Exhibit 4.7


 


EXECUTION COPY


 


 




 


 





AGREEMENT AND PLAN OF MERGER


 


by and among


 


NOVARTIS CORPORATION


 


 


ZODNAS ACQUISITION CORP.


 


 


an indirect, wholly owned subsidiary of Novartis
Corporation


 


 


EON LABS, INC.


 


 


and for purposes of Section 10.12 only, NOVARTIS
AG


 


 


Dated as of February 20, 2005




 


 





 

















 


TABLE OF CONTENTS


 


	
   

  	
  Page

  
	
   

  	
   

  
	
  AGREEMENT
  AND PLAN OF MERGER

  	
  1

  
	
   

  	
   

  
	
  ARTICLE I
  The Offer

  	
  2

  
	
  1.1

  	
  The
  Offer

  	
  2

  
	
  1.2

  	
  Company
  Actions

  	
  4

  
	
  1.3

  	
  Directors

  	
  5

  
	
   

  	
   

  
	
  ARTICLE II
  The Merger

  	
  6

  
	
  2.1

  	
  The
  Merger

  	
  6

  
	
  2.2

  	
  Effective
  Time

  	
  6

  
	
  2.3

  	
  Certificate
  of Incorporation

  	
  6

  
	
  2.4

  	
  By-Laws

  	
  6

  
	
  2.5

  	
  Directors

  	
  6

  
	
  2.6

  	
  Officers

  	
  7

  
	
   

  	
   

  
	
  ARTICLE III
  Effect of the Merger on Capital Stock; Exchange of Certificates

  	
  7

  
	
  3.1

  	
  Effect
  on Capital Stock

  	
  7

  
	
  3.2

  	
  Exchange
  of Share Certificates

  	
  8

  
	
  3.3

  	
  Dissenters’
  Rights

  	
  10

  
	
  3.4

  	
  Stockholders’
  Meeting

  	
  10

  
	
  3.5

  	
  Merger
  Without Meeting of Stockholders

  	
  11

  
	
   

  	
   

  
	
  ARTICLE IV
  The Closing

  	
  11

  
	
  4.1

  	
  Closing

  	
  11

  
	
   

  	
   

  
	
  ARTICLE V
  Representations and Warranties

  	
  11

  
	
  5.1

  	
  Representations
  and Warranties of the Company

  	
  11

  
	
  5.2

  	
  Representations
  and Warranties of Novartis and Merger Sub

  	
  16

  
	
   

  	
   

  
	
  ARTICLE VI
  Conduct of Business Pending the Merger

  	
  18

  
	
  6.1

  	
  Covenants
  of the Company

  	
  18

  
	
   

  	
   

  
	
  ARTICLE VII
  Additional Agreements

  	
  19

  
	
  7.1

  	
  Access

  	
  19

  
	
  7.2

  	
  No
  Solicitation

  	
  20

  
	
  7.3

  	
  Other
  Actions; Notification

  	
  20

  
	
  7.4

  	
  Publicity

  	
  21

  
	
  7.5

  	
  Expenses

  	
  21

  
	
  7.6

  	
  Anti-Takeover
  Statute

  	
  21

  
	
  7.7

  	
  Novartis
  Vote

  	
  21

  
	
  7.8

  	
  Section 16
  Matters

  	
  21

  
	
  7.9

  	
  Indemnification;
  Directors’ and Officers’ Insurance

  	
  21

  
	
   

  	
   

  
	
  ARTICLE VIII
  Conditions

  	
  22

  



 


i

















 


	
   

  	
  Page

  
	
   

  	
   

  
	
  8.1

  	
  Conditions
  to Each Party’s Obligation to Effect the Merger

  	
  22

  
	
   

  	
   

  
	
  ARTICLE IX
  Termination

  	
  23

  
	
  9.1

  	
  Termination
  by Mutual Consent

  	
  23

  
	
  9.2

  	
  Termination
  Upon Termination of the Santo Agreement

  	
  23

  
	
  9.3

  	
  Termination
  Upon Expiration of Offer Without Requisite Tender Amount

  	
  23

  
	
  9.4

  	
  Effect
  of Termination and Abandonment

  	
  23

  
	
   

  	
   

  
	
  ARTICLE X
  Miscellaneous and General

  	
  24

  
	
  10.1

  	
  Survival

  	
  24

  
	
  10.2

  	
  Modification
  or Amendment

  	
  24

  
	
  10.3

  	
  Waiver
  of Conditions

  	
  24

  
	
  10.4

  	
  Counterparts

  	
  24

  
	
  10.5

  	
  Governing
  Law and Venue

  	
  24

  
	
  10.6

  	
  Notices

  	
  24

  
	
  10.7

  	
  Entire
  Agreement; No Other Representations

  	
  26

  
	
  10.8

  	
  No
  Third-Party Beneficiaries

  	
  26

  
	
  10.9

  	
  Severability

  	
  26

  
	
  10.10

  	
  Interpretation

  	
  27

  
	
  10.11

  	
  Assignment

  	
  27

  
	
  10.12

  	
  Parent
  Guarantee

  	
  27

  
				



 


ii

















 


INDEX OF DEFINED TERMS


 


	
  Defined
  Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Affiliate

  	
   

  	
  5.1(a)

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Anti-Takeover Statute

  	
   

  	
  7.7

  
	
  By-Laws

  	
   

  	
  2.4

  
	
  Certificate

  	
   

  	
  3.1(c)

  
	
  Certificate of Incorporation

  	
   

  	
  2.3

  
	
  Certificate of Merger

  	
   

  	
  2.2

  
	
  Closing

  	
   

  	
  4.1

  
	
  Closing Date

  	
   

  	
  4.1

  
	
  Company

  	
   

  	
  Preamble

  
	
  Company Common Stock

  	
   

  	
  Recitals

  
	
  Company Disclosure Schedule

  	
   

  	
  5.1

  
	
  Company Material Adverse Effect

  	
   

  	
  5.1(a)

  
	
  Company Option

  	
   

  	
  3.1(d)(i)

  
	
  Company Outstanding Shares

  	
   

  	
  3.2(a)

  
	
  D&O Insurance

  	
   

  	
  7.10(ii)

  
	
  DGCL

  	
   

  	
  1.2(a)

  
	
  Dissenting Shares

  	
   

  	
  3.3(a)

  
	
  Effective Time

  	
   

  	
  2.2

  
	
  Exchange Act

  	
   

  	
  1.1(a)

  
	
  Exchange Fund

  	
   

  	
  3.2(a)

  
	
  Expiration Date

  	
   

  	
  1.1(b)

  
	
  Governmental Entity

  	
   

  	
  3.2(b)

  
	
  Law

  	
   

  	
  1.1(b)

  
	
  Maximum Annual Premium

  	
   

  	
  7.10(ii)

  
	
  Merger

  	
   

  	
  1

  
	
  Merger Consideration

  	
   

  	
  3.1(c)

  
	
  Merger Sub

  	
   

  	
  Preamble

  
	
  Novartis

  	
   

  	
  Preamble

  
	
  Novartis Disclosure Schedule

  	
   

  	
  5.2

  
	
  Offer

  	
   

  	
  Recitals

  
	
  Offer Documents

  	
   

  	
  1.1(a)

  
	
  Offer Price

  	
   

  	
  Recitals

  
	
  Option Cash Payment

  	
   

  	
  3.1(d)(i)

  
	
  Organizational Documents

  	
   

  	
  5.1(c)(i)

  
	
  Paying Agent

  	
   

  	
  3.2(a)

  
	
  Person

  	
   

  	
  3.2(b)

  
	
  Proxy Statement

  	
   

  	
  3.4(a)(ii)

  
	
  Public Shares

  	
   

  	
  Recitals

  
	
  Representatives

  	
   

  	
  7.1

  



 


iii

















 


	
  Defined
  Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Requisite Tender Amount

  	
   

  	
  2.1

  
	
  Santo

  	
   

  	
  Recitals

  
	
  Santo Agreement

  	
   

  	
  Recitals

  
	
  Santo Shares

  	
   

  	
  Recitals

  
	
  Schedule 14D-9

  	
   

  	
  1.2(a)

  
	
  SEC

  	
   

  	
  1.1(a)

  
	
  Special Committee

  	
   

  	
  Recitals

  
	
  Special Meeting

  	
   

  	
  3.4(a)(i)

  
	
  Surviving Corporation

  	
   

  	
  2.1

  
	
  Tender Offer Conditions

  	
   

  	
  1.1(a)

  
	
  Year End

  	
   

  	
  5.1(g)

  



 


iv

















 


AGREEMENT
AND PLAN OF MERGER


 


This Agreement and Plan of Merger (this “Agreement”)
is made and entered into as of this 20th day of February 2005, by and
among Novartis Corporation, a New York corporation (“Novartis”), Zodnas
Acquisition Corp., an indirect, wholly owned Subsidiary of Novartis (“Merger
Sub”), Eon Labs, Inc., a Delaware corporation (the “Company”)
and, for purposes of Section 10.12 only, 
Novartis AG, a Swiss Company (“Parent”).


 


W  I  T 
N  E  S 
S  E  T 
H:


 


WHEREAS, the Boards of Directors of Parent, Novartis
and Merger Sub, have each unanimously approved the acquisition of the Company
on the terms and subject to the conditions set forth in this Agreement;


 


WHEREAS, contemporaneously with the execution of this
Agreement, Novartis is entering into an Agreement for Purchase and Sale of
Stock (the “Santo Agreement”) by and among Novartis, Santo Holding (Deutschland)
GmbH (“Santo”), and Novartis AG whereby Novartis is agreeing to
purchase, and Santo is agreeing to sell, all of the 60,000,000 (sixty million)
shares of common stock, par value $0.01 per share of the Company (“Company
Common Stock”) owned by Santo (the “Santo Shares”, such transaction,
the “Santo Purchase”), representing approximately 67.5% of the total
amount of outstanding shares of Company Common Stock, on the terms and subject
to the conditions set forth therein;


 


WHEREAS, pursuant to this Agreement, Novartis and
Merger Sub have agreed that (i) Merger Sub will commence a tender offer
(the “Offer”) to purchase all of the outstanding shares of Company
Common Stock other than the Santo Shares (the “Public Shares”), at a
price per share of U.S. $31.00 (thirty one U.S. dollars) net to the seller in
cash (the “Offer Price”) upon the terms and subject to the conditions
set forth in this Agreement and (ii) if Merger Sub acquires the Requisite
Tender Amount (as defined below) pursuant to the Offer, Merger Sub will merge
with and into the Company, with the Company being the surviving corporation, on
the terms and subject to the conditions set forth in this Agreement (the merger
of Merger Sub into the Company being referred to in this Agreement as the “Merger”);


 


WHEREAS, the Board of Directors of the Company and a
special committee of the Board of Directors of the Company consisting of
independent directors not affiliated with Santo (the “Special Committee”)
(i) have approved the Offer, (ii) have determined that the Offer, the
Merger (as defined herein) and the other transactions contemplated hereby are
fair to and in the best interests of the Company and its stockholders other
than Santo, (iii) have approved this Agreement and the transactions
contemplated hereby and (iv) are recommending that the Company’s
stockholders other than Santo accept the Offer, tender their shares of Company
Common Stock to Merger Sub in the Offer and adopt this Agreement;


 


WHEREAS, Novartis, Merger Sub and the Company desire
to make certain representations, warranties, covenants and agreements in
connection with the Offer and the Merger and to prescribe certain conditions to
the Offer and the Merger;


 

















 


NOW, THEREFORE, in consideration of the premises, and
of the representations, warranties, covenants and agreements contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, intending to be legally bound hereby, the
parties hereto agree as follows:


 


ARTICLE I


 


THE OFFER


 


1.1                                 The
Offer.


 


(a)                                  Provided
that this Agreement shall not have been terminated in accordance with Article IX
hereof, within 10 (ten) Business Days following the date hereof (or such later
date as the parties may mutually agree), Merger Sub will commence (within the
meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as
amended (including the rules and regulations promulgated thereunder, the “Exchange
Act”)) an offer to purchase any and all outstanding Public Shares at the
Offer Price, shall file a Schedule TO and all other necessary documents
with the Securities and Exchange Commission (the “SEC”) and make all
deliveries, mailings and telephonic notices required by Rule 14d-3 under
the Exchange Act, in each case in connection with the Offer (such documents
filed with the SEC and such other deliveries, mailings and notices, the “Offer
Documents”) and shall use reasonable best efforts to consummate the Offer,
subject to the terms and conditions thereof. 
Novartis will cause Merger Sub to accept for payment or pay for any
Public Shares tendered pursuant to the Offer, subject only to (1) the
contemporaneous (or immediately subsequent) purchase of the Santo Shares
pursuant to the Santo Agreement and (2) all of the requirements of Law for
consummating the Offer (the “Tender Offer Conditions”).  “Law” shall mean any applicable United
States or foreign, federal, state or local law, statute, ordinance, rule,
regulation, judgment, order, injunction, decree, agency requirement, license or
permit of any Governmental Entity.  “Governmental
Entity” shall mean any United States or foreign federal, state or local
governmental or regulatory authority, agency, commission, body or other
governmental entity.  “Business Day”
shall mean any day that is not a Saturday, a Sunday or other day on which banks
are required or authorized by Law to be closed in The City of New York.


 


(b)                                 Without
the prior written consent of the Company by action of the Special Committee,
Merger Sub shall not decrease the Offer Price or change the form of
consideration payable in the Offer, decrease the number of Public Shares sought
to be purchased in the Offer, impose additional conditions to the Offer or
amend any other term of the Offer in any manner adverse to the holders of
Public Shares, except as provided in this Agreement.  The Offer shall remain open until the date
that is 20 (twenty) business days (as such term is defined in Rule 14d-1(g)(3) under
the Exchange Act) after the commencement of the Offer (the “Expiration Date”),
unless Novartis shall have extended the period of time for which the Offer is
open pursuant to, and in accordance with, the two succeeding sentences or as
may be required by applicable Law, in which event the term “Expiration Date”
shall mean the latest time and date as the Offer, as so extended, may expire; provided, however, that
Novartis may provide for a subsequent offering period after the Expiration
Date, in accordance with Rule 14d-11 under the Exchange Act (including the
obligation that Merger Sub accept and promptly pay for any Public Shares
tendered during such subsequent offering period).  If, at any Expiration Date, any of the Tender


 


2

















 


Offer Conditions are not satisfied or waived by Merger Sub, Merger Sub
shall extend the Offer from time to time, each such extension not to exceed
such number of days that Merger Sub reasonably believes are necessary to cause
the Tender Offer Conditions to be satisfied (but in any event not more than 30
Business Days per extension unless the parties shall otherwise mutually agree),
provided, that at an Expiration Date, if
all of the Tender Offer Conditions have been satisfied or waived, Merger Sub
may extend the Offer for a period of time not to exceed 10 (ten) Business Days on
one occasion in order to obtain the Requisite Tender Amount (as defined below)
of tendered shares (if at least 40% of the Public Shares have been tendered and
not withdrawn at that Expiration Date) and on one occasion in order to satisfy
the requirements necessary to effect a subsequent merger without a meeting of
stockholders as contemplated by Section 3.5 (if the number of Public
Shares tendered and not withdrawn at that Expiration Date together with other
Company Common Stock owned by Merger Sub and Novartis or to be acquired under
the Santo Agreement would constitute at least 80% of the Company Common Stock).  Subject to the terms of the Offer and this
Agreement and the satisfaction of all the Tender Offer Conditions as of any
Expiration Date, Novartis will cause Merger Sub to accept for payment and pay
for any and all Public Shares validly tendered and not validly withdrawn
pursuant to the Offer at the earliest time after such Expiration Date,
regardless of the number of Public Shares tendered in the Offer (such date as
Merger Sub shall be obligated to accept for payment any and all Public Shares
validly tendered and not validly withdrawn pursuant to the Offer, the “Acceptance
Date”).  On the Acceptance Date, the
Confidentiality Agreement, dated as of February 11, 2005, by and between
Novartis and the Company (the “Confidentiality Agreement”) shall be
amended such that the fifth paragraph thereof shall permit Novartis and Merger
Sub to make acquisitions of Public Shares that are voluntary to the holders of
Public Shares (such as by means of legally permissible open market purchases or
tender offers), but shall not permit Novartis to cause a merger transaction (or
other business combination) to be effected which would cancel Public Shares
unless (i) a majority of the outstanding Public Shares vote in favor of
such a transaction or (ii) Novartis and its Subsidiaries shall, at that
time, own at least 90% of the outstanding Company Common Stock; provided, that the consideration to be received by the holders
of Public Shares in any such transaction described in (ii) above shall be
at least equal to the Offer Price per Public Share.


 


(c)                                  Novartis
and Merger Sub represent that the Offer Documents will comply in all material
respects with the provisions of applicable federal and state securities laws
and, on the date filed with the SEC and on the date first published, sent or
given to the Company’s stockholders, shall not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading, except that no
representation is made by either Novartis or Merger Sub with respect to
information supplied by the Company in writing for inclusion in the Offer
Documents.  Each of Novartis and Merger
Sub, on the one hand, and the Company, on the other hand, agrees promptly to
correct any information provided by it for use in the Offer Documents if and to
the extent that it shall have become false or misleading in any material
respect and Merger Sub further agrees to take all steps necessary to cause the
Offer Documents as so corrected to be filed with the SEC and to be disseminated
to stockholders of the Company, in each case, as and to the extent required by
applicable federal securities laws.  The
Company and its counsel shall be given a reasonable opportunity to review and
comment on the Offer Documents in advance of their filing with the SEC or dissemination
to stockholders of the Company.  Novartis
shall provide to the Company


 


3

















 


and its counsel in writing any comments Novartis, Merger Sub or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after receipt of such comments.


 


1.2                                 Company
Actions.


 


(a)                                  The
Company shall, after affording Novartis a reasonable opportunity to review and
comment thereon, file with the SEC and mail to the holders of Company Common
Stock, as promptly as practicable on the date of the filing by Novartis and
Merger Sub of the Offer Documents, a Solicitation/Recommendation Statement on Schedule 14D-9
(together with any amendments or supplements thereto, the “Schedule 14D-9”)
reflecting the recommendation of the Company’s Board of Directors and the
Special Committee that holders of Public Shares tender their shares of Company
Common Stock into the Offer, and shall disseminate the Schedule 14D-9 as
required by Rule 14d-9 promulgated under the Exchange Act.  The Schedule 14D-9 will set forth, and
the Company hereby represents, that the Company’s Board of Directors and the
Special Committee, at a meeting duly called at which a quorum was present
throughout, have (i) determined by unanimous vote of
all its members that each of the transactions
contemplated hereby, including each of the Offer and the Merger, is fair to and
in the best interests of the Company and its stockholders other than Santo, (ii) approved
the Santo Purchase, the Offer and the Merger and this Agreement in accordance
with the Delaware General Corporation Law (“DGCL”), (iii) recommended
acceptance and approval of the Offer and adoption of this Agreement by the
Company’s stockholders, and (iv) taken all other action within the Board
of Directors’ and the Special Committee’s power to render Section 203 of
the DGCL, if applicable, inapplicable to the Santo Purchase, the Offer and the
Merger, provided, however,
that Novartis and Merger Sub agree that such recommendations may be modified or
withdrawn after the date hereof if, but only if, after consultation with its
outside counsel, the Special Committee determines that doing so is required in
the proper exercise of its fiduciary duties. 
The Company further represents that, prior to the execution hereof,
Merrill Lynch & Co. (“Merrill Lynch”) has delivered to the
Special Committee its written opinion that, as of the date of this Agreement,
the consideration to be received by the holders of Public Shares pursuant to
the Offer and the Merger is fair to such stockholders from a financial point of
view.  The Company hereby consents to the
inclusion in the Offer Documents of the recommendations of the Special
Committee described in this Section 1.2(a).


 


(b)                                 The
Company represents that the Schedule 14D-9 shall comply in all material
respects with the provisions of applicable federal and state securities laws
and, on the date filed with the SEC and on the date first published, sent or
given to the Company’s stockholders, shall not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information supplied by
Novartis or Merger Sub in writing for inclusion in the Schedule 14D-9.  Each of the Company, on the one hand, and
Novartis and Merger Sub, on the other hand, agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the
extent that it shall have become false or misleading in any material respect,
and the Company further agrees to take all steps necessary to cause the Schedule 14D-9
as so corrected to be filed with the SEC and to be disseminated to stockholders
of the Company, in each case, as and to the extent required by applicable
federal securities laws.


 


4

















 


The Company shall provide to Novartis and its counsel in writing any
comments the Company or its counsel may receive from the SEC or its staff with
respect to the Schedule 14D-9 promptly after receipt of such comments.


 


(c)                                  In
connection with the Offer, the Company will promptly furnish Merger Sub with
mailing labels, security position listings, any available non-objecting
beneficial owner lists and any available listing or computer list containing
the names and addresses of the record holders of the Company Common Stock as of
the most recent practicable date and shall furnish Merger Sub with such
additional available information (including, but not limited to, updated lists
of holders of the Company Common Stock and their addresses, mailing labels and
lists of security positions and non-objecting beneficial owner lists) and such
other assistance as Merger Sub or its agents may reasonably request in
communicating the Offer to the Company’s record and beneficial
stockholders.  Subject to the
requirements of applicable Law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Merger, Novartis, Merger Sub and their Affiliates, associates, agents and
advisors shall keep such information confidential and use the information contained
in any such labels, listings and files only in connection with the Offer and
the Merger and, should the Offer terminate or if this Agreement shall be
terminated, will destroy all copies of such information then in their
possession, provided, that Novartis, Merger Sub and
their Affiliates, associates, agents and advisors may keep one copy of such
information in the office of their general counsel solely for the purpose of
preserving the record of the materials received and using the same to defend against
any claims or actions threatened or instituted involving such information.  Novartis, Merger Sub and their Affiliates,
associates, agents and advisors may retain all analyses, compilations, studies
or other documents or records prepared by them, which contain or otherwise
reflect or are generated from such information.


 


1.3                                 Directors.


 


(a)                                  Subject
to compliance with applicable Law, from and after the Acceptance Date, Novartis
shall be entitled to designate each member of the Company’s Board of Directors,
and the Company shall promptly take all actions necessary to cause Novartis’
designees to be so elected, including, if necessary, seeking the resignations
of one or more existing directors and prior to the Acceptance Date removing any
potential restrictions on the ability of any Novartis designees to serve on the
Company’s Board of Directors; provided,
that if Novartis and the Company shall have purchased in the Offer (including
any subsequent offering period) the Requisite Tender Amount, then until the Effective
Time, Novartis and Merger Sub shall allow the members of the Special Committee or
their designees’ who shall be deemed the “Special Committee” for all purposes
of this Agreement, to remain on the Company’s Board of Directors provided, that if both of the members of the Special
Committee shall be unable or unwilling to remain on the Company’s Board of
Directors and neither shall have designated a replacement, Novartis shall be
permitted to replace such members with other independent directors who shall be
deemed the “Special Committee” for all purposes of this Agreement; provided, however, that such independent directors designated by Novartis shall
not have the authority to reduce the Merger Consideration.


 


(b)                                 The
Company’s obligations to appoint Novartis’ designees to the Company’s Board of
Directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1


 


5

















 


thereunder.  The Company shall
promptly take all actions required pursuant to such Section and Rule in
order to fulfill its obligations under this Section 1.3 and shall include
in the Schedule 14D-9 such information with respect to the Company and its
officers and directors as is required under such Section and Rule in
order to fulfill its obligations under this Section 1.3.  Novartis will supply to the Company any
information with respect to itself and its nominees, officers, directors and
Affiliates required by such Section and Rule.


 


ARTICLE II


 


THE MERGER


 


2.1                                 The
Merger.  Upon the terms and subject
to the conditions set forth in this Agreement, and in accordance with the DGCL,
at the Effective Time, Merger Sub shall be merged with and into the Company,
and the separate corporate existence of Merger Sub shall thereupon cease.  The Company shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the “Surviving
Corporation”), and the separate corporate existence of the Company with all
of its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger, except as set forth in this Article II.  The Merger shall have the effects specified
in the DGCL.


 


2.2                                 Effective
Time.  As promptly as practicable
after the satisfaction or, if permissible, waiver of the conditions set forth in
Article VIII, the parties hereto shall cause the Merger to be consummated
by filing this Agreement or a certificate of merger (the “Certificate of
Merger”) with the Secretary of State of the State of Delaware, in such form
as is required by, and executed in accordance with, the relevant provisions of
the DGCL (the date and time that the Merger becomes effective in accordance
with applicable Law being the “Effective Time”).


 


2.3                                 Certificate
of Incorporation.  At the Effective
Time, and without any further action on the part of the Company or Merger Sub,
subject to Section 7.9, the certificate of incorporation of Merger Sub, as
in effect immediately prior to the Effective Time, shall be amended in its
entirety to read the same as the certificate of incorporation of the Surviving
Corporation until thereafter amended as provided therein or by applicable Law
(the “Certificate of Incorporation”).


 


2.4                                 By-Laws.  At the Effective Time, and without any
further action on the part of the Company or Merger Sub, subject to Section 7.9,
the by-laws of Merger Sub, as in effect immediately prior to the Effective
Time, shall be amended in its entirety to read the same as the by-laws of the
Surviving Corporation (the “By-Laws”), until thereafter amended as
provided therein, in the Certificate of Incorporation or in accordance with
applicable Law.


 


2.5                                 Directors.  Subject to requirements of applicable Law,
the directors of Merger Sub immediately prior to the Effective Time shall, from
and after the Effective Time, be the directors of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the
Certificate of Incorporation and the By-Laws.


 


6

















 


2.6                                 Officers.  The officers of the Company immediately prior
to the Effective Time shall, from and after the Effective Time, be the officers
of the Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Certificate of Incorporation and the By-Laws.


 


ARTICLE III


 


EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF
CERTIFICATES


 


3.1                                 Effect
on Capital Stock.  At the Effective
Time, as a result of the Merger and without any further action on the part of
the Company, Novartis, Merger Sub or any holder of any shares of capital stock
of the Company, Novartis or Merger Sub:


 


(a)                                  Merger
Sub.  Each share of common stock, par
value of $0.01 per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time shall be converted into and become one (1) fully
paid share of common stock, par value $0.01 per share, of the Surviving
Corporation (which will be owned by Novartis) and constitute the only
outstanding shares of capital stock of the Surviving Corporation and shall not
be affected by the Merger.


 


(b)                                 Cancellation
of Treasury Stock and Novartis-Owned Stock. 
Each share of Company Common Stock that is owned by the Company directly
as treasury stock or by Parent or any of its Subsidiaries (other than in a
representative or fiduciary capacity) shall automatically be retired and shall
cease to be outstanding, and no cash or other consideration shall be delivered
in exchange therefor.  As used in this
Agreement, “Subsidiary” when used with respect to any party hereto,
means any entity of which such party (a) owns 50% or more of the
outstanding securities or other ownership interests, or (b) through
contract or otherwise possesses power to appoint at least 50% of the directors
of such entity (or Persons performing similar functions).


 


(c)                                  Conversion
of Company Common Stock.  Subject to Section 3.3,
each issued and outstanding share of Company Common Stock (other than shares of
Company Common Stock to be retired in accordance with Section 3.1(b)),
shall be converted into the right to receive the Offer Price in cash, without
interest (the “Merger Consideration”). 
As of the Effective Time, all such shares of Company Common Stock shall
no longer be outstanding and shall automatically be retired and shall cease to
exist, and each holder of a certificate representing any such shares of Company
Common Stock (a “Certificate”) shall cease to have any rights with
respect thereto, except the right to receive, upon the surrender of such
certificates (for each share of Company Common Stock represented thereby), the
Merger Consideration.


 


(d)                                 Stock
Options.   As of the Effective Time,
each outstanding option to purchase shares of Company Common Stock under any
employee stock option or compensation plan or arrangement of the Company (a “Company
Option”), whether or not exercisable or vested, shall by virtue of the
Merger and without any action on the part of any holder of any Company Option
be cancelled and the holder thereof will receive as soon as reasonably
practicable following the Effective Time a cash payment with respect thereto
equal to the product of (a) the excess, if any, of the Merger
Consideration over the exercise price per share of such Company Option and (b) the
number of shares of Company Common Stock issuable upon exercise of such Company
Option (the “Option Cash Payment”). 
As of the Effective Time, all Company Options shall no


 


7

















 


longer be outstanding and shall automatically cease to exist, and each
holder of a Company Option shall cease to have any rights with respect thereto,
except the right to receive the Option Cash Payment.  Prior to the Acceptance Date the Company shall
take any and all actions necessary to effectuate this Section 3.1(d).


 


3.2                                 Exchange
of Share Certificates.


 


(a)                                  Paying
Agent.  Prior to the Effective Time,
Novartis shall designate a paying agent reasonably acceptable to the Company to
act as paying agent (the “Paying Agent”) for the payment of the Merger
Consideration or other payment to which holders of Company Options shall become
entitled pursuant to Section 3.1. 
Prior to the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware, Novartis shall deposit with the Paying Agent,
for the benefit of the holders of Certificates and Company Options, cash equal
to the product of (A) the number of shares of Company Common Stock
outstanding (and not to be retired pursuant to Section 3.1(b)) as of
immediately prior to the Effective Time (the “Company Outstanding Shares”)
multiplied by (B) the Merger
Consideration, plus an amount equal to (Y) the sum of the Option Cash
Payments.  The deposit made by Novartis,
pursuant to this Section 3.2(a) is hereinafter referred to as the “Exchange
Fund.”  The Paying Agent shall cause
the Exchange Fund to be (i) held for the benefit of the holders of Company
Common Stock and holders of Company Options and (ii) applied promptly to
making the payments provided for in Section 3.1.  The Exchange Fund shall not be used for any
purpose that is not expressly provided for in this Agreement.  If the Paying Agent invests the Exchange
Fund, the Paying Agent shall only invest the Exchange Fund in obligations of or
guaranteed by the United States of America and backed by the full faith and
credit of the United States of America or in commercial paper obligations rated
A-1 or P-1 or better by Moody’s Investors Services, Inc. or Standard &
Poor’s Corporation, respectively.


 


(b)                                 Exchange
Procedures.  As soon as reasonably
practicable after the Effective Time, Novartis shall cause the Paying Agent to
mail to each holder of record of a Certificate (i) a letter of transmittal
specifying that delivery of the Certificates shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates (or affidavits of loss in lieu thereof) to the Paying Agent, such
letter of transmittal to be in customary form and have such other provisions as
Novartis may reasonably specify and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the Merger Consideration
(such instructions shall include instructions for the payment of the Merger
Consideration to a Person other than the Person in whose name the surrendered
Certificate is registered on the transfer books of the Company, subject to the
receipt of appropriate documentation for such transfer).  Upon surrender to the Paying Agent of a
Certificate (or evidence of loss in lieu thereof) for cancellation together
with such letter of transmittal, duly completed and validly executed, and such
other documents as may reasonably be requested by the Paying Agent, the holder
of such Certificate shall be entitled to receive in exchange therefor the
Merger Consideration that such holder is entitled to receive pursuant to this Article III,
and the Certificate so surrendered shall forthwith be cancelled; provided that in no event will a holder of a Certificate be entitled
to receive the Merger Consideration if Merger Consideration was already paid
with respect to the shares of Company Common Stock underlying such Certificate
in connection with an affidavit of loss. 
No interest will be paid or accrued on any amount payable upon due
surrender of the Certificates.  In the
event of a transfer of ownership of Company Common Stock that is not


 


8

















 


registered in the transfer records of the Company, payment may be
issued to such a transferee if the Certificate formerly representing such
Company Common Stock is presented to the Paying Agent, accompanied by all
documents required to evidence and effect such transfer, and the Person
requesting such issuance pays any transfer or other taxes required by reason of
such payment to a Person other than the registered holder of such Certificate
or establishes to the satisfaction of Novartis and the Company that such tax
has been paid or is not applicable.


 


For the purposes of this Agreement, the term “Person”
shall mean any individual, corporation (including not-for-profit corporations),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, Governmental Entity or other entity
of any kind or nature.


 


(c)                                  Transfers.  After the Effective Time, there shall be no
registration of transfers on the stock transfer books of the Company of Company
Common Stock that were outstanding immediately prior to the Effective Time.


 


(d)                                 Termination
of Exchange Fund.  Any portion of the
Exchange Fund relating to the Merger Consideration that remains unclaimed by
the stockholders of the Company or holders of Company Options 180 (one hundred
and eighty) days after the Effective Time shall be returned to Novartis or the
Surviving Corporation.  Any stockholders
of the Company or holders of Company Options who have not theretofore complied
with this Article III shall thereafter look only to Novartis for payment
of the Merger Consideration upon due surrender of their Certificates (or
affidavits of loss in lieu thereof), without any interest thereon.  Notwithstanding the foregoing, none of
Novartis, Merger Sub, the Surviving Corporation, the Paying Agent or any other
Person shall be liable to any former holder of Company Common Stock or holder
of Company Options for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar Laws.


 


(e)                                  Lost,
Stolen or Destroyed Certificates.  In
the event that any Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the Person claiming such Certificate
to be lost, stolen or destroyed and, if required by Novartis, the posting by
such Person of a bond reasonably satisfactory to Novartis as indemnity against
any claim that may be made against it with respect to such Certificate, the
Paying Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration upon due surrender of the Company Common Stock
represented by such Certificate pursuant to this Agreement.


 


(f)                                    Withholding
Rights.  Each of Novartis, Merger
Sub, the Paying Agent and the Surviving Corporation shall be entitled to deduct
and withhold from the consideration otherwise payable to any Person pursuant to
this Article III such amounts as it is required to deduct and withhold
with respect to the making of such payment under provision of any federal,
state, local or foreign tax law.  If
Novartis, Merger Sub, the Paying Agent or the Surviving Corporation, as the
case may be, so withholds amounts, such amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the Company
Common Stock in respect of which Novartis, Paying Agent or the Surviving
Corporation, as the case may be, made such deduction and withholding.


 


9

















 


3.3                                 Dissenters’
Rights.


 


(a)                                  Notwithstanding
anything in any other Section of this Agreement to the contrary, Company
Common Stock, outstanding immediately prior to the Effective Time and held by a
holder who has not voted in favor of the Merger or consented thereto in writing
and who has demanded appraisal for such shares in accordance with Section 262
of the DGCL (the “Dissenting Shares”) shall not be converted into, or
represent the right to receive, the Merger Consideration, unless such holder
fails to perfect or withdraws or otherwise loses his right to appraisal.  At the Effective Time, all Dissenting Shares
shall no longer be outstanding and shall automatically be cancelled and shall
cease to exist, and each holder of Dissenting Shares shall cease to have any
rights with respect thereto, except the right to receive, subject to and net of
any applicable withholding of Taxes, payment of the appraised value of such
Dissenting Shares held by them in accordance with the provisions of Section 262
of the DGCL.  Notwithstanding the
foregoing, if any such holder shall fail to perfect or otherwise shall waive,
withdraw or lose the right to appraisal under Section 262 of the DGCL or a
court of competent jurisdiction shall determine that such holder is not
entitled to the relief provided by Section 262 of the DGCL, then the right
of such holder to receive, subject to and net of any applicable withholding of
Taxes, payment of the appraised value of such Dissenting Shares held by them in
accordance with the provisions of Section 262 of the DGCL shall cease and
such Dissenting Shares shall thereupon be deemed to have been converted into,
and to have become exchangeable for, as of the Effective Time, the right to
receive the Merger Consideration, without any interest thereon, upon surrender,
in the manner provided in Section 3.2, of the Certificate or Certificates
that formerly evidenced such Dissenting Shares.


 


(b)                                 The
Company shall give Novartis prompt notice of any demands for appraisal received
by the Company, withdrawals of such demands and any other instruments served on
or otherwise received by the Company pursuant to the DGCL, and Novartis shall
have the right to participate in and control all negotiations and proceedings
with respect to demands for appraisal under the DGCL.  The Company shall not, except with the prior
written consent of Novartis, make any payment with respect to any demands for
appraisal or offer to settle or settle any such demands.


 


3.4                                 Stockholders’
Meeting.


 


(a)                                  If
required by applicable Law in order to consummate the Merger, the Company,
acting through its Board of Directors, shall, in accordance with applicable
Law:


 


(i)                                     duly
call, give notice of, convene and hold a special meeting of its stockholders
(the “Special Meeting”) as soon as practicable following the Acceptance
Date for the purpose of considering and taking action upon this Agreement;


 


(ii)                                  prepare
and file with the SEC a preliminary proxy statement or information statement
relating to this Agreement and any other required filings, and use its
reasonable efforts (x) to obtain and furnish the information required to be
included by the SEC in the Proxy Statement (as hereinafter defined) and, after
consultation with Novartis, to respond promptly to any comments made by the SEC
with respect to the preliminary proxy statement and cause a definitive proxy or
information statement (the


 


10

















 


“Proxy
Statement”) and any other required documents to be mailed to its
stockholders and (y) to obtain the necessary approvals of the Merger and this
Agreement and the transactions contemplated hereby by its stockholders; and


 


(iii)                               subject
to the proviso in the second sentence of Section 1.2(a), include, if
required, in the Proxy Statement the recommendation of the Company’s Board of
Directors and the Special Committee that the stockholders of the Company adopt
this Agreement.


 


3.5                                 Merger
Without Meeting of Stockholders. 
Notwithstanding Section 3.4, but subject to Article VIII
hereof, in the event that Novartis, Merger Sub or any other Subsidiary of
Novartis shall acquire at least 90% of the outstanding Company Common Stock
following the purchase of the Santo Shares and the completion of the Offer, the
parties hereto agree to take all necessary and appropriate action to cause the
Merger to become effective as soon as practicable after the acceptance for
payment of and payment for Company Common Stock by Merger Sub pursuant to the
Offer without a meeting of stockholders of the Company, in accordance with Section 253
of the DGCL.


 


ARTICLE IV


 


THE CLOSING


 


4.1                                 Closing.  The closing of the Merger (the “Closing”)
shall take place (i) at the offices of Wachtell, Lipton, Rosen &
Katz, 51 West 52nd Street, New York, New York 10019 at 10:00 a.m.
Eastern time on the second Business Day after the last to be satisfied or
waived of the conditions set forth in Article VIII (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the satisfaction or waiver of those conditions) shall be satisfied or waived
(by the party entitled to the benefit of such condition) in accordance with
this Agreement or (ii) at such other place and time and/or on such other
date as the Company and Novartis may agree in writing (the “Closing Date”).


 


ARTICLE V


 


REPRESENTATIONS AND WARRANTIES


 


5.1                                 Representations
and Warranties of the Company. 
Except as set forth in the section of the disclosure schedules
delivered to Novartis by the Company on or prior to the date of this Agreement
(the “Company Disclosure Schedule”) that corresponds with the applicable
subsection of Section 5.1, the Company hereby represents and warrants
to Novartis and Merger Sub that:


 


(a)                                  Organization,
Good Standing and Qualification. 
Each of the Company and each of its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the Laws of its
respective jurisdiction of organization. 
Each of the Company and each of its Subsidiaries has all requisite
corporate or similar power and authority to own and operate its properties and
assets and to carry on its business as currently conducted and is qualified to
do business and is in good standing as a foreign corporation in each
jurisdiction where the


 


11

















 


ownership or operation of its properties and assets or conduct of its
business requires such qualification, except where the failure to be so
qualified or be in good standing that would not be reasonably likely, either
individually or in the aggregate, to have Company Material Adverse Effect.  The Company has heretofore made available to
Novartis complete and correct copies of the Company’s and each of its Subsidiaries’
certificate of incorporation and by-laws (or comparable governing
instruments).  The certificate of
incorporation and by-laws or comparable governing instruments (“Organizational
Documents”) of each of the Company and its Subsidiaries so made available
are in full force and effect.


 


As used in this Agreement, the term “Affiliate”
shall mean, with respect to any Person, any other Person directly or indirectly
controlling, controlled by, or under common control with, such Person; provided, that, for the purposes of this definition, “control”
(including, with correlative meanings, the terms “controlled by” and “under
common control with”), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.


 


As used in this Agreement, the term “Company
Material Adverse Effect” means a material adverse effect on the condition
(financial or otherwise), business, assets, liabilities or results of
operations of the Company and its Subsidiaries, taken as a whole, other than (i) any
effect resulting from events, facts or circumstances relating to the economy in
general, including market fluctuations and changes in interest rates, or to the
Company’s industry in general and not specifically relating to the Company or
any of its Subsidiaries, other than any such effects that disproportionately
impact the Company and its Subsidiaries (ii) any effect resulting from
changes in legal or regulatory conditions that affect in general the business
in which the Company and its Subsidiaries are engaged, other than any such
effects that disproportionately impact the Company and its Subsidiaries or (iii) the
impact of this Agreement, the announcement or performance of this Agreement and
the transactions contemplated hereby (including the impact of this Agreement on
relationships with customers, suppliers, distributors or employees).


 


(b)                                 Capital
Structure.  The authorized capital
stock of the Company consists 105,000,000 (one hundred and five million)
shares, consisting of (i) 100,000,000 (one hundred million) shares of
Company Common Stock, of which 88,832,664 shares are outstanding as of the date
hereof, and (ii) 5,000,000 (five million) shares of preferred stock, par
value $0.01 per share (“Preferred Stock”), none of which are outstanding
as of the date hereof.  Each of the
outstanding shares of capital stock or other securities of each of the Company’s
Subsidiaries is duly authorized, validly issued, fully paid and nonassessable
and is owned by the Company or a direct or indirect wholly owned Subsidiary of
the Company, free and clear of any lien, pledge, claim, option, charge,
security interest, limitation, encumbrance and restriction of any kind
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock of other ownership interests).  Other than with respect to the Subsidiaries
listed on Section 5.1(b) of the Company Disclosure Schedule, the
Company does not directly or indirectly own any securities or other beneficial
ownership interests in any other entity (including through joint ventures or
partnership arrangements), or have any investment in any other Person.  Other than options to purchase up to 4,737,980
shares of Company Common Shares at an average price of $12.69 per share
pursuant to the Company’s 2001 Stock Option Plan and the Company’s 2003 Stock
Incentive Plan, there are no preemptive or other outstanding rights, options,
warrants,


 


12

















 


conversion rights, stock appreciation rights, redemption rights,
repurchase rights, agreements, arrangements or commitments of any kind to which
the Company or any of its Subsidiaries is a party, or by which the Company or
any of its Subsidiaries are bound, obligating the Company or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, any shares of capital stock or other securities of the Company or any of
its Subsidiaries or any securities or obligations convertible or exchangeable
into or exercisable for, or giving any Person a right to subscribe for or
acquire, any securities of the Company or any of its Subsidiaries, and no
securities or obligations evidencing such rights are authorized, issued or
outstanding.  Neither the Company nor any
of its Subsidiaries is a party to or aware of any voting or other shareholders
agreement with respect to its securities or the securities of any of its
Subsidiaries.  Other than as set forth in
Section 5.1(b) of the Company Disclosure Schedule, there are not any
outstanding contractual obligations of the Company or any of its Subsidiaries
to repurchase, redeem or otherwise acquire or to file any registration
statement with respect to any shares of capital stock of the Company or any of
its Subsidiaries.  Following the
consummation of the Merger, there will not be outstanding any rights, warrants,
options or other securities entitling the holder thereof to purchase, acquire
or otherwise receive any shares of the capital stock of the Company or any of
its Subsidiaries (or any other securities exercisable for or convertible into
such shares).  Neither the Company nor
any of its Subsidiaries has outstanding any bonds, debentures, notes or other
obligations the holders of which have the right to vote (or convertible into or
exercisable for securities having the right to vote) with the stockholders of
the Company or any Subsidiary of the Company on any matter or any agreements
with respect to the voting of any Company Common Stock.


 


(c)                                  Corporate
Authority.


 


(i)                                     The
Company has all requisite corporate power and authority and has taken all
corporate action necessary in order to execute, deliver and perform its
obligations under this Agreement and to consummate, on the terms and subject to
the conditions of this Agreement, the transactions contemplated hereby.  This Agreement has been duly authorized,
executed and delivered by the Company, and no other corporate proceedings on
the part of the Company are necessary to authorize or approve this Agreement or
to consummate the transactions contemplated hereby (other than, with respect to
the Merger, the adoption of this Agreement by the affirmative vote of the
holders of a majority of the then outstanding shares of Common Stock entitled
to vote thereon, to the extent required by applicable Law).  Assuming due authorization, execution and
delivery by each of Novartis and Merger Sub, this Agreement is a valid and
legally binding agreement of the Company enforceable against the Company in
accordance with its terms.


 


(ii)                                  Each
of the Company’s Board of Directors and the Special Committee has unanimously approved this Agreement and the Merger and other
transactions contemplated hereby and has approved the Santo Purchase, the Offer
and has recommended that the stockholders of the Company tender their Public
Shares into the Offer and adopt this Agreement.


 


(d)                                 No
Conflicts.  Neither the execution,
delivery and performance of this Agreement and the consummation by the Company
of the transactions contemplated hereby nor compliance


 


13

















 


by the Company with any of the provisions hereof or thereof will
constitute or result in (A) a breach, conflict or violation of, or a
default under, the Organizational Documents of the Company or any of its
Subsidiaries, or (B) a breach, conflict or violation of, a default under,
the acceleration of any obligations, the loss of any right or benefit, or the
creation of a lien, pledge, security interest or other encumbrance on any
assets of the Company or any Subsidiary of the Company (with or without notice,
lapse of time or both) pursuant to, any agreement, lease, contract, note,
mortgage, indenture, arrangement or other obligation binding upon the Company
or any Subsidiary of the Company or any Law or governmental or non-governmental
permit or license to which the Company or any of its Subsidiaries is subject or
(C) any change in the rights or obligations of any party under contracts
binding on the Company, except, in the case of clause (B) or (C) above,
for such breaches, conflicts, violations, defaults, accelerations, creations or
changes that would not be reasonably likely, either individually or in the
aggregate, to have a Company Material Adverse Effect or prevent, impair or
materially delay the ability of the Company to consummate the transactions
contemplated by this Agreement.


 


(e)                                  The
Company Reports; Financial Statements.


 


(i)                                     The
Company and its Subsidiaries have filed with the SEC all registration
statements, prospectuses, forms, reports, schedules, statements and other
documents required to be filed by them since May 24, 2002 under the
Exchange Act or the Securities Act of 1933, as amended (the “Securities Act”)
(collectively, the “Company Reports”). 
The Company Reports, including any financial statements or schedules
included in the Company Reports, at the time filed (and, in the case of
registration statements and proxy statements, on the dates of effectiveness and
the dates of mailing, respectively, and, in the case of any Company Report
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such amending or superseding filing) (i) did not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, and (ii) complied
in all material respects with the applicable requirements of the Exchange Act
and the Securities Act, as the case may be. 
The financial statements of the Company and its Subsidiaries included in
the Company Reports (i) have been prepared from, and are in accordance
with, the books and records of the Company and its Subsidiaries, (ii) at
the time filed (and, in the case of registration statements and proxy
statements, on the dates of effectiveness and the dates of mailing,
respectively, and, in the case of any Company Report amended or superseded by a
filing prior to the date of this Agreement, then on the date of such amending
or superseding filing) complied as to form in all material respects with
applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, (iii) were prepared in
accordance with United States generally accepted accounting principles (“U.S.
GAAP”) applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto, or, in the case of unaudited statements,
as permitted by Form 10-Q of the SEC), and (iv) fairly present in all
material respects (subject, in the case of unaudited statements, to normal,
recurring audit adjustments) the consolidated financial position of the Company
and its consolidated Subsidiaries as at the dates thereof and the consolidated
results of their operations and cash flows (and changes in financial position,
if any) for the periods then ended.


 


14

















 


(ii)                                  With
respect to each Annual Report on Form 10-K and each Quarterly Report on Form 10-Q
included in the Company Reports filed since January 1, 2003, the financial
statements and other financial information included in such reports fairly present
(subject, in the case of unaudited statements, to normal, recurring audit
adjustments) in all material respects the financial condition and results of
operations of the Company as of, and for, the periods presented in the Company
Report.  Since August 29, 2002, the
Company’s principal executive officer and its principal financial officer have
disclosed, based on their most recent evaluation, to the Company’s auditors and
the audit committee of the Company’s Board of Directors (i) all
significant deficiencies and material weaknesses in the design or operation of
internal controls over financial reporting which are reasonably likely to
adversely affect the Company’s ability to record, process, summarize and report
financial information and (ii) any fraud, whether or not material, that
involves management or other employees who have a significant role in the
Company’s internal controls over financial reporting and the Company has
provided to Novartis copies of any written materials relating to the foregoing.  The Company has established and maintains
disclosure controls and procedures (as such term is defined in Rule 13a-15
under the Exchange Act); such disclosure controls and procedures are designed
to ensure that material information relating to the Company, including its
consolidated Subsidiaries, is made known to the Company’s principal executive
officer and its principal financial officer by others within those entities,
particularly during the periods in which the periodic reports required under
the Exchange Act are being prepared; and, to the knowledge of the Company, such
disclosure controls and procedures are effective in timely alerting the Company’s
principal executive officer and its principal financial officer to material
information required to be included in the Company’s periodic reports required
under the Exchange Act.  There are no
outstanding loans made by the Company or any of its Subsidiaries to any
executive officer (as defined in Rule 3b-7 under the Exchange Act) or
director of the Company.  Since the
enactment of the Sarbanes-Oxley Act of 2002, neither the Company nor any of its
Subsidiaries has made any loans to any executive officer (as defined in Rule 3b-7
under the Exchange Act) or director of the Company or any of its Subsidiaries.


 


(f)                                    No
Undisclosed Material Liabilities. 
Except: (i) liabilities disclosed and provided for on the balance
sheets included in the Company Reports, (ii) liabilities or obligations
incurred in the ordinary course of business consistent with past practices since
September 30, 2004; or (iii) liabilities or obligations that would
not be reasonably likely, either individually or in the aggregate to have Company Material Adverse Effect, there are no liabilities
or obligations of the Company or any of its Subsidiaries of any kind
whatsoever, whether accrued, contingent, absolute, determined or otherwise.


 


(g)                                 Absence
of Certain Changes.  Since December 31,
2004 (“Year End”), except as disclosed in the Company Reports filed on
or after Year End and prior to the date of the Agreement or as set forth on Section 5.1(g) of
the Company Disclosure Schedule, the Company and its Subsidiaries have
conducted their business only in, and have not engaged in any material
transaction, entered into any material agreement or made any material
commitment other than according to, the Company’s ordinary and usual course of
such business, and (i) there has not been any Company Material Adverse
Effect and (ii) neither the Company nor any of its Subsidiaries has taken
any action referred to in Section 6.1 except as permitted hereby.


 


15

















 


(h)                                 Litigation.  There are no civil, criminal or
administrative actions, suits, claims, hearings, investigations, reviews,
inquiries or proceedings pending, or to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries, except for those
that would not be reasonably likely, either individually or in the aggregate,
to have a Company Material Adverse Effect or to prevent, impair or materially
delay the ability of the Company to consummate the transactions contemplated by
this Agreement.  Except as disclosed in
the Company Reports filed prior to the date of this Agreement, neither the
Company nor any of its Subsidiaries is subject to any outstanding order, writ,
injunction or decree which, individually or in the aggregate, would be
reasonably likely to have Company Material Adverse Effect or to prevent, impair
or materially delay the consummation of the transactions contemplated hereby.


 


(i)                                     Anti-takeover
Statutes.  The Company has taken all
action necessary to exempt the purchase of the Santo Purchase, the Offer, the
Merger, this Agreement and the transactions contemplated hereby or thereby from
the provisions of Section 203 of the DGCL, if applicable, and such action
is effective at the date of this Agreement.


 


(j)                                     Brokers
and Finders.  Except for Merrill
Lynch, neither the Company nor any of its Subsidiaries nor any of their
respective officers, directors or employees has retained any broker or finder
or incurred any liability for any brokerage fees, commissions or finders’ fees
in connection with the Offer, the Merger, or the other transactions
contemplated hereby or thereby.  Prior to
the date hereof, the Company has provided Novartis with a true and complete
copy of the engagement letter between the Company and Merrill Lynch whose fee
will be paid by the Company.


 


(k)                                  Opinion
of Financial Advisor.  The Company
has received an opinion of Merrill Lynch, dated as of the date hereof, to the
effect that, as of such date, the consideration to be received by the holders
of Public Shares pursuant to the Offer and the Merger is fair to such
stockholders from a financial point of view.


 


5.2                                 Representations
and Warranties of Novartis and Merger Sub. 
Except as set forth in the section of the disclosure schedules
delivered to the Company by Novartis on or prior to the date of this Agreement
(the “Novartis Disclosure Schedule”) that corresponds with the
applicable subsection of Section 5.2, Novartis and Merger Sub each
represents and warrants to the Company that:


 


(a)                                  Organization,
Good Standing and Qualification. 
Each of Parent, Novartis and Merger Sub is a company duly organized,
validly existing and in good standing under the Laws of its respective
jurisdiction of organization.  Each of
Parent, Novartis and Merger Sub has all requisite corporate power to own and
operate its material properties and assets and to carry on its business as
currently conducted in all material respects and is qualified to do business
and is in good standing as a foreign corporation in each jurisdiction where the
ownership or operation of its properties and assets or conduct of its business
requires such qualification, except where the failure to be so qualified as a foreign
corporation or be in good standing would not be reasonably likely to prevent,
impair or materially delay the consummation of the transactions contemplated by
this Agreement.


 


16

















 


(b)                                 Corporate
Authority.


 


(i)                                     Each
of Parent, Novartis and Merger Sub has all requisite corporate power and
authority and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement and to consummate on
the terms and subject to the conditions of this Agreement, the transactions
contemplated hereby.  This Agreement has
been duly authorized, executed and delivered by Parent, Novartis and Merger
Sub, and no other corporate proceedings on the part of Parent, Novartis or
Merger Sub are necessary to authorize or approve this Agreement or to
consummate the transactions contemplated hereby.  Assuming due authorization, execution and
delivery by the Company, this Agreement is a valid and legally binding
agreement of Parent, Novartis and Merger Sub, enforceable against each of
Parent, Novartis and Merger Sub in accordance with its terms.


 


(ii)                                  The
Boards of Directors of Novartis and Merger Sub have approved and adopted this
Agreement and the Merger and other transactions set forth herein.


 


(c)                                  No
Conflicts. Neither the execution, delivery and performance of this
Agreement by Parent, Novartis and Merger Sub and the consummation by Parent,
Novartis and Merger Sub of the transactions contemplated hereby nor compliance
by Parent, Novartis and Merger Sub with any of the provisions hereof will
constitute or result in (A) a breach or violation of, or a default under
the Organizational Documents of Parent, Novartis, Merger Sub or of any of
Parent’s Subsidiaries, (B) a breach or violation of, or a default under,
the acceleration of any obligations, the loss of any right or benefit or the
creation of a lien, pledge, security interest or other encumbrance on the
assets of Parent, Novartis, Merger Sub or any of Parent’s Subsidiaries (with or
without notice, lapse of time or both) pursuant to any contracts binding upon
Parent, Novartis, Merger Sub or any of Parent’s Subsidiaries or any Law or
governmental or non-governmental permit or license to which Parent, Novartis,
Merger Sub or any of Parent’s Subsidiaries is subject, except, in the case of
clause (B) above, for such breaches, violations, defaults accelerations,
creations or changes that would not, individually or in the aggregate, be
reasonably likely to prevent, impair or materially delay the ability of Parent,
Novartis or Merger Sub to consummate the transactions contemplated hereby.


 


(d)                                 Required
Funds.  Novartis has, and will
provide to Merger Sub at the expiration of the Offer and at the Closing, funds
on hand necessary to consummate the transactions contemplated by this Agreement
and to pay all related fees and expenses.


 


(e)                                  Consents
and Approvals.  Neither the execution
and delivery of this Agreement by Novartis or Merger Sub nor the consummation
of the transactions contemplated by this Agreement will result in a violation
of Law by Novartis or Merger Sub.  The
execution and delivery of this Agreement by Novartis or Merger Sub and the
consummation of the transactions contemplated by this Agreement will not
require any material action or consent or approval of, or review by, or
registration or filing by Novartis or Merger Sub with any Governmental Entity
except for antitrust filings under the HSR Act and the laws of the European
Community, under the rules of the Exchange Act and under Delaware law.


 


17

















 


(f)                                    Ownership
of Common Stock.  None of Novartis or
any of its Affiliates (i) beneficially owns a Significant Amount of the shares
of Company Common Stock, directly or indirectly, (ii) has the right to
acquire a Significant Amount of shares of Company Common Stock pursuant to any
agreement, arrangement or understanding, or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise; (iii) has the
right to vote a Significant Amount of such stock pursuant to any agreement,
arrangement or understanding; or (iv) has any agreement, arrangement or
understanding for the purposes of acquiring, holding, voting or disposing of a
Significant Amount such stock with any other Person.  As used in this Agreement, “Significant
Amount” means 5% or more of the outstanding shares of Company Common Stock.


 


ARTICLE VI


 


CONDUCT OF BUSINESS PENDING THE MERGER


 


6.1                                 Covenants
of the Company.  The Company
covenants and agrees as to itself and its Subsidiaries (as applicable) that,
from the date hereof and continuing until the Effective Time, except as
expressly contemplated or permitted by this Agreement:


 


(a)                                  the
Company shall conduct its business only in the ordinary and usual course,
consistent with past practice, and it and its Subsidiaries shall use their
respective commercially reasonable efforts to (i) preserve their current
business organizations intact and maintain their existing relations and
goodwill with material customers, suppliers, distributors, creditors, lessors,
licensors, licensees, agents, employees, business associates and others having
material business dealings with them to the end that the Company’s and its
Subsidiaries’ goodwill and ongoing businesses shall not be impaired in any
material respect at the Effective Time; (ii) maintain and keep their
properties and assets in good repair and condition; and (iii) maintain in
effect all governmental permits pursuant to which the Company or any of its
Subsidiaries currently operates;


 


(b)                                 neither
the Company nor any of its Subsidiaries shall (i) amend or modify its
Organizational Documents in any way that would or would be reasonably expected
to adversely affect the consummation of the transactions contemplated by this
Agreement, including the Offer and the Merger, including the timing therefor; (ii) split,
combine or reclassify its outstanding shares of capital stock; (iii) declare,
set aside or pay any dividend payable in cash, stock or property in respect of
any capital stock (other than dividnds from its direct or indirect wholly-owned
Subsidiaries to it or a wholly owned Subsidiary in the ordinary course of
business); (iv) repurchase, redeem or otherwise acquire any shares of its
capital stock or any securities convertible into or exchangeable or exercisable
for any shares of its capital stock or permit any of its Subsidiaries to
purchase or otherwise acquire any shares of its capital stock or any securities
convertible into or exchangeable or exercisable for any shares of its capital
stock; or (v) make any other change in its capital structure;


 


(c)                                  except
as provided for herein or as required under agreements already in existence,
there shall not be any material increase in the compensation payable or that
could become payable by the Company or any of its Subsidiaries to directors,
officers or key employees or any material amendment of any of the Company’s
employee compensation and


 


18

















 


employee benefit plans other than increases to employees that are not
officers made in the ordinary course of business consistent with past practice;


 


(d)                                 neither
the Company nor any Subsidiary shall (i) directly or indirectly, sell,
transfer, lease, pledge, mortgage, encumber or otherwise dispose of any
material portion of its property or assets (including stock or other ownership
interests of its Subsidiaries) or (ii) acquire a material amount of assets
or capital stock of any other Person, other than in the ordinary course of
business, consistent with past practice;


 


(e)                                  neither
the Company nor any of its Subsidiaries shall make any change in accounting
principles, practices or methods which is not required by U.S. GAAP;


 


(f)                                    neither
the Company nor any of its Subsidiaries shall issue, sell, pledge, dispose of
or encumber any shares of, or securities convertible into or exchangeable or
exercisable for, or options, warrants, calls, commitments or rights of any kind
to acquire, any shares of its capital stock of any class or any other property
or assets, other than Company Common Stock issuable pursuant to options or
restricted share units (whether or not vested) outstanding on the date hereof;


 


(g)                                 neither
the Company nor any of its Subsidiaries shall extend, modify, terminate, amend
or enter into any contract with any Affiliate of the Company, except pursuant
to intercompany transactions in the ordinary course of business, consistent
with past practice; or


 


(h)                                 neither
the Company nor any of its Subsidiaries shall incur any indebtedness for
borrowed money that cannot be repaid or retired within 30 days at no penalty;
and


 


(i)                                     neither
the Company nor any of its Subsidiaries will authorize or enter into an
agreement to do anything prohibited by this Section 6.1.


 


ARTICLE VII


 


ADDITIONAL AGREEMENTS


 


7.1                                 Access.  The Company agrees that upon reasonable
notice, and except as may otherwise be prohibited by applicable Law, it shall
(and shall cause its Subsidiaries to) afford Novartis’ officers, directors,
employees, counsel, accountants and other authorized representatives (“Representatives”)
reasonable access, during normal business hours throughout the period prior to
the Effective Time, to its executive officers, to its properties, books,
contracts and records, and, during such period, the Company shall (and shall
cause its Subsidiaries to) furnish promptly to Novartis all information
concerning its business, properties and personnel as may reasonably be
requested; provided that no investigation pursuant
to this Section shall affect or be deemed to modify any representation or
warranty made by the Company, Novartis or Merger Sub in this Agreement.  The Company shall furnish promptly to
Novartis a copy of each report, schedule, registration statement and other
document filed by it or its Subsidiaries during such period pursuant to the
requirements of federal or state securities Laws.


 


19

















 


7.2                                 No
Solicitation.  From and after the
date hereof, the Company shall not, and shall not authorize or permit any of
its Subsidiaries or any of its or their Representatives to, directly or
indirectly, solicit, initiate or encourage any inquiries or the making of any
proposal with respect to any merger, liquidation, recapitalization,
consolidation or other business combination involving the Company or its
Subsidiaries or acquisition of any capital stock or any material portion of the
assets of the Company or its Subsidiaries, or any combination of the foregoing
(other than Novartis, Merger Sub or their respective directors, officers, employees,
agents and representatives); provided,
however, that at any time prior
to the Acceptance Date the Company may furnish information, hold discussions
and take related actions in respect of any such proposal received that was not
solicited or knowingly encouraged by the Company if, but only if, after
consultation with its outside counsel, the Special Committee determines that
doing so is required in the proper exercise of its fiduciary duties.


 


7.3                                 Other
Actions; Notification.


 


(a)                                  The
Company and Novartis shall cooperate with each other and use (and the Company
shall its Subsidiaries to use and Novartis shall cause its Affiliates to use)
their respective reasonable best efforts to take or cause to be taken all
actions, and do or cause to be done all things, necessary, proper or advisable
on its part under this Agreement and applicable Law to consummate and make
effective the Offer and the Merger and the other transactions contemplated
hereby as soon as practicable.


 


(b)                                 Each
of the Company and Novartis shall as promptly as practicable, following the
execution and delivery of this Agreement, file with the United States Federal
Trade Commission (the “FTC”) and the United States Department of Justice
(the “DOJ”) the notification and report form, if any, required for the
consummation of the Offer and the Merger under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the “HSR Act”), and file such other filings
and notifications as are required under Law in foreign jurisdictions governing
merger control and/or foreign investment control and provide any supplemental
information requested in connection therewith pursuant to the HSR Act or any
other such other Law.  Any such
notification and report form, filings and supplemental information shall be in
substantial compliance with the requirements of the HSR Act or any other such
other Law.  Each of the Company and
Novartis shall furnish to the other such necessary information and reasonable
assistance as the other may request in connection with its preparation of any
filing or submission that is necessary under the HSR Act or any other such Law.


 


(c)                                  Subject
to any confidentiality obligations, the Company and Novartis each shall keep
the other apprised of the status of matters relating to completion of the transactions
contemplated hereby,  furnishing the
other with copies of filings with and notices or other communications received
by Novartis or its Affiliates or the Company or any of its Subsidiaries, as the
case may be, from any third party and/or any Governmental Entity with respect
to the Offer and the Merger and the other transactions contemplated hereby.


 


(d)                                 Each
party hereby agrees to perform any further acts and to execute and deliver any
documents which may be reasonably necessary to carry out the provisions of this
Agreement.


 


20

















 


7.4                                 Publicity.  The Company and Novartis each shall consult
with the other prior to issuing any press releases or otherwise making public
announcements with respect to the Offer or the Merger and the other
transactions contemplated hereby and prior to making any filings with any third
party and/or any Governmental Entity with respect thereto, except as may be
required by Law or by obligations pursuant to any listing agreement with or rules of
any national securities exchange or national market system on which such party’s
securities are listed or traded.


 


7.5                                 Expenses.  Whether or not the Offer or the Merger is
consummated, all costs and expenses incurred in connection with the Offer and
the Merger and the other transactions contemplated hereby shall be paid by the
party incurring such expense, except that each of the Company and Novartis
shall bear and pay one-half of the costs and expenses incurred in connection
with the filing, printing and mailing of the Proxy Statement (including any SEC
filing fees).


 


7.6                                 Anti-Takeover
Statute.  If any Anti-Takeover
Statute is or may become applicable to the Santo Purchase Offer, the Merger or
the other transactions contemplated hereby, each of Novartis, the Company and
Merger Sub and their respective Board of Directors (or with respect to Company,
the Special Committee, if appropriate) shall grant all such approvals and take
all such actions as are necessary so that such transactions may be consummated
as promptly as practicable hereafter on the terms contemplated hereby and
otherwise act to eliminate or minimize the effects of such statute or
regulation on such transactions.  “Anti-Takeover
Statute” shall mean any restrictive provision of any applicable “fair
price,” “moratorium,” “control share acquisition,” “interested stockholder” or
other similar anti-takeover Law, including Section 203 of the DGCL.


 


7.7                                 Novartis
Vote.  Novartis shall vote (or
consent with respect to) or cause to be voted (or a consent to be given with
respect to) any Company Common Stock and any shares of capital stock of Merger
Sub beneficially owned by it or any of its Affiliates or with respect to which
it or any of such Affiliates has the power (by agreement, proxy or otherwise)
to cause to be voted (or to provide a consent), in favor of the adoption of
this Agreement at any meeting of stockholders of the Company or Merger Sub,
respectively, at which this Agreement shall be submitted for approval and at
all adjournments or postponements thereof (or, if applicable, by any action of
stockholders of either the Company or Merger Sub by consent in lieu of a
meeting).


 


7.8                                 Section 16
Matters.  Prior to the Acceptance
Date, the Board of Directors of the Company shall take all such steps as may be
required and permitted to cause the transactions contemplated by this
Agreement, including any dispositions of Company Common Stock (including
derivative securities with respect to such Company Common Stock) by each
individual who is or will be subject to the reporting requirements of Section 16(a) of
the Exchange Act with respect to the Company to be exempt under Rule 16b-3
promulgated under the Exchange Act.


 


7.9                                 Indemnification;
Directors’ and Officers’ Insurance.


 


(a)                                  The
indemnification and exculpation provisions of the certificate of incorporation
and by-laws of the Company as in effect on the date hereof shall be included in
the Certificate of


 


21

















 


Incorporation and the By-Laws and shall not be amended, repealed or
otherwise modified for a period of six years from the Acceptance Date in any
manner that would adversely affect the rights thereunder of all present and
former directors, officers or employees of the Company.


 


(b)                                 The
Surviving Corporation shall maintain the Company’s and its Subsidiaries’
existing directors’ and officers’ liability insurance (“D&O Insurance”)
(including for acts or omissions occurring in connection with this Agreement
and the consummation of the transactions contemplated hereby) covering each
person who was covered under such policies as of the date of this Agreement
(each an “Indemnified Person”) by the Company’s officers’ and directors’
liability insurance policy on terms with respect to coverage and amount no less
favorable than those of such policy in effect on the date hereof for a period
of six years after the Acceptance Date; provided, however,
that in no event shall the Surviving Corporation be required to expend in any
one year an amount in excess of 200% of the current annual premium paid by the
Company for such insurance (such 200% amount, the “Maximum Annual Premium”);
provided, further, that if the annual
premiums of such insurance coverage exceed such amount, the Surviving
Corporation shall be obligated to obtain a policy with the greatest coverage
available for a cost not exceeding the Maximum Annual Premium.  In addition, the Company may, after
consultation with Novartis, and will at Novartis’ request, purchase a six-year “tail”
prepaid policy prior to the Effective Time on terms and conditions no less
advantageous to the Indemnified Parties than the existing directors’ and
officers’ liability insurance maintained by the Company; provided,
that the amount paid by the Company shall not exceed six times the Maximum
Annual Premium.  If such “tail” prepaid
policies have been obtained by the Company prior to the Closing, the Surviving
Corporation shall, and Novartis shall cause the Surviving Corporation to,
maintain such policies in full force and effect, and continue to honor the
respective obligations thereunder, and all other obligations under this Section 7.9(b) shall
terminate.


 


(c)                                  This
Section shall survive the consummation of the Merger at the Effective
Time, is intended to the benefit of the Company, the Surviving Corporation and
each Indemnified Person, shall be binding on all successors and assigns of the
Surviving Corporation and shall be enforceable by each Indemnified Person.


 


7.10                           Nasdaq
Listing.  Novartis and Merger Sub
shall use their reasonable best efforts, following the Acceptance Date and
until the earlier of (i) the Effective Time and (ii) February 11,
2006, to keep the Company’s Common Stock quoted for trading on the NASDAQ
National Market, as long as the Company is required to be registered under the
Exchange Act and satisfies the NASDAQ National Market listing standards (other
than standards entirely within the Company’s control).


 


ARTICLE VIII


 


CONDITIONS


 


8.1                                 Conditions
to Each Party’s Obligation to Effect the Merger.  The respective obligation of each party to
effect the Merger is subject to the satisfaction or, to the extent permitted by
applicable Law, waiver at or prior to the Effective Time of each of the
following conditions:


 


22

















 


(a)                                  The
completion of the Offer on the terms and subject to the conditions set forth
herein and a majority of the Public Shares having been purchased in the Offer
(the “Requisite Tender Amount”). 
This condition set forth in this Section 8.1(a) shall be
waivable only with the approval of the Special Committee.  Notwithstanding the foregoing, if the Offer
can not be completed (on the terms and subject to the conditions set forth
herein) as a result of the failure to satisfy a requirement of Law in connection
therewith, but the Merger is capable of consummation in compliance with the
requirements of Law, then the parties shall, subject to Section 8.1(b),
proceed with the consummation of the Merger, subject in such circumstances to
the additional condition that the Merger be approved at the Special Meeting by
a majority of the Public Shares; provided that
if the Merger is not approved by a majority of the Public Shares at such
Special Meeting, this Agreement shall automatically terminate and the date of such
Special Meeting shall be deemed to be the Acceptance Date for purposes of the
last sentence of Section 1.1(b).


 


(b)                                 No
court or Governmental Entity of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any statute, Law, ordinance, rule,
regulation, judgment, decree, injunction or other order that is in effect or
taken any other action enjoining, restraining or otherwise prohibiting the
consummation of the Merger or has the effect of making the purchase of Company
Common Stock illegal.


 


ARTICLE IX


 


TERMINATION


 


9.1                                 Termination
by Mutual Consent.  This Agreement
may be terminated and the Offer and the Merger contemplated hereby may be
abandoned at any time prior to the Effective Time, by mutual written consent of
the Company and Novartis.


 


9.2                                 Termination
Upon Termination of the Santo Agreement. 
This Agreement shall automatically terminate and the Offer, if
outstanding, shall be abandoned, upon the termination of the Santo Agreement if
at the time of such termination, no Santo Shares shall have been purchased by
Novartis or its Affiliates.


 


9.3                                 Termination
Upon Completion of Offer Without Requisite Tender Amount.  This Agreement shall terminate if, following
the completion of the Offer and the acceptance for payment or payment for any
Public Shares tendered pursuant to the Offer, Novartis or its Affiliates shall
not have purchased the Requisite Tender Amount. 
For the avoidance of doubt, such termination shall be without prejudice
to the Company’s obligations set forth in Section 1.3.


 


9.4                                 Effect
of Termination and Abandonment.  In
the event of termination of this Agreement and the abandonment of the Offer and
the Merger pursuant to this Article IX, this Agreement (other than as set
forth in Section 10.1) shall become void and of no effect with no
liability on the part of any party hereto or its Subsidiaries or Affiliates (or
of any of their respective directors, officers, employees, agents, legal and
financial advisors or other representatives); provided,
however, that except as otherwise provided herein, no such
termination shall relieve any party hereto of any liability resulting from any
breach of this Agreement.


 


23

















 


ARTICLE X


 


MISCELLANEOUS AND GENERAL


 


10.1                           Survival.  This Article X and the agreements of the
Company, Novartis and Merger Sub contained in Sections 7.5 (Expenses) and
7.9 (Indemnification; Directors’ and Officers’ Insurance) shall survive the
consummation of the Merger.  This Article X,
the agreements of the Company, Novartis and Merger Sub contained in Sections
7.5 (Expenses), Section 7.11 (Nasdaq Listing) and 9.4 (Effect of
Termination and Abandonment) and, if such termination occurs on or after the
Acceptance Date, Section 1.3 (Directors) shall survive the termination of
this Agreement.  Subject to Section 9.4,
all other representations, warranties, covenants and agreements in this
Agreement shall not survive the consummation of the Merger or the termination
of this Agreement.


 


10.2                           Modification
or Amendment.  Subject to the
provisions of applicable Law, at any time prior to the Effective Time, the
parties hereto may modify or amend this Agreement, by written agreement
executed and delivered by duly authorized officers of the respective parties, provided, that any modifications or amendments of provisions
that are for the benefit of the Company may only be effected with the approval
of the Special Committee.


 


10.3                           Waiver
of Conditions.  The conditions to
each of the parties’ obligations to consummate the Merger are for the sole
benefit of such party and may be waived by such party in whole or in part to
the extent permitted by applicable Law, provided, that
any conditions that are for the benefit of the Company may only be waived with
the approval of the Special Committee.


 


10.4                           Counterparts.  This Agreement may be executed in any number
of counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute the same
agreement.


 


10.5                           Governing
Law and Venue.  This Agreement shall
be governed by and construed in accordance with the Laws of the State of
Delaware, without regard to the principles of conflicts of Law thereof.  The parties hereto (for the avoidance of
doubt, other than Parent) hereby agree and consent to be subject to the
exclusive jurisdiction of the federal and state courts in the State of Delaware
in any suit, action or proceeding seeking to enforce any provision of, or based
on any matter arising out of or in connection with, this Agreement or the
transactions contemplated hereby.  Each
party hereto (for the avoidance of doubt, other than Parent) hereby irrevocably
waives, to the fullest extent permitted by Law, (i) any objection that it
may now or hereafter have to laying venue of any suit, action or proceeding
brought in such courts, and (ii) any claim that any suit, action or
proceeding brought in such courts has been brought in an inconvenient forum.


 


10.6                           Notices.  Any notice, request, instruction or other
document to be given hereunder by any party to the others shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid, or by facsimile (upon receipt of electronic confirmation of successful
transmission):


 


24

















 


if to Novartis or Merger
Sub,


 


Novartis Corporation


608 Fifth Avenue


New York, New York 10020

Attention:                         Executive
Vice President and Regional General Counsel

Telephone:                    (212) 307-1122

Facsimile:                            (212) 830-2416


 


with a copy to (which
shall not constitute notice)


 


Novartis AG


WSJ-200.195


4002 Basel


Switzerland


Attention:  Head of Legal and General Affairs


Telephone: 011-41-61-324-11-11


Facsimile: 011 41 61 324
3731


 


and to


 


Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, NY 10019

Attention:                         Andrew
R. Brownstein


Trevor S. Norwitz


Telephone:                    (212) 403-1000

Facsimile:                            (212)
403-2000


 


if to the Company,


 


Eon Labs, Inc.

1999 Marcus Avenue

Lake Success, NY 11042

Attention:                         Bernhard
Hampl, Ph.D.

Telephone:                    (516) 478-9700

Facsimile:                            (516) 478-9810


 


with a copy to (which
shall not constitute notice)


 


Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, New York  10019

Attention:                         Steven
A. Seidman


 


25

















 


David
K. Boston


Telephone:                    (212) 728-8763

Facsimile:         (212) 728-9763


 


and to the members of the Special Committee


 


Douglas M. Karp 

c/o Tailwind Capital Partners LLC

390 Park Avenue

New York, New York  10022

Telephone:                    (212)
271-3886

Facsimile:         (212) 271-3646


 


and


 


Mark Patterson 

c/o MatlinPatterson Global Advisers LLC

520 Madison Avenue

New York, New York  10022

Telephone:                    (212)
651-9555

Facsimile:         (212) 651-9556


 


with a copy to (which shall not constitute notice)


 


Simpson Thacher & Bartlett LLP 

425 Lexington Avenue

New York, New York  10017

Attention:                         Robert
E. Spatt


Patrick
J. Naughton


Telephone:                    (212) 455-2000

Facsimile:         (212) 455-2502


 


or to such other Persons or addresses as may be
designated in writing by the party to receive such notice as provided above.


 


10.7                           Entire
Agreement; No Other Representations. 
This Agreement (including any annexes, schedules and exhibits hereto),
the Company Disclosure Schedule, the Novartis Disclosure Schedule and the
Confidentiality Agreement constitute the entire agreement by and among the
parties hereto and supersede all other prior agreements, understandings,
representations and warranties, both written and oral, among the parties, with
respect to the subject matter hereof.


 


10.8                           No
Third-Party Beneficiaries.  Other
than with respect to the matters set forth in Section 7.9
(Indemnification; Directors’ and Officers’ Insurance), this Agreement is not
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.


 


10.9                           Severability.  The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the


 


26

















 


other provisions hereof.  Upon
any determination that any term or other provision of this Agreement, or the
application thereof to any Person or any circumstance, is invalid, illegal or
unenforceable, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.


 


10.10                     Interpretation.  The table of contents and headings herein are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions
hereof.  Where a reference in this
Agreement is made to a Section, such reference shall be to a Section of
this Agreement unless otherwise indicated. 
Whenever the words “include,” “includes” or “including” are used in this
Agreement, they shall be deemed to be followed by the words “without
limitation.”   The parties hereto each
acknowledge that each party has participated in the drafting of and been
represented by counsel in connection with this Agreement and the transactions
contemplated hereby.  Accordingly, any rule of
Law or any legal decision that would require interpretation of any claimed
ambiguities in any portions of this Agreement against the party that drafted it
has no application and is expressly waived.


 


10.11                     Assignment.  This Agreement shall not be assignable by
operation of Law or otherwise; provided, however, that Novartis may designate, by written notice to
the Company, another Subsidiary of Novartis to be a constituent corporation in
lieu of Merger Sub, whereupon all references herein to Merger Sub shall be
deemed references to such other Subsidiary, except that all representations and
warranties made herein with respect to Merger Sub as of the date of this
Agreement shall be deemed representations and warranties made with respect to
such other Subsidiary as of the date of such designation.


 


10.12                     Parent Guarantee.  Whenever in this Agreement performance of or
compliance with a covenant or obligation is expressed to be required by
Novartis or Merger Sub, Parent shall cause Novartis or Merger Sub to perform or
comply with such covenant or obligation, such that any failure of Novartis or
Merger Sub to perform or comply with any such covenant or obligation shall be
deemed to be a breach of such covenant or obligation by Parent.


 


27

















 


IN WITNESS WHEREOF, this Agreement has been duly
executed, acknowledged and delivered by the duly authorized officers of the parties
hereto as of the date first written above.


 


 


	
   

  	
  EON LABS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ BERNHARD HAMPL

  
	
   

  	
   

  	
  Name: Bernhard Hampl,
  Ph.D.

  
	
   

  	
   

  	
  Title:   Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NOVARTIS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ TERRY BARNETT

  
	
   

  	
   

  	
  Name:  Terry Barnett

  
	
   

  	
   

  	
  Title:    President and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ZODNAS ACQUISITION
  CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ WAYNE P. MERKELSON

  
	
   

  	
   

  	
  Name:  Wayne P. Merkelson

  
	
   

  	
   

  	
  Title:    VP and Asst. Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NOVARTIS AG, for
  purposes of Section 10.12 only

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ URS BÄRLOCHER

  
	
   

  	
   

  	
  Name:  Urs Bärlocher

  
	
   

  	
   

  	
  Title:    General Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JÖRG WALTHER

  
	
   

  	
   

  	
  Name:  Jörg Walther

  
	
   

  	
   

  	
  Title:   Authorized Signatory