Exhibit
10.12


 


ASSET PURCHASE AGREEMENT


 


among


 


ERGO RESEARCH (NEVADA) CORP.,


 


ERGO SCIENCE CORPORATION


 


and


 


PLIVA D.D.


 


Dated November 24, 2003


 

















 


TABLE OF CONTENTS


 


	
  ARTICLE 1

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
  SALE,
  ASSIGNMENT AND ASSUMPTION

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Sale
  and Assignment to Pliva

  	
   

  
	
  2.2

  	
  Consideration

  	
   

  
	
  2.3

  	
  Assumption
  of Liabilities

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
  THE
  CLOSING

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Time
  and Place of Closing

  	
   

  
	
  3.2

  	
  Transactions
  at the Closing

  	
   

  
	
   

  	
  3.2.1

  	
  Instruments
  of Transfer by Ergo Companies

  	
   

  
	
   

  	
  3.2.2

  	
  FDA
  Letters

  	
   

  
	
   

  	
  3.2.3

  	
  Evidence
  of Shipment of Books, Records, Etc.

  	
   

  
	
   

  	
  3.2.4

  	
  Ergo
  Texas Agreement

  	
   

  
	
   

  	
  3.2.5

  	
  Assignment
  and Amendment of LSU Agreement

  	
   

  
	
   

  	
  3.2.6

  	
  Payment

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
  OBLIGATIONS
  OF THE PARTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Cooperation

  	
   

  
	
  4.2

  	
  Transfer
  of Books, Records, Etc.

  	
   

  
	
  4.3

  	
  Non-Compete

  	
   

  
	
  4.4

  	
  J&J
  Agreement

  	
   

  
	
  4.5

  	
  Sales
  and Transfer Taxes; Fees

  	
   

  
	
  4.6

  	
  Contingent
  Purchase Price; MGH Patents; Cycloset Trademark

  	
   

  
	
  4.7

  	
  Confidentiality

  	
   

  
	
  4.8

  	
  Guaranty
  of the Ergo Parties; Preservation of Corporate Existence of Ergo Science

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
  CONDITIONS
  TO THE OBLIGATIONS OF THE PARTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Conditions
  to the Obligations of Pliva

  	
   

  
	
   

  	
  5.1.1

  	
  Truth
  of Representations; Performance of Covenants

  	
   

  
	
   

  	
  5.1.2

  	
  No
  Litigation

  	
   

  
	
   

  	
  5.1.3

  	
  No
  Adverse Event

  	
   

  
	
   

  	
  5.1.4

  	
  Opinions
  of Counsel

  	
   

  
	
   

  	
  5.1.5

  	
  Consents

  	
   

  



 

















 


	
   

  	
  5.1.6

  	
  Execution
  and Delivery of Agreements

  	
   

  
	
   

  	
  5.1.7

  	
  FDA
  Position

  	
   

  
	
   

  	
  5.1.8

  	
  Satisfaction
  with Investigations

  	
   

  
	
  5.2

  	
  Conditions
  to the Obligations of the Ergo Parties

  	
   

  
	
   

  	
  5.2.1

  	
  Truth
  of Representations; Performance of Covenants

  	
   

  
	
   

  	
  5.2.2

  	
  No
  Litigation

  	
   

  
	
   

  	
  5.2.3

  	
  Opinions
  of Counsel

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  By the
  Ergo Parties

  	
   

  
	
   

  	
  6.1.1

  	
  Corporate Organization and Power

  	
   

  
	
   

  	
  6.1.2

  	
  Corporate
  Action

  	
   

  
	
   

  	
  6.1.3

  	
  No
  Conflict

  	
   

  
	
   

  	
  6.1.4

  	
  Ownership
  of Transferred Assets

  	
   

  
	
   

  	
  6.1.5

  	
  Title

  	
   

  
	
   

  	
  6.1.6

  	
  No
  Litigation

  	
   

  
	
   

  	
  6.1.7

  	
  Agreements

  	
   

  
	
   

  	
  6.1.8

  	
  No
  Consents

  	
   

  
	
   

  	
  6.1.9

  	
  Books
  and Records

  	
   

  
	
   

  	
  6.1.10

  	
  Patents,
  Trademarks, Copyrights and Know-How

  	
   

  
	
   

  	
  6.1.11

  	
  Cycloset
  Rights

  	
   

  
	
   

  	
  6.1.12

  	
  Regulatory
  Filings

  	
   

  
	
   

  	
  6.1.13

  	
  J&J
  Agreement

  	
   

  
	
   

  	
  6.1.14

  	
  No
  Brokers

  	
   

  
	
   

  	
  6.1.15

  	
  Bulk
  Sales

  	
   

  
	
   

  	
  6.1.16

  	
  Inventory
  of Books, Records, Etc.

  	
   

  
	
   

  	
  6.1.17

  	
  Ergo
  Texas Agreement and Royalty Agreements

  	
   

  
	
   

  	
  6.1.18

  	
  Further Representations and Warranties

  	
   

  
	
  6.2

  	
  By Pliva

  	
   

  
	
   

  	
  6.2.1

  	
  Organization
  and Power

  	
   

  
	
   

  	
  6.2.2

  	
  Corporate
  Action

  	
   

  
	
   

  	
  6.2.3

  	
  No
  Conflict

  	
   

  
	
   

  	
  6.2.4

  	
  No
  Brokers

  	
   

  
	
   

  	
  6.2.5

  	
  Further
  Representations and Warranties

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
  INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Indemnification
  by the Ergo Parties

  	
   

  
	
  7.2

  	
  Indemnification by Pliva

  	
   

  
	
  7.3

  	
  Limitations

  	
   

  
	
  7.4

  	
  Procedures

  	
   

  
					



 


ii

















 


	
  7.5

  	
  Survival
  of Representations and Warranties; Time for Asserting Claims

  	
   

  
	
  7.6.

  	
  Set-off

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Severability

  	
   

  
	
  8.2

  	
  Further
  Assurances

  	
   

  
	
  8.3

  	
  Counterparts

  	
   

  
	
  8.4

  	
  Governing
  Law

  	
   

  
	
  8.5

  	
  Headings,
  Gender

  	
   

  
	
  8.6

  	
  Entire
  Agreement

  	
   

  
	
  8.7

  	
  Amendment

  	
   

  
	
  8.8

  	
  Notices

  	
   

  
	
  8.9

  	
  Waiver

  	
   

  
	
  8.10

  	
  Assignment;
  Successors in Interest

  	
   

  
	
  8.11

  	
  Payment
  of Expenses

  	
   

  
	
  8.12

  	
  Arbitration

  	
   

  
	
  8.13

  	
  Termination

  	
   

  
	
  8.14

  	
  Schedules

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT A

  	
  Form of
  Instrument of Assignment and Bill of Sale

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT B

  	
  Form of LSU Amendment

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT C

  	
  Form of LSU Assignment

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT D

  	
  Form of Ergo Texas Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT E-1

  	
  Form of Opinion of Counsel to the Ergo Parties

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT E-2

  	
  Form of Opinion of Patent Counsel to the Ergo Parties

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT E-3

  	
  Form of Opinion of Special Delaware Counsel to the Ergo Parties

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT E-4

  	
  Form of Opinion of Nevada Counsel to Sellers

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT E-5

  	
  Form of Opinion of Louisiana Counsel to the Ergo Parties

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT F-1

  	
  Form of Opinion of Croatian Counsel to Pliva

  	
   

  



 


iii

















 


	
  EXHIBIT F-2

  	
  Form of Opinion of New York Counsel to Pliva

  	
   

  
	
   

  	
   

  	
   

  



 


	
  DISCLOSURE SCHEDULE

  
	
   

  	
   

  
	
  SCHEDULE 4.6(a)

  	
  MGH Patents

  
	
  SCHEDULE 5.1.5

  	
  Consents

  
	
  SCHEDULE 6.1.3

  	
  Judgments, Orders and Decrees

  
	
  SCHEDULE 6.1.5(c)

  	
  Claims Relating to Transferred Assets

  
	
  SCHEDULE 6.1.5(d)

  	
  Names, Addresses, Etc. of Persons with
  Interests in Transferred Assets

  
	
  SCHEDULE 6.1.7

  	
  Terminations and Defaults Under Agreements;
  Fixed Introduction Costs

  
	
  SCHEDULE 6.1.8

  	
  Required Consents

  
	
  SCHEDULE 6.1.9

  	
  Incomplete Books and Records

  
	
  SCHEDULE 6.1.10(a)-1

  	
  Transferred Patent Rights

  
	
  SCHEDULE 6.1.10(a)-2

  	
  Transferred Trademarks

  
	
  SCHEDULE 6.1.10(b)

  	
  License Agreements and Sublicenses, Etc.

  
	
  SCHEDULE 6.1.10(c)n

  	
  Claims with Respect to Transferred Patent
  Rights, Transferred Trademarks, Know-How

  
	
  SCHEDULE 6.1.12

  	
  Regulatory Filings and Cycloset Patents

  



 


iv

















 


ASSET PURCHASE AGREEMENT dated November 24, 2003 among ERGO
RESEARCH (NEVADA) CORP., a Nevada corporation, having its principal place of
business at 2325-B Renaissance Drive, Suite 22, Las Vegas, Nevada 89119
(“Seller”), ERGO SCIENCE CORPORATION, a Delaware corporation, having its
principal place of business at 790 Turnpike Street, Suite 205, North Andover,
Massachusetts 01845 (“Ergo Science” and, together with Seller, the “Ergo Parties”),
and PLIVA D.D., a company organized under the laws of Croatia having its
principal place of business at Ulica Grada Vukovara 49, 10000 Zagreb, Croatia
(“PLIVA”).


 


WHEREAS, Seller is the owner, at least in part, or licensee of certain
patents, patent applications, rights under patent license agreements,
discoveries, trademarks, regulatory filings and approvals and other assets and
intellectual property relating to certain neuroendocrine resetting therapy
products and photodynamic therapy products, including pharmaceutical products
incorporating the active pharmaceutical ingredient bromocriptine mesylate to be
used in the treatment of Type II Diabetes.


 


WHEREAS, PLIVA desires to acquire such assets and assume certain
related liabilities and to use such assets in connection with the development,
manufacture, marketing and sale of certain pharmaceutical products.


 


NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereby agree as follows:


 


ARTICLE 1


 


DEFINITIONS


 


For purposes of this Agreement, the following definitions shall apply
unless specifically stated otherwise:


 


“Act” shall mean the Federal Food, Drug, and Cosmetic Act, as amended
from time to time (21 U.S.C. § 301 et  seq.).


 


“Affiliate” shall mean in respect of any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person; and for purposes of this definition “control” shall mean the power
to direct the management or policies of a Person, directly or indirectly,
whether through the ownership of shares or other securities, by 


 

















 


contract or otherwise; provided, that
the direct or indirect ownership of fifty-one percent (51%) or more of the
voting share capital of a Person is deemed to constitute control of that
Person, and “controlling” and “controlled” have corresponding meanings.


 


“Assumed Liabilities” shall mean and consist exclusively of the
obligations of the Ergo Companies under the LSU Agreement, other than the
Excluded Obligations.


 


“Citicorp Parties” shall mean Citicorp Venture Capital Ltd., Court
Square Capital Limited, Citicorp Banking Corporation and Citibank, N.A. and any
of their respective Affiliates, but excluding the Ergo Companies.


 


“Closing” shall mean the closing provided for in Section 3.1.


 


“Closing Date” shall mean the fifth business day following the
satisfaction of the conditions in Sections 5.1 and 5.2.


 


“Contingent
Purchase Price” shall mean the five hundred two thousand dollars ($502,000) to
be paid to Seller, or retained by PLIVA, as the case may be, in accordance with
Sections 4.6(a) and 4.6(b) of this Agreement.


 


“Cycloset” shall mean the fast-release oral formulation of
bromocriptine mesylate developed by Ergo Science for the treatment of Type II
Diabetes and for which an NDA was filed with the FDA.


 


“Cycloset Patents” shall mean the United States patents listed in the
Cycloset NDA (as of the Closing Date) as patents covering the use of Cycloset
to treat Type II Diabetes all of which are identified in Schedule 6.1.12.


 


“Cycloset NDA” shall mean the New Drug Application as filed by the Ergo
Parties with the FDA for the use of Cycloset for the treatment of Type II
Diabetes.


 


“Domani” shall mean Gematria Sciences, LLC, a Delaware limited
liability company, formerly known as Domani Sciences, LLC.


 


“Domani Term Sheet” shall mean a term sheet signed by PLIVA, Domani and
Odyssey setting forth the terms of an agreement for Domani to assist PLIVA and
Odyssey with the development of Cycloset, any clinical trials in connection with



 


2

















 


the approval of the NDA for Cycloset and all other matters relating to
the regulatory approval, manufacture, marketing and sale of Cycloset and for
Domani to conduct research and development for PLIVA and Odyssey with respect
to other pharmaceutical products.


 


“Encumbrance” shall mean any title defect, mortgage, assignment,
pledge, hyphothecation, security interest, lien, charge, option, claim of
others or encumbrance of any kind; provided, however, that the
obligations under the LSU Agreement and the Royalty Agreements shall not be
considered encumbrances for purposes of this definition.


 


“Ergo Companies” shall mean the Ergo Parties and their Affiliates; provided,
that the Citicorp Parties shall not be considered Ergo Companies.


 


“Ergo Parties” shall have the meaning given such term in the recitals.


 


“Ergo Science” shall have the meaning given such term in the recitals.


 


“Ergo Texas” shall mean Ergo Texas Holdings Incorporated, a Delaware
corporation and wholly-owned subsidiary of Ergo Science.


 


“Ergo Texas Agreement” shall mean the agreement among PLIVA, the Ergo
Parties and Ergo Texas dated the Closing Date in the form of Exhibit D.


 


“Excluded Obligations” shall mean:


 


(a)           any and all obligations
of the Ergo Companies under the LSU Agreement that arise from events occurring
prior to the Closing; provided, that no Ergo Party shall be liable for
any obligation to LSU that results from the LSU Amendment; and


 


(b)           any and all obligations
of the Ergo Companies, whether arising from events occurring prior to or after
the Closing, for which the Ergo Companies have agreed to remain obligated
pursuant to the LSU Assignment, including the obligations of the Ergo Companies
under Article III, Paragraph (L), Article III, Paragraph (R),
Article V, Subparagraph (F)(2), and Article VIII, Subparagraph
(A)(1), of the LSU Agreement; provided, that such obligations under


 


3

















 


Article VIII, Subparagraph (A)(1), of
the LSU Agreement arise from actions of the Ergo Companies.


 


“FDA” shall mean the United States Food and Drug Administration or any
agency that succeeds to the functions of such agency.


 


“IND” shall mean an investigational new drug application submitted to
the FDA pursuant to the Act and the regulations thereunder.


 


“Instruments of Assignment” shall mean the instruments referred to in
Section 3.2.1.


 


“J&J Agreement” shall mean the Joint Collaboration and License
Agreement date February 23, 1998 among the Ergo Parties, Ortho
Pharmaceutical Corporation, Ortho-McNeil Pharmaceutical, Inc., Cilag AG
International, and Johnson and Johnson.


 


“Know-How” shall mean all technology, know-how, processes and trade
secrets included within the Transferred Assets.


 


“Losses” shall mean all liabilities, losses, damages, deficiencies,
costs and expenses for which a party may be entitled to indemnification
pursuant to Article 7.


 


“LSU” shall mean the Board of Supervisors of Louisiana State University
and Agricultural and Mechanical College.


 


“LSU Agreement” shall mean the Novated License and Royalty Agreement
effective as of May 1, 1995 among LSU, the Ergo Parties and certain of
their Affiliates, as amended on September 3, 1997.


 


“LSU Amendment” shall mean Amendment No. 2 to Novated License and
Royalty Agreement dated the Closing Date between LSU and PLIVA in the form of
Exhibit B.


 


“LSU Assignment” shall mean the Assignment of Novated License and
Royalty Agreement dated the Closing Date among LSU, PLIVA and the Ergo Parties
in the form of Exhibit C.


 


“MGH” shall mean The General Hospital Corporation, a not-for-profit
corporation doing business as Massachusetts General Hospital.


 


“MGH Agreement” shall mean the License Agreement dated as of
February 1, 1997 among MGH and the Ergo Parties.


 


4

















 


“MGH Patents” shall mean the patents and patent applications listed on
Schedule 4.6(a) and the non-U.S. equivalents of such patents and
applications, including any utility patent application based on any provisional
application included in the MGH Patents, and any division, continuation or any
letters patent or the equivalent thereof issuing thereon or reissue,
reexamination or extension thereof.  The
MGH Patents shall also include those claims in any continuation-in-part of the
aforementioned patent applications owned, controlled, or available for license
from MGH or Harvard University, which claims an invention described or claimed
in said patent applications and any other rights under any patents or patent applications
licensed by MGH to any of the Ergo Companies at any time prior to the Closing.


 


“MGH Contingent Purchase Price” shall have the meaning given such term
in Section 4.6(a).


 


“NDA” shall mean a new drug application submitted to the FDA pursuant
to the Act and the regulations thereunder.


 


“Odyssey” shall mean Odyssey Pharmaceuticals, Inc., a New Jersey
corporation and wholly-owned subsidiary of PLIVA, Inc.


 


“Person” shall mean any natural person, corporation, company,
partnership, firm, voluntary association, joint venture, trust, unincorporated
organization, or any other entity whether acting in an individual, fiduciary or
other capacity.


 


“PLIVA” shall have the meaning given such term in the recitals.


 


“Products” shall mean all pharmaceutical products developed or under
development prior to or as of the date of this Agreement by any of the Ergo
Companies, including, without limitation, Cycloset and other neuroendocrine
resetting therapy products and photodynamic therapy products.


 


“Purchase Price” shall have the meaning given such term in
Section 2.2.


 


“Regulatory Filings” shall have the meaning given such term in
Section 6.1.12.


 


“Royalty Agreements” shall mean the following agreements:


 


(a)           Confidential Settlement
Agreement, effective as of June 12, 1993, by and among Ergo Science
Incorporated, 


 


5

















 


Ergo Texas
Holdings Incorporated and certain ETI Investor Payees (as defined therein)
represented by Attorney Chadderdon;


 


(b)           Agreement of Settlement
and Release, dated October 5, 1994, by and among Dr. William W. Filler,
Jr., MD, Howard J. Steinberg, Esq., Ergo Science Incorporated, Mark C. Hansen,
Esq. and Brian O’Neill, Esq.;


 


(c)           Confidential Settlement
Agreement, effective as of August 15, 1995, by and among Ergo Science
Incorporated, Ergo Texas Holdings Incorporated and certain ETI Investor Payees
(as defined therein) represented by Attorney Greene;


 


(d)           Confidential Settlement
Agreement entered into effective as of August 31, 1995, by and among Ergo Science
Incorporated, Ergo Texas Holdings Incorporated, Elite Therapeutics, Inc., Donn
D. Martin and certain other parties identified therein (the “Martin
Agreement”); and


 


(e)           Confidential Settlement
Agreement effective as of October 11, 1995, by and among Ergo Science
Incorporated, Ergo Texas Holdings Incorporated and certain ETI Investor Payees
(as defined therein).


 


“Seller” shall have the meaning given such term in the recitals.


 


“Technologies” shall mean all methods of use and treatment of or
pertaining to the Products and all methods for development of the Products.


 


“Trademark Contingent Purchase Price” shall have the meaning given such
term in Section 4.6(b).


 


“Transaction Documents” shall mean this Agreement, the LSU Amendment,
the LSU Assignment, the Ergo Texas Agreement, and the Instruments of
Assignment.


 


“Transferred Assets” shall mean:


 


(a)           all right, title and
interest of the Seller in and to the Products and the Technologies;


 


(b)           all right, title and
interest of the Seller in and to any and all United States and foreign patents,
patent applications, inventions, discoveries, know-how, data (including,
clinical and preclinical 


 


6

















 


data),
trademarks, copyrights and other intellectual property, whether owned or
licensed, pertaining to the Products and the Technologies, including, without
limitation, the Transferred Patent Rights and the Transferred Trademarks;


 


(c)           all right, title and
interest of the Seller in and to any and all INDs, NDAs, and all other United
States and foreign regulatory filings and data pertaining to the Products and
the Technologies; and


 


(d)           all rights of the Ergo
Companies under the LSU Agreement.


 


“Transferred Patent Rights” shall mean all of Seller’s right, title and
interest in the patents and the rights and interests in the patents listed in
Schedule 6.1.10(a)-1 and any division, continuation, continuation-in-part,
renewal, extension, reexamination or reissue of each such patent and any and
all corresponding United States and foreign counterpart patent applications or
patents.


 


“Transferred Trademarks” shall mean all of Seller’s right, title and
interest in the trademarks listed in Schedule 6.1.10(a)-2, including, all
federal, state, foreign, statutory and common law and other rights relating
thereto, all domestic and foreign trademark applications and registrations
therefor (and all extensions and renewals of such applications and
registrations, and the right to apply for any of the foregoing), all goodwill
of the Ergo Companies’ business in which such trademarks are used and
symbolized by such trademarks.


 


ARTICLE 2


 


SALE,
ASSIGNMENT AND ASSUMPTION


 


2.1           Sale and
Assignment to PLIVA.  Subject to the
terms and conditions of this Agreement, the Seller hereby agrees to sell, assign
and transfer or cause to be sold, assigned and transferred to PLIVA at the
Closing all of the Transferred Assets, free and clear of any Encumbrance, but
no other assets, and PLIVA hereby agrees to purchase at the Closing all of the
Transferred Assets and to pay and deliver the Purchase Price (hereinafter
defined) at the Closing; provided, that, subject to any right of PLIVA
to defend such claim pursuant to Section 7.4, upon any transfer hereunder
of the Transferred Assets, the Ergo 


 


7

















 


Companies shall retain the right to defend
themselves if a claim is brought against them under the LSU Agreement.


 


2.2           Consideration.  The consideration for the sale and
assignment of the Transferred Assets by the Ergo Parties to PLIVA shall be the
sum of (a) five million four hundred ninety-eight thousand Dollars ($5,498,000)
and (b) such portion of the Contingent Purchase Price as is paid to the Ergo
Parties in accordance with the provisions of Sections 4.6(a) and 4.6(b) (the
“Purchase Price”).


 


2.3           Assumption of
Liabilities.  Subject to the terms
and conditions of this Agreement, PLIVA agrees to assume at the Closing the
Assumed Liabilities, but no other liabilities or obligations of the Ergo
Parties.


 


ARTICLE 3


 


THE CLOSING


 


3.1           Time and Place
of Closing.  The closing of the
transactions provided for in Article 2 shall take place at the offices of
Becker, Glynn, Melamed & Muffly LLP, 299 Park Avenue, New York, New York
10171, at 10:00 a.m. on the Closing Date, or at such other time and place as
the parties shall agree.


 


3.2           Transactions
at the Closing.  At the Closing:


 


3.2.1        Instruments
of Transfer by Ergo Companies.  The
Ergo Parties shall deliver to PLIVA such bills of sale, instruments of
assignment and assumption and other documents, in form and substance
satisfactory to PLIVA, as shall effectively transfer to PLIVA the Transferred
Assets.  Such instruments shall include:


 


(a)                                  an
Instrument of Assignment and Bill of Sale in the form of Exhibit A;


 


(b)                                 instruments
of assignment of the Transferred Patent Rights in form and substance acceptable
to PLIVA in its reasonable judgment; and


 


(c)                                  an
instrument or instruments of assignment of the Transferred Trademarks in form
and substance acceptable to PLIVA in its reasonable judgment.


 


8

















 


All such instruments that must be filed, recorded or registered to
effect, register or record the transfer of any of the Transferred Assets shall
be in proper form for recording or filing in all appropriate filing offices.


 


3.2.2          FDA Letters.  The Ergo Parties shall deliver to PLIVA
letters addressed to the FDA notifying the FDA of the transfer of ownership of
the NDA for Cycloset to PLIVA, effective as of the Closing Date, and shall
deliver to PLIVA such other instruments and documents as may be necessary to
effect and record with the FDA the transfer to PLIVA of such NDA, any other
NDA, IND or regulatory filing relating to the Products, and all data, documents
and submissions relating thereto.


 


3.2.3        Evidence
of Shipment of Books, Records, Etc. 
The Ergo Parties shall deliver to PLIVA evidence that the documents and
other materials referred to in Section 4.2 will be delivered as provided
in such Section.


 


3.2.4        Ergo Texas
Agreement.  Ergo Texas, the Ergo
Parties and PLIVA, Inc. shall execute and deliver Ergo Texas Agreement.


 


3.2.5        Assignment
and Amendment of LSU Agreement.  The
LSU Assignment and the LSU Amendment shall be executed and delivered by the
parties thereto.


 


3.2.6        Payment.  PLIVA shall pay and deliver to Seller at the
Closing five million four hundred ninety-eight thousand Dollars ($5,498,000) on
account of the Purchase Price by wire transfer of immediately available funds
to such bank account as Seller shall designate at least three (3) business days
prior to the Closing Date.


 


ARTICLE 4


 


OBLIGATIONS OF
THE PARTIES


 


4.1           Cooperation.  The Ergo Parties shall cooperate with PLIVA
in:


 


(a)           effecting the transfer
to PLIVA of the NDA for Cycloset and any other NDA or IND for the Products;


 


9

















 


(b)           obtaining any consent
of government authorities or consent of third parties required for the transfer
of the Transferred Assets to PLIVA and for the assumption of the Assumed
Liabilities by PLIVA;


 


(c)           at no out-of-pocket
expense to the Ergo Parties, prosecuting and maintaining the Transferred Patent
Rights, including the patents licensed under the LSU Agreement, and the MGH
Patents; and


 


(d)           the filing in the
United States Patent and Trademark Office and all foreign patent offices of any
documents necessary to record the transfer to PLIVA of the Transferred Patent
Rights,


 


provided, that after
the Closing, such cooperation shall be provided at no expense to the Ergo
Parties, except that all costs and expenses associated with the transfer and
assignment to Seller of the Transferred Assets and the recording of such
transfers and assignments, shall be paid by the Ergo Parties.


 


4.2           Transfer
of Books, Records, Etc.  The Ergo
Parties shall give possession to PLIVA of all books, records and documents
relating to the Transferred Assets, the Products and the Technologies (other
than general corporate and financial records) and all samples of the Products
and any other tangible property comprising the Transferred Assets, including,
without limitation, all data and documents prepared for any of the Ergo
Companies by Scirex Corporation, Oxford Research International Corporation,
Geneva Pharmaceuticals, Inc., Poli Industrie Chimica S.p.a., Ivers-Lee
Corporation, Gedeon Richter Ltd., Medimpex Northamerica or any other Person, in
the possession of any of the Ergo Companies, by shipping such documents and
other materials as are listed in the inventory referred to in
Section 6.1.16 on the Closing Date to PLIVA, Inc. at the address specified
in Section 8.8, to the attention of Mr. Roger Schwede, Vice President,
Research and Development and Regulatory, of PLIVA, Inc. for delivery no later
than five (5) days after the Closing Date.


 


4.3           Non-Compete.  For a period of ten (10) years after the
approval of the NDA for Cycloset,
the Ergo Parties shall not, and they shall cause their Affiliates, other than
the Citicorp Parties, not to, engage, anywhere in the world, directly or in
collaboration with other Persons, in the research, development, marketing or
sale of any of the Products or the Technologies.


 


10

















 


4.4           J&J Agreement.  The
Ergo Parties represent and warrant pursuant to Section 6.1.13 of this
Agreement that the J&J Agreement has been terminated without
liability.  In the event liabilities or
obligations of the Ergo Companies arise under or in respect of the J&J
Agreement, whether before or after the Closing, the Ergo Parties agree to
discharge such liabilities and to perform such obligations, subject to any
rights and defenses of the Ergo Parties under the J&J Agreement and in law
or in equity.


 


4.5           Sales
and Transfer Taxes; Fees. 
The Ergo Parties shall pay all applicable sales, value added, transfer,
documentary use, filing and other taxes that may be levied on the sale,
assignment, transfer or delivery of the Transferred Assets, any registration or
recording of the transfer of the Transferred Assets or otherwise hereunder,
and, at their own expense, file all necessary tax returns and other
documentation with respect to all such sales or transfer taxes.  Notwithstanding the foregoing, PLIVA shall
be responsible for the cost of recording the assignment of any patents (other
than the cost of recording the assignment of any patents to Seller).


 


4.6           Contingent
Purchase Price; MGH Patents; Cycloset Trademark.  (a) 
PLIVA shall negotiate in good faith with MGH, Harvard University and any
other owner of the MGH Patents with the intention of acquiring the exclusive
right to practice the MGH Patents on or before the first anniversary of the
Closing Date.  If PLIVA has not acquired
the exclusive right to practice the MGH Patents on or before such date, PLIVA
shall retain five hundred thousand dollars ($500,000) of the Contingent
Purchase Price (“MGH Contingent Purchase Price”) and shall have no further
obligation to pay the MGH Contingent Purchase Price to Seller.  If PLIVA has acquired the exclusive right to
practice the MGH Patents on or before such date, PLIVA shall pay the MGH
Contingent Purchase Price to Seller less any amount paid by PLIVA to acquire
such rights, other than running royalties in respect of the MGH Patents.


 


(b)           PLIVA shall take all action necessary and
commercially reasonable in its judgment to register in the United States Patent
and Trademark Office on or before the first anniversary of the Closing Date the
trademark “Cycloset” for use by PLIVA to identify the fast-release oral
formulation of bromocriptine mesylate. 
If such trademark is not so registered on or before such date, PLIVA
shall retain two thousand dollars ($2,000) of the Contingent Purchase Price
(“Trademark Contingent Purchase Price”) and shall have no further obligation to
pay the 


 


11

















 


Trademark Contingent Purchase Price to Seller.  If such trademark is so registered on or
before such date, PLIVA shall pay the Trademark Contingent Purchase Price to
Seller less all costs and expenses, including legal fees, incurred by PLIVA in
connection with such registration of the trademark “Cycloset”.


 


(c)           Nothing in this Section 4.6 shall
obligate PLIVA to acquire any rights to or interest in the MGH Patents or to
register the trademark “Cycloset” if PLIVA reasonably concludes, in its sole
discretion, that it is not in its interest to do so.


 


4.7           Confidentiality.  Each of the parties shall keep any
proprietary information furnished to it by any other party in the negotiation
and performance of this Agreement confidential and shall not use such
information for its own purposes, nor disclose same to third parties without
the prior written consent of the other parties except to the extent such
information: (a) was already in the rightful possession of such party prior to
the disclosure by another party to this Agreement; (b) becomes generally known
to the public otherwise than as a result of the breach of this Section;  (c) is disclosed by a third party having no
obligation to keep such information confidential; or (d) is required to be disclosed  pursuant to applicable law; provided,
that in such event the party required to disclose such information will give as
much advance notice as is reasonably possible to the other parties so that the
other parties would have an opportunity to seek relief from such requirement.


 


4.8           Guaranty
of the Ergo Parties; Preservation of Corporate Existence of Ergo Science.


 


(a)           Ergo Science hereby guarantees the
obligations of the Seller under this Agreement and agrees to maintain, preserve
and keep in full force and effect the corporate existence of Ergo Science and
not to dissolve or liquidate until the earlier of:


 


(A)          (I) the date five (5) years after the launch
of the marketing and sale of Cycloset, or (II) the date one (1) year after
PLIVA abandons its plans to launch Cycloset; or


 


(B)           ten (10) years from the date of this
Agreement.


 


(b)           Seller hereby guarantees the obligations of
Ergo Science under this Agreement.


 


12

















 


(c)           During the term of Ergo Science’s guaranty
pursuant to Section 4.8(a) above, Ergo Science agrees to furnish PLIVA, as
soon as practicable after filing thereof, copies of each proxy statement,
Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on
Form 8-K or other reports filed with by Ergo Science with the U.S. Securities
and Exchange Commission.


 


ARTICLE 5


 


CONDITIONS TO
THE OBLIGATIONS OF THE PARTIES


 


5.1           Conditions
to the Obligations of PLIVA.  The
obligation of PLIVA to purchase the Transferred Assets and assume the Assumed
Liabilities, and the obligation of PLIVA to perform the other obligations to be
performed by it at the Closing is subject to the following conditions
precedent:


 


5.1.1        Truth of Representations;
Performance of Covenants.  The
representations and warranties of the Ergo Parties made in and pursuant to any
of the Transaction Documents  or any
other document delivered at the Closing or in connection with the transactions
contemplated by this Agreement shall have been true in all material respects
when made and shall be true in all material respects at and as of the Closing
Date as though such representations and warranties had been made at and as of
the Closing Date, and the Ergo Parties shall have performed all covenants and
agreements on their part required to be performed on or before the Closing Date
and shall not be in default under any of the provisions of any of the
Transaction Documents at or prior to the Closing Date; and PLIVA shall have
received from the Ergo Parties on the Closing Date a certificate dated such
date, signed by the President of each of the Ergo Parties to the foregoing
effect.


 


5.1.2        No Litigation.  No action or proceeding shall have been
instituted or threatened, and no investigation which might, in the opinion of
PLIVA, lead to any such action or proceeding shall have begun or been
threatened, on or prior to the Closing Date before any court or other
governmental body by any Person or public authority seeking to restrain or
prohibit the consummation of the transactions provided for in any of the
Transaction Documents or seeking damages or other relief in connection with any
of the Transaction Documents.


 


13

















 


5.1.3        No Adverse
Event.  The Transferred Assets and
the Assumed Liabilities shall not have been adversely affected in any material
way, including as the result of any action by the FDA or any other government
agency or by any act of God, fire, flood, war, labor disturbance or similar
calamity or by any other occurrence.


 


5.1.4          Opinions
of Counsel.  (a)  PLIVA shall have received from Messrs.
Greenberg, Traurig, LLP, Morris, Nichols, Arsht & Tunnell, Jones Vargas,
and Milling Benson Woodward L.L.P., for the Ergo Parties, opinions dated the
Closing Date, in the forms annexed hereto as Exhibits E-1, E-2, E-3, E-4 and E-5.


 


(b)           PLIVA shall have received evidence
satisfactory to it that the execution, delivery and performance by LSU of the
LSU Assignment and the LSU Amendment have been duly authorized by all necessary
corporate action and that the LSU Assignment and the LSU Amendment have been
duly executed and delivered by LSU and constitute the legal, valid, and binding
obligations of LSU.


 


5.1.5        Consents.  Except as set forth in Schedule 5.1.5,
all consents, authorizations and approvals of government agencies and third parties
necessary for the transfers of the Transferred Assets and assumption of the
Assumed Liabilities, the consummation of the transactions provided for in this
Agreement and the execution, delivery and performance of the Transaction
Documents shall have been obtained and be in full force and effect.


 


5.1.6        Execution
and Delivery of Agreements.  Each of
the following agreements shall have been executed and delivered by the parties
thereto:


 


(a)                                  the
LSU Assignment;


 


(b)                                 the
LSU Amendment;


 


(c)                                  the
Ergo Texas Agreement; and


 


(d)                                 the
Domani Term Sheet.


 


5.1.7        FDA
Position.  The FDA shall not
have retracted or in any way modified the advice given in the “approvable
letter” dated October 15, 1999 relating to Cycloset or the position
reflected in the minutes dated August 1, 2002 of 


 


14

















 


the meeting with the FDA relating to Cycloset held on April 6,
2000, and PLIVA shall not have any reason to believe that the FDA has changed
its position that the NDA for Cycloset is approvable upon the successful
conclusion of an acceptable large safety trial to assess the potential risk of
serious cardiac adverse events, a biostudy in humans of high dose treatment
given with diabetic meals and high-fat meals, additional dissolution testing of
Cycloset tablets and qualification by International Committee on Harmonization
(ICH) Quality Control for two impurities reported in Cycloset.


 


5.1.8        Satisfaction
with Investigations.  PLIVA shall be
satisfied with the results of the review conducted by its patent counsel of all
patents included within the Transferred Assets or relating to the Products and
the Technologies.


 


5.2           Conditions
to the Obligations of the Ergo Parties. 
The obligations of the Ergo Parties to sell the Transferred Assets
pursuant to this Agreement and to perform the other obligations to be performed
by them at the Closing are subject to the following conditions precedent:


 


5.2.1        Truth
of Representations; Performance of Covenants.  The representations and warranties of PLIVA
made in and pursuant to this Agreement shall have been true in all material
respects when made and shall be true in all material respects at and as of the
Closing Date as though such representations and warranties had been made at and
as of the Closing Date, and PLIVA shall have performed all covenants and
agreements on its part required to be performed on or before the Closing Date,
including the payment to the Ergo Parties of the portion of the purchase price
to be paid to the Ergo Parties at the Closing, and shall not be in default
under any of the provisions of this Agreement at or prior to the Closing Date;
and the Ergo Parties shall have received from PLIVA on the Closing Date a
certificate dated such date, signed by an Authorized Representative of PLIVA,
to the foregoing effect.


 


5.2.2        No
Litigation.  No action or
proceeding shall have been instituted or threatened, and no investigation which
might, in the opinion of the Ergo Parties, lead to any such action or
proceeding, shall have begun or been threatened, on or prior to the Closing
Date before any court or other governmental body by any Person or public
authority seeking to restrain or prohibit the consummation of the transactions
provided for in any of the Transaction Documents or seeking 


 


15

















 


damages or seeking other relief in connection with any of the
transaction Documents.


 


5.2.3        Opinions
of Counsel.  The Ergo
Parties shall have received from Croatian counsel to PLIVA (which may be
in-house counsel to PLIVA) and from Messrs. Becker, Glynn, Melamed and Muffly
LLP, New York counsel for PLIVA, opinions dated the Closing Date in the forms
annexed hereto as Exhibits F-1 and F-2.


 


5.2.4        Ergo Texas Agreement.  The Ergo Texas Agreement shall have been executed
and delivered by the parties thereto.


 


ARTICLE 6


 


REPRESENTATIONS
AND WARRANTIES


 


6.1           By the
Ergo Parties.  Each of
the Ergo Parties represents and warrants as of the date hereof and as of the
Closing Date that:


 


6.1.1        Corporate
Organization and Power. 
It is a corporation duly organized, existing and in good standing under
the laws of the state of Nevada, in the case of the Seller, and the state of
Delaware, in the case of Ergo Science, with full right, power and authority to
enter into and perform the Transaction Documents to which it is a party and to
sell and assign the Transferred Assets.


 


6.1.2        Corporate
Action.  The execution, delivery and
performance by it of the Transaction Documents to which it is a party by it
have been authorized by its Board of Directors and any other necessary
corporate action.  Each Transaction
Document to which it is a party has been duly executed and delivered by it and
is its legal, valid and binding obligation, enforceable against it in
accordance with its terms.


 


6.1.3        No Conflict.  The execution, delivery and performance by
it of the Transaction Documents to which it is a party do not and will not
violate any law, statute, local ordinance, state or federal regulation, court
order, judgment or administrative order or ruling, its corporate charter or
bylaws, or any agreement by which it is bound. 
All material orders, judgments, decrees, contracts and agreements to
which any of the Ergo Companies is a party or is subject and which relate to
the 


 


16

















 


Transferred Assets or the transactions contemplated by the Transaction
Documents and all pending or, to the knowledge of the Ergo Parties, threatened
claims, suits, proceedings or investigations involving the Transferred Assets
or the Transaction Document, are referred to in the Schedules to this
Agreement.


 


6.1.4        Ownership
of Transferred Assets.  None of the
Ergo Companies other than Seller and none of the Citicorp Parties or any of
their Affiliates other than Seller has any right, title or interest in or to:


 


(a)           the Products or the Technologies;


 


(b)           any United States or foreign patents, patent
applications, inventions, discoveries, know-how, data (including, clinical and
preclinical data), trademarks, copyrights and other intellectual property,
whether owned or licensed, pertaining to the Products or the Technologies,
including, without limitation, the Transferred Patent Rights and the
Transferred Trademarks; or


 


(c)           any United States and foreign NDAs, INDs,
regulatory filings and data pertaining to the Products or the Technologies.


 


6.1.5        Title.  (a) The Seller is the sole and exclusive
owner of the Transferred Assets free and clear of any Encumbrances, and has the
right to sell, assign, transfer, and convey the Transferred Assets as provided
in this Agreement, subject to the approval of LSU as provided in the LSU
Assignment. After the consummation of the transactions contemplated hereby, the
Ergo Companies and the Citicorp Parties and their Affiliates will have no
further rights in the Transferred Assets (except pursuant to the Ergo Texas
Agreement).


 


(b)           PLIVA will receive, pursuant to this
Agreement as of the Closing Date, the sole and exclusive legal and beneficial
right, title and interest in and to the Transferred Assets, free and clear of
all Encumbrances.


 


(c)           Except as set forth in
Schedule 6.1.5(c), to the knowledge of the Ergo Companies no claim has
ever been asserted, and no claims are pending, challenging or questioning the
validity or enforceability of any of the Transferred Assets.


 


17

















 


(d)           The names, any former names, the
jurisdiction of incorporation, and the addresses and principal places of
business and former addresses and principal places of business of all Persons
(including Persons to which any of the Ergo Parties is a successor by merger or
otherwise) that at any time had any right, title or interest in or to, or
sublicense of, the Transferred Assets and a description of the Transferred
Assets in which each such Persons had any such right, title, interest or
sublicense, are set forth in Schedule 6.1.5(d).  The right, title, interest or sublicense of each such Person in
the Transferred Assets has terminated in the manner set forth in
Schedule 6.1.5(d).


 


6.1.6        No Litigation.  There is no pending or, to the best of the
knowledge of the Ergo Parties, threatened litigation involving the Transferred
Assets or this Agreement.


 


6.1.7        Agreements.  Except as set forth in Schedule 6.1.7,
the LSU Agreement is in full force and effect and has not been terminated or
modified.  Except as set forth in
Schedule 6.1.7, none of the Ergo Companies has received notice of any
default under the LSU Agreement, the MGH Agreement, the J&J Agreement, the
Royalty Agreements or any other agreement relating to the Products or the
Technologies, no claim for any payment has been made under any such agreement,
and, to the best of the knowledge of the Ergo Parties, no event has occurred
that would give rise to any such claim. 
Except as set forth in Schedule 6.1.7, the Ergo Companies have not
incurred any Fixed Introduction Costs (as defined in the LSU Agreement) with
respect to any product other than Cycloset.


 


6.1.8        No Consents.  Except as disclosed in Schedule 6.1.8,
no consent, authorization or approval of, or filing with or application to, any
Person or government agency is required in connection with the execution and
delivery of the Transaction Documents and the consummation of the transactions
provided for in the Transaction Documents.


 


6.1.9        Books
and Records.  Except as
set forth in Schedule 6.1.9, all of the Ergo Parties’ books and records
relating to the NDA for Cycloset and, to the best of the knowledge of the Ergo
Parties, all other books and records of the Ergo Parties relating to the
Transferred Assets and Assumed Liabilities are complete and correct in all
material respects and the copies of all instruments, agreements, or other
documents and written information relating to the Transferred Assets and
Assumed Liabilities delivered to PLIVA or Domani by 


 


18

















 


the Ergo Parties or their representatives pursuant to or in connection
with this Agreement were, are, and shall be complete and correct in all
material respects when delivered, as of the date of this Agreement and as of
the Closing Date.


 


6.1.10      Patents,
Trademarks, Copyrights and Know-How. 
(a) Schedules 6.1.10(a)-1 and 6.1.10(a)-2 list all of the Transferred
Patent Rights and Transferred Trademarks and all owners or licensees thereof.  Except for the Transferred Patent Rights and
Transferred Trademarks, the Ergo Companies do not own or have licenses to use
any patents, trademarks (registered or unregistered), copyrights, tradenames,
or assumed names relating in any way to the Products, the Technologies or the
Transferred Assets.


 


(b)           Except as set forth in
Schedule 6.1.10(b), any of the Transferred Patent Rights, Transferred
Trademarks and Know-How that is licensed to any of the Ergo Companies is
licensed to Seller pursuant to valid and enforceable agreements that are in
full force and effect.  Except as set
forth in Schedule 6.1.10(b), there are not any existing sublicenses or
commitments to enter into sublicenses under the LSU Agreement and there were
not at any time any sublicenses under the MGH Agreement and any such
sublicenses that may have been granted have been terminated without liability
to any Person.


 


(c)           Except as set forth in
Schedule 6.1.10(c), to the best of the knowledge of the Ergo Parties, no
claims have been asserted by any Person with respect to the ownership, validity
or use of the Transferred Patent Rights, Transferred Trademarks, or Know-How,
there is no valid basis for any such claim, and the use or other exploitation
thereof does not infringe on or dilute the patent or other recognized
intellectual property rights of any Person.


 


(d)           To the best of the knowledge of the Ergo
Parties, no Person is infringing the rights of the Ergo Parties with respect to
the Transferred Patent Rights, Transferred Trademarks or Know-How.


 


(e)           Any and all maintenance or other government
fees due and owing, as of the effective date of this Agreement, to the U.S.
Patent and Trademark Office (“USPTO”) or any other patent office in the world,
with respect to the Transferred Patent Rights, have been timely and
appropriately paid, and any and all renewal or other government fees due and
owing, as of the effective date of this Agreement, to the USPTO, or any other 


 


19

















 


trademark office in the world, with respect to the Transferred
Trademarks, have been timely paid.


 


6.1.11      Cycloset
Rights.  (a)  To the knowledge of the Ergo Parties,
subject to PLIVA receiving the requisite approval of the Cycloset NDA by the
FDA to market and sell Cycloset for the treatment of Type II Diabetes as
specified in the Cycloset NDA and the Cycloset Patents, there are no additional
recognized legal intellectual property rights that PLIVA needs to manufacture
and sell Cycloset in the United States for the treatment of Type II Diabetes as
contemplated in the Cycloset NDA and the Cycloset Patents other than those
intellectual property rights transferred to PLIVA as part of the Transferred
Assets and the requisite FDA approval.


 


(b)           To the knowledge of the Ergo Parties, subject
to PLIVA receiving from the FDA the requisite approval of the Cycloset NDA to
begin manufacturing and selling Cycloset in the United States for the treatment
of Type II Diabetes as specified in the Cycloset NDA and the Cycloset Patents,
the legal rights included in such NDA approval by the FDA and the Cycloset
Patents will provide PLIVA with the exclusive right to manufacture and sell
Cycloset for the treatment of Type II Diabetes as set forth in the Cycloset NDA
and Cycloset Patents for proscribed periods of times in the United States
subject to the following: (i) PLIVA’s manufacture and sale must comply and
conform with the terms of the Cycloset NDA (including any terms relating to its
approval) and the Cycloset Patents, and (ii) the exclusivity provided by such
NDA approval and patent rights is only to the extent provided by applicable FDA
and United States patent laws, regulations, interpretations, and case law,
including, without limitation, any limitations on exclusivity, including but
not limited to, limitations related to geography, time, manner of manufacture
and sale, and the equitable conduct of the holder of  such rights under FDA and patent laws, regulations,
interpretations and case law.


 


(c)           Furthermore, representations in subsections
6.1.11(a) and 6.1.11(b) are made with respect to the Cycloset NDA and the
Cycloset Patents as they are in existence as of the Closing Date. These
representations do not apply to any amendments, modifications, supplements or
other changes or additions to the Cycloset NDA or Cycloset Patents that are
made after the Closing Date. The use of one or more of the Cycloset Patents
will also be subject to any limitations imposed by the LSU Agreement.


 


20

















 


6.1.12      Regulatory
Filings.  Schedule 6.1.12
correctly describes all NDAs, INDAs and other filings made by any of the Ergo
Companies in order to obtain regulatory approval for the marketing or sale of
any of the Products (the “Regulatory Filings”) and correctly lists all of the
Cycloset Patents.  Except for the
Regulatory Filings and documentary submissions in connection with the
Regulatory Filings, the Ergo Companies have not made any filings with
regulatory authorities with respect to the Products or the Technologies.  Subject to Sections 6.1.10(c) and 6.1.11, on
or before the Closing, the Ergo Parties have the sole and exclusive right, free
from any Encumbrance, to use Regulatory Filings.  On or before the Closing, no claims have been asserted by any
Person with respect to the ownership, validity or use of the Regulatory
Filings.  To the knowledge of the Ergo
Parties, the manufacturing section of the NDA (which was completed by
Geneva Pharmaceuticals, Inc., a Colorado corporation (“Geneva”)) sets forth an
accurate description of the manufacturing process for the NDA for Cycloset used
by Geneva.


 


6.1.13      J&J
Agreement.  The J&J
Agreement has terminated without liability to any Person, and the parties
thereto other than the Ergo Parties have no right, title or interest in or to
the Products, the Technologies or the Transferred Assets.


 


6.1.14      No Brokers.  The Ergo Parties have no liability to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.


 


6.1.15      Bulk Sales.  Neither the execution, delivery nor the
performance of this Agreement is subject to any bulk sales law.


 


6.1.16      Inventory
of Books, Records, Etc.  The Ergo
Parties have delivered to PLIVA a complete inventory, dated November 5,
2003, of all of the documents, records and other property to be transferred to
PLIVA pursuant to Section 4.2.


 


6.1.17      Ergo
Texas Agreement and Royalty Agreements.  The Agreement to Sublicense dated
June 12, 1993 between Ergo Science Incorporated and Ergo Texas has been
terminated, and none of the Royalty Agreements has been terminated.


 


6.1.18      Further
Representations and Warranties. 
No representation or warranty by the Ergo Parties in this Agreement 


 


21

















 


contains any untrue statement of material fact, or omits to state a
material fact necessary in order to make any of the statements made, in light
of the circumstances under which it was made, not misleading.


 


6.2  By PLIVA.      PLIVA represents and
warrants, as of the date hereof and as of the Closing Date, as to itself that:


 


6.2.1        Organization
and Power.  It is a corporation duly
organized, validly existing and in good standing under the laws of Croatia, and
it has full right, power and authority to enter into and perform the Transaction
Documents to which it is a party.


 


6.2.2        Corporate
Action.  The execution, delivery and
performance by it of the Transaction Documents to which it is a party has been
authorized by its Board of Directors and any other necessary corporate action.  The Transaction Documents to which it is a
party have been duly executed and delivered by it and is its legal, valid and
binding obligation, enforceable against it in accordance with its terms.


 


6.2.3        No
Conflict.  The execution,
delivery and performance by it of the Transaction Documents to which it is a
party does not and will not violate any law, statute, local ordinance, state or
federal regulation, court order, or administrative order ruling, its corporate
charter or bylaws, or any agreement by which it is bound.


 


6.2.4        No
Brokers.  PLIVA has no
liability to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement.


 


6.2.5        Further
Representations and Warranties. 
No representation or warranty by PLIVA in this Agreement contains any
untrue statement of material fact, or omits to state a material fact necessary
in order to make any of the statements made, in light of the circumstances
under which it was made, not misleading.


 


ARTICLE 7


 


INDEMNIFICATION


 


7.1           Indemnification
by the Ergo Parties.  Subject to and
conditioned upon the occurrence of the Closing, the Ergo Parties, jointly and
severally, shall indemnify, defend and hold 


 


22

















 


harmless PLIVA against and from any and all damages, losses,
liabilities, claims and expenses (whether or not involving a third party claim)
which PLIVA may incur or suffer which arise out of or result from:


 


(a)           the untruth of any
representation or the breach of any warranty, covenant or agreement made by
either of the Ergo Parties in this Agreement, the LSU Assignment or any other
Transaction Document or document delivered at the Closing or in connection with
the transactions contemplated in this Agreement;


 


(b)           any and all claims by
third parties arising prior to the Closing Date relating to the Products, the
Technologies or the Transferred Assets;


 


(c)           the Excluded
Obligations and any other obligation of the Ergo Companies not expressly
assumed by PLIVA pursuant to this Agreement;


 


(d)           the J&J Agreement,
including any claim that any amount is owing under the J&J Agreement as a
consequence of the termination of the J&J Agreement or that any Person
other than Seller has any rights in the Transferred Assets pursuant to the
J&J Agreement;


 


(e)           any and all claims
under the Royalty Agreements, the Agreement to Sublicense dated June 12,
1993 between Ergo Science Incorporated and Ergo Texas, and any and all
settlement agreements other than the Royalty Agreements relating to the
Products, the Technologies or the Transferred Assets, to which any of the Ergo
Companies is a party; provided, however, that the Ergo Parties shall not
have any obligation to indemnify PLIVA with respect to any claim by any party
to a Royalty Agreement for any amount not paid by PLIVA in violation of the
provisions of the Ergo Texas Agreement;


 


(f)            any failure of the
Ergo Companies to comply with any applicable bulk transfer or bulk sales laws;


 


(g)           any claim by any
shareholder of any of the Ergo Companies relating to or arising out of the
transactions provided for in this Agreement;


 


(h)           any claim by Geneva
Pharmaceuticals, Inc. (“Geneva”) for costs relating to the filing of NDA 20-866



 


23

















 


or any other claim by Geneva relating to the
Products or the Transferred Assets that arise from actions of, or agreements
with, the Ergo Companies; or


 


(i)            any and all actions,
suits, proceedings, demands, assessments, judgments, costs and expenses, and
reasonable attorneys’ fees, incident to any of the foregoing.


 


7.2           Indemnification by PLIVA.  Subject to and conditioned upon the
occurrence of the Closing, PLIVA shall indemnify, defend and hold harmless the
Ergo Parties against and from any and all damages, losses, liabilities, claims
and expenses (whether or not involving a third party claim) which the Ergo
Parties may incur or suffer which arise out of or result from:


 


(a)           the untruth of any
representation or the breach of any warranty, covenant or agreement made by
PLIVA in this Agreement;


 


(b)           any and all claims by
third parties with respect to the PLIVA Assumed Liabilities;


 


(c)           any claims by third
parties arising from the manufacture, sale, marketing or use of the Products by
PLIVA, its Affiliates or any of their respective sublicensees or agents; or


 


(d)           any and all actions,
suits, proceedings, demands, assessments, judgments, reasonable costs and
expenses incident to any of the foregoing.


 


7.3           Limitations.           (a)           In determining the amount of Losses for
which:


 


(i)                                                 PLIVA
shall be entitled to indemnification from the Ergo Parties, there shall be
excluded the first fifty thousand Dollars ($50,000) of the aggregate Losses
incurred by PLIVA; and


 


(ii)                                              the
Ergo Parties shall be entitled to indemnification from PLIVA, there shall be
excluded the first fifty thousand Dollars ($50,000) of the aggregate Losses of
the Ergo Parties;


 


provided, that if
the threshold amounts of Losses referred to in this Section 7.3(a) are
met, the party or parties that have met 


 


24

















 


such thresholds shall be entitled to indemnification for all Losses
incurred.


 


(b)           If, at least seven (7) days prior to the
Closing Date, any party shall have informed another party in writing of the
untruth of any representation or warranty made by it in this Agreement and
shall have corrected or restated in writing such representation or warranty,
and such other party shall nevertheless have elected to close the transactions
provided for in this Agreement, such other party shall not be entitled to
indemnification based on the untruth of such representation or warranty in this
Agreement, but shall be entitled to indemnification as provided in this
Agreement based on the untruth of such corrected or restated representation or
warranty.


 


(c)           Notwithstanding anything to the contrary
herein:


 


(i)            the aggregate liability of the Seller for
Losses under Sections 7.1(a), 7.1(b) and 7.1(f) and (to the extent it relates
to Losses for which PLIVA is entitled to indemnification under Sections 7.1(a),
7.1(b) and 7.1(f)) Section 7.1(i) shall not exceed the Purchase Price (but
only to extent the Purchase Price is actually paid by PLIVA to Seller); and


 


(ii)           the aggregate liability of PLIVA for Losses
under Section 7.2 shall not exceed the Purchase Price (but only to extent
the Purchase Price is actually paid by PLIVA to Seller).


 


(d)           Except with respect to claims based on
intentional fraud, the parties’ rights to indemnification under this
Article 7 shall be the exclusive remedy of the parties with respect to
claims resulting from or relating to any misrepresentation, breach of warranty
or failure to perform any covenant or agreement contained in this Agreement.


 


7.4           Procedures.  Any party entitled to indemnification
hereunder as a result of a claim made by a third party shall give prompt
written notice to the indemnifying party of such third party claim.  The indemnifying party shall, within thirty
(30) days after receipt of such notice, notify the party claiming entitlement
to indemnification if the indemnifying party intends to contest the same.  If the indemnifying party shall fail to give
such notice, or shall fail to state affirmatively in such notice that it will
contest the same, the 


 


25

















 


party so entitled shall have the right to undertake the defense,
compromise or settlement of the same (exercising reasonable business judgment)
on behalf of and for the account and risk of the indemnifying party.  If an indemnifying party shall notify
affirmatively the party entitled to indemnification that the claim will be
contested by the indemnifying party, then the indemnifying party shall be
entitled to control the defense thereof by counsel of its own selection (not
reasonably objectionable to the party entitled to indemnification) and at its
own expense.  So long as an indemnifying
party shall continue to defend any claim in good faith, the party entitled to
indemnification shall not settle or compromise such claim.  Each party shall give the other parties all
information and insistence which the latter may reasonably request in defending
any matter hereunder.


 


7.5           Survival of
Representations and Warranties; Time for Asserting Claims.  Except with respect to claims based on
intentional fraud, all representations and warranties that are covered by the
indemnification agreements in Section 7.1 and Section 7.2 shall
survive the Closing but only to the extent specified below:


 


(a)           except as set forth in
clause (b) below, the representations and warranties that are covered by the
indemnification agreements in Section 7.1 and Section 7.2 shall
expire upon the earlier of (i) the date four (4) years after the launch of the
marketing and sale of Cycloset and (ii) the date one (1) year after PLIVA
abandons its plans to launch Cycloset, and claims for indemnification based on
such representations and warranties may not be asserted after such date;


 


(b)           the representations and
warranties that are covered by the indemnification agreements in Sections
7.1(c), 7.1(d), 7.1(e), 7.1(g) and 7.1(h) and (to the extent that it relates to
Losses for which PLIVA is entitled to indemnification under Sections 7.1(c),
7.1(d), 7.1(e), 7.1(g) and 7.1(h)) Section 7.1(i) shall survive without
limitation, and all claims for indemnification based on Sections 7.1(c),
7.1(d), 7.1(e), 7.1(g) and 7.1(h) and (to such extent) Section 7.1(i) may
be asserted at any time after the Closing.


 


7.6.          Set-off.   Any amount properly owed by the
Ergo Parties to PLIVA under Section 7.1 may be deducted from and set-off
against any amount payable by PLIVA under the Ergo Texas Agreement as provided
in the Ergo Texas Agreement.  Any such 


 


26

















 


proper deduction or set-off shall not affect the obligations of the
Ergo Companies under the Royalty Agreements or any other obligations of the
Ergo Companies.


 


ARTICLE 8


 


MISCELLANEOUS


 


8.1           Severability.  If any provision of this Agreement is held
to be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired, and
the parties shall use their best efforts to substitute a valid, legal and
enforceable provision, which, insofar as practical, implements the purpose of
this Agreement.


 


8.2           Further
Assurances.  Each party
agrees that it will, and that at will cause its Affiliates to, promptly perform
all other acts and execute and deliver all other documents as may be necessary
or appropriate to carry out the intent and purposes of this Agreement.


 


8.3           Counterparts.  This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall be deemed one and the same instrument.


 


8.4           Governing
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.


 


8.5           Headings,
Gender.  Headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.  All
personal pronouns used in this Agreement shall include the other genders,
whether used in the masculine, feminine or neuter gender, and the singular
shall include the plural and vice versa, whenever and as often as may be
appropriate.


 


8.6           Entire
Agreement.  This Agreement,
together with the annexed Exhibits and Schedules, represents the entire
agreement of the parties with respect to its subject matter.  Any and all prior discussions or agreements
with respect hereto are merged into and superseded by the terms of this Agreement.


 


27

















 


8.7           Amendment.  This Agreement may be modified or amended
only in writing signed by all parties which expressly refers to this Agreement
and states an intention to modify or amend it.


 


8.8           Notices.  Any notice or communication required
hereunder shall be validly given if in writing and sent by personal delivery,
first class registered mail, return receipt requested and post prepaid,
facsimile followed by a letter of confirmation, or express courier service, and
addressed as follows:


 


if to PLIVA:


 


PLIVA D.D.


Ulica Grada Vukovara 49


10000 Zagreb


Croatia


 


Attention:              Vesna Visiljevic


 


Facsimile:               385-1-61-20622


 


with a copy to:


 


PLIVA, Inc.


72 Eagle Rock Avenue


P.O.Box 371


East Hanover, New Jersey 07936


 


Attention:              Paul D. Cottone


 


Facsimile:               (973) 599-5786


 


if to Seller:


 


Ergo Research (Nevada) Corp.


2325-B Renaissance Drive, Suite 22


Las Vegas, Nevada 89119


 


Attention               President


 


Facsimile:               702-966-4247


 


if to Ergo Science:


 


Ergo Science Corporation


 


28

















 


790 Turnpike Street


Suite 205


North Andover, Massachusetts 01845


 


Attention:              President


 


Facsimile:               978-689-3910


 


All such notices shall be effective upon receipt.  Each party may give written notice to the
other parties in accordance with the provisions of this section of a
change of address, following which all such notices shall be given to such
parties as above provided at such changed address.


 


8.9           Waiver.  A waiver by any party of a breach of any of
the terms of this Agreement by any other party shall not be deemed a waiver of
any subsequent breach of the terms of this Agreement.  The failure of any party to insist upon strict performance of any
provisions of this Agreement or to exercise any right under it shall not
constitute a waiver of that provision.


 


8.10         Assignment;
Successors in Interest.  This
Agreement and all rights and obligations under it are personal to the parties
to it and may not be assigned or delegated by any party, except that the rights
or obligations of PLIVA hereunder may be assigned or delegated to an Affiliate;
provided, however, that PLIVA shall remain liable for any and all of its
obligations under this Agreement.  Any
assignment or delegation not permitted by this Agreement, or attempt at the
same, in the absence of the prior written consent of the other parties shall be
void and without effect.  Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their successors and assigns.


 


8.11         Payment
of Expenses.  Except as expressly
set forth herein, all costs and expenses related to this Agreement and the
related transactions, including the fees and expenses of legal counsel,
accountants, brokers and other representatives and consultants, shall be borne
by the party incurring such costs and expenses, whether or not such
transactions are consummated.


 


8.12         Arbitration.  Any dispute between the parties arising
directly or indirectly from this Agreement or any transaction contemplated
hereby or in connection herewith shall be resolved 


 


29

















 


by arbitration in New York, New York, pursuant to the Commercial
Arbitration Rules then obtaining of the American Arbitration Association.  No party shall commence any action against
another party to resolve any such dispute in any court except to confirm such
an arbitrator’s award.  Judgment upon
any award rendered in such arbitration may be entered by any court having
jurisdiction thereof. For the purpose of enforcement of any such award, each of
the parties hereto submits to the jurisdiction of the state and federal courts
located in the State of New York.


 


8.13         Termination.  If the Closing does not occur within sixty
(60) days after the date of this Agreement, any party may terminate this
Agreement by notice to the other parties; provided, that failure of the
Closing to occur does not result from the failure of the party seeking
termination to perform any obligation to be performed of it prior to the
Closing.  Any such termination shall not
release any party of any liability arising prior to such termination.


 


8.14         Schedules.  The Schedules to this Agreement are
contained in a document entitled “Disclosure Schedules to Asset Purchase
Agreement among Ergo Research (Nevada) Corp., Ergo Science Corporation and
PLIVA d.d.,” dated November 24, 2003, and such document forms an integral
part of this Agreement.


 


[signatures appear on following page]


 


30

















 


IN WITNESS WHEREOF, the parties have executed
this Agreement on the date indicated above.


 


	
   

  	
  ERGO RESEARCH (NEVADA) CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Burt

  	
   

  
	
   

  	
   

  	
  Name: 
  David Burt

  
	
   

  	
   

  	
  Title:   
  President & CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ERGO SCIENCE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Burt

  	
   

  
	
   

  	
   

  	
  Name: David Burt

  
	
   

  	
   

  	
  Title:   
  President & CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PLIVA D.D.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul D. Cottone

  	
   

  
	
   

  	
   

  	
  Name: 
  Paul D. Cottone

  
	
   

  	
   

  	
  Title:   
  Authorized Signatory

  



 


31

















 


EXHIBIT A


 


Form of Instrument of Assignment

and Bill of Sale


 


INSTRUMENT OF ASSIGNMENT AND
BILL OF SALE


 


1.             Sale and Transfer of Assets and
Contract Rights.  For good and
valuable consideration, the receipt, adequacy and legal sufficiency of which
are hereby acknowledged, and as contemplated by the Asset Purchase Agreement
dated as of November 24, 2003 (the “Asset Purchase Agreement”) among Ergo
Research (Nevada) Corp. (“Seller”), Ergo Science Corporation (“Ergo Science”),
and PLIVA D.D. (“PLIVA”), Seller hereby sells, transfers, assigns, conveys,
grants and delivers to PLIVA all of Seller’s right, title and interest in and
to all of the assets (the “Assets”) and contract rights (“Rights”) described on
Schedule A hereto (collectively, the Assets and the Rights being referred
to as the “Transferred Assets”); provided that, subject to any right of
PLIVA to defend such claim pursuant to Section 7.4 of the Asset Purchase
Agreement, Seller and its affiliates shall retain the right to defend
themselves if any claim is brought against them under the LSU Agreement.


 


2.             Further Actions.  Seller covenants and agrees execute and
deliver further instruments of transfer and assignment and take such other
action as PLIVA may reasonably request to more effectively transfer and assign
to and vest in PLIVA each of the Transferred Assets, all at the sole cost and
expense of Seller.


 


3.             Power of Attorney.  Without limiting Section 2 hereof,
Seller hereby constitutes and appoints PLIVA the true and lawful agent and
attorney in fact of Seller, with full power of substitution and resubstitution,
in whole or in part, in the name and stead of Seller but on behalf and for the
benefit of PLIVA and its successors and assigns, from time to time:


 


(a)           to demand, receive and
collect any and all of the Transferred Assets and to give receipts and releases
for and with respect to the same, or any part thereof;


 


(b)           to institute and
prosecute, in the name of Seller or otherwise, any and all proceedings at law,
in equity or 


 


A-1

















 


otherwise, that PLIVA or its successors and
assigns may deem proper in order to collect or reduce to possession any of the
Transferred Assets and in order to collect or enforce any claim or right of any
kind hereby assigned or transferred, or intended so to be; and


 


(c)           to do all things
legally permissible, required or reasonably deemed by PLIVA to be required to
recover and collect the Assets and to use Seller’s name in such manner as PLIVA
may reasonably deem necessary for the collection and recovery of same,


 


Seller hereby declaring that the foregoing powers are coupled with an
interest and are and shall be irrevocable by Seller.


 


4.             Terms of the Asset Purchase Agreement.  The terms of the Asset Purchase Agreement,
including but not limited to Seller’s representations, warranties, covenants,
agreements and indemnities relating to the Transferred Assets, are incorporated
herein by this reference.  Seller
acknowledges and agrees that the representations, warranties, covenants,
agreements and indemnities contained in the Asset Purchase Agreement shall not
be superseded hereby but shall remain in full force and effect to the full
extent provided therein.  In the event
of any conflict or inconsistency between the terms of the Asset Purchase
Agreement and the terms hereof, the terms of the Asset Purchase Agreement shall
govern.


 


IN WITNESS WHEREOF, Seller has executed this
Instrument of Assignment and Bill of Sale as of November 24, 2003.


 


 


	
   

  	
  ERGO RESEARCH (NEVADA) CORP.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


A-2

















 


SCHEDULE A to


Instrument of
Assignment and Bill of Sale


 


 


Transferred
Assets


 


(a)           all right, title and interest of the Seller
in and to all pharmaceutical products developed or under development prior to
or as of the date of this Bill of Sale by any of the Ergo Parties and their
affiliates (other than the Citicorp Parties (as defined in the Asset Purchase
Agreement)) (hereinafter the “Ergo Companies”), including, without limitation,
Cycloset and other neuroendocrine resetting therapy products and photodynamic
therapy products (the “Products”) and all methods of use and treatment of or
pertaining to the Products and all methods for development of the Products (the
“Technologies”);


 


(b)           all right, title and interest of the Seller
in and to any and all United States and foreign patents, patent applications,
inventions, discoveries, know-how, data (including, clinical and preclinical
data), trademarks, copyrights and other intellectual property, whether owned or
licensed, pertaining to the Products and the Technologies, including, without
limitation, the Transferred Patent Rights and the Transferred Trademarks (each
as defined in the Asset Purchase Agreement);


 


(c)           all right, title and interest of the Seller
in and to any and all new drug applications submitted to the United States Food
and Drug Administration pursuant to the Federal Food, Drug and Cosmetics Act,
all investigational new drug applications submitted to the United States Food
and Drug Administration pursuant to the Federal Food, Drug and Cosmetics Act
and the regulations thereunder, and all other United States and foreign
regulatory filings and data pertaining to the Products and the Technologies;
and


 


(d)           all rights of the Ergo Companies under the
Novated License and Royalty Agreement effective as of May 1, 1995 among
the Board of Sponsors of Louisiana State University and Agricultural and
Mechanical College, Ergo Research, Ergo Science and certain of their
Affiliates, as amended from time to time.


 


F-2-1