Austauschtag f¨ r einen solchen Austausch soll nicht weniger als
                                                      a
          40 Tage nach dem Tag der Ausgabe der vorl¨ ufigen Globalurkunde liegen. Ein solcher Austausch soll
                                                                                                      u
          nur nach Vorlage von Bescheinigungen erfolgen, wonach der oder die wirtschaftlichen Eigent¨ mer der
                         a
          durch die vorl¨ ufige Globalurkunde verbrieften Schuldverschreibungen keine U.S.-Personen sind
          (ausgenommen bestimmte Finanzinstitute oder bestimmte Personen, die Schuldverschreibungen uber   ¨
                                                                               a
          solche Finanzinstitute halten). Zinszahlungen auf durch eine vorl¨ ufige Globalurkunde verbriefte
          Schuldverschreibungen erfolgen erst nach Vorlage solcher Bescheinigungen. Eine gesonderte
          Bescheinigung ist hinsichtlich einer jeden solchen Zinszahlung erforderlich. Jede Bescheinigung, die
                                                                           a
          am oder nach dem 40. Tag nach dem Tag der Ausgabe der vorl¨ ufigen Globalurkunde eingeht, wird
                                                 a                           a
          als ein Ersuchen behandelt, diese vorl¨ ufige Globalurkunde gem¨ ß Absatz (b) dieses § 1 Absatz 3
                                                          u         a
          auszutauschen. Wertpapiere, die im Austausch f¨ r die vorl¨ ufige Globalurkunde geliefert werden, sind
          nur außerhalb der Vereinigten Staaten zu liefern (wie in § 4 (3) definiert).]
                                                                                       ¨
          [Im Fall von Schuldverschreibungen, die Bayer Corporation begeben werden einfugen:
    (c)                              a
          40 Tage nachdem die Vorl¨ ufige Globalurkunde ausgegeben wurde, werden aufgrund einer 90 Tage im
                                                                                  u
          voraus erteilten schriftlichen Mitteilung (wobei die Mitteilungsfrist fr¨ hestens 30 Tage nach dem
                            a                                                                a
          Austauschtag abl¨ uft) des Clearing Systems, das auf Weisung eines Gl¨ ubigers handelt,
                                                        o      u
          Einzelurkunden und gegebenenfalls dazugeh¨ rige R¨ ckzahlungsscheine, Zinsscheine und Talons
                                                        a
          begeben und im Umtausch gegen die Vorl¨ ufige Globalurkunde oder die Dauerglobalurkunde

                                                     38
                                            u            a
            geliefert. Eine im Umtausch f¨ r eine Vorl¨ ufige Globalurkunde oder eine Dauerglobalurkunde
            gelieferte Einzelurkunde darf lediglich außerhalb der Vereinigten Staaten (wie in § 4 (3) definiert)
            geliefert werden.]

                                                                                              ¨
      [Im Fall von Schuldverschreibungen, die nicht von Bayer Corporation begeben werden, einfugen:
(4)    Clearing System. Die Dauerglobalurkunde wird solange von einem oder im Namen eines Clearing
                                a                                                                         u
       Systems verwahrt, bis s¨ mtliche Verbindlichkeiten der Emittentin aus den Schuldverschreibungen erf¨ llt
                                                                                     ¨
       sind. ‘‘Clearing System’’ bedeutet [bei mehr als einem Clearing System einfugen: jeweils] folgendes:
                                                                                                ee
       [Clearstream Banking AG, Frankfurt am Main, (‘‘CBF’’)] [Clearstream Banking, soci´ t´ anonyme,
       Luxembourg, (‘‘CBL’’)] [Euroclear Bank S.A./N.V., als Betreiberin des Euroclear Systems
       (‘‘Euroclear’’)] [,] [und] [anderes Clearing System angeben].]
(5)      a                                        a
       Gl¨ ubiger von Schuldverschreibungen. ‘‘Gl¨ ubiger’’ bedeutet jeder Inhaber eines Miteigentumsanteils
       oder anderen treugeberischen oder eigenen Rechts an den Schuldverschreibungen.


                                                 §2
      STATUS, NEGATIVVERPFLICHTUNG [im Fall von Schuldverschreibungen begeben von Bayer
                                                                    ¨
              Corporation, Bayer Capital Corp oder Bayer Japan, einfugen: ; GARANTIE]
(1)                                             u
       Status. Die Schuldverschreibungen begr¨ nden nicht besicherte und nicht nachrangige Verbindlichkeiten
                                                                     a               u
       der Emittentin, die untereinander und mit allen anderen gegenw¨ rtigen und zuk¨ nftigen nicht besicherten
       und nicht nachrangigen Verbindlichkeiten der Emittentin gleichrangig sind, soweit diesen
                                                                                  a
       Verbindlichkeiten nicht durch gesetzliche Bestimmungen ein Vorrang einger¨ umt wird.
(2)    Negativverpflichtung.
      [Im Fall von Schuldverschreibungen begeben von Bayer AG, Bayer Capital Corp oder Bayer Japan,
           ¨
      einfugen: Die Emittentin verpflichtet sich, solange Schuldverschreibungen ausstehen, jedoch nur bis zu dem
                                   a                                                     u
      Zeitpunkt, an dem alle Betr¨ ge an Kapital und Zinsen der Hauptzahlstelle zur Verf¨ gung gestellt worden
             u
      sind, f¨ r andere, nachstehend definierte Wertpapieremissionen nach dem Tag der Begebung kein
                                                       a              o                             a
      Sicherungsrecht (‘‘Pfandrecht’’) am eigenen inl¨ ndischen Verm¨ gen zu bestellen, ohne die Gl¨ ubiger zur
      gleichen Zeit und im gleichen Rang an einem solchen Pfandrecht teilhaben zu lassen, mit der Maßgabe, daß
      diese Verpflichtung keine Anwendung findet, falls die Emittentin Pfandrechte folgender Art bestellt,
      ¨                          a
      ubernimmt oder bestehen l¨ ßt:
      (a)                                  o
            Pfandrechte, die auf einem Verm¨ gensgegenstand zum Zeitpunkt des Erwerbs durch die Emittentin
            lasten;
      (b)   Pfandrechte zur Besicherung von Verbindlichkeiten, die vor dem Erwerb, zum Zeitpunkt des Erwerbs
                                                                        o
            oder innerhalb von 12 Monaten nach dem Erwerb eines Verm¨ gensgegenstandes durch die Emittentin
                                  a
            zum Zwecke der vollst¨ ndigen oder teilweisen Kaufpreisfinanzierung eingegangen worden sind, sowie
                                                ¨
            Pfandrechte, die zur Sicherung von uber diesen Kaufpreis hinausgehenden Verbindlichkeiten dienen,
                                   u                                                        o
            vorausgesetzt, daß f¨ r deren Begleichung ausschließlich auf diesen Vem¨ gensgegenstand
               u
            zur¨ ckgegriffen werden kann;
      (c)   Pfandrechte zur Besicherung von Verbindlichkeiten, die vor, zum Zeitpunkt, oder innerhalb von 12
                                                                 a
            Monaten nach der Fertigstellung einer Errichtung, Ver¨ nderung, Instandsetzung oder Verbesserung
                       o                                                             a
            eines Verm¨ gensgegenstandes der Emittentin zum Zwecke der vollst¨ ndigen oder teilweisen
            Finanzierung der dabei entstehenden Kosten eingegangen worden sind, sowie Pfandrechte, die zur
                           ¨                                                                               u
            Sicherung von uber diese Kosten hinausgehenden Verbindlichkeiten dienen, vorausgesetzt, daß f¨ r
                                                            o                    u
            deren Begleichung ausschließlich auf diesen Verm¨ gensgegenstand zur¨ ckgegriffen werden kann;
      (d)                   a                          a
            jedwede vollst¨ ndige oder teilweise Verl¨ ngerung, Erneuerung oder Ersetzung (oder wiederholte
                 a
            Verl¨ ngerungen, Erneuerungen oder Ersetzungen) eines der vorstehend in den Klauseln (a) bis
                       u
            (c) aufgef¨ hrten Pfandrechte, soweit der Nennbetrag der dadurch besicherten Verbindlichkeit den im
                                           a
            Zeitpunkt einer solchen Verl¨ ngerung, Erneuerung oder Ersetzung besicherten Nennbetrag nicht
            ¨                                             a
            ubersteigt (mit der Ausnahme, daß zus¨ tzliche Verbindlichkeiten sowie damit verbundene
                                                                               o
            Finanzierungskosten durch das Pfandrecht besichert werden k¨ nnen, wenn diese zus¨ tzlichen  a
                                                          u
            Verbindlichkeiten zur Mittelbeschaffung f¨ r die Fertigstellung eines bestimmten Vorhabens
                                                                                  o
            eingegangen werden), und soweit das Pfandrecht auf denselben Verm¨ gensgegenstand, an welchem
                    a                                                                 a
            das verl¨ ngerte, erneuerte oder ersetzte Pfandrecht bestanden hat, beschr¨ nkt bleibt (einschließlich
                                           o
            Wertverbesserungen des Verm¨ gensgegenstandes);

                                                        39
    (e)   Pfandrechte, die kraft Gesetzes entstehen;
    (f)                                                             a
          Pfandrechte, die aus oder in Verbindung mit der Ver¨ ußerung oder der Vermietung von
               o            a
          Verm¨ gensgegenst¨ nden an Leasinggesellschaften entstehen, die den Gesamtbetrag von Euro
                                                              a               ¨
          1 Milliarde pro Jahr oder den Gegenwert in anderen W¨ hrungen nicht ubersteigen (seit dem Tag der
          Begebung); und
    (g)    Pfandrechte, die Verbindlichkeiten besichern, deren Betrag Euro 250.000.000 (aggregiert mit dem
           Betrag von anderen Verbindlichkeiten, die ein Pfandrecht besitzen welches nach den vorstehenden
                    a                                                         a
           Unterabs¨ tzen nicht erlaubt ist) oder den Gegenwert in anderen W¨ hrungen zu jeder Zeit nicht
           ¨
           ubersteigt.
    In Bezug auf von der Emittentin begebene asset-backed Emissionen, schließen die im ersten Satz dieses
                                      o                                             o           a
Abschnittes (2) benutzten Worte ‘‘Verm¨ gen’’ und ‘‘Wertpapieremission’’ nicht Verm¨ gensgegenst¨ nde und
                                                          o
Wertpapiermissionen der Emmittentin ein, solange das Verm¨ gen, das derartige Emissionen deckt zusammen
42.000.000.000 nicht ubersteigt.
                     ¨
     ‘‘Wertpapieremission’’ bedeutet jede Zahlungsverpflichtung aus der Aufnahme von Geld in der Form von
                                                  ¨                                           u
oder verbrieft durch Schuldverschreibungen oder ahnliche(n) Wertpapiere(n) mit einer urspr¨ nglichen Laufzeit
von mehr als einem Jahr, [im Fall von Schuldverschreibungen begeben von Bayer Japan, einfugen: die     ¨
(A) aufgrund ihrer Bedingungen in einer anderen oder unter Bezugnahme auf eine andere W¨ hrung als   a
                                                                            a
japanischen Yen zahlbar sind oder bei denen eine Zahlung in einer anderen W¨ hrung als japanischen Yen verlangt
werden kann und (B) bei denen mehr als 50 % des Nennbetrages mit der Zustimmung der Emittentin und der
            a                                                                      o
Garantin anf¨ nglich außerhalb Japans plaziert wurden und] die an einer Wertpapierb¨ rse oder in einem over-the-
                                        u                                                   ¨
counter Wertpapiermarkt notiert, eingef¨ hrt oder gehandelt werden oder die anderweitig offentlich gehandelt
werden oder gehandelt werden sollen.]
                                                                                         ¨
      [Im Fall von Schuldverschreibungen begeben von Bayer Corporation, einfugen: Die Emittentin
verpflichtet sich, solange Schuldverschreibungen ausstehen, jedoch nur bis zu dem Zeitpunkt, an dem alle
     a                                                     u                             u
Betr¨ ge an Kapital und Zinsen der Hauptzahlstelle zur Verf¨ gung gestellt worden sind, f¨ r andere, nachstehend
definierte Wertpapieremissionen nach dem Tag der Begebung kein Sicherungsrecht (‘‘Pfandrecht’’) am eigenen
   a               o                              a
inl¨ ndischen Verm¨ gen zu bestellen, ohne die Gl¨ ubiger zur gleichen Zeit und im gleichen Rang an einem
solchen Pfandrecht teilhaben zu lassen, solange die andere Wertpapieremission derart besichert ist, mit der
Maßgabe, daß diese Verpflichtung keine Anwendung findet, falls die Emittentin Pfandrechte folgender Art
          ¨                        a
bestellt, ubernimmt oder bestehen l¨ ßt:
    (a)                                    o
          Pfandrechte, die auf einem Verm¨ gensgegenstand zum Zeitpunkt des Erwerbs durch die Emittentin
          lasten oder zum Zeitpunkt, zu dem eine Gesellschaft Tochtergesellschaft der Emittentin wurde, auf
                                       o                                   o
          einem dieser Gesellschaft geh¨ renden oder von ihr geleasten Verm¨ gensgegenstand lasten;
    (b)    Pfandrechte zur Besicherung von Verbindlichkeiten, die vor dem Erwerb, zum Zeitpunkt des Erwerbs
                                                                       o
           oder innerhalb von 12 Monaten nach dem Erwerb eines Verm¨ gensgegenstandes durch die Emittentin
                                 a
           zum Zwecke der vollst¨ ndigen oder teilweisen Kaufpreisfinanzierung eingegangen worden sind, sowie
                                               ¨
           Pfandrechte, die zur Sicherung von uber diesen Kaufpreis hinausgehenden Verbindlichkeiten dienen,
                                  u                                                        o
           vorausgesetzt, daß f¨ r deren Begleichung ausschließlich auf diesen Vem¨ gensgegenstand
              u
           zur¨ ckgegriffen werden kann;
    (c)   Pfandrechte zur Besicherung von Verbindlichkeiten, die vor, zum Zeitpunkt, oder innerhalb von 12
                                                               a
          Monaten nach der Fertigstellung einer Errichtung, Ver¨ nderung, Instandsetzung oder Verbesserung
                     o                                                             a
          eines Verm¨ gensgegenstandes der Emittentin zum Zwecke der vollst¨ ndigen oder teilweisen
          Finanzierung der dabei entstehenden Kosten eingegangen worden sind, sowie Pfandrechte, die zur
                         ¨                                                                               u
          Sicherung von uber diese Kosten hinausgehenden Verbindlichkeiten dienen, vorausgesetzt, daß f¨ r
                                                          o                    u
          deren Begleichung ausschließlich auf diesen Verm¨ gensgegenstand zur¨ ckgegriffen werden kann;
    (d)    Pfandrechte zugunsten der Vereinigten Staaten von Amerika, eines ihrer Bundesstaaten oder eines
                                           o                              o
           anderen Landes bzw. einer Beh¨ rde, Einrichtung oder Gebietsk¨ rperschaft eines der Vorgenannten,
           die aufgrund Vertrags oder Gesetzes Teil-, Voraus-, Abschlags- oder andere Zahlungen oder die
              u
           Erf¨ llung sichern, oder Pfandrechte zur Sicherung von Wertpapieren, die zur Finanzierung der
                                                               ¨
           industriellen Entwicklung, des Umweltschutzes oder ahnlicher Aufgaben begeben wurden (‘‘industrial
           development, pollution control or similar revenue bonds’’);
    (e)                   a                          a
          jedwede vollst¨ ndige oder teilweise Verl¨ ngerung, Erneuerung oder Ersetzung (oder wiederholte
              a
          Verl¨ ngerungen, Erneuerungen oder Ersetzungen) eines der vorstehend in den Klauseln (a) bis
                    u
          (d) aufgef¨ hrten Pfandrechte, soweit der Nennbetrag der dadurch besicherten Verbindlichkeit den im

                                                       40
                                        a
          Zeitpunkt einer solchen Verl¨ ngerung, Erneuerung oder Ersetzung besicherten Nennbetrag nicht
          ¨                                             a
          ubersteigt (mit der Ausnahme, daß zus¨ tzliche Verbindlichkeiten sowie damit verbundene
                                                                             o
          Finanzierungskosten durch das Pfandrecht besichert werden k¨ nnen, wenn diese zus¨ tzlichen  a
                                                        u
          Verbindlichkeiten zur Mittelbeschaffung f¨ r die Fertigstellung eines bestimmten Vorhabens
                                                                                o
          eingegangen werden), und soweit das Pfandrecht auf denselben Verm¨ gensgegenstand, an welchem
                  a                                                                 a
          das verl¨ ngerte, erneuerte oder ersetzte Pfandrecht bestanden hat, beschr¨ nkt bleibt (einschließlich
                                         o
          Wertverbesserungen des Verm¨ gensgegenstandes);
    (f)   Pfandrechte, die kraft Gesetzes entstehen;
    (g)                                                              a
           Pfandrechte, die aus oder in Verbindung mit der Ver¨ ußerung oder der Vermietung von
                o            a
           Verm¨ gensgegenst¨ nden an Leasinggesellschaften entstehen, die den Gesamtbetrag von Euro
                                                               a               ¨
           1 Milliarde pro Jahr oder den Gegenwert in anderen W¨ hrungen nicht ubersteigen (seit dem Tag der
           Begebung);
    (h)    Pfandrechte, die aus oder in Verbindung mit der Sale- und Leaseback-Transaktion der Bayer
           Corporation (wie nachstehend definiert) entstehen; und
    (i)   Pfandrechte, die Verbindlichkeiten besichern, deren Betrag Euro 250.000.000 (aggregiert mit dem
          Betrag von anderen Verbindlichkeiten, die ein Pfandrecht besitzen welches nach den vorstehenden
                   a                                                         a
          Unterabs¨ tzen nicht erlaubt ist) oder den Gegenwert in anderen W¨ hrungen zu jeder Zeit nicht
          ¨
          ubersteigt.
    In Bezug auf von der Emittentin begebene asset-backed Emissionen, schließen die im ersten Satz dieses
                                      o                                             o           a
Abschnittes (2) benutzten Worte ‘‘Verm¨ gen’’ und ‘‘Wertpapieremission’’ nicht Verm¨ gensgegenst¨ nde und
                                                          o
Wertpapiermissionen der Emmittentin ein, solange das Verm¨ gen, das derartige Emissionen deckt zusammen
42.000.000.000 nicht ubersteigt.
                     ¨
       u
     F¨ r Zwecke dieses § 2 bedeutet ‘‘Wertpapieremission’’ jede Zahlungsverpflichtung aus der Aufnahme von
                                                                          ¨
Geld in der Form von oder verbrieft durch Schuldverschreibungen oder ahnliche(n) Wertpapiere(n) mit einer
     u                                                                      o
urspr¨ nglichen Laufzeit von mehr als einem Jahr, die an einer Wertpapierb¨ rse oder in einem over-the-counter
                               u                                                ¨
Wertpapiermarkt notiert, eingef¨ hrt oder gehandelt werden oder die anderweitig offentlich gehandelt werden oder
gehandelt werden sollen.
       u
     F¨ r Zwecke dieses § 2 bedeutet ‘‘Sale- und Leaseback-Transaktion der Bayer Corporation’’ eine
Vielzahl von Sale- und Leaseback-Transaktionen, durch die Bayer Corporation eigene chemische
             u
Industrieausr¨ stungen im Wert von ca. USD 590.000.000, die derzeit in ihrem Werk in Baytown, Texas in Betrieb
                     a                                                                               u
sind, an einen Treuh¨ nder (zugunsten bestimmter institutioneller Investoren) verkauft und diese Ausr¨ stungen
                          a
danach von diesem Treuh¨ nder (zugunsten dieser institutionellen Investoren) gemietet hat.]

[Im Fall von Schuldverschreibungen begeben von Bayer Corporation, Bayer Capital Corp oder Bayer
                     ¨
Japan, außerdem einfugen:
(3) Garantie und Negativverpflichtung der Garantin. Bayer AG (die ‘‘Garantin’’) hat eine unbedingte und
                                                                      u                    a
    unwiderrufliche Garantie (die ‘‘Garantie’’) vom 17. Oktober 2003 f¨ r die ordnungsgem¨ ße Zahlung von
                                                                                 a ¨
    Kapital und Zinsen und sonstiger auf die Schuldverschreibungen zahlbarer Betr¨ ge ubernommen.
                    ¨
     Die Garantin ubernimmt außerdem eine Negativverpflichtung (die ‘‘Negativverpflichtung’’), solange
                                                                                       a
Schuldverschreibungen ausstehen, jedoch nur bis zu dem Zeitpunkt, an dem alle Betr¨ ge an Kapital und Zinsen
                             u                            u
der Hauptzahlstelle zur Verf¨ gung gestellt worden sind, f¨ r andere, nachstehend definierte Wertpapieremissionen
                                                                                         a
nach dem Tag der Begebung kein Sicherungsrecht (‘‘Pfandrecht’’) am eigenen inl¨ ndischen Verm¨ gen zu   o
                       a
bestellen, ohne die Gl¨ ubiger zur gleichen Zeit und im gleichen Rang an einem solchen Pfandrecht teilhaben zu
lassen, mit der Maßgabe, daß diese Verpflichtung keine Anwendung findet, falls die Garantin Pfandrechte
                         ¨                         a
folgender Art bestellt, ubernimmt oder bestehen l¨ ßt:
    (a)                                   o
           Pfandrechte, die auf einem Verm¨ gensgegenstand zum Zeitpunkt des Erwerbs durch die Garantin
           lasten;
    (b)    Pfandrechte zur Besicherung von Verbindlichkeiten, die vor dem Erwerb, zum Zeitpunkt des Erwerbs
                                                                        o
           oder innerhalb von 12 Monaten nach dem Erwerb eines Verm¨ gensgegenstandes durch die Garantin
                                 a
           zum Zwecke der vollst¨ ndigen oder teilweisen Kaufpreisfinanzierung eingegangen worden sind, sowie
                                               ¨
           Pfandrechte, die zur Sicherung von uber diesen Kaufpreis hinausgehenden Verbindlichkeiten dienen,
                                  u                                                        o
           vorausgesetzt, daß f¨ r deren Begleichung ausschließlich auf diesen Vem¨ gensgegenstand
              u
           zur¨ ckgegriffen werden kann;

                                                       41
    (c)   Pfandrechte zur Besicherung von Verbindlichkeiten, die vor, zum Zeitpunkt, oder innerhalb von 12
                                                               a
          Monaten nach der Fertigstellung einer Errichtung, Ver¨ nderung, Instandsetzung oder Verbesserung
                      o                                                           a
          eines Verm¨ gensgegenstandes der Garantin zum Zwecke der vollst¨ ndigen oder teilweisen
          Finanzierung der dabei entstehenden Kosten eingegangen worden sind, sowie Pfandrechte, die zur
                         ¨                                                                               u
          Sicherung von uber diese Kosten hinausgehenden Verbindlichkeiten dienen, vorausgesetzt, daß f¨ r
                                                          o                    u
          deren Begleichung ausschließlich auf diesen Verm¨ gensgegenstand zur¨ ckgegriffen werden kann;
    (d)                   a                          a
          jedwede vollst¨ ndige oder teilweise Verl¨ ngerung, Erneuerung oder Ersetzung (oder wiederholte
               a
          Verl¨ ngerungen, Erneuerungen oder Ersetzungen) eines der vorstehend in den Klauseln (a) bis
                     u
          (c) aufgef¨ hrten Pfandrechte, soweit der Nennbetrag der dadurch besicherten Verbindlichkeit den im
                                         a
          Zeitpunkt einer solchen Verl¨ ngerung, Erneuerung oder Ersetzung besicherten Nennbetrag nicht
          ¨                                             a
          ubersteigt (mit der Ausnahme, daß zus¨ tzliche Verbindlichkeiten sowie damit verbundene
                                                                             o
          Finanzierungskosten durch das Pfandrecht besichert werden k¨ nnen, wenn diese zus¨ tzlichen  a
                                                        u
          Verbindlichkeiten zur Mittelbeschaffung f¨ r die Fertigstellung eines bestimmten Vorhabens
                                                                                o
          eingegangen werden), und soweit das Pfandrecht auf denselben Verm¨ gensgegenstand, an welchem
                  a                                                                 a
          das verl¨ ngerte, erneuerte oder ersetzte Pfandrecht bestanden hat, beschr¨ nkt bleibt (einschließlich
                                         o
          Wertverbesserungen des Verm¨ gensgegenstandes);
    (e)   Pfandrechte, die kraft Gesetzes entstehen;
    (f)                                                             a
          Pfandrechte, die aus oder in Verbindung mit der Ver¨ ußerung oder der Vermietung von
               o            a
          Verm¨ gensgegenst¨ nden an Leasinggesellschaften entstehen, die den Gesamtbetrag von Euro
                                                              a               ¨
          1 Milliarde pro Jahr oder den Gegenwert in anderen W¨ hrungen nicht ubersteigen (seit dem Tag der
          Begebung);
    (g)   Pfandrechte, die Verbindlichkeiten besichern, deren Betrag Euro 250.000.000 (aggregiert mit dem
          Betrag von anderen Verbindlichkeiten, die ein Pfandrecht besitzen welches nach den vorstehenden
                   a                                                         a
          Unterabs¨ tzen nicht erlaubt ist) oder den Gegenwert in anderen W¨ hrungen zu jeder Zeit nicht
          ¨
          ubersteigt.
    In Bezug auf von der Garantin begebene asset-backed Emissionen, schließen die im ersten Satz des zweiten
                                                               o
Absatzes dieses Abschnittes (3) benutzten Worte ‘‘Verm¨ gen’’ und ‘‘Wertpapieremission’’ nicht
     o           a                                                                      o
Verm¨ gensgegenst¨ nde und Wertpapieremissionen der Garantin ein, solange das Verm¨ gen, das derartige
Emissionen deckt, zusammen 42.000.000.000 nicht ubersteigt.
                                                  ¨
     ‘‘Wertpapieremission’’ bedeutet jede Zahlungsverpflichtung aus der Aufnahme von Geld in der Form von
                                                 ¨                                         u
oder verbrieft durch Schuldverschreibungen oder ahnliche(n) Wertpapiere(n) mit einer urspr¨ nglichen Laufzeit
                                                  o
von mehr als einem Jahr, die an einer Wertpapierb¨ rse oder in einem over-the-counter Wertpapiermarkt notiert,
       u                                                  ¨
eingef¨ hrt oder gehandelt werden oder die anderweitig offentlich gehandelt werden oder gehandelt werden
sollen.
                                                                                              a
      Die Garantie und die Negativverpflichtung stellen einen Vertrag zugunsten eines jeden Gl¨ ubigers als
   u                      a                                                              a          u
beg¨ nstigtem Dritten gem¨ ß § 328 Absatz 1 BGB dar, welcher das Recht eines jeden Gl¨ ubigers begr¨ ndet,
   u
Erf¨ llung aus der Garantie und der Negativverpflichtung unmittelbar von der Garantin zu verlangen und die
                                                      u
Garantie und die Negativverpflichtung unmittelbar gegen¨ ber der Garantin durchzusetzen.]


                                                  §3
                                       [ZINSEN] [INDEXIERUNG]

                                                          ¨
[Im Falle von festverzinslichen Schuldverschreibungen einfugen:
(1) Zinssatz und Zinszahlungstage. Die Schuldverschreibungen werden bezogen auf ihren Nennbetrag
                                                                   ¨                             a
    verzinst, und zwar von einschließlich [Verzinsungsbeginn einfugen] bis zum Beginn des F¨ lligkeitstags
                                          a                     ¨                                  a
    (wie in § 5 Absatz 1 definiert) mit j¨ hrlich [Zinssatz einfugen] %. Die Zinsen sind nachtr¨ glich am
                             ¨
    [Festzinstermin(e) einfugen] eines jeden Jahres zahlbar (jeweils ein ‘‘Zinszahlungstag’’). Die erste
                                                          ¨
    Zinszahlung erfolgt am [ersten Zinszahlungstag einfugen] [sofern der erste Zinszahlungstag nicht der
                                                            ¨              a
    erste Jahrestag des Verzinsungsbeginns ist, einfugen: und bel¨ uft sich auf [den anf¨ nglichen a
                                                   ¨            ¨        u
    Bruchteilzinsbetrag je kleinste festgelegte Stuckelung einfugen] f¨ r eine Schuldverschreibung mit einer
                     u                                        ¨              ¨
    festgelegten St¨ ckelung von [kleinste festgelegte Stuckelung einfugen] und [die anf¨ nglichen a
                       a   ¨                             ¨             ¨      u
    Bruchteilzinsbetr¨ ge fur jede weitere festgelegte Stuckelung einfugen] f¨ r eine Schuldverschreibung mit
                           u                                         ¨                  ¨
    einer festgelegten St¨ ckelung von [weitere festgelegte Stuckelungen einfugen]]. [Sofern der
      a                                          ¨                  u
    F¨ lligkeitstag kein Festzinstermin ist, einfugen: Die Zinsen f¨ r den Zeitraum von einschließlich [den

                                                       42
                   a                                                 ¨                         a
     letzten dem F¨ lligkeitstag vorausgehenden Festzinstermin einfugen] bis zum Beginn des F¨ lligkeitstags
                                                                                         ¨            ¨
     belaufen sich auf [den abschließenden Bruchteilzinsbetrag je kleinste festgelegte Stuckelung einfugen]
      u                                                     u                                      ¨
     f¨ r eine Schuldverschreibung mit einer festgelegten St¨ ckelung von [kleinste festgelegte Stuckelung
           ¨                                                a      ¨                               ¨
     einfugen] und [die abschließenden Bruchteilzinsbetr¨ ge fur jede weitere festgelegte Stuckelung
           ¨     u                                                      u
     einfugen] f¨ r eine Schuldverschreibung mit einer festgelegten St¨ ckelung von [weitere festgelegte
         ¨              ¨
     Stuckelungen einfugen].]
(2) Auflaufende Zinsen. Die Verzinsung der Schuldverschreibungen endet mit Beginn des Tages, an dem sie
          u            a                                                               a                    o
    zur R¨ ckzahlung f¨ llig sind. Falls die Emittentin die Schuldverschreibungen bei F¨ lligkeit nicht einl¨ st,
                                                                                 a
    fallen auf den ausstehenden Nennbetrag der Schuldverschreibungen ab dem F¨ lligkeitstag (einschließlich)
                          a           u
    bis zum Tag der tats¨ chlichen R¨ ckzahlung (ausschließlich) Zinsen zum gesetzlich festgelegten Satz f¨ r u
    Verzugszinsen an(1).
                            u                 a                      u
(3) Berechnung der Zinsen f¨ r Teile von Zeitr¨ umen. Sofern Zinsen f¨ r einen Zeitraum von weniger als einem
    Jahr zu berechnen sind, erfolgt die Berechnung auf der Grundlage des Zinstagequotienten (wie nachstehend
    definiert).]

                                                               ¨
[Im Falle von variabel verzinslichen Schuldverschreibungen einfugen:
(1) Zinszahlungstage.
     (a)     Die Schuldverschreibungen werden bezogen auf ihren Nennbetrag vom [Verzinsungsbeginn
                 ¨
             einfugen] einschließlich (der ‘‘Verzinsungsbeginn’’) bis zum Beginn des ersten Zinszahlungstags
             und danach vom Beginn jedes Zinszahlungstags bis zum Beginn des n¨ chstfolgenden a
             Zinszahlungstags verzinst. Zinsen auf die Schuldverschreibungen sind an jedem Zinszahlungstag
             zahlbar.
     (b)     ‘‘Zinszahlungstag’’ bedeutet
             [(i)                                                   ¨
                    im Falle von festgelegten Zinszahlungstagen einfugen: jeder [festgelegte Zinszahlungstage
                        ¨
                    einfugen].]
                                                                 ¨
             [(ii) im Falle von festgelegten Zinsperioden einfugen: (soweit diese Emissionsbedingungen keine
                                                                                              ¨
                   abweichenden Bestimmungen vorsehen) jeweils der Tag, der [Zahl einfugen] [Wochen]
                                                       a         ¨
                   [Monate] [andere festgelegte Zeitr¨ ume einfugen] nach dem vorausgehenden Zinszahlungstag
                   liegt, oder im Fall des ersten Zinszahlungstages, nach dem Verzinsungsbeginn.]
     (c)     a                                                      a
            F¨ llt ein Zinszahlungstag auf einen Tag, der kein Gesch¨ ftstag (wie nachstehend definiert) ist, so wird
            dieser Tag
             [(i)                                                                a
                    bei Anwendung der modifizierten folgender Gesch¨ ftstag-Konvention (‘‘Modified
                                                                    ¨                 a
                    Following Business Day Convention’’) einfugen: auf den n¨ chstfolgenden Gesch¨ ftstag   a
                                                    u                     a
                    verschoben, es sei denn, jener w¨ rde dadurch in den n¨ chsten Kalendermonat fallen; in diesem
                                                                                             a
                    Fall wird der Zinszahlungstag auf den unmittelbar vorausgehenden Gesch¨ ftstag vorgezogen.]
                                                                    ¨                  a
             [(ii) bei Anwendung der FRN-Konvention einfugen: auf den n¨ chstfolgenden Gesch¨ ftstag         a
                                                      u                     a
                   verschoben, es sei denn, jener w¨ rde dadurch in den n¨ chsten Kalendermonat fallen; in diesem
                                                                                                  a
                   Fall wird der Zinszahlungstag auf den unmittelbar vorausgehenden Gesch¨ ftstag vorgezogen
                   und im Falle einer Zinszahlung jeder nachfolgende Zinszahlungstag der Tag, der numerisch dem
                   vorhergehenden Zinszahlungstag ist in demjenigen Kalendermonat entspricht, der [Zahl
                         ¨                                            a          ¨
                   einfugen] [Monate] [andere festgelegte Zeitr¨ ume einfugen] nach dem vorhergehenden
                   Zinszahlungstag oder, im Fall des ersten Zinszahlungstages, dem Begebungstag liegt; außer, daß
                   wenn (a) kein derartiger numerisch korrespondierender Tag in dem Kalendermonat existiert, in
                                                a                                                   a
                   den der Zinszahlungstag f¨ llt, dann ist der Zinszahlungstag der letzte Gesch¨ ftstag in diesem
                                                                                                      u
                   Kalendermonat; (b) der relevante Zinszahlungstag auf einen Tag fallen w¨ rde, der kein
                           a                                                                            a
                   Gesch¨ ftstag ist, dann ist der Zinszahlungstag der erste darauf folgende Gesch¨ ftstag es sei
                                      a            a
                   denn, dieser Tag f¨ llt in den n¨ chsten Kalendermonat; in diesem Fall wird der Zinszahlungstag
                                                                a
                   auf den ersten vorhergehenden Gesch¨ ftstag verschoben; und (c) der vorhergehende
                                                                                                         u
                   anwendbare Zinszahlungstag auf den letzten Tag in einem Kalendermonat fallen w¨ rde, der ein
                           a
                   Gesch¨ ftstag war, dann sind alle folgenden anwendbaren Zinszahlungstage vor dem
                    a                                                                a
                   F¨ lligkeitstag (wie in § 5 (1) definiert) der jeweils letzte Gesch¨ ftstag des Monats, der [Zahl

                                          a   u             u                  ¨
(1) Der gesetzliche Verzugszinssatz betr¨ gt f¨ r das Jahr f¨ nf Prozentpunkte uber dem von der Deutsche Bundesbank von Zeit zu Zeit
       o
    ver¨ ffentlichten Basiszinssatz, §§ 288 Absatz 1, 247 BGB.


                                                                43
                     ¨                                       a         ¨
                 einfugen] [Monate] [andere festgelegte Zeitr¨ ume einfugen] nach dem vorhergehenden
                 anwendbaren Zinszahlungstag liegt.]
                                                         a
          [(iii) bei Anwendung der folgender Gesch¨ ftstag-Konvention (‘‘Following Business Day
                                   ¨                                a
                 Convention’’) einfugen: auf den nachfolgenden Gesch¨ ftstag verschoben.]
                                                               a
          [(iv) bei Anwendung der vorhergegangener Gesch¨ ftstag-Konvention (‘‘Preceding Business
                                      ¨                                             a
                Day Convention’’) einfugen: auf den unmittelbar vorhergehenden Gesch¨ ftstag vorgezogen.]
                      u
          Sollte ein f¨ r die Zahlung von Kapital [im Fall von nicht abgezinsten Schuldverschreibungen
              ¨
          einfugen: und Zinsen] vorgesehener Tag wie oben beschrieben verschoben werden, haben die
                    a
          Anleihegl¨ ubiger keinen Anspruch auf Zahlung weiterer Zinsen oder sonstiger Zahlungen aufgrund
                      a
          dieser Versp¨ tung.
            u                                   a
          F¨ r diese Zwecke bezeichnet ‘‘Gesch¨ ftstag’’ einen Tag (außer einem Samstag oder Sonntag), an
                          a                      a
          dem (i) Gesch¨ ftsbanken und Devisenm¨ rkte Zahlungen am jeweiligen Ort der Vorlage abwickeln und
                                       a                     ¨
          (ii) [falls die festgelegte W¨ hrung Euro ist, einfugen: und das Trans-European Automated Real-
          time Gross Settlement Express Transfer System (TARGET) betriebsbereit ist.] [falls die festgelegte
             a                               ¨                 a                       a
          W¨ hrung nicht Euro ist, einfugen: und Gesch¨ ftsbanken und Devisenm¨ rkte in [s¨ mtlichea
                                           ¨
          relevanten Finanzzentren einfugen] Zahlungen abwickeln.
                                                 ¨                                   u
(2) Zinssatz. [Bei Bildschirmfeststellung einfugen: Der Zinssatz (der ‘‘Zinssatz’’) f¨ r jede Zinsperiode (wie
    nachstehend definiert) ist, sofern nachstehend nichts Abweichendes bestimmt wird der Angebotssatz
             u                                   u                                 a          u
    (ausgedr¨ ckt als Prozentsatz per annum) f¨ r Einlagen in der festgelegten W¨ hrung f¨ r die jeweilige
    Zinsperiode, der auf der Bildschirmseite am Zinsfestlegungstag (wie nachstehend definiert) ab 11.00 Uhr
                    u                                                           ¨           u          u
    ([Londoner] [Br¨ sseler] Ortszeit) angezeigt wird [im Falle einer Marge einfugen: [zuz¨ glich] [abz¨ glich]
    der Marge (wie nachstehend definiert)], wobei alle Festlegungen durch die Berechnungsstelle erfolgen.
                                                               o
    ‘‘Zinsperiode’’ bezeichnet den [eins-] [drei-] [sechs-] [zw¨ lf-] Monats-Zeitraum [anderen relevanten
                  ¨
    Zeitraum einfugen] ab einschließlich dem Verzinsungsbeginn bis zum Beginn des ersten Zinszahlungstags
    bzw. ab einschließlich jedem Zinszahlungstag bis zum Beginn des jeweils darauffolgenden
    Zinszahlungstags.
    ‘‘Zinsfestlegungstag’’ bezeichnet den [zweiten] [zutreffende andere Zahl von Tagen einfugen]     ¨
                                                   ¨                           a
    [Londoner] [zutreffende andere Orte einfugen] [TARGET] Gesch¨ ftstag vor Beginn der jeweiligen
                                                     a             ¨                  a
    Zinsperiode. [Im Falle eines TARGET-Gesch¨ ftstages einfugen: ‘‘TARGET-Gesch¨ ftstag’’ bezeichnet
    einen Tag, an dem TARGET betriebsbereit ist.] [Im Falle eines nicht-TARGET-Gesch¨ ftstages   a
         ¨                                                    ¨              a
    einfugen: ‘‘[Londoner] [zutreffenden anderen Ort einfugen] Gesch¨ ftstag’’ bezeichnet einen Tag (außer
                                                  a                                                  ¨
    einem Samstag oder Sonntag), an dem Gesch¨ ftsbanken in [London] [zutreffenden anderen Ort einfugen]
     u        a                                             a        o
    f¨ r Gesch¨ fte (einschließlich Devisen- und Sortengesch¨ fte) ge¨ ffnet sind.]
    [Im Falle einer Marge einfugen: Die ‘‘Marge’’ betr¨ gt [
                              ¨                       a              (     ] % per annum.]
                                                      ¨
    ‘‘Bildschirmseite’’ bedeutet [Bildschirmseite einfugen].
                                                                                               a
    [Falls eine andere Basis zur Bestimmung eines Referenzsatzes vereinbart wird, werden vollst¨ ndige
                                                                                ¨
    Einzelheiten dieser Basis hier und in dem jeweiligen Konditionenblatt ausgefuhrt.]
                                                            u
    Sollte die maßgebliche Bildschirmseite nicht zur Verf¨ gung stehen oder wird kein Angebotssatz angezeigt
    (zu der genannten Zeit), wird die Berechnungsstelle von den Referenzbanken (wie nachstehend definiert)
                                  a                                                     u       u
    deren jeweilige Angebotss¨ tze (jeweils als Prozentsatz per annum ausgedr¨ ckt) f¨ r Einlagen in der
                     a          u                                      u        u
    festgelegten W¨ hrung f¨ r die betreffende Zinsperiode gegen¨ ber f¨ hrenden Banken im [Londoner]
                                                              u
    Interbanken-Markt [in der Euro-Zone] um ca. 11.00 ([Br¨ sseler] [Londoner] Ortszeit) am Zinsfestlegungstag
                                                                                                     a
    anfordern. Falls zwei oder mehr Referenzbanken der Berechnungsstelle solche Angebotss¨ tze nennen, ist
                  u
    der Zinssatz f¨ r die betreffende Zinsperiode das arithmetische Mittel (falls erforderlich, auf- oder abgerundet
              a                                                           ¨
    auf den n¨ chsten ein [falls der Referenzsatz EURIBOR ist, einfugen: Tausendstel Prozentpunkt, wobei
                                                                  ¨
    0,0005] [falls der Referenzsatz nicht EURIBOR ist, einfugen: Hunderttausendstel Prozentpunkt, wobei
                                                    a                                 ¨           u          u
    0,000005] aufgerundet wird) dieser Angebotss¨ tze [im Fall einer Marge einfugen: [zuz¨ glich] [abz¨ glich]
    der Marge], wobei alle Festlegungen durch die Berechnungsstelle erfolgen.
    Falls an einem Zinsfestlegungstag nur eine oder keine der Referenzbanken der Berechnungsstelle die im
                                                 a                            u
    vorstehenden Absatz beschriebenen Angebotss¨ tze nennt, ist der Zinssatz f¨ r die betreffende Zinsperiode
    der Satz per annum, den die Berechnungsstelle als das arithmetische Mittel (falls erforderlich, auf- oder
                           a                                                               ¨
    abgerundet auf den n¨ chsten ein [falls der Referenzsatz EURIBOR ist, einfugen: Tausendstel
                                                                                    ¨
    Prozentpunkt, wobei 0,0005] [falls der Referenzsatz nicht EURIBOR ist, einfugen: Hunderttausendstel

                                                        44
                                                                       a
     Prozentpunkt, wobei 0,000005] aufgerundet wird) der Angebotss¨ tze ermittelt, die die Referenzbanken bzw.
     zwei oder mehrere von ihnen der Berechnungsstelle auf deren Anfrage als den jeweiligen Satz nennen, zu
                                          u
     dem ihnen um ca. 11.00 Uhr ([Br¨ sseler] [Londoner] Ortszeit) an dem betreffenden Zinsfestlegungstag
                                   a        u                                    u
     Einlagen in der festgelegten W¨ hrung f¨ r die betreffende Zinsperiode von f¨ hrenden Banken im [Londoner]
                                                                                               ¨
     Interbanken-Markt [in der Euro-Zone] angeboten werden [im Fall einer Marge einfugen: [zuz¨ glich]     u
          u
     [abz¨ glich] der Marge]; falls weniger als zwei der Referenzbanken der Berechnungsstelle solche
                a                                     u                                               u
     Angebotss¨ tze nennen, dann soll der Zinssatz f¨ r die betreffende Zinsperiode der Angebotssatz f¨ r Einlagen
                            a      u
     in der festgelegten W¨ hrung f¨ r die betreffende Zinsperiode oder das arithmetische Mittel (gerundet wie
                                         a      u                                     a       u
     oben beschrieben) der Angebotss¨ tze f¨ r Einlagen in der festgelegten W¨ hrung f¨ r die betreffende
     Zinsperiode sein, den bzw. die eine oder mehrere Banken (die nach Ansicht der Berechnungsstelle und der
                  u                                                            a
     Emittentin f¨ r diesen Zweck geeignet sind) der Berechnungsstelle als S¨ tze bekannt geben, die sie an dem
                                            u       u
     betreffenden Zinsfestlegungstag gegen¨ ber f¨ hrenden Banken am [Londoner] Interbanken-Markt [in der
                                                            u
     Euro-Zone] nennen (bzw. den diese Banken gegen¨ ber der Berechnungsstelle nennen) [im Fall einer
                  ¨           u          u                       u
     Marge einfugen: [zuz¨ glich] [abz¨ glich] der Marge]. F¨ r den Fall, daß der Zinssatz nicht gem¨ ß dena
     vorstehenden Bestimmungen dieses Absatzes ermittelt werden kann, ist der Zinssatz der Angebotssatz oder
                                             a
     das arithmetische Mittel der Angebotss¨ tze auf der Bildschirmseite, wie vorstehend beschrieben, an dem
                                                                           a
     letzten Tag vor dem Zinsfestlegungstag, an dem diese Angebotss¨ tze angezeigt wurden [im Fall einer
                  ¨         u           u                                        u
     Marge einfugen: [zuz¨ glich] [abz¨ glich] der Marge (wobei jedoch, falls f¨ r die relevante Zinsperiode eine
                         u
     andere Marge als f¨ r die unmittelbar vorhergehende Zinsperiode gilt, die relevante Marge an die Stelle der
              u
     Marge f¨ r die vorhergehende Zinsperiode tritt)].
     ‘‘Referenzbanken’’ bezeichnen [falls im Konditionenblatt keine anderen Referenzbanken bestimmt
                   ¨                                                                             a
     werden, einfugen: diejenigen Niederlassungen von vier derjenigen Banken, deren Angebotss¨ tze zur
     Ermittlung des maßgeblichen Angebotssatzes zu dem Zeitpunkt verwendet wurden, als solch ein Angebot
     letztmals auf der maßgeblichen Bildschirmseite angezeigt wurde] [Falls im Konditionenblatt andere
                                                           ¨
     Referenzbanken bestimmt werden, sind sie hier einzufugen].
                                                                                     a
     [‘‘Euro-Zone’’ bezeichnet das Gebiet derjenigen Mitgliedstaaten der Europ¨ ischen Union, die die
                    a
     einheitliche W¨ hrung in Zusammenhang mit dem Vertrag zur Schaffung der Europ¨ ischen Uniona
                                       a            a                       a
     (unterschrieben in Rom am 25. M¨ rz 1957), ge¨ ndert durch den Europ¨ ischen Einheitsvertrag 1986, den
                       a
     Vertrag der Europ¨ ischen Union (unterschrieben in Maastricht am 7. Februar 1992) und den Amsterdamer
                                                                                      u
     Vertrag (unterschrieben am 2. Oktober 1997), in seiner aktuellsten Fassung eingef¨ hrt haben.]
     [Wenn der Referenzsatz ein anderer als LIBOR oder EURIBOR ist, sind die entsprechenden
                                                                    ¨
     Einzelheiten anstelle der Bestimmungen dieses Absatzes 2 einzufugen]
                                                                                       ¨
     [Sofern ISDA-Feststellung gelten soll, sind die entsprechenden Bestimmungen einzufugen und die von
                                                                              o
     der International Swap and Derivatives Association, Inc. (‘‘ISDA’’) ver¨ ffentlichten 2000 ISDA-
                                                                  ¨
     Definitionen diesen Emissionsbedingungen als Anlage beizufugen]
     [Sofern eine andere Methode der Feststellung/Indexierung anwendbar ist, sind die entsprechenden
                                                                    ¨
     Einzelheiten anstelle der Bestimmungen dieses Absatzes 2 einzufugen]
                                   o                        ¨
     [Falls ein Mindest- und/oder H¨ chstzinssatz gilt, einfugen:
                      o
(3) [Mindest-] und] [H¨ chst-] Zinssatz.
                                           ¨                  a                               u
     [Falls ein Mindestzinssatz gilt, einfugen: Wenn der gem¨ ß den obigen Bestimmungen f¨ r eine Zinsperiode
                                                                ¨                           u
     ermittelte Zinssatz niedriger ist als [Mindestzinssatz einfugen], so ist der Zinssatz f¨ r diese Zinsperiode
                            ¨
     [Mindestzinssatz einfugen].]
                   o                                     a                               u
     [Falls ein H¨ chstzinssatz gilt: Wenn der gem¨ ß den obigen Bestimmungen f¨ r eine Zinsperiode
                          o               o                  ¨                           u
     ermittelte Zinssatz h¨ her ist als [H¨ chstzinssatz einfugen], so ist der Zinssatz f¨ r diese Zinsperiode
       o                  ¨
     [H¨ chstzinssatz einfugen].]]
                                                                o
[(4)] Zinsbetrag. Die Berechnungsstelle wird zu oder baldm¨ glichst nach jedem Zeitpunkt, an dem der Zinssatz
      zu bestimmen ist, den auf die Schuldverschreibungen zahlbaren Zinsbetrag in bezug auf jede festgelegte
        u                               u
      St¨ ckelung (der ‘‘Zinsbetrag’’) f¨ r die entsprechende Zinsperiode berechnen. Der Zinsbetrag wird ermittelt,
                                                                                                         u
      indem der Zinssatz und der Zinstagequotient (wie nachstehend definiert) auf jede festgelegte St¨ ckelung
                                                                                                      a
      angewendet werden, wobei der resultierende Betrag auf die kleinste Einheit der festgelegten W¨ hrung auf-
      oder abgerundet wird, wobei 0,5 solcher Einheiten aufgerundet werden.
[(5)] Mitteilung von Zinssatz und Zinsbetrag. Die Berechnungsstelle wird veranlassen, daß der Zinssatz, der
                  u
      Zinsbetrag f¨ r die jeweilige Zinsperiode, die jeweilige Zinsperiode und der relevante Zinszahlungstag der

                                                        45
     Emittentin [im Falle von Schuldverschreibungen, die von Bayer Corporation, Bayer Capital Corp oder
                                              ¨                                            a
     Bayer Japan begeben werden, einfugen: und der Garantin] sowie den Gl¨ ubigern gem¨ ß § 12            a
            o                                                    a
     baldm¨ glichst nach ihrer Feststellung, aber keinesfalls sp¨ ter als am vierten auf die Berechnung jeweils
                                                                                  ¨            a
     folgenden [Londoner] [TARGET] [zutreffende andere Bezugnahme einfugen] Gesch¨ ftstag (wie in § 3
                                      o
     Absatz 2 definiert) sowie jeder B¨ rse, an der die betreffenden Schuldverschreibungen zu diesem Zeitpunkt
                                                           o                      o
     notiert sind und deren Regeln eine Mitteilung an die B¨ rse verlangen, baldm¨ glichst nach ihrer Feststellung,
                         a
     aber keinesfalls sp¨ ter als am ersten Tag der jeweiligen Zinsperiode mitgeteilt werden. Im Fall einer
         a                   u                        o
     Verl¨ ngerung oder Verk¨ rzung der Zinsperiode k¨ nnen der mitgeteilte Zinsbetrag und Zinszahlungstag ohne
             u               a
     Vorank¨ ndigung nachtr¨ glich angepaßt (oder andere geeignete Anpassungsregelungen getroffen) werden.
                                                        o
     Jede solche Anpassung wird umgehend allen B¨ rsen, an denen die Schuldverschreibungen zu diesem
                                          a             a
     Zeitpunkt notiert sind, sowie den Gl¨ ubigern gem¨ ß § 12 mitgeteilt.
[(6)] Verbindlichkeit der Festsetzungen. Alle Bescheinigungen, Mitteilungen, Gutachten, Festsetzungen,
                                                                                         u
      Berechnungen, Quotierungen und Entscheidungen, die von der Berechnungsstelle f¨ r die Zwecke dieses § 3
      gemacht, abgegeben, getroffen oder eingeholt werden, sind (sofern nicht ein offensichtlicher Irrtum vorliegt)
       u
      f¨ r die Emittentin, [im Falle von Schuldverschreibungen, die von Bayer Corporation, Bayer Capital
                                                      ¨
      Corp oder Bayer Japan begeben werden, einfugen: die Garantin,] die Emissionsstelle, [die Zahlstellen]
                 a
      und die Gl¨ ubiger bindend.
[(7)] Auflaufende Zinsen. Der Zinslauf der Schuldverschreibungen endet mit Beginn des Tages, an dem sie zur
        u            a                                                                  a                    o
      R¨ ckzahlung f¨ llig werden. Sollte die Emittentin die Schuldverschreibungen bei F¨ lligkeit nicht einl¨ sen,
                                                                                    a
      fallen auf den ausstehenden Nennbetrag der Schuldverschreibungen ab dem F¨ lligkeitstag (einschließlich)
                            a           u
      bis zum Tag der tats¨ chlichen R¨ ckzahlung (ausschließlich) Zinsen zum gesetzlich festgelegten Satz f¨ r  u
      Verzugszinsen an(1).]
                                                       ¨
     [Im Falle von Nullkupon-Schuldverschreibungen einfugen:
                                                   a
(1) Keine periodischen Zinszahlungen. Es erfolgen w¨ hrend der Laufzeit keine periodischen Zinszahlungen
    auf die Schuldverschreibungen.
                                                                              a                   o
(2) Auflaufende Zinsen. Sollte die Emittentin die Schuldverschreibungen bei F¨ lligkeit nicht einl¨ sen, fallen
                                                                      a
    auf den ausstehenden Nennbetrag der Schuldverschreibungen ab dem F¨ lligkeitstag (einschließlich) bis zum
                  a          u
    Tag der tats¨ chlichen R¨ ckzahlung (ausschließlich) Zinsen zum gesetzlich festgelegten Satz f¨ r       u
    Verzugszinsen an(1) .]
     [Im Fall von indexierten Schuldverschreibungen, Credit Linked Notes oder Equity Linked Notes
     hinsichtlich Zinsen anwendbare Bestimmungen hier und im anwendbaren Konditionenblatt einfugen.¨
                    ¨         a
     Dasselbe gilt fur Doppelw¨ hrungs-Schuldverschreibungen und teileingezahlte Schuldverschreibungen.]
[(()]Zinstagequotient. ‘‘Zinstagequotient’’ bezeichnet im Hinblick auf die Berechnung des Zinsbetrages auf
                               u
     eine Schuldverschreibung f¨ r einen beliebigen Zeitraum (der ‘‘Zinsberechnungszeitraum’’):
                                                                    ¨
     [im Falle Actual/Actual (ISMA Regelung 251) einfugen: die Anzahl von Tagen in dem
     Zinsberechnungszeitraum, geteilt durch (x) die Anzahl der Tage in der Zinsperiode im Fall von
                                                   a                                  a      a
     Schuldverschreibungen, bei denen die planm¨ ßige Zinszahlung nur durch regelm¨ ßige j¨ hrliche Zahlungen
     erfolgt, oder (y) das Produkt der Anzahl der Tage in der Zinsperiode und der Anzahl von Zinszahlungstagen,
                                        u                               a                                u
     die — angenommen, daß Zinsen f¨ r das gesamte Jahr zu zahlen w¨ ren — in ein Kalenderjahr fallen w¨ rden,
                                                                      a
     im Fall von Schuldverschreibungen, bei denen die planm¨ ßige Zinszahlung anders als nur durch
            a       a
     regelm¨ ßige j¨ hrliche Zahlungen erfolgt.]
     [im Falle von Actual/365 (Fixed) einfugen:     ¨                     die    tats¨ chliche
                                                                                     a             Anzahl     von     Tagen     im
     Zinsberechnungszeitraum, dividiert durch 365.]
                                  ¨             a
     [im Falle von Actual/360 einfugen: die tats¨ chliche Anzahl von Tagen im Zinsberechnungszeitraum,
     dividiert durch 360.]
                                                                        ¨
     [im Falle von 30/360, 360/360 oder Bond Basis einfugen: die Anzahl von Tagen im
     Zinsberechnungszeitraum dividiert durch 360, wobei die Anzahl der Tage auf der Grundlage eines Jahres
                           o
     von 360 Tagen mit zw¨ lf Monaten zu je 30 Tagen zu ermitteln ist (es sei denn, (A) der letzte Tag des
                               a                                     a
     Zinsberechnungszeitraums f¨ llt auf den 31. Tag eines Monates, w¨ hrend der erste Tag des Zinsberechnungs-
                                                                       a
     zeitraumes weder auf den 30. noch auf den 31. Tag eines Monats f¨ llt, wobei in diesem Fall der den letzten

                                           a   u            u                  ¨
(1) Der gesetzliche Verzugszinssatz betr¨ gt f¨ r das Jahr f¨ nf Prozentpunkte uber dem von der Deutsche Bundesbank von Zeit zu Zeit
       o
    ver¨ ffentlichten Basiszinssatz, §§ 288 Absatz 1, 247 BGB.


                                                                46
                                                        u
    Tag enthaltende Monat nicht als ein auf 30 Tage gek¨ rzter Monat zu behandeln ist, oder (B) der letzte Tag
                                     a
    des Zinsberechnungszeitraumes f¨ llt auf den letzten Tag des Monats Februar, wobei in diesem Fall der
                                                a
    Monat Februar nicht als ein auf 30 Tage verl¨ ngerter Monat zu behandeln ist).]
                                                         ¨
    [im Falle von 30E/360 oder Eurobond Basis einfugen: die Anzahl der Tage im Zinsberechnungszeitraum
    dividiert durch 360 (dabei ist die Anzahl der Tage auf der Grundlage eines Jahres von 360 Tagen mit
                                                                 u
    12 Monaten zu 30 Tagen zu ermitteln, und zwar ohne Ber¨ cksichtigung des ersten oder letzten Tages des
                                                                         a
    Zinsberechnungszeitraumes, es sei denn, daß im Falle einer am F¨ lligkeitstag endenden Zinsperiode der
      a
    F¨ lligkeitstag der letzte Tag des Monats Februar ist, in welchem Fall der Monat Februar als nicht auf einen
                               a
    Monat zu 30 Tagen verl¨ ngert gilt).]


                                                   §4
                                               ZAHLUNGEN
(1) [(a)] Zahlungen auf Kapital. Zahlungen auf Kapital in bezug auf die Schuldverschreibungen erfolgen nach
    Maßgabe des nachstehenden Absatzes 2 an das Clearing System oder gegebenenfalls dessen Order zur
    Gutschrift auf den Konten der jeweiligen Kontoinhaber des Clearing Systems gegen Vorlage und, soweit es
                                             ¨
    sich nicht um eine Teilzahlung handelt) Ubergabe der Globalurkunde, mit der die Schuldverschreibungen
                                                                              a
    verbrieft werden, zum Zeitpunkt der Zahlung in der bezeichneten Gesch¨ ftsstelle der Emissionsstelle
    außerhalb der Vereinigten Staaten.
                                                                                             ¨
    [Im Falle von Schuldverschreibungen, die keine Nullkupon-Schuldverschreibungen sind, einfugen:
(b) Zahlung von Zinsen. Die Zahlung von Zinsen auf Schuldverschreibungen erfolgt nach Maßgabe von Absatz
    2 an das Clearing System oder gegebenenfalls dessen Order zur Gutschrift auf den Konten der jeweiligen
    Kontoinhaber des Clearing Systems.
                                               a                         ¨
    [Im Falle von Zinszahlungen auf eine vorl¨ ufige Globalurkunde einfugen: Die Zahlung von Zinsen auf
                                             a
    Schuldverschreibungen, die durch die vorl¨ ufige Globalurkunde verbrieft sind, erfolgt nach Maßgabe von
    Absatz 2 an das Clearing System oder gegebenenfalls dessen Order zur Gutschrift auf den Konten der
                                                                                 a
    jeweiligen Kontoinhaber des Clearing Systems, und zwar nach ordnungsgem¨ ßer Bescheinigung gem¨ ß   a
    § 1 Absatz 3(b).]]
(2) Zahlungsweise. Vorbehaltlich geltender steuerlicher und sonstiger gesetzlicher Regelungen und
    Vorschriften erfolgen zu leistende Zahlungen auf die Schuldverschreibungen in der frei handelbaren und
                       a                               a                 a
    konvertierbaren W¨ hrung, die am entsprechenden F¨ lligkeitstag die W¨ hrung des Staates der festgelegten
      a
    W¨ hrung ist. Zahlungen erfolgen nicht durch einen an eine Adresse in den Vereinigten Staaten gesandten
                         ¨
    Scheck oder durch Uberweisung auf ein Konto in den Vereinigten Staaten.
                          u                                                                      ¨
(3) Vereinigte Staaten. F¨ r die Zwecke des [im Fall von TEFRA D Schuldverschreibungen einfugen: §1(3)
    und des] Absatzes 1 dieses § 4 bezeichnet ‘‘Vereinigte Staaten’’ die Vereinigten Staaten von Amerika
    (einschließlich deren Bundesstaaten und des District of Columbia) sowie deren Territorien (einschließlich
    Puerto Rico, der U.S. Virgin Islands, Guam, American Samoa, Wake Island und Northern Mariana Islands).
       u
(4) Erf¨ llung. Die Emittentin [Im Falle von Schuldverschreibungen, die von der Bayer Corporation, Bayer
                                                        u
    Capital Corp oder Bayer Japan begeben werden, einf¨ gen: bzw. die Garantin] wird durch Leistung der
    Zahlung an das Clearing System oder dessen Order von ihrer Zahlungspflicht befreit.
               a         a
(5) Zahltag. F¨ llt der F¨ lligkeitstag einer Zahlung in bezug auf eine Schuldverschreibung auf einen Tag, der
                                         a                                                a
    kein Zahltag ist, dann hat der Gl¨ ubiger keinen Anspruch auf Zahlung vor dem n¨ chsten Zahltag am
                      a                a
    jeweiligen Gesch¨ ftsort. Der Gl¨ ubiger ist nicht berechtigt, weitere Zinsen oder sonstige Zahlungen
                          a
    aufgrund dieser Versp¨ tung zu verlangen.
     u
    F¨ r diese Zwecke bezeichnet ‘‘Zahltag’’ einen Tag, [bei nicht auf Euro lautenden
                                  ¨
    Schuldverschreibungen, einfugen: der ein Tag (außer einem Samstag oder Sonntag) ist, an dem
          a                          a                    a
    Gesch¨ ftsbanken und Devisenm¨ rkte Zahlungen in [s¨ mtliche relevante Finanzzentren angeben]
                                                                  ¨
    abwickeln] [bei auf Euro lautenden Schuldverschreibungen, einfugen: der ein Tag (außer einem Samstag
    oder Sonntag) ist, an dem alle betroffenen Bereiche des Trans-European Automated Real-time Gross
    Settlement Express Transfer System (TARGET) und das betreffende Clearing System betriebsbereit sind,
    um die betreffenden Zahlungen weiterzuleiten.]
(6) Bezugnahmen auf Kapital und Zinsen. Bezugnahmen in diesen Emissionsbedingungen auf einen
                                                                                           a
    Kapitalbetrag der Schuldverschreibungen schließen, soweit anwendbar, die folgenden Betr¨ ge ein: den
     ¨                                                                          ¨
    Ruckzahlungsbetrag der Schuldverschreibungen; den vorzeitigen Ruckzahlungsbetrag der

                                                      47
    Schuldverschreibungen; [falls die Emittentin das Wahlrecht hat, die Schuldverschreibungen aus
                                    ¨                  ¨               ¨                  u
    anderen als steuerlichen Grunden vorzeitig zuruckzuzahlen, einfugen: den Wahl-R¨ ckzahlungsbetrag
                                                    a
    (Call) der Schuldverschreibungen;] [falls der Gl¨ ubiger ein Wahlrecht hat, die Schuldverschreibungen
                    ¨              ¨               u
    vorzeitig zu kundigen, einfugen: den Wahl-R¨ ckzahlungsbetrag (Put) der Schuldverschreibungen;] [im
    Fall     von    Nullkupon-Schuldverschreibungen              ¨
                                                             einfugen:   den    Amortisationsbetrag   der
                                                                                      ¨
    Schuldverschreibungen;] [im Fall von Raten-Schuldverschreibungen einfugen: die auf die
    Schuldverschreibungen anwendbare(n) Rate(n);] sowie jeden Aufschlag sowie sonstige auf oder in bezug
                                                   a
    auf die Schuldverschreibungen zahlbaren Betr¨ ge. Bezugnahmen in diesen Emissionsbedingungen auf
                                                                          a             a
    Zinsen auf die Schuldverschreibungen sollen, soweit anwendbar, s¨ mtliche gem¨ ß § 7 zahlbaren
       a              a
    zus¨ tzlichen Betr¨ ge einschließen.
(7) Hinterlegung von Kapital und Zinsen. Die Emittentin ist berechtigt, beim Amtsgericht Frankfurt am Main
                           a                                 a                               o
    Zins- oder Kapitalbetr¨ ge zu hinterlegen, die von den Gl¨ ubigern nicht innerhalb von zw¨ lf Monaten nach
            a                                                           a
    dem F¨ lligkeitstag beansprucht worden sind, auch wenn die Gl¨ ubiger sich nicht in Annahmeverzug
                                                                                     u
    befinden. Soweit eine solche Hinterlegung erfolgt, und auf das Recht der R¨ cknahme verzichtet wird,
       o                u            a
    erl¨ schen die Anspr¨ che der Gl¨ ubiger gegen die Emittentin.

                                                  ¨
                                             § 5 RUCKZAHLUNG
     u                   a
(1) R¨ ckzahlung bei Endf¨ lligkeit.
                                                                                                ¨
    [Im Fall von Schuldverschreibungen, die keine Raten-Schuldverschreibungen sind, einfugen: Soweit
                                                     u
    nicht zuvor bereits ganz oder teilweise zur¨ ckgezahlt oder angekauft und entwertet, werden die
                                         u                                                    a
    Schuldverschreibungen zu ihrem R¨ ckzahlungsbetrag am [im Fall eines festgelegten F¨ lligkeitstages,
      a                 ¨                        ¨                        ¨                ¨
    F¨ lligkeitstag einfugen] [im Fall eines Ruckzahlungsmonats einfugen: in den [Ruckzahlungsmonat
          ¨                                         a                 u                 u
    einfugen] fallenden Zinszahlungstag] (der ‘‘F¨ lligkeitstag’’) zur¨ ckgezahlt. Der R¨ ckzahlungsbetrag in
    bezug auf jede Schuldverschreibung entspricht [falls die Schuldverschreibungen zu ihrem Nennbetrag
         ¨                        ¨                                                                ¨
    zuruckgezahlt werden, einfugen: dem Nennbetrag der Schuldverschreibungen] [ansonsten einfugen: dem
      u                   u                              u
    R¨ ckzahlungsbetrag f¨ r die jeweilige festgelegte St¨ ckelung].]
                                                       ¨
    [Im Fall von Raten-Schuldverschreibungen einfugen: Soweit nicht zuvor bereits ganz oder teilweise
       u
    zur¨ ckgezahlt oder angekauft und entwertet, werden die Schuldverschreibungen an dem/den nachstehenden
                                                              u
    Ratenzahlungstermin(en) zu der/den folgenden Rate(n) zur¨ ckgezahlt:
         Ratenzahlungstermin(e)                                                           Rate(n)
                                     ¨
         [Ratenzahlungstermin(e) einfugen]                                                        ¨
                                                                                     [Rate(n) einfugen]

         [          ] *************************************************                 [           ]
         [          ] *************************************************                 [           ]
                 u                                u
(2) Vorzeitige R¨ ckzahlung aus steuerlichen Gr¨ nden. Sollte die Emittentin [im Fall von durch Bayer
    Corporation, Bayer Capital Corp oder Bayer Japan begebenen Schuldverschreibungen einfugen:         ¨
                                                 a             a
    und/oder die Garantin] zur Zahlung von zus¨ tzlichen Betr¨ gen (wie in § 7 dieser Bedingungen definiert)
                         ¨
    aufgrund einer Anderung des Steuerrechts (wie nachstehend definiert) [im Falle von
    Schuldverschreibungen, die nicht Nullkupon-Schuldverschreibungen sind, einfugen: am           ¨
      a
    n¨ chstfolgenden Zinszahlungstag (wie in § 3 Absatz 1 definiert)] [im Falle von Nullkupon-
                                   ¨             a
    Schuldverschreibungen einfugen: bei F¨ lligkeit oder im Fall des Kaufs oder Tauschs einer
    Schuldverschreibung] verpflichtet sein und kann diese Verpflichtung nicht durch das Ergreifen
    angemessener, der Emittentin [im Fall von durch Bayer Corporation, Bayer Capital Corp oder Bayer
                                                      ¨                                      u
    Japan begebenen Schuldverschreibungen einfugen: und/oder der Garantin] zur Verf¨ gung stehender
                                       o
    Maßnahmen vermieden werden, k¨ nnen die Schuldverschreibungen insgesamt, jedoch nicht teilweise, nach
    Wahl der Emittentin [im Fall von durch Bayer Corporation, Bayer Capital Corp oder Bayer Japan
                                             ¨                                       u
    begebenen Schuldverschreibungen einfugen: und/oder der Garantin] mit einer K¨ ndigungsfrist von nicht
                                                       u                               a             u
    weniger als 30 und nicht mehr als 60 Tagen gegen¨ ber der Emissionsstelle und gem¨ ß § 12 gegen¨ ber den
        a                      u                                 u
    Gl¨ ubigern vorzeitig gek¨ ndigt und zu ihrem vorzeitigen R¨ ckzahlungsbetrag (wie nachstehend definiert)
         u                  u        u                                                    u
    zuz¨ glich bis zu dem f¨ r die R¨ ckzahlung festgesetzten Tag aufgelaufener Zinsen zur¨ ckgezahlt werden.
            ¨                                       ¨                 a
    Eine ‘‘Anderung des Steuerrechts’’ ist (i) eine Anderung oder Erg¨ nzung der Steuer- oder Abgabengesetze
    und -vorschriften [im Falle von Schuldverschreibungen, die von Bayer AG begeben werden, einfugen:  ¨
    der Bundesrepublik Deutschland] [im Falle von Schuldverschreibungen, die von Bayer Capital Corp
                             ¨
    begeben werden, einfugen: der Niederlande oder der Bundesrepublik Deutschland] [im Falle von
                                                                                ¨
    Schuldverschreibungen, die von Bayer Corporation begeben werden, einfugen: der Vereinigten Staaten]
                                                                                        ¨
    [im Falle von Schuldverschreibungen, die von Bayer Japan begeben werden, einfugen: Japans oder der

                                                     48
                                                                                         o
    Bundesrepublik Deutschland] oder deren politischen Untergliederungen oder Steuerbeh¨ rden, (ii) die Folge
            ¨                  a
    einer Anderung oder Erg¨ nzung der Anwendung oder der offiziellen Auslegung dieser Gesetze und
                                               o                  a
    Vorschriften, (iii) jede von den Steuerbeh¨ rden oder der zust¨ ndigen Gerichtsbarkeit in [im Falle von
    Schuldverschreibungen, die von Bayer AG begeben oder garantiert werden, einfugen: der         ¨
    Bundesrepublik Deutschland] [im Falle von Schuldverschreibungen, die von Bayer Capital Corp
                            ¨
    begeben werden, einfugen: oder den Niederlanden] [im Falle von Schuldverschreibungen, die von Bayer
                                         ¨
    Corporation begeben werden, einfugen: den Vereinigten Staaten] [im Falle von Schuldverschreibungen,
                                                  ¨
    die von Bayer Japan begeben werden, einfugen: oder Japan] oder deren politischen Untergliederungen
                   o                                               a
    oder Steuerbeh¨ rden getroffene Maßnahme/Entscheidung, unabh¨ ngig davon, ob eine derartige Maßnahme
    in Zusammenhang mit der Emittentin [im Falle von Schuldverschreibungen, die von Bayer Corporation,
                                                                      ¨
    Bayer Capital Corp oder Bayer Japan begeben werden, einfugen: oder der Garantin] stehen, oder
              ¨
    (iv) jede Anderung, jeder Zusatz, jede Neufassung, Anwendung, Auslegung oder Durchsetzung der Gesetze
    [im Falle von Schuldverschreibungen, die von Bayer AG begeben oder garantiert werden, einfugen:     ¨
    der Bundesrepublik Deutschland] [im Falle von Schuldverschreibungen, die von Bayer Capital Corp
                            ¨
    begeben werden, einfugen: oder der Niederlande] [im Falle von Schuldverschreibungen, die von Bayer
                                         ¨
    Corporation begeben werden, einfugen: der Vereinigten Staaten] [im Falle von Schuldverschreibungen,
                                                  ¨
    die von Bayer Japan begeben werden, einfugen: oder Japans] (oder jeder dazu ergangenen Verordnung
                                                                                    ¨
    oder Regelung), der oder die offiziell vorgeschlagen wurde (vorausgesetzt, diese Anderung, dieser Zusatz,
                                                                    u
    diese Neufassung, Anwendung, Auslegung oder Durchsetzung w¨ rde am oder nach dem Tag, an dem die
    letzte Tranche dieser Serie von Schuldverschreibungen begeben wird, wirksam werden).
                    u                                     u                            u     o
    Eine solche K¨ ndigung darf allerdings nicht (i) fr¨ her als 90 Tage vor dem fr¨ hestm¨ glichen Termin
    erfolgen, an dem die Emittentin [im Fall von durch Bayer Corporation, Bayer Capital Corp oder Bayer
                                                       ¨
    Japan begebenen Schuldverschreibungen einfugen: und/oder die Garantin] verpflichtet w¨ re, solchea
       a              a                                                                      a            u
    zus¨ tzlichen Betr¨ ge zu zahlen, falls eine Zahlung auf die Schuldverschreibungen dann f¨ llig sein w¨ rde,
                                                                u
    oder (ii) erfolgen, wenn zu dem Zeitpunkt, zu dem die K¨ ndigung erfolgt, die Verpflichtung zur Zahlung
             a             a
    von zus¨ tzlichen Betr¨ gen nicht mehr wirksam ist. [Bei variabel verzinslichen Schuldverschreibungen
        ¨            u        u
    einfugen: Der f¨ r die R¨ ckzahlung festgelegte Termin muß ein Zinszahlungstag sein.]
                 u                 a                                                    u        u
    Eine solche K¨ ndigung hat gem¨ ß § 12 zu erfolgen. Sie ist unwiderruflich, muß den f¨ r die R¨ ckzahlung
                                                                        a
    festgelegten Termin nennen und eine zusammenfassende Erkl¨ rung enthalten, welche die das
      u
    R¨ ckzahlungsrecht der Emittentin [im Fall von durch Bayer Corporation, Bayer Capital Corp oder
                                                              ¨
    Bayer Japan begebenen Schuldverschreibungen einfugen: und/oder der Garantin] begr¨ ndenden      u
          a
    Umst¨ nden darlegt.

                                                                                ¨                ¨
[Falls die Emittentin das Wahlrecht hat, die Schuldverschreibungen vorzeitig zuruckzuzahlen, einfugen:
                u
(3) Vorzeitige R¨ ckzahlung nach Wahl der Emittentin.
                                          a                 u
(a) Die Emittentin kann, nachdem sie gem¨ ß Absatz (b) gek¨ ndigt hat, die Schuldverschreibungen insgesamt
                                        u
    oder teilweise innerhalb des Wahl-R¨ ckzahlungszeitraumes (Call) zum/zu den nachstehend angegebenen
            u                    a
    Wahl-R¨ ckzahlungsbetrag/betr¨ gen (Call), nebst etwaigen bis zum Beginn des letzten Tags des Wahl-
      ¨                                                               ¨
    Ruckzahlungszeitraumes (Call) aufgelaufenen Zinsen zuruckzahlen. [Bei Geltung eines
              ¨                                      o        ¨                         ¨
    Mindestruckzahlungsbetrages oder eines erh¨ hten Ruckzahlungsbetrages einfugen: Eine solche
      u                    o                                                 ¨                      ¨
    R¨ ckzahlung muß in H¨ he eines Nennbetrages von [mindestens [Mindestruckzahlungsbetrag einfugen]]
        o        ¨                      ¨
    [erh¨ hten Ruckzahlungsbetrag einfugen] erfolgen.]
                 ¨
          Wahl-Ruckzahlungszeitraum (Call)                                  ¨                     a
                                                                     Wahl-Ruckzahlungsbetrag/betr¨ ge (Call)
                   ¨                  a         ¨
          [Wahl-Ruckzahlungszeitraum/r¨ ume einfugen]                     ¨                     a        ¨
                                                                   [Wahl-Ruckzahlungsbetrag/betr¨ ge einfugen]

                                                           ¨
                               [Formel zur Berechnung des Ruckzahlungsbetrages angeben]

          [         ] **********************************                            [        ]
          [         ] **********************************                            [        ]
                  a                                                                       ¨
    [Falls der Gl¨ ubiger ein Wahlrecht hat, die Schuldverschreibungen vorzeitig zu kundigen, einfugen:¨
                                                                                                  u
    Der Emittentin steht dieses Wahlrecht nicht in bezug auf eine Schuldverschreibung zu, deren R¨ ckzahlung
                  a              u
    bereits der Gl¨ ubiger in Aus¨ bung seines Wahlrechts nach Absatz 4 dieses § 5 verlangt hat.]
          u                     a                                                        a
(b) Die K¨ ndigung ist den Gl¨ ubigern der Schuldverschreibungen durch die Emittentin gem¨ ß § 12
    bekanntzugeben. Sie beinhaltet die folgenden Angaben:
    (i)              u
              die zur¨ ckzuzahlende Serie von Schuldverschreibungen;

                                                         49
     (ii)                 a                                             u
                 eine Erkl¨ rung, ob diese Serie ganz oder teilweise zur¨ ckgezahlt wird und im letzteren Fall den
                                           u
                 Gesamtnennbetrag der zur¨ ckzuzahlenden Schuldverschreibungen;
     (iii)                  u                                                                     ¨
                 den Wahl-R¨ ckzahlungszeitraum (Call), dessen Beginn nicht weniger als [Mindestkundigungsfrist
                     ¨                           o     ¨                    ¨                          u
                 einfugen] und nicht mehr als [H¨ chstkundigungsfrist einfugen] Tage nach dem Tag der K¨ ndigung
                                           u           a
                 durch die Emittentin gegen¨ ber den Gl¨ ubigern liegen darf; und
     (iv)                  u                                                              u
                 den Wahl-R¨ ckzahlungsbetrag (Call), zu dem die Schuldverschreibungen zur¨ ckgezahlt werden.
                                                    u                                 u
(c) Wenn die Schuldverschreibungen nur teilweise zur¨ ckgezahlt werden, werden die zur¨ ckzuzahlenden
                              ¨
    Schuldverschreibungen in Ubereinstimmung mit den Regeln des betreffenden Clearing Systems
          a
    ausgew¨ hlt.]
                  a                                                                   ¨            ¨
     [Falls der Gl¨ ubiger ein Wahlrecht hat, die Schuldverschreibungen vorzeitig zu kundigen, einfugen:
                  u                           a
[(4)] Vorzeitige R¨ ckzahlung nach Wahl des Gl¨ ubigers.
                                                           u
(a) Die Emittentin hat eine Schuldverschreibung nach Aus¨ bung des entsprechenden Wahlrechts durch den
      a                               u                                               u
    Gl¨ ubiger innerhalb des Wahl-R¨ ckzahlungszeitraumes (Put) zum/zu den Wahl-R¨ ckzahlungsbetrag/
        a
    betr¨ gen (Put), wie nachstehend angegeben nebst etwaigen bis zum Beginn des letzten Tags des Wahl-
     u                                                    u
    R¨ ckzahlungszeitraumes (Put) aufgelaufener Zinsen zur¨ ckzuzahlen.
                    ¨
             Wahl-Ruckzahlungszeitraum (Put)                                     ¨                     a
                                                                          Wahl-Ruckzahlungsbetrag/betr¨ ge (Put)
                      ¨                  a         ¨
             [Wahl-Ruckzahlungszeitraum/r¨ ume einfugen]                       ¨                     a        ¨
                                                                        [Wahl-Ruckzahlungsbetrag/betr¨ ge einfugen]

                                                                ¨
                                    [Formel zur Berechnung des Ruckzahlungsbetrages angeben]
             [          ] ********************************                               [        ]
             [          ] ********************************                               [        ]
            a                                                                                     u
     Dem Gl¨ ubiger steht dieses Wahlrecht nicht in bezug auf eine Schuldverschreibung zu, deren R¨ ckzahlung
                                 u
     die Emittentin zuvor in Aus¨ bung eines ihrer Wahlrechte nach diesem § 5 verlangt hat.
                                 u               a                                    ¨
(b) Um dieses Wahlrecht auszu¨ ben, hat der Gl¨ ubiger nicht weniger als [Mindestkundigungsfrist einfugen]  ¨
                             o      ¨                    ¨                                        u
    und nicht mehr als [H¨ chstkundigungsfrist einfugen] Tage vor dem Beginn des Wahl-R¨ ckzahlungs-
                                       u               a         u            a
    zeitraumes (Put), an dem die R¨ ckzahlung gem¨ ß der Aus¨ bungserkl¨ rung (wie nachstehend definiert)
                                                     a                                   a
    erfolgen soll, bei der bezeichneten Gesch¨ ftsstelle der Emissionsstelle w¨ hrend der normalen
           a                                 a             ¨
    Gesch¨ ftszeiten eine ordnungsgem¨ ß ausgefullte Mitteilung zur vorzeitigen Ruckzahlung          ¨
           u         a                                             a                              a
    (‘‘Aus¨ bungserkl¨ rung’’), wie sie von der bezeichneten Gesch¨ ftsstelle des Fiscal Agent erh¨ ltlich ist, zu
                          u
    hinterlegen. Die Aus¨ bung des Wahlrechts kann nicht widerrufen werden.]
                                                                                      ¨
     [Im Falle von Schuldverschreibungen (außer Nullkupon-Schuldverschreibungen), einfugen:
                   u
[(5)] Vorzeitiger R¨ ckzahlungsbetrag.
 u                                                                                u
F¨ r die Zwecke des § 9 und des Absatzes 2 dieses § 5, entspricht der vorzeitige R¨ ckzahlungsbetrag einer
                         u
Schuldverschreibung dem R¨ ckzahlungsbetrag.]

                                                  ¨
[Im Falle von Nullkupon-Schuldverschreibungen einfugen:
                   u
[(5)] Vorzeitiger R¨ ckzahlungsbetrag.
     u                                                                                u
(a) F¨ r die Zwecke des § 9 und des Absatzes 2 dieses § 5, entspricht der vorzeitige R¨ ckzahlungsbetrag einer
    Schuldverschreibung dem Amortisationsbetrag der Schuldverschreibung:
(b) [Sollten aufgelaufene Zinsen addiert werden,                              ¨
                                                                          einfugen:     Der    Amortisationsbetrag    der
    Schuldverschreibung entspricht der Summe aus:
     (i)                            u
                 [Referenzpreis einf¨ gen] (der ‘‘Referenzpreis’’), und
     (ii)                                                                ¨
                 dem Produkt aus [Emissionsrendite in Prozent einfugen] (die ‘‘Emissionsrendite’’) und dem
                                                                                      ¨
                 Referenzpreis ab dem (und einschließlich) [Tag der Begebung einfugen] bis zu (aber ausschließlich)
                                        u
                 dem vorgesehenen R¨ ckzahlungstag oder (je nachdem) dem Tag, an dem die Schuldverschreibungen
                  a           u                                               a
                 f¨ llig und r¨ ckzahlbar werden, wobei die Emissionsrendite j¨ hrlich kapitalisiert wird.]

                                 ¨
     [Im Falle der Abzinsung einfugen:
     Der Amortisationsbetrag einer Schuldverschreibung entspricht dem Nennbetrag einer Schuldverschreibung
                                                                       ¨
     abgezinst mit der Emissionsrendite von [Emissionsrendite einfugen] ab und einschließlich dem

                                                              50
     a
    F¨ lligkeitsdatum bis zu dem Tilgungstermin, jedoch unter Ausschluß desselben. Die Berechnung dieses
                                          a
    Betrages erfolgt auf der Basis einer j¨ hrlichen Kapitalisierung der aufgelaufenen Zinsen.]
                                  u
    Wenn diese Berechnung f¨ r einen Zeitraum, der nicht einer ganzen Zahl von Jahren entspricht,
            u                                           a
    durchzuf¨ hren ist, hat sie im Fall des nicht vollst¨ ndigen Jahres (der ‘‘Zinsberechnungszeitraum’’) auf der
    Grundlage des Zinstagequotienten (wie vorstehend in § 3 definiert) zu erfolgen.
                                                 u                           a
(c) Falls die Emittentin den vorzeitigen R¨ ckzahlungsbetrag bei F¨ lligkeit nicht zahlt, wird der
    Amortisationsbetrag einer Schuldverschreibung wie vorstehend beschrieben berechnet, jedoch mit der
                                                                           u        u
    Maßgabe, daß die Bezugnahmen in Unterabsatz (b)(ii) auf den f¨ r die R¨ ckzahlung vorgesehenen
      u                                                                    a         u
    R¨ ckzahlungstag oder den Tag, an dem diese Schuldverschreibungen f¨ llig und r¨ ckzahlbar werden, durch
           u
    den fr¨ heren der nachstehenden Zeitpunkte ersetzt werden: (i) der Tag, an dem die Zahlung gegen
                  a
    ordnungsgem¨ ße Vorlage und Einreichung der betreffenden Schuldverschreibungen (sofern erforderlich)
                                                                         a                                     u
    erfolgt, und (ii) der vierzehnte Tag, nachdem die Emissionsstelle gem¨ ß § 12 mitgeteilt hat, daß ihr die f¨ r
          u                                         u
    die R¨ ckzahlung erforderlichen Mittel zur Verf¨ gung gestellt wurden.]
    [Im Fall von indexierten Schuldverschreibungen, Credit Linked Notes oder Equity Linked Notes
    hinsichtlich des Kapitalbetrages, anwendbare Bestimmungen hier und im anwendbaren
                            ¨                    ¨            a
    Konditionenblatt einfugen. Dasselbe gilt fur Doppelw¨ hrungs-Schuldverschreibungen und
    teileingezahlte Schuldverschreibungen.]


                                               §6
                        DIE EMISSIONSSTELLE[, ] [UND] [DIE ZAHLSTELLE[N]
                                 [UND DIE BERECHNUNGSSTELLE]
                                    a                     a
(1) Bestellung; bezeichnete Gesch¨ ftsstelle. Die anf¨ nglich bestellte Emissionsstelle[,] [und] [die
                                                                                      a
    Zahlstelle[n]] [und die Berechnungsstelle] und [seine] [ihre] bezeichnete[n] Gesch¨ ftsstelle[n] laute[t][n]
    wie folgt:

     Emissionsstelle:          Deutsche Bank AG London
                               Winchester House
                               1 Great Winchester Street
                               London EC2N 2DB

     Zahlstelle:               Deutsche Bank Luxembourg S.A.
                               2, boulevard Konrad Adenauer
                               L-1115 Luxembourg
                                                    a                ¨
     [andere Zahlstellen und deren bezeichnete Gesch¨ ftsstellen einfugen]
                                                                                ¨
     [Falls die Emissionsstelle als Berechnungsstelle bestellt werden soll, einfugen: Die Emissionsstelle
     handelt auch als Berechnungsstelle.]
                                                                                                ¨
     [Falls eine Berechnungsstelle bestellt werden soll, die nicht die Emissionsstelle ist, einfugen: Die
                                   a                         a
     Berechnungsstelle und ihre anf¨ nglich bezeichnete Gesch¨ ftsstelle lauten:
                                                      a               ¨
     [Berechnungsstelle:] [Namen und bezeichnete Gesch¨ ftsstelle einfugen]]
                                                                                      a
     Die Emissionsstelle[,] [und] [die Zahlstelle[n]] [und die Berechnungsstelle] [beh¨ lt] [behalten] sich das
                                                                a
     Recht vor, jederzeit [seine] [ihre] bezeichnete[n] Gesch¨ ftsstelle[n] durch eine andere bezeichnete
          a
     Gesch¨ ftsstelle in derselben Stadt zu ersetzen.
     ¨                                                                     a
(2) Anderung der Bestellung oder Abberufung. Die Emittentin beh¨ lt sich das Recht vor, jederzeit die
                                                                                                  ¨
    Bestellung der Emissionsstelle [oder einer Zahlstelle] [oder der Berechnungsstelle] zu andern oder zu
                                                            a
    beenden und eine andere Emissionsstelle [oder zus¨ tzliche oder andere Zahlstellen] [oder eine andere
    Berechnungsstelle] zu bestellen. Die Emittentin wird zu jedem Zeitpunkt (i) eine Emissionsstelle unterhalten
                                                             o                      ¨
    [im Fall von Schuldverschreibungen, die an einer B¨ rse notiert sind, einfugen: [,] [und] (ii) solange die
                                                    o
    Schuldverschreibungen an der [Name der B¨ rse] notiert sind, eine Zahlstelle (die mit der Emissionsstelle
                                                  a                      o
    identisch sein kann) mit bezeichneter Gesch¨ ftsstelle in [Sitz der B¨ rse] und/oder an solchen anderen Orten
                                        o                                                            ¨
    unterhalten, die die Regeln dieser B¨ rse verlangen] [im Fall von Zahlungen in US-Dollar einfugen: [,] und
                                                           a
    [(iii)] falls Zahlungen bei den oder durch die Gesch¨ ftsstellen aller Zahlstellen außerhalb der Vereinigten
                                                           u                           a
    Staaten (wie in § 4 definiert) aufgrund der Einf¨ hrung von Devisenbeschr¨ nkungen oder ahnlichen    ¨
             a                               a                                                             a
    Beschr¨ nkungen hinsichtlich der vollst¨ ndigen Zahlung oder des Empfangs der entsprechenden Betr¨ ge in

                                                       51
                                           a
      US-Dollar widerrechtlich oder tats¨ chlich ausgeschlossen werden, eine Zahlstelle mit bezeichneter
            a
      Gesch¨ ftsstelle in New York City unterhalten] [falls eine Berechnungsstelle bestellt werden soll,
          ¨
      einfugen: [,] [und] [(iv)] eine Berechnungsstelle [falls die Berechnungsstelle eine bezeichnete
            a                                                                          ¨
      Gesch¨ ftsstelle an einem vorgeschriebenen Ort zu unterhalten hat, einfugen: mit bezeichneter
            a                                       ¨                         ¨
      Gesch¨ ftsstelle in [vorgeschriebenen Ort einfugen]] unterhalten]. Eine Anderung, Abberufung, Bestellung
                                                                                               ¨
      oder ein sonstiger Wechsel wird nur wirksam (außer im Insolvenzfall, in dem eine solche Anderung sofort
                                       a          u         a
      wirksam wird), sofern die Gl¨ ubiger hier¨ ber gem¨ ß § 12 vorab unter Einhaltung einer Frist von
      mindestens 30 und nicht mehr als 45 Tagen informiert wurden.

(3) Beauftragte der Emittentin. Die Emissionsstelle[,] [und] [die Zahlstelle[n]] [und die Berechnungsstelle]
                                                                              u            u
    [handelt] [handeln] ausschließlich als Beauftragte[r] der Emittentin und [¨ bernimmt] [¨ bernehmen] keinerlei
                           u            a                                                         a
    Verpflichtungen gegen¨ ber den Gl¨ ubigern und es wird kein Auftrags- oder Treuhandverh¨ ltnis zwischen
                             a              u
    [ihr] [ihnen] und den Gl¨ ubigern begr¨ ndet.


                                                     §7
                                                  STEUERN

       a                                                          a
      S¨ mtliche auf die Schuldverschreibungen zu zahlenden Betr¨ ge sind an der Quelle ohne Einbehalt oder
                                       a            u
Abzug von oder aufgrund von gegenw¨ rtig oder zuk¨ nftig bestehenden Steuern oder sonstigen Abgaben gleich
welcher Art zu leisten, die von oder in der Bundesrepublik Deutschland [im Fall von Schuldverschreibungen
begeben von Bayer Capital Corp, Bayer Corporation oder Bayer Japan, bitte wie jeweils erforderlich
     ¨                                                                     u                                   u
einfugen: oder [den Niederlanden] [den Vereinigten Staaten] [Japan]] oder f¨ r deren Rechnung oder von oder f¨ r
Rechnung einer mit dem Recht zur Steuererhebung versehenen politischen Untergliederung oder Beh¨ rde dero
Vorgenannten auferlegt oder erhoben werden (zusammen ‘‘Quellensteuer’’), es sei denn, dieser Einbehalt oder
                                                                                       a             a
Abzug ist gesetzlich vorgeschrieben. In diesem Fall wird die Emittentin diejenigen zus¨ tzlichen Betr¨ ge zahlen,
                                        a                              a
die erforderlich sind, damit die den Gl¨ ubigern zufließenden Nettobetr¨ ge nach diesem Einbehalt oder Abzug
                 a
jeweils den Betr¨ gen an Kapital und Zinsen entsprechen, die ohne einen solchen Abzug oder Einbehalt von den
   a                             a                                               a            a
Gl¨ ubigern empfangen worden w¨ ren. Die Verpflichtung zur Zahlung solcher zus¨ tzlicher Betr¨ ge besteht jedoch
nicht im Hinblick auf Steuern und Abgaben, die:

[Im Fall von Schuldverschreibungen begeben von Bayer AG, Bayer Capital Corp und Bayer
                 ¨
Corporation, einfugen:

(a) anders als durch Einbehalt oder Abzug von Zahlungen zu entrichten sind, die die Emittentin an den
      a
    Gl¨ ubiger leistet; oder

                           a      a           a                                                    a
(b) nicht erhoben worden w¨ ren, h¨ tte der Gl¨ ubiger die Schuldverschreibung nicht erst zu dem sp¨ teren der
                                                           a
    folgenden Termine vorgelegt: mehr als 15 Tage nach F¨ lligkeit der entsprechenden Zahlung oder nach dem
                                            a
    Tag, an dem die Zahlung ordnungsgem¨ ß erfolgen konnte; oder

(c) von einer Zahlstelle abgezogen oder einbehalten werden, wenn eine andere Zahlstelle die Zahlung ohne
                                        a              o
    einen solchen Abzug oder Einbehalt h¨ tte leisten k¨ nnen; oder

                                             a                a
(d) nicht erhoben oder einbehalten worden w¨ ren, wenn der Gl¨ ubiger die Schuldverschreibungen nicht in [der
                                                                                                      a
    Bundesrepublik Deutschland] [den Vereinigten Staaten] [den Niederlanden] zur Zahlung vorgelegt h¨ tte, es
                    a
    sei denn, der Gl¨ ubiger war verpflichtet, die Schuldverschreibungen in [der Bundesrepublik Deutschland]
                                                                                          o
    [den Vereinigten Staaten] [den Niederlanden] zur Zahlung vorzulegen, ohne daß die M¨ glichkeit bestand,
    diese an einem anderen Ort vorzulegen; oder

                                                              a
(e) aufgrund (i) einer Richtlinie oder Verordnung der Europ¨ ischen Union betreffend die Besteuerung von
            a                                                           ¨
    Zinsertr¨ gen oder (ii) einer zwischenstaatlichen Vereinbarung uber deren Besteuerung, an der die
                                                                                                        a
    Bundesrepublik Deutschland [, die Niederlande] [und/oder die Vereinigten Staaten] oder die Europ¨ ische
    Union beteiligt ist/sind, oder (iii) einer gesetzlichen Vorschrift, die diese Richtlinie, Verordnung oder
    Vereinbarung umsetzt oder befolgt, abzuziehen oder einzubehalten sind, oder

(f)                                a                a
      nicht zu zahlen gewesen w¨ ren, wenn der Gl¨ ubiger entsprechende Informationen oder andere relevante
                                              u                      o
      Bescheinigungen oder Nachweise bez¨ glich seiner Staatsangeh¨ rigkeit, seines Wohnsitzes oder seiner
             a                                                           u                 a
      Identit¨ t beigebracht, einen Nachweis oder anderen Beweis dar¨ ber erbracht h¨ tte, daß er kein
                a                                                                  a
      Steuerinl¨ nder ist, oder eine entsprechende andere Bescheinigung vorgelegt h¨ tte, deren Vorlegung die
                                               a
      Zahlung von Quellensteuer vermieden h¨ tte.] [; oder]

                                                       52
                                                                  ¨
[Im Fall von Schuldverschreibungen begeben durch Bayer Japan, einfugen:
                u           a
(a) durch oder f¨ r einen Gl¨ ubiger zu entrichten sind, der in Japan keinen Wohnsitz hat oder bei dem es sich um
    eine nichtjapanische Kapitalgesellschaft handelt und der oder die in bezug auf die Schuldverschreibung
    aufgrund irgendeiner Verbindung mit Japan mit Ausnahme der bloßen Innehabung der Schuldverschreibung
    Quellensteuer schuldet; oder
                u           a
(b) durch oder f¨ r einen Gl¨ ubiger zu entrichten sind, der ansonsten von einem Abzug an der Quelle oder
                               a                                                              u
    sonstigem Abzug befreit w¨ re, der jedoch die jeweiligen Anforderungen an die Zurverf¨ gungstellung von
                                                                         u
    Befreiungsinformationen (wie untenstehend definiert) nicht erf¨ llt oder keinen Befreiungsantrag (wie
    untenstehend definiert) bei derjenigen Zahlstelle stellt, der die entsprechende Schuldverschreibung vorgelegt
                                                                     a
    wird, oder dessen Befreiungsinformation nicht ordnungsgem¨ ß durch den Teilnehmer (wie untenstehend
    definiert) und das entsprechende internationale Clearing System der Zahlstelle mitgeteilt wird; oder
                u           a                                 u
(c) durch oder f¨ r einen Gl¨ ubiger zu entrichten sind, der f¨ r Zwecke der japanischen Besteuerung so behandelt
    wird, als habe er in Japan einen Wohnsitz bzw. als handele es sich um eine japanische Kapitalgesellschaft
    (außer (A) eine bestimmte Finanzeinrichtung (wie untenstehend definiert), die die Pflicht zur
            u                                               u
    Zurverf¨ gungstellung von Befreiungsinformation erf¨ llt bzw. einen Befreiungsantrag stellt, und (B) eine
                                                                                                a
    Person mit Wohnsitz in Japan bzw. eine japanische Kapitalgesellschaft, die die zust¨ ndige Zahlstelle
                  a      u                                                                u
    ordnungsgem¨ ß dar¨ ber informiert, daß sie von der durch die Emittentin zur¨ ckzubehaltenden oder
    abzuziehenden Quellensteuer befreit ist, weil sie Zinsen auf die entsprechende Schuldverschreibung durch
                                                      a
    einen von ihr ernannten Zahlungsvermittler erh¨ lt); oder
                                                                    a
(d) aufgrund (i) einer Richtlinie oder Verordnung der Europ¨ ischen Union betreffend die Besteuerung von
            a                                                               ¨
    Zinsertr¨ gen oder (ii) einer zwischenstaatlichen Vereinbarung uber deren Besteuerung, an der die
    Bundesrepublik Deutschland [, die Niederlande] [und/oder die Vereinigten Staaten von Amerika] oder die
          a
    Europ¨ ische Union beteiligt ist/sind, oder (iii) einer gesetzlichen Vorschrift, die diese Richtlinie, Verordnung
    oder Vereinbarung umsetzt oder befolgt, abzuziehen oder einzubehalten sind, oder
                                                                                             a
(e) mehr als 15 Tage nach dem jeweiligen Datum zu entrichten sind, es sei denn, daß der Gl¨ ubiger einen
                                    a              a
    Anspruch auf Zahlung solcher zus¨ tzlicher Betr¨ ge gegen die Emittentin nach Maßgabe der vorstehenden
                          a
    Bestimmungen gehabt h¨ tte, wenn er die Schuldverschreibung bei Ablauf dieser 15-Tagefrist vorgelegt
     a
    h¨ tte.
                                                                                                      a
     In diesen Bedingungen bedeutet ‘‘jeweiliges Datum’’ das Datum, an dem diese Zahlung erstmals f¨ llig
     wird, außer daß, sofern die Emissionsstelle an oder vor diesem Datum den geschuldeten Betrag nicht
     erhalten hat, sich dieser Begriff auf das Datum bezieht, an dem, nachdem die Emissionsstelle die
           a                                                                                    a
     vollst¨ ndige Summe dieses Betrages erhalten hat, eine entsprechende Mitteilung ordnungsgem¨ ß an die
       a            ¨
     Gl¨ ubiger in Ubereinstimmung mit § 12 gegeben wurde.
      u                            a
     F¨ r die Zwecke der obigen Abs¨ tze (b) und (c) gilt:
     (i)                                                    u
            Um Zahlungen ohne Einbehalt oder Abzug f¨ r Zwecke der Quellensteuer durch die Emittentin zu
            erhalten, soweit eine Schuldverschreibung durch einen bestimmten Teilnehmer an einem
            internationalen Clearing System oder einen bestimmten Finanzdienstleister (jeweils ein
                                                                  a              ¨
            ‘‘Teilnehmer’’) gehalten wird und der jeweilige Gl¨ ubiger in Ubereinstimmung mit dem Gesetz
            (A) keinen Wohnsitz in Japan hat bzw. eine nichtjapanische Kapitalgesellschaft ist oder (B) eine
                                                      a
            japanische Finanzeinrichtung gem¨ ß bestimmten durch das Gesetz uber besondere        ¨
            Besteuerungsmaßnahmen (Gesetz Nr. 26 von 1957) und die dazu ergangene Kabinettsverf¨ gung        u
            (Nr. 362) vom 17. Dezember 1997 (zusammen mit der dazu ergangenen ministeriellen Verordnung das
                                                                                                         a
            ‘‘Gesetz’’) geregelten Kategorien ist (eine ‘‘bestimmte Finanzeinrichtung’’), hat dieser Gl¨ ubiger zu
            dem Zeitpunkt, zu dem er den Teilnehmer mit der Verwahrung der jeweiligen Schuldverschreibung
                                                                                              u
            beauftragt, bestimmte durch das Gesetz vorgeschriebene Informationen zur Verf¨ gung zu stellen, um
                                                        o                      a
            dem Teilnehmer die Darlegung zu erm¨ glichen, daß dieser Gl¨ ubiger von der Verpflichtung, daß
            Quellensteuer einbehalten oder abgezogen wird, befreit ist (die ‘‘Befreiungsinformation’’). Zudem
                       a                            u
            soll der Gl¨ ubiger den Teilnehmer dar¨ ber informieren, falls er nicht mehr in dieser Weise befreit ist;
            und
     (ii)                                                  u
            Um Zahlungen ohne Einbehalt oder Abzug f¨ r Zwecke von Quellensteuern durch die Emittentin zu
            erhalten, soweit eine Schuldverschreibung nicht durch einen Teilnehmer verwahrt wird und der
                              a         ¨
            entsprechende Gl¨ ubiger in Ubereinstimmung mit dem Gesetz (A) keinen Wohnsitz in Japan hat oder
            eine nicht japanische Kapitalgesellschaft ist oder (B) eine bestimmte Finanzeinrichtung ist, hat dieser
               a                                                              a
            Gl¨ ubiger an oder vor dem Tag, an dem er jeweils Zinsen erh¨ lt, an die jeweilige Zahlstelle einen

                                                         53
            Befreiungsantrag hinsichtlich Quellensteuer (Hikazei Tekiyo Shinkokusho) (einen
                                                               a
            ‘‘Befreiungsantrag’’) in der von der Zahlstelle erh¨ ltlichen Form zu richten, die unter anderem den
                                                a
            Namen und die Anschrift des Gl¨ ubigers, den Titel der Schuldverschreibungen, den jeweiligen
                                                                                      a
            Zinszahlungstag, den Betrag der Zinsen und die Tatsache, daß der Gl¨ ubiger zur Stellung eines
                                                  u
            Befreiungsantrags berechtigt ist, auff¨ hrt.
     Jede Bezugnahme in dieser Schuldverschreibung oder der in der Schuldverschreibung genannten Garantie
                                                                           a           a
auf den Nennbetrag oder Zinsen versteht sich auch als Bezugnahme auf zus¨ tzliche Betr¨ ge, die durch die
              a                                                 o
Emittentin gem¨ ß § 7 dieser Emissionsbedingungen zahlbar sein k¨ nnen.]

                                                                                     ¨
[Im Fall von Schuldverschreibungen begeben von Bayer AG oder Bayer Capital Corp, einfugen:
(g)                        a              u         o                   a                          a
      wegen einer gegenw¨ rtigen oder fr¨ heren pers¨ nlichen oder gesch¨ ftlichen Beziehung des Gl¨ ubigers [im
                                                                                    ¨
      Fall von durch Bayer AG begebenen Schuldverschreibungen einfugen: zur Bundesrepublik
      Deutschland] [im Fall von Schuldverschreibungen, die von Bayer Capital Corp begeben werden,
          ¨                                           a                                               u
      einfugen: zu den Niederlanden oder weil der Gl¨ ubiger in den Niederlanden wohnhaft ist bzw. f¨ r Zwecke
                                                           a           u
      der Besteuerung so behandelt wird oder weil der Gl¨ ubiger qew¨ nscht hat, so behandelt zu werden oder
                 a
      weil der Gl¨ ubiger einen dauerhaften Wohnsitz in den Niederlanden hat (oder so behandelt wird)] oder zu
                                             a
      einem anderen Mitgliedstaat der Europ¨ ischen Union zu zahlen sind. Dies gilt jedoch nicht allein deshalb,
      weil Zahlungen auf die Schuldverschreibungen aus Quellen in [im Fall von durch Bayer AG begebenen
                                        ¨
      Schuldverschreibungen einfugen: der Bundesrepublik Deutschland] [im Fall von
                                                                                        ¨
      Schuldverschreibungen, die von Bayer Capital Corp begeben werden, einfugen: den Niederlanden]
                       u
      stammen (oder f¨ r Zwecke der Besteuerung so behandelt werden) oder dort besichert sind.]

                                                                      ¨
[Im Fall von Schuldverschreibungen begeben von Bayer Corporation, einfugen:
                                                       a             u                            a
(g) die erhoben werden aufgrund (i) einer gegenw¨ rtigen oder fr¨ heren Beziehung des Gl¨ ubigers (oder des
          a                                                u
    Treuh¨ nders, Treugebers, Gesellschafters, Beg¨ nstigten oder Mitglieds des Gl¨ ubigers oder     a
             a                   a                           a
    Bevollm¨ chtigten des Gl¨ ubigers, sofern der Gl¨ ubiger eine Erbengemeinschaft, ein Trust, eine
    Kapitalgesellschaft oder eine Personengesellschaft ist), zu den Vereinigten Staaten, z.B, in der Form, daß der
      a                        a                                         u
    Gl¨ ubiger (oder Treuh¨ nder, Treugeber, Gesellschafter, Beg¨ nstigte oder das Mitglied oder der
             a                     o
    Bevollm¨ chtigte) Staatsangeh¨ riger der Vereinigten Staaten ist bzw. war oder dort seinen Wohnsitz oder Sitz
                                                               a
    hat oder hatte, bzw. so behandelt wird oder wurde, als h¨ tte er seinen Sitz oder Wohnsitz dort, oder daß er
                          u                    a                                               a                 a
    dort ein Gewerbe aus¨ bt oder ein Gesch¨ ft hat oder daran beteiligt ist, oder dort eine st¨ ndige Betriebsst¨ tte
           a                                     u                  a                      a                 o
    unterh¨ lt oder unterhielt; oder (ii) des fr¨ heren oder gegenw¨ rtigen Status des Gl¨ ubigers als pers¨ nliche
                                   a                o
    Holding-Gesellschaft, ausl¨ ndische pers¨ nliche Holding-Gesellschaft, kontrollierte ausl¨ ndische     a
    Kapitalgesellschaft private Stiftung oder sonstige steuerbefreite Organisation jeweils in bezug auf die
    Vereinigten Staaten oder als einer Gesellschaft, die Einkommen zur Vermeidung von US-Einkommensteuer
    akkumuliert; oder
                                  a                 a
(h) die nicht erhoben worden w¨ re, wenn der Gl¨ ubiger einer durch Gesetz oder durch eine Verordnung der
    Vereinigten Staaten vorgeschriebenen anwendbaren, Informations- oder Mitteilungspflicht hinsichtlich
                      o                                                       a
    seiner Staatszugeh¨ rigkeit, seines Sitzes oder Wohnsitzes, seiner Identit¨ t oder seiner Beziehungen zu den
                            u      a
    Vereinigten Staaten gen¨ gt h¨ tte; oder
(i)                                      a                  a            u
      die erhoben werden, weil der Gl¨ ubiger (i) gegenw¨ rtig oder fr¨ her mindestens 10% der gesamten
                                                                                                    a
      ausstehenden und stimmberechtigten Stimmrechte aller Aktiengattungen der Emittenten tats¨ chlich h¨ lt a
                                                                                  a
      bzw. hielt oder lhm diese Stimmrechte zugerechnet werden, (ii) aufgrund tats¨ chlichen oder zurechenbaren
                                                            a
      Aktienbesitzes als mit den Emittenten verbundene ausl¨ ndische kontrollierte Gesellschaft einzuordnen ist
      oder (iii) Zinsen vereinnahmt, die von einer Bank aufgrund einer Kreditvergabe auf der Grundlage eines
                                                           a           a
      Darlehnsvertrages, der im Rahmen ihres ordnungsgem¨ ßen Gesch¨ ftsgangs abgeschlossen wurde, erhalten
      werden; oder
(j)   die erhoben werden als Nachlaßsteuern, Erbschaftssteuern, Schenkungssteuern, Verkaufs- oder
                     ¨                  o                  ¨
      Umsatzsteuern, Ubertragungs-, Verm¨ genssteuern oder ahnliche Steuern, Steuerveranlagungen oder
      Abgaben; oder
(k) soweit nicht im jeweiligen Konditionenblatt abweichend geregelt, Steuern sind, die auf die in § 871(h)(4)(A)
    der jeweiligen Fassung des Internal Revenue Code of 1986 (Steuergesetz) der Vereinigten Staaten sowie der
    dazu ergangenen Rechtsverordnungen beschriebenen Zinsen erhoben werden; oder
(l)                                                           u                       a
      aufgrund jeglicher Kombination der in (a) bis (j) aufgef¨ hrten Punkte zahlbar w¨ ren;

                                                         54
                                 a               a
außerdem werden keine zus¨ tzlichen Betr¨ ge in bezug auf Zins- oder Kapitalzahlungen auf eine
                                                                       a
Schuldverschreibung an eine Person oder Gesellschaft, die ein Treuh¨ nder oder eine Personengesellschaft oder
                                                   u                                                      u
sonstiger nicht alleiniger wirtschaftlicher Eigent¨ mer einer solchen Zahlung ist, gezahlt, sofern der Beg¨ nstigte
                                            a
oder Treugeber in bezug auf diesen Treuh¨ nder, das Mitglied der Personengesellschaft oder der wirtschaftliche
       u                                a            a                         a                     u
Eigent¨ mer nicht zum Bezug der zus¨ tzlichen Betr¨ ge berechtigt gewesen w¨ re, wenn dieser Beg¨ nstigte oder
                                                                   u
Treugeber, dieses Mitglied oder dieser wirtschaftliche Eigent¨ mer der Inhaber dieser Schuldverschreibung
           a
gewesen w¨ re.]


                                                  §8
                                            VORLEGUNGSFRIST

                                                                      u
     Die in § 801 Absatz 1 Satz 1 BGB bestimmte Vorlegungsfrist wird f¨ r die Schuldverschreibungen auf zehn
          u
Jahre verk¨ rzt.


                                                    §9
                                                  ¨
                                                 KUNDIGUNG

      u           u              a                                                     u
(1) K¨ ndigungsgr¨ nde. Jeder Gl¨ ubiger ist berechtigt, seine Schuldverschreibung zu k¨ ndigen und deren
                u                                  u                                               u
    sofortige R¨ ckzahlung zu ihrem vorzeitigen R¨ ckzahlungsbetrag (wie in § 5 beschrieben), zuz¨ glich
                               u
    etwaiger bis zum Tage der R¨ ckzahlung aufgelaufener Zinsen zu verlangen, falls:

     (a)   die Emittentin [im Fall von Schuldverschreibungen begeben von Bayer Corporation, Bayer
                                               ¨
           Capital Corp oder Bayer Japan, einfugen: oder die Garantin] Kapital oder Zinsen nicht innerhalb
                                                                    a
           von 30 aufeinanderfolgenden Tagen nach dem betreffenden F¨ lligkeitstag zahlt; oder

     (b)   die Emittentin [im Fall von Schuldverschreibungen begeben von Bayer Corporation, Bayer
                                                   ¨                                             a
           Capital Corp oder Bayer Japan, einfugen: oder die Garantin] die ordnungsgem¨ ße Erf¨ llung    u
                                                                                  u
           irgendeiner anderen Verpflichtung aus den Schuldverschreibungen f¨ r einen ununterbrochenen
                                        a                                                                  u
           Zeitraum von 30 Tagen unterl¨ ßt, nachdem die Emissionsstelle schriftlich mitteilt, daß sie hier¨ ber
                                                a                                 u
           eine Benachrichtigung von einem Gl¨ ubiger erhalten hat, mit der Erf¨ llung bzw. die Beachtung
           anderer wesentlicher Verpflichtungen aus diesen Bedingungen verlangt wird; oder

     (c)                                  a                                                   a          a
           ein am Sitz der Emittentin zust¨ ndiges Gericht in einem zwangsweisen Verfahren gem¨ ß gegenw¨ rtig
                   u                                                 ¨
           oder k¨ nftig anwendbaren Konkurs-, Insolvenz- oder ahnlichem Recht eine Entscheidung oder
                                     a
           Zahlungsaussetzung erl¨ ßt oder ein Konkursverwalter, Abwickler, Rechtsnachfolger,
                 o                     a                                   ¨                    a      u
           Verm¨ gensverwalter, Treuh¨ nder, Zwangsverwalter oder ein ahnlicher Funktionstr¨ ger f¨ r die
           Emittentin [im Falle von Schuldverschreibungen begeben von Bayer Corporation, Bayer Capital
                                             ¨                                u
           Corp oder Bayer Japan, einfugen: oder die Garantin] oder f¨ r einen wesentlichen Teil des
                 o
           Verm¨ gens der Emittentin [im Falle von Schuldverschreibungen begeben von Bayer Corporation,
                                                              ¨
           Bayer Capital Corp oder Bayer Japan, einfugen: oder der Garantin] bestellt wird oder die
                o                                    a
           Aufl¨ sung oder der Liquidation der Gesch¨ fte der Emittentin [im Falle von Schuldverschreibungen
                                                                                              ¨
           begeben von Bayer Corporation, Bayer Capital Corp oder Bayer Japan, einfugen: oder der
                                                                                       u
           Garantin] angeordnet wird, und eine solche Entscheidung oder Anordnung f¨ r einen Zeitraum von
           90 aufeinanderfolgenden Tagen nicht ausgesetzt wird und wirksam bleibt; oder

     (d)   die Emittentin [im Falle von Schuldverschreibungen begeben von Bayer Corporation, Bayer
                                                   ¨
           Capital Corp oder Bayer Japan, einfugen: oder die Garantin] (i) von sich aus ein Verfahren gem¨ ß a
                   a            u                                               ¨
           gegenw¨ rtig oder k¨ nftig anwendbaren Konkurs-, Insolvenz- oder ahnlichem Recht einleitet oder
                                      a
           (ii) dem Erlaß einer gem¨ ß solchem Recht zwangsweise ergangenen Zahlungsaussetzung zustimmt
           oder der Bestellung eines, oder Inbesitznahme durch einen, Konkursverwalter(s), Abwickler(s),
                                        o                       a                                      ¨
           Rechtsnachfolger(s), Verm¨ gensverwalter(s), Treuh¨ nder(s), Zwangsverwalter(s), oder ahnlichen
                      a         u
           Funktionstr¨ ger(s) f¨ r die Emittentin [im Falle von Schuldverschreibungen begeben von Bayer
                                                                          ¨
           Corporation, Bayer Capital Corp oder Bayer Japan, einfugen: oder die Garantin] oder eines
                                          o
           wesentlichen Teils des Verm¨ gens der Emittentin [im Falle von Schuldverschreibungen begeben
                                                                                      ¨
           von Bayer Corporation, Bayer Capital Corp oder Bayer Japan, einfugen: oder die Garantin]
                                                                                            a
           zustimmt oder (iii) eine allgemeine Schuldenregelung zugunsten ihrer Gl¨ ubiger trifft oder
                                                                      a
           (iv) allgemein die Bezahlung ihrer Verbindlichkeiten bei F¨ lligkeit einstellt oder (v) irgendwelche
                              o                                 a
           Maßnahmen zur F¨ rderung einer der vorgenannten F¨ lle trifft; oder

                                                        55
    (e)    [Im Falle von Schuldverschreibungen begeben von Bayer Corporation, Bayer Capital Corp oder
                             ¨                              a
           Bayer Japan, einfugen: falls die Garantie nicht l¨ nger rechtswirksam und bindend ist oder die die
                                                                   u
           Garantin ihre Verpflichtungen aus der Garantie nicht erf¨ llt.]
         u                                    u                      u
    Das K¨ ndigungsrecht erlischt, falls der K¨ ndigungsgrund vor Aus¨ bung des Rechts geheilt wurde.
                                                                         u
(2) Bekanntmachung. Eine Benachrichtigung, einschließlich einer K¨ ndigung der Schuldverschreibungen
         a
    gem¨ ß vorstehendem Absatz 1 ist schriftlich in deutscher oder englischer Sprache gegen¨ ber der u
                           a             o                                                       a
    Emissionsstelle zu erkl¨ ren und pers¨ nlich oder per Einschreiben an deren bezeichnete Gesch¨ ftsstelle zu
    ¨                                                           u
    ubermitteln. Der Benachrichtigung ist ein Nachweis beizuf¨ gen, aus dem sich ergibt, daß der betreffende
       a
    Gl¨ ubiger zum Zeitpunkt der Abgabe der Benachrichtigung Inhaber der betreffenden Schuldverschreibung
    ist. Der Nachweis kann durch eine Bescheinigung der Depotbank (wie in § 13 Absatz [(4)] definiert) oder
    auf andere geeignete Weise erbracht werden.


                                                   § 10
                                                ERSETZUNG
(1) Ersetzung. Die Emittentin ist jederzeit berechtigt, sofern sie sich nicht mit einer Zahlung von Kapital oder
                                                                                          a
    Zinsen auf die Schuldverschreibungen in Verzug befindet, ohne Zustimmung der Gl¨ ubiger [im Falle von
    Schuldverschreibungen, die von Bayer Corporation, Bayer Capital Corp oder Bayer Japan begeben
                  ¨
    werden, einfugen: die Garantin oder] jede andere Gesellschaft, deren stimmberechtigte Anteile zu mehr als
    90% direkt oder indirekt von [im Falle von Schuldverschreibungen, die von Bayer Corporation, Bayer
                                                                        ¨
    Capital Corp oder Bayer Japan begeben werden, einfugen: der Garantin] [im Falle von
                                                                          ¨
    Schuldverschreibungen, die von Bayer AG begeben werden, einfugen: der Emittentin] gehalten werden,
                                                                                      u
    an Stelle der Emittentin als Hauptschuldnerin (die ‘‘Nachfolgeschuldnerin’’) f¨ r alle Verpflichtungen aus
    und im Zusammenhang mit dieser Emission einzusetzen, vorausgesetzt, daß:
    (a)    die Nachfolgeschuldnerin alle Verpflichtungen der Emittentin in bezug auf die Schuldverschreibungen
           ¨
           ubernimmt;
    (b)    die Nachfolgeschuldnerin alle erforderlichen Genehmigungen erhalten hat und berechtigt ist, an die
                                         a
           Emissionsstelle die zur Erf¨ llung der Zahlungsverpflichtungen aus den Schuldverschreibungen
                         a                                a
           zahlbaren Betr¨ ge in der hierin festgelegten W¨ hrung zu zahlen, ohne verpflichtet zu sein, jeweils in
           dem Land, in dem die Nachfolgeschuldnerin oder die Emittentin ihren Sitz oder Steuersitz haben,
           erhobene Steuern oder andere Abgaben jeder Art abzuziehen oder einzubehalten;
    (c)                                                           a
           die Nachfolgeschuldnerin sich verpflichtet hat, jeden Gl¨ ubiger hinsichtlich solcher Steuern, Abgaben
                    o                                               a            u
           oder beh¨ rdlichen Lasten freizustellen, die einem Gl¨ ubiger bez¨ glich der Ersetzung auferlegt
           werden;
                                                                              ¨
    [Im Falle von Schuldverschreibungen, die von Bayer AG begeben werden, einfugen:
    (d)                                                      u           a
           die Emittentin unwiderruflich und unbedingt gegen¨ ber den Gl¨ ubigern die Zahlung aller von der
                                                                             a
           Nachfolgeschuldnerin auf die Schuldverschreibungen zahlbaren Betr¨ ge zu Bedingungen garantiert,
           die den Bedingungen der Garantie der Emittentin vom 17. Oktober 2003 hinsichtlich der
           Schuldverschreibungen, die von Bayer Corporation, Bayer Capital Corp oder Bayer Ltd., Japan unter
           dem Emissionsprogramm begeben werden, entsprechen; und]
    [Im Falle von Schuldverschreibungen, die von Bayer Corporation, Bayer Capital Corp oder Bayer
                              ¨
    Japan begeben werden, einfugen:
    (d)                                                    u           a
           die Garantin unwiderruflich und unbedingt gegen¨ ber den Gl¨ ubigern die Zahlung aller von der
                                                                            a
           Nachfolgeschuldnerin auf die Schuldverschreibungen zahlbaren Betr¨ ge zu Bedingungen garantiert,
           die den Bedingungen der Garantie entsprechen; und]
    (e)                                                             u
           der Emissionsstelle jeweils ein Rechtsgutachten bez¨ glich der betroffenen Rechtsordnungen von
                                   a                                    a
           anerkannten Rechtsanw¨ lten vorgelegt werden, die best¨ tigen, daß die Bestimmungen in den
                                 a                              u
           vorstehenden Unterabs¨ tzen (a), (b), (c) und (d) erf¨ llt wurden.
(2) Bekanntmachung.                            a
                         Jede Ersetzung ist gem¨ ß § 12 bekanntzumachen.
    ¨
(3) Anderung von Bezugnahmen. Im Fall einer Ersetzung gilt jede Bezugnahme in diesen
    Emissionsbedingungen auf die Emittentin ab dem Zeitpunkt der Ersetzung als Bezugnahme auf die
    Nachfolgeschuldnerin und jede Bezugnahme auf das Land, in dem die Emittentin ihren Sitz oder Steuersitz

                                                       56
     hat, gilt ab diesem Zeitpunkt als Bezugnahme auf das Land, in dem die Nachfolgeschuldnerin ihren Sitz
     oder Steuersitz hat.
     Außerdem gilt im Falle der Ersetzung folgendes:
     [(a)] in § 7 und § 5 Absatz 2 gilt eine alternative Bezugnahme auf [im Falle von durch Bayer AG
                                                      ¨
           begebenen Schuldverschreibungen einfugen: die Bundesrepublik Deutschland] [im Fall von
           Schuldverschreibungen begeben von Bayer Capital Corp, Bayer Corporation oder Bayer Japan,
               u                                                                               a
           einf¨ gen: [die Niederlande] [die Vereinigten Staaten] [Japan]] als aufgenommen (zus¨ tzlich zu der
           Bezugnahme nach Maßgabe des vorstehenden Satzes auf das Land, in dem die Nachfolgeschuldnerin
           ihren Sitz oder Steuersitz hat)[.] [im Fall von Schuldverschreibungen begeben von Bayer AG,
               ¨
           einfugen: ; und
     (b)   in § 9 Absatz 1(a) bis (e) gilt eine alternative Bezugnahme auf die Emittentin in ihrer Eigenschaft als
                                             a
           Garantin als aufgenommen (zus¨ tzlich zu der Bezugnahme auf die Nachfolgeschuldnerin).]


                                           § 11
                        BEGEBUNG WEITERER SCHULDVERSCHREIBUNGEN,
                                 ANKAUF UND ENTWERTUNG
(1) Begebung weiterer Schuldverschreibungen. Die Emittentin ist jederzeit berechtigt, ohne Zustimmung der
      a
    Gl¨ ubiger weitere Schuldverschreibungen mit den gleichen Bedingungen (gegebenenfalls mit Ausnahme des
    Tags der Begebung, des Verzinsungsbeginns und/oder des Ausgabepreises) in der Weise zu begeben, daß sie
    mit den Schuldverschreibungen eine einheitliche Serie bilden.
(2) Ankauf. Die Emittentin ist berechtigt, jederzeit Schuldverschreibungen im Markt oder anderweitig zu
                                                                                                  o
    jedem beliebigen Preis zu kaufen. Die von der Emittentin erworbenen Schuldverschreibungen k¨ nnen nach
    Wahl der Emittentin von ihr gehalten, weiterverkauft oder bei der Emissionsstelle zwecks Entwertung
                                      a           ¨             u
    eingereicht werden. Sofern diese K¨ ufe durch offentliches R¨ ckkaufangebot erfolgen, muß dieses Angebot
            a
    allen Gl¨ ubigern gleichermaßen gemacht werden.
                   a               a        u                                             u
(3) Entwertung. S¨ mtliche vollst¨ ndig zur¨ ckgezahlten Schuldverschreibungen sind unverz¨ glich zu
                   o
    entwerten und k¨ nnen nicht wiederbegeben oder wiederverkauft werden.


                                                   § 12
                                              MITTEILUNGEN
                                                  o                       ¨
[Im Fall von Schuldverschreibungen, die an einer B¨ rse notiert sind, einfugen:
                                                        o
(1) Bekanntmachung. Solange es die Regeln der B¨ rse, an der die Schuldverschreibungen notiert sind
                                                                                        u
    erfordern, sind alle die Schuldverschreibungen betreffenden Mitteilungen in einer f¨ hrenden Tageszeitung
                                                                                      o
    mit allgemeiner Verbreitung in [Deutschland] [Luxemburg] [dem Vereinigten K¨ nigreich] [anderen Ort
         ¨                            o
    einfugen], voraussichtlich [der B¨ rsen-Zeitung] [dem Luxemburger Wort] [dem Tageblatt] [der Financial
                                                                     ¨             o
    Times] [andere Zeitung mit allgemeiner Verbreitung einfugen] zu ver¨ ffentlichen. Jede derartige
                                                       o                                    o
    Mitteilung gilt am dritten Tag nach dem Tag der Ver¨ ffentlichung (oder bei mehreren Ver¨ ffentlichungen am
                                                     o
    dritten Tag nach dem Tag der ersten solchen Ver¨ ffentlichung) als wirksam erfolgt.]
[(2)] Mitteilungen an das Clearing System. [Im Fall von Schuldverschreibungen, die nicht notiert sind,
          ¨
      einfugen: Die Emittentin wird alle die Schuldverschreibungen betreffenden Mitteilungen an das Clearing
                                         a        ¨
      System zur Weiterleitung an die Gl¨ ubiger ubermitteln. Jede derartige Mitteilung gilt am siebten Tag nach
                                                                           a
      dem Tag der Mitteilung an das Clearing System als den Gl¨ ubigern mitgeteilt.] [Im Fall von
                                                                      o
      Schuldverschreibungen, die an der Luxemburger B¨ rse notiert sind, einfugen: Solange       ¨
                                                     o
      Schuldverschreibungen an der Luxemburger B¨ rse notiert sind, findet Absatz 1 Anwendung. Soweit dies
                    ¨                                                                  o
      Mitteilungen uber den Zinssatz betrifft oder die Regeln der Luxemburger B¨ rse es zulassen, kann die
                          o
      Emittentin eine Ver¨ ffentlichung nach Absatz 1 durch eine Mitteilung an das Clearing System zur
                               a
      Weiterleitung and die Gl¨ ubiger ersetzen; jede derartige Mitteilung gilt am siebten Tag nach dem Tag der
                                                    a
      Mitteilung an das Clearing System als den Gl¨ ubigern mitgeteilt.] [Im Fall von Schuldverschreibungen,
                                o                               o                        ¨
      die an einer anderen B¨ rse als der Luxemburger B¨ rse notiert sind, einfugen: Die Emittentin ist
                          o
      berechtigt, eine Ver¨ ffentlichung nach Absatz 1 durch eine Mitteilung an das Clearing System zur
                                a                                                              o
      Weiterleitung an die Gl¨ ubiger zu ersetzen, vorausgesetzt, dass die Regeln der B¨ rse, an der die
      Schuldverschreibungen notiert sind, diese Form der Mitteilung zulassen. Jede derartige Mitteilung gilt am
                                                                                     a
      siebten Tag nach dem Tag der Mitteilung an das Clearing System als den Gl¨ ubigern mitgeteilt.]

                                                       57
                                          § 13
                                  ANWENDBARES RECHT,
                    GERICHTSSTAND UND GERICHTLICHE GELTENDMACHUNG

(1) Anwendbares Recht. Form und Inhalt der Schuldverschreibungen sowie die Rechte und Pflichten der
      a
    Gl¨ ubiger und der Emittentin bestimmen sich in jeder Hinsicht nach deutschem Recht.

                                              a       ¨     a
(2) Gerichtsstand. Nicht ausschließlich zust¨ ndig fur s¨ mtliche im Zusammenhang mit den
    Schuldverschreibungen entstehenden Klagen oder sonstige Verfahren (‘‘Rechtsstreitigkeiten’’) ist das
    Landgericht Frankfurt am Main.

[Im Falle von Schuldverschreibungen, die von Bayer Capital Corp, Bayer Corporation oder Bayer
                           ¨
Japan begeben werden, einfugen:

                                     a           u
(3) Ernennung von Zustellungsbevollm¨ chtigten. F¨ r etwaige Rechtsstreitigkeiten vor deutschen Gerichten
                                                          ¨                                   a
    bestellt die Emittentin die Bayer AG, [Adresse einfugen] zu ihrer Zustellungsbevollm¨ chtigten in
    Deutschland.]

                                                  a
[(4)] Gerichtliche Geltendmachung. Jeder Gl¨ ubiger von Schuldverschreibungen ist berechtigt, in jedem
                                                                                 a
      Rechtsstreit gegen die Emittentin oder in jedem Rechtsstreit, in dem der Gl¨ ubiger und die Emittentin Partei
      sind, seine Rechte aus diesen Schuldverschreibungen im eigenen Namen auf der folgenden Grundlage
      wahrzunehmen oder geltend zu machen: (i) er bringt eine Bescheinigung der Depotbank bei, bei der er f¨ r   u
                                                              a                           a
      die Schuldverschreibungen ein Wertpapierdepot unterh¨ lt, welche (a) den vollst¨ ndigen Namen und die
             a                        a             a
      vollst¨ ndige Adresse des Gl¨ ubigers enth¨ lt, (b) den Gesamtnennbetrag der Schuldverschreibungen
                                                 a                                                            a
      bezeichnet, die unter dem Datum der Best¨ tigung auf dem Wertpapierdepot verbucht sind und (c) best¨ tigt,
                                  u                                                 a
      daß die Depotbank gegen¨ ber dem Clearing System eine schriftliche Erkl¨ rung abgegeben hat, die die
                                                                          a
      vorstehend unter (a) und (b) bezeichneten Informationen enth¨ lt; und (ii) er legt eine Kopie der die
                                                                                       ¨
      betreffenden Schuldverschreibungen verbriefenden Globalurkunde vor, deren Ubereinstimmung mit dem
      Original eine vertretungsberechtigte Person des Clearing Systems oder des Verwahrers des Clearing Systems
          a
      best¨ tigt hat, ohne daß eine Vorlage der Originalbelege oder der die Schuldverschreibungen verbriefenden
                                                                a       u
      Globalurkunde in einem solchen Verfahren erforderlich w¨ re. F¨ r die Zwecke des Vorstehenden bezeichnet
      ‘‘Depotbank’’ jede Bank oder ein sonstiges anerkanntes Finanzinstitut, das berechtigt ist, das
                                    a                                        a                              u
      Wertpapierverwahrungsgesch¨ ft zu betreiben und bei der/dem der Gl¨ ubiger ein Wertpapierdepot f¨ r die
                                     a
      Schuldverschreibungen unterh¨ lt, einschließlich des Clearing Systems. Unbeschadet des Vorstehenden kann
                a                                                                                       u
      jeder Gl¨ ubiger seine Rechte aus den Schuldverschreibungen auch auf jede andere Weise sch¨ tzen oder
                                                                      a
      geltend machen, die im Land des Rechtsstreits prozessual zul¨ ssig ist


                                                      § 14
                                                    SPRACHE

                                                               ¨
[Falls die Emissionsbedingungen in deutscher Sprache mit einer Ubersetzung in die englische Sprache
                   ¨
abgefaßt sind, einfugen:

                                                                                ¨
     Diese Emissionsbedingungen sind in deutscher Sprache abgefaßt. Eine Ubersetzung in die englische
                   u                                                      ¨
Sprache ist beigef¨ gt. Der deutsche Text ist bindend und maßgeblich. Die Ubersetzung in die englische Sprache
ist unverbindlich.]

                                                                ¨
[Falls die Emissionsbedingungen in englischer Sprache mit einer Ubersetzung in die deutsche Sprache
                   ¨
abgefaßt sind, einfugen:

                                                                                 ¨
     Diese Emissionsbedingungen sind in englischer Sprache abgefaßt. Eine Ubersetzung in die deutsche
                   u                                                       ¨
Sprache ist beigef¨ gt. Der englische Text ist bindend und maßgeblich. Die Ubersetzung in die deutsche Sprache
ist unverbindlich.]

                                                                                       ¨
[Falls die Emissionsbedingungen ausschließlich in deutscher Sprache abgefaßt sind, einfugen:

     Diese Emissionsbedingungen sind ausschließlich in deutscher Sprache abgefaßt.]

                                                        58
                         TEIL II — ZUSATZ ZU DEN GRUNDBEDINGUNGEN

                        AUF DEN INHABER LAUTENDE EINZELURKUNDEN
    Falls das anwendbare Konditionenblatt die Begebung von Einzelurkunden vorsieht, werden die
                      u
Emissionsbedingungen f¨ r Inhaberschuldverschreibungen soweit unten angegeben und nach Maßgabe der
                                                   a
Bedingungen des anwendbaren Konditionenblattes erg¨ nzt.

             ¨               ¨                            a
[§ 1(3)(a) (WAHRUNG, STUCKELUNG, FORM, DEFINITIONEN — Vorl¨ ufige Globalurkunde —
Austausch) ist wie folgt zu ersetzen:
                                            a                        a
(a) Die Schuldverschreibungen sind anf¨ nglich durch eine vorl¨ ufige Globalurkunde (die ‘‘vorl¨ ufige      a
                                                             a
    Globalurkunde’’) ohne Zinsscheine verbrieft. Die vorl¨ ufige Globalurkunde wird [falls die vorl¨ ufige  a
    Globalurkunde ausschließlich gegen Einzelurkunden ausgetauscht wird, einfugen: gegen         ¨
                                           u
    Einzelurkunden in den festgelegten St¨ ckelungen (‘‘Einzelurkunden’’) [falls die Schuldverschreibungen
                                                 ¨
    mit Zinsscheinen, Talons und/oder Ruckzahlungsscheinen ausgegeben werden, einfugen: mit          ¨
           u                                                                   u
    beigef¨ gten [Zinsscheinen (‘‘Zinsscheine’’)] [und Talons (‘‘Talons’’) f¨ r weitere Zinsscheine] [und]
       u                          ¨                      u
    [R¨ ckzahlungsscheinen (‘‘Ruckzahlungsscheine’’) f¨ r die Zahlung der Tilgungsraten]] ausgetauscht] [falls
             a
    die vorl¨ ufige Globalurkunde gegen Einzelurkunden und Sammelurkunden ausgetauscht wird,
         ¨                                                         u
    einfugen: zum Teil gegen Einzelurkunden in den festgelegten St¨ ckelungen (‘‘Einzelurkunden’’) [falls die
                                                                          ¨
    Schuldverschreibungen mit Zinsscheinen, Talons und/oder Ruckzahlungsscheinen ausgegeben
                   ¨                   u                                                             u
    werden, einfugen: mit beigef¨ gten Zinsscheinen (‘‘Zinsscheine’’) [Talons (‘‘Talons’’) f¨ r weitere
                           u                        ¨                       u
    Zinsscheine] [und] [R¨ ckzahlungsscheinen (‘‘Ruckzahlungsscheine’’) f¨ r die Zahlung der Tilgungsraten]]
    und zum anderen Teil gegen eine oder mehrere Sammelurkunden (jeweils eine ‘‘Sammelurkunde’’) [falls
                                                                                       ¨
    die Schuldverschreibungen mit Zinsscheinen ausgegeben werden, einfugen: mit beigef¨ gten               u
                                                                                                   a
    Globalzinsscheinen (jeweils ein ‘‘Globalzinsschein’’)] ausgetauscht; das Recht der Gl¨ ubiger, die
    Auslieferung von Einzelurkunden im Austausch gegen Schuldverschreibungen, die durch eine
                                                                                                          a
    Sammelurkunde verbrieft sind, zu fordern, richtet sich nach § 9a (3) Satz 1 Depotgesetz]. Die vorl¨ ufige
                                      a
    Globalurkunde [falls die vorl¨ ufige Globalurkunde gegen Einzelurkunden und Sammelurkunden
                                ¨
    ausgetauscht wird, einfugen: und jede Sammelurkunde [falls die Schuldverschreibungen mit
                                               ¨                                         a
    Zinsscheinen ausgegeben werden, einfugen: und jeder Globalzinsschein]] tr¨ gt die eigenh¨ ndigen    a
    Unterschriften [im Fall von durch Bayer AG oder Bayer Corporation begebenen
                                    ¨                       a          a
    Schuldverschreibungen einfugen: zweier ordnungsgem¨ ß bevollm¨ chtigter Vertreter] [im Fall von durch
    Bayer Capital Corp oder Bayer Japan begebenen Schuldverschreibungen einfugen: eines            ¨
                  a           a                                               a
    ordnungsgem¨ ß bevollm¨ chtigten Vertreters] der Emittentin und die vorl¨ ufige Globalurkunde [und jede
    Sammelurkunde] ist von der Emissionsstelle oder in deren Namen mit einer Kontrollunterschrift versehen.
    Die Einzelurkunden [falls die Schuldverschreibungen mit Zinsscheinen, Talons und/oder
      ¨                                                  ¨
    Ruckzahlungsscheinen ausgegeben werden, einfugen: und die [Zinsscheine][,] [und] [Talons] [und
      u                                                                                    a           a
    R¨ ckzahlungsscheine]] tragen die faksimilierten Unterschriften zweier ordnungsgem¨ ß bevollm¨ chtigter
    Vertreter der Emittentin und die Einzelurkunden sind von der Emissionsstelle oder in deren Namen mit einer
    Kontrollunterschrift versehen.]

[(i) im Fall von Schuldverschreibungen, die keine TEFRA D Schuldverschreibungen sind, ist § 1(3)(b)
     ¨             ¨                                          a
(WAHRUNG, STUCKELUNG, FORM, DEFINITIONEN — Vorl¨ ufige Globalurkunde — Austausch)
wie folgt zu ersetzen:
            a                                                                         a
(b) Die vorl¨ ufige Globalurkunde ist an einem Tag (der ‘‘Austauschtag’’), der nicht sp¨ ter als 180 Tage nach
                                  a
    dem Tag der Ausgabe der vorl¨ ufigen Globalurkunde liegt, gegen Schuldverschreibungen in der in dem
    vorstehenden Absatz (a) vorgesehenen Form auszutauschen.]

                                                               ¨         ¨
(ii) im Fall von TEFRA D Schuldverschreibungen ist § 1(3)(b) (WAHRUNG, STUCKELUNG, FORM,
                       a
DEFINITIONEN — Vorl¨ ufige Globalurkunde — Austausch) wie folgt zu ersetzen:
             a
(b) Die vorl¨ ufige Globalurkunde wird an einem Tag (der ‘‘Austauschtag’’) gegen Schuldverschreibungen in
    der in dem vorstehenden Absatz (a) vorgesehenen Form ausgetauscht, der nicht mehr als 180 Tage nach dem
                              a                                               u
    Tag der Ausgabe der vorl¨ ufigen Globalurkunde liegt. Der Austauschtag f¨ r einen solchen Austausch wird
            u                                                      a
    nicht fr¨ her als 40 Tage nach dem Tag der Ausgabe der vorl¨ ufigen Globalurkunde liegen. Ein solcher
    Austausch soll nur nach Vorlage von Bescheinigungen erfolgen, wonach der oder die wirtschaftlichen
           u                      a
    Eigent¨ mer der durch die vorl¨ ufige Globalurkunde verbrieften Schuldverschreibungen keine U.S.-Personen
    sind (ausgenommen bestimmte Finanzinstitute oder bestimmte Personen, die Schuldverschreibungen uber  ¨
                                                                            a
    solche Finanzinstitute halten). Zinszahlungen auf durch eine vorl¨ ufige Globalurkunde verbriefte

                                                     59
     Schuldverschreibungen erfolgen erst nach Vorlage solcher Bescheinigungen. Jede Bescheinigung, die am
                                                                   a
     oder nach dem 40. Tag nach dem Tag der Ausgabe der vorl¨ ufigen Globalurkunde eingeht, wird als ein
                                           a                           a
     Ersuchen behandelt werden, diese vorl¨ ufige Globalurkunde gem¨ ß Absatz (b) dieses § 1(3) auszutauschen.
                                     u          a
     Wertpapiere, die im Austausch f¨ r die vorl¨ ufige Globalurkunde geliefert werden, sind nur außerhalb der
     Vereinigten Staaten (wie in § 4 Absatz (3) definiert) zu liefern.]

                                a
(c) 40 Tage nachdem die Vorl¨ ufige Globalurkunde ausgegeben wurde, werden aufgrund einer 90 Tage im
                                                                                u
    voraus erteilten schriftlichen Mitteilung (wobei die Mitteilungsfrist fr¨ hestens 30 Tage nach dem
                     a                                                   a
    Austauschtag abl¨ uft) des Clearing Systems, das auf Weisung eines Gl¨ ubigers handelt, Einzelurkunden und
                             o       u
    gegebenenfalls dazugeh¨ rige R¨ ckzahlungsscheine, Zinsscheine und Talons begeben und im Umtausch
                   a
    gegen die Vorl¨ ufige Globalurkunde oder die Dauerglobalurkunde geliefert. Eine im Umtausch f¨ r eineu
        a
    Vorl¨ ufige Globalurkunde oder eine Dauerglobalurkunde gelieferte Einzelurkunde darf lediglich außerhalb
    der Vereinigten Staaten (wie in § 4 (3) definiert) geliefert werden.

                  ¨             ¨                                            a
[§ 1(4) und (5) (WAHRUNG, STUCKELUNG, FORM, DEFINITIONEN — Clearing System/Gl¨ ubiger
von Schuldverschreibungen) ist wie folgt zu ersetzen:

                                                                                          ¨
(4) Clearing System. ‘‘Clearing System’’ bedeutet [bei mehr als einem Clearing System einfugen: jeweils]
    folgendes: [Clearstream Banking AG, Frankfurt am Main, (‘‘CBF’’)] [Clearstream Banking, soci´ t´ee
    anonyme, Luxembourg, (‘‘CBL’’)] [Euroclear Bank S.A./N.V., als Betreiberin des Euroclear Systems
    (‘‘Euroclear’’)][,] [und] [anderes Clearing System angeben].

      a                                          a
(5) Gl¨ ubiger von Schuldverschreibungen. ‘‘Gl¨ ubiger’’ bedeutet, in bezug auf die bei einem Clearing
    System oder einem sonstigen zentralen Wertpapierverwahrer hinterlegten Schuldverschreibungen, jeder
    Inhaber eines Miteigentumsanteils oder anderen treugeberischen oder sonstigen Rechts an den hinterlegten
    Schuldverschreibungen und im Fall von Einzelurkunden der Inhaber einer Einzelurkunde.

(6) Bezugnahmen auf Schuldverschreibungen. Bezugnahmen in diesen Emissionsbedingungen auf die
    ‘‘Schuldverschreibungen’’ schließen Bezugnahmen auf jede die Schuldverschreibungen verbriefende
    Globalurkunde und jede Einzelurkunde [falls die Schuldverschreibungen mit Zinsscheinen, Talons und/
            ¨                                           ¨                  o
    oder Ruckzahlungsscheinen begeben werden, einfugen: und die zugeh¨ rigen [Zinsscheine][,] [und]
                                                      u
    [Globalzinsscheine] [,] [und] [Talons] [und R¨ ckzahlungsscheine]] ein, es sei denn, aus dem
    Zusammenhang ergibt sich etwas anderes.]

[Im Fall von festverzinslichen Schuldverschreibungen ist § 3(2) (ZINSEN — INDEXIERUNG —
Auflaufende Zinsen) wie folgt zu ersetzen:

(2) Auflaufende Zinsen. Der Zinslauf der Schuldverschreibungen endet mit Beginn des Tages, an dem sie zur
      u            a                                                                   a                  o
    R¨ ckzahlung f¨ llig werden. Falls die Emittentin die Schuldverschreibungen bei F¨ lligkeit nicht einl¨ st,
                                                                                a
    fallen auf den ausstehenden Nennbetrag der Schuldverschreibungen ab dem F¨ lligkeitstag (einschließlich)
                           a            u                             a
    bis zum Tag der tats¨ chlichen R¨ ckzahlung (ausschließlich), sp¨ testens jedoch bis zum Ablauf des
                                                                                a                      u
    vierzehnten Tages nach der Bekanntmachung durch die Emissionsstelle gem¨ ß § 12, daß ihr die f¨ r die
      u                                                                   u
    R¨ ckzahlung der Schuldverschreibungen erforderlichen Mittel zur Verf¨ gung gestellt worden sind, Zinsen
    zum gesetzlich festgelegten Satz f¨ r Verzugszinsen an(1).]
                                      u

[Im Fall von variabel verzinslichen Schuldverschreibungen ist § 3[(7)] (ZINSEN — INDEXIERUNG —
Auflaufende Zinsen) wie folgt zu ersetzen:

[(7)] Auflaufende Zinsen. Der Zinslauf der Schuldverschreibungen endet mit Beginn des Tages, an dem sie zur
        u            a                                                                  a                    o
      R¨ ckzahlung f¨ llig werden. Sollte die Emittentin die Schuldverschreibungen bei F¨ lligkeit nicht einl¨ sen,
                                                                                   a
      fallen auf den ausstehenden Nennbetrag der Schuldverschreibungen ab dem F¨ lligkeitstag (einschließlich)
                             a            u                               a
      bis zum Tag der tats¨ chlichen R¨ ckzahlung (ausschließlich), sp¨ testens jedoch bis zum Ablauf des
                                                                                   a
      vierzehnten Tages nach der Bekanntmachung durch die Emissionsstelle gem¨ ß § 12, daß ihr die f¨ r die u
        u                                                                    u
      R¨ ckzahlung der Schuldverschreibungen erforderlichen Mittel zur Verf¨ fung gestellt worden sind, Zinsen
      zum gesetzlich festgelegten Satz f¨ r Verzugszinsen an(1).]
                                         u

                                           a   u            u                  ¨
(1) Der gesetzliche Verzugszinssatz betr¨ gt f¨ r das Jahr f¨ nf Prozentpunkte uber dem von der Deutsche Bundesbank von Zeit zu Zeit
       o
    ver¨ ffentlichten Basiszinssatz, §§ 288 Absatz 1, 247 BGB

                                                                60
[Im Fall von Nullkupon-Schuldverschreibungen ist § 3(2) (ZINSEN — INDEXIERUNG — Auflaufende
Zinsen) wie folgt zu ersetzen:
                                                                                a                 o
(2) Auflaufende Zinsen. Sollte die Emittentin die Schuldverschreibungen bei F¨ lligkeit nicht einl¨ sen, fallen
                                                                          a
    auf den ausstehenden Nennbetrag der Schuldverschreibungen ab dem F¨ lligkeitstag (einschließlich) bis zum
                  a          u
    Tag der tats¨ chlichen R¨ ckzahlung (ausschließlich) Zinsen zum gesetzlich festgelegten Satz f¨ r       u
    Verzugszinsen an(1); die Verzinsung endet jedoch sp¨ testens mit Ablauf des vierzehnten Tages nach
                                                           a
                                                       a                           u        u
    Bekanntmachung durch die Emissionsstelle gem¨ ß § 12, daß ihr die f¨ r die R¨ ckzahlung der
                                                        u
    Schuldverschreibungen erforderlichen Mittel zur Verf¨ fung gestellt worden sind.]

[§ 4(1)[(a)] (ZAHLUNGEN — Zahlungen auf Kapital) ist wie folgt zu ersetzen:
(1) [(a)] Zahlungen auf Kapital. Zahlungen auf Kapital in bezug auf die Schuldverschreibungen erfolgen nach
    Maßgabe des nachstehenden Absatzes 2 gegen Vorlage und, soweit es sich nicht um Teilzahlungen handelt,
                                                                       a
    Einreichung der entsprechenden Urkunde bei der bezeichneten Gesch¨ ftsstelle der Emissionsstelle außerhalb
                                                            a
    der Vereinigten Staaten oder bei der bezeichneten Gesch¨ ftsstelle einer anderen Zahlstelle außerhalb der
    Vereinigten Staaten.]
                                                          ¨
     [Im Fall von Raten-Schuldverschreibungen einfugen: Die Zahlung von Raten auf eine Raten-
                               u
     Schuldverschreibung mit R¨ ckzahlungsscheinen erfolgt gegen Vorlage der Schuldverschreibung zusammen
                            u                                            u
     mit dem betreffenden R¨ ckzahlungsschein und Einreichung dieses R¨ ckzahlungsscheins und, im Falle der
                                                                                                   a
     letzten Ratenzahlung gegen Einreichung der Schuldverschreibung bei der bezeichneten Gesch¨ ftsstelle der
                                                                                      a
     Emissionsstelle außerhalb der Vereinigten Staaten oder bei der bezeichneten Gesch¨ ftsstelle einer anderen
                                                             u                        u
     Zahlstelle außerhalb der Vereinigten Staaten. R¨ ckzahlungsscheine begr¨ nden keinen Titel.
       u                                        o                                                  u
     R¨ ckzahlungsscheine, die ohne die dazugeh¨ rige Schuldverschreibung vorgelegt werden, begr¨ nden keine
     Verpflichtungen der Emittentin. Daher berechtigt die Vorlage einer Raten-Schuldverschreibung ohne den
                       u                                           u
     entsprechenden R¨ ckzahlungsschein oder die Vorlage eines R¨ ckzahlungsscheins ohne die dazugeh¨ rigeo
                                a
     Schuldverschreibung den Gl¨ ubiger nicht, die Zahlung einer Rate zu verlangen.]

[Im Fall von Schuldverschreibungen, die keine Nullkupon-Schuldverschreibungen sind, ist § 4(1)(b)
(ZAHLUNGEN — Zahlungen von Zinsen) wie folgt zu ersetzen:
(b) Zahlung von Zinsen. Die Zahlung von Zinsen auf Schuldverschreibungen erfolgt nach Maßgabe von
    Absatz 2 gegen Vorlage und Einreichung der entsprechenden Zinsscheine oder, im Fall von nicht mit
                                                                                                          u
    Zinsscheinen ausgestatteten Schuldverschreibungen oder im Fall von Zinszahlungen, die nicht an einem f¨ r
                                        a
    Zinszahlungen vorgesehenen Tag f¨ llig werden, gegen Vorlage der entsprechenden Schuldverschreibungen
                                 a
    bei der bezeichneten Gesch¨ ftsstelle der Emissionsstelle außerhalb der Vereinigten Staaten oder bei der
                       a
    bezeichneten Gesch¨ ftsstelle einer anderen Zahlstelle außerhalb der Vereinigten Staaten.]
                                                                   ¨
     [Im Fall von TEFRA D Schuldverschreibungen einfugen: Die Zahlung von Zinsen auf
                                               a
     Schuldverschreibungen, die durch eine vorl¨ ufige Globalurkunde verbrieft sind, erfolgt nach Maßgabe von
     Absatz 2 an das Clearing System oder dessen Order zur Gutschrift auf den Konten der jeweiligen
                                                                     a                         a
     Kontoinhaber des Clearing Systems, und zwar nach ordnungsgem¨ ßer Bescheinigung gem¨ ß § 1(3)(b).]

                                                                           ¨
[Im Fall von Schuldverschreibungen, die mit Zinsscheinen, Talons und/oder Ruckzahlungsscheinen
begeben werden, ist als § 4(1)(c) (ZAHLUNGEN — Einreichung von [Zinsscheinen] [,] [und] [Talons]
      ¨                             ¨
[und Ruckzahlungsscheinen]) einzufugen:
                                                                                ¨
(c) Einreichung von [Zinsscheinen][,] [und] [Talons] [und Ruckzahlungsscheinen]. Jede
                                      a                    u
    Schuldverschreibung, die anf¨ nglich mit beigef¨ gten [Zinsscheinen] [oder] [Talons] [oder
      u                                                   u
    R¨ ckzahlungsscheinen] ausgegeben wurde, ist bei R¨ ckzahlung vorzulegen und, außer im Falle einer
                         u                                                       o
    Teilzahlung des R¨ ckzahlungsbetrages, zusammen mit allen dazugeh¨ rigen noch nicht f¨ lligen      a
                                           u
    [Zinsscheinen][,] [und] [Talons] [und R¨ ckzahlungsscheinen] einzureichen; erfolgt dies nicht [Im Fall von
                                                    ¨                                                  a
    festverzinslichen Schuldverschreibungen einfugen:, wird der Betrag der fehlenden noch nicht f¨ lligen
                                              u           a
    Zinsscheine von dem ansonsten bei der R¨ ckzahlung f¨ lligen Betrag abgezogen[,] [und] [.]] [Im Fall von
                                                            ¨                             a
    variabel verzinslichen Schuldverschreibungen einfugen: werden alle nicht f¨ lligen zugeh¨ rigen     o
                                                                                        u
    Zinsscheine (gleich, ob sie zusammen mit diesen eingereicht werden oder nicht) ung¨ ltig und es erfolgt ab
    diesem Zeitpunkt keine Zahlung mehr auf sie[,] [und] [.]] [Im Fall von Schuldverschreibungen, die
        a                                             ¨              a               a
    anf¨ nglich mit Talons ausgegeben werden, einfugen: werden s¨ mtliche nicht f¨ lligen Talons (gleich, ob

                                           a   u            u                  ¨
(1) Der gesetzliche Verzugszinssatz betr¨ gt f¨ r das Jahr f¨ nf Prozentpunkte uber dem von der Deutsche Bundesbank von Zeit zu Zeit
       o
    ver¨ ffentlichten Basiszinssatz, §§ 288 Absatz 1, 247 BGB


                                                                61
                                                                    u          o                         a
     sie zusammen mit diesen eingereicht werden oder nicht) ung¨ ltig und k¨ nnen nicht zu einem sp¨ teren
     Zeitpunkt gegen Zinsscheine ausgetauscht werden [und] [.]] [Im Fall von Schuldverschreibungen, die
         a               ¨                                               ¨                a
     anf¨ nglich mit Ruckzahlungsscheinen ausgegeben werden, einfugen: werden s¨ mtliche zugeh¨ rigen    o
       u                                                                   a                  u            a
     R¨ ckzahlungsscheine, die in bezug auf die Zahlung einer Rate, die (w¨ re sie nicht zur R¨ ckzahlung f¨ llig
                                          u             a                    a
     geworden) an einem Tag nach R¨ ckzahlung f¨ llig geworden w¨ re (gleich, ob sie mit dieser
                                                           u                                   a
     Schuldverschreibung eingereicht wurde oder nicht) ung¨ ltig, und bei Vorlage zu einem sp¨ teren Zeitpunkt
     erfolgt auf sie keine Zahlung.]
                                                                            a
    [Im Fall von festverzinslichen Schuldverschreibungen, die anf¨ nglich mit Zinsscheinen ausgegeben
                     ¨                                                          a
    werden, einfugen: Werden Schuldverschreibungen mit einer F¨ lligkeit und einem Zinssatz oder
          a                           u          u
    Zinss¨ tzen begeben, die dazu f¨ hren w¨ rden, daß bei Vorlage zur Zahlung dieser Schuldverschreibungen
                     o                  a
    ohne dazugeh¨ rige noch nicht f¨ llige Zinsscheine der wie vorstehend dargelegt in Abzug zu bringende
                                               u                   ¨                                     a
    Betrag den ansonsten zu zahlenden R¨ ckzahlungsbetrag ubersteigt, so werden diese noch nicht f¨ lligen
                                               u
    Zinsscheine (gleich, ob sie beigef¨ gt sind oder nicht) zum Zeitpunkt der F¨ lligkeit solcher     a
                                   u
    Schuldverschreibungen ung¨ ltig (und es erfolgt auf sie keine Zahlung), insoweit als dies erforderlich ist,
                       a
    damit der gem¨ ß der vorstehenden Regelung in Abzug zu bringende Betrag den vorgesehenen
      u                          ¨
    R¨ ckzahlungsbetrag nicht ubersteigt. Sofern die Anwendung des letzten Satzes die Entwertung einiger, aber
             a                         a
    nicht s¨ mtlicher noch nicht f¨ lliger Zinsscheine einer Schuldverschreibung erfordert, bestimmt die
                                             a                        u
    betreffende Zahlstelle, welche nicht f¨ lligen Zinsscheine ung¨ ltig werden sollen, wobei zu diesem Zwecke
      a      a                         u      a                      u      u             a
    sp¨ ter f¨ llige Zinsscheine vor fr¨ her f¨ lligen Zinsscheinen f¨ r ung¨ ltig zu erkl¨ ren sind.]
                                                    a
    [Im Fall von Schuldverschreibungen, die anf¨ nglich mit Talons ausgegeben werden, einfugen: Am ¨
                                                                                            a
    oder nach dem Zinszahlungstag, an dem der letzte Zinsschein eines Zinsscheinbogens f¨ llig wird, kann der
                                                                      a
    im Zinsscheinbogen enthaltene Talon bei der bezeichneten Gesch¨ ftsstelle einer Zahlstelle im Austausch
    gegen einen weiteren Zinsscheinbogen (einschließlich ggf. eines weiteren Talons) eingereicht werden. Jeder
                u                                                                   a
    Talon gilt f¨ r die Zwecke dieser Emissionsbedingungen als am Zinszahlungstag f¨ llig, an dem der letzte im
                                                       a
    jeweiligen Zinsscheinbogen enthaltene Zinsschein f¨ llig wird.]

[§ 4(2) (ZAHLUNGEN — Zahlungsweise) ist wie folgt zu ersetzen:
(2) Zahlungsweise. Vorbehaltlich geltender steuerlicher und sonstiger gesetzlicher Regelungen und
    Vorschriften erfolgen auf die Schuldverschreibungen zu leistende Zahlungen in der frei handelbaren und
                       a                              a                  a
    konvertierbaren W¨ hrung, die am entsprechenden F¨ lligkeitstag die W¨ hrung des Staates der festgelegten
      a
    W¨ hrung ist
                                                  a                                      ¨
    [Im Fall von Zahlungen in einer anderen W¨ hrung als Euro oder U.S. Dollar einfugen:, und zwar
                        a
    durch in dieser W¨ hrung zahlbaren Scheck, ausgestellt auf eine Bank in dem Hauptfinanzzentrum des
                               a                                     a              ¨
    Landes der festgelegten W¨ hrung oder, nach Wahl des Zahlungsempf¨ ngers, durch Uberweisung auf ein auf
                      a                                        a
    die festgelegte W¨ hrung lautendes Konto des Zahlungsempf¨ ngers, das dieser bei einer Bank in diesem
                          a
    Finanzzentrum unterh¨ lt.]
                                           ¨
    [Im Fall von Zahlungen in Euro einfugen:, und zwar in bar oder durch in Euro zahlbaren Scheck,
    ausgestellt auf eine Bank in einem Hauptfinanzzentrum eines Landes, das Teilnehmerstaat in der
          a                            a                                                            a
    Europ¨ ischen Wirtschafts- und W¨ hrungsunion geworden ist, oder nach Wahl des Zahlungsempf¨ ngers,
           ¨                                                                a
    durch Uberweisung auf ein auf Euro lautendes Konto, das der Zahlungsempf¨ nger bei einer Bank in einem
                                 a
    solchen Finanzzentrum unterh¨ lt.]
                                                 ¨
    [Im Fall von Zahlungen in U.S. Dollar einfugen:, und zwar durch in U.S. Dollar zahlbaren Scheck,
                                                                               a              ¨
    ausgestellt auf eine Bank in New York City oder, nach Wahl des Zahlungsempf¨ ngers, durch Uberweisung
                                                                     a
    auf ein auf U.S. Dollar lautendes Konto, das der Zahlungsempf¨ nger bei einer Bank außerhalb der
                               a
    Vereinigten Staaten unterh¨ lt.]]
    Zahlungen erfolgen nicht durch einen an eine Adresse in den Vereinigten Staaten gesandten Scheck oder
      ¨
durch Uberweisung auf ein Konto in den Vereinigten Staaten.

[§ 4(3) (ZAHLUNGEN — Vereinigte Staaten) ist wie folgt zu ersetzen:
                          u                                                                        ¨
(3) Vereinigte Staaten. F¨ r die Zwecke des [im Fall von TEFRA D Schuldverschreibungen einfugen: § 1(3)
                                                                         ¨
    und des] Absatzes 1 [im Fall von Zahlungen in U.S. Dollar einfugen: und des Absatzes 2] dieses § 4
    bezeichnet ‘‘Vereinigte Staaten’’ die Vereinigten Staaten von Amerika (einschließlich deren Bundesstaaten
    und des Districts of Columbia) sowie deren Territorien (einschließlich Puerto Rico, der U.S. Virgin Islands,
    Guam, American Samoa, Wake Island und Northern Mariana Islands).]

                                                       62
                        ¨
[§ 4(4) (ZAHLUNGEN — Erfullung) ist wie folgt zu ersetzen:
       u                                               ¨
(4) Erf¨ llung. Im Fall von Schuldverschreibungen, die uber ein Clearing System gehalten werden, wird die
    Emittentin [im Fall von Schuldverschreibungen, die von Bayer Corporation, Bayer Capital Corp or
                                       ¨
    Bayer Japan begeben werden, einfugen: bzw. die Garantin] durch Leistung der Zahlung an das Clearing
    System oder dessen Order von ihrer Zahlungspflicht befreit.]

                   ¨                        ¨
[§ 5[(3)](b)(ii) (RUCKZAHLUNG — Vorzeitige Ruckzahlung nach Wahl der Emittentin) ist wie folgt zu
ersetzen:
              a                                              u
(ii) eine Erkl¨ rung, ob diese Serie ganz oder teilweise zur¨ ckgezahlt wird und im letzten Fall den
                                                   u
     Gesamtnennbetrag und die Seriennummern der zur¨ ckzuzahlenden Schuldverschreibungen;]

               ¨                        ¨
[§ 5[(3)](c) (RUCKZAHLUNG — Vorzeitige Ruckzahlung nach Wahl der Emittentin) ist wie folgt zu
ersetzen:
                                                        u                                     u
(c) Wenn die Schuldverschreibungen nur teilweise zur¨ ckgezahlt werden, werden die zur¨ ckzuzahlenden
    Schuldverschreibungen durch Los oder auf eine andere Art und Weise ermittelt, die der Emissionsstelle nach
    ihrem Ermessen als angemessen und billig erscheint.]

               ¨                        ¨                          a
[§ 5[(4)](b) (RUCKZAHLUNG — Vorzeitige Ruckzahlung nach Wahl des Gl¨ ubigers) ist wie folgt zu
ersetzen:
                                u              a                                    ¨                    ¨
(b) Um dieses Wahlrecht auszu¨ ben, hat der Gl¨ ubiger nicht weniger als [Mindestkundigungsfrist einfugen]
                          u                                  u                a        u           a
    Tage vor dem Wahl-R¨ ckzahlungstag (Put), an dem die R¨ ckzahlung gem¨ ß der Aus¨ bungserkl¨ rung (wie
                                                                      a
    nachstehend definiert) erfolgen soll, bei der bezeichneten Gesch¨ ftsstelle der Emissionsstelle oder einer
                        a                           a                           a       u
    anderen Zahlstelle w¨ hrend der normalen Gesch¨ ftszeiten eine ordnungsgem¨ ß ausgef¨ llten Mitteilung zur
                  u                  ¨         a                                                 a
    vorzeitigen R¨ ckzahlung (‘‘Ausubungserkl¨ rung’’), wie sie von der bezeichneten Gesch¨ ftsstelle der
                                                         a
    Emissionsstelle oder einer jeden Zahlstelle erh¨ ltlich ist, zusammen mit der entsprechenden
                                                  u
    Schuldverschreibung zu hinterlegen. Die Aus¨ bung des Wahlrechts kann nicht widerrufen und die so
                                                  u
    hinterlegte Schuldverschreibung kann nicht zur¨ ckgenommen werden.]

[Nach § 6(2) (DIE EMISSIONSSTELLE[,] [UND] [DIE ZAHLSTELLEN] [UND DIE
                           ¨                                            ¨
BERECHNUNGSSTELLE] — Anderung der Bestellung oder Abberufung) ist einzufugen:
                                        a
      Sollte eine Richtlinie der Europ¨ ischen Union zur Umsetzung der Schlußfolgerungen des Treffens des
      ECOFIN-Rates vom 26.-27. November 2000 oder eine Rechtsnorm, die zur Umsetzung einer solchen
                                                                                              u
      Richtlinie vorgesehen ist, dieser entspricht oder zur Anpassung an die Richtlinie eingef¨ hrt wird, ergehen,
                                                                                              a
      verpflichtet sich die Emittentin, eine Zahlstelle in einem Mitgliedstaat der Europ¨ ischen Union zu
                                                                                       u
      unterhalten, welche nicht zur Vornahme von steuerlichen Einbehalten oder Abz¨ gen nach Maßgabe einer
                                                                                                           a
      solchen Richtlinie oder Rechtsnorm verpflichtet ist, soweit dies in einem Mitgliedstaat der Europ¨ ischen
               o
      Union m¨ glich ist.]

                                              ¨                                  a
[Nach § 7 (STEUERN) Unterabsatz (e) ist einzufugen und die verbleibenden Unterabs¨ tze sind
entsprechend neu zu beziffern:
(f)                  a
      nicht zahlbar w¨ ren, wenn die Schuldverschreibungen bei einer Bank oder einem vergleichbaren Institut
                         a                                                                          a
      verwahrt worden w¨ ren und die Bank oder das vergleichbare Institut die Zahlungen eingezogen h¨ tte, oder]

[§ 8 (VORLEGUNGSFRIST) ist wie folgt zu ersetzen:


                                                 §8
         VORLEGUNGSFRIST, ERSETZUNG VON SCHULDVERSCHREIBUNGEN [falls die
                                                                  ¨
       Schuldverschreibungen mit Zinsscheinen begeben werden, einfugen: UND ZINSSCHEINEN]
                                                                    u
Die in § 801 Absatz 1 Satz 1 BGB bestimmte Vorlegungsfrist wird f¨ r die Schuldverschreibungen auf zehn Jahre
       u                                                                              ¨
abgek¨ rzt. [Falls die Schuldverschreibungen mit Zinsscheinen begeben werden einfugen: Die Vorlegungsfrist
 u                    a      a
f¨ r Zinsscheine betr¨ gt gem¨ ß § 801 Absatz 2 BGB vier Jahre und beginnt mit dem Ablauf des Kalenderjahres,
                                                   a
in dem der betreffende Zinsschein zur Zahlung f¨ llig geworden ist.] Sollte eine Schuldverschreibung [falls die
                                                                    ¨
Schuldverschreibungen mit Zinsscheinen begeben werden einfugen: oder ein Zinsschein] verloren gehen,
                   a                                       o
gestohlen, besch¨ digt, unleserlich gemacht oder zerst¨ rt werden, so kann sie[/er] bei der bezeichneten
       a                                                             o
Gesch¨ ftsstelle der Emissionsstelle vorbehaltlich der betreffenden B¨ rsenbestimmungen und aller anwendbaren

                                                        63
                                                                    o
Gesetze ersetzt werden; dabei hat der Anspruchsteller alle dabei m¨ glicherweise entstehenden Kosten und
Auslagen zu zahlen und alle angemessenen Bedingungen der Emittentin hinsichtlich des Nachweises, der
                                                       u                 a
Sicherheit, einer Freistellung und dergleichen zu erf¨ llen. Eine besch¨ digte oder unleserlich gemachte
                                                                                            ¨
Schuldverschreibung [falls die Schuldverschreibungen mit Zinsscheinen begeben werden einfugen: oder ein
solcher Zinsschein] muß eingereicht werden, bevor eine Ersatzurkunde ausgegeben wird.]

[Falls die Schuldverschreibungen mit Zinsscheinen begeben werden, ist § 11(3) (BEGEBUNG
WEITERER SCHULDVERSCHREIBUNGEN, ANKAUF UND ENTWERTUNG — Entwertung) wie
folgt zu ersetzen:

                   a             a         u                                              u
(3) Entwertung. S¨ mtliche vollst¨ ndig zur¨ ckgezahlten Schuldverschreibungen sind unverz¨ glich zusammen
                      a
    mit allen nicht f¨ lligen und zusammen mit den Schuldverschreibungen eingereichten oder den
                                 u                                        o
    Schuldverschreibungen beigef¨ gten Zinsscheinen zu entwerten und k¨ nnen nicht wiederbegeben oder
    wiederverkauft werden.]

                               a
[§ 12 (MITTEILUNGEN) ist vollst¨ ndig wie folgt zu ersetzen:


                                                  § [12]
                                              MITTEILUNGEN

                                                                                    u
      Alle die Schuldverschreibungen betreffenden Mitteilungen sind in einer f¨ hrenden Tageszeitung mit
                                                                            o                            ¨
allgemeiner Verbreitung in [Deutschland] [Luxemburg] [dem Vereinigten K¨ nigreich] [anderen Ort einfugen],
                        o
voraussichtlich [der B¨ rsen-Zeitung] [dem Luxemburger Wort] [der Financial Times] [andere Zeitung mit
                               ¨           o
allgemeiner Verbreitung einfugen] zu ver¨ ffentlichen. Jede derartige Mitteilung gilt am dritten Tag nach dem
             o                                  o
Tag der Ver¨ ffentlichung (oder bei mehreren Ver¨ ffentlichungen am dritten Tag nach dem Tag der ersten solchen
    o
Ver¨ ffentlichung) als wirksam erfolgt.]

[§ 13[(4)] (ANWENDBARES RECHT, GERICHTSSTAND UND GERICHTLICHE
GELTENDMACHUNG — Gerichtliche Geltendmachung) ist wie folgt zu ersetzen:

                                                a                                      ¨
[(4)] Gerichtliche Geltendmachung. Jeder Gl¨ ubiger von Schuldverschreibungen, die uber ein Clearing System
      gehalten werden, ist berechtigt, in jedem Rechtsstreit gegen die Emittentin oder in jedem Rechtsstreit, in
                   a
      dem der Gl¨ ubiger und die Emittentin Partei sind, seine Rechte aus diesen Schuldverschreibungen im
                                                              a
      eigenen Namen auf der folgenden Grundlage zu sch¨ tzen oder geltend zu machen: (i) er bringt eine
                                                     u                                                       a
      Bescheinigung der Depotbank bei, bei der er f¨ r die Schuldverschreibungen ein Wertpapierdepot unterh¨ lt,
                              a                               a                      a              a
      welche (a) den vollst¨ ndigen Namen und die vollst¨ ndige Adresse des Gl¨ ubigers enth¨ lt, (b) den
                                                                                                a
      Gesamtnennbetrag der Schuldverschreibungen bezeichnet, die unter dem Datum der Best¨ tigung auf dem
                                                  a                              u
      Wertpapierdepot verbucht sind und (c) best¨ tigt, daß die Depotbank gegen¨ ber dem Clearing System eine
                       a
      schriftliche Erkl¨ rung abgegeben hat, die die vorstehend unter (a) und (b) bezeichneten Informationen
           a
      enth¨ lt; und (ii) er legt eine Kopie der die betreffenden Schuldverschreibungen verbriefenden
                                                            ¨
      Globalurkunde oder der Einzelurkunde vor, deren ubereinstimmung mit dem Original eine vertretung-
                                                                                              a
      sberechtigte Person des Clearing Systems oder des Verwahrers des Clearing Systems best¨ tigt hat, ohne daß
                                                       a
      eine Vorlage der Originalbelege oder der vorl¨ ufigen Globalurkunde oder der Einzelurkunde [falls die
          a
      vorl¨ ufige Globalurkunde gegen Einzelurkunden und Sammelurkunden ausgetauscht wird, einfugen:        ¨
                                                                         a     u
      oder Sammelurkunde] in einem solchen Verfahren erforderlich w¨ re. F¨ r die Zwecke des Vorstehenden
      bezeichnet ‘‘Depotbank’’ jede Bank oder ein sonstiges anerkanntes Finanzinstitut, das berechtigt ist, das
                                   a                                         a                            u
      Wertpapierverwahrungsgesch¨ ft zu betreiben und bei der/dem der Gl¨ ubiger ein Wertpapierdepot f¨ r die
                                    a
      Schuldverschreibungen unterh¨ lt, einschließlich des Clearing Systems. Unbeschadet des Vorstehenden kann
                a                                                                                     u
      jeder Gl¨ ubiger seine Rechte aus den Schuldverschreibungen auch auf jede andere Weise sch¨ tzen oder
                                                                     a
      geltend machen, die im Land des Rechtsstreits prozessual zul¨ ssig ist.]




                                                       64
                                   GUARANTEE AND NEGATIVE PLEDGE

    Non-binding English language translation of the Guarantee and Negative Pledge:

                                GUARANTEE AND NEGATIVE PLEDGE
                                              of
                                         Bayer Aktiengesellschaft,
                                 Leverkusen, Federal Republic of Germany,
                            for the benefit of the holders of Notes (the ‘‘Notes’’)
                                                  issued by
                                                   Bayer Ltd.
                    (incorporated as a limited liability company under the laws of Japan),
                                        Bayer Capital Corporation B.V.
               (incorporated as a limited liability company under the laws of The Netherlands)
                                                     or by
                                              Bayer Corporation
          (a corporation organised under the laws of the State of Indiana, United States of America)

under the Euro 8,000,000,000 Programme for the Issuance of Debt Instruments (the ‘‘Programme’’) established
on October 20, 2000, as amended, supplemented or restated from time to time

WHEREAS:

(A) Bayer Ltd. (‘‘Bayer Japan’’), Bayer Capital Corporation B.V. (‘‘Bayer Capital Corp’’) and Bayer
    Corporation (‘‘Bayer Corporation’’) intend to issue Notes under the Programme from time to time.

(B) Bayer AG (the ‘‘Guarantor’’) wishes to guarantee the due payment of principal and, interest and any other
    amounts payable in respect of any and all Notes that may be issued by Bayer Japan, Bayer Capital Corp and
    Bayer Corporation under the Programme.

(C) The Guarantor wishes to enter into a negative pledge for the benefit of each Holder (as defined below) that
    may be issued by Bayer Japan, Bayer Capital Corp and Bayer Corporation under the Programme.

IT IS AGREED AS FOLLOWS:

(1) (a)   The Guarantor unconditionally and irrevocably guarantees to the holder of each Note (which
          expression shall include any Temporary Global Note, Permanent Global Note or Collective Note
          representing Notes), Coupon or Receipt (each a ‘‘Holder’’) issued by Bayer Japan, Bayer
          Capital Corp or Bayer Corporation now or at any time hereafter under the Programme, the due and
          punctual payment of the principal of, and interest on, the Notes, Coupons or Receipts, and any other
          amounts which may be expressed to be payable under any Note, Coupon or Receipt appertaining
          thereto, as and when the same shall become due, in accordance with the Terms and Conditions of the
          Notes, as amended, supplemented or varied by the applicable Pricing Supplement.

    (b)   This Guarantee constitutes an unconditional, unsecured and unsubordinated obligation of the
          Guarantor and ranks pari passu with all other present or future unsecured and unsubordinated
          obligations of the Guarantor outstanding from time to time, subject to any obligations preferred by
          law.

    (c)   All payments under this Guarantee shall be made without withholding or deduction for or on account
          of any present or future taxes or duties of whatever nature imposed or levied at source by or on behalf
          of the Federal Republic of Germany or any political subdivision thereof or any authority thereof or
          therein having power to tax, unless such withholding or deduction is required by law. In such event,
          the Guarantor shall pay such additional amounts as shall be necessary in order that the net amounts
          received by the Holders pursuant to this Guarantee, after such withholding or deduction, shall equal
          the respective amounts of principal and interest which would otherwise have been receivable in the

                                                      65
           absence of such withholding or deduction. No such additional amounts shall be payable on account of
           any taxes or duties which:
           (i)     are payable otherwise than by withholding or deduction from payments made by the Issuer/
                   Guarantor to the Holder; or
           (ii)    would not be imposed but for the presentation by the Holder of a Note for payment on a date
                   more than 15 days after the date on which such payment became due and payable or the date on
                   which payment thereof is duly provided for, whichever occurs later; or
           (iii)   are deducted or withheld by a Paying Agent from a payment if the payment could have been
                   made by another Paying Agent without such deduction or withholding; or
           (iv)    would not have been imposed or withheld if such Holder had not presented those Notes for
                   payment in Germany/the Netherlands/Japan/the United States of America, as the case may be,
                   unless such Holder was required to present the Notes for payment in Germany/the Netherlands/
                   Japan/the United States of America, as the case may be, and it could not have been presented for
                   payment anywhere else; or
           (v)     would not have been imposed or withheld if such Holder had provided information or satisfied
                   other applicable certification or reporting requirements concerning the nationality, residence or
                   identity of the Holder, made a declaration of non residence or other similar claim for exemption
                   or presented any applicable form or certificate, upon the making or presentation of which that
                   Holder would have been able to avoid such withholding taxes; or
           (vi)    are deducted or withheld pursuant to (i) any European Union Directive or Regulation pursuant
                   to the taxation of savings, or (ii) any international treaty or understanding relating to such
                   taxation and to which the Federal Republic of Germany or the European Union is a party or
                   (iii) any provision of law implementing, or complying with, or introduced to conform with, such
                   Directive, Regulation, treaty or understanding; or
           (vii) are payable by reason of the Holder having, or having had, some personal or business
                 connection with the Federal Republic of Germany or another member state of the European
                 Union and not merely by reason of the fact that payments in respect of the Notes are, or for
                 purposes of taxation are deemed to be, derived from sources in, or are secured in, the Federal
                 Republic of Germany.
     (d)   The obligations of the Guarantor under this guarantee (i) shall be separate and independent from the
           obligations of the respective Issuer under the Notes, Coupons or Receipts, (ii) shall exist irrespective
           of the legality, validity and binding effect or enforceability of the Notes, Coupons or Receipts, and
           (iii) shall not be affected by any event, condition or circumstance of whatever nature, whether factual
           or legal, save the full, definitive and irrevocable satisfaction of any and all payment obligations
           expressed to be assumed under the Notes, Coupons or Receipts.
     (e)   This Guarantee is given in respect of any and all Notes which are or will be issued by Bayer Japan,
           Bayer Capital Corp or Bayer Corporation under the Programme on or after the date hereof. The
           Guarantee dated October 18, 2002 extends to any and all Notes which have been issued by Bayer
           Japan or Bayer Capital Corp during the period beginning on October 18, 2002 through September 5,
           2003. The Guarantee dated September 5, 2003 extends to any and all Notes which have been issued by
           Bayer Japan, Bayer Corporation or Bayer Capital Corp during the period beginning on September 5,
           2003 through October 17, 2003.
(2) The Guarantor undertakes towards each Holder, as long as Notes are outstanding but only up to the time all
    amounts of principal and interest have been provided to the Fiscal Agent, not to provide after the Issue Date
    any Lien upon its domestic assets for other security issues (as defined below) without at the same time
    letting the Holders share pari passu in such Lien; provided, however, that this Undertaking shall not be
    applicable in the event the Guarantor shall create, assume or suffer to exist Liens of the following character:
     (a)   any Lien existing on property at the time of the acquisition thereof by the Guarantor;
     (b)   any Lien to secure any debt incurred prior to, at the time of, or within 12 months after the acquisition
           of property by the Guarantor for the purpose of financing all or any part of the purchase price thereof
           and any Lien to the extent that it secures debt which is in excess of such purchase price and for the
           payment of which recourse may be had only against such property;

                                                         66
     (c)     any Lien to secure any debt incurred prior to, at the time of, or within 12 months after the completion
             of the construction, alteration, repair or improvement of property of the Guarantor for the purpose of
             financing all or any part of the cost thereof and any Lien to the extent that it secures debt which is in
             excess of such cost and for the payment of which recourse may be had only against such property;

     (d)     any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole
             or in part of any Lien referred to in clauses (a) through (c) above, so long as the principal amount of
             debt so secured does not exceed the principal amount secured at the time of extension, renewal or
             replacement (except that, where an additional principal amount of debt is incurred to provide funds for
                                     e
             the completion of a sp´ cifie project, the additional principal amount and any related financial costs,
             may be secured by the Lien as well) and the Lien is limited to the same property subject to the Lien so
             extended, renewed or replaced (plus improvement on the property);

     (e)     any Lien arising by operation of law;

     (f)     any Lien arising from or related to a disposal or lease-out of assets to any person whose core business
             is the leasing business (Leasinggesellschaften) not to exceed in the aggregate Euro one billion per year
             or the equivalent in other currencies (as from the Issue Date); and

     (g)     any Lien securing indebtedness the amount of which (when aggregated with the amount of any other
             indebtedness which has the benefit of a Lien not allowed under the preceding sub-paragraphs) does
             not exceed Euro 250,000,000 or its equivalent in other currencies at any time.

     In respect of asset-backed securitizations originated by the Guarantor, the expressions ‘‘assets’’ and
     ‘‘Security Issue’’ as used in the first sentence of this subparagraph (2) do not include assets and Security
     Issues of the Guarantor for as long as the assets backing such securitizations do in aggregate not exceed
     Euro 2,000,000,000.

     ‘‘Security Issue’’ shall mean any obligation for the payment of borrowed money represented by bonds,
     notes, debentures or any similar securities which are quoted, listed or traded on any stock exchange or
     over-the-counter securities market or which are otherwise publicly traded or intended to be publicly traded,
     having an original maturity of more than one year.

(3) This Agreement and all undertakings contained herein constitute a contract for the benefit of the Holders
    from time to time as third party beneficiaries pursuant to § 328 (1) BGB (German Civil Code)(1). They give
    rise to the right of each such Holder to require performance of the obligations undertaken herein directly
    from the Guarantor, and to enforce such obligations directly against the Guarantor.

(4) Deutsche Bank AG London in its capacity as Fiscal Agent does not act in a fiduciary or in any other similar
    capacity for the Holders.

(5) Terms used in this Agreement and not otherwise defined herein shall have the meaning attributed to them in
    the Terms and Conditions of the Notes, a copy of which is attached hereto.

(6) This Agreement shall be governed by, and construed in accordance with, German law.

(7) This Agreement is written in the German language and attached hereto is a non-binding English translation.

(8) The original version of this Agreement shall be delivered to, and kept by, the Fiscal Agent.

(9) Place of performance shall be Leverkusen.

(10) The place of jurisdiction for all legal proceedings arising out of or in connection with this Agreement shall
     be Frankfurt am Main. Each Holder may, however, also pursue his claims before any other court of
     competent jurisdiction.

(11) On the basis of a copy of this Agreement certified as being a true copy by a duly authorized officer of the
     Fiscal Agent, each Holder may protect and enforce in his own name his rights arising under this Agreement

(1) In English language translation § 328 (1) BGB (German Civil Code) reads as follows: ‘‘A contract may stipulate performance for the
    benefit of a third party, to the effect that the third party acquires the right directly to demand performance.’’


                                                                 67
in any legal proceedings against the Guarantor or to which such Holder and the Guarantor are parties,
without the need for production of this Agreement in such proceedings.



Leverkusen, October 17, 2003
Bayer Aktiengesellschaft




We accept the terms of the above Guarantee without recourse, warranty or liability.



London, October 17, 2003
Deutsche Bank AG London




                                                68
                               GUARANTEE AND NEGATIVE PLEDGE
                                 Binding German Language Version

                            GARANTIE UND NEGATIVVERPFLICHTUNG
                                                der
                                      Bayer Aktiengesellschaft,
                               Leverkusen, Bundesrepublik Deutschland,
                                             a
                            zugunsten der Gl¨ ubiger von Schuldverschreibungen
                                     (die ‘‘Schuldverschreibungen’’),
                                                die von der
                                              Bayer Ltd., Japan
                               a
              (einer mit beschr¨ nkter Haftung nach dem Recht Japans errichteten Gesellschaft),
                                        Bayer Capital Corporation B.V.
                           a
          (einer mit beschr¨ nkter Haftung nach dem Recht der Niederlande errichteten Gesellschaft)
                                                  oder der
                                            Bayer Corporation
     (eine nach dem Recht des Staates Indiana, Vereinigte Staaten von Amerika, errichtete Gesellschaft)
  im Rahmen des Euro 8.000.000.000 Programme for the Issuance of Debt Instruments (das ‘‘Programm’’)
                                                     a           a
     (aufgelegt am 20. Oktober 2000, wie jeweils abge¨ ndert, erg¨ nzt oder neu gefaßt) begeben werden

IM HINBLICK DARAUF, DASS:
(A) Bayer Ltd. (‘‘Bayer Japan’’), Bayer Capital Corporation B.V. (‘‘Bayer Capital Corp’’) und Bayer
    Corporation (‘‘Bayer Corporation’’) beabsichtigen, von Zeit zu Zeit Schuldverschreibungen im Rahmen
    des Programms zu begeben;
                                                  a
(B) Bayer AG (die ‘‘Garantin’’) die ordnungsgem¨ ße Zahlung von Kapital und Zinsen sowie von allen
                  a
    sonstigen Betr¨ gen, die aufgrund der von Bayer Japan, Bayer Capital Corp und Bayer Corporation im
                                                                                       o
    Rahmen des Programms begebenen Schuldverschreibungen zu zahlen sind, garantieren m¨ chte;
                                     a
(C) die Garantin zugunsten jeden Gl¨ ubigers (wie nachfolgend definiert) der von Bayer Japan, Bayer
    Capital Corp und Bayer Corporation im Rahmen des Programms begebenen Schuldverschreibungen eine
                                  o
    Negativverpflichtung eingehen m¨ chte;

WIRD FOLGENDES VEREINBART:
(1) (a)                     ¨                 u                 a                           a
          Die Garantin ubernimmt gegen¨ ber jedem Gl¨ ubiger (jeweils ein ‘‘Gl¨ ubiger’’) der
                                                                a
          Schuldverschreibungen (wobei dieser Begriff jede vorl¨ ufige oder Dauer- oder Sammelurkunde, die
                                                                                        u
          Schuldverschreibungen verbrieft, einschließt) oder der Zinsscheine oder R¨ ckzahlungsscheine,
          welche jetzt oder zu irgendeinem Zeitpunkt nach dem Datum dieser Garantie von Bayer Japan, Bayer
          Capital Corporation oder Bayer Corporation im Rahmen des Programms begeben werden, die
                                                      u                    a         u
          unbedingte und unwiderrufliche Garantie f¨ r die ordnungsgem¨ ße und p¨ nktliche Zahlung bei
           a
          F¨ lligkeit von Kapital und Zinsen auf die Schuldverschreibungen und die Zinsscheine und
           u                                                 a              a
          R¨ ckzahlungsscheine sowie von allen sonstigen Betr¨ gen, die gem¨ ß den Emissionsbedingungen (in
                                                        a             a
          der durch das anwendbare Konditionenblatt ge¨ nderten, erg¨ nzten oder modifizierten Fassung) auf
                                                 o                          u
          Schuldverschreibungen und die dazugeh¨ rigen Zinsscheine oder R¨ ckzahlungsscheine zahlbar sind.
    (b)                       u
          Diese Garantie begr¨ ndet eine unbedingte, unbesicherte und nicht nachrangige Verbindlichkeit der
          Garantin, die vorbehaltlich solcher Verbindlichkeiten, die aufgrund Gesetz vorrangig sind, mit allen
          anderen jeweils bestehenden, nicht besicherten und nicht nachrangigen Verbindlichkeiten der Garantin
          gleichrangig ist.
    (c)     a
          S¨ mtliche Zahlungen aufgrund dieser Garantie sind ohne Einbehalt oder Abzug von oder aufgrund
                       a             u
          von gegenw¨ rtig oder zuk¨ nftig bestehenden Steuern oder sonstigen Abgaben gleich welcher Art zu
                                                                        u                                 u
          leisten, die von oder in der Bundesrepublik Deutschland oder f¨ r deren Rechnung oder von oder f¨ r
                                                                o
          Rechnung einer politischen Untergliederung oder Beh¨ rde der Bundesrepublik Deutschland an der
          Quelle auferlegt oder erhoben werden, es sei denn, dieser Einbehalt oder Abzug ist gesetzlich
                                                                             a           a
          vorgeschrieben. In diesem Fall hat die Garantin diejenigen zus¨ tzlichen Betr¨ ge zu zahlen, die

                                                     69
                                              a                                                       a
          erforderlich sind, damit die den Gl¨ ubigern aufgrund dieser Garantie zufließenden Nettobetr¨ ge nach
                                                          a
          diesem Einbehalt oder Abzug jeweils den Betr¨ gen an Kapital und Zinsen entsprechen, die ohne einen
                                                      a                              a
          solchen Abzug oder Einbehalt von den Gl¨ ubigern empfangen worden w¨ ren. Die Verpflichtung zur
                               a            a
          Zahlung solcher zus¨ tzlichen Betr¨ ge besteht jedoch nicht im Hinblick auf Steuern und Abgaben, die:

          (i)     anders als durch Abzug oder Einbehalt auf Zahlungen zu entrichten sind, die die Emittentin/
                                    a
                  Garantin an den Gl¨ ubiger leistet; oder

          (ii)                             a      a          a
                  nicht erhoben worden w¨ ren, h¨ tte der Gl¨ ubiger die Schuldverschreibung nicht erst zu dem
                    a                                                               a
                  sp¨ teren der folgenden Termine vorgelegt: mehr als 15 Tage nach F¨ lligkeit der entsprechenden
                                                                                  a
                  Zahlung oder nach dem Tag, an dem die Zahlung ordnungsgem¨ ß erfolgen konnte; oder

          (iii)   von einer Zahlstelle abgezogen oder einbehalten werden, wenn eine andere Zahlstelle die
                                                                   a              o
                  Zahlung ohne einen solchen Abzug oder Einbehalt h¨ tte leisten k¨ nnen; oder

          (iv)                                            a                a
                  nicht erhoben oder einbehalten worden w¨ ren, wenn der Gl¨ ubiger die Schuldverschreibungen
                  nicht in der Bundesrepublik Deutschland/den Niederlanden/Japan/den Vereinigten Staaten von
                                                     a                          a
                  Amerika zur Zahlung vorgelegt h¨ tte, es sei denn, der Gl¨ ubiger war verpflichtet, die
                  Schuldverschreibungen in der Bundesrepublik Deutschland/den Niederlanden/Japan/den
                                                                                           o
                  Vereinigten Staaten von Amerika zur Zahlung vorzulegen ohne daß die M¨ glichkeit bestand,
                  diese an einem anderen Ort vorzulegen; oder

          (v)                                                       a                        a
                  nicht erhoben oder einbehalten worden w¨ ren, wenn der Gl¨ ubiger entsprechende
                                                                                                     u
                  Informationen oder andere relevante Bescheinigungen oder Nachweise bez¨ glich seiner
                            a                                         a
                  Nationalit¨ t, seines Wohnsitzes oder seiner Identit¨ t beigebracht, einen Nachweis oder anderen
                               u               a                             a
                  Beweis dar¨ ber erbracht h¨ tte, daß er kein Steuerinl¨ nder ist, oder entsprechende andere
                                                a                                                       a
                  Bescheinigungen vorgelegt h¨ tte, die die Erhebung von Quellensteuern vermieden h¨ tten; oder

          (vi)                                                                    a
                  aufgrund (i) einer Richtlinie oder Verordnung der Europ¨ ischen Union betreffend die
                                             a                                                      ¨
                  Besteuerung von Zinsertr¨ gen oder (ii) einer zwischenstaatlichen Vereinbarung uber deren
                                                                                       a
                  Besteuerung, an der die Bundesrepublik Deutschland oder die Europ¨ ische Union beteiligt ist,
                  oder (iii) einer gesetzlichen Vorschrift, die diese Richtlinie, Verordnung oder Vereinbarung
                  umsetzt oder befolgt, abzuziehen oder einzubehalten sind, oder

                                    a             u           o                   a
          (vii) wegen einer gegenw¨ rtigen oder fr¨ heren pers¨ nlichen oder gesch¨ ftlichen Beziehung        des
                  a
                Gl¨ ubigers zur Bundesrepublik Deutschland oder einem anderen Mitgliedstaat                   der
                      a
                Europ¨ ischen Union zu zahlen sind, jedoch nicht allein deshalb, weil Zahlungen auf           die
                Schuldverschreibungen aus Quellen in der Bundesrepublik Deutschland stammen (oder              u
                                                                                                              f¨ r
                Zwecke der Besteuerung so behandelt werden) oder dort besichert sind.

    (d)                                                                        a                 a
          Die Verpflichtungen der Garantin aus dieser Garantie (i) sind selbst¨ ndig und unabh¨ ngig von den
          Verpflichtungen der Emittentin aus den Schuldverschreibungen und den Zinsscheinen oder
            u                                         a                    a         u
          R¨ ckzahlungsscheinen, (ii) bestehen unabh¨ ngig von der Rechtm¨ ßigkeit, G¨ ltigkeit, Verbindlichkeit
                                                                                       u
          oder Durchsetzbarkeit der Schuldverschreibungen und der Zinsscheine oder R¨ ckzahlungsscheine und
                                                                        a        a
          (iii) werden nicht durch Ereignisse, Bedingungen oder Umst¨ nde tats¨ chlicher oder rechtlicher Art
              u                           a             u                            u        a
          ber¨ hrt, außer durch die vollst¨ ndige, endg¨ ltige und unwiderrufliche Erf¨ llung s¨ mtlicher in den
                                                                        u
          Schuldverschreibungen und den Zinsscheinen oder R¨ ckzahlungsscheinen eingegangenen
          Zahlungsverpflichtungen.

    (e)                                        a
          Diese Garantie erstreckt sich auf s¨ mtliche Schuldverschreibungen, die am oder nach dem Datum
          dieser Garantie von Bayer Japan, Bayer Capital Corp oder Bayer Corporation unter dem Programm
          begeben werden. Die Garantie mit Datum vom 18. Oktober 2002 gilt f¨ r s¨ mtliche     u    a
          Schuldverschreibungen, die von Bayer Japan oder Bayer Capital Corp in der Zeit vom 18. Oktober
          2002 bis zum 5. September 2003 begeben worden sind. Die Garantie mit Datum vom 5. September
                     u a
          2003 gilt f¨ r s¨ mtliche Schuldverschreibungen, die von Bayer Japan, Bayer Corporation oder Bayer
          Capital Corp in der Zeit vom 5. September 2003 bis zum 17. Oktober 2003 begeben worden sind.

                                            u               a
(2) Die Garantin verpflichtet sich gegen¨ ber jedem Gl¨ ubiger, solange Schuldverschreibungen ausstehen,
                                                           a
    jedoch nur bis zu dem Zeitpunkt, an dem alle Betr¨ ge an Kapital und Zinsen der Hauptzahlstelle zur
         u                            u
    Verf¨ gung gestellt worden sind, f¨ r andere, nachstehend definierte Wertpapieremissionen nach dem Tag der
                                                                    a              o
    Begebung kein Sicherungsrecht (‘‘Pfandrecht’’) am eigenen inl¨ ndischen Verm¨ gen zu bestellen, ohne die
       a
    Gl¨ ubiger zur gleichen Zeit und im gleichen Rang an einem solchen Pfandrecht teilhaben zu lassen, mit der

                                                        70
    Maßgabe, daß diese Verpflichtung keine Anwendung findet, falls die Garantin Pfandrechte folgender Art
              ¨                        a
    bestellt, ubernimmt oder bestehen l¨ ßt:
    (a)                                  o
          Pfandrechte, die auf einem Verm¨ gensgegenstand zum Zeitpunkt des Erwerbs durch die Garantin
          lasten;
    (b)   Pfandrechte zur Besicherung von Verbindlichkeiten, die vor dem Erwerb, zum Zeitpunkt des Erwerbs
                                                                       o
          oder innerhalb von 12 Monaten nach dem Erwerb eines Verm¨ gensgegenstandes durch die Garantin
                                a
          zum Zwecke der vollst¨ ndigen oder teilweisen Kaufpreisfinanzierung eingegangen worden sind, sowie
                                              ¨
          Pfandrechte, die zur Sicherung von uber diesen Kaufpreis hinausgehenden Verbindlichkeiten dienen,
                                 u                                                        o
          vorausgesetzt, daß f¨ r deren Begleichung ausschließlich auf diesen Vem¨ gensgegenstand
             u
          zur¨ ckgegriffen werden kann;
    (c)   Pfandrechte zur Besicherung von Verbindlichkeiten, die vor, zum Zeitpunkt, oder innerhalb von
                                                                  a
          12 Monaten nach der Fertigstellung einer Errichtung, Ver¨ nderung, Instandsetzung oder Verbesserung
                     o                                                               a
          eines Verm¨ gensgegenstandes der Garantin zum Zwecke der vollst¨ ndigen oder teilweisen
          Finanzierung der dabei entstehenden Kosten eingegangen worden sind, sowie Pfandrechte, die zur
                         ¨
          Sicherung von uber diese Kosten hinausgehenden Verbindlichkeiten dienen, vorausgesetzt, daß f¨ r u
                                                            o                     u
          deren Begleichung ausschließlich auf diesen Verm¨ gensgegenstand zur¨ ckgegriffen werden kann;
    (d)                   a                          a
          jedwede vollst¨ ndige oder teilweise Verl¨ ngerung, Erneuerung oder Ersetzung (oder wiederholte
              a
          Verl¨ ngerungen, Erneuerungen oder Ersetzungen) eines der vorstehend in den Klauseln (a) bis (c)
                 u
          aufgef¨ hrten Pfandrechte, soweit der Nennbetrag der dadurch besicherten Verbindlichkeit den im
                                        a
          Zeitpunkt einer solchen Verl¨ ngerung, Erneuerung oder Ersetzung besicherten Nennbetrag nicht
          ¨                                             a
          ubersteigt (mit der Ausnahme, daß zus¨ tzliche Verbindlichkeiten sowie damit verbundene
                                                                             o
          Finanzierungskosten durch das Pfandrecht besichert werden k¨ nnen, wenn diese zus¨ tzlichen  a
                                                        u
          Verbindlichkeiten zur Mittelbeschaffung f¨ r die Fertigstellung eines bestimmten Vorhabens
                                                                                o
          eingegangen werden), und soweit das Pfandrecht auf denselben Verm¨ gensgegenstand, an welchem
                   a                                                                a
          das verl¨ ngerte, erneuerte oder ersetzte Pfandrecht bestanden hat, beschr¨ nkt bleibt (einschließlich
                                         o
          Wertverbesserungen des Verm¨ gensgegenstandes);
    (e)   Pfandrechte, die kraft Gesetzes entstehen;
    (f)                                                              a
          Pfandrechte, die aus oder in Verbindung mit der Ver¨ ußerung oder der Vermietung von
               o             a
          Verm¨ gensgegenst¨ nden an Leasinggesellschaften entstehen, die den Gesamtbetrag von
                                                                   a               ¨
          Euro 1 Milliarde pro Jahr oder den Gegenwert in anderen W¨ hrungen nicht ubersteigen (seit dem Tag
          der Begebung); und
    (g)   Pfandrechte, die Verbindlichkeiten besichern, deren Betrag Euro 250.000.000 (aggregiert mit dem
          Betrag von anderen Verbindlichkeiten, die ein Pfandrecht besitzen welches nach den vorstehenden
                   a                                                         a
          Unterabs¨ tzen nicht erlaubt ist) oder den Gegenwert in anderen W¨ hrungen zu jeder Zeit nicht
          ¨
          ubersteigt.
    In Bezug auf von der Garantin begebene asset-backed Emissionen, schließen die im ersten Satz dieses
                                          o                                           o            a
    Abschnittes (2) benutzen Worte ‘‘Verm¨ gen’’ und ‘‘Wertpapieremission’’ nicht Verm¨ gensgegenst¨ nde und
                                                                o
    Wertpapieremissionen der Garantin ein, solange das Verm¨ gen, das derartigen Emissionen unterliegt,
                                        ¨
    zusammen Euro 2.000.000.000 nicht ubersteigt.
    ‘‘Wertpapieremission’’ bedeutet jede Zahlungsverpflichtung aus der Aufnahme von Geld in der Form von
                                                         ¨                                            u
    oder verbrieft durch Schuldverschreibungen oder ahnliche(n) Wertpapiere(n) mit einer urspr¨ nglichen
                                                                        o
    Laufzeit von mehr als einem Jahr, die an einer Wertpapierb¨ rse oder in einem over-the-counter
                                   u                                                ¨
    Wertpapiermarkt notiert, eingef¨ hrt oder gehandelt werden oder die anderweitig offentlich gehandelt werden
    oder gehandelt werden sollen.
                                                                                                   a
(3) Dieser Vertrag und alle darin enthaltenen Vereinbarungen stellen einen Vertrag zugunsten der Gl¨ ubiger als
       u                   a                                      u                              a
    beg¨ nstigte Dritte gem¨ ß § 328 Absatz 1 BGB dar. Sie begr¨ nden das Recht eines jeden Gl¨ ubigers, die
       u
    Erf¨ llung der hierin eingegangenen Verpflichtungen unmittelbar von der Garantin zu fordern und diese
                                       u
    Verpflichtungen unmittelbar gegen¨ ber der Garantin durchzusetzen.
                                                                                            a
(4) Deutsche Bank AG London in ihrer Eigenschaft als Emissionsstelle handelt nicht als Treuh¨ nder oder in
          ¨                      u         a
    einer ahnlichen Eigenschaft f¨ r die Gl¨ ubiger.
(5) Die in diesem Vertrag verwendeten und nicht anders definierten Begriffe haben die ihnen in den diesem
                  u
    Vertrag beigef¨ gten Emissionsbedingungen zugewiesene Bedeutung.

                                                       71
(6) Dieser Vertrag unterliegt deutschem Recht.
                                                                          ¨
(7) Dieser Vertrag ist in deutscher Sprache abgefaßt. Eine unverbindliche Ubersetzung in die englische Sprache
              u
    ist beigef¨ gt.
                                                                 a
(8) Das Original dieses Vertrages wird der Emissionsstelle ausgeh¨ ndigt und von dieser verwahrt.
       u
(9) Erf¨ llungsort ist Leverkusen.
                    u
(10) Gerichtsstand f¨ r alle Rechtsstreitigkeiten aus oder im Zusammenhang mit diesem Vertrag ist Frankfurt am
                    a                            u                                     a
     Main. Jeder Gl¨ ubiger kann seine Anspr¨ che jedoch auch vor jedem anderen zust¨ ndigen Recht geltend
     machen.
             a
(11) Jeder Gl¨ ubiger kann in jedem Rechtsstreit gegen die Garantin und in jedem Rechtsstreit, in dem er und die
     Garantin Partei sind, seine Rechte aus diesem Vertrag auf der Grundlage einer von einer vertretungs-
     berechtigten Person der Emissionsstelle beglaubigten Kopie dieses Vertrages ohne Vorlage des Originals im
     eigenen Namen wahrnehmen und durchsetzen.



    Leverkusen, 17. Oktober 2003
    Bayer Aktiengesellschaft




                                                                         a
    Wir nehmen die Bedingungen der vorstehenden Garantie ohne Obligo, Gew¨ hrleistung oder Haftung an.


    London, 17. Oktober 2003
    Deutsche Bank AG London




                                                      72
                                           FORM OF PRICING SUPPLEMENT
                                           (MUSTER — KONDITIONENBLATT)

                                                                                                                                [Date]
                                                                                                                              [Datum]
                                                       Pricing Supplement
                                                        Konditionenblatt
                                          [Title of relevant Series of Notes]
                            [Bezeichnung der betreffenden Serie der Schuldverschreibungen]
                                                    Series: [(], Tranche [(]
                                                    Serien: [(], Tranche [(]
                                                      issued pursuant to the
                                                      begeben aufgrund des
                                                 Euro 8,000,000,000
                                    Programme for the Issuance of Debt Instruments
                                                     dated October 15, 2004
                                                     vom 15. Oktober 2004
                                                                   of
                                                                  der
                                                  Bayer Aktiengesellschaft,
                                               Bayer Capital Corporation B.V.,
                                                   Bayer Corporation, and
                                                         Bayer Ltd.
                                                   Issue Price: [ ( ] percent.
                                                     Ausgabepreis: [ ( ] %
                                                    Issue Date: [ (            ](1)
                                                 Tag der Begebung: [           (    ]

     This Pricing Supplement is issued to give details of an issue of Notes under the Euro 8,000,000,000 Debt
Issuance Programme of Bayer AG, Bayer Capital Corporation B.V., Bayer Corporation, and Bayer Ltd. (the
‘‘Programme’’).

                                 a            ¨
     Dieses Konditionenblatt enth¨ lt Angaben uber eine Emission von Schuldverschreibungen unter dem Euro
8.000.000.000 Debt Issuance Programm der Bayer AG, Bayer Capital Corporation B.V., Bayer Corporation, und
Bayer Ltd. (das ‘‘Programm’’).

     [It is to be read in conjunction with the Terms and Conditions of the Notes (the ‘‘Terms and Conditions’’)
set forth in the Information Memorandum pertaining to the Programme, as the same may be amended or
supplemented from time to time. Capitalised Terms not otherwise defined herein shall have the meanings
specified in the Terms and Conditions.

     Es ist in Verbindung mit den Emissionsbedingungen (die ‘‘Emissionsbedingungen’’) zu lesen, die in dem
                          ¨
Information Memorandum uber das Programm in seiner jeweils geltenden Fassung abgedruckt sind. Begriffe, die
in den Emissionsbedingungen definiert sind, haben auch in diesem Konditionenblatt die ihnen in den
Emissionsbedingungen beigelegte Bedeutung.

     All references in this Pricing Supplement to numbered sections and sub-paragraphs are to sections and sub-
paragraphs of the Terms and Conditions.

                                                                  a
    Bezugnahmen in diesem Konditionenblatt auf Paragraphen und Abs¨ tze beziehen sich auf die Paragraphen
       a
und Abs¨ tze der Emissionsbedingungen.

(1) The Issue Date is the date of payment and settlement of the Notes. In the case of free delivery, the Issue Date is the delivery date.
    Der Tag der Begebung ist der Tag, an dem die Schuldverschreibungen begeben und bezahlt werden. Bei freier Lieferung ist der Tag der
    Begebung der Tag der Lieferung.


                                                                   73
     All provisions in the Terms and Conditions corresponding to items in this Pricing Supplement which are
either not selected or completed or which are deleted shall be deemed to be deleted from the terms and conditions
applicable to the Notes (the ‘‘Conditions’’).
      a
    S¨ mtliche Bestimmungen der Emissionsbedingungen, die sich auf Titel dieses Konditionenblatts beziehen
                                       u
und die nicht angekreuzt oder ausgef¨ llt sind oder die gestrichen sind, gelten als in den f¨ r dieu
Schuldverschreibungen geltenden Emissionsbedingungen (die ‘‘Bedingungen’’) gestrichen.] (2)
     [The Conditions applicable to the Notes (the ‘‘Conditions’’) and the German or English language translation
thereof, if any, are attached to this Pricing Supplement and replace in full the Terms and Conditions of the Notes
as set out in the Information Memorandum and take precedence over any conflicting provisions in this Pricing
Supplement.
          u
     Die f¨ r die Schuldverschreibungen geltenden Bedingungen (die ‘‘Bedingungen’’) sowie eine etwaige
                                ¨                                              u
deutsch- oder englischsprachige Ubersetzung sind diesem Konditionenblatt beigef¨ gt. Die Bedingungen ersetzen
     a
in G¨ nze die im Information Memorandum abgedruckten Emissionsbedingungen und gehen etwaigen
abweichenden Bestimmungen dieses Konditionenblatts vor.](3)

Issuer               [Bayer Aktiengesellschaft] [Bayer Capital Corporation B.V.] [Bayer Corporation] [Bayer Ltd.]
Emittentin
Form of Conditions(5)
Form der Bedingungen
n        Long-Form
         Nicht-konsolidierte Bedingungen
n        Integrated
         Konsolidierte Bedingungen

Language of Conditions(6)
Sprache der Bedingungen
n      German only
       ausschließlich Deutsch

(2) To be inserted in the case of Long-Form Conditions.
                                                        u
     Im Fall von nicht-konsolidierten Bedingungen einzuf¨ gen.

(3) To be inserted in the case of Integrated Conditions.
                                                  u
     Im Fall von konsolidierten Bedingungen einzuf¨ gen.

(5) To be determined in consultation with the Issuer. It is anticipated that Long-Form Conditions will generally be used for Notes in bearer
    form sold on a non-syndicated basis and which are not publicly offered. Integrated Conditions will generally be used for Notes in bearer
    form sold and distributed on a syndicated basis. Integrated Conditions will be required where the Notes are to be publicly offered, in
    whole or in part, or to be distributed, in whole or in part, to non-professional investors.
                                                                                                                                        u
     Die Form der Bedingungen ist in Abstimmung mit der Emittentin festzulegen. Es ist vorgesehen, daß nicht-konsolidierte Bedingungen f¨ r
                                                                                                                    ¨
     Inhaberschuldverschreibungen verwendet werden, die auf nicht syndizierter Basis verkauft und die nicht offentlich zum Verkauf
                                                                          u
     angeboten werden. Konsolidierte Bedingungen werden in der Regel f¨ r Inhaberschuldverschreibungen verwendet, die auf syndizierter
     Basis verkauft und vertrieben werden. Konsolidierte Bedingungen sind erforderlich, wenn die Schuldverschreibungen insgesamt oder
                               a                                                ¨
     teilweise an nicht berufsm¨ ßige oder gewerbliche Investoren verkauft oder offentlich angeboten werden.

(6) To be determined in consultation with the Issuer. It is anticipated that, subject to any stock exchange or legal requirements applicable
    from time to time, and unless otherwise agreed, in the case of Notes in bearer form sold and distributed on a syndicated basis, German
    will be the controlling language. In the case of Notes publicly offered, in whole or in part, in the Federal Republic of Germany, or
    distributed, in whole or in part, to non-professional investors in the Federal Republic of Germany, German will be the controlling
    language. If, in the event of such public offer or distribution to non-professional investors, however, English is chosen as the controlling
    language, a German language translation of the Conditions will be available from the principal offices of the Fiscal Agent and Bayer AG.
                                                                                                    o
     In Abstimmung mit der Emittentin festzulegen. Es wird erwartet, daß vorbehaltlich geltender B¨ rsen- oder anderer Bestimmungen und
                                                           u
     soweit nicht anders vereinbart, die deutsche Sprache f¨ r Schuldverschreibungen maßgeblich sein wird, die auf syndizierter Basis verkauft
                                                                                                ¨
     und vertrieben werden. Falls Inhaberschuldverschreibungen insgesamt oder teilweise offentlich zum Verkauf in Bundesrepublik
                                                    a
     Deutschland angeboten oder an nicht berufsm¨ ßige oder gewerbliche Investoren in der Bundesrepublik Deutschland verkauft werden,
                                                                             ¨                                                          a
     wird die deutsche Sprache maßgeblich sein. Falls es bei einem solchen offentlichen Verkaufsangebot oder Verkauf an nicht berufsm¨ ßige
                                                                                                                             ¨
     oder gewerbliche Investoren die englische Sprache als maßgeblich bestimmt wird, wird eine deutschsprachige Ubersetzung der
                                                                                         a
     Bedingungen bei der Hauptniederlassungen der Emissionsstelle und Bayer AG erh¨ ltlich sein.

                                                                      74
n     English only
      ausschließlich Englisch

n     English and German (English controlling)
      Englisch und Deutsch (englischer Text maßgeblich)

n     German and English (German controlling)
      Deutsch und Englisch (deutscher Text maßgeblich)

CURRENCY, DENOMINATION, FORM, CERTAIN DEFINITIONS (§ 1)
  ¨        ¨
WAHRUNG, STUCKELUNG, FORM, DEFINITIONEN (§ 1)

Currency and Denomination
 a             ¨
W¨ hrung und Stuckelung

       Specified Currency                                                                                                           [ ( ]
                     a
       Festgelegte W¨ hrung
       Aggregate Principal Amount                                                                                                  [ ( ]
       Gesamtnennbetrag
       Specified Denomination(s)                                                                                                    [ ( ]
                     u           u
       Festgelegte St¨ ckelung/St¨ ckelungen
       Number of Notes to be issued in each Specified Denomination                                                                  [ ( ]
                                        u
       Zahl der in jeder festgelegten St¨ ckelung auszugebenden Schuldverschreibungen

n     TEFRA C
      TEFRA C

       n      Permanent Global Note
              Dauerglobalurkunde

       n      Temporary Global Note exchangeable for:
                  a
              Vorl¨ ufige Globalurkunde austauschbar gegen:

              n      Definitive Notes
                     Einzelurkunden

              n      Definitive Notes and Collective Notes(7)
                     Einzelurkunden und Sammelurkunden

n     TEFRA D
      TEFRA D

       Temporary Global Note exchangeable for:
           a
       Vorl¨ ufige Globalurkunde austauschbar gegen:

       n      Permanent Global Note
              Dauerglobalurkunde

       n      Permanent Global Note exchangeable by Clearing System Request into Definitive Notes(8)
              Auf Anforderung des Clearing Systems in Einzelurkunden umtauschbare Dauerglobalurkunde

       n      Definitive Notes
              Einzelurkunden

       n      Definitive Notes and Collective Notes
              Einzelurkunden und Sammelurkunden

(7) To be completed only if any global Note initially representing the Notes is to be deposed with Clearstream, Frankfurt.
            u                                                                a
    Nur ausf¨ llen, wenn die Globalurkunde, die die Schuldverschreibungen anf¨ nglich verbrieft, von Clearstream, Frankfurt verwahrt wird.

(8) Applicable only in case of Bayer Corporation.
    Nur im Fall der Bayer Corporation anwendbar.


                                                                   75
n     Neither TEFRA D nor TEFRA C (9)
      Weder TEFRA D noch TEFRA C

       n       Permanent Global Note
               Dauerglobalurkunde

       n       Temporary Global Note exchangeable for:
                   a
               Vorl¨ ufige Globalurkunde austauschbar gegen:

                n     Definitive Notes
                      Einzelurkunden

                n     Definitive Notes and Collective Notes
                      Einzelurkunden und Sammelurkunden

Definitive Notes                                                                                                                    [Yes/No]
Einzelurkunden                                                                                                                     [Ja/Nein]

n      Coupons
       Zinsscheine

n      Talons
       Talons

n      Receipts
        u
       R¨ ckzahlungsscheine

Certain Definitions
Definitionen

Clearing System

n      Clearstream Banking AG

n                               ee
       Clearstream Banking, soci´ t´ anonyme

n      Euroclear bank S.A./N.V. (as operator of the Euroclear System)

n      Other (specify)                                                                                                                  [ ( ]
       sonstige (angeben)
Calculation Agent                                                                                                                   [Yes/No]
Berechnungsstelle                                                                                                                   [Ja/Nein]
n      Fiscal Agent
       Emissionsstelle
n      Other (specify)                                                                                                                  [ ( ]
       sonstige (angeben)

[INTEREST] [INDEXATION] (§ 3)
[ZINSEN] [INDEXIERUNG] (§ 3)




(9) Applicable only if Notes have an initial maturity of one year or less (in the case of Notes issued by Bayer Corporation, an initial maturity
    of 183 days or less).
                                                                 u
     Nur anwendbar bei Schuldverschreibungen mit einer urspr¨ nglichen Laufzeit von einem Jahr oder weniger (im Fall von
                                                                        u
     Schuldverschreibungen begeben von Bayer Corporation mit einer urspr¨ nglichen Laufzeit von 183 Tagen oder weniger).


                                                                      76
n    Fixed Rate Notes
     Festverzinsliche Schuldverschreibungen
    Rate of Interest and Interest Payment Dates
    Zinssatz und Zinszahlungstage
    Rate of Interest                                                                     [ ( ] percent per annum
    Zinssatz                                                                                 [ ( ] % per annum
    Interest Commencement Date                                                                              [ ( ]
    Verzinsungsbeginn
    Fixed Interest Date(s)                                                                                 [ ( ]
    Festzinstermin(e)
    First Interest Payment Date                                                                            [ ( ]
    Erster Zinszahlungstag
    Initial Broken Amount(s) (per Specified Denomination)                                                   [ ( ]
        a                                    a       u                      u
    Anf¨ ngliche(r) Bruchteilzinsbetrag(-betr¨ ge) (f¨ r jede festgelegte St¨ ckelung)
    Fixed Interest Date preceding the Maturity Date                                                        [ ( ]
                               a
    Festzinstermin, der dem F¨ lligkeitstag vorangeht
    Final Broken Amount(s) (per Specified Denomination)                                                     [ ( ]
                                                a       u
    Abschließende(r) Bruchteilzinsbetrag(-betr¨ ge) (f¨ r jede festgelegte
      u
    St¨ ckelung)

    Interest Payments:
    Zinszahlungen:

    n    adjusted
         angepaßt

    n    unadjusted
         nicht angepaßt

n   Floating Rate Notes
    Variabel verzinsliche Schuldverschreibungen
    Interest Payment Dates
    Zinszahlungstage
    Interest Commencement Date                                                                             [ ( ]
    Verzinsungsbeginn
    Specified Interest Payment Dates                                                                        [ ( ]
    Festgelegte Zinszahlungstage
    Specified Interest Period(s)                                          [ ( ] [weeks/months/other — specify]
    Festgelegte Zinsperiode(n)                                        [ ( ] [Wochen/Monate/andere — angeben]

    Business Day
         a
    Gesch¨ ftstag

         Business Day Convention
              a
         Gesch¨ ftstagskonvention
         n     Modified Following Business Day Convention
                                          a
               Modifizierte folgender Gesch¨ ftstag-Konvention
         n     FRN Convention (specify period(s))                                 [ ( ] [months/other — specify]
               FRN Konvention (Zeitraum angeben)                                 [(] [Monate/andere — angeben]
         n     Following Business Day Convention
                              a
               Folgender Gesch¨ ftstag-Konvention
         n     Preceding Business Day Convention
                                     a
               Vorangegangener Gesch¨ ftstag-Konvention

                                                        77
    Interest Payments:
    Zinszahlungen:
    n    adjusted
         angepaßt
    n    unadjusted
         nicht angepaßt
    Relevant Financial Centre(s) (specify all)                                                      [ ( ]
    Relevante(s) Finanzzentren(um) (alle angeben)
    Rate of Interest
    Zinssatz
n   Screen Rate Determination
    Bildschirmfeststellung
    n               u
         EURIBOR (Br¨ ssels time/TARGET Business Day/EURIBOR panel/Interbank-Market in the
         Euro-Zone)
                    u                             a
         EURIBOR (Br¨ sseler Ortszeit/TARGET Gesch¨ ftstag/EURIBOR Panel/Interbanken-Markt in der
         Euro-Zone)
                Screen page                                                                         [ ( ]
                Bildschirmseite
    n    LIBOR (London time/London Business Day/City of London/London Office/London Interbank Market)
                                                a                                     a
         LIBOR (Londoner Ortszeit/Londoner Gesch¨ ftstag/City of London/Londoner Gesch¨ ftsstelle/Londoner
         Interbankmarkt)

                Screen page                                                                         [ ( ]
                Bildschirmseite

    n     Other (specify)                                                                           [ ( ]
          Sonstige (angeben)
          Screen page(s)                                                                            [ ( ]
          Bildschirmseite(n)
    Interest Period
    Zinsperiode
    n    one month
         ein Monat
    n    three months
         drei Monate
    n    six months
         sechs Monate
    n    twelve months
           o
         zw¨ lf Monate
    n    other period to be specified
         anderer festzulegender Zeitraum

    Margin                                                                       [ ( ] percent per annum
    Marge                                                                            [ ( ] % per annum
    n    plus
         plus
    n    minus
         minus
    Interest Determination Date
    Zinsfestlegungstag

                                                    78
     n      second Business Day prior to commencement of Interest Period
                         a
            zweiter Gesch¨ ftstag vor Beginn der jeweiligen Zinsperiode
     n      other (specify)                                                                                               [ ( ]
            sonstige (angeben)
     Reference Banks (if other than as specified in § 3(2)) (specify)                                                      [ ( ]
     Referenzbanken (sofern abweichend von § 3 Absatz 2) (angeben)

n    ISDA Determination(10)                                                                                  [specify details]
     ISDA-Feststellung                                                                                                  u
                                                                                                           [Details einf¨ gen]

n    Other Method of Determination (insert details (including Margin, Interest Determination Date,
     Reference Banks, fallback provisions))                                                                               [ ( ]
     Andere Methoden der Bestimmung (Einzelheiten angeben (einschließlich Marge,
     Zinsfestlegungstag, Referenzbanken, Ausweichungsbestimmungen))

     Minimum and Maximum Rate of Interest
                   o
     Mindest- und H¨ chstzinssatz
     n      Minimum Rate of Interest                                                               [ ( ] percent per annum
            Mindestzinssatz                                                                            [ ( ] % per annum
     n      Maximum Rate of Interest                                                               [ ( ] percent per annum
            H¨ chstzinssatz
             o                                                                                         [ ( ] % per annum

n    Zero Coupon Notes
     Nullkupon-Schuldverschreibungen
     Accrual of Interest
     Auflaufende Zinsen
             Amortisation Yield                                                                                           [ ( ]
             Emissionsrendite
n    Accumulating Notes
     Aufgezinste Schuldverschreibungen
     Accrual of Interest
     Auflaufende Zinsen
     Amortisation Yield                                                                                                   [ ( ]
     Emissionsrendite
n    Dual Currency Notes                                                                                                  [ ( ]
               a
     Doppelw¨ hrungs-schuldverschreibungen
     (set forth details in full here (including exchange rate(s) or basis for calculating exchange
     rate(s) to determine interest/fall-back provisions))
                        u                                                      u
     (Einzelheiten einf¨ gen (einschließlich Wechselkurs(e) oder Grundlage f¨ r die Berechnung
                                                             a
     des/der Wechselkurs(e) zur Bestimmung von Zinsbetr¨ gen/Ausweichbestimmungen))
n    Partly Paid Notes                                                                                                    [ ( ]
     Teileingezahlte Schuldverschreibungen
     (set forth details in full here (including amount of each instalment/due dates for
     payment/consequences of failure to pay/interest rate))
                        u                       o
     (Einzelheiten einf¨ gen (einschließlich H¨ he der Raten/Ratenzahlungstermine/Konsequenzen bei
     Nicht-Zahlung/Zinssatz))
n    Index Linked Notes                                                                                                   [ ( ]
     Indexierte Schuldverschreibungen
     (set forth details in full here)
                        u
     (Einzelheiten einf¨ gen)

(10) ISDA Determination should only be applied in the case of Notes permanently represented by a Global Note because the ISDA
     Agreement and the ISDA Definitions have to be attached to the relevant Notes.
                                           a
     ISDA-Feststellung sollte nur dann gew¨ hlt werden, wenn die betreffenden Schuldverschreibungen durch eine Dauerglobalurkunde
                                                                                                       u
     verbrieft werden, weil das ISDA-Agreement und die ISDA Definitions den Schuldverschreibungen beizuf¨ gen sind.


                                                              79
n    Instalment Notes                                      [ ( ]
     Raten-Schuldverschreibungen
     (set forth details in full here)
                        u
     (Einzelheiten einf¨ gen)
n    Credit Linked Notes                                   [ ( ]
     Credit Linked Notes
     (set forth details in full here)
                        u
     (Einzelheiten einf¨ gen)
n    Equity Linked Notes                                   [ ( ]
     Equity Linked Notes
     (set forth details in full here)
                        u
     (Einzelheiten einf¨ gen)
n    Convertible Notes                                     [ ( ]
     Convertible Notes
     (set forth details in full here)
                        u
     (Einzelheiten einf¨ gen)
n    Exchangeable Notes                                    [ ( ]
     Exchangeable Notes
     (set forth details in full here)
                        u
     (Einzelheiten einf¨ gen)
Day Count Fraction(11)
Zinstagequotient
n    Actual/Actual (ISMA Rule 251)
n    Actual/365 (Fixed)
n    Actual/360
n    30E/360 (Eurobond Basis)
n    30/360 or 360/360 (Bond Basis)
PAYMENTS (§ 4)
ZAHLUNGEN (§ 4)
Payment Business Day
Zahlungstag
     Relevant Financial Centre(s) (specify all)            [ ( ]
     Relevante(s) Finanzzentrum(en) (alle angeben)
REDEMPTION (§ 5)
 ¨
RUCKZAHLUNG (§ 5)
Final Redemption
  ¨                 a
Ruckzahlung bei Endf¨ lligkeit
Notes other than Instalment Notes
Schuldverschreibungen außer Raten-Schuldverschreibungen
     Maturity Date                                         [ ( ]
      a
     F¨ lligkeitstag
     Redemption Month                                      [ ( ]
      u
     R¨ ckzahlungsmonat
     Final Redemption Amount
      u
     R¨ ckzahlungsbetrag

     n       Principal amount
             Nennbetrag
     n       Final Redemption Amount (per denomination)    [ ( ]
              u                    u          u
             R¨ ckzahlungsbetrag (f¨ r jede St¨ ckelung)

(11) Complete for all Notes.
     u
    F¨ r alle Schuldverschreibungen.


                                                     80
Instalment Notes
Raten-Schuldverschreibungen
    Instalment Date(s)                                       [ ( ]
    Ratenzahlungstermin(e)
    Instalment Amount(s)                                     [ ( ]
    Rate(n)
Early Redemption
            ¨
Vorzeitige Ruckzahlung
Early Redemption at the Option of the Issuer               [Yes/No]
            ¨
Vorzeitige Ruckzahlung nach Wahl der Emittentin           [Ja/Nein]
    Minimum Redemption Amount                                [ ( ]
            u
    Mindestr¨ ckzahlungsbetrag
    Higher Redemption Amount                                 [ ( ]
     o        u
    H¨ herer R¨ ckzahlungsbetrag
    Call Redemption Period(s)                                [ ( ]
          u                     a
    Wahlr¨ ckzahlungszeitraum (r¨ ume) (Call)
    Call Redemption Amount(s)                                [ ( ]
          u                      a
    Wahlr¨ ckzahlungsbetrag/-betr¨ ge (Call)
    Minimum Notice to Holders                                [ ( ]
            u
    Mindestk¨ ndigungsfrist
    Maximum Notice to Holders                                [ ( ]
     o      u
    H¨ chstk¨ ndigungsfrist
    Formula for calculation of redemption amount             [ ( ]
                                  u
    Formel zur Berechnung des R¨ ckzahlungsbetrages
Early Redemption at the Option of a Holder                 [Yes/No]
            ¨                          a
Vorzeitige Ruckzahlung nach Wahl des Gl¨ ubigers          [Ja/Nein]
    Put Redemption Period(s)                                 [ ( ]
         u                      a
    Wahlr¨ ckzahlungszeitraum (r¨ ume) (Put)
    Put Redemption Amount(s)                                 [ ( ]
         u                       a
    Wahlr¨ ckzahlungsbetrag/-betr¨ ge (Put)
    Minimum Notice to Issuer                             [ ( ] days
    Mindestk¨ ndigungsfrist
            u                                            [ ( ] Tage
    Maximum Notice to Issuer (never more than 60 days)   [ ( ] days
    H¨ chstk¨ ndigungsfrist (nie mehr als 60 Tage)
     o      u                                            [ ( ] Tage
    Formula for calculation of redemption amount             [ ( ]
                                  u
    Formel zur Berechnung des R¨ ckzahlungsbetrages
Early Redemption Amount
             ¨
Vorzeitiger Ruckzahlungsbetrag
    Accumulating Notes:
    aufgezinste Schuldverschreibungen:
    Early Redemption Amount
    Vorzeitiger Auszahlungstag
    Reference Price                                          [ ( ]
    Referenzpreis
n   Index Linked Notes                                       [ ( ]
    Indexierte Schuldverschreibungen
    (set forth details in full here)
                       u
    (Einzelheiten einf¨ gen)
n   Credit Linked Notes                                      [ ( ]
    Credit Linked Notes
    (set forth details in full here)
                       u
    (Einzelheiten einf¨ gen)

                                                   81
n    Equity Linked Notes                                                                     [ ( ]
     Equity Linked Notes
     (set forth details in full here)
                        u
     (Einzelheiten einf¨ gen)
n    Dual Currency Notes                                                                     [ ( ]
               a
     Doppelw¨ hrungs-schuldverschreibungen
     (set forth details in full here (including exchange rate(s) or basis for calculating
     exchange rate(s) to determine principal/fall-back provisions))
                        u                                                      u
     (Einzelheiten einf¨ gen (einschließlich Wechselkurs(e) oder Grundlage f¨ r die
     Berechnung des/der Wechselkurs(e) zur Bestimmung von Kapitalbetr¨ gen/  a
     Ausweichbestimmungen))
n    Partly Paid Notes                                                                       [ ( ]
     Teileingezahlte Schuldverschreibungen
     (set forth details in full here (including amount of each instalment/due dates for
     payment/consequences of failure to pay/interest rate))
                        u                       o
     (Einzelheiten einf¨ gen (einschließlich H¨ he der Raten/Ratenzahlungstermine/
     Konsequenzen bei Nicht-Zahlung/Zinssatz))
n    Convertible Notes
     Convertible Notes
     (set forth details in full here)
                        u
     (Einzelheiten einf¨ gen)
n    Exchangeable Notes                                                                      [ ( ]
     Exchangeable Notes
     (set forth details in full here)
                        u
     (Einzelheiten einf¨ gen)
AGENTS (§ 6)
Calculation Agent/specified office(12)                                                         [ ( ]
                                     a
Berechnungsstelle/bezeichnete Gesch¨ ftsstelle
     Required location of Calculation Agent (specify)                                        [ ( ]
                           u
     Vorgeschriebener Ort f¨ r Berechnungsstelle (angeben)

Paying Agents
Zahlstellen
     n       Deutsche Bank Luxembourg S.A.
             Deutsche Bank Luxembourg S.A.
     n       Additional Paying Agent(s)/specified office(s)                                    [ ( ]
                                           a
             Zahlstelle(n)/bezeichnete Gech¨ ftsstelle(n)

NOTICES (§ 12)
MITTEILUNGEN (§ 12)
Place and medium of publication
Ort und Medium der Bekanntmachung
n               o
     Germany (B¨ rsen-Zeitung)
                   o
     Deutschland (B¨ rsen-Zeitung)
n    Luxembourg (Luxemburger Wort)
     Luxemburg (Luxemburger Wort)
n    London (Financial Times)
     London (Financial Times)
n    Clearing System
n    Other (specify)                                                                         [ ( ]
     sonstige (angeben)

(12) Not to be completed if Fiscal Agent is to be appointed as Calculation Agent.
                 u
     Nicht auszuf¨ llen, falls Emissionsstelle als Berechnungsstelle bestellt werden soll.

                                                                     82
GENERAL PROVISIONS APPLICABLE TO THE NOTE(S)
ALLGEMEINE BESTIMMUNGEN HINSICHTLICH DER SCHULDVERSCHREIBUNG(EN)
Listing(s)                                                                                                                [Yes/No]
 o
B¨ rsenzulassung(en)                                                                                                      [Ja/Nein]
n    Luxembourg
     Luxemburg
n    Other (insert details)                                                                                                   [ ( ]
                                u
     sonstige (Einzelheiten einf¨ gen)
Method of distribution                                                                                           [insert details]
Vertriebsmethode                                                                                                           ¨
                                                                                                         [Einzelheiten einfugen]
n    Non-syndicated
     Nicht syndiziert
n    Syndicated
     Syndiziert
Management Details
                ¨
Einzelheiten bezuglich des Bankenkonsortiums
Management Group (specify)                                                                                                    [ ( ]
Bankenkonsortium (angeben)
Commissions
Provisionen
     Management/Underwriting Commission (specify)                                                                             [ ( ]
                      ¨
     Management — und Ubernahmeprovision (angeben)
     Selling Concession (specify)                                                                                             [ ( ]
     Verkaufsprovision (angeben)
     Listing Commission (specify)                                                                                             [ ( ]
      o
     B¨ rsenzulassungsprovision (angeben)
     Other (specify)                                                                                                          [ ( ]
     Andere (angeben)

Stabilizing Dealer/Manager                                                                               [insert details/None]
Kursstabilisierender Dealer/Manager                                                                               ¨
                                                                                                [Einzelheiten einfugen/keiner]
Securities Identification Numbers
Wertpapierkennummern
     German Security Code (WKN)                                                                                               [ ( ]
     Wertpapierkennummer
     ISIN                                                                                                                     [ ( ]
     ISIN
     Common Code                                                                                                              [ ( ]
     Common Code
     Any other securities number                                                                                              [ ( ]
     Sonstige Wertpapiernummer
Supplemental Tax Disclosure (specify)(13)                                                                                     [ ( ]
   a                                ¨
Zus¨ tzliche Steueroffenlegung (einfugen)

(13) Supplemental tax disclosure should be provided if the Notes would be classified as financial innovations (Finanzinnovationen) under
     German tax law or may have to be provided, if the terms of the Notes are not fully described in the Information Memorandum.
        a
    Zus¨ tzliche Angaben zur steuerlichen Situation sollten erfolgen, wenn die Schuldverschreibungen nach deutschem Steuerrecht als
                                       u           o
    Finanzinnovationen eingeordnet w¨ rden und k¨ nnten notwendig sein, wenn die Bedingungen der Schuldverschreibungen nicht
          a
    vollst¨ ndig im Information Memorandum wiedergegeben sind.


                                                                 83
Selling Restrictions
               a
Verkaufsbeschr¨ nkungen
n     TEFRA C
      TEFRA C
n     TEFRA D
      TEFRA D
n     Neither TEFRA C nor TEFRA D
      Weder TEFRA C noch TEFRA D
Additional selling restrictions (specify)                                                                                             [ ( ]
   a                         a
Zus¨ tzliche Verkaufsbeschr¨ nkungen (angeben)
Rating(14)                                                                                                                            [ ( ]
Rating
Governing Law                                                                                                              German Law
Anwendbares Recht                                                                                                        Deutsches Recht
Other relevant terms and conditions (specify)                                                                                         [ ( ]
                                    ¨
Andere relevante Bestimmungen (einfugen)
[Listing:(15)
  o
[B¨ rsenzulassung:

    The above Pricing Supplement comprises the details required to list this issue of Notes pursuant to the
Euro 8,000,000,000 Debt Issuance Programme of Bayer AG, Bayer Capital Corporation B.V., Bayer Corporation,
and Bayer Ltd. (as from [insert Issue Date for the Notes]).

                                           a                      u
     Das vorstehende Konditionenblatt enth¨ lt die Angaben, die f¨ r die Zulassung dieser Emission von
                           a
Schuldverschreibungen gem¨ ß dem Euro 8.000.000.000 Debt Issuance Programme der Bayer AG, Bayer Capital
Corporation B.V., Bayer Corporation, und Bayer Ltd. (ab dem [Tag der Begebung der Schuldverschreibungen
    ¨
einfugen]) erforderlich sind.]

      The Issuer accepts responsibility for the information contained in this Pricing Supplement.

                     ¨                            u
      Die Emittentin ubernimmt die Verantwortung f¨ r die in diesem Konditionenblatt enthaltenen Informationen.

      [Bayer Aktiengesellschaft] [Bayer Capital Corporation B.V.] [Bayer Corporation] [Bayer Ltd.]




[Name & title of signatories]
[Name und Titel der Unterzeichnenden]




(14) Insert only if the Notes are rated on an individual basis.
               u                            u
     Nur einzuf¨ gen wenn ein Einzelrating f¨ r die Schuldverschreibungen vorliegt.

(15) Include only in the version of the Pricing Supplement which is submitted to the relevant stock exchange in the case of Notes to be listed
     on such stock exchange.
                                                           u                             o
     Nur in derjenigen Fassung des Konditionenblatts einzuf¨ gen, die der betreffenden B¨ rse, bei der die Schuldverschreibungen zugelassen
     werden sollen, vorgelegt wird. (1) The purchase prices of the foreign acquisitions are translated at the exchange rates in effect at the
     respective dates of acquisition. 2 The financial statements of Bayer Ltd. have been audited up to April 2000 by Aoyama Audit
     Coporation, which then merged at that date into ChuoAoyama PricewaterhouseCoopers.

                                                                     84
                                             USE OF PROCEEDS
     The net proceeds of the issue of each Tranche of Notes will be applied by the relevant Issuer to meet part of
its general financing requirements.




                                                       85
                                      BAYER AKTIENGESELLSCHAFT

Capitalisation of Bayer Aktiengesellschaft/Bayer Group

     The following presents the capitalisation and indebtedness of Bayer Aktiengesellschaft (‘‘Bayer AG’’) and
its consolidated subsidiaries (together with Bayer AG ‘‘Bayer Group’’ or ‘‘Bayer’’) on an unaudited and
consolidated basis as of June 30, 2004. The information below was extracted from the unaudited financial
statement of Bayer Group as of June 30, 2004.
                                                                                                             As of
                                                                                                         June 30, 2004
                                                                                                          (In millions
                                                                                                              of 5)
Stockholders’ equity ***********************************************************                           12,606
Minority Stockholders’ interest *************************************************                             100
Liabilities ********************************************************************                           23,230
Long-term liabilities ***********************************************************                          13,206
  Long-term financial obligations *************************************************                          6,671
  Miscellaneous long-term liabilities **********************************************                          105
  Provisions for pensions and other post-employment benefits**************************                       5,020
  Other long-term provisions*****************************************************                           1,410
Short-term liabilities***********************************************************                          10,024
  Short-term financial obligations *************************************************                         2,699
  Trade accounts payable********************************************************                            2,079
  Miscellaneous short-term liabilities **********************************************                       1,709
  Short-term provisions *********************************************************                           2,903
  Deferred income *************************************************************                               634
Deferred taxes ****************************************************************                             1,435
Total Capitalisation************************************************************                           37,371

    There has been no material change in the capitalisation and indebtedness of Bayer Group since June 30,
2004.

General Information on Bayer AG

     History and Incorporation

     Bayer AG was established on December 19, 1951 under the name ‘‘Farbenfabriken Bayer
Aktiengesellschaft’’. It was registered in the commercial register of the local court at Opladen (today the local
court of Cologne) under the number HRB 1122. Its name was changed to ‘‘Bayer Aktiengesellschaft’’ by
resolution of the Meeting of the Stockholders on June 14, 1972.

     The registered seat of Bayer AG is at 51368 Leverkusen.

     Object

     According to its Articles of Incorporation, the objective of Bayer AG is the manufacturing, marketing and
other industrial activities or provision of services in the fields of health care, agriculture, polymers and chemicals,
as well as the transaction of all other business which is related to, or directly or indirectly serves, the object of
Bayer AG.

     Capital

     The issued capital stock of Bayer AG amounts to 41,869,675,315.20, as in the previous year, and is divided
into 730,341,920 no-par bearer shares of a single class.

     The shares are admitted to trading with official quotation on all German stock exchanges. The shares are
also quoted on the stock exchanges at Amsterdam, Antwerp, Barcelona, Brussels, London, Luxembourg, Madrid,
                                                                                            o
Milan, New York, Paris and Tokyo as well as on the Swiss Stock Exchange (‘‘Elektronische B¨ rse Schweiz’’).

                                                         86
     Authorised Capital
     With the consent of the Supervisory Board until April 26, 2007, the Board of Management is authorised to
increase the share capital by 4250,000,000.00 through issuing new shares against cash payments. The Board of
Management may exclude the pre-emption right of the shareholders.
     Furthermore, with the consent of the Supervisory Board until April 27, 2006 the Board of Management is
authorised to increase the share capital by a nominal amount of up to 4373,935,063.04 in one or more stages by
issuing new shares against non-cash contributions. Subscription rights shall not be granted to the shareholders.
     Therefore, the authorised capital is 4623,935,063.04.

     Conditional Capital
     The capital stock is conditionally increased by an additional 4186,880,000 divided into no more than
73,000,000 bearer shares (Contingent Capital). The increase shall be implemented only to the extent that holders
of subscription or conversion rights based on such warrant bonds or convertible bonds as may be issued or
guaranteed — under the authorization granted to the Board of Management by the resolution of the Annual
Stockholders’ Meeting on April 30, 2004 — by Bayer AG or by a Bayer Group company, as defined in Article 18
of the German Stock Corporation Act (Aktiengesetz), in which Bayer owns a direct or indirect interest of at least
90 percent, choose to exercise their subscription or conversion rights, or persons obligated to exercise such rights
discharge that obligation. Such new shares shall be issued in accordance with the aforementioned authorization
on the basis of the subscription or conversion price set and shall have profit participation rights beginning in the
fiscal year in which they were issued as a result of the voluntary or obligatory exercise of subscription or
conversion rights. The Board of Management is authorized, subject to the approval of the Supervisory Board, to
stipulate any additional details concerning the implementation of the conditional capital increase.

     Fiscal Year
     Bayer AG’s fiscal year is the calendar year.

     Supervisory Board
     According to the Articles of Incorporation the Supervisory Board consists of 20 members. Pursuant to the
German Stock Corporation Act (‘‘Aktiengesetz’’) and the German Law on Co-Determination
(‘‘Mitbestimmungsgesetz’’) ten of the members are elected by the Meeting of Stockholders and ten by the
employees.
     All of the current shareholder representatives on the Supervisory Board were elected by the shareholders at
the annual meeting of shareholders:
Hermann Josef Strenger, Honorary Chairman, Leverkusen
Dr. Manfred Schneider, Chairman, Former Chairman of the company’s Board of Management, Leverkusen
Erhard Gipperich, Vice Chairman, Chairman of the Group and Central Works Councils of Bayer AG, Leverkusen
Dr. Paul Achleitner, Member of the Board of Management of Allianz AG, Munich
Dr. Josef Ackermann, Spokesman of the Board of Managing Directors and Chairman of the Group Executive
Committee of Deutsche Bank AG, Frankfurt am Main
Karl-Josef Ellrich, Chairman of the Works Council of the Dormagen site of Bayer AG, Dormagen
Thomas Hellmuth, Agricultural Engineer, Langenfeld
Prof. Dr.-Ing. e.h. Hans-Olaf Henkel, President of the Leibniz Association, Berlin
Dr. h. c. Martin Kohlhaussen, Chairman of the Supervisory Board of Commerzbank AG, Frankfurt am Main
John C. Kornblum, Chairman of Lazard & Co. GmbH, Berlin
Petra Kronen, Chairwoman of the Works Council of the Uerdingen site of Bayer AG, Krefeld-Uerdingen
Dr. Heinrich von Pierer, President and Chief Executive Officer of Siemens AG, Munich
Wolfgang Schenk, Graduate Engineer, Leverkusen
Hubertus Schmoldt, Chairman of the German Mine, Chemical and Power Workers Union, Hannover

                                                        87
Dieter Schulte, Former Chairman of the German Unions Federation (DGB), Duisburg
                         u
Dipl.-Ing. Dr.-Ing e.h. J¨ rgen Weber, Chairman of the Supervisory Board of Deutsche Lufthansa AG, Cologne
Siegfried Wendlandt, North Rhine District Secretary of the German Mine, Chemical and Power Workers Union,
  u
D¨ sseldorf
Reinhard Wendt, Printer, Walsrode
Thomas de Win, Commercial Clerk, Cologne
Prof. Dr. Dr. h.c. Ernst-Ludwig Winnacker, President of the German Research Association, Bonn
Dr. Hermann Wunderlich, Former Vice Chairman of Bayer AG’s Board of Management, Odenthal
     The business address of each of the above is Bayer AG, 51368 Leverkusen, Germany.

     Board of Management
    Pursuant to the Articles of Incorporation of Bayer AG, the Board of Management must have at least two
members. The Supervisory Board may appoint one member of the Board of Management as chairman of the
Board of Management.
     Since February 28, 2003, the Board of Management consists of the following members:
Werner Wenning, Chairman
Klaus Kuehn
Dr. Udo Oels
Dr. Richard Pott
     The business address of each of the above is Bayer AG, 51368 Leverkusen, Germany.

     Auditors
                                                                                                    u
     The independent auditors of Bayer AG are PwC Deutsche Revision Aktiengesellschaft Wirtschaftspr¨ fung-
sgesellschaft, Friedrich-List-Str. 20, 45128 Essen, Germany (‘‘PwC’’). PwC has examined the consolidated
financial statements of Bayer AG for the fiscal years ended on December 31, 2002 and 2003, and have, in each
case, given their unqualified opinion.

Scope of Operating Activities of Bayer AG
     The reorganization of the Bayer Group into a holding company structure was completed on December 30,
2003 when the carve-out of the last business and service areas was entered in the Commercial Register in line
with the resolution taken at the Annual Stockholders’ Meeting in April 2003. Bayer Chemicals AG, Bayer
HealthCare AG and Bayer MaterialScience AG, formerly Bayer Polymers, have now taken their place alongside
Bayer CropScience AG as separate legal entities within the Bayer Group. Similarly, the service companies Bayer
Technology Services GmbH, Bayer Business Services GmbH and Bayer Industry Services GmbH & Co. OHG
are now all wholly owned subsidiaries of Bayer AG.
      The Group is steered by the four-member Board of Management of Bayer AG, which operates as a
management holding company. Supported by the Corporate Center, the Board of Management of Bayer AG
decides on the corporate strategy of the Group and its portfolio, appoints executive staff and allocates resources.
Its responsibilities also include financial management.
    The subgroups are run independently by their management boards, the service companies by their executive
boards/managing directors within the scope set by the Group Management Board.
      In November 2003, the Board of Management and the Supervisory Board of Bayer AG decided to carry out
a strategic realignment of the Bayer Group. In the future, the Bayer Group will therefore concentrate to a large
extent on its research-intensive activities and on those that harbor high growth and innovation potential, require
considerable capital investments and possess appropriately sophisticated structures. These include the business
activities in the health, nutrition and high-tech materials areas conducted by the respective subgroups, Bayer
HealthCare, Bayer CropScience and Bayer MaterialScience. The major portion of the classical chemical business
belonging to the former Bayer Chemicals subgroup, and approximately one third of the polymer business of the
former Bayer Polymers subgroup no longer belong to the core business sectors of the future Bayer Group and are
thus to be separated from the Bayer Group. Insofar as the Bayer Group’s internal and external reporting structure
is concerned, these activities have, as of the beginning of 2004, been grouped and reported within the new

                                                        88
LANXESS Subgroup — independently of the group’s former legal structure, which temporarily continues to
exist. The Board of Management then intends to list LANXESS on the stock market, a spin-off (as defined by the
German Companies Reorganization Act) to existing stockholders followed by a stock market listing.

   Bayers’ business activities are grouped together in the HealthCare, CropScience, MaterialScience and
LANXESS subgroups, comprising the following reporting segments:
Subgroups                                                     Segments
HealthCare                                                    Pharmaceuticals/Biological Products
                                                              Consumer Care/Diagnostics
                                                              Animal Health
CropScience                                                   CropScience
MaterialScience                                               Materials
                                                              Systems
LANXESS                                                       LANXESS

     The composition of the segments Materials, Systems and LANXESS and their relationship to the previous
reporting structure are depicted in the following table:
             Reporting structure in 2004                    Materials                                Systems                             LANXESS

                                                        Thermo-                                                 Inorganic   Chemical    Per-   Engineer-      Per-
                                              Poly-                  Wollf                 Poly-
                                                      plastic Poly-          H.C. Starck             Coatings     Basic      Inter-  formance    ing       formance
                                           carbonates               Walsrode             urethanes
 Reporting structure in 2003                           urethanes                                                Chemicals   mediates Chemicals Plastics     Rubber

              Thermoplastic Polymers
 Plastics/
 Rubber
                 Rubber Polymers
   Poly-   Polyurethane Materials
urethanes/
Coatings/
             Coatings Materials
  Fibers
                Industrial Chemicals

               Custom Manufacturing

               Functional Chemicals
Chemicals
                 Process Chemicals

                    H.C. Starck

                   Wollf Walsrode



      The subgroup/segment LANXESS is reported under Discontinuing Operations.

Recent Developments

     Bayer Group made gratifying operating gains in the second quarter of 2004. Sales grew by 4.5 percent to
47,583 million compared to the same period of 2003, and by 7.9 percent when adjusted for currency and portfolio
effects. Bayer CropScience, Bayer MaterialScience and LANXESS contributed to this development.

     EBIT (operating result) improved by 10.3 percent to 4524 million, and by 44.1 percent to 4660 million
before special items of 4136 million. Included in the special items are 460 million for antitrust risks and 422
million for the stock-market listing of LANXESS. The biggest earnings improvements were achieved by
CropScience and MaterialScience. LANXESS also posted a substantial increase in EBIT. As expected, EBIT of
HealthCare was down significantly due to expiration of the U.S. patent for Bayer’s anti-infective Cipro˛. EBIT
before special items improved by 14.5 percent compared with the same period in 2003 to 41,487 million. The
EBIT figure in 2004 also includes a non-cash gain of 4121 million resulting from a reduction in pension programs
in the United States.

      With a non-operating result of minus 4278 million, income before income taxes amounted to 4246 million.
The non-operating result includes non-cash expenses of 498 million from investments in affiliated companies,
attributable mainly to one-time charges. After income taxes of 4115 million and minority stockholders’ interest,
Group net income in the second quarter totaled 4128 million. The tax rate was 47 percent due to non-deductible
expenses.

     Gross cash flow declined by 472 million, or 8.0 percent, to 4831 million compared to the same period of last
year. By contrast, net cash flow advanced by 4209 million, or 22.3 percent, year on year to 41,146 million. Net
debt was reduced by 40.5 billion to 46.1 billion.

                                                                                    89
    Bayer’s preparations for the stock-market listing of LANXESS are proceeding on schedule. LANXESS will
be separated from the Bayer Group by way of a spin-off. An Extraordinary Stockholders’ Meeting on
November 17, 2004 will vote on this course of action. The proposal is that the stockholders of Bayer AG receive
100 percent of the shares of the spun-off LANXESS Group.
     Pending the approval of the antitrust authorities, Bayer has acquired the OTC business of Roche with the
exception of Roche OTC business in Japan for a total purchase price of 42.38 billion. This transaction, which was
announced in July 2004, represents an important part of Bayer’s HealthCare strategy of growing its consumer
health activities by expanding the product portfolio. With total sales of about 42.4 billion, the combined OTC
business will be among the world’s top three leading suppliers of non-prescription medicines.
     On January 15, 2004, Bayer Corporation, the U.S. holding subsidiary of Bayer AG, has repurchased
US$ 500 million of variable-interest debt securities it issued in 2001. At the same time Bayer Corporation was
launching a five-year fixed-interest bond-issue in the nominal volume of 4460 million under the programme for
the issuance of debt instruments guaranteed by Bayer AG.
     Bayer CropScience AG and Aventis S.A., Strasbourg, France, announced on March 8, 2004, that they have
reached agreement on the final purchase price for Aventis CropScience, the former Aventis agricultural division
that Bayer acquired in 2002. Under the agreement, 4327 million out of the 47.25 billion originally negotiated is
being refunded to Bayer.
     Bayer CropScience LP in the U.S. and Bayer CropScience Inc. in Canada signed on March 22, 2004,
agreements to purchase Crompton Corporation’s 50 percent share of the Gustafson seed treatment business in the
United States, Canada and Mexico for the purchase price of US$ 124 million in cash.
     On May 4, 2004 Bayer signed an agreement with the Shanghai Chemical Industry Park Cooperation, to
build a world-scale production plant for the coating raw material HDI (hexamethylene diisocyanate). Over the
next few years, total investments of some US$ 3.1 billion are scheduled for the integrated production site at
Caojing near Shanghai.
     On July 19, 2004, Bayer announced that it has agreed to acquire Roche Consumer Health. Additionally,
Bayer will acquire Roche’s 50 percent share of the 1997 Bayer/Roche joint venture in the U.S. (an element not
included in Roche’s original offering), and five Roche production sites in Grenzach (Germany), Gaillard
(France), Pilar (Argentina), Casablanca (Morocco) and Jakarta (Indonesia). The OTC business of the Japanese
company Chugai, in which Roche has a majority stake, is not included. The acquired business has yearly sales of
around 41 billion. The 42.380 billion transaction is subject to approval by relevant antitrust authorities.
      On August 5, 2004 BASF, Bayer and Hoechst announced that Platinum Equity, a global investment firm
based in Los Angeles, California, acquires DyStar, the Frankfurt-based manufacturer of textile dyes. The relevant
antitrust authorities had approved the transaction. As a result, BASF, Bayer and Hoechst have completed the
divestment of their holdings in DyStar.
     On September 13, 2004, Bayer announced that it is continuing the systematic realignment of its HealthCare
business and has entered a broad pharmaceuticals alliance with U.S.-based Schering-Plough Corporation, of
Kenilworth/N.J. According to the terms of the agreement, Bayer’s primary care pharmaceutical products will be
marketed and distributed by Schering-Plough in the United States. The companies have also committed to a co-
marketing agreement for future promotion of a Schering-Plough cardio-vascular product, Zetia, in Japan. At the
same time Bayer HealthCare will build up a new US-based global oncology business unit and refocus its
U.S. organization on high-profit specialty and biotech products to form Bayer HealthCare’s Specialty
Pharmaceuticals business. The agreements became effective in part on October 1, 2004. Triggered by the
reduction of positions and extra one-time expenditures Bayer will incur one-time costs in the range of
450-70 million, the majority of which will occur in 2004. The agreement is expected to be accretive in subsequent
years.
     In connection with the planned spin-off of the new chemical company LANXESS, Bayer AG announced on
October 6, 2004, that its stockholders will be granted one LANXESS share for every ten Bayer shares that they
hold. This is provided for in the Spin-Off and Acquisition Agreement to be voted on at an Extraordinary
Stockholders’ Meeting in Essen on November 17.
     If the shareholders approve the plan by a majority of at least 75 percent of the capital stock represented,
LANXESS AG will be listed on the stock market at the beginning of 2005. A total of 73,034,192 no-par bearer
shares of LANXESS will be allotted to Bayer stockholders. The spin-off is intended to have retroactive economic
effect from July 1, 2004. To bolster the financial condition and credit rating of LANXESS, Bayer has purchased a
EUR 200 million mandatory convertible bond issued by LANXESS.

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     Detailed information about LANXESS and the planned spin-off is contained in the Spin-Off and Acquisition
Agreement and the Spin-Off Report, which have been published on October 6, 2004.
     LANXESS will have net debt of approximately 41.5 billion, including pension commitments, when the
spin-off takes effect. The financial liabilities to the Bayer Group are to be redeemed by drawing on a syndicated
credit line. This 41.0 to 1.5 billion credit line will consist of a short-term and a long-term tranche.
     In addition, Bayer is bolstering the financial position of LANXESS through the purchase of a
EUR 200 million mandatory convertible bond from the new company. The bond was issued on September 15,
2004, and acquired in its entirety by Bayer. Its terms reflect going market rates, with a three-year maturity and an
interest rate of 6 percent. Conversion to LANXESS shares is possible on July 20, 2005 at the earliest, but will
take place on maturity of the bond at the latest. This does not alter the Bayer Group’s goal of wholly divesting
LANXESS through the planned spin-off. Neither company will hold shares of the other immediately following
the spin-off, nor does Bayer intend to hold the shares acquired through the bond conversion for the long term or
use them to influence the policy of LANXESS AG. Rather, Bayer intends to divest these shares with the smallest
possible impact on the market price.
     Bayer expects the bond to favorably influence LANXESS’ credit rating. The company is striving for an
investment-grade — or ‘‘BBB’’ — rating. Since rating agencies generally regard a mandatory convertible bond as
having primarily the character of stockholders’ equity, this instrument is expected to strengthen the balance-sheet
structure of LANXESS and its position on the capital market. The amount by which LANXESS’ capital stock
increases as a result of the conversion will depend on the share price. Bayer expects to hold an interest of less
than 20 percent in LANXESS after the bond is converted.

Highlights in 2003
     Net sales of the Bayer Group declined by 3.6 percent, or 41,057 million, from the previous year to
428,567 million in 2003. In local currencies and adjusted for portfolio effects, however, sales rose by 5.0 percent.
     EBIT declined to minus 41,119 million after net special charges totaling 42,585 million, the latter amount
being the balance primarily of impairment losses, restructuring expenses and income from divestitures. Before
these items, however, EBIT climbed by 99.2 percent to 41,466 million.
     The impairment losses recognised following the global review of asset valuations led to substantial deferred
tax assets, resulting in net tax income of 4645 million. The Group recorded a net loss of 41,361 million.
     The CFROI increased from 7.5 percent in 2002 to 8.1 percent in 2003, due both to the higher gross cash flow
and to the lower capital invested. Earnings per share fell from 41.45 in the fiscal year 2002 to minus 41.86 for the
fiscal year 2003. Bayer AG closed 2003 with the year-end price of stock at 423.22, up 14 percent from 420.45 at
year end 2002. At their Annual Meeting the shareholders approved a dividend of 40.50 per share for 2003. The
gross dividend amounted to 40.50 per share for the 2003 fiscal year, down 40.40 compared to 2002. The dividend
yield came to 2.2 percent based on the stock price at the end of 2003 and the total payout was 4365 million.

Divestments, Joint Ventures and Acquisitions in 2003
    In 2003 Bayer spent a total of 472 million on acquisitions mainly for increasing its interest in the Bayer
Polymers Sheet Europe Group (formerly known as Makroform) up to 100 percent.
     Significant divestitures in 2003 were as follows:
     By the end of fiscal 2003, the conditions set by the European, U.S. and Canadian antitrust authorities for the
acquisition of Aventis CropScience Holding S.A., France, as of June 1, 2002 had been met in full, except for
those relating to propoxycarbazone, which has been divested in the first quarter 2004. In compliance with these
regulatory conditions, Bayer CropScience AG sold the insecticide active ingredients fipronil (worldwide, except
China) and ethiprole, and the attendant rights to BASF AG, Ludwigshafen, Germany, together with a number of
fungicidal active ingredients (principally in Europe), though the transaction also included a non-exclusive license
for seed treatment outside Europe.
     In 2003, the Bayer Group sold the remaining parts of the Consumer Care Business Group’s household
insecticides business to SC Johnson & Son Inc., of the United States, for 4339 million after obtaining the
necessary approvals from the respective local antitrust authorities.
     The successful five-year research cooperation between Bayer HealthCare AG and Millennium
Pharmaceuticals Inc., U.S.A., was terminated in the fourth quarter of 2003. At the same time, Bayer AG sold its
6.6 percent interest in Millennium Pharmaceuticals to the investment bank CSFB for 4272 million.

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    In fiscal 2003 the Bayer Group sold further real estate in Germany, Belgium and Spain for a total of
4122 million, continuing the streamlining of its portfolio.
    Effective April 1, 2003 Bayer sold its 50 percent interest in the PolymerLatex group, which is based in Marl,
Germany, to Soros Private Equity Partners for 4118 million.
    At the end of January 2003, the Bayer Group’s organic pigments business was sold to the Sun Chemicals
group, of the United States, for 446 million.

Business Segments
    The following summaries provide highlights of activities in the business areas and business activities of
Bayer Group in the full year 2003 and the first two quarters of 2004.

     HealthCare
     Full year 2003
     Sales in the Bayer HealthCare subgroup declined by 5.3 percent to 48,871 million, mainly due to currency
factors. Adjusted for portfolio and currency effects, however, business expanded by 9.2 percent. EBIT fell by
34.9 percent to 4365 million. Before special items, EBIT increased by 31.3 percent to 4907 million. Gross cash
flow decreased by 4.6 percent to 4815 million. After disbursements made following an agreement reached with
U.S. federal authorities in the context of an investigation into pharmaceutical product pricing, net cash flow for
the year amounted to 4782 million. The previous year’s net cash flow was boosted by refinements in working
capital management.
     Sales of the Pharmaceuticals /Biological Products segment, at 44,745 million, almost matched those of the
previous year. In local currencies, sales rose by 11.4 percent.
     The primary growth market for the Pharmaceuticals /Biological Products segment is North America. Sales in
the North America, Asia/Pacific and Latin America/Africa/Middle East regions were impaired by unfavourable
currency parities. Business in Europe remained steady year on year.
      Before special items, EBIT for the segment grew by 4291 million in 2003, to 4424 million, thanks mainly to
the upward trend in the Pharmaceuticals Division and the Kogenate˛ business of the Biological Products
Division. In Pharmaceuticals, the improvement was also aided by cost reductions achieved through production
facility closures and relocations and the consolidation of research activities. Additional contributory factors in the
Biological Products Division were the optimization of production processes and improved cost structures for
Kogenate˛. The principal special charges in 2003 — totaling 4756 million — were impairment losses and other
valuation adjustments for the plasma business, charges in connection with Lipobay/Baycol, and expenses for the
closure of the research center in Kyoto, Japan, and the termination of research activities in Berkeley, California.
     Sales of the Consumer Care Division declined by 18.2 percent, or 4313 million, to 41,403 million, mainly
due to the divestment of the household insecticides activities and the strength of the euro. Adjusted for portfolio
changes and currency effects, however, sales advanced by 11.6 percent. This business thus expanded much faster
than the market, which grew by only 3 percent. The global OTC business developed well, with particularly strong
growth in the United States. There, the upward trend was enhanced by certain drug products coming off
prescription status. Sales were also helped by a strong cold season in Europe and North America. On the other
hand, business in over-the-counter drugs in Europe continued to be hampered by the effects of health care reform.
     Sales of the Diagnostics Division were down by 5.2 percent, or 4106 million, to 41,933 million. In local
currencies, however, business grew by 5.1 percent. The global diagnostic products industry grew more slowly
than in the preceding years, the main reasons being the negative trend for blood glucose monitoring systems,
particularly in the United States, and the weak economy in the principal markets.
      EBIT for the Consumer Care, Diagnostics segment increased by 1.3 percent to 4601 million, marred by the
lower sales in Self-Testing and adverse currency factors. Bayer Group successfully completed the divestment of
the household insecticides business, initiated in 2002, to U.S.-based SC Johnson & Son. Of the total gain on this
sale, 4256 million was realised in 2003.
     Sales of the Animal Health segment fell by 7.1 percent, or 460 million, to 4790 million, due to negative
currency effects. Adjusted for these effects, however, sales rose by 4.7 percent. This good performance resulted
primarily from the successful launch in North America of the new antiparasitic treatment Advantix˛.

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    EBIT increased by 2.4 percent to 4172 million. Before special items, EBIT fell by 429 million, due to
exchange rate developments and expenses for product introductions.

     First Quarter 2004
     Sales of the Bayer HealthCare subgroup in the first quarter of 2004 increased by 0.8 percent to 42,124
million. Measured in local currencies, business expanded by 8.9 percent. Adjusted for the positive special items
recognised in 2003, EBIT showed a year-on-year decline of 11 million, or 3.8 percent, to 4277 million. The drop
in gross cash flow, to 4258 million, is to be viewed in light of the 4134 million gain from the divestiture of the
household insecticides business that was contained in the previous year’s figure.
     Sales of the Pharmaceuticals /Biological Products segment rose by 4.0 percent, or 445 million, to
41.176 million. In local currencies the increase came to 12.6 percent.
     EBIT of the Pharmaceuticals /Biological Products segment declined by 439 million to 4164 million in the
first quarter, though it should be noted here that the previous year’s figure contained 421 million in positive
special items. EBIT before special items fell by 9.9 percent. The drop in earnings was due primarily to the lower
sales of Cipro˛ and high launch costs for Levitra˛, these effects not being fully offset by the savings achieved
through Bayer’s cost-containment measures.
     Sales in Consumer Care fell by 6.9 percent to 4326 million, due particularly to the divestment of the
household insecticides business and the strong euro. Portfolio- and currency-adjusted sales were up by
5.8 percent.
     Diagnostics sales remained steady year on year at 4444 million. In local currencies, sales grew by
6.1 percent, or 428 million, thanks to positive trends in both Self Testing Systems and Professional Testing
Systems.
      EBIT of the Consumer Care/Diagnostics segment fell by 4164 million to 481 million. The decline is
attributable to the positive special items — comprising mainly the 4134 million gain from the divestment of the
household insecticides business — recognised in the first quarter of 2003. Before special items, EBIT grew by
414 million or 20.9 percent, due especially to the strong performance of the Diagnostics Division.
     Sales of the Animal Health segment remained steady year on year at 4178 million. In local currencies,
business grew by 6.3 percent.

     Second Quarter 2004
     Sales of the Bayer HealthCare subgroup fell by 4.4 percent to 42,108 million in the second quarter of 2004.
Adjusted for currency and portfolio effects, sales dipped by 0.9 percent year on year. EBIT dropped by
4169 million, or 43.8 percent, to 4217 million, due mostly to special gains (4122 million) from the divestiture of
the household insecticides business recognized in the previous year’s figure. Bayer HealthCare was able to
largely offset the reduction in earnings resulting from the genericization of Cipro˛ in the United States.
     Sales of the Pharmaceuticals Division fell in the second quarter by 4186 million, or 20.0 percent, to
4744 million. The decline in sales of the anti-infective Cipro˛ following expiration of Bayer’s patent in the
United States could only be compensated in part by growing business with other products.
     Sales of the Biological Products Division climbed by 13.8 percent in the second quarter of 2004, to
4296 million. Kogenate˛, in particular, continued to perform very satisfactorily, with sales moving ahead by
429 million, or 27.4 percent, to 4135 million. Business expanded most strongly in Europe and North America.
Bayer is currently involved in negotiations with potential buyers for its plasma business, which is reported under
discontinuing operations.
     The global pharmaceuticals market maintained its high growth rate in the second quarter, spurred primarily
by North America, which accounts for almost 50 percent of the world market. Bayer saw business decline
considerably in this region, due especially to the genericization of its best-selling product Cipro˛.
     The European pharmaceuticals market expanded by an average 7 percent, with the rates differing
considerably from country to country. Bayer slightly outperformed the European market overall, growing by
9.0 percent.
     In the Asia/Pacific region, growth rates in Japan edged up to about 4 percent despite price reductions in
April. Bayer grew considerably faster than the market, with sales up by 9.1 percent. Particularly pleasing was the
growth in sales of 46.1 percent posted by Bayer’s business in China.

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     Year-on-year EBIT of the Pharmaceuticals /Biological Products segment fell by 485 million to 465 million.
This decline, which was due mostly to the expiration of Bayer’s patent for Cipro˛ in the United States and to high
launch costs for Levitra˛, could only be partially offset by growing sales of individual products and by cost-
containment measures.

     Sales of the Consumer Care Division moved back by 2.1 percent to 4333 million, due to the divestment of
the household insecticides business. When adjusted for portfolio changes and currency effects, sales rose by
8.0 percent. The main growth market was North America, where sales were up by 11.7 percent in local
currencies. This was attributable to new product launches — including the One-A-Day CarbSmart˛ dietary
supplement — and to the continued positive performance of Aleve˛, co-marketed with Roche, this product is now
the third leading pain reliever in the U.S. OTC market.

     There were contrasting trends in the world’s OTC markets. Growth in nearly all segments of the U.S. OTC
market weakened slightly, although Bayer increased sales in the United States by 4.9 percent and 11.8 percent in
local currencies. In Germany, Europe’s biggest OTC market, development was restrained largely by reforms to
the country’s health care system. In other countries, such as Italy and the United Kingdom, Bayer participated in
the growth of the market, with business advancing by 23.2 and 8.9 percent, respectively.

     Effective June 1, 2004, Bayer divided Diagnostics into two divisions: Diagnostics Professional Testing
Systems and Diagnostics Self Testing Systems.

     Continued positive development in the U.S. self-testing market was the main factor in growth of 12 percent
worldwide in the first half of 2004. All major suppliers in this industry benefited from market expansion in the
United States, with Bayer achieving the highest growth rates. Bayer also grew faster than the market outside of
the U.S. Globally, the professional testing market expanded by about 5 percent. Here, too, Bayer grew
considerably faster than the market.

     EBIT of the Consumer Care/Diagnostics segment fell by 484 million to 4107 million as a result of special
gains of 4122 million from the divestment of the household insecticides business in the second quarter of 2003.
Before special items, EBIT climbed significantly by 435 million, or 48.6 percent.

      Sales of the Animal Health segment rose by 411 million, or 5.1 percent, overall to 4225 million due largely
to stronger demand in North America. Measured in local currencies, the increase was 8.8 percent. Bayer’s new
antiparasitic Advantix˛ and the coccidiosis treatment Baycox˛ 5 % continued to perform well. EBIT remained
steady at last year’s pleasing level of 445 million.

     CropScience

     Full year 2003

     Sales of the Bayer CropScience subgroup climbed by 22.7 percent to 45,764 million, largely because of the
Aventis CropScience acquisition. Exchange rates had a negative effect. After adjusting for portfolio changes and
currency factors, business grew by an impressive 11.8 percent in a market that stagnated in local currency terms.

    Sales of the Crop Protection Business Group rose by 20.0 percent to 44,801 million. This increase was
mainly due to acquisitions and a gratifying increase in sales of Bayer’s top products.

     Sales of the Environmental Science Business Group improved by 14.4 percent to 4692 million.

     The BioScience Business Group saw sales advance to 4271 million. Sales of Bayer’s vegetable seeds
developed favourably, as did its cotton and canola seed products in the United States and Canada.

    Sales of Bayer CropScience were encouraging in North America, Latin America, Europe, Africa and the
Middle East, while business in Japan and South Korea was below expectations.

     EBIT climbed sharply from minus 4112 million to 4341 million despite negative currency effects, the
growth in earnings being mainly due to higher sales. While special items in 2002 comprised mainly the proceeds
of individual product divestments, in 2003 they included primarily restructuring charges. EBIT before special
items improved by 4601 million to 4422 million.

     Gross cash flow advanced significantly to 4860 million due to the improvement in EBIT. Net cash flow
declined by 3.9 percent to 41,165 million, the previous year’s figure having been boosted by the success of the
program to improve working capital management that Bayer Group embarked on in 2001.

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    First Quarter 2004
     Sales of the Bayer CropScience subgroup advanced by 4.3 percent in the first quarter of 2004 to
41,732 million, or by 16.2 percent when adjusted for currency and portfolio effects.
     Sales of the Crop Protection Business Group improved by 4.3 percent, due in large part to continuing strong
sales in Brazil of its fungicide Folicur˛ and of Stratego˛/Sphere˛ combinations for the control of Asian rust in
soybeans.
     Sales of the Environmental Science Business Group fell by 9.3 percent to 4186 million, though by only
2.8 percent after adjustment for currency and portfolio changes.
     The BioScience Business Group turned in a very positive performance, with sales climbing by 31.3 percent
in the first quarter of 2004, to 4130 million. The growth drivers here were the products InVigor˛ (canola seed) in
Canada and FiberMax˛ (cotton seed) in the United States.
     EBIT of the CropScience segment decreased by 468 million to 4379 million. Adjusted for the special item
recognized in the first quarter of 2003, representing the gain from the sale of certain products to meet antitrust
conditions, and the absence of earnings from divested products, the operating result was above the previous year
in spite of adverse currency effects.
     With effect from March 31, 2004, Bayer Group acquired the remaining 50 percent interest in its Gustafson
joint venture from Crompton Corporation for approximately 4100 million.

    Second Quarter 2004
     Following a strong first quarter, the Bayer CropScience subgroup increased its year-on-year sales in the
second quarter as well. Business was up by 475 million, or 4.8 percent, to 41,642 million; when adjusted for
currency and portfolio effects, the improvement was 7.5 percent.
    The Crop Protection Business Group saw sales increase by 5.3 percent to 41,352 million.
     Business in Bayer’s highest-volume product group, Confidor˛/Gaucho˛/Admire˛/Merit˛, improved in the
second quarter by 5.3 percent, or by 10.7 percent in local currencies. This was mainly attributable to weather
conditions favorable to Bayer’s business and the delayed start – in part into the second quarter – to the
insecticides business.
     Sales of the Folicur˛ fungicide rose by 7.2 percent to 4104 million. This resulted both from continuing
efforts to eliminate Asian rust in Brazil and from the weather conditions in Europe, which led to higher sales of
crop protection products for cereals.
     Due to lower sales in Canada and the United States, in particular, Bayer’s Puma˛ herbicide saw a year-on-
year decline of 13.7 percent in the second quarter. However, sales remained steady for the first half as a whole.
    Bayer’s Basta˛ herbicide put in a strong showing, with sales advancing by 17.7 percent overall to
473 million. The product performed particularly well in Canada.
     Sales of the FLINT˛ fungicide receded by 7.0 percent to 453 million in a difficult western European market
for products containing strobilurins as the active substance. In local currencies the decrease was 1.8 percent.
However, Bayer Group was able to more than compensate for this decline through the successful introduction of
the innovative Proline˛ family of cereal fungicides in Germany.
     Compared with the same period last year, sales of the Environmental Science Business Group remained
steady at 4216 million. After adjustment for currency changes, the improvement was 4.6 percent. This was due in
part to higher sales of the insecticide Merit˛ for landscape management and of the U.S. home and garden
products.
     Sales of the BioScience Business Group moved ahead year on year by 8.8 percent to 474 million, with
strong contributions coming from InVigor˛ (canola seed) and FiberMax˛ (cotton seed), as well as from Bayer’s
rice seed products.
    The positive trend in the global crop protection market continued in the second quarter.
    The industry benefited from favorable weather conditions in Europe, although sales were held back in some
countries by high inventories from the previous year. Bayer expanded its sales in this region by 4.2 percent,
improving particularly in fungicides.

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     In the North America region, too, Bayer Group’s business performed very well in the second quarter 2004,
primarily as a result of good growing conditions for key crops: cereals, corn and soybeans. A further reason for
the 8.7 percent growth in sales was the weather-related increase in the occurrence of corn pests. After adjustment
for currency effects, sales advanced by 15.7 percent.
     In Asia, market performance was unsatisfactory, particularly in the important Japanese and South Korean
markets, as a result of intense competition and heavy pressure on prices. Bayer made modest gains in the region
as a whole, with sales up by 2.7 percent.
     Growth in the Latin America region remained brisk year on year. The increase in soybean acreages, coupled
with a massive outbreak of Asian rust in soybean crops, triggered a market increase in fungicide use, from which
Bayer also benefited. Despite receding sales in the Middle East, Bayer grew its business by 6.3 percent for the
region as a whole in local currencies.
     EBIT of CropScience rose by 4122 million in the second quarter, to 4159 million. This substantial increase
in earnings resulted above all from higher sales and the achievement of further synergies from the integration of
the ACS business. The special charges of 441 million comprise mainly restructuring expenses for site closures in
the United Kingdom, as well as charges for legal risks. After adjustment, EBIT thus climbed by 4114 million to
4200 million.

     MaterialScience
     Full year 2003
     Sales of the Bayer MaterialScience subgroup receded by 2.7 percent to 47,453 million, mainly as a result of
unfavourable currency parities. Because of high special charges, particularly impairment losses, EBIT declined
from 496 million in 2002 to minus 4397 million in 2003. The unsatisfactory situation in MaterialScience was
mainly attributable to high raw material and energy costs combined with heightened competitive pressure. Gross
cash flow shrank by 13.2 percent to 4927 million. With working capital virtually unchanged, net cash flow
declined accordingly by 5.5 percent to 41,085 million.
     Sales of Materials segment fell by 3.4 percent to 42,777 million in 2003. EBIT for the Materials segment
dropped to 458 million in 2003 following 430 million in other special charges, primarily restructuring expenses.
EBIT before special items decreased to 488 million. This was attributable mainly to declining selling prices and
higher raw material and energy costs.
     Despite growth in volumes, sales of Bayer’s Systems segment dropped by 2.3 percent in 2003 to
44,676 million, particularly as a result of currency effects.
     EBIT for the Systems segment fell from minus 478 million in 2002 to minus 4455 million in 2003. Before
impairment losses of 4622 million and other special items, EBIT climbed by 19.3 percent to 4260 million as a
result of higher volumes and the success of Bayer’s restructuring program. Further increases in raw material costs
and the continuing low level of selling prices had a negative effect. The other special items of 4 93 million mainly
comprised restructuring charges for polyether and isocyanates.
      Impairment tests resulted in the recognition of 4622 million in impairment losses for the Systems segment.
Impairment losses for the polyols business already having been recognised in the previous year, a further write-
down was necessary in 2003 because the original economic assumptions had to be revised downward in light of
these businesses’ long-term perspectives. The polyols business was impacted by overcapacities and continuing
strong competitive pressure in all regions, particularly Asia. The resulting decline in prices, combined with the
sustained high level of raw material costs, created constant pressure on margins. Bayer’s economic expectations
for other businesses also declined. The solvent-free powder coatings business that passed to Bayer Group with the
acquisition of Sybron Chemicals Inc. in 2000 now operates in a difficult environment marked by low capacity
utilisation and low prices. This business was also hurt by high raw material and energy costs.

     First Quarter 2004
     Sales of the Bayer MaterialScience subgroup advanced by 0.5 percent from the same period of last year, to
41,877 million. Currency- and portfolio-adjusted sales grew by 8.2 percent. EBIT before special items improved
by 21.6 percent to 4135 million. Gross cash flow receded by 17.8 percent to 4231 million, mainly due to lower
EBITDA (operating result (EBIT) plus depreciation and amortization) and higher tax payments.
     Sales of the Materials segment in the first quarter of 2004 increased by just 0.7 percent in euros but by
7.5 percent in local currencies. In the key area of Polycarbonates, in particular, business was spurred by a general

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recovery in demand and robust product sales in the optical storage media sector. Sales of polycarbonate film also
grew strongly in light of increased demand from manufacturers of ID cards and cellular phones. H.C. Starck also
registered faster-than-average growth, with sales up by 7.2 percent to 4148 million due to recovery in the
electronics industry and higher market prices for certain products. Sales of Wolff Walsrode declined to
477 million following the divestiture of Walothen GmbH to the Wihuri group of Finland.
     EBIT of the Materials segment, at 432 million, was 43 million lower than for the same period of 2003. This
was mainly attributable to negative currency and portfolio effects, continuing pressure on prices and product mix
effects in polycarbonates, which were not fully offset by Bayer Group’s successful cost-containment measures.
     Sales of the Systems segment edged up 0.4 percent to 41,177 million, advancing by 6.8 percent in local
currencies. Polyurethanes showed especially strong growth due to a cyclical recovery in certain user industries in
North America. Sales of Polyurethanes rose by 3.8 percent to 4820 million, or by 11.1 percent in local currencies.
     EBIT of the Systems segment advanced by a substantial 440 million, or 63.5 percent, to 4103 million. This
earnings improvement was driven by higher capacity utilization and improved margins in certain areas of the
Polyurethanes business. Bayer Group’s cost-containment measures also continued to have a positive effect.

     Second Quarter 2004
     In the second quarter of 2004, Bayer MaterialScience subgroup increased sales by a gratifying 4237 million,
or 12.8 percent, to 42,091 million. Currency- and portfolio-adjusted sales jumped by 17.3 percent. EBIT rose by
4122 million, or 131.2 percent, to 4215 million, due especially to the improved earnings performance in
Polycarbonates and Polyurethanes. The growth in EBIT before special items was 484 million, or 64.1 percent.
     Sales of the Materials segment were up substantially compared with the second quarter of 2003, growing
15.3 percent to 4800 million. When adjusted for currency and portfolio effects, sales growth was even stronger at
20.8 percent.
     In this segment, the Polycarbonates Business Unit posted very pleasing growth of 472 million, or
17.3 percent, to 4489 million. This was attributable particularly to strong demand from producers of optical
storage media such as CDs and DVDs.
    H.C. Starck also significantly boosted its performance year on year, growing sales by 26.2 percent. This was
due mainly to the upturn in the electronics industry and to price increases for some products. In the North
American region, Bayer Group was able to grow faster than the market.
      Second-quarter sales of the segment increased by 6.2 percent in Europe. However, growth fell far short of
that in the other regions due to the sluggish economy.
     In North America, Bayer benefited from vigorous economic growth, increasing sales by a total of
20.3 percent — 27.7 percent in local currencies — thanks to strong demand for Makrolon˛ polycarbonate.
     Buoyed by continuing strong demand from the electronics industry, sales in the Asia/Pacific region
increased by 26.7 percent. High sales of polycarbonate in China played a key role in this growth.
     EBIT of the Materials segment advanced by 445 million to 478 million in the second quarter 2004, due
particularly to a demand-driven increase in production capacity utilization. This earnings increase was also made
possible in part by the success of Bayer Group’s cost-containment programs and by the absence of special
charges that were still a factor in the previous year. Significantly higher raw material costs could only be passed
on to customers in part through price increases.
    Sales of the Systems segment moved ahead by 11.3 percent to 41,291 million compared to the previous year,
and by 15.3 percent when adjusted for currency and portfolio effects.
     Polyurethanes performed gratifyingly, with sales advancing by 14.4 percent. MDI production has been
increased to full capacity. As raw material costs remain high, nearly all producers have implemented price
increases. The announcement of further price adjustments for the third quarter led to Bayer’s customers building
up inventories in the second quarter 2004. The polyether business also contributed to improved sales through
higher prices and volumes.
    Growth in the Coatings, Adhesives, Sealants Business Unit was largely achieved with the aliphatic and
aromatic isocyanates product lines (for surface coatings).
     Sales of Inorganic Basic Chemicals declined by 12.1 percent due to a sharp drop in prices for caustic soda.

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     Despite stagnation in the automotive industry, sales in the Europe region improved by a gratifying
7.5 percent to 4575 million.

     Sales in North America and the Asia/Pacific region climbed 18.1 and 21.1 percent, respectively, due
especially to continuing strong demand from the construction industry for MDI for thermal insulating materials.

     Currency-adjusted sales in the Latin America/Africa/Middle East region rose by 21.8 percent, mostly as a
result of good business with polyurethane raw materials. Due to restrained demand from the construction
industry, only single-digit growth was recorded in Latin America.

     EBIT for Systems segment improved by 477 million to 4137 million in the second quarter 2004. EBIT
before special items grew by 451 million, or 59.3 percent. High utilization of capacities and successful cost-
containment measures were largely responsible for this rise in earnings. Sharply increased raw material prices,
especially for benzene, could only be partially offset by price increases.

     LANXESS

     Full year 2003

     In 2003, the subgroup’s net sales declined by 7.5 percent from the previous year — from 46,241 million to
45,776 million — primarily as a result of unfavourable exchange rate effects (4357 million) and portfolio effects
(458 million). The portfolio effect resulted from the sale of the Organic Pigments product group in 2003. Organic
Pigments was sold to the Sun Chemicals Group in the United States for a purchase price of 446 million, which
was offset against asset disposals totaling 441 million and transaction and other costs in the amount of 45 million.

     The EBIT deteriorated from a 4128 million loss to a 41,290 million loss. The impairment and restructuring
charges with a net effect of 4934 million were the primary drivers behind this deterioration in the operating result.

     First Quarter 2004

     Sales of the LANXESS subgroup declined by 2.1 percent in the first quarter of 2004, to 41,478 million, but
increased by 2.2 percent in local currencies.

      EBIT of the LANXESS segment improved significantly in the first quarter of 2004, rising by 458 million to
475 million. This increase in earnings, while partly attributable to higher volumes in Chemicals Intermediates and
Performance Plastics, was mainly the result of savings achieved through Bayer Group’s cost-containment
projects. A further contributory factor was the lower depreciation following the impairment losses recognised in
2003. Gross cash flow amounted to 4111 million, with higher pension payments offset by the improvement in
EBIT. Net cash flow came in at minus 462 million due to an increase in working capital at the beginning of the
year.

     Second Quarter 2004

     Sales of the LANXESS subgroup advanced by 4141 million, or 9.7 percent, to 41,592 million in the second
quarter 2004, and by 11.6 percent when adjusted for currency and portfolio effects.

    Business in Chemical Intermediates grew by 5.9 percent over the second quarter of 2003 to 4288 million,
due particularly to increased sales of basic chemicals in North America and inorganic pigments in Europe.

    Performance Chemicals boosted sales by 2.1 percent year on year to 4488 million. Gratifying gains were
made above all by Rhein Chemie, Material Protection Products and Ion Exchange Resins.

     Sales of Engineering Plastics were up by 27.3 percent compared to the same period of 2003, to 4424 million.
This was mainly attributable to the Styrenic Resins business, where Bayer was able to grow volume sales and
pass on raw material cost increases to some extent in its selling prices.

     Sales of Performance Rubber moved ahead by 9.1 percent to 4371 million. The Technical Rubber Products
business grew by 17.1 percent, while sales of Butyl Rubber rose by 10.9 percent as a result of higher prices and
volumes.

     EBIT of the LANXESS segment amounted to 420 million in the second quarter, a year-on-year gain of
467 million. Bayer improved EBIT before special items by 475 million. In a pleasing development, LANXESS
increased EBITDA by 478 million to 4135 million.

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Statement of Income
     Full year 2003
     Group sales in 2003 declined by 3.6 percent, or 41,057 million, to 428,567 million due to exchange rate
factors, particularly the weakness of the U.S. dollar. In local currencies, however, business improved by
5.0 percent.
     EBIT fell from 41,518 million in 2002 to minus 41,119 million in 2003. This 42,637 million drop in
reported earnings is due to a 43,367 million negative swing in the balance of special items. While EBIT for 2002
was boosted by net special income of 4782 million, including the gain from the divestment of Haarmann
& Reimer, the 2003 figure contains 42,585 million in net special charges. Adjusted for the special items, EBIT
climbed by 4730 million, or 99.2 percent, to 41,466 million.
     The improvement in operating performance (EBIT before special items) was achieved primarily through
cost-saving and efficiency improvement measures that took effect during the year.
     Special charges in 2003 comprised mainly impairment losses and valuation adjustments, totaling
41,927 million, that were largely attributable to the strategic realignment of the portfolio and to changes in
economic conditions. Bayer Group also took a total of 4508 million in restructuring charges and other asset write-
downs. The restructuring expenses related chiefly to site consolidations. Bayer recorded special income of 4469
million from portfolio measures, principally the divestment of the household products business. The remaining
net special charges of 4619 million included a 4300 million charge taken on the basis of the final agreement
reached with the majority of insurers in connection with Lipobay/Baycol, as well as expenses for achieving staff
reductions through special early retirement plans and provisions for antitrust risks in the Polymers business area.
     The exceptional charges of 41,123 million for 2002 included 4289 million in impairment losses for the
polyols and fibers businesses and a total of 4470 million in restructuring expenses and other asset write-downs.
The remaining 4364 million in charges for 2002 consisted largely of the expense pertaining to the agreement
concluded with U.S. federal authorities in the context of an investigation into pharmaceutical product pricing.
Positive special items in 2002 comprised a total of 41,905 million in income from the divestments of Haarmann
& Reimer, the household insecticides business and the housing company Baywoge GmbH, as well as from
product divestments made in connection with the Aventis CropScience acquisition.
     The non-operating result of minus 4875 million for 2003 included write-downs of 4273 million on
investments in affiliated companies and a divestiture gain of 4191 million. After net tax income of 4645 million,
the Group recorded a net loss for 2003 of 41,361 million. Gross cash flow improved in 2003 by 3.0 percent year
on year to 42,865 million, mainly due to the increase in earnings from operations. Net operating cash flow, at
43,293 million, was again at a high level. The net cash flow for 2002 was boosted by improvements in working
capital management. In 2003, Bayer Group succeeded in keeping working capital at virtually the same level. Net
debt was reduced by 42,909 million, to below 45,952 million, thanks largely to the net cash flow and to income
from divestments.

     First Quarter 2004
     Bayer got off to 2004 with first-quarter sales of 47,362 million matching the previous year’s high level
despite the substantial appreciation of the euro. Adjusted for currency and portfolio effects, sales advanced by
8.6 percent. This growth was driven primarily by HealthCare and CropScience.
     EBIT for the first quarter 2004, at 4820 million, was below the prior-year figure of 41,096 million. However,
that number contained positive special items arising particularly from the divestiture of the household insecticides
business and real estate holdings. EBIT before special items in the first quarter of 2004, at 4827 million, remained
steady at the high level of the same period last year (4841 million). This was achieved mainly through earnings
improvement in the Bayer MaterialScience and LANXESS subgroups. The non-operating result improved by
436 million to minus 4157 million, mainly because of a drop in net interest expense. Income before income taxes
was 4663 million. After income taxes of 4257 million and minority stockholders’ interest, Group net income
amounted to 4400 million, compared to 4586 million in the previous year.

     Second Quarter 2004
     Sales grew by 4.5 percent to 47,583 million compared to the same period of 2003, and by 7.9 percent when
adjusted for currency and portfolio effects. Bayer CropScience, Bayer MaterialScience and LANXESS
contributed to this development.

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      EBIT improved by 10.3 percent to 4524 million, and by 44.1 percent to 4660 million before special items of
4136 million. Included in the special items are 460 million for antitrust risks and 422 million for the stock-market
listing of LANXESS. The biggest earnings improvements were achieved by CropScience and MaterialScience.
LANXESS also posted a substantial increase in EBIT. As expected, EBIT of HealthCare was down significantly
due to expiration of the U.S. patent for Bayer’s anti-infective Cipro˛. The EBIT figure in 2004 also includes a
non-cash gain of 4121 million resulting from a reduction in pension programs in the United States.
      With a non-operating result of minus 4278 million, income before income taxes amounted to 4246 million.
The non-operating result includes non-cash expenses of 498 million from investments in affiliated companies,
attributable mainly to one-time charges. After income taxes of 4115 million and minority stockholders’ interest,
Group net income in the second quarter 2004 totaled 4128 million. The tax rate was 47 percent due to non-
deductible expenses.
     EBIT before special items improved by 14.5 percent compared with the same period in 2003 to
41,487 million.

Dividend
     To strengthen stockholders’ confidence in its potential, Bayer had decided to uphold its policy of dividend
continuity, even though the Group reported a net loss of 41,361 million for 2003. At the Annual Stockholders’
Meeting on April 30, 2004, Bayer AG declared a dividend of 40.50 per share (730,341,920 shares) on the capital
stock of 41,870 million entitled to the dividend for 2003. This gave a payout of 4365 million and a dividend yield
of 2.2 percent based on the 2003 year-end share price.

Cash Flow Statement
     Full year 2003
     The cash flow statement shows the cash inflows and outflows from operating, investing and financing
activities. Gross cash flow improved by 3.0 percent from the previous year to 42,865* million, mainly due to the
higher income from operations which was, however, partly offset by an increase in income tax payments due to
the fact that the previous year’s income included tax-free divestment proceeds.
     Net cash flow amounted to 43,293 million, after disbursements of 4231 million made following a settlement
reached with U.S. authorities in the context of an investigation into pharmaceutical product prices. Provisions for
these payments had already been established in 2002. The high net cash flow achieved in 2002 was largely due to
the success of the program Bayer Group initiated in 2001 to improve working capital management.
     Net cash of 4460 million was provided by investing activities. Bayer maintained strict capital discipline,
reducing outflows for additions to property, plant and equipment from 42,239 million in 2002 to 41,653 million
in 2003. These disbursements were more than offset by 41,644 million in cash receipts from sales of such assets.
These inflows included, in particular, 41,185 million from the divestments of certain crop science business
mandated by the antitrust authorities and the 4118 million in proceeds from the sale of Bayer Group’s interest in
PolymerLatex. The 4258 million in cash inflows related to investments included the income from the divestment
of Bayer’s equity stake in Millennium Pharmaceuticals. Bayer’s research collaboration with this biotechnology
company ended on schedule on October 31, 2003. The previous year’s item contained a 4714 million cash inflow
from the sale of shares in Agfa-Gevaert N.V. The cash disbursements for acquisitions relate mainly to the
purchase of the remaining 45.5 percent of the shares of the Bayer Polymers Sheet Europe group (formerly
Makroform). In the previous year, disbursements in connection with the acquisition of Aventis CropScience led
to net cash usage of 46,570 million in investing activities.
     The net cash outflow of 41,761 million from financing activities resulted primarily from 4664 million in
dividend payments, 4782 million in interest payments and 4315 million in debt retirements.

     First Quarter 2004
     The gross cash flow of the Bayer Group receded by 4443 million, or 31.0 percent, to 4984 million. The
decline was mainly attributable to lower EBITDA and to higher cash contributions to funded pension plans in the
United States at the beginning of 2004. Net cash flow was minus 4299 million due to a seasonal increase of
nearly 41.3 billion (2003: 41.2 billion) in working capital, particularly in the CropScience subgroup.

* The gross cash flow now reflects only changes in pension provisions and no longer changes in any other long-term provisions. The gross
  cash flow restatement for 2003 was minus 4379 million and for 2002 minus 4303 million. The net cash flow was not affected.

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      Net cash provided by investing activities came to 4160 million. Cash outflows of 4185 million for capital
expenditures were partially offset by 463 million in inflows from sales of noncurrent assets. The figure for the
corresponding quarter last year contained inflows from divestments in CropScience that were mandated by the
antitrust authorities. A further 4327 million was received in the first quarter of 2004 in the context of the
agreement reached with Aventis S.A. concerning the acquisition price for Aventis CropScience. Particularly with
large transactions, adjustment of the purchase price is a common way of offsetting subsequently determined
discrepancies in valuation of certain purchase price components, such as working capital and net debt. Cash
outflows for acquisitions comprised mainly the approximately 4100 million paid to acquire the remaining
50 percent interest in Gustafson.
     Net cash of 4158 million was used in financing activities. Interest payments amounted to 4133 million, while
tax payments were 4176 million. The tax payments comprised withholding tax on dividends. Net borrowings
provided 4151 million.
     Cash and cash equivalents increased by 4275 million to 42,440 million. Including marketable securities and
other instruments, the Group had liquid assets of 42,632 million on March 31, 2004.

     Second Quarter 2004
     Compared to the same period of 2003, the gross cash flow of the Bayer Group receded by 472 million, or
8.0 percent, to 4831 million. A diminishing effect came from higher payments associated with the utilization of
provisions for early retirement programs, as well as from non-cash gains of 4121 million resulting from a
reduction in pension programs in the United States. By contrast, the net cash flow increased by 4209 million, or
22.3 percent, to 41,146 million, due to a reduction in working capital. Depreciation and amortization amounted to
4627 million in the second quarter; for the full year Bayer Group expects depreciation and amortization to total
approximately 42.3 billion.
    Net cash of 455 million was provided by investing activities. Outflows of 4237 million were partially offset
by 470 million in cash receipts from sales of noncurrent assets. Interest and other cash inflows amounted to
4222 million. Capital expenditures in the second half of 2004 will substantially exceed those of the first half
(4422 million). For the full year 2004, Bayer Group expects capital expenditures to total around 41.4 billion.
     Financing activities resulted in net cash outflows of 4977 million, including dividend payments of
4372 million, net loan repayments of 4263 million and interest payments of 4342 million, which decreased
largely because of a reduction in Bayer’s financial liabilities.
     Cash and cash equivalents increased overall by 4226 million to 42,666 million. Including marketable
securities and other instruments, the Group had liquid assets of 42,881 million on June 30, 2004.

Balance Sheet
     Full year 2003
     Total assets decreased by 44.2 billion compared with December 31, 2002, to 437.4 billion.
     Noncurrent assets shrank by 45.3 billion, with intangibles decreasing by 42.4 billion to 46.5 billion and
property, plant and equipment by 42.5 billion to 49.9 billion. The main reasons for the decline were impairment
losses and valuation adjustments totaling 41.9 billion, along with other asset write-downs. Negative currency
effects diminished noncurrent assets by a further 41.5 billion. Investments declined by 40.4 billion to 41.8 billion,
mainly due to the sale of Bayer’s interest in Millennium Pharmaceuticals and write-downs of its equity
investments in DyStar and Curagen.
     The total of inventories and receivables diminished by 41.3 billion to 414.8 billion. Inventories declined by
7.2 percent to 45.9 billion, while trade accounts receivable fell by 8.5 percent to 45.1 billion. Other receivables
were down by 8.5 percent to 43.9 billion, as the assets earmarked for divestiture, and since divested, in
connection with the Aventis CropScience acquisition were still reflected in this item at the end of 2002. Liquid
assets grew by 42.1 billion to 42.9 billion, particularly as a result of the net cash inflow from operating activities.
Current assets increased by 40.8 billion, compared with the end of 2002, to 417.7 billion.
     Stockholders’ equity shrank by 43.1 billion to 412.2 billion. This decline was primarily attributable to the
41.4 billion net loss, 41.1 billion in negative currency translation effects and the 40.7 billion dividend payment for
2002. Equity coverage of total assets fell by 4.2 percentage points compared with the end of 2002, to
32.6 percent.

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     Liabilities dropped by 40.3 billion to 423.0 billion. Net debt was reduced by 42.9 billion in 2003, to below
46.0 billion.

Risk Management
     As a global company, Bayer is exposed to a wide variety of risks in the course of its worldwide activities.
Even before Germany’s ‘‘Law on Corporate Supervision and Transparency’’ came into force on May 1, 1998,
Bayer AG operated an effective system for identifying, communicating and dealing with risks at an early stage.
The principles behind that system are spelled out in the Risk Management Guidelines valid throughout the Bayer
Group. The goal is to identify and evaluate as early as possible the potential risks associated with Bayer’s
activities, assess the possible consequences of their occurrence and take suitable measures to mitigate them. The
various processes and instruments used depending on the respective risk profile are constantly being improved,
supplemented and optimized in line with statutory requirements.
     Risk management is an integral part of all decisions and business processes in the Bayer Group.
     The management structure, the planning system, and the detailed reporting and information systems, in
particular, form the basis for the organizational integration of risk management into business processes.
      Reporting plays a key role in monitoring the economic risks of Bayer’s everyday business. It must ensure
that the business performance of individual Group companies is described and explained according to uniform
guidelines. In addition to the data on which external reports are based, internal reports are produced each month
to ensure that the Board of Management and the various management levels are fully alerted to possible risks in a
timely fashion. Group accounting and controlling functions support these activities and work to increase the
responsiveness and efficiency of the reporting system.
     Bayer Group’s risk management system is supported by monitoring and control mechanisms based on
established standard software. These mechanisms are the subject of continuous improvement and are adjusted to
changes in circumstances.
     In addition, possible risks are identified and documented with respect to their quantitative and qualitative
effects and the likelihood of their occurrence so that precautionary measures can be taken.
     The internal audit department examines at regular intervals the risk management system’s efficiency and
functionality. Additionally, Bayer’s external auditors regularly evaluate the system’s functionality and brief the
Board of Management and the Supervisory Board on the results of these evaluations. The Audit Committee of the
Supervisory Board consults regularly on risk management.
     Bayer’s business activities involve the following primary risks:
     As a manufacturing company active in numerous areas of the health care and chemicals industry, Bayer is
subject to the procurement market risk that the raw materials and utilities needed to manufacture its products may
not be available, or that their quality or quantity may be insufficient. During the reorganization process, therefore,
the existing procurement structures were adapted to the new holding company structure with independent
operating subgroups. The ongoing development of the procurement system into a flexible network structure
allows Bayer to more easily identify risks on the procurement markets at an early stage, respond to changes and
ensure a constant supply of raw materials. The holding company structure also ensures that Bayer can leverage its
position as a single enterprise to achieve more favorable prices and supply terms for the Group as a whole.
     Bayer guards against exchange and interest rate risks by financing its business in local currencies or by
hedging currency and interest positions using derivative financial instruments that serve no other purpose. Such
instruments are employed according to the respective risk assessments and on the basis of detailed guidelines.
     Bayer addresses product and environmental risks by way of suitable quality assurance measures. These
include certifying its operations to international standards, continuously upgrading its plants and processes, and
developing new and improved products. Strict quality requirements are met by applying uniform standards
throughout the world. Bayer places great importance on the safety of its products and their proper usage by
customers.
     Bayer Group is committed to the international Responsible Care initiative of the chemical industry and to its
own safety and environmental management system, which Bayer reports on at regular intervals. Specially
developed guidelines on product stewardship, occupational safety and environmental protection are designed to
ensure that all of its employees act competently and responsibly.

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     To guard against possible liability risks and compensation claims, Bayer has concluded insurance
agreements to keep the potential consequences within reasonable limits or exclude them completely. The level of
insurance coverage is continuously reexamined.
     To counter risks that could arise from the numerous tax, competition, patent, antitrust and environmental
regulations and laws, Bayer makes its decisions and engineers its business processes on the basis of
comprehensive legal advice provided both by its own experts and by acknowledged external specialists. Bayer
establishes provisions in the balance sheet for risks resulting from new laws or legal judgments that apply
retroactively.
     The extent to which the German government’s emissions trading plans affect Bayer’s earnings depends on
the legislative implementation of these measures.
     Business risks also include those pertaining to acquisitions, capital expenditures and research and
development activities. These future-oriented activities are vital to the continued existence of Bayer Group, yet
they also harbor risks because of the related uncertainties.
     Bayer controls and mitigates operating risks by exercising due diligence prior to such activities and by
tracking their progress. For example, Bayer investigates whether budgets can be adhered to, whether original
forecasts can be met, and whether additional financial or technological risks are likely to emerge.
     The future success of Bayer’s business depends in no small part on the dedication, motivation and skills of
its employees. Bayer must be capable at all times of attracting suitably qualified technical and managerial
personnel, successfully integrating them into its operations and ensuring that they stay with Bayer over the long
term.
     With this goal in mind, Bayer offers its employees internal education and training opportunities, as well as
performance-oriented remuneration systems. To ensure that the employees act responsibly from both a
professional and a legal point of view within their respective fields of work, Bayer has promulgated a worldwide
legal compliance program. Supported by thorough training, this behavioral code obligates employees to observe
the relevant laws and regulations. Complying with the rules at all times and monitoring the way employees handle
risks are among the basic duties of all managers and supervisors throughout Bayer Group. Binding guidelines,
instructions and manuals are distributed throughout the enterprise to help ensure that Bayer Group’s employees
act consistently and safely.
     In addition to the risks described above, further risks could exist for its business that Bayer Group currently
is unaware of or regards as negligible.

Legal Proceedings
      Bayer is involved in a number of legal proceedings. As a global company active in a wide range of life
sciences and chemical activities, we may in the normal course of our business become involved in proceedings
relating to such matters as:
     )   product liability;
     )   patent validity and infringement disputes;
     )   tax assessments;
     )   competition and antitrust; and
     )   past waste disposal practices and release of chemicals into the environment.
      We cannot predict with certainty the outcome of any proceedings in which we are or may become involved.
An adverse decision in a lawsuit seeking damages from us, or our decision to settle certain cases, could result in a
monetary award to the plaintiff and, to the extent not covered by our insurance policies, could significantly harm
our business or the result of our operations, financial positions or cash flows. If we lose a case in which we seek
to enforce our patent rights, we could sustain a loss of future revenue as other manufacturers begin to market
products we developed. The following discussion describes what we believe to be the most significant of the
proceedings in which Bayer AG or its subsidiaries are currently involved. The list of cases is not an exhaustive
list of all of the claims that have been made against Bayer AG or its subsidiaries or of the proceedings in which
they are involved, and subsequent developments in any pending matter, as well as additional claims that may arise
from time to time, including additional claims similar to those described below, could become significant to
Bayer.

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     Patent validity challenges and infringement proceedings; patent-related antitrust actions
    In the United States, Bayer AG and its U.S. subsidiaries are and have been plaintiffs or coplaintiffs in a
number of patent infringement actions against generic drug manufacturers. The lawsuits arose because these
manufacturers filed applications in the United States for regulatory approval of generic versions of products
marketed by Bayer or its licensees. Some of these actions have, in turn, given rise to lawsuits alleging that Bayer
AG, Bayer Corporation and other parties violated federal and state antitrust and similar statutes.
     Generic drug manufacturers may receive approval to market formerly patented products after all applicable
patent protections have expired. A generic drug manufacturer may, however, attempt to avoid a patent prior to its
scheduled expiry by attacking its validity or enforceability. In the United States, the Federal Food, Drug, and
Cosmetics Act (the ‘‘Act’’) enables generic manufacturers wishing to market a bio-equivalent version of another
manufacturer’s product to seek regulatory approval by filing an Abbreviated New Drug Application (ANDA). In
its ANDA the applicant must state the basis on which it seeks to avoid any applicable patents.
     One basis for seeking approval is a claim that the applicant’s product does not infringe existing patent rights
or that the patent is invalid or unenforceable. This claim is commonly known as a ‘‘paragraph IV certification’’ or
‘‘ANDA (IV).’’ Under the Act, the filing of a paragraph IV certification is deemed an infringement of patent
rights. The Act permits the holder of the patent rights to file an infringement action against the ANDA applicant
within 45 days of receiving notice of the paragraph IV certification. If the holder of the patent rights chooses not
to file suit within this period, the FDA may approve the ANDA immediately. The filing of a suit, however, stays
final FDA approval of the ANDA for a period of 30 months. The court may shorten or extend this period. If the
court rules that the applicant’s product will not infringe the patent or that the patent is invalid or unenforceable,
the FDA may grant approval immediately. If, on the other hand, the court rules that the product will infringe the
patent, the FDA may not grant final approval until the original patent has expired.

     Ciprofloxacin-related actions
      Patent-related actions. In January 1997, Bayer AG and Bayer Corporation settled a patent infringement
suit against Barr Laboratories, Inc. This suit arose when Barr filed an ANDA (IV) seeking regulatory approval of
a generic form of Bayer’s ciprofloxacin anti-infective product, which we sell in the United States under the
trademark Cipro. Under the settlement agreement, Barr and Rugby Laboratories Inc., another generic
manufacturer that supported Barr during the infringement suit, agreed to dismiss the litigation, acknowledging the
validity and enforceability of Bayer’s patent rights, and we agreed to pay each company $24.5 million. The
agreement gave us the option, until our patent expired in 2003, to supply Barr and Rugby’s then parent company
Hoechst Marion Roussel Inc. with ciprofloxacin products, which they could then market under a license from
Bayer using a single trade name, or else to make quarterly cash payments. Since concluding the settlement
agreement, we have opted to make payments. As of June 9, 2003, Barr began selling ciprofloxacin hydrochloride
tablets in the United States using licensed product purchased from Bayer. Shortly after settling this suit, we
applied to the U.S. Patent and Trademark Office for a re-examination of our patent. The Patent and Trademark
Office reissued the patent in February 1999. See below, — Antitrust actions.
      Antitrust actions. Since July 2000 Bayer Corporation has been named as a defendant in 39 putative class
action lawsuits, one individual lawsuit and one consumer protection group lawsuit filed in a number of state and
federal courts in the United States. Bayer AG has also been named as a defendant in 20 of those cases, including
the individual lawsuit and the consumer protection group lawsuit; however, to date it has only been served with
process in the individual lawsuit and twelve of the putative class action lawsuits. In addition, Barr Laboratories,
Aventis S.A., Hoechst Marion Roussel, Inc., Rugby Laboratories, Inc., and Watson Pharmaceuticals, Inc. have
each been named as a defendant in one or more of these lawsuits. The plaintiffs in these suits allege that they are
direct or indirect purchasers of Cipro who were damaged because Bayer’s settlement of the Barr ANDA (IV)
litigation prevented generic manufacturers from selling a generic version of Cipro. The plaintiffs allege that the
settlement violates various federal antitrust and state business, antitrust, unfair trade practices, and consumer
protection statutes, and seek treble damages and injunctive relief.
     The Judicial Panel for Multidistrict Litigation (or MDL Panel) transferred 35 of these cases to the U.S.
District Court for the Eastern District of New York for coordinated pre-trial proceedings. The district court later
remanded nine of those cases to various state courts.
     On January 25, 2002, Bayer filed a motion to dismiss all of the cases pending in the District Court for the
Eastern District of New York, and the plaintiffs filed motions for partial summary judgment that the conduct
alleged in the complaints constitutes an agreement that is unlawful on its face. On May 20, 2003, the district court
denied the plaintiffs’ motions for partial summary judgment, concluding that the alleged conduct was not per se

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anticompetitive under U.S. antitrust laws. The district court also denied Bayer’s motion to dismiss, except as to
the consumer protection group lawsuit.
     Nine cases have been consolidated and are currently pending in a California state court. The consolidated
case is scheduled for trial in January 2005. The California state court certified a class of certain indirect
purchasers on December 1, 2003 and the defendants appealed that decision on January 9, 2004. On July 21, 2004,
the California appellate court granted in part and denied in part the appeal, excluding certain purchasers but
otherwise leaving the certification in place. No other court has certified a class. Bayer is also involved in state
court proceedings in Florida, New York, Kansas, Tennessee and Wisconsin. The New York and Wisconsin cases
have been dismissed and plaintiffs have appealed the dismissal in Wisconsin. The Kansas court has denied the
motion to dismiss.
   The Barr settlement is also the subject of an ongoing antitrust investigation by the U.S. Federal Trade
Commission and a number of state attorneys general.
      Because these cases, which may involve joint and several liability among the defendants, in the aggregate
allege substantial unquantified damages and also seek treble and punitive damages and penalties, it is possible
that the ultimate liability for us could materially adversely affect our results of operations, financial position or
cash flows. Although we cannot predict the outcome of these cases with certainty, we believe that we have
meritorious defenses to the antitrust allegations and intend to defend them vigorously. Additionally, due to the
considerable uncertainty associated with these proceedings, it is currently not possible to accurately estimate
potential liability. Depending on the progress of the litigation, we will continue to reconsider the need to establish
provisions, which may have a negative effect on our results of operations, financial positions or cash flows.

     Moxifloxacin-related actions
      In February 2004, Bayer AG and Bayer Corporation received separate ANDA (IV)s from the generic
manufacturers Dr. Reddy’s Laboratories, Ltd., Dr. Reddy’s Laboratories, Inc. and Ranbaxy Laboratories Limited
stating that they had filed ANDAs seeking regulatory marketing approval for allegedly bioequivalent versions of
our respiratory tract anti-infective brand name product, Avelox. Both Reddy’s and Ranbaxy sought the approval
prior to the expiry of at least one Bayer patent that, among other things, protects the active ingredient of Avelox,
moxifloxacin. Bayer filed suit against Dr. Reddy’s Laboratories, Ltd. and Dr. Reddy’s Laboratories Inc. in the
United States District Court in Delaware alleging infringement of two U.S. patents which cover the active
ingredient, moxifloxacin. Dr. Reddy’s answered and counterclaimed, alleging that the patents are invalid, not
infringed and unenforceable. We believe that we have meritorious claims and defenses in this action and intend to
pursue them vigorously. By the timely filing of suit against Dr. Reddy’s the regulatory approval proceedings will
be delayed as provided under applicable laws. Bayer did not file an action against Ranbaxy Laboratories Limited
at this time.

     Vardenafil-related actions
      On October 22, 2002 a lawsuit (Declaratory Judgment of Infringement of Pfizer’s U.S. Patent
No. 6,469,012) was filed by Pfizer alleging that Bayer and GlaxoSmithKline Inc. had and were engaging in
activities directed toward infringement of Pfizer’s patent, including seeking FDA approval to market their
co-promoted product, Levitra˛. FDA approved Levitra˛for marketing in the U.S. on August 19, 2003. Bayer and
SmithKline Beecham Corporation launched the product in the U.S. shortly thereafter. On September 22, 2003,
Bayer AG, Bayer Corporation and SmithKline Beecham Corporation were sued by Pfizer Inc. and certain of its
affiliates in the U.S. District Court for the District of Delaware in conjunction with Pfizer’s earlier patent
infringement lawsuit against the same Bayer companies and two different GlaxoSmithKline companies. In this
action Pfizer alleged that Bayer and GlaxoSmithKline were infringing the patent by, inter alia, marketing their
co-promoted product, Levitra˛, for the treatment of erectile dysfunction. In both, now consolidated, lawsuits, we
and GlaxoSmithKline/SmithKline Beecham denied the allegations raised by Pfizer and filed a counterclaim that
Pfizer’s patent is invalid. We believe that we have meritorious defenses in these actions and intend to defend them
vigorously. In September 2003, the U.S. Patent and Trademark Office initiated a re-examination of the Pfizer
patent based on questions of patentability in light of prior art. Bayer also filed a request for re-examination of the
Pfizer patent with the U.S. Patent and Trademark Office, and as a procedural matter, the request for re-
examination has been granted. The litigation has been stayed pending resolution of the PTO-initiated re-
examination.
     In some other countries further proceedings are pending, in part infringement actions initiated by Pfizer, in
part patent nullity proceedings initiated by Bayer. In October 2001, the equivalent European Patent held by Pfizer

                                                         105
was revoked by the European Patent Office. Pfizer has appealed against the decision of the European Patent
Office. The proceeding is pending. We do not expect a final decision before the end of 2004.

     Aventis Behring actions
      Patent Litigation. On April 11, 2003, affiliates of Aventis, A. Nattermann & Cie GmbH and Aventis
Behring L.L.C., filed a lawsuit against Bayer Corporation and Bayer HealthCare LLC in the U.S. District Court
for the Eastern District of Pennsylvania. The plaintiffs allege that Bayer’s manufacture and distribution of
Kogenate˛, a recombinant factor VIII product for the treatment of hemophilia, constitutes an infringement of
U.S. Patent No. 5,565,427 held by Nattermann and licensed to Aventis Behring. In response, Bayer denied the
allegation that manufacturing and the distribution of Kogenate˛ is covered by any valid and enforceable patent of
Aventis or its affiliates, and averred that Bayer’s contract with Aventis Behring for the supply of a recombinant
factor VIII product known as Helixate˛ to Aventis Behring provides Bayer with any necessary license, if Aventis
or its affiliates hold a valid patent.
     On December 22, 2003, the USPTO granted the patent owner’s request for a reexamination of the ‘‘427
patent. On March 30, 2004, the federal district court in Pennsylvania ordered a partial stay of the proceedings
pending the completion of the reexamination. The Court has allowed Bayer to continue with limited discovery
which is now ongoing. We believe we have meritorious defenses in this patent infringement action and intend to
defend it vigorously.
     Contract Litigation. On December 4, 2003, Aventis Behring LLC filed a suit against Bayer Corporation
and Bayer HealthCare LLC in the Court of Common Pleas of Montgomery County, Pennsylvania, USA alleging
that Aventis Behring has been damaged as a result of Bayer’s breach of a contract to supply Aventis Behring with
agreed-upon quantities of Helixate˛. We believe we have meritorious defenses to this contract claim and intend to
defend it vigorously.

     ADVIA Centaur˛-related actions
     Patent-related action. In February 2003, Bayer HealthCare LLC sued Abbott Laboratories in the U.S.
District Court for the District of Delaware alleging that Abbott’s Architect˛ immunoassay analyzer infringes four
Bayer U.S. patents. These Bayer patents cover various apparatus and methods for storing, transporting, and
mixing reagents used in medical diagnostics equipment, and protect Bayer’s ACS:180˛ SE Automated
Chemiluminescence System. A jury trial to resolve the issues remaining in this case is scheduled for early 2005.
     On September 10, 2004, Abbott filed suit in the U.S. District Court for the District of Delaware against
Bayer HealthCare LLC and Bayer Corporation alleging that Bayer is infringing three U.S. patents relating to
scheduling protocols used in automated analytical instrument systems. Abbott alleges that Bayer uses such
protocols in its products, including by the operation of Bayer’s ADVIA Centaur˛ Immunoassay System. Bayer is
investigating these charges.

     Product liability proceedings
     HIV/HCV-related actions. During the past decade, Bayer Corporation, as well as other fractionators of
plasma products, have been involved in lawsuits alleging that hemophiliacs became infected with the human
immunodeficiency virus (HIV), or ultimately developed AIDS, by using clotting factor concentrates derived from
human plasma. Plaintiffs have brought actions on these grounds in the United States, Ireland, Italy, Taiwan,
Argentina, Canada, Japan and Germany. All of the actions brought on these grounds in the United States have
been resolved. Other actions brought on these grounds outside the United States are still pending.
     In June 2003 a U.S. law firm filed a putative class action against Bayer Corporation and other manufacturers
on behalf of non-U.S. residents claiming compensation for HIV/HCV (hepatitis C virus) infections allegedly
acquired through blood plasma products manufactured in the U.S. In September 2003, plaintiffs amended the
complaint to include class action allegations on behalf of U.S. residents claiming compensation for HCV,
infections. The case has been transferred from the Northern District of California to the U.S. District Court for
the Northern District of Illinois for coordinated discovery and other pre-trial proceedings. In addition to the June
2003 matter, non-U.S. residents have filed and served nine additional cases claiming compensation for HIV/HCV
infections allegedly acquired through blood plasma products manufactured in the U.S. All of these matters have
been transferred to the Northern District of Illinois. These matters are at an early stage.
     We believe that we have meritorious defenses to the HIV/HCV and remaining HIV-related actions and
intend to defend them vigorously. Due to the considerable uncertainty associated with these proceedings, it is
currently not possible to estimate potential liability.

                                                        106
      Cerivastatin-related actions. In August 2001, Bayer voluntarily ceased marketing Baycol, the cerivastatin
anticholesterol product, in response to reports of serious side effects in some patients. As of September 20, 2004,
7,499 lawsuits are pending in the U.S. in both federal and state courts, including putative class actions. The
actions in the United States have been based primarily on theories of product liability, consumer fraud, medical
monitoring, predatory pricing and unjust enrichment. These lawsuits seek remedies including compensatory and
punitive damages, disgorgement of funds received from the marketing and sale of cerivastatin and the
establishment of a trust fund to finance the medical monitoring of former cerivastatin users. The federal cases
were transferred to the U.S. District Court for the District of Minnesota for coordinated discovery and other pre-
trial proceedings. A motion for certification of nationwide personal injury, medical monitoring and economic
refund classes was denied by this court on September 17, 2003. Similarly, on December 15, 2003, the Circuit
Court of Cook County, Illinois denied a motion to certify a class action. On June 16, 2002, the Oklahoma District
Court of Pottawatomie County certified a class of all Oklahoma residents who took cerivastatin and sustained
muscular/skeletal injuries as a result. Bayer appealed this ruling to the Oklahoma Court of Appeals, which
affirmed the lower court’s class certification ruling on June 20, 2003. On November 3, 2003, the Oklahoma
Supreme Court denied Bayer’s motion for a writ of certiorari. On March 19, 2004, the Philadelphia County Court
of Common Pleas in Pennsylvania certified a medical monitoring class of persons in Pennsylvania who took
cerivastatin and have not been diagnosed with the diseases specified in the certification order. The appellate court
denied our request for leave to appeal this ruling and the case will proceed as a class. The certification of a class
is unrelated to a determination of our liability.
      As of September 20, 2004, 78 actions are pending against other companies of the Bayer Group in other
countries, including class actions in Canada. In August 2003, the Supreme Court of British Columbia certified a
class of all persons resident in British Columbia who ingested cerivastatin. Bayer appealed this ruling and a
settlement agreement has been signed in this matter. Subject to court approval, the settlement agreement provides
for a decertification of the class proceeding for all persons included in the original class who did not suffer from
rhabdomyolysis. In January 2004, Bayer signed settlement agreements with lawyers representing plaintiffs in
Baycol litigation pending in the remaining provinces of Canada. These agreements together establish a procedure
to settle claims of rhabdomyolysis for all Canadian residents. To facilitate an efficient implementation of the
agreement, the parties have agreed to a settlement class which is subject to approval by the courts. Bayer expects
additional lawsuits to be filed in the United States and elsewhere. Three U.S. cases have been tried to date, all of
which resulted in a verdict in our favor.
      In negotiations with the insurance companies concerning the cerivastatin litigation, an agreement was
reached with the majority of the insurers. The insurers had previously proceeded only on a provisional basis
under a customary reservation of rights. The insurers that are parties to this agreement have now withdrawn the
reservations of rights. Thus, Bayer expects the insurance coverage for cerivastatin to be approximately
$1.2 billion. Based on the agreement reached with the insurers and in consideration of further expected
settlements and further defense costs, the Company has taken accounting measures, which resulted in a charge to
income of 4300 million for the fiscal year 2003.
     Due to the considerable uncertainty associated with these proceedings, it is currently not possible to estimate
the potential liability and thus no provisions exceeding the expected insurance coverage and the above referenced
accounting measures already taken have been made. Depending on the progress of the litigation, Bayer may face
payments that exceed our expected insurance coverage and the above referenced accounting measures and will
continue to reconsider the need to establish additional provisions, which may have a negative effect on the results
of our operations, financial positions or cash flows. Without acknowledging any liability, we have settled 2,861
cases worldwide as of September 20, 2004, resulting in settlement payments of approximately $1.094 billion.
      Bayer will continue to offer fair compensation to people who experienced serious side effects while taking
cerivastatin on a voluntary basis and without concession of liability. In cases where an examination of the facts
indicates that cerivastatin played no part in the patient’s medical situation, or where a settlement is not achieved,
Bayer will continue to defend itself vigorously. Bayer believes it has meritorious defenses in these actions. In
some countries, criminal proceedings have been initiated by the relevant authorities. In the United States, Bayer
co-promoted this product with SmithKline Beecham Corporation. SmithKline Beecham Corporation and Bayer
Corporation have signed an allocation agreement under which SmithKline Beecham has agreed to pay 5 percent
of all settlements and compensatory damage judgments arising out of actions based on the sale or distribution of
cerivastatin in the United States, with each party responsible for paying its own attorneys’ fees.
     In January 2004, Bayer Corporation received a subpoena for documents principally relating to cerivastatin
from the Defense Criminal Investigative Service of the U.S. Department of Defense Inspector General. Prior to
the withdrawal, Bayer had a contract with the Department to provide it with a supply of cerivastatin. Preliminary

                                                        107
conversations with the Justice Department indicate that this is a joint Department of Defense/Food and Drug
Administration investigation relating to cerivastatin. Bayer is not aware of any charges or complaints filed in
connection with this inquiry. Bayer believes it has acted responsibly and fulfilled its responsibilities to the U.S.
government, and will work cooperatively to provide the information requested. Since April 2004, Bayer has
received civil investigative demands from 24 states seeking documents regarding the marketing of Baycol. These
investigations are being conducted pursuant to consumer protection laws. Bayer is not aware of any complaints
filed in connection with these investigations. Bayer believes it has acted responsibly in the marketing of Baycol
and will work cooperatively to provide the information requested.
     Phenylpropanolamine (PPA) actions. In late 2000, Bayer voluntarily discontinued marketing over-the
counter cough and cold remedies containing PPA in the United States in response to a recommendation from the
FDA that manufacturers voluntarily discontinue marketing products containing PPA. Bayer also voluntarily
discontinued marketing products containing PPA in Canada and in various Latin American countries in late 2000
and in Spain in 2001. The FDA issued this recommendation after one epidemiological study of a small number of
patients suggested a possible association between PPA and hemorrhagic stroke in women of certain ages. As of
September 23, 2004, approximately 1,150 lawsuits are pending in the United States against Bayer Corporation.
Of these, approximately 700 cases name Bayer as the only manufacturing defendant. In the remaining 450 cases,
one or more other manufacturers are also defendants. As of September 23, 2004, Bayer AG has been named as a
defendant in 37 of these individual cases; however, plaintiffs have agreed not to actively pursue their claims
against Bayer AG at this time. The MDL Panel has assigned management of the federal court cases to the U.S.
District Court for the Western District of Washington. Additionally, two purported class action suits against
Bayer Corporation are currently pending in Pennsylvania and New Jersey. There has been little activity in these
two cases since they were filed in 2001. Class certification was denied in a total of twelve cases. A class
certification was denied in an economic injury case brought in California. Plaintiffs appealed but later voluntarily
dismissed their appeal. In another economic injury class action case, which was part of the multi-district litigation
proceeding, class certification was denied and that decision affirmed on appeal. On October 13, 2004, in a state
court trial in Texas, the jury found a design defect and awarded plaintiff compensatory damages in the amount of
$400,000. The jury rejected plaintiff’s claim for punitive damages. Bayer is considering its options, including the
opportunity for appeal.
     The PPA claims primarily relate to compensation for alleged damage to health and personal injury, breach of
warranty, negligent and reckless misrepresentation, entitlement to subsequent monitoring and reimbursement of
the purchase price, and conspiracy to defraud and fraudulently conceal. Claims for punitive damages have also
been filed. It is probable that additional actions will be initiated in the United States or in other jurisdictions
where products containing PPA were marketed. Bayer believes it has meritorious defenses to these actions and
intends to defend them vigorously. Bayer will, at times, consider the option of settling litigation on a case-by-case
basis and, without acknowledging any liability, has recently settled a number of cases.
     Due to the considerable uncertainty associated with these proceedings, it is currently not possible to estimate
potential liability and thus no provisions for such potential liabilities have yet been made. Depending on the
progress of the litigation, Bayer may face payments that exceed our insurance coverage and will continue to
reconsider the need to establish provisions, which may have a negative effect on the results of our operations,
financial positions or cash flows.
     Thimerosal actions. As of September 15, 2004, Bayer Corporation is a defendant in 19 lawsuits filed in
various state and U.S. federal courts by or on behalf of persons alleging injuries from use of Bayer products
containing Thimerosal or phenylmercuric acetate, specifically immunoglobulin injectable products and over-the-
counter nasal sprays. Many of these cases involve multiple unrelated plaintiffs.
     Numerous manufacturers used mercury-containing compounds as preservative agents in vaccines and other
medical and over-the-counter products. Plaintiffs allege that use of products containing these compounds has
caused autism, neurodevelopmental disorders and other injuries. They are requesting various remedies for the
alleged resulting injuries including compensatory, punitive and statutory damages and funding for medical
monitoring and research. Additional cases may be filed in the future against Bayer and other companies that sold
products using mercury-containing compounds. The cases against Bayer are at an early stage, and Bayer is
contesting them on both procedural and substantive grounds. Bayer believes it has meritorious defenses in these
actions and intends to defend them vigorously. Due to the considerable uncertainty associated with these
proceedings, it is currently not possible to estimate potential liability.




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     Everest litigation
     The purchaser of Bayer CropScience’s global Everest herbicide business, Arvesta, has filed a lawsuit in
California demanding rescission of the asset purchase agreement in connection with the purchase of Everest and
return of the purchase price or, alternatively, monetary damages. Arvesta alleges that Bayer CropScience
withheld material information concerning the value of certain claims resulting from Everest use in Idaho and that
Bayer CropScience misled Arvesta about the amount of Everest that had been used in Canada in 2002 and
perhaps other years. Bayer CropScience has filed its answer and discovery is proceeding.

     Imidacloprid actions
     The French registration on Maize of the Bayer CropScience product containing imidacloprid, Gaucho», has
been suspended by the French Ministry of Agriculture in May 2004, until finalization of the review of the active
ingredient by the European Commission which is expected in 2007. Bayer CropScience has appealed this
decision to the Conseil d’Etat.
      In the U.S. owners of honeybees and honeybee hives have filed a purported class action against Bayer in
federal court in Pennsylvania alleging that imidacloprid caused damage to their honeybees, to the honey, the wax
and the beekeeping equipment. This proceeding is at a preliminary stage. The court has not decided whether to
certify a class. It is not possible to estimate accurately potential liability in these cases. Bayer believes it has
meritorious defenses and intends to vigorously defend this action.

     Fipronil action
     Pending before a state court in Louisiana is a case brought against Bayer CropScience LP on behalf of
crawfish processors and buyers seeking to recover lost profits and other damages allegedly arising from their
inability to purchase crawfish for processing and resale. The case follows the 2004 settlement of litigation with
crawfish growers who had alleged damage to their crawfish crops and harvesting ponds following use of a Bayer
CropScience product containing Fipronil. The case is at a preliminary stage. Bayer believes it has meritorious
defenses and intends to vigorously defend this action.

     BASF Fipronil claim
     BASF has notified Bayer CropScience AG of a claim, which is based on the allegation that Bayer
CropScience AG in connection with the sale of its Fipronil business to BASF willfully misled BASF by not
disclosing updated business developments with respect to Fipronil in Brazil and Korea in the third quarter of 2002
and not disclosing updated business expectations for 2003 and the following years. Discussions between the
parties are ongoing. Bayer believes it has meritorious defenses in this action and intends to defend them
vigorously. Due to the considerable uncertainty associated with these proceedings, it is currently not possible to
estimate potential liability.

     Limagrain indemnity claim
     Bayer CropScience Inc. was recently served with a Notice of Arbitration by Limagrain Genetics
Corporation, Inc. Limagrain is seeking indemnification from Bayer CropScience for liability that Limagrain has
potentially incurred to a third party, Midwest Oilseeds, Inc. arising from an alleged breach of a 1986 agreement
involving Midwest Oilseeds. Midwest Oilseeds was awarded a jury verdict against Limagrain for approximately
$40 million plus interest and costs. Limagrain’s appeal of this decision is still pending.
                                                                                             o
     Limagrain seeks indemnification from Bayer CropScience, successor-in-interest to Rhˆ ne-Poulenc Inc., for
approximately $60 million resulting from the Midwest Oilseeds judgment, together with costs and damages
associated with that lawsuit. Limagrain also has sued Bayer CropScience S.A. in France, as successor-in-interest
     o
to Rhˆ ne-Poulenc Agro S.A., with respect to a separate agreement relating to the transaction by which Limagrain
                                o
acquired certain assets from Rhˆ ne-Poulenc. Allegedly included in that transaction were the contract obligations
claimed owing to Midwest Oilseeds.

     Average wholesale price manipulation proceedings
      Nineteen pending lawsuits allege that a number of pharmaceutical companies, including Bayer Corporation,
manipulated the average wholesale price (‘‘AWP’’) and/or Medicaid best price of their products. The suits allege
that this manipulation resulted in overcharges to Medicare beneficiaries, Medicaid recipients, state governmental
health programs, and private health plans. These suits generally seek damages, treble damages, disgorgement of
profits, restitution and attorney’s fees. Eleven of the nineteen actions are private class actions alleging injury to

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patients or payors. The remaining eight are brought by government entities — four states (Nevada, Montana,
Pennsylvania, and Wisconsin) and four local units of New York government.
     Fifteen of the suits are pending in federal court and four are pending in state court. All of the suits in federal
court have been transferred to the U.S. District Court for the District of Massachusetts for coordinated pretrial
proceedings. Two of the suits name Bayer AG together with Bayer Corporation as defendants.
     In June 2003, plaintiffs filed an Amended Master Consolidated Complaint governing most of the private
party class actions pending against Bayer. Bayer, along with other defendants, moved to dismiss that complaint.
On February 24, 2004, the court granted the defendants’ motion in part and denied it in part, dismissing the first
count of the ten-count complaint. Discovery is proceeding.
    Bayer believes prior settlements between Bayer and certain States may preclude recovery by those States in
pending cases that relate to similar claims.
     Due to the considerable uncertainty associated with these proceedings, it is not possible to accurately
estimate potential liability. Depending on the progress of the proceedings, we will continue to reconsider the need
to establish provisions, which may have a negative effect on the results of our operations, financial positions and
cash flows.

     Rubber-related actions
      Bayer AG and certain of its subsidiaries are the subjects of criminal and civil investigations being conducted
by the Antitrust Division of the U.S. Department of Justice (‘‘DOJ’’), the Directorate General for Competition of
the European Commission (‘‘EC’’), and the Canadian Competition Bureau (‘‘CCB’’) (collectively, the
‘‘Competition Authorities’’). The Competition Authorities are investigating potential violations of their respective
antitrust or competition laws involving certain of Bayer’s rubber-related lines of business.
      Since September 2002, the DOJ has undertaken criminal grand jury investigations of potential antitrust
violations involving Bayer’s rubber chemicals, ethylene propylene diene monomer (‘‘EPDM’’) synthetic rubber,
and acrylonitrile butadiene rubber (‘‘NBR’’) synthetic rubber lines of business. On July 14, 2004, Bayer AG
announced that it had reached agreement with the DOJ to settle charges related to allegations that its rubber
chemicals business unit engaged in anti-competitive activities between 1995 and 2001. Under the terms of the
agreement, Bayer agreed to plead guilty and to pay a fine of $66 million. The company established a provision for
this payment in the second quarter of 2004. The agreement, which is subject to court approval, is expected to
resolve all criminal charges against Bayer in the U.S. for activities related to its rubber chemicals business. On
October 14, 2004, Bayer AG confirmed that it has reached agreement with the U.S. Department of Justice to
settle charges related to allegations that it engaged in anti-competitive activities from May 2002 through
December 2002 involving acrylonitrile-butadiene rubber. Under the terms of the agreement, Bayer agreed to
plead guilty and to pay a fine of $4.7 million. The company will set up a respective provision for the third quarter
of 2004. Bayer has cooperated with the Department during the investigation. The agreement, if approved by the
court, resolves all criminal charges against Bayer in the U.S. for activities related to its acrylonitrile-butadiene
rubber business. Acrylonitrile-butadiene rubber is used to manufacture, among other things, hoses, belting, cable,
o-rings, seals, adhesives and sealants. The EC is conducting civil investigations of potential violations of
European competition laws involving Bayer’s rubber chemicals, EPDM and NBR lines of business. The CCB is
conducting criminal investigations of potential violations of Canadian competition laws involving Bayer’s rubber
chemicals, EPDM and NBR lines of business.
     Bayer and certain of its subsidiaries have been named, among others, as defendants in multiple putative class
action lawsuits in various state courts in the U.S. and as defendants in lawsuits pending before various federal
courts in the U.S., involving rubber-related products including rubber chemicals, EPDM, NBR and
polychloroprene rubber. In each state court action, the plaintiffs have alleged violations based on the defendants’
alleged participation in a conspiracy to fix prices. The state court plaintiffs seek damages as indirect purchasers of
the allegedly affected products. In the federal court actions the plaintiffs allege the defendants’ participation in a
conspiracy to fix the prices and/or to allocate markets and customers for the sale of the allegedly affected
products and seek damages as direct purchasers of those products. These proceedings are at various preliminary
stages.
      Because these cases, which may involve joint and several liability among the defendants, in the aggregate
allege substantial, unquantified damages and also seek treble and punitive damages and penalties, it is possible
that the ultimate liability could be materially adverse to our results of operations, financial positions or cash flows
in one or more periods. Additionally, due to the considerable uncertainty associated with these proceedings, it is
currently not possible to accurately estimate potential liability. Depending on the progress of the litigation, we

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will continue to reconsider the need to establish or adjust provisions, which may have a negative effect on the
results of our operations, financial positions and cash flows.

     Polyester polyols investigation/Urethane actions
      Bayer’s US subsidiary, Bayer Corporation, was the subject of a criminal antitrust investigation by the
Antitrust Division of the U.S. Department of Justice. On September 30, 2004, Bayer Corporation announced that
it had reached agreement with the Department of Justice to settle charges related to the allegations that Bayer
Corporation engaged in anti-competitive activities from February 1998 through December 2002 involving adipic-
based polyester polyols. Under the terms of the agreement, Bayer Corporation agreed to plead guilty and to pay a
fine of $33 million. The company will set up a respective provision in the third quarter of 2004. The agreement,
which is subject to court approval, is expected to resolve all criminal charges against Bayer for activities related
to its adipic-based polyester polyols business. Adipic-based polyester polyols are a distinct type of a polyol raw
material supplied to customers who produce polyurethanes. Adipic-based polyester polyols are not urethanes.
Bayer and certain of its subsidiaries have been named, among others, as defendants in multiple putative class
action lawsuits in multiple state courts in the United States and as defendants in lawsuits pending before various
federal courts in the United States, involving allegations of price fixing involving urethane and urethane
chemicals products. These matters are at an early stage. It is not possible to estimate potential liability in these
matters.

     Securities litigation
     Bayer AG, along with certain of its current and former officers and members of the Bayer AG Board of
Management, and Bayer Corporation have been named as defendants in a purported class action lawsuit pending
in the U.S. District Court for the Southern District of New York. The class action alleges violations of the U.S.
securities laws and asserts that the defendants made false and misleading statements and omissions with respect
to the commercial prospects, safety and efficacy of our cerivastatin anticholesterol products and with respect to
the extent of the potential product liability exposure following our voluntary decision to cease marketing and to
withdraw these products in August 2001. The case seeks damages on behalf of class members who allegedly
purchased Bayer securities at inflated prices. The case results from court consolidation on June 27, 2003 of seven
purported class action lawsuits that had been filed on related grounds. In consolidating the seven cases, the court
appointed a lead plaintiff and lead plaintiff’s counsel. On October 31, 2003, the lead plaintiff filed a consolidated
amended complaint seeking unspecified damages on behalf of a class of all persons who purchased Bayer AG
stock (including Bayer AG American Depository Receipts) between March 6, 1998 and February 21, 2003.
Defendants filed a motion to dismiss the consolidated amended complaint on January 15, 2004. On
September 30, 2004, the Court granted defendants’ motion (with leave to replead) as to claims asserted on behalf
of non-U.S. purchasers of Bayer AG stock on non-U.S. exchanges, claims involving statements made prior to
August 2, 2000, and claims asserted against two of the four individual defendants. The Court denied the
remainder of the motion. Bayer AG, as with the other defendants, denies liability, believes that it has meritorious
defenses to this action and intends to defend itself vigorously. Due to the considerable uncertainty associated with
these proceedings, it is currently not possible to estimate potential liability.

     Asbestos litigation
     We are currently involved in asbestos litigation in the United States, primarily as a premises defendant,
predominantly in the states in which Bayer has industrial sites. The overwhelming majority of cases involving
Bayer have been filed in West Virginia and Texas and involve allegations of exposure at Bayer’s sites. There are
also some asbestos cases pending against Bayer in Indiana and California. Texas law and West Virginia law
permit consolidated asbestos actions in which multiple plaintiffs can sue multiple defendants for asbestos-related
conditions without specifying which plaintiff has a claim against which defendant. While Bayer may be named as
a defendant, each plaintiff does not have to assert a claim against Bayer.
     The allegations as to Bayer and numerous other premises defendants are that Bayer employed many
contractors on our industrial sites, yet failed to warn them or protect them from the known hazards of asbestos
exposures throughout the 1960s, 1970s and 1980s. Since premises owners now form a new group of targeted
corporate defendants in these litigations, these types of actions may have an adverse impact on our results of
operations, financial positions or cash flows.
     One of our U.S. subsidiaries, Bayer CropScience, Inc., is the legal successor to entities that sold asbestos-
containing products from the 1940’s until 1976 and is named as a defendant in asbestos-related litigation. Bayer
CropScience is and has been fully indemnified for its costs and exposure in relation to this litigation by Union

                                                        111
Carbide. Union Carbide continues to accept Bayer CropScience’s tender of these cases, and it defends and settles
them in Bayer CropScience’s name, in its own name and in the name of the several predecessor companies to
Bayer CropScience.
     We believe that we have meritorious defenses in these actions and are defending them vigorously. Without
acknowledging any liability, we have settled a number of these cases in the past. We may, on a case-by-case
basis, settle additional cases for reasonable amounts when, in our judgment, settlement is economically feasible
given the risks and costs inherent in the litigation. We have made what we believe to be appropriate provisions
should these suits result in judgments in favor of the plaintiffs.

Outlook
      Looking at the first half of the year 2004, operating performance of Bayer Group was gratifying. EBIT
before special items improved by 14.5 percent compared with the same period in 2003 to 41,487 million. Risks
for the second half result above all from the costs of petrochemical raw materials, which have recently increased
sharply and can only be passed on to some extent in Bayer’s selling prices. Nonetheless, Bayer forecasts second-
half EBIT before special items significantly above the level posted in the same period of last period. Bayer
reaffirms its expectation of growing full-year EBITDA by more than 10 percent.




                                                      112
                                     Bayer Group Consolidated Statements of Income
                                                                                     Dec. 31, 2003*   Dec. 31, 2002*
                                                                                       (5 million)      (5 million)
Net sales **********************************************************                    28,567           29,624
Net sales from discontinuing operations *********************************               (6,389)          (7,586)
Cost of goods sold **************************************************                  (16,802)         (17,715)
Gross profit *******************************************************                     11,765           11,909
Selling expenses ****************************************************                   (6,460)          (6,959)
Research and development expenses ************************************                  (2,404)          (2,588)
General administration expenses ***************************************                 (1,672)          (1,480)
Other operating income **********************************************                    1,158            2,706
Other operating expenses *********************************************                  (3,506)          (2,070)
Operating result (EBIT) ********************************************                    (1,119)           1,518
Operating result from discontinuing operations ***************************              (1,639)             737
Income from investments in affiliated companies — net********************                   (93)             223
Interest expense — net***********************************************                     (437)            (357)
Other non-operating expenses — net ***********************************                    (345)            (428)
Non-operating result************************************************                      (875)            (562)
Income before income taxes *****************************************                    (1,994)             956
Income taxes *******************************************************                       645              107
Income after taxes *************************************************                    (1,349)           1,063
Minority stockholders’ interest ****************************************                   (12)              (3)
Net income********************************************************                      (1,361)           1,060
Earnings per share (5) **********************************************                    (1.86)            1.45
Diluted earnings per share (5) ***************************************                   (1.86)            1.45

* 2003 and 2002 figures reclassified




                                                         113
                              Bayer Group Consolidated Balance Sheets
                                                                              Dec. 31, 2003   Dec. 31, 2002
                                                                               (5 million)     (5 million)
Assets
Noncurrent assets
Intangible assets *****************************************************          6,514           8,879
Property, plant and equipment *****************************************          9,937          12,436
Investments *********************************************************            1,781           2,198
                                                                                18,232          23,513
Current assets
Inventories *********************************************************             5,885           6,342
Receivables and other assets
  Trade accounts receivable *******************************************          5,071           5,542
  Other receivables and other assets ************************************        3,854           4,210
                                                                                 8,925           9,752
Liquid assets********************************************************            2,863             796
                                                                                17,673          16,890
Deferred taxes******************************************************             1,298             967
Deferred charges ***************************************************               242             322
                                                                                37,445          41,692
Of which discontinuing operations **************************************         5,655           6,904
Stockholders’ Equity and Liabilities
Stockholders’ equity
Capital stock of Bayer AG ********************************************           1,870           1,870
Capital reserves of Bayer AG ******************************************          2,942           2,942
Retained earnings ****************************************************          10,479          10,076
Net income *********************************************************            (1,361)          1,060
Other comprehensive income
  Currency translation adjustment **************************************        (1,699)           (593)
  Miscellaneous items ************************************************             (18)            (20)
                                                                                12,213          15,335
Minority stockholders’ interest ***************************************            123             120
Liabilities
Long-term liabilities
  Long-term financial obligations***************************************          7,113           7,318
  Miscellaneous long-term liabilities ************************************          98              92
  Provisions for pensions and other post-employment benefits ***************      5,072           4,925
  Other long-term provisions ******************************************          1,343           1,215
                                                                                13,626          13,550
Short-term liabilities
  Short-term financial obligations **************************************         2,313           2,841
  Trade accounts payable *********************************************           2,265           2,534
  Miscellaneous short-term liabilities************************************       2,361           2,138
  Short-term provisions***********************************************           2,448           2,257
                                                                                 9,387           9,770
                                                                                23,013          23,320
Of which discontinuing operations **************************************         2,933           2,769
Deferred taxes******************************************************             1,462           2,453
Deferred income ****************************************************               634             464
                                                                                37,445          41,692




                                                 114
                   BAYER GROUP STATEMENTS FOR THE FIRST HALF 2004
                                     (Summary)

                           Consolidated Statement of Income (unaudited)
                                                                                         June 30, 2004
                                                                                           (5 million)
Net sales ***********************************************************************          14,945
of which discontinuing operations ***************************************************       3,380
Cost of goods sold****************************************************************         (8,470)
Gross profit *********************************************************************           6,475
Selling expenses******************************************************************         (3,094)
Research and development expenses *************************************************        (1,012)
General administration expenses*****************************************************         (813)
Other operating income (expenses) — net*********************************************         (212)
Operating result (EBIT) **********************************************************          1,344
of which discontinuing operations ***************************************************         117
Non-Operating result*************************************************************            (435)
Income before income taxes *******************************************************            909
Income taxes ********************************************************************            (372)
Income after taxes ***************************************************************            537
Minority stockholders’ interest ******************************************************         (9)
Net income**********************************************************************              528
Earnings per share (5) ***********************************************************           0.72


                              Consolidated Balance Sheet (unaudited)
                                                                                         June 30, 2004
                                                                                           (5 million)
Assets
Noncurrent assets****************************************************************          17,688
Inventories **********************************************************************          6,151
Receivables**********************************************************************           9,067
Liquid assets ********************************************************************          2,881
Current assets*******************************************************************          18,099
Deferred taxes ******************************************************************           1,310
Deferred charges ****************************************************************             274
                                                                                           37,371
Of which discontinuing operations ***************************************************       5,393

Stockholders’ Equity and Liabilities
Capital stock and reserves**********************************************************         4,812
Retained earnings*****************************************************************           8,753
Net income**********************************************************************               528
Other comprehensive income
  Currency translation adjustment ***************************************************      (1,514)
  Miscellaneous items*************************************************************             27
Stockholders’ equity *************************************************************         12,606
Minority stockholders’ interest ****************************************************          100
Long-term liabilities **************************************************************       13,206
Short-term liabilities **************************************************************       9,390
Liabilities***********************************************************************         22,596
Of which discontinuing operations ***************************************************       3,314
Deferred taxes ******************************************************************           1,435
Deferred income*****************************************************************              634
                                                                                           37,371




                                               115
                                   BAYER CAPITAL CORPORATION B.V.

Capitalisation of Bayer Capital Corporation B.V.
    The following presents the capitalisation and indebtedness of Bayer Capital Corporation B.V. on an
unaudited basis as of June 30, 2004:
                                                                                                        June 30, 2004
                                                                                                     (In thousands of 5)
Stockholders’ equity********************************************************                                6,965
Liabilities
Long-term liabilities********************************************************                              14,337
  Associated companies *****************************************************                               14,337
Short-term liabilities *******************************************************                             69,353
  Liabilities to banks********************************************************                             65,000
  Associated companies *****************************************************                                3,073
  Miscellaneous ************************************************************                                1,280
Total Capitalisation ********************************************************                              90,655

     There has been no material change in the capitalisation and indebtedness of Bayer Capital Corporation B.V.
since June 30, 2004.

General Information on Bayer Capital Corporation B.V.
     History, Incorporation and Location
    Bayer Capital Corp, a directly wholly owned subsidiary of Bayer AG, was incorporated on July 10, 1980,
under the laws of The Netherlands. Bayer Capital Corp’s registered office is at Energieweg 1, 3641 RT Mijdrecht
and Bayer Capital Corp is registered at the Commercial Register of the Utrecht Chamber of Commerce under
33160792. Bayer Capital Corp’s fiscal year is the calendar year.

     Business
     Bayer Capital Corp engages in several activities in the field of finance. Bayer Capital Corp serves as a
vehicle for the financing activities of Bayer Group companies including the issuance of bonds as well as
performing certain administrative functions. These activities include mostly long term financing. The corporate
object of Bayer Capital Corp (as provided for in article 2 of its articles of association) is: i. to borrow, lend and
raise money (including the issuance of bonds); ii. to participate in, manage, incorporate and finance companies
and enterprises; iii. to conduct any other activities of a financial nature; and iv. to undertake anything related to or
in furtherance of the foregoing. Bayer Capital Corp does not have any subsidiaries.
     Bayer Capital Corp is a finance company exempt under the provisions of the Exemption Regulation dated 26
June 2002 relating to the Act on the Supervision of the Credit System 1992 (Vrijstellingsregeling wet toezicht
kredietwezen 1992), as amended, from the prohibition (of operating without a banking license) laid down in
section 6 subsection 1 of such Act.

     Recent Developments
    For the first six months of the year 2004 Income before taxes was 4229 thousand (first six months 2003
4231 thousand). Income after taxes as of June 30, 2004, was 4150 thousand (first six months 2003
4151 thousand).

     Capital Stock
     The authorised capital of Bayer Capital Corp consists of 5,000 shares of Common Stock with 4453.78 par
value each, of which 1,000 shares are issued and outstanding. The issued and paid up share capital amounts to
4453,780.

     Auditors
    The financial statements of Bayer Capital Corp as of and for the year ended December 31, 2003 incorporated
by reference into the Information Memorandum have been audited by PricewaterhouseCoopers Accountants

                                                         116
N.V., Archimedeslaan 21, 3584 BA Utrecht, independent auditors of Bayer Capital Corp, who have given their
unqualified opinion.

    Management
Board of Supervisory Directors     Dr. Roland Alexander Hartwig, Director of Bayer AG, Leverkusen,
                                                   o
                                   Karl-Heinz Kleed¨ rfer, Senior Executive Corporate Finance, Bayer AG,
                                   Leverkusen,
Managing Director                  Cyprianus Hermanus Alphonsus Koersvelt, Finance Director of Bayer
                                   Benelux (Bayer B.V., Bayer s.a.-n.v. and Bayer Antwerpen N.V.)




                                                   117
                Statements of income for the years ended 31 December 2002 and 2003
                                                                               Dec 31, 2003    Dec 31, 2002
                                                                              (In thousands   (In thousands
                                                                                   of 5)           of 5)
Statement of income
Interest income
  Interest and other income*******************************************            4,420         14,250
Interest expense
  Interest and other expenses *****************************************           3,901         13,610
Gross profit *******************************************************                 519            640
  General administration expenses *************************************              88             59
Operating result ***************************************************                431            581
  Exchange rate differences*******************************************                0              0
Income before income taxes *****************************************                431            581
  Income taxes *****************************************************                146            200
Income after taxes *************************************************                285             381

                    Balance sheet per 31st December 2003 (after Profit allocation)
                                                                               Dec 31, 2003    Dec 31, 2002
                                                                              (In thousands   (In thousands
                                                                                   of 5)           of 5)
Assets
Investments
  Loans to associated companies **************************************          102,117         107,985
Current assets
Receivables
  Receivables from associated companies *******************************             346             446
  Miscellaneous receivables ******************************************               26               0
Liquid assets ******************************************************                 69             131
                                                                                    441             577
                                                                                102,558         108,562
Stockholders’ Equity and Liabilities
Stockholders’ equity
  Capital stock *****************************************************               454             454
  Capital reserves***************************************************             6,353           6,353
  Retained earnings *************************************************                 8               3
                                                                                  6,815           6,810
Long-term liabilities
  Liabilities to banks ************************************************          65,000          65,000
  Liabilities to associated companies ***********************************        27,673          29,920
                                                                                 92,673          94,920
Short-term liabilities
  Liabilities to associated companies ***********************************           289           5,383
  Liabilities for taxes and social expenses *******************************           2              45
  Miscellaneous liabilities ********************************************          2,779           1,404
                                                                                  3,070           6,832
                                                                                102,558         108,562




                                                  118
                                  INDEPENDENT AUDITORS’ REPORT
     In our opinion, the Balance Sheets and Statements of Income of Bayer Capital Corporation B.V. for the
years ended December 31, 2003 and December 31, 2002 as included in this Information Memorandum on
page 118 are consistent, in all material aspects, with the financial statements for the years ended December 31,
2003 and December 31, 2002 from which they have been derived.
     We issued an unqualified auditors’ report on the financial statements for the year ended December 31, 2003
on the 19th of January 2004 and for the year ended December 31, 2002 on the 24th of January 2003.
     For a better understanding of the company’s financial position and results and of the scope of the audit, the
Balance Sheets and Statements of Income should be read in conjunction with the financial statements from which
they have been derived and the auditors’ report thereon.



Utrecht, 15th October 2004

PricewaterhouseCoopers Accountants N.V.




                                                      119
                                                   BAYER CORPORATION

Capitalization of Bayer Corporation

     The following presents the consolidated capitalization and indebtedness of Bayer Corporation on an
unaudited basis as of June 30, 2004. The information below was extracted from the unaudited consolidated
financial statements of Bayer Corporation and subsidiaries prepared in accordance with accounting principles
generally accepted in the United States of America (US GAAP) as of June 30, 2004. Under U.S. GAAP the
businesses that will form LANXESS are consolidated and included in the capitalization of Bayer Corporation.
                                                                                                  As of June 30,
                                                                                                       2004
                                                                                                 (In thousands of
                                                                                                       U.S.$)
Shareholder’s Equity(1) *******************************************************                     3,319,829
Current Liabilities
  Notes Payable affiliates ******************************************************                      145,000
  Accounts Payable
    Trade*******************************************************************                          550,373
    Affiliates ****************************************************************                        924,129
Other Liabilities Held for Sale **************************************************                    216,194
Other(2) *********************************************************************                      2,981,532
Long-term Liabilities
    Long-Term Debt(3) ********************************************************                     3,087,127
    Other *******************************************************************                      1,390,062
Total Capitalization **********************************************************                   12,614,246

(1) Includes minority interests of 394,331.
(2) Includes 1,057,554 current portion L/T debt and capitalized leases.
(3) Includes capitalized leases of 388,343.


General Information on Bayer Corporation

      History, Incorporation and Locations

     Bayer Corporation, a wholly owned subsidiary of Bayer AG, was incorporated in Indiana on March 6, 1986,
as Miles Inc. On April 2, 1995, following its acquisition of Sterling Winthrop Inc. whose assets included the
Bayer trademark and trade name for the United States and Canada, Miles Inc. changed its name to Bayer
Corporation. As of January 1, 2003, Bayer Corporation substantially completed an internal restructuring of its
business. Pursuant to this restructuring, the four principal operating businesses previously conducted by Bayer
Corporation (namely, healthcare, crop science, polymers and chemicals) were divided and transferred into one or
more separate legal entities owned and controlled, directly or indirectly, by Bayer Corporation. Bayer
Corporation now serves as a holding company.

      As of July 1, 2004, Bayer Corporation and certain of its subsidiaries sold certain business and assets
comprising most of its chemicals and large segments of its polymers activities, and transferred certain related
liabilities, to a newly formed affiliate, LANXESS Corporation. LANXESS Corporation is a wholly-owned
subsidiary of LANXESS GmbH, which is a member of the LANXESS Group. The LANXESS Group presently is
part of the Bayer Group. Bayer AG intends to divest itself of the LANXESS Group through a spin-off of
securities to Bayer AG shareholders. The spin-off is intended to occur during the first quarter of 2005.

     The principal offices of Bayer Corporation are located at 100 Bayer Road, Pittsburgh, Pennsylvania 15205-
9741, U.S.A. Additionally, subsidiaries of Bayer Corporation operate major facilities in the following states:
California, Connecticut, Georgia, Indiana, Kansas, Massachusetts, Missouri, New Jersey, New York, North
Carolina, Ohio, South Carolina, Texas and West Virginia.

      Capital Stock

     The authorized capital of Bayer Corporation consists of 1,100 shares of Common Stock U.S. $ 1 par value
each, of which 1,003 shares are issued and outstanding. The shares are issued in registered form only.

                                                                  120
     Fiscal Year
     The fiscal year for Bayer Corporation is the calendar year.

     Board of Directors
    The property, business and affairs of Bayer Corporation are managed by and under the direction of its Board
of Directors. The Board of Directors must have at least three and not more than twenty-one members, as the
Board will determine. Presently, the Board of Directors consists of three members.
     As of October 1, 2004, the Board of Directors of Bayer Corporation consisted of the following members:
     Dr. Franz-Josef Berners
     Head of Regional Coordination in the Corporate Center, Bayer AG
     Dr. Attila Molnar
     President and Chief Executive Officer, Bayer Corporation
     Dr. Richard Pott, Chairman
     Member of the Board of Management, Bayer AG
     The business address of Drs. Berners and Pott is Bayer-Werk 51368 Leverkusen, Germany. The business
address of Dr. Molnar is 100 Bayer Road, Pittsburgh, Pennsylvania, 15205-9741, U.S.A.

     Auditors
     The financial statements of Bayer Corporation as of and for the years ended December 31, 2003 and 2002
incorporated by reference into the Information Memorandum have been audited by PricewaterhouseCoopers
LLP, independent accountants, as stated in their report incorporated by reference herein.

Scope of Operating Activities of Bayer Corporation
     Bayer Corporation, headquartered in Pittsburgh, Pennsylvania, is a wholly-owned subsidiary of Bayer AG.
As of December 31, 2003, Bayer Corporation employed 23,300 in North America. Bayer’s three operating
business areas — HealthCare, CropScience and MaterialScience, improve people’s lives through a broad range of
essential products that help diagnose and treat diseases, protect crops and advance automobile safety and
durability.

Scope of Operating Activities of LANXESS Corporation
     LANXESS Corporation, also headquartered in Pittsburgh, Pennsylvania, was established in 2004 as part of
the worldwide reorganization of the Bayer Group’s chemicals and polymers businesses. LANXESS Corporation
is a wholly-owned subsidiary of LANXESS GmbH. As of July 1, 2004, LANXESS Corporation employed 2,100
in the United States. LANXESS Corporation manufactures and distributes products in the chemicals, synthetic
rubber and plastics fields. The company’s portfolio comprises basic and fine chemicals, pigments, plastics, fibers,
synthetic rubber and rubber chemicals, leather, textile and paper processing chemicals, material protection
products, and water treatment products.

Recent Developments (see also, Bayer AG — Recent Developments)
     In March 2004, Bayer CropScience LP in the U.S. and Bayer CropScience Inc. in Canada purchased
Crompton Corporation’s 50 percent share of the Gustafson seed treatment business in the United States, Canada
and Mexico. The purchase gave Bayer CropScience, which already held a 50 percent share of the U.S. and
Canadian Gustafson joint ventures, full ownership of Gustafson’s NAFTA (North American Free Trade
Association) business. Gustafson, which employs approximately 250 people in the NAFTA region and had 2003
sales of approximately $130 million, is being integrated into a Seed Treatment Business Unit within Bayer
CropScience.
     In March 2004, as described above, Bayer CropScience AG and Aventis S.A. reached an agreement on
purchase price. Of the total amount agreed upon, an amount in excess of U.S.$80 million was allocated to the
U.S.
      In April 2004, BAY 43-9006, Bayer’s novel investigational drug candidate in Phase III studies for the
treatment of advanced kidney cancer, received Fast Track designation from the FDA. BAY 43-9006 has shown
encouraging results in a clinical trial for treatment of advanced renal cell carcinoma, and is currently in Phase III
clinical development.

                                                        121
     On June 1, 2004, the Diagnostics Division of Bayer HealthCare LLC divided into two separate operating
units — the Bayer HealthCare Diagnostics Self-Testing Systems Division (STS) and the Bayer HealthCare
Diagnostics Professional Testing Systems Division (PTS).
     In June 2004, the six-month pediatric exclusivity extension granted by the U.S. Food and Drug
Administration for Cipro˛ (ciprofloxacin HCl) tablets expired. Several approved generic versions of ciprofloxacin
tablets are now being marketed in the U.S. As a result, sales of Cipro˛ tablets are expected to drop sharply in the
second half of 2004.
     As of June 30, 2004, Bayer Polymers LLC changed its entity name to Bayer MaterialScience LLC.
     As of July 1, 2004, most of the chemicals businesses and large segments of the polymers businesses
previously operated by subsidiaries of Bayer Corporation were sold to LANXESS Corporation.
    In July 2004, Bayer AG announced Bayer HealthCare LLC will acquire Roche Consumer Health’s
50 percent share of the 1997 Bayer/Roche joint venture in the U.S. as part of the agreement between Bayer AG
and F. Hoffman-LaRoche Ltd. for the global acquisition of the Roche Consumer Health business.
     In September 2004, Bayer Pharmaceuticals Corporation announced that it had entered a strategic
pharmaceuticals alliance with Schering-Plough Corporation for regional marketing and distribution in the United
States and Japan. According to the terms of the agreement, Bayer Pharmaceuticals’ primary care pharmaceutical
products will be marketed and distributed by Schering-Plough in the United States. At the same time Bayer will
build up a new US-based global oncology business unit and refocus its U.S. organization on high-profit specialty
and biotech products to form Bayer’s Specialty Pharmaceuticals business.
     In 2004, Bayer CropScience LP has to date introduced eight new crop protection products to the U.S.
market, based on new registrations obtained from the U.S. Environmental Protection Agency during 2003 and
2004. The company continues to develop and register new products for the U.S. market, with the objective of
introducing two or more new active ingredients each year.
    For the first six months of 2004, Net Sales were U.S. $5,561 million, Operating Income was
U.S.$147.9 million and Net Loss was U.S. $0.7 million.

Highlights in 2003
     As of January 1, 2003, Bayer Corporation substantially completed an internal restructuring of its business.
Pursuant to this restructuring, the four principal operating businesses previously conducted by Bayer Corporation
(namely, healthcare, crop science, polymers and chemicals) were divided and transferred into one or more
separate legal entities owned and controlled, directly or indirectly, by Bayer Corporation. Bayer Corporation now
serves as a holding company for these entities that conduct the research and business operations concentrated in
the United States.
     In January 2003, Bayer Polymers LLC sold its high-performance organic pigment manufacturing business to
Sun Chemical Corporation, including the high-performance organic pigment manufacturing and wastewater
treatment facilities located in Bushy Park, South Carolina.
     In March 2003, Bayer AG announced that it had concluded the sale of all products required to be divested as
a condition of its obtaining antitrust regulatory approval of Bayer AG’s acquisition of the Aventis crop sciences
business.
     In August 2003, Bayer Pharmaceuticals Corporation obtained approval from the U.S. Food and Drug
Administration for the marketing and sale in the United States of Levitra˛ (vardenafil HCl), a new drug used for
the treatment of erectile dysfunction. Sale of Levitra˛ in the United States commenced in September 2003.
   Also in August 2003, Bayer Biological Products received approval from the U.S. Food and Drug
Administration and HealthCanada for the marketing and sale in the United States and Canada, respectively, of
Gamunex˛ Immune Globulin Intravenous (Human) 10% Caprylate/Chromotography Purified, an advanced
immunoglobulin intravenous product for individuals with compromised immune systems.
      In October 2003, Bayer AG announced plans to divest the worldwide plasma business which is part of Bayer
HealthCare LLC’s Biological Products (BP) division. These activities are therefore reported as discontinuing
operations in 2003. The Kogenate˛ line of products and hemophilia franchise is not included as part of this
initiative. The plasma business recorded sales of 4679 million in 2002; sales in the first half of 2003 reached
4293 million. As of December 2003, the unit, which is headquartered in Research Triangle Park, North Carolina,
U.S.A., employed around 1,600 people, the vast majority of them in the U.S.A.

                                                       122
     During 2003, the global Fipronil products business and other intangibles acquired in the Aventis
CropScience acquisition were divested as required as a condition of closing. Bayer CropScience in the U.S. was
allocated proceeds totaling $136,565,000; however, no gain or loss was recognized on the divestiture of these
assets. Rather, the asset balances were adjusted as part of the final purchase accounting adjustments.
    In November 2003, Bayer AG announced its intention to form a new, independent business group which is
now referred to as the LANXESS Group to conduct its worldwide chemicals and rubber, ABS, semi-crystalline
and fibers businesses.
     In December 2003, Bayer Pharmaceuticals Corporation received from the U.S. Food and Drug
Administration pediatric exclusivity for Cipro˛ (ciprofloxacin HCl) tablets, which delayed U.S. introduction of
unauthorized generic versions of ciprofloxacin tablets for six months beyond expiration of the patent. The
ciprofloxacin patent expired in December 2003.

Businesses
     The following provides information on Bayer Corporation’s businesses:

     HealthCare
     Animal Health
     Bayer HealthCare LLC’s Animal Health Division is a world leader in the animal health business and is
committed to providing effective and dependable products that enhance and maintain the health of companion
animals and livestock. Bayer ADVANTAGE˛ Topical Solution continued to have success as an effective flea
treatment for dogs and cats. Introduced in 2003, K9 Advantix has become one of the leading treatments in the
U.S. to protect dogs from ticks, fleas and mosquitoes.

     Pharmaceuticals
     Bayer HealthCare LLC’s Specialty Pharmaceuticals business, including the newly established Oncology
business unit, will be headquartered in West Haven, Connecticut and will focus on high-profit specialty and
biotech products with specialist physicians. The new Oncology business unit will begin to create an oncology
field sales force and is preparing for the potential approval and market launch of BAY 43-9006, Bayer’s cancer
compound currently being co-developed with Onyx Pharmaceuticals, Inc. In addition to Oncology products, the
portfolio will be comprised of Kogenate˛ FS for the treatment of hemophilia and Trasylol˛, which is used during
open-heart surgery. Viadur˛, for the treatment of prostate cancer, will also be aligned with the Oncology unit. See
‘‘Recent Developments’’ for details on the Bayer Pharmaceuticals Corporation and Schering-Plough agreement.

     Biological Products
     Bayer HealthCare LLC’s Biological Products Division, headquartered in Research Triangle Park, North
Carolina, is dedicated to developing and producing novel treatments that extend and enhance the lives of
individuals who are diagnosed with hemophilia, primary immune deficiency and alpha 1-antitrypsin deficiency
and a variety of immune deficiency diseases. Scientists and researchers at Biological Products Division facilities
in Research Triangle Park, Raleigh and Clayton, North Carolina and Berkeley, California support a wide range of
scientific activities, including drug discovery and biotechnology. As noted in ‘‘Highlights in 2003’’ Bayer AG has
announced its plans to divest the worldwide plasma business, which is part of the Biological Products Division.
The Kogenate˛ line of products and hemophilia franchise is not included as part of this initiative.

     Consumer Care
     Bayer Consumer Care, a division of Bayer HealthCare LLC, is headquartered in Morristown, New Jersey.
Bayer Consumer Care is among the largest marketers of over-the-counter medications and nutritional
supplements in the world, including Bayer˛ Aspirin, Aleve˛, Phillips’˛ Milk of Magnesia, Midol˛, Alka-
Seltzer˛, Alka-Seltzer Plus˛, Bactine˛, RID˛ and One-A-Day˛ and Flintstones˛ vitamins.

     Diagnostics
     On June 1, 2004, the Diagnostics Division of Bayer HealthCare LLC divided into two business units — the
Bayer HealthCare Diagnostics Self-Testing Systems Division (STS) and the Bayer HealthCare Diagnostics
Professional Testing Systems Division (PTS), to be known as Bayer HealthCare Diagnostics.

                                                       123
     Professional Testing Systems
      Bayer HealthCare Diagnostics, based in Tarrytown, New York, is one of the largest diagnostic businesses in
the world. The organization supports customers in 100 countries through an extensive portfolio of laboratory
testing, molecular testing and near patient care diagnostics systems and services for use in the assessment and
management of health, including the areas of cardiovascular and kidney disease, oncology, virology and women’s
health.

     Self Testing Systems
      Bayer HealthCare Diagnostics, Self Testing Systems Division, based in Elkhart, Indiana, is one of the largest
self test diagnostic businesses in the world, supporting customers in 100 countries and providing devices and test
strips for blood glucose monitoring for more than 40 years. Bayer changed the face of diabetes care in 1969 when
it introduced the first portable blood glucose meter and strips. These products are used by diabetics to safely and
conveniently monitor their blood glucose levels both at home and on the move.
      Blood glucose meters, the corresponding test strips, other accessories and services are marketed under the
Ascensia˛ global umbrella brand. The Ascensia˛ range of products comprises both simple devices and equipment
that can perform a number of additional functions. All require a minimal quantity of blood for testing and provide
convenient data management.

CropScience
     Bayer CropScience LP, headquartered in Research Triangle Park, North Carolina, researches, develops,
manufactures and sells a broad range of innovative crop science products for the crop protection, biotechnology
and seed markets; the turf and ornamental and professional pest management markets; and the consumer lawn
and garden markets.

MaterialScience (formerly known as Bayer Polymers)
     Bayer MaterialScience LLC is a leading supplier of high-tech materials and focuses on innovation-driven
polymer products that require complex technologies and capital-intensive production processes. Headquartered in
Pittsburgh, Pennsylvania, major products include polyurethanes, high-end thermoplastics, materials for coatings,
adhesives and sealants, thermoplastic urethanes and inorganic basic chemicals.

Legal Proceedings
     Reference is made to the Bayer AG discussion of legal proceedings (see ‘‘Bayer AG — Legal Proceedings’’)
with respect to certain matters that also involve Bayer Corporation.

Outlook
     Economic conditions in the United States appear to be improving, but there is still substantial uncertainty as
to how the economy will develop for the remainder of the year. Current high energy costs will negatively impact
earnings, however on a consolidated basis, management expects Bayer Corporation’s results of operations for
2004 to be improved over results of operations for 2003.




                                                       124
     The following consolidated financial data of Bayer Corporation has been prepared in accordance with
U.S. GAAP. Under U.S. GAAP, the businesses that will form LANXESS are consolidated and its results are
reported as part of the income from operations for Bayer Corporation.


                           BAYER CORPORATION AND SUBSIDIARIES

                Statements of Consolidated Operations and Retained (Deficit) Earnings
                          for the years ended December 31, 2003 and 2002
                                             (Summary)
                                                                                 2003            2002
                                                                            (In thousands   (In thousands
                                                                               of U.S.$)       of U.S.$)
Net Sales**********************************************************          10,328,884      8,908,621
  Cost of goods sold ************************************************         6,231,483      5,337,176
Gross Profit *******************************************************           4,097,401      3,571,445
  Selling, administration and other — net *******************************     4,740,702      3,079,100
  Research ********************************************************             839,551        821,300
  Total operating expenses — net**************************************        5,580,253      3,900,400
Loss from Operations***********************************************          (1,482,852)      (328,955)
  Interest incurred — net ********************************************         (206,007)      (196,197)
  Interest capitalised ************************************************           5,261          7,352
  Other (expense) income ********************************************            40,978        (30,209)
Loss from Continuing Operations before Income Taxes, Minority Interests
  and Cumulative Effect of Change in Accounting Principle *************      (1,642,620)      (548,009)
  Benefit for income taxes *******************************************           528,610        137,020
  Minority Interests *************************************************           (8,061)        11,263
  Cumulative Effect of Change in Accounting Principle *******************            —        (141,095)
Loss from Continuing Operations ************************************         (1,122,071)      (540,821)
Loss from Discontinued Operations (net of tax benefits of 168,980 & 47,701
  respectively) *****************************************************          (305,306)       (74,610)
Net Loss **********************************************************          (1,427,377)      (615,431)
Retained Earnings, January 1****************************************          1,414,461      2,029,892
Retained (Deficit) Earnings, December 31 *****************************           (12,916)     1,414,461




                                                 125
                                    BAYER CORPORATION AND SUBSIDIARIES

                                                Consolidated Balance Sheets
                                             as of December 31, 2003 and 2002
                                                        (Summary)
                                                                                                          2003            2002
                                                                                                     (In thousands   (In thousands
                                                                                                        of U.S.$)       of U.S.$)
Assets
Current Assets
  Cash and cash equivalents ******************************************                                    44,760         32,946
  Trade receivables *************************************************                                  1,108,669      1,030,152
  Receivables — affiliates and other ***********************************                                1,611,814        787,195
  Inventories *******************************************************                                  1,627,652      2,037,679
  Assets held for sale ***********************************************                                   705,900             —
  Other ***********************************************************                                      518,497        331,821
Total current assets*************************************************                                  5,617,292      4,219,793
Property, plant and equipment
  At cost**********************************************************                                    7,551,927      8,250,817
  Accumulated depreciation ******************************************                                  4,363,569      3,983,499
Net property, plant and equipment ***********************************                                  3,188,358      4,267,318
Other assets
  Goodwill ********************************************************                                     991,553       1,258,610
  Patents, trademarks and technology***********************************                               1,417,323       2,397,679
  Other ***********************************************************                                   1,468,544       1,216,191
Total other assets **************************************************                                 3,877,420       4,872,480
Total assets********************************************************                                 12,683,070      13,359,591

Liabilities and stockholder’s equity
Current liabilities
  Notes payable — banks and affiliates *********************************                                    1,000          1,093
  Current portion of long-term debt(1) **********************************                                 60,815        568,928
  Trade accounts payable ********************************************                                    539,626        669,216
  Liabilities of operations held for sale *********************************                              244,852             —
  Other ***********************************************************                                    2,860,381      2,693,260
Total current liabilities**********************************************                                3,706,674      3,932,497
Long-term debt(2) **************************************************                                   4,049,297      4,057,459
Other long-term liabilities *******************************************                                1,590,157      1,158,401
Total Liabilities ****************************************************                                 9,346,128      9,148,357
Minority Interests **************************************************                                    363,692        355,631
Stockholder’s equity
  Common stock ***************************************************                                            1               1
  Paid-in capital ****************************************************                                3,028,043       2,528,043
  Retained (deficit) earnings ******************************************                                 (12,916)      1,414,461
  Accumulated other comprehensive (loss) ******************************                                 (41,878)        (86,902)
Total stockholder’s equity *******************************************                                2,973,250       3,855,603
Total liabilities and stockholder’s equity*******************************                            12,683,070      13,359,591


(1) In 2003 and 2002, includes U.S.$54,500 and U.S.$55,295 in the current portion of capitalized leases.

(2) In 2003 and 2002, includes U.S.$418,751 and U.S.$473,270 in long-term capitalized leases.




                                                                 126
                          BAYER CORPORATION AND SUBSIDIARIES

                      Statements of Consolidated Income and Retained Deficit
                           for the six month period ended June 30, 2004
                                            (Summary)
                                                                                       (In thousands
                                                                                          of U.S.$)

Net sales *********************************************************************         5,560,956
  Cost of goods sold************************************************************        3,449,962
Gross profit *******************************************************************         2,110,994
  Selling, administration and other — net ******************************************    1,600,996
  Research ********************************************************************           362,113
  Total operating expenses — net *************************************************      1,963,109
Operating Income *************************************************************            147,885
  Interest incurred — net ********************************************************        (96,957)
  Interest capitalized ************************************************************         2,096
  Other income (expense)********************************************************          (23,794)
Income from Continuing Operations before income taxes and minority interests *******       29,230
  Benefit for income taxes *******************************************************           8,294
  Minority interests*************************************************************         (30,639)
Income from Continuing Operations *********************************************             6,885
Loss from Discontinued Operations (net of tax benefit 4,070) ************************       (7,558)
Net Loss**********************************************************************               (673)
Retained deficit, January 1, 2004 ************************************************         (12,916)
Deemed dividend **************************************************************            (81,687)
Retained deficit, June 30, 2004 **************************************************         (95,276)




                                               127
                                    BAYER CORPORATION AND SUBSIDIARIES

                                                  Consolidated Balance Sheet
                                                     as of June 30, 2004
                                                          (Summary)
                                                                                               (In thousands
                                                                                                  of U.S.$)

Assets
Current Assets
  Cash and cash equivalents******************************************************                  15,572
  Trade receivables *************************************************************               1,319,759
  Receivables — affiliates and other ***********************************************             1,378,937
  Inventories ******************************************************************                1,745,600
  Assets held for sale ***********************************************************                716,454
  Other***********************************************************************                    546,209
Total Current Assets ***********************************************************                5,722,531
Property, Plant and Equipment
  At cost *********************************************************************                 7,540,002
  Accumulated depreciation ******************************************************               4,463,749
Net Property, Plant and Equipment **********************************************                3,076,253
Other Assets
  Goodwill********************************************************************                  1,059,811
  Patents, trademarks and technology **********************************************             1,346,713
  Other***********************************************************************                  1,408,938
Total Other Assets *************************************************************                3,815,462
Total Assets *******************************************************************               12,614,246
Liabilities and Stockholder’s Equity
Current Liabilities
  Notes payable — affiliates *****************************************************                 145,000
  Trade accounts payable ********************************************************                 550,373
  Other Liabilities held for sale ***************************************************             216,194
  Other(1) *********************************************************************                3,905,661
Total Current Liabilities ********************************************************              4,817,228
Long-Term Debt(2) *************************************************************                 3,087,127
Other Long-Term Liabilities ****************************************************                1,390,062
Total Liabilities****************************************************************               9,294,417
Minority Interests *************************************************************                  394,331
Stockholder’s Equity
  Common stock ***************************************************************                          1
  Paid-in capital ***************************************************************               3,028,043
  Retained deficit **************************************************************                  (95,276)
  Accumulated other comprehensive (loss) ******************************************                (7,270)
Total Stockholder’s Equity ******************************************************               2,925,498
Total Liabilities and Stockholder’s Equity*****************************************            12,614,246

(1) Includes U.S.$1,057,554 in the current portion of long-term debt and capitalized leases.
(2) Includes U.S.$388,343 in long-term capitalized leases.




                                                                  128
                                                 BAYER LTD.

Capitalisation of Bayer Ltd.
    The following presents the capitalisation and indebtedness of Bayer Ltd. on an unaudited and non-
consolidated basis as of June 30, 2004.

Bayer Ltd.
                                                                                                     June 30, 2004
                                                                                                     (In thousands
                                                                                                        of Yen)
  Shareholders’ Equity ********************************************************                       83,702,366
  Current Liabilities
  Short-term loans payable ******************************************************                       2,151,050
  Accrued payable — other *****************************************************                           432,194
  Accrued expenses ************************************************************                           258,341
  Corporation taxes payable *****************************************************                         104,554
  Accounts payable — trade *****************************************************                          565,949
  Employee savings deposits*****************************************************                           19,005
  Deferred Income *************************************************************                         2,586,000
  Other **********************************************************************                             23,138

Fixed Liabilities
  Bond **********************************************************************                         25,475,152
  Accrued severance indemnities *************************************************                          1,999
  Provision for retirement allowance **********************************************                      322,924
  Long-term deposits received****************************************************                        299,127
  Other **********************************************************************                            53,165
  Total Capitalization**********************************************************                     115,999,964

      On July 1, 2004, the shares of LANXESS (‘‘Bayer Chemicals Japan Ltd.’’ by the end of June 2004) were
sold to LANXESS (SEA), Singapore. The deferred income of 2.5 billion Yen in the above mentioned
capitalization of Bayer Ltd. is advance receipt from LANXESS (SEA), Singapore in June 2004 in accordance
with the share transfer. As the shares of LANXESS (Bayer Chemicals Japan Ltd.) were sold to LANXESS
(SEA), Singapore on July 1, 2004, the deferred income of 2.5 billion Yen was reversed, investments in
subsidiaries decreased by 1.5 billion Yen and other income increased by 1.0 billion Yen in July 2004. As a result,
total capitalization of Bayer Ltd. as of August 31, 2004 decreased by 1.5 billion Yen.

General Information on Bayer Ltd.
     History and Incorporation
    In 1960, Chemdyes Doitsu Senryo was set up by Bayer AG for the handling of dyes and chemicals. In 1964,
Chemdyes Doitsu Senryo became Bayer Japan Ltd. Bayer Japan Ltd. changed its corporate name to Bayer Ltd. in
1992. Bayer Ltd. mainly imports and sells dyestuffs and chemicals, covering the three business segments
Chemicals, Polymers, and Agriculture.
     Bayer Ltd.’s headquarters are located at 10-8 Takanawa 4-chome, Minato-ku, Tokyo, 108-8571 Japan and is
registered with the ‘‘Japanese Commercial Register’’ under 023698.

     Objects
     Under its articles of incorporation the objects of Bayer Ltd. are the following:
     (1)   Import, manufacture and sales including export of (I) dyestuffs and chemicals of any kind,
           (II) Pharmaceuticals, quasi drugs, medical appliances, equipment and tools for human and veterinary
           use, (III) cosmetics and cosmetic materials, (IV) food and feed additives for animals, (V) food
           additives, (VI) tools, other articles and supplies for animal and fish keeping, and (VII) machines and
           technical equipment related to the foregoing.
     (2)   To act as distributor and agent for manufactures of the foregoing items,

                                                       129
      (3)   All and any other activities relating to the foregoing two items, and

      (4)   Investment in enterprises relating to the foregoing three items.

      Capital Stock

     The authorised capital of Bayer Ltd. consists of 640,000 registered shares of Common Stock, of which
223,040 shares are issued and outstanding. Bayer Ltd. is a wholly owned subsidiary of Bayer AG.

      Fiscal Year

      Bayer Ltd.’s fiscal year is the calendar year.

      Board of Directors

     The property, business and affairs of Bayer Ltd. are managed by and under the direction of its Board of
Directors. The Board of Directors shall consist of at least three Directors and three Corporate Auditors. Presently,
the Board of Directors consists of three Directors and three Corporate Auditors. Members of the Board of
Directors, in addition to performing individual supervising functions at affiliated companies, hold offices as
members of the supervisory board or a comparable supervising body of other corporations as well as holding
managerial positions in other Bayer companies.

      As of July 1, 2004, the Board of Directors of Bayer Ltd. consists of the following members:

Board of Directors

(1)    Michael Portoff, President and Representative Director

(2)    Frank J. Witasek, Senior Managing Director and Representative Director

(3)    Udo Oels, Chairman, Director

Board of Corporate Auditors

(4)    Ryo Ozawa (full time auditor)

(5)    Mitsukiyo Kojima

(6)    Hidehiko Okui

      The business address of each of the above is 10-8 Takanawa 4-chome, Minato-ku, Tokyo, 108-8571 Japan.

      Auditors

     The independent auditors of Bayer Ltd. are ChuoAoyama PricewaterhouseCoopers, Certified Public
Accountants, 3-2-5 Kasumigaseki Chiyoda-ku, Tokyo. ChuoAoyama PricewaterhouseCoopers has examined the
non-consolidated financial statements of Bayer Ltd. for each of the years ended December 31, 2002 and
December 31, 2003. ChuoAoyama PricewaterhouseCoopers has examined, in accordance with Article 2 of the
‘‘Law for Special Measures under the Commercial Code with respect to Auditing, etc. of Joint Stock
Corporations’’, the balance sheet, the related profit and loss statement, the business report (accounting figures
only included therein), the proposed appropriation of retained earnings, and the related supplementary statements
of account (accounting figures only included therein) of Bayer Ltd. for the 44th fiscal period. An unqualified
opinion was issued.

Information on the Bayer Group Japan

     The Bayer Group Japan (‘‘Bayer in Japan’’) consists of the companies Bayer Ltd., Bayer Yakuhin, Bayer
CropScience, BCS Japan, Bayer Medical, Sumika Bayer Urethane, Rhein Chemie Japan, DIC Bayer Polymer,
Teijin-Bayer Polytec, LANXESS, H.C. Starck — V TECH, which are directly or indirectly wholly or partly
owned by Bayer AG. In Japan, Bayer Ltd. is acting as an operative holding company (‘‘Bayer Ltd. Holding’’) for
the companies Bayer Yakuhin, Bayer CropScience, Bayer Medical, Sumika Bayer Urethane, DIC Bayer Polymer
and Teijin-Bayer Polytec.

                                                        130
Scope of Operating Activities of Bayer in Japan
    Import, manufacture and sales including export of the following products
) Dyestuffs and chemicals of any kind
) Pharmaceuticals, quasi drugs, medical appliances, equipment and tools for human veterinary use
) Cosmetics and cosmetic materials
) Food and feed additives for animals
) Food additives
) Metal powder
) Tools, other articles and supplies for animal and fish keeping, and
) Machines and technical equipment related to the foregoing

Recent Developments 2004
) On July 1, 2004, the shareholderships of LANXESS and Rhein Chemie are transferred from Bayer Ltd. to
  LANXESS (SEA), Singapore and Rhein Chemie Reinau GmbH, Germany, respectively.
) Bayer Chemicals is combined with certain parts of Bayer Ltd.’s polymers business to form a new company
  called‘‘LANXESS’’ on July 1, 2004.
) On June 25, 2004, Bayer Chemicals and Rhein Chemie reduce their equity by 1,300 million yen and
  400 million yen, respectively.
) First shipment of Levitra˛ from Shiga Factory on June 8, 2004.
) On April 1, 2004, Bayer Medical establishes independent distribution for diagnostics, following the
  termination of its distribution agreement with Sankyo.
) On March 31, 2004, Bayer in Japan announces 2003 results: Sales Increase 2.6 percent Year-on Year to
  217 billion Yen.

Highlights in 2003
    Bayer Yakuhin announces in December 2003 to close — in line with the global realignment of
pharmaceutical R&D activities — the research center in Kyoto until December 31, 2003.
) In October 2003, Bayer CropScience begins its own production of non-selective contact herbicide ‘‘Basta’’.
) Bayer Yakuhin changes at end of July 2003 its pension system from a defined benefit scheme to a defined
  contribution scheme. The amount used for settlement accounts for 3,308 million Yen.
) Bayer CropScience changes at end of July 2003 its pension system from a defined benefit scheme to a defined
  contribution scheme. The amount used for settlement accounts for 1,169 million Yen.
) On July 7, 2003, Bayer Yakuhin introduces new electronic customer relationship management (eCRM) system
  ‘‘Frontline’’.
) Bayer Chemicals Japan is founded on July 1, 2003 after carve-out from Bayer Ltd.
) Starting in June 2003, Bayer Yakuhin carried out ‘‘ASPIRIN Lady Campain’’ targeting women in their
  twenties and thirties.
) ‘‘Bayer Aspirin 100’’ is launched by Bayer Yakuhin and Meiji Seika on May 20, 2003.
) In May 2003, Bayer in Japan announces 2002 results: Achieves 2002 target with 2 percent year-on-year sales
  increase to 211 billion Yen.
) Bayclear Plus is re-launched in January 2003 by Bayer Yakuhin in cooperation with Meiji Seika.
) Bayer Medical launches ‘‘Advantage Heart’’ on January 14, 2003, Japan’s first topical treatment for both
  Heartworm and Flea Control.
) In January 2003, the Animal Health division of Bayer Ltd. is integrated in Bayer Medical after being carved
  out of Bayer Ltd.

                                                     131
Mergers & Acquisitions in 2003
     Merger & Acquisitions
     No mergers & acquisitions in 2003.

     Corporate Restructurings
     In January 2003, the Animal Health division of Bayer Ltd. is integrated in Bayer Medical after being carved
out of Bayer Ltd.
     Bayer Ltd. carved-out the business related to the business groups CH, SP, LS, which became the
independent legal entity Bayer Chemicals Japan on July 1, 2003.

     Divestment in 2003
     No divestment in 2003.

Information on Bayer Ltd. Holding by Company and its Respective business groups
     Bayer Ltd. and its business groups
     Plastics
     In Europe, North America, South America and Asia, Bayer supplies engineering plastics that add value to
products in the automobile, electronic equipment, IT, optical disk, and other cutting-edge industries. These
include Makrolon high-strength polycarbonate, Apec heat-resistant polycarbonate, and Makrofol and Bayfol
polycarbonate films. Bayer will concentrate management resources in the growing Asian market for
polycarbonates. Bayer plans to begin production at a new Makrolon production site in Shanghai, China in 2006.
In addition, Bayer is bolstering its total technology service system that supports Japanese companies in Asia from
planning to production. Bayer will continue to provide innovative materials and solutions for the products
customers create in the future, as well as in the area of product application development.

     Rubber
     Weak housing construction and stagnant domestic car manufacturing market, in addition to the trend toward
low-cost electorical consumer goods, created a challenging environment the Polymers business. The market for
Rubber products, however, was positive, driven by strong demand especially for butyl rubber. Rising prices
resulting from the strong demand led to increased sales.

     Basic and Fine Chemicals, and Specialty Products
     Bayer has a long history of success in the chemicals field and offers a wide range of products, from
industrial, pharmaceutical and agrochemical intermediates to products for designated industrial needs in the areas
of basic and fine chemicals, and specialty products.
    As part of the Bayer Group’s global realignment, Bayer Chemicals (excluding H.C. Starck and Wolff
Walsrode) is scheduled to be combined with certain parts of the polymers business to form a new company called
‘‘LANXESS’’.

     Affiliated companies
     Bayer Ltd.’s subsidiaries as of July 1, 2004 are the following:
     Bayer Yakuhin (100 percent)
      Under its basic policy of focusing on core businesses, Bayer plans to achieve long-term growth by
specializing in its areas of strength in cardiovascular, infectious and urinary diseases. Aiming for business growth
based on Bayer products in line with Group strategy, Bayer in Japan conducts integrated activities from
production to sales with a motto of benefiting doctors and patients. Core brand Adalat, an anti-hypertensive agent,
has established itself as a safe, effective long-selling product since its 1976 launch. Large-scale overseas clinical
tests have established Bayaspirin, an anti-platelet agent, as the drug of choice for preventing the recurrence of
myocardial infarction and stroke. Also, large-scale clinical tests have confirmed the effectiveness of Glucobay in
reducing the occurrence of Impaired Glucose Tolerance (IGT) and to lower diabetes patients’ cardiovascular
risks. Glucobay is expected to play an important role in the treatment of diabetes. In December 2003, Bayer and
Shire Pharmaceuticals Group plc reached an agreement on the development, production and sale of lanthanum

                                                        132
carbonate (FOSRENOL) in Japan. In the area of infectious diseases, Bayer updated Ciproxan i.v., the first
injectable quinolone in the Japanese market, into a softbag formulation for easy use in hospital wards. The
Biological Products business, headquartered in the U.S., aims to provide treatments for hemophilia and other
serious diseases. Following the July 2002 launch of Kogenate FS, the second generation of Kogenate recombinant
Factor VIII coagulation products for the treatment of hemophilia, Bayer licensed out its production technologies
to the Japanese Red Cross Society in December 2002 to maintain a stable supply of intravenous immune globulin
(IVIG) products in the Japanese market. Furthermore, in December 2003, Bayer filed an application for injectable
Kogenate FS solution kits, which offer greater convenience of storage and portability than previous products.
Bayer has also established the ‘‘Bayer Hemophilia Village’’ website and periodically publishes the journal Echo,
both of which provide information for hemophiliacs and physicians. In more than 80 countries, Bayer markets a
lineup of original OTC and functional food products. Bayer has made steady progress in increasing the
penetration of the Bayer Aspirin brand by expanding the content of its ASPIRIN Lady.com site (www.aspirin-
lady.com), and through its 2003 Aspirin Lady campaign. Mainstay OTC product Bayclear Plus is a remedy for
athlete’s foot and ringworm. Bayer, which has a comprehensive sales agreement with Meiji Seika, has been
concentrating on strengthening its OTC brands through the optimization of Meiji Seika’s sales channels. Net
sales and net loss of Bayer Yakuhin for 2003, were 78,674 million yen and 7,235 million yen, respectively.

     Bayer CropScience (75.46 percent)

      Bayer CropScience, a leader in the global crop protection market, is expanding its presence in Japan.
Following the acquisition of Aventis CropScience Shionogi K.K., the company now conducts sales through six
sales offices nationwide, and has about 130 sales representatives and technology and marketing specialists in
Japan, including support staff from the head office. Under the slogan, ‘‘Your partner for growth,’’ the company is
working to maximize sales and profits in Japan by building long-term, cooperative relationships with partners
who have strong technological or marketing capabilities. Since the integration, Bayer CropScience has fortified
its sales force and emphasized greater efficiency in R&D, manufacturing and other operations. Research and
development is concentrated at the Yuki Research Center, and a herbicide formulation plant has been established
at the Hofu Factory, which now handles all production of Basta SL. In addition to ensuring the effectiveness and
safety of agrochemicals, Bayer is working to develop and provide high-value-added products that reduce labor
and raise efficiency in farm work to help solve the problems facing agriculture in Japan. Bayer has a robust lineup
of products for both aquaculture and horticulture. Successful products created by Bayer in Japan include Admire,
a top-selling insecticide around the world, and Innova, a rice herbicide that requires only a single application at
transplanting time. Bayer has an advantage in the market with other top brands such as Win fungicide, which
provides long-lasting crop protection, Basta, a non-selective contact herbicide, and Rovral, a popular horticultural
fungicide. In September 2003, Bayer launched Daniemon Flowable, which provides long-lasting, stable
protection for citrus crops against pesticide-resistant spider mites. Net sales and net profit of Bayer CropScience
for 2003, were 47,260 million yen and 2,805 million yen, respectively.

     Bayer Medical (100 percent)

      The mission of the Diagnostics business is to contribute to the improvement of patients quality of life (QOL)
through the early detection of diseases. Bayer’s extensive portfolio covers laboratory, nucleic acid diagnostics,
self-testing and near patient (critical care and point-of-care) diagnostic systems and services for use in the
assessment and management of health. The world’s fourth-largest supplier of diagnostic systems, Bayer has
earned top-level status in the Japanese market through its many years of proven results. In April 2003, Bayer
Diagnostics (U.S.) became the first major medical diagnostics company to receive ISO 9001: 2000 certification of
its headquarters, R&D and manufacturing sites around the world, further strengthening trust in Bayer’s diagnostic
products. New product introductions in 2003 included ADVIA 120CSF Assay, the first fully automated assay for
spinal fluid analysis on a routine hematology analyzer, and Rapidpoint 405 Critical Care Analyzer, the world’s
first point-of-care blood gas system to offer a fully integrated CO-oximetry module. Bayer aims to be the leading
company in the Japanese diagnostics market by further strengthening its products, services and support systems.
With more than 80 years experience and operations in 140 countries, Bayer is a leader in the field of Animal
Health. Based on the motto of ‘‘Protect Animals, Benefit People,’’ Bayer aims to enhance co-existence between
humans and animals by protecting a wide range of animals from sickness, from small animals such as pets to
livestock and fish, and by helping to maintain sanitary environments. Launched in January 2003, the ‘‘spot’’ type
product for heartworm prevention and flea control, Advantage Heart has become a popular product well received
by veterinarians and pet owners. Bayer will continue to play a leading role in all aspects of human and animal
health through such activities as disseminating information as well as providing products and services. Net sales
and net loss of Bayer Medical for 2003, were 23,118 million yen and 360 million yen, respectively.

                                                        133
    Sumika Bayer Urethane (60 percent)

      Sumika Bayer Urethane has two business groups, namely Polyurethane and the Coatings and Colorants
business group. As the world’s leading producer of polyurethane raw materials, Bayer is strengthening its total
customer support in Japan including application development and technology support. Its main product lineup
includes isocyanates Desmodur, Sumidur and SBU Isocyanate and polyols Sumiphen and SBU Polyol. As with
polycarbonates, Bayer is focusing on development of the Asian market through optimization of production in
Japan and procurement from domestic sources and from the Bayer Group worldwide. Recent developments in
applied technologies include an integrated material developed with a customer that uses polyurethane for
automobile headliners. Another example of Bayer’s applied technology is the high-quality polyurethane surface
used in athletic fields, such as Niigata Stadium (Big Swan). The Polyurethane Application Research Laboratories
in Hyogo Prefecture develop energy efficient housing insulation and other polyurethane materials at a low cost to
meet customer needs. Bayer’s coatings business provides high-quality, highly functional, environmentally
friendly products to the automobile, building material, household appliance, and OA appliance industries, among
others. The coatings business handles coatings and adhesive materials such as Sumidur and Desmodur, and is
positioning aliphatic isocyanates as strategic products. Bayer is also concentrating on environmentally friendly
products. In 1990, Bayer developed the waterborne polyurethane coatings Bayhydrol and Bayhydur, and since
then has reduced the amount of harmful organic solvents used and improved the usability of its coatings. These
products have increased market share in the automobile and building materials industries, while Bayer continues
to reduce their environmental impact. Furthermore, because these products do not contain formalin, which causes
‘‘sick house syndrome,’’ they are popular as adhesives for residential use. Bayer is actively developing sales of
these coatings and adhesive materials. Net sales and net profit of Sumika Bayer Urethane for 2003, were
32,302 million yen and 502 million yen, respectively.

    DIC Bayer Polymer (50 percent)

    DIC Bayer Polymer Ltd. — a joint venture consolidating the thermoplastic polyurethane (TPU) businesses
of Bayer and Dainippon Ink and Chemicals, Incorporated. Its net sales and net profit of DIC Bayer Polymer for
2003, were 3,162 million yen and 151 million yen, respectively.

    Teijin-Bayer Polytec (50 percent)

     Teijin-Bayer Polytec was established in 1998 and is developing and producing raw-materials for optical laser
discs applications. Net sales and net loss of Teijin-Bayer Polytec for 2003 were 152 million yen and, 5 million
yen, respectively.




                                                      134
Financial Statements
    The following information refers to Bayer Ltd. only and is extracted from their financial statements:

                                           Statement of Income
                                                                                  Dec. 31, 2003   Dec. 31, 2002
                                                                                  (In thousands   (In thousands
                                                                                     of Yen)         of Yen)
Operating Income and Expenses
  Net Sales*********************************************************                8,720,202     21,301,142
  Commission received ***********************************************                 678,972        778,956
  Cost of Goods Sold ************************************************               7,027,426     16,166,503
  Selling, general and administrative expenses ****************************         2,270,504      5,325,608
Operating Profit ****************************************************                  101,244        587,987
Non-operating income
  Interests income ***************************************************                265,042        264,863
  Dividends received *************************************************                     —      67,084,077
  Foreign exchange profit, net *****************************************                 5,456          8,070
  Other income *****************************************************                1,019,298      1,511,736
Non-operating expenses
  Interest expenses***************************************************               389,669         702,077
  Loss on cancellation of derivative contracts *****************************              —          436,273
  Loss on cancellation of loan payable **********************************            820,628              —
  Other expenses ****************************************************                119,837         126,796
Ordinary profit *****************************************************                  60,906      68,191,587
Extraordinary gains
  Gains from sale of invest, securities ***********************************               —            35,851
  Reversal of allowance for doubtful accounts ****************************           108,680           25,721
Extraordinary losses
  Loss on disposition of fixed assets ************************************             14,489              —
  Loss on transition of retirement benefit plan ****************************               —          716,868
Profit before taxes***************************************************                155,097      67,536,291
Corporation, inhabitant and enterprise taxes*******************************          130,234         489,816
Deferred income taxes ************************************************                94,181         177,067
Net profit for the year ***********************************************               119,044      67,223,542
Unappropriated retained earnings brought forward *************************        70,800,335       3,574,478
Unappropriated earnings at the end of the year *************************          70,919,379      70,798,020

    Dividend
    There was no dividend paid in 2002 and 2003.




                                                    135
    Balance Sheet
                                                                       Dec. 31, 2003   Dec. 31, 2002
                                                                       (In thousands   (In thousands
                                                                          of Yen)         of Yen)
Current Assets
  Cash ***********************************************************     2,661,803           676,434
 Note receivable — trade*******************************************       55,948           340,028
 Account receivable — trade ****************************************     465,352         6,372,422
 Receivable — others**********************************************     1,524,594         2,196,980
 Inventories ******************************************************      645,765         2,698,413
 Short-term loans receivable **************************************** 22,620,686        26,044,967
 Consumption tax receivable ****************************************     133,024                —
 Corporation tax refundable*****************************************          —         13,209,893
 Other current assets **********************************************     480,100           791,056
 Allowance for doubtful accounts ************************************         —           (102,680)
 Fixed Assets
 Tangible fixed assets **********************************************     287,518         3,242,578
 Intangible fixed assets*********************************************      54,169            95,789
 Investments & others *********************************************   86,055,137        82,947,553
 Total Assets **************************************************** 114,984,096         138,513,433

  Shareholders’ Equity ******************************************** 83,657,140          83,538,096
  Current Liabilities
  Short-term loans payable ******************************************    3,238,694       8,128,559
  Accrued payable — other *****************************************        885,164       1,295,974
  Accrued expenses ************************************************        263,922         882,647
  Corporation taxes payable *****************************************      232,409         184,908
  Consumption taxes payable ****************************************            —           84,217
  Accounts payable — trade *****************************************       510,192       2,229,500
  Employee savings deposits*****************************************        32,240          85,887
  Other **********************************************************          23,481          13,623
  Fixed Liabilities
  Bond **********************************************************       25,475,152      25,475,152
  Long-term debt **************************************************             —       15,649,335
  Accrued severance indemnities *************************************        1,499          22,446
  Provision for retirement allowance **********************************    311,911              —
  Long-term deposits received****************************************      299,127         829,091
  Other **********************************************************          53,165          93,998
  Total Liabilities + Equity ***************************************** 114,984,096     138,513,433




                                              136
Risk Management
     Bayer Ltd. enters into interest rate swap and forward rate agreements as a hedge to reduce interest rate risks
inherent in Bayer Ltd.’s debt portfolio. Bayer Ltd. is exposed to losses in the event of non-performance by
counterparties to the swap and forward rate agreements; however, it does not expect any counterparties to fail to
meet their obligations.
     Bayer Ltd.’s geographic orientation in diverse businesses with a large number of customers and suppliers
minimises concentrations of credit risk. At December 31, 2003, Bayer Ltd. had no significant concentration of
credit risk.

Outlook
     In the HealthCare subgroup, Levitra (vardenafil), a drug for the improvement of erectile dysfunction, is
expected to receive approval in the first half of 2004. In addition, an NDA (New Drug Approval) for the Kogenate
Kit (BIO-SET) was filed at the end of December 2003. The product launch is expected in the second half of 2005.
European and U.S. approval is expected in the second half of 2004.
     In 2004 and thereafter, the CropScience subgroup will continue to benefit from demand for labor saving
products, which demand for less toxic, environmentally safe products continues to grow. In addition, the start of
production at the new Basta formulation facility at the Hofu Factory in October 2003 will enable greater
efficiency and cost savings.
     In accordance with the Bayer Group’s global realignment plan, Bayer restructured the polymers business.
Recently the business of H.C. Starck, a refractory metals specialist, has been brought under the umbrella of the
Bayer MaterialScience subgroup. Bayer will promote optimization of production, marketing, distribution and
technology support in line with its global supply concept aimed at flexibly and quickly meeting the needs of
businesses throughout the world.




                                                       137
                                                   TAXATION

Taxation in the Federal Republic of Germany
     The following is a general discussion of certain German income tax consequences of the acquisition and
ownership of the Notes. This discussion does not purport to be a comprehensive description of all tax
considerations which may be relevant to a decision to purchase Notes. In particular, this discussion does not
consider any specific facts or circumstances that may apply to a particular purchaser. This summary is based on
the laws of Germany currently in force and as applied on the date of this Information Memorandum, which are
subject to change, possibly with retroactive effect.
     Prospective purchasers of Notes are advised to consult their own tax advisors as to the tax
consequences of the purchase, ownership and disposition of Notes, including the effect of any state or local
taxes, under the tax laws in Germany and each country of which they are residents.

     Tax Residents
     Payments of interest on the Notes, including interest having accrued up to the sale of a Note and credited
separately (‘‘Accrued Interest’’) to persons who are tax residents of Germany (i.e., persons whose residence,
habitual abode, statutory seat, or place of effective management and control is located in Germany) are subject to
                                                                               a
German personal or corporate income tax (plus solidarity surcharge (Solidarit¨ tszuschlag) at a rate of 5.5 percent
thereon). Such interest is also subject to trade tax if the Notes form part of the property of a German trade or
business. Accrued Interest paid upon the acquisition of the Notes may give rise to negative income if the Notes is
held as a non-business asset.
     Upon maturity of a Note the initial subscriber of the Note receives, in addition to or, as in the case of a zero
coupon Note or a discounted Assignable Loan, instead of the current interest, taxable investment income in an
amount equal to the difference between the issue price of the Note and the redemption amount (‘‘Original Issue
Discount’’), in the case of Notes held as non-business assets, however, only if the Original Issue Discount
exceeds certain thresholds. Provided that the Note can be classified as a financial innovation (Finanzinnovation)
under German tax law, including, among other things, zero coupon Notes, discounted Notes, and is purchased or
disposed of while outstanding, or redeemed at maturity, the Original Issue Discount (provided the holder of the
Note gives proof of the applicable yield to maturity) to the extent attributable to the period over which the holder
of a Note has held such Note minus interest, including accrued interest, already taken into account, or,
alternatively, the difference between the proceeds from the disposition, assignment or redemption and the
purchase price is subject to personal or corporate income tax in the year of the disposition, assignment or
maturity of the Note, unless the Note forms part of the property of a German trade or business, in which case
each year the part of the Original Issue Discount attributable to such year as well as interest accrued must be
taken into account proportionately as interest income and may also be subject to trade tax. Where the Note or
Assignable Loan is expressed in a currency other than the Euro, the difference referred to in the preceding
sentence is computed as the difference between the foreign-currency denominated proceeds and the foreign-
currency denominated price.
     Capital gains from the disposition of Notes, other than income from Original Issue Discount exceeding
certain thresholds, as defined above, are only taxable to a German tax-resident individual if the Notes are
disposed of within one year after their acquisition or form part of the property of a German trade or business, in
which case the capital gains may also be subject to trade tax. Capital gains derived by German-resident corporate
holders of Notes will be subject to corporate income tax (plus solidarity surcharge at a rate of 5.5 percent thereon)
and trade tax.
     If the Notes are held in a custodial account which the Noteholder maintains with a German branch of a
German or non-German financial or financial services institution (the ‘‘Disbursing Agent’’) a 30 percent
withholding tax on interest payments (Zinsabschlag), plus 5.5 percent solidarity surcharge on such tax, will be
levied, resulting in a total tax charge of 31.65 percent of the gross interest payment. Withholding tax is also
imposed on Accrued Interest. If the Notes qualify as financial innovations, as explained above, and are kept in a
custodial account which the Noteholder maintains with a Disbursing Agent such Agent will generally withhold
tax at a rate of 30 percent (plus solidarity surcharge at a rate of 5.5 percent thereon) from interest payments,
Accrued Interest as well as from the positive difference between the redemption amount or proceeds from the
disposition or assignment and the issue or purchase price of the Notes if the Note has been kept in a custodial
account with such Agent since the time of issuance or acquisition, respectively, and will compute such difference,
where the Note is expressed in a currency other than the Euro, as the difference between the foreign-currency
denominated proceeds and the foreign-currency denominated price. Otherwise the 30 percent withholding tax is

                                                        138
applied to 30 percent of the amounts paid in partial or final redemption of the Notes or the proceeds from the
disposition or assignment of the Notes, respectively.
      In computing the tax to be withheld, the Disbursing Agent may deduct from the basis of the withholding tax
any Accrued Interest paid by the holder of a Note to the Disbursing Agent during the same calendar year; this
does not apply with respect to the withholding of tax from interest on Assignable Loans. In general, no
withholding tax will be levied if the holder of a Note is an individual (i) whose Note does not form part of the
property of a German trade or business nor gives rise to income from the letting and leasing of property, and
(ii) who filed a withholding exemption certificate (Freistellungsauftrag) with the Disbursing Agent but only to the
extent the interest income derived from the Note together with other investment income does not exceed the
maximum exemption amount shown on the withholding exemption certificate. Similarly, no withholding tax will
be deducted if the holder of the Note has submitted to the Disbursing Agent a certificate of non-assessment
(Nichtveranlagungsbescheinigung) issued by the relevant local tax office.
      Withholding tax and solidarity surcharge thereon are credited as prepayments against the German personal
or corporate income tax and the solidarity surcharge liability of the German resident. Amounts overwithheld will
entitle the holder of a Note to a refund, based on an assessment to tax.

     Non-residents
     Interest, including Accrued Interest and Original Issue Discount, and capital gains are not subject to German
taxation, unless (i) the Notes form part of the business property of a permanent establishment, including a
permanent representative, or a fixed base maintained in Germany by the holder of a Note or (ii) the interest
income otherwise constitutes income taxable in Germany (such as income from the letting and leasing of certain
German-situs property). In the latter case a tax regime similar to that explained above under ‘‘Tax Residents’’
applies; capital gains from the disposition of Notes are, however, only taxable in the case of (i).
     Nonresidents of Germany are, in general, exempt from German withholding tax on interest and solidarity
surcharge thereon. However, where the interest is subject to German taxation as set forth in the preceding
paragraph and the Notes are held in a custodial account with a Disbursing Agent, withholding tax is levied as
explained above under ‘‘Tax Residents’’.

     Inheritance and Gift Tax
     No inheritance or gift taxes with respect to any Note will arise under the laws of Germany, if, in the case of
inheritance tax, neither the decedent nor the beneficiary, or, in the case of gift tax, neither the donor nor the
donee, is a resident of Germany and such Note is not attributable to a German trade or business for which a
permanent establishment is maintained, or a permanent representative has been appointed, in Germany.
Exceptions from this rule apply to certain German expatriates.

     Other Taxes
     No stamp, issue, registration or similar taxes or duties will be payable in Germany in connection with the
issuance, delivery or execution of the Notes. Currently, net assets tax is not levied in Germany.

Taxation in the United States of America
     The statements made herein regarding taxation are based on the laws in force as of the date of this
Information Memorandum and are subject to any changes in law occurring after such date, which changes may be
applied retroactively. The following summary applies only to United States Alien Holders (as defined below) of
the Notes and is not a comprehensive description of all of the tax considerations that may be relevant to a
decision to purchase, own or dispose of the Notes. The summary does not deal with the tax consequences
applicable to all categories of investors, some of which (such as financial institutions or dealers in securities or
commodities) may be subject to special rules. The summary also does not apply to any United States Alien
Holder of the Notes that owns, actually or constructively, 10 percent or more of the total combined voting power
of all classes of stock of the relevant Issuer entitled to vote or that is a ‘‘controlled foreign corporation’’ with
respect to the relevant Issuer. Investors should consult their tax advisers with respect to the possible tax
consequences to them of acquiring, holding and disposing of the Notes.
     For purposes of the following discussion, ‘‘United States Alien Holder’’ means a beneficial owner that is
(a) an individual that is a nonresident alien for United States Federal income tax purposes, (b) a corporation
organized or created under non-United States law or (c) an estate or trust that is not taxable in the United States
on its worldwide income.

                                                        139
     General

     Under present United States Federal income and estate tax law and applicable regulations thereunder, and
subject to the qualifications and assumptions set forth above and to the discussion of backup withholding below
and the certification requirements contained therein:

     (a)   Payments of principal of and interest on the Notes and Coupons made outside the United States by the
           relevant Issuer or any of its paying agents to a United States Alien Holder generally will not be subject
           to United States Federal income tax payable by withholding;

     (b)   A United States Alien Holder of a Note or Coupon generally will not be subject to United States
           Federal income tax or withholding tax on any gain realized on the sale, exchange or redemption of
           such Note, unless (1) the gain is effectively connected with the holder’s trade or business in the United
           States or (2) in the case of an individual, the holder is present in the United States for 183 days or
           more in the taxable year in which the sale, exchange or redemption occurs and certain other conditions
           are met; and

     (c)   A Note or Coupon held by an individual at the time of death who at that time is not a citizen or
           resident of the United States will not be subject to United States Federal estate tax, provided that at the
           time of the individual’s death, interest on the Notes would not have been income which is effectively
           connected with the conduct by such individual of a United States trade or business.

     Information Reporting and Backup Withholding

     The payment of the proceeds on the sale, exchange or redemption of a Note to or through the United States
office of a United States or non-United States broker will be subject to information reporting and backup
withholding (currently at a rate of 28%) unless the owner provides certification of its non-United States status or
otherwise establishes an exemption. The proceeds of the sale, exchange or redemption of a Note by a United
States Alien Holder to or through a non-United States office of a broker will not be subject to backup withholding
and, under current law, will also not be subject to information reporting unless the broker has certain connections
to the United States.

Taxation in the Netherlands

    This is a general summary and the tax consequences as described here may not apply to a holder of Notes.
Any potential investor should consult his own tax adviser for more information about the tax consequences of
acquiring, owning and disposing of Notes in his particular circumstances.

     This taxation summary solely addresses the principal Dutch tax consequences of the acquisition, the
ownership and disposition of Notes issued by Bayer Capital Corp. It does not consider every aspect of taxation
that may be relevant to a particular holder of Notes under special circumstances or who is subject to special
treatment under applicable law.

     This summary is based on the tax laws of the Netherlands as they are in force and in effect on the date of this
Information Memorandum. Where in this summary English terms and expressions are used to refer to Dutch
concepts, the meaning to be attributed to such terms and expressions shall be the meaning to be attributed to the
equivalent Dutch concepts under Dutch tax law. The laws upon which this summary is based are subject to
change, perhaps with retroactive effect. A change to such laws may invalidate the contents of this summary,
which will not be updated to reflect any such changes. This summary assumes that each transaction with respect
to Notes is at arm’s length.

     Withholding tax

      All payments under Notes may be made free from withholding or deduction of, for or on account of any
taxes of whatever nature imposed, levied, withheld or assessed by the Netherlands or any political subdivision or
taxing authority thereof or therein, except where Notes are issued under such terms and conditions that such
Notes at any time are capable of being classified as equity, or actually function as equity of Bayer Capital Corp
within the meaning of article 10, paragraph 1, letter d, of the Dutch Corporation Tax Act 1969 (Wet op de
vennootschapsbelasting 1969) and where Notes are issued that are redeemable in exchange for, convertible into
or linked to shares or other equity instruments issued or to be issued by Bayer Capital Corp or by any entity
related to Bayer Capital Corp.

                                                        140
     Taxes on income and capital gains
     The summary set out in this section ‘‘Taxes on income and capital gains’’ only applies to a holder of Notes
who is neither resident nor deemed to be resident in the Netherlands for purposes of Dutch income tax or
corporation tax, as the case may be, and, in the case of an individual, has not elected to be treated as a resident of
the Netherlands for Dutch income tax purposes (a ‘‘Non-Resident holder of Notes’’).

     General
     A Non-Resident holder of Notes will not be subject to income taxation in the Netherlands by reason only of
the execution (ondertekening), delivery (overhandiging) and/or enforcement of the documents relating to the
issue of Notes or the performance by Bayer Capital Corp of its obligations thereunder or under Notes.

     Individuals
     A Non-Resident holder of Notes who is an individual will not be subject to any Dutch taxes on income or
capital gains in respect of any benefit derived or deemed to be derived from Notes, including any payment under
Notes and any gain realised on the disposal of Notes, provided that both of the following conditions are satisfied.
     1.    If he derives profits from an enterprise, whether as an entrepreneur (ondernemer) or pursuant to a co-
           entitlement to the net value of such enterprise, other than as an entrepreneur or a shareholder, which
           enterprise is either managed in the Netherlands or carried on, in whole or in part, through a permanent
           establishment or a permanent representative in the Netherlands, as the case may be, his Notes are not
           attributable to such enterprise.
     2.    He does not derive benefits and is not deemed to derive benefits from Notes that are taxable as benefits
           from miscellaneous activities in the Netherlands (resultaat uit overige werkzaamheden in Nederland).
     Benefits derived or deemed to be derived from Notes by a Non-Resident holder of Notes who is an
individual and who satisfies condition 1. above, including any gain realised on the disposal thereof, will be
taxable as benefits from miscellaneous activities in the Netherlands if he, or an individual who is a connected
person in relation to him as meant in article 3.91, paragraph 2, letter b, or letter c, of the Dutch Income Tax Act
2001 (Wet inkomstenbelasting 2001), has a substantial interest (aanmerkelijk belang) in Bayer Capital Corp.
     A person has a substantial interest in Bayer Capital Corp if such person — either alone or, in the case of an
individual, together with his partner (partner), if any has — directly or indirectly, either the ownership of shares
representing five per cent. or more of the total issued and outstanding capital (or the issued and outstanding
capital of any class of shares) of Bayer Capital Corp, or rights to acquire, directly or indirectly, shares, whether or
not already issued, that represent five per cent. or more of the total issued and outstanding capital (or the issued
and outstanding capital of any class of shares) of Bayer Capital Corp, or the ownership of profit participating
certificates (winstbewijzen) that relate to five per cent. or more of the annual profit of Bayer Capital Corp or to
five per cent. or more of the liquidation proceeds of Bayer Capital Corp.
     A person who is only entitled to the benefits from shares or profit participating certificates (for instance a
holder of a right of usufruct) is deemed to be a holder of shares or profit participating certificates, as the case may
be, and such person’s entitlement to such benefits is considered a share or a profit participating certificate, as the
case may be.
     Furthermore, a Non-Resident holder of Notes who is an individual and who satisfies condition 1. above may,
inter alia, derive benefits from Notes that are taxable as benefits from miscellaneous activities in the following
circumstances, if such activities are performed or deemed to be performed in the Netherlands:
     (a)   if his investment activities go beyond the activities of an active portfolio investor, for instance in case
           of the use of insider knowledge (voorkennis) or comparable forms of special knowledge; or
     (b)   if he makes Notes available or is deemed to make Notes available, legally or in fact, directly or
           indirectly, to certain parties as meant in articles 3.91 and 3.92 of the Dutch Income Tax Act 2001
           under circumstances described there.

     Entities
     A Non-Resident holder of Notes other than an individual will not be subject to any Dutch taxes on income or
capital gains in respect of any payment under the Notes or in respect of any gain realized on the disposal of
Notes, provided that (a) if such Non-Resident holder of Notes derives profits from an enterprise that is either
managed in the Netherlands or carried on, in whole or in part, through a permanent establishment or a permanent

                                                         141
representative in the Netherlands, whether as an entrepreneur (ondernemer) or pursuant to a co-entitlement to the
net value of such enterprise (other than as an entrepreneur or as a holder of securities), the Notes are not
attributable to such enterprise, and (b) such Non-Resident holder of Notes does not have a substantial interest in
Bayer Capital Corp.
     A person other than an individual has a substantial interest in Bayer Capital Corp, (x) if it has a substantial
interest in Bayer Capital Corp (as described above under Individuals) or (y) if it has a deemed substantial interest
in Bayer Capital Corp. A deemed substantial interest may be present if its shares, profit participating certificates
or rights to acquire shares or profit participating certificates in Bayer Capital Corp have been acquired by such
person or are deemed to have been acquired by such person on a non-recognition basis.

     Gift and inheritance taxes
    A person who acquires Notes as a gift, in form or in substance, or who acquires or is deemed to acquire
Notes on the death of an individual, will not be subject to Dutch gift tax or to Dutch inheritance tax, as the case
may be, unless:
     (i)     the donor is, or the deceased was resident or deemed to be resident in the Netherlands for purposes of
             gift or inheritance tax, as the case may be; or
     (ii)    the Notes are or were attributable to an enterprise or part of an enterprise that the donor or the
             deceased carried on through a permanent establishment or a permanent representative in the
             Netherlands at the time of the gift or of the death of the deceased; or
     (iii)   the donor made a gift of Notes, then became a resident or deemed resident of the Netherlands, and
             died as a resident or deemed resident of the Netherlands within 180 days after the date of the gift.

     Other taxes and duties
     No Dutch registration tax, transfer tax, stamp duty or any other similar documentary tax or duty, other than
court fees, will be payable by a holder of Notes in the Netherlands in respect of or in connection with the
execution, delivery and/or enforcement by legal proceedings (including the enforcement of any foreign judgment
in the courts of the Netherlands) of the documents relating to the issue of Notes or the performance by Bayer
Capital Corp of its obligations thereunder or under the Notes.

Taxation in Japan
     Gains derived from the sale outside Japan of Notes issued by Bayer Japan by a non-resident of Japan or a
non-Japanese corporation not having a permanent establishment in Japan are in general not subject to Japanese
income or corporate taxes. Japanese inheritance and gift taxes at progressive rates may be payable by an
individual, wherever resident, who has acquired Notes issued by Bayer Japan as legatee, heir or donee from an
individual.
    No stamp, issue, registration or similar taxes or duties will, under present Japanese law, be payable in Japan
by Noteholders in connection with the issue of the Notes issued by Bayer Japan.
     The following description of Japanese taxation (limited to national taxes) (subject always to the relevant tax
treaty between Japan and the relevant country) applies exclusively to interest with respect to Notes issued by
Bayer Japan outside Japan and payable outside Japan. It is not intended to be exhaustive and Noteholders and/or
Couponholders are recommended to consult their tax advisers as to their exact tax position.
     1.      If the recipient of interest on the Notes is a non-resident of Japan or a non-Japanese corporation with
             no permanent establishment within Japan or with a permanent establishment within Japan but where
             the receipt of interest under the Note is not attributable to the business carried on within Japan by the
             recipient through such permanent establishment, no Japanese income tax or corporate tax is payable
             with respect to such interest whether by way of withholding or otherwise, if such recipient complies
             with certain requirements, inter alia:
             (i)   if the relevant Notes or Coupons are held through a certain participant in an international
                   clearing organisation such as Euroclear and Clearstream, Luxembourg or a certain financial
                   intermediary prescribed by the Special Taxation Measures Law and the relevant cabinet order
                   thereunder (together with the ministerial regulation thereunder, the ‘‘Law’’) (each, a
                   ‘‘Participant’’), the requirement to provide certain information prescribed by the Law to enable

                                                         142
            the Participant to establish that the recipient is exempt from the requirement for Japanese tax to
            be withheld or deducted (the ‘‘Exemption Information’’); and
     (ii)   if the relevant Notes or Coupons are not held by a Participant, the requirement to submit to the
            relevant Paying Agent a claim for exemption from withholding tax (Hikazei Tekiyo
            Shinkokusho) (the ‘‘Claim for Exemption’’), together with certain documentary evidence.
     Failure to comply with such requirements described above will result in the withholding by Bayer
     Japan of income tax at the rate of 15 percent, unless any lower rate is applicable under the relevant tax
     treaty between Japan and another country. Japan has income treaties, conventions or agreements
     whereby the above-mentioned withholding tax rate is reduced, generally to 10 percent with inter alia,
     Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy,
     Luxembourg, The Netherlands, Norway, Singapore, Spain, Sweden, Switzerland, the United Kingdom
     and the United States of America. In order to avail themselves of such reduced rate of withholding tax,
     non-residents of Japan or non-Japanese corporations are required to submit an Application Form for
     Income Tax Convention regarding Relief from Japanese Income Tax on Interest in advance through
     Bayer Japan to the relevant tax authority before payment of interest.
     Under the new Convention Between the Government of Japan and the Government of the United
     States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
     Respect to Taxes on Income, which became effective on March 30, 2004, certain limited categories of
     qualified United States resident investors who hold the Notes may be, subject to compliance with
     certain procedural requirements under Japanese law, fully exempt from Japanese withholding tax for
     interests on the Notes.
     If the recipient of interest on the Notes is a Japanese bank, Japanese insurance company, Japanese
     securities company or other Japanese financial institution falling under certain categories prescribed
     by the relevant Cabinet Order under Article 6, Paragraph 8 of the Special Taxation Measures Law
     (each a ‘‘Designated Financial Institution’’) and such recipient complies with the requirement, inter
     alia, to provide the Exemption Information or to submit the Claim for Exemption, as the case may be,
     no income tax will be imposed, either by way of withholding or otherwise, but the recipient will be
     subject to regular corporate tax with respect to such interest.
2.   If the recipient of interest on the Notes is a non-resident of Japan or a non-Japanese corporation with a
     permanent establishment within Japan and the receipt of interest is attributable to the business of such
     nonresident or non-Japanese corporation carried on within Japan through such permanent
     establishment, such interest will not be subject to a 15 percent withholding tax by Bayer Japan
     provided that the recipient complies with the requirement, inter alia, to provide the Exemption
     Information or to submit the Claim for Exemption as set out in 1. above. Failure to comply with such
     requirement will result in the withholding by Bayer Japan of income tax at the rate of 15 percent. The
     amount of such interest will then be aggregated with the recipient’s other Japanese source income
     which is subject to Japanese taxation and will be subject to regular income tax of corporate tax, as
     appropriate.
3.   If any recipient of interest on the Notes who is a resident of Japan or a Japanese corporation (other
     than Japanese banks, Japanese insurance companies, Japanese securities companies or other Japanese
     financial institutions falling under certain categories prescribed by the relevant Cabinet Order under
     Article 3-3, Paragraph 6 of the Special Taxation Measures Law (each a ‘‘Specified Financial
     Institution’’) or Japanese public corporations (a ‘‘Public Corporation’’) designated by the relevant law
     who comply with the requirement as referred to in the next paragraph) receives payment of interest
     through certain Japanese payment handling agents (each, a ‘‘Japanese Payment Handling Agent’’),
     income tax at the rate of 15 percent will be withheld by the Japanese Payment Handling Agent rather
     than Bayer Japan. An individual Noteholder or Couponholder who receives interest through a
     Japanese Payment Handling Agent will be subject only to the foregoing 15 percent withholding tax by
     the Japanese Payment Handling Agent. In all other cases, the amount of interest will be included in
     the recipient’s gross income and subject to normal income tax or corporate tax, as appropriate.
     If the recipient of interest on the Notes is a Public Corporation or Specified Financial Institution that
     keeps its Notes deposited with, and receives the interest through, a Japanese Payment Handling Agent
     with custody of the Notes (the ‘‘Japanese Custodian’’) and such recipient submits through the
     Japanese Custodian, to the competent tax authority, the report prescribed by the Law, no income tax
     will be levied by way of withholding or otherwise, on such portion of interest as is prescribed by the

                                                  143
           relevant Cabinet Order as that which is corresponding to the period the Notes were held by such
           recipient. However, since Bayer Japan is not in a position to know in advance the recipient’s tax
           exemption status the recipient of interest falling within this category should inform Bayer Japan
           through a Paying Agent of its status in a timely manner. Failure to so notify Bayer Japan may result in
           the withholding by Bayer Japan of a 15 percent income tax. Any amount of interest received by such
           Public Corporation or Specified Financial Institution in excess of the non-taxable portion described
           above is subject to a 15 percent income tax to be withheld by the Japanese Custodian. Any interest on
           the Notes received during the period when Notes were held by a Japanese Payment Handling Agent
           will not be subject to withholding tax by Bayer Japan of 15 percent as set out in 1. above.

Proposed EU Withholding Tax Directive
     On June 3, 2003, the Council of the European Union approved a directive regarding the taxation of interest
income. Accordingly, each EU Member State must require paying agents (within the meaning of the directive)
established within its territory to provide to the competent authority of this state details of the payment of interest
made to any individual resident in another EU Member State as the beneficial owner of the interest. The
competent authority of the EU Member State of the paying agent (within the meaning of the directive) is then
required to communicate this information to the competent authority of the EU Member State of which the
beneficial owner of the interest is a resident.
     For a transitional period, Austria, Belgium and Luxembourg may opt instead to withhold tax from interest
payments within the meaning of the directive at a rate of 15% for the first three years from application of the
provisions of the directive, of 20% for the subsequent three years, and of 35% from the seventh year after
application of the provisions of the directive.
     The Council of the European Union agreed that the provisions to be enacted for implementation of the
directive shall be applied by the member states as of July 1, 2005. This presupposes that (i) Switzerland,
Liechtenstein, San Marino, Monaco and Andorra apply from that same date measures equivalent to those
contained in the directive, in accordance with agreements entered into by them with the European Community
and (ii) also all the relevant dependent or associated territories (the Channel Islands, the Isle of Man and the
dependent or associated territories in the Caribbean) apply from that same date an automatic exchange of
information or, during the transitional period described above, apply a withholding tax in the described manner.
     By legislative regulations dated January 26, 2004, the Federal Government enacted the provisions for
implementing the directive into German law. The entry into force of the legislative regulations depends, however,
on a determination by the Council of the European Union to the effect that the conditions for the application of
the directive have been fulfilled. In view of the conditions mentioned before, it is presently not yet possible to
predict when the directive will ultimately be applicable.
     Holders who are individuals should note that, if this proposal is adopted, the Issuer will not pay additional
amounts under § 7 of the Terms and Conditions of the Notes in respect of any withholding tax imposed as a result
thereof.




                                                         144
                                           SELLING RESTRICTIONS

General

      Each Dealer acknowledges that, other than with respect to the listing of the Notes on the relevant stock
exchange, no action has been or will be taken in any country or jurisdiction by the Issuer or the Dealers that
would permit a public offering of Notes, or possession or distribution of any offering material in relation thereto,
in any country or jurisdiction where action for that purpose is required. Each Dealer will (to the best of its
knowledge) comply with all applicable laws and regulations in each country or jurisdiction in or from which it
purchases, offers, sells or delivers Notes or has in its possession or distributes such offering material, in all cases
at its own expense.

United States of America

     Each Dealer understands that the Notes have not been and will not be registered under the U.S. Securities
Act of 1933, as amended (the ‘‘Securities Act’’), and may not be offered or sold in the United States or to, or for
the account or benefit of, U.S. persons except in accordance with Regulation S under the Securities Act or
pursuant to another exemption from the registration requirements of the Securities Act. Terms used in this
paragraph have the same meaning given to them by Regulation S under the Securities Act.

      Each Dealer has represented and agreed and each further Dealer appointed under the Programme will be
required to agree that it has not offered or sold Notes and will not offer or sell Notes (a) as part of their
distribution at any time or (b) otherwise until forty days after the later of the date the Notes were first offered to
persons other than distributors and the completion of the distribution of all Notes of the Tranche of which such
Notes are a part, as determined and certified to the Fiscal Agent and the Issuer by the relevant Dealer (or, in the
case of a sale of a Tranche to or through more than one Dealer, by each of such Dealers as to the Notes of such
Tranche purchased by or through it, in which case the Fiscal Agent shall notify each such Dealer when all such
Dealers have so certified), within the United States or to, or for the account or benefit of, U.S. persons, except in
accordance with Rule 903 of Regulation S under the Securities Act and the U.S. tax law requirements.
Accordingly, none of the Dealers, their affiliates nor any persons acting on its or their behalf have engaged or will
engage in any directed selling efforts with respect to any Note, and the Dealers, their affiliates and any person
acting on their behalf have complied and will comply with the offering restrictions requirements of Regulation S.
Each Dealer has agreed that, at or prior to confirmation of sale of Notes, it will have sent to each distributor,
dealer or other person receiving a selling concession, fee or other remuneration that purchases Notes from it or
through it prior to the expiration of the 40-day distribution compliance period a confirmation or notice to
substantially the following effect:

                  ‘‘The Notes offered and/or sold hereby have not been registered under the United
            States Securities Act of 1933, as amended (the ‘‘Securities Act’’) and may not be offered
            or sold within the United States or to, or for the account or benefit of, U.S. persons (a) as
            part of their distribution at any time or (b) otherwise until forty days after the later of
            (i) the date the Notes were first offered to persons other than distributors and (ii) the
            completion of the distribution of all Notes of the Tranche of which such Notes are a part,
            as determined and certified by the Agent for the Notes to [Name of Dealer or Dealers, as
            the case may be], except in either case in accordance with Regulation S under the
            Securities Act, pursuant to the registration of the Notes under the Securities Act or
            pursuant to another available exemption from the registration requirements of the
            Securities Act. Terms used above have the meaning given to them by Regulation S.’’

     Terms used in the above paragraph have the meanings given to them by Regulation S.

     In addition, until 40 days after the commencement of the offering of Notes comprising any Tranche, an offer
or sale of such Notes in the United States by a dealer (whether or not participating in the offering) may violate the
registration requirements of the Securities Act if such offer or sale is made otherwise than pursuant to the
registration of such Notes under the Securities Act or in accordance with an available exemption from the
registration requirements of the Securities Act.

      Each issuance of Notes will be subject to such additional U.S. selling restrictions as indicated in the
applicable Pricing Supplement. Each Dealer has agreed and each further Dealer appointed under the Programme
will be required to agree that it will offer, sell and deliver such Notes only in compliance with such additional
selling restrictions.

                                                         145
     Each Dealer who has purchased Notes of any Tranche in accordance with this Agreement (or, in the case of
a sale of a Tranche of Notes issued to or through more than one Dealer, each of such Dealers as to Notes of such
Tranche purchased by or through it) shall determine and certify to the Fiscal Agent and the Issuer the completion
of the distribution of the Notes of such Tranche as aforesaid. On the basis of such certification or certifications,
the Fiscal Agent agrees to notify such Dealer or Dealers of the end of the distribution compliance period with
respect to such Tranche.

     Notes will be issued in accordance with the provisions of United States Treasury Regulation § 1.163-
5(c)(2)(i)(D) (the ‘‘D Rules’’), unless the relevant Pricing Supplement specifies that Notes will be issued in
accordance with the provisions of United States Treasury Regulation § 1.163-5(c)(2)(i)(C) (the ‘‘C Rules’’).

        In addition, in respect of Notes issued in accordance with the D Rules each Dealer represents and agrees
that:

        (a)   except to the extent permitted under the D Rules, (i) it has not offered or sold, and during the restricted
              period will not offer or sell, Notes in bearer form to a person who is in the United States or its
              possessions or to a United States person, and (ii) such Dealer has not delivered and will not deliver in
              the United States or its possessions definitive Notes in bearer form that are sold during the restricted
              period;

        (b)   it has and throughout the restricted period will have in effect procedures reasonably designed to ensure
              that its employees or agents who are directly engaged in selling Notes in bearer form are aware that
              such Notes may not be offered or sold during the restricted period to a person who is in the United
              States or its possessions or to a United States person, except as permitted by the D Rules;

        (c)   if such Dealer is a United States person, it represents that it is acquiring the Notes in bearer form for
              purposes of resale in connection with their original issuance and, if such Dealer retains Notes in bearer
              form for its own account, it will only do so in accordance with the requirements of U.S. Treas. Reg.
              § 1.163-5(c)(2)(i)(D)(6) and the provisions of U.S. Treas. Reg. § 1.163-5(c)(2)(i)(D)(7) governing the
              restricted period for unsold allotments or subscriptions shall apply to any obligation it retains for
              investment; and

        (d)   with respect to each affiliate that acquires from such Dealer Notes in bearer form for the purposes of
              offering or selling such Notes during the restricted period, such Dealer either (i) hereby represents and
              agrees on behalf of such affiliate to the effect set forth in sub-paragraph (a), (b) and (c) of this
              paragraph or (ii) agrees that it will obtain from such affiliate for the benefit of the Issuer the
              representations and agreements contained in sub-paragraphs (a), (b) and (c) of this paragraph.

    Terms used in the above paragraph have the meanings given to them by the United States Internal Revenue
Code of 1986, as amended, and Regulations thereunder, including the D Rules.

      In addition, where the C Rules are specified in the relevant Pricing Supplement as being applicable in
relation to any Tranche of Notes, Notes in bearer form must be issued and delivered outside the United States and
its possessions in connection with their original issuance. Each Dealer represents and agrees that it has not
offered, sold or delivered, and will not offer, sell or deliver, directly or indirectly, Notes in bearer form within the
United States or its possessions in connection with the original issuance. Further, each Dealer represents and
agrees in connection with the original issuance of Notes in bearer form, that it has not communicated, and will
not communicate, directly or indirectly, with a prospective purchaser if such purchaser is within the United States
or its possessions and will not otherwise involve its U.S. office in the offer or sale of Notes in bearer form. Terms
used in this paragraph have the meanings given to them by the U.S. Internal Revenue Code of 1986, as amended,
and regulations thereunder, including the C Rules.

      Each issuance of index-, commodity- or currency-linked Notes shall be subject to such additional U.S.
selling restrictions as the relevant Issuer and the relevant Dealer or Dealers may agree as a term of the issuance
and purchase of such Notes, which additional selling restrictions shall be set out in the relevant Pricing
Supplement and the Relevant Agreement. Each Dealer agrees that it shall offer, sell and deliver such Notes only
in compliance with such additional U.S. selling restrictions.

     Each Dealer represents and agrees that it has not entered and will not enter into any contractual
arrangements with respect to the distribution or delivery of Notes into the United States, except with its affiliates
or with the prior written consent of the Issuer.

                                                           146
United Kingdom
      Each Dealer has represented and agreed that:
      (i)     in relation to Notes which have a maturity of one year or more, it has not offered or sold and, prior to
              the expiry of a period of six months from the Issue Date of such Notes, will not offer or sell any such
              Notes to persons in the United Kingdom except to persons whose ordinary activities involve them in
              acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of
              their businesses or otherwise in circumstances which have not resulted and will not result in an offer to
              the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations
              1995;
      (ii)    in relation to any Notes which must be redeemed before the first anniversary of the date of their issue,
              (a) it is a person whose ordinary activities involve it in acquiring, holding, managing or disposing of
              investments (as principal or agent) for the purposes of its business and (b) it has not offered or sold
              and will not offer or sell any Notes other than to persons whose ordinary activities involve them in
              acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of
              their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments
              (as principal or agent) for the purposes of their businesses where the issue of the Notes would
              otherwise constitute a contravention of Section 19 of the FSMA by the relevant Issuer;
      (iii)   it has only communicated or caused to be communicated and will only communicate or cause to be
              communicated any invitation or inducement to engage in investment activity (within the meaning of
              section 21 of the FSMA) received by it in connection with the issue or sale of any Notes in
              circumstances in which section 21(1) of the FSMA does not apply to the relevant Issuer or the
              Guarantor; and
      (iv)    it has complied and will comply with all applicable provisions of the FSMA with respect to anything
              done by it in relation to such Notes in, from or otherwise involving the United Kingdom.

Japan
      The Notes have not been and will not be registered under the Securities and Exchange Law of Japan (Law
No. 25 of 1948) (as amended) (the ‘‘Securities and Exchange Law’’) and are subject to the Special Taxation
Measures Law of Japan (Law No. 26 of 1957) (as amended) (the ‘‘Special Taxation Measures Law’’). Each of the
Dealers has represented and agreed that (i) it has not, directly or indirectly, offered or sold and will not, directly
or indirectly, offer or sell Notes in Japan or to any person resident in Japan for Japanese securities law purposes
(including any corporation or other entity organised under the laws of Japan), except pursuant to an exemption
from the registration requirements of, and otherwise in compliance with, the Securities and Exchange Law of
Japan; and (ii) it has not, directly or indirectly, offered or sold and will not, (a) as part of its distribution at any
time and (b) otherwise until forty days after the closing date, directly or indirectly offer or sell Notes to any
person other than a Gross Recipient. A ‘‘Gross Recipient’’ for this purpose is (i) a beneficial owner that is not an
individual resident of Japan or a Japanese corporation for Japanese tax purposes, (ii) a Japanese financial
institution, designated in Article 3-2 paragraph (19) of the Cabinet Order (Cabinet Order No. 43 of 1957) (as
amended) (the ‘‘Cabinet Order’’) relating to the Special Taxation Measures Law that will hold Notes for its own
proprietary account or (iii) an individual resident of Japan or a Japanese corporation whose receipt of interest on
the Notes will be made through a payment handling agent in Japan as defined in Article 2-2 paragraph (2) of the
Cabinet Order.

Federal Republic of Germany
     Each Dealer has confirmed that it is aware of the fact that no German selling prospectus (Verkaufsprospekt)
has been or will be published with respect to the Programme and that such Dealer will comply with the Securities
Selling Prospectus Act (the ‘‘SSPA’’) of the Federal Republic of Germany (Wertpapier-Verkaufsprospektgesetz).
                                                                         o
In particular, each Dealer undertakes not to engage in public offering (¨ ffentliches Anbieten) or other selling
activities in the Federal Republic of Germany with respect to any Notes issued under the Programme otherwise
than in accordance with the SSPA and any other legislation replacing or supplementing the SSPA and all other
applicable laws and regulations.

The Netherlands/Global
(I)   Any Notes (including rights representing an interest in a Note in global form) issued under the Programme
      that are offered in or from The Netherlands may, in order to comply with the Act on the Supervision of

                                                          147
Securities Trade 1995 (Wet toezicht effectenverkeer 1995; the ‘‘Netherlands Securities Act’’), only be
offered in accordance with any one of the following restrictions (or a combination of (b) and (c)) as specified
in the relevant Pricing Supplement;

(a)   in the event that such Notes have been or are likely to be shortly admitted to listing on the Official
      Segment of the stock market of Euronext Amsterdam N.V.; or

(b)   to individuals or legal entities who or which trade or invest in securities in the conduct of a business or
      profession (which includes banks, securities intermediaries (including dealers and brokers), insurance
      companies, pension funds, collective investment institutions, central governments, large international
      and supranational organisations, other institutional investors and other parties, including treasury
      departments of commercial enterprises, which as an ancillary activity regularly invest in securities),
      provided that it must be made clear in the offer, the Information Memorandum, the applicable Pricing
      Supplement and in any documents or advertisements in which a forthcoming offer of the Notes is
      announced (collectively ‘‘announcements’’) that such offer is exclusively made to such individuals or
      legal entities; and/or

(c)   to persons or entities who or which are established, domiciled or have their usual residence
      (collectively, ‘‘are resident’’) outside The Netherlands, provided that:

      (i)     in the offer, the Information Memorandum, the applicable Pricing Supplement and in any
              announcement, it is stated that the offer is not and will not be made to persons or entities who or
              which are resident in The Netherlands;

      (ii)    the offer, the Information Memorandum, the applicable Pricing Supplement, and any
              announcement comply with the laws and regulations of each jurisdiction where persons or
              entities to whom or which the offer is made are resident; and

      (iii)   a statement by the issuer to the effect that such laws and regulations are complied with is
                                                                                         e
              submitted to the Authority for the Financial Markets (Autoriteit Financi¨ le Markten: the
              ‘‘AFM’’) before the offer or any such announcement is made and such statement is included in
              the Information Memorandum, the applicable Pricing Supplement and in each announcement;
              or

(d)   if the Notes are part of an issue comprising only Notes with a denomination of at least EUR 50,000
      each or the equivalent in another currency; or

(e)   if the offer or the forthcoming offer concerns a syndicated issue of Notes (Euro-effecten), provided
      that:

      (i)     the Notes are subscribed for and placed by a syndicate of which at least two members have their
              statutory seat in different states which are a party to the European Treaty on the Economic Area
              (‘‘EEA’’);

      (ii)    60 % or more of the relevant issued amount of the Notes are offered outside the Issuer’s
              jurisdiction of incorporation;

      (iii)   the Notes can only be subscribed for or in first instance only be purchased through the
              intermediation of a credit institution (registered with the Dutch Central Bank) or another
              financial institution providing services described in paragraphs 7 and 8 of the Annex to the
              Banking Co-ordination Directive (2000/12/EC); and

      (iv)    no general advertising or cold calling campaign may be conducted in respect of the securities in
              or outside The Netherlands; or

(f)   in the event that (a) such Notes have been admitted to the official listing on a stock exchange, or have
      otherwise been publicly offered, in another state which is a party to the EEA and (b) the Information
      Memorandum has been approved by, and the applicable Pricing Supplement has been submitted to or
      approved by, the competent authority as referred to in Article 20 or Article 21 of EC Directive 89/298/
      EEC (the ‘‘Competent Authority’’) and (c) the AFM has confirmed, where necessary, the availability
      of recognition in respect of such documents and (d) the offering circular and relevant Pricing
      Supplement have been drawn up in accordance with Article 8 or Article 12 of EC Directive 89/298/

                                                    148
             EEC provided that the offer is made within 6 months after the approval of the Information
             Memorandum referred to under (b) and:
             (i)     each announcement is submitted to the AFM prior to publication thereof and mentions where
                     and when the Information Memorandum and the applicable Pricing Supplement will be or have
                     been made generally available; and
             (ii)    prior to the submission of the Information Memorandum (together with the written approval
                     thereof by the Competent Authority) and the applicable Pricing Supplement to the AFM and the
                     publication thereof in accordance with (i) above:
                     a)   each relevant Dealer shall not offer, transfer or sell any Notes except to individuals or
                          legal entities as referred to in paragraph (b) and/or (c) above; and
                     b)   either it has not distributed and will not distribute any offering or promotional materials in
                          respect of the Notes (whether electronically or otherwise) or it has complied and will
                          comply with the conditions under paragraph (b) and/or (c) above;
                     and each invitation telex and Pricing Supplement in respect of such Notes will set forth the
                     restrictions under b) and/or (c) above; and
             (iii)   if after the date of the Information Memorandum new relevant facts occur or become known,
                     section 6 of the Decree on the Supervision of the Securities Trade 1995 (Besluit toezicht
                     effectenverkeer 1995) is complied with; or
       (g)   if any other exemption from the prohibition contained in article 3 paragraph 1 of the Netherlands
             Securities Act applies or if the AFM has, upon request, granted an (individual) dispensation from the
             above prohibition and the conditions attached to such dispensation are fully complied with.
(II)    In addition and without prejudice to the relevant restrictions set out under (I) above, Zero Coupon Notes
        (as defined below) in definitive form of any Issuer may only be transferred and accepted, directly or
        indirectly, within, from or into The Netherlands through the mediation of either the relevant Issuer or a
        member of Euronext Amsterdam N.V. with due observance of the Dutch Savings Certificates Act (Wet
        inzake spaarbewijzen) of 21 May 1985 (as amended) and its implementing regulations. No such mediation
        is required: (a) in respect of the transfer and acceptance of rights representing an interest in a Zero Coupon
        Note in global form, or (b) in respect of the initial issue of Zero Coupon Notes in definitive form to the first
        holders thereof, or (c) in respect of the transfer and acceptance of Zero Coupon Notes in definitive form
        between individuals not acting in the conduct of a business or profession, or (d) in respect of the issue and
        trading of such Zero Coupon Notes within, from or into The Netherlands if all Zero Coupon Notes (either
        in definitive form or as rights representing an interest in a Zero Coupon Note in global form) of any
        particular Series are issued outside The Netherlands and are not distributed into The Netherlands in the
        course of initial distribution or immediately thereafter. As used herein ‘‘Zero Coupon Notes’’ are Notes
        that are in bearer form and that constitute a claim for a fixed sum against the relevant Issuer and on which
        interest does not become due during their tenor or on which no interest is due whatsoever.

Switzerland
     Each Dealer represents and agrees that any issue of Notes denominated in Swiss Francs will be in
compliance with the guidelines of the Swiss National Bank regarding issues of Swiss Franc denominated debt
securities.




                                                          149
                                          GENERAL INFORMATION

1.   Application has been made to list Notes under the Programme on the Luxembourg Stock Exchange. Prior to
     the listing of any Notes, the constitutional documents of the Issuers and the Guarantor and the legal notice
     relating to the issue will be registered with the Registrar of the District Court in Luxembourg (Registre de
                            ee ´
     Commerce et des Soci´ t´ s a Luxembourg), where copies of these documents may be obtained upon request.

     However, Notes may be issued pursuant to the Programme which will not be listed on the Luxembourg
     Stock Exchange or any other stock exchange or which will be listed on such stock exchange as the Issuer
     and the relevant Dealer(s) may agree.

2.   Notes may be sold from time to time by the Issuers to any one or more of Morgan Stanley & Co.
     International Limited, Deutsche Bank Aktiengesellschaft and the other Dealers specified herein (the
     ‘‘Dealers’’). The arrangements under which Notes may from time to time be agreed to be sold by the Issuer
     to, and purchased by, Dealers are set out in an Amended and Restated Dealership Agreement dated
     October 15, 2004 (the ‘‘Dealership Agreement’’) and made between the Issuers, the Guarantor and the
     Dealers. Any such agreement will, inter alia, make provision for the form and terms and conditions of the
     relevant Notes, the price at which such Notes will be purchased by the Dealers and the commissions or other
     agreed deductibles (if any) payable or allowable by the Issuers in respect of such purchase. The Dealership
     Agreement makes provision for the resignation or termination of appointment of existing Dealers and for the
     appointment of additional or other Dealers either generally in respect of the Programme or in relation to a
     particular Tranche of Notes.

3.   The establishment of the Programme was authorized by the competent representatives of Bayer AG on
     April 25, 2000 and September 14, 2000, of Bayer Capital Corp on October 18, 2000, of Bayer Corporation
     on July 25, 2000 and of Bayer Japan on October 18, 2000. The increase of the Programme Amount to Euro
     8,000,000,000 was authorized by the competent representatives of Bayer AG on August 3, 2001 and
     September 13, 2001, of Bayer Capital Corp on October 2, 2001, of Bayer Corporation on September 5, 2001
     and of Bayer Japan on October 3, 2001. The Issuers and the Guarantor have obtained or will obtain from
     time to time all necessary consents, approvals and authorisations in connection with the issue and
     performance of the Notes.

4.   The Notes have been accepted for clearance through Euroclear, Clearstream Banking AG, Frankfurt am
                                            ee
     Main, and Clearstream Banking, soci´ t´ anonyme, Luxembourg. The appropriate common code and the
     International Securities Identification Number in relation to the Notes of each Series will be specified in the
     Pricing Supplement relating thereto. The relevant Pricing Supplement shall specify any other clearing
     system as shall have accepted the relevant Notes for clearance together with any further appropriate
     information.

5.   Bearer Notes (other than Temporary Global Notes) and any Coupon appertaining thereto with a maturity of
     more than 183 days will bear a legend substantially to the following effect: ‘‘Any United States person who
     holds this obligation will be subject to limitations under the United States income tax laws, including the
     limitations provided in Sections 165(j) and 1287(a) of the Internal Revenue Code.’’ The sections referred to
     in such legend provide that a United States person who holds a Bearer Note or Coupon generally will not be
     allowed to deduct any loss realised on the sale, exchange or redemption of such Bearer Note or Coupon and
     any gain (which might otherwise be characterised as capital gain) recognised on such sale, exchange or
     redemption will be treated as ordinary income. The following legend will appear on all global notes and
     Definitive Notes, coupons, talons and receipts in bearer form with a maturity at issuance of 183 days or less:
     ‘‘By accepting this obligation, the holder represents and warrants that it is not a United States person (other
     than an exempt recipient described in Section 6049 (b)(4) of the Internal Revenue Code of the United States
     and the regulations thereunder) and that it is not acting for or on behalf of a United States person (other than
     an exempt recipient described in Section 6049 (b)(4) of the Internal Revenue Code of the United States and
     the regulations thereunder).

6.   Any Notes and Coupons appertaining thereto will bear a legend substantially to the following effect:
     ‘‘Interest payment on this security will be subject to Japanese withholding tax unless the Holder establishes
     that the security is held by or for the account of a Holder that is not an individual resident of Japan or a
     Japanese corporation for Japanese tax purposes or is a designated Japanese financial institution described in
     Article 6 of the Special Taxation Measures Law of Japan.

                                                        150
     Interest payments on this security to an individual resident of Japan or a Japanese corporation not described
     in the preceding paragraph will be subject to deduction in respect of Japanese income tax at a rate of
     15 percent of the amount specified in subparagraphs (A) or (B) below, as applicable:

     (A)    If interest is paid to an individual resident or to a Japanese corporation (except as provided in
            subparagraph (B) below), the amount of such interest;

     (B)   If interest is paid to a public corporation, a financial institution or a securities company through a
           Japanese payment handling agent as provided in Article 3-3, paragraph 6 of the Special Taxation
           Measures Law of Japan, the amount of such interest minus the amount provided in the Cabinet Order
           relating to said paragraph 6.’’

7.   Settlement arrangements will be agreed between the Issuers, the Guarantor, the relevant Dealer and the
     Fiscal Agent or, as the case may be, the Registrar in relation to each Tranche of Notes.

8.   The Luxembourg Stock Exchange has allocated to the Programme the number 12474 for listing purposes.

9.   In connection with the issue of any Tranche (as defined herein) of Notes under the Programme, the Dealer
     who is specified in the relevant Pricing Supplement as the stabilizing manager (or persons acting on its
     behalf) may over-allot or effect transactions with a view to supporting the price of the Notes at a level higher
     than that which might otherwise prevail. However, there is no assurance that such Dealer (or persons acting
     on its behalf) will undertake stabilization action. Any stabilization action may begin at any time after the
     adequate public disclosure of the final terms of the offer of the Notes and, if begun, may be ended at any
     time, but it must end no later than the earlier of 30 days after the Issue Date and 60 days after the date of the
     allotment of the Notes.

10. There are no legal, arbitration or administrative proceedings against or affecting any of the Issuers or the
    Guarantor or any of their subsidiaries (and no such proceedings are pending or threatened) which have or
    may have, individually or in the aggregate, a significant effect on the financial position of any of the Issuers
    or the Guarantor or of the Guarantor and its subsidiaries taken as a whole, other than those referred to in
    ‘‘Bayer Aktiengesellschaft – Legal Proceedings’’.

11. Except as laid down in this Information Memorandum, there has been, since December 31, 2003, the last
    day of the financial period in respect of which the most recent audited financial statements of the Issuers and
    the Guarantor have been prepared, no significant change in the financial or trading position nor any material
    adverse change in the financial position or prospects of the Issuers and the Guarantor and its subsidiaries
    taken as a whole.

12. The financial statements of Bayer AG have been audited for the financial years ended December 31, 2002
                                                                                       u
    through December 31, 2003 by PwC Deutsche Revision Aktiengesellschaft Wirtschaftspr¨ fungsgesellschaft,
    independent public auditors of Bayer AG for that period, and unqualified opinions have been reported
    thereon.

13. The financial statements of Bayer Capital Corp as of and for the years ended December 31, 2002 through
    December 31, 2003 have been audited by PricewaterhouseCoopers Accountants N.V., independent auditors
    of Bayer Capital Corp for that period as stated in their report and unqualified opinions have been reported
    thereon.

14. The financial statements of Bayer Corporation as of and for the years ended December 31, 2002 through
    December 31, 2003 incorporated by reference into the Information Memorandum have been audited by
    PricewaterhouseCoopers LLP, independent accountants, for that period as stated in their report incorporated
    by reference herein.

15. The financial statements of Bayer Japan have been audited for the financial years ended December 31, 2002
    through December 31, 2003 by ChuoAoyama PricewaterhouseCoopers, independent public auditors of
    Bayer Japan for that period, and unqualified opinions have been reported thereon.

16. Bayer AG produces semi-annual unaudited financial statements. Bayer Capital Corp does not produce
    interim financial statements. Bayer Corporation produces semi-annual unaudited financial statements. Bayer
    Japan does not produce interim financial statements.

17. For so long as the Programme remains in effect or any Notes shall be outstanding, copies and, where
    appropriate, English translations of the following documents may be inspected (and in the case of (b) and

                                                        151
(e) through (h) will be available free of charge) during normal business hours at the specified office of the
Paying Agent in Luxembourg, namely:
(a)   The constitutional documents of the Issuers and the Guarantor;
(b)   the Information Memorandum and any document incorporated by reference therein, any Supplemental
      Information Memorandum and any Pricing Supplement prepared in connection with the issue of Notes
      under the Programme;
(c)   the Fiscal Agency Agreement;
(d)   the Dealership Agreement;
(e)   the Guarantee and Negative Pledge;
(f)   the most recent publicly available audited consolidated and non-consolidated financial statements of
      Bayer AG, the most recent publicly available consolidated financial statements of Bayer Corporation
      (Bayer Corporation does not prepare non-consolidated financial statements) and the most recent
      publicly available non-consolidated financial statements of Bayer Capital Corp and Bayer Japan
      (Bayer Capital Corp and Bayer Japan do not prepare consolidated financial statements) beginning with
      such financial statements for the year ended 2002; and
(g)   the most recent publicly available unaudited interim financial statements of Bayer AG and Bayer
      Corporation, beginning with the interim report for the period from January 1, 2004 to June 30, 2004.




                                                 152
                REGISTERED OFFICES OF THE ISSUERS

Bayer Aktiengesellschaft                Bayer Capital Corporation B.V.
   51368 Leverkusen                             Energieweg 1
       Germany                                3641 RT Mijdrecht
                                               The Netherlands

    Bayer Corporation                              Bayer Ltd.
      100 Bayer Road                   10-8, Takanawa 4-chome, Minato-ku
Pittsburgh, PA 15205-9741                        Tokyo 108-8571
            USA                                      Japan




                               153
                                 NAMES AND ADDRESSES

                                        FISCAL AGENT
                                 Deutsche Bank AG London
                                      Winchester House
                                  1 Great Winchester Street
                                     London EC2N 2DB



                                        PAYING AGENTS
        Deutsche Bank AG London                          Deutsche Bank Luxembourg S.A.
             Winchester House                              2, boulevard Konrad Adenauer
         1 Great Winchester Street                              L-1115 Luxembourg
            London EC2N 2DB



                                         ARRANGERS
Morgan Stanley & Co. International Limited               Deutsche Bank Aktiengesellschaft
             25 Cabot Square                                 Große Gallusstrasse 10-14
              Canary Wharf                                  D-60272 Frankfurt am Main
            London E14 4QA



                                          DEALERS
         ABN AMRO Bank N.V.                             Banc of America Securities Limited
            250 Bishopsgate                                      5 Canada Square
          London EC2M 4AA                                        London E14 5AQ

  Bayerische Hypo- und Vereinsbank AG                         Bayerische Landesbank
             Arabellastrasse 12                                 Brienner Strasse 18
                       u
              81925 M¨ nchen                                              u
                                                                 80333 M¨ nchen

     Commerzbank Aktiengesellschaft                Credit Suisse First Boston (Europe) Limited
         60 Gracechurch Street                                  One Cabot Square
          London EC3V OHR                                        London E14 4QJ

     Deutsche Bank Aktiengesellschaft                   Dresdner Bank Aktiengesellschaft
         Große Gallusstrasse 10-14                             u
                                                              J¨ rgen-Ponto-Platz 1
        D-60272 Frankfurt am Main                          D-60301 Frankfurt am Main

       Goldman Sachs International                         J.P. Morgan Securities Ltd.
           Peterborough Court                                    125 London Wall
            133 Fleet Street                                    London EC2Y 5AZ
           London EC4A 2BB



                         Morgan Stanley & Co. International Limited
                                      25 Cabot Square
                                       Canary Wharf
                                     London E14 4QA




                                             154
                                             LAWYERS
                                            To the Dealers
                                          As to German Law
                                           Hengeler Mueller
                                   Partnerschaft von Rechtsanwaelten
                                     Bockenheimer Landstraße 51
                                      D-60325 Frankfurt am Main



                                             LAWYERS
                                            To the Issuers
     As to Japanese Law            As to the Laws of The Netherlands            As to U.S. Law
Nagashima Ohno & Tsunematsu                Loyens & Loeff              Cravath, Swaine & Moore LLP
         Kioicho Bldg.                       Weena 690                        Worldwide Plaza
   3-12, Kioicho, Chiyoda-ku            NL-3012 CN Rotterdam                 825 Eighth Avenue
     Tokyo 102-0094, Japan                                              New York, N.Y. 10019-7475
                                                                                  U.S.A.



                                          LISTING AGENT
                                          Kredietbank S.A.
                                          Luxembourgeoise
                                         43 Boulevard Royal
                                         L-2955 Luxembourg



                                             AUDITORS
                                            To the Issuers
        For Bayer Aktiengesellschaft                          For Bayer Capital Corporation B.V.
         PwC Deutsche Revision                           PricewaterhouseCoopers Accountants N.V.
            Aktiengesellschaft                                       Archimedeslaan 21
                    ¨
      Wirtschaftsprufungsgesellschaft                               NL-3584 BA Utrecht
           Friedrich-List-Str. 20
              D-45128 Essen

           For Bayer Corporation                                        For Bayer Ltd.
        PricewaterhouseCoopers LLP                           ChuoAoyama PricewaterhouseCoopers
                US Steel Tower                                    Certified Public Accountants
               600 Grant Street                                 3-2-5 Kasumigaseki Chiyoda-ku
                   52nd Floor                                            Tokyo, Japan
             Pittsburgh, PA 15219
                     U.S.A.




                                                 155

				
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