<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
- ----- Exchange Act of 1934. For the quarterly period ended March 31, 2000.
Transition report pursuant to Section 13 or 15(d) of the Securities
- ----- Exchange Act of 1934. For the transition period from ______ to ______.
Commission File Number
0-23160
Anesta Corp.
(Exact name of registrant as specified in its charter)
Delaware 87-0424798
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4745 Wiley Post Way
Salt Lake City, UT 84116
(801) 595-1405
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $.001 par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--------- ---------
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date .
Common Stock $.001 par value 13,395,666
Outstanding at May 10, 2000
<PAGE>
ANESTA CORP.
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
--------
Balance Sheets -
March 31, 2000 (unaudited) and December 31, 1999 2
Statements of Operations and Comprehensive Loss -
for the three months ended March 31, 2000 and
1999 (unaudited) 3
Statements of Cash Flows -
for the three months ended March 31, 2000 and 1999 (unaudited) 4
Notes to Financial Statements (unaudited) 5
Management's Discussion and Analysis of
Financial Condition and Results
of Operations 9
PART II. OTHER INFORMATION 12
SIGNATURES 13
1
<PAGE>
ANESTA CORP.
BALANCE SHEETS
----------
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 2000 1999
------------ ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 27,116,792 $ 11,746,093
Current portion of certificate of deposit 340,000 340,000
Marketable debt securities,
available-for-sale 35,897,459 59,031,849
Accounts receivable 736,748 1,956,357
Prepaid expenses and other current assets 2,360,143 667,960
------------ ------------
Total current assets 66,451,142 73,742,259
------------ ------------
Property and equipment, at cost:
Furniture and equipment 1,108,590 1,099,529
Leasehold improvements 2,813,166 2,813,166
Accumulated depreciation (1,527,050) (1,447,484)
------------ ------------
2,394,706 2,465,211
------------ ------------
Other assets:
Certificate of deposit 1,700,000 1,700,000
Other assets 5,268,925 301,327
------------ ------------
6,968,925 2,001,327
------------ ------------
Total assets $ 75,814,773 $ 78,208,797
============ ============
</TABLE>
<TABLE>
<CAPTION>
March 31, December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 2000 1999
------------ ------------
(Unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable $ 611,416 $ 409,584
Accrued liabilities:
Accrued compensation 567,380 655,870
Other 86,960 139,062
Current portion of unearned revenues 350,830 746,389
Current portion of note payable 333,333 333,333
------------ ------------
Total current liabilities 1,949,919 2,284,238
Unearned revenues 1,852,586 1,831,759
Note payable 1,666,667 1,666,667
------------ ------------
Total liabilities 5,469,172 5,782,664
------------ ------------
Commitments
Stockholders' equity:
Common stock, par value, $.001 per share; Authorized:
35,000,000 shares; Issued: 13,382,432 shares
in 2000 and 13,311,839 shares in 1999 13,382 13,312
Additional paid-in capital 131,486,040 130,742,839
Accumulated deficit (60,984,942) (58,166,809)
Accumulated other comprehensive loss (168,879) (163,209)
------------ ------------
Total stockholders' equity 70,345,601 72,426,133
------------ ------------
Total liabilities and stockholders' equity $ 75,814,773 $ 78,208,797
============ ============
</TABLE>
The accompanying notes are an integral
part of the financial statements
<PAGE>
ANESTA CORP.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
---------
<TABLE>
<CAPTION>
Three months ended
---------------------------
March 31, March 31,
2000 1999
----------- -----------
<S> <C> <C>
Revenues:
Product sales $ 907,812 $ 33,108
Royalty revenue 26,211 980
Revenues from contract research/license agreements 395,558 171,148
----------- -----------
Total revenues 1,329,581 205,236
----------- -----------
Operating costs and expenses:
Cost of goods sold 247,730 9,194
Royalties 27,932 1,022
Research and development 2,744,922 2,206,640
Depreciation 82,645 73,050
Marketing, general and administrative 1,972,177 1,794,279
----------- -----------
Total costs and expenses 5,075,406 4,084,185
----------- -----------
Loss from operations (3,745,825) (3,878,949)
Non operating income (expense):
Interest income 987,025 1,021,817
Interest expense (35,389) (26,075)
Other 1,676 (28)
----------- -----------
Loss before provision for income taxes (2,792,513) (2,883,235)
Provision for income taxes (25,620) (6,400)
----------- -----------
Net loss (2,818,133) (2,889,635)
Other comprehensive loss:
Foreign currency translation adjustment (6,270) (7,765)
Unrealized gain (loss) on marketable debt
securities, available-for-sale 600 (61,107)
----------- -----------
Total other comprehensive loss (5,670) (68,872)
----------- -----------
Comprehensive loss $ (2,823,803) $(2,958,507)
=========== ===========
Basic and diluted loss per common share--
Net loss per common share $ (0.21) $ (0.22)
=========== ===========
Weighted average shares outstanding 13,349,960 13,121,837
=========== ===========
</TABLE>
The accompanying notes are an integral
part of the financial statements
3
<PAGE>
ANESTA CORP.
STATEMENTS OF CASH FLOWS
(Unaudited)
---------
<TABLE>
<CAPTION>
Three months ended
---------------------------
March 31, March 31,
2000 1999
----------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(2,818,133) $ (2,889,635)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 82,645 73,050
(Gain ) loss on retirement of assets (25) 28
Increase (decrease) due to changes in:
Accounts receivable 1,219,608 218,038
Prepaid expenses and other current assets (1,692,182) (479,414)
Other assets 32,402 (2,027)
Accounts payable 201,832 (987,796)
Accrued liabilities (140,592) (764,446)
Unearned revenues (374,732) 785,102
----------- ------------
Net cash used in operating activities (3,489,177) (4,047,100)
----------- ------------
Cash flows from investing activities:
Capital expenditures (12,141) (28,829)
Proceeds from sale of assets 25 25
Purchase of other assets (5,000,000)
Purchase of marketable debt securities,
available-for-sale (6,020,987) (36,354,319)
Maturities of marketable debt securities,
available-for-sale 29,155,977 7,109,539
----------- ------------
Net cash provided by (used in) investing activities 18,122,874 (29,273,584)
----------- ------------
Cash flows from financing activities:
Net proceeds from issuance of common stock 743,272 569,666
----------- ------------
Net cash provided by financing activities 743,272 569,666
----------- ------------
Effect of exchange rate changes on cash (6,270) (7,765)
----------- ------------
Net increase (decrease) in cash and cash equivalents 15,370,699 (32,758,783)
Cash and cash equivalents at beginning of period 11,746,093 55,889,226
----------- ------------
Cash and cash equivalents at end of period $27,116,792 $ 23,130,443
=========== ============
</TABLE>
The accompanying notes are an integral
part of the financial statements
4
<PAGE>
ANESTA CORP.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
---------
1. Significant Accounting Policies:
-------------------------------
In the opinion of management, the accompanying financial statements contain
all adjustments (consisting only of normal recurring items) necessary to
present fairly the financial position of Anesta Corp. (the Company) as of
March 31, 2000, the results of its operations for the three months ended
March 31, 2000 and 1999, and its cash flows for the three months ended
March 31, 2000 and 1999. The results of operations for the periods
presented are not necessarily indicative of the results to be expected for
the full year period.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
financial statements be read in conjunction with the Company's Annual
Report on Form 10-K for the period ended December 31, 1999.
Net Loss Per Share
------------------
Basic and diluted earnings per share are computed in accordance with
Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per
------------
Share (EPS). Basic EPS excludes dilution and is computed by dividing
-----
income available to common stockholders by the weighted-average number of
common shares outstanding for the period. Diluted EPS reflects the
potential dilution from convertible securities or contracts to issue common
stock. Common equivalent shares are excluded from the computation of
diluted EPS when their effect is antidilutive. As of March 31, 2000,
options to purchase 1,578,292 shares of common stock at prices between
$5.25 and $25.1875 per share were outstanding. As of March 31, 1999,
options to purchase 1,399,305 shares of common stock at prices between
$5.25 and $25.1875 were outstanding. None of these options were included
in the computation of diluted loss per share because the effect would have
been antidilutive.
2. Cash, Cash Equivalents and Marketable Debt Securities:
-----------------------------------------------------
At March 31, 2000, the Company maintained a majority of its cash, cash
equivalents and marketable debt securities in two banks in San Francisco,
California.
3. Income Taxes:
------------
The provision for income taxes for the three months ended March 31, 2000
and 1999 is related solely to state income taxes.
4. Revolving/Term Promissory Note Agreements:
-----------------------------------------
In January 1995, the Company secured a revolving/term loan in the amount of
$1,500,000. This loan converted to a 10 year term loan on May 15, 1995.
In March 1997 and July 1999, the Company borrowed an additional $800,000
and $500,000, respectively.
5
<PAGE>
ANESTA CORP.
NOTES TO FINANCIAL STATEMENTS, Continued
(Unaudited)
---------
4. Revolving/Term Promissory Note Agreements, Continued
-----------------------------------------
As of March 31, 2000, the balance of the loan is $2,000,000. Annual
principal payments in the amount of $333,333 will be made on approximately
July 15 for the next 6 years beginning on July 15, 2000. Interest at the
rate of 7% is paid monthly. As of March 31, 2000, borrowings under the
agreement are collateralized by a certificate of deposit in the amount of
$2,040,000, which is maintained in a bank in Salt Lake City, Utah.
5. Collaborative Relationships:
---------------------------
In 1989, Anesta entered into a research and development, license, supply
and distribution agreement (1989 Agreement) with Abbott Laboratories
(Abbott). Under the agreement, as amended, Anesta granted to Abbott the
exclusive right to make, use and market in the United States OTS products
resulting from technology owned or licensed by Anesta consisting of OTS
fentanyl. Under the 1989 Agreement, Abbott provided development funding
and milestone payments and was obligated to pay royalties and other
payments on product sales. Through March 31, 2000, Abbott had paid a total
of $10,050,000 for the development of Anesta's OTS fentanyl product line.
On March 13, 2000, Anesta announced that it had renegotiated the U.S.
marketing rights for Actiq with Abbott. Effective April 2000, Anesta will
have responsibility for the sales and marketing of Actiq in the U.S. As
part of the renegotiation, Anesta will make cash payments to Abbott and is
obligated to make on-going earn-out payments to Abbott until the end of the
first patent covering oral transmucosal fentanyl citrate. Through March
31, 2000, Anesta had made cash payments to Abbott of $5,000,000, which
amount is included in other assets in the accompanying balance sheet. The
Company also made payments to Abbott totaling $18,850,000 in May 2000.
Capitalized amounts related to this agreement will be amortized on a
straight-line basis over a ten year expected life. Abbott will continue to
manufacture Actiq and Fentanyl Oralet for Anesta in the U.S. for a period
of 24 to 36 months, after which Anesta has the right to manufacture such
products.
In January 1998, the Company entered into an exclusive agreement with Grupo
Ferrer Internacional S.A. (Ferrer), a leading private Spanish
pharmaceutical company, for the marketing, sales and distribution rights of
Anesta's OTS fentanyl product line, including Actiq, in Spain and Portugal.
Ferrer made a payment to the Company and Anesta will manufacture such
products for Ferrer.
In June 1998, the Company entered into an exclusive agreement with
Laboratoire L. Lafon (Lafon), a leading private French pharmaceutical
company, for the marketing, sales and distribution rights of Anesta's OTS
fentanyl product line, including Actiq, in France. Under terms of the
agreement, Lafon made payments to the Company and Anesta will manufacture
such products for Lafon.
In February 1999, the Company entered into a 12-month option agreement with
Novartis Consumer Health, Inc. (Novartis) involving the Company's
proprietary OTS for drug delivery. Under the terms of the option agreement,
Novartis and the Company assessed the worldwide commercial opportunity of
potential products combining Novartis compounds with the Company's OTS.
Currently, the Company and Novartis are in discussions about the
possibility of a definitive licensing agreement.
6
<PAGE>
ANESTA CORP.
NOTES TO FINANCIAL STATEMENTS, Continued
(Unaudited)
---------
5. Collaborative Relationships, Continued
---------------------------
In May 1999, the Company entered into an exclusive agreement with Swedish
Orphan AB (SWO), a leading private Swedish pharmaceutical company, for the
marketing, sales and distribution rights of Anesta's OTS fentanyl product
line, including Actiq, in Scandinavia (Denmark, Finland, Iceland, Norway
and Sweden). Under terms of the agreement, SWO made payments to the
Company and Anesta will manufacture such products for SWO.
In September 1999, the Company entered into an exclusive agreement with
Elan Pharma International, a unit of Elan Corporation, plc (Elan), a
leading public Irish pharmaceutical company, for the marketing, sales and
distribution rights of Anesta's OTS fentanyl product line, including Actiq,
in Austria, Belgium, Germany, Greece, Ireland, Italy, Luxembourg,
Netherlands, Philippines, Switzerland, Taiwan and the United Kingdom.
Under terms of the agreement, Elan made payments to the Company and Anesta
will manufacture such products for Elan.
7
<PAGE>
ANESTA CORP.
NOTES TO FINANCIAL STATEMENTS, Continued
(Unaudited)
---------
6. Stockholders' Equity:
--------------------
The table below presents the activity in stockholders' equity from January
1, 2000 to March 31, 2000:
<TABLE>
<CAPTION>
Common Stock
---------------------------------------
Accumulated
Additional Other
Paid-in Accumulated Comprehensive
Shares Amount Capital Deficit Loss Total
---------- ------- ------------ ------------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 2000 13,311,839 $13,312 $130,742,839 $(58,166,809) $(163,209) $72,426,133
Exercise of stock options for cash 70,593 70 743,201 743,271
Net loss (2,818,133) (2,818,133)
Other comprehensive loss (5,670) (5,670)
---------- ------- ------------ ------------ --------- -----------
Balance at March 31, 2000 13,382,432 $13,382 $131,486,040 $(60,984,942) $(168,879) $70,345,601
========== ======= ============ ============ ========= ===========
</TABLE>
8
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements which involve risks
and uncertainties. The Company's actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors discussed in this section. Additional risks and uncertainties are
described in the Company's most recently filed Annual Report on Form 10-K for
the fiscal year ended December 31, 1999.
Results of Operations
Revenues.
Total revenues increased by $1,124,000 or 547.8% for the three months ended
March 31, 2000 as compared to the corresponding period in 1999. The increase is
primarily a result of product sales of Actiq in the U.S. and recognition of
upfront fees paid by Elan, Novartis and Ferrer.
In March 2000, Anesta renegotiated the U.S. marketing rights for Actiq and
Fentanyl Oralet with Abbott. Under terms of the agreements, Anesta will have
primary responsibility for sales and marketing in the U.S. As part of the
renegotiation, Anesta will make cash payments to Abbott and is obligated to make
on-going earn-out payments to Abbott until the end of the first patent covering
oral transmucosal fentanyl citrate. Abbott will continue to manufacture Actiq
and Fentanyl Oralet in the U.S. for Anesta for a period of 24 to 36 months,
after which Anesta will have the right to manufacture such products. Anesta
recognizes revenue when Abbott ships product against a customer order. Anesta's
gross margin therefore is directly affected by Abbott's manufacturing costs.
Anesta is also obligated to pay a small royalty to the University of Utah
Research Foundation on its sales of Actiq and Fentanyl Oralet.
Operating Costs and Expenses.
Cost of goods sold increased by $239,000 or 2,594.5% for the three months ended
March 31, 2000 as compared to the corresponding period in 1999. The increase is
a result of product sales of Actiq in the U.S.
Research and development expenses increased by $538,000 or 24.4% for the three
months ended March 31, 2000 as compared to the corresponding period in 1999.
The increase is due to higher expenditures related to additional research and
development programs, increased number of personnel, and continuing support for
Actiq in Europe. The Company expects that its research and development expenses
will increase in the future as a result of increased expenses related to the
hiring of additional personnel, preclinical studies, clinical trials, product
development, manufacturing process development and clinical manufacturing
activities.
Depreciation expense increased by $10,000 or 13.1% for the three months ended
March 31, 2000 as compared to the corresponding period in 1999. The increase is
due primarily to the Company's remodeling of additional facilities.
Marketing, general and administrative expenses increased by $178,000 or 9.9% for
the three months ended March 31, 2000 as compared to the corresponding period in
1999. The increase is due primarily to higher expenditures for personnel,
corporate development activities, European operations, marketing research and
continuing support of Actiq sales activities. The Company expects that its
marketing and general and administrative expenses will significantly increase in
the future as a result of the increased support required for Actiq marketing and
sales activities, European operations, including Actiq pre-launch activities in
Europe, and corporate development activities.
9
<PAGE>
Non Operating Income (Expense).
Interest income decreased by $35,000 or 3.4% for the three months ended March
31, 2000 as compared to the corresponding period in 1999. The decrease is
primarily due to a decrease in the balance of invested net proceeds from the
Company's public offering in December 1998.
Interest expense increased by $9,000 or 35.7% for the three months ended March
31, 2000 as compared to the corresponding period in 1998. The increase is
primarily due to higher net borrowings under the term note (See Note 4 to
Financial Statements).
Income Taxes.
The provision for income taxes in 2000 and 1999 relates solely to state income
taxes. The Company recognized no tax benefit from its losses in those years.
Net Loss.
As a result of the increase in total revenues, the increase in research and
development activities, the increase in marketing, general and administrative
expenses, the decrease in interest income and other factors discussed above, the
net loss for the three months ended March 31, 2000 was $2,818,133 or $0.21 per
share as compared to $2,889,635 or $0.22 per share for the same period in 1999.
Liquidity and Capital Resources
As of March 31, 2000, the Company had cash and cash equivalents totaling
$27,117,000, $2,040,000 in a certificate of deposit used as collateral for a
revolving/term loan (See Note 4 to Financial Statements) and $35,897,000 in
marketable debt securities which are available for sale. Thus cash, cash
equivalents, certificate of deposit and marketable debt securities totaled
$65,054,000 as of March 31, 2000. Cash in excess of immediate requirements is
invested according to the Company's investment policy, which provides guidelines
with regard to liquidity and return, and, wherever possible, seeks to minimize
the potential effects of concentration of credit risk.
The Company used cash in operating activities of $3,489,000 for the three months
ended March 31, 2000 compared to $4,047,000 for the corresponding period in
1999. The decrease in cash used in the period is a direct result of lower
working capital requirements.
During the three months ended March 31, 2000, the Company made capital
expenditures of approximately $12,000 as compared to capital expenditures of
$29,000 during the corresponding period in 1999. During the three months ended
March 31, 2000, the Company had a net decrease of marketable debt securities of
$23,135,000. This compares to a net increase in marketable debt securities of
$29,245,000 during the corresponding period in 1999. During the three months
ended March 31, 2000, other assets increased by approximately $5,000,000 as a
result of payments to Abbott under the renegotiated marketing agreement. The
Company also made payments to Abbott related to the agreement totaling
$18,850,000 in May 2000.
During the three months ended March 31, 2000, the Company realized cash proceeds
of $743,000 relating to the exercise of stock options. During the three months
ended March 31, 1999 the Company realized cash proceeds of $570,000 relating to
the exercise of stock options.
The Company's future capital requirements could be substantial and will depend
on, and could increase as a result of, many factors, including progress of the
Company's research and development programs; the results and costs of
preclinical and clinical testing of the Company's products, if developed; the
time and costs involved in obtaining regulatory approvals; the costs involved in
filing patents; the time and costs involved in developing and maintaining
collaborative research relationships; the costs associated with potential
commercialization of its products; and administrative and legal costs. The
Company believes
10
<PAGE>
that existing capital resources will be sufficient to meet the Company's capital
needs through at least the end of 2001.
The Company believes that it is prudent to monitor existing cash balances in
order to fund the activities which the Company believes are necessary to
continue its growth. Therefore, the Company periodically evaluates market
conditions and various financing alternatives for obtaining funds to augment
existing cash balances.
Other Matters.
The Company has reviewed all other recently issued, but not yet adopted,
accounting standards in order to determine their effects, if any, on the results
of operations or financial position of the Company. Based on that review, the
Company believes that none of these pronouncements will have a significant
effect on current or future earnings or operations.
11
<PAGE>
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits.
(10.19*) Termination and Asset Sale and Purchase Agreement dated
March 13, 2000 between the Company and Abbott Laboratories.
(27) Financial Data Schedule
b) Reports on Form 8-K.
None.
* Certain confidential information contained in this exhibit, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission based upon a request for confidential treatment pursuant to Rule 24b-
2 of the Securities Exchange Act of 1934, as amended.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 15, 2000 ANESTA CORP.
By: /s/ Thomas B. King
-------------------------------
Thomas B. King, President and
Chief Executive Officer
(Authorized Signatory)
By: /s/ Roger P. Evans
-------------------------------
Roger P. Evans, Vice President-
Finance and Administration
(Principal Accounting Officer)
13
<PAGE>
EXHIBIT 10.19
*** Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R.(S)(S). 200.80(b)(4),
200.83 and 240.24b-2
TERMINATION AND ASSET SALE AND PURCHASE AGREEMENT
-------------------------------------------------
THIS TERMINATION AND ASSET SALE AND PURCHASE AGREEMENT is entered into by
and between Abbott Laboratories, an Illinois corporation, with its principal
place of business at 100 Abbott Park Road, Abbott Park, Illinois 60064-3500
("Seller"), and Anesta Corp., a Delaware corporation with its principal place of
business at 4745 Wiley Post Way, Salt Lake City, Utah 84116 ("Purchaser").
WITNESSETH:
WHEREAS, Seller and Purchaser entered into a certain Research &
Development, License, Supply and Distribution Agreement dated December 27, 1989,
as amended August 12, 1991 and December 30, 1992, a letter agreement dated
August 31, 1995, and a Trademark License Agreement dated June 11, 1999
(collectively, the "Original Agreements") regarding the development and
marketing of certain oral transmucosal fentanyl citrate products;
WHEREAS, Seller and Purchaser desire to terminate the Original Agreements
prior to their respective expiration dates;
WHEREAS, Seller desires to sell and assign or license to Purchaser certain
intellectual property rights and related assets associated with such oral
transmucosal fentanyl citrate products, to have Purchaser assume certain of
Seller's liabilities associated therewith, and to provide certain services to
Purchaser on an interim basis; and
WHEREAS, Purchaser desires to purchase or license such intellectual
property rights and assets, assume such liabilities from Seller, and have Seller
perform certain services on an interim basis.
NOW THEREFORE, in consideration of the foregoing and of the mutual promises
and covenants contained in this Agreement, Seller and Purchaser agree as
follows:
1
<PAGE>
ARTICLE I
DEFINITIONS
-----------
1.1 Definitions. As used in this Agreement, the following terms shall have
-----------
the following meanings:
(a) "Abbott Non-Patent Rights" shall mean all rights, other than
------------------------
Abbott Patent Rights, that are owned by or licensed to Abbott with the
right to sublicense, and that arise out of work done with, or refer or
relate to Products, any intermediate composition or material
therefore, or the methods of making or using the same, including, but
not limited to, any and all rights which relate to:
(i) trade secrets, know-how, show-how, computer software,
unpatented and unpatentable inventions, discoveries and ideas;
(ii) manufacturing, technical and technological
information, methods, processes and techniques, whether relating
to successful or unsuccessful work;
(iii) preclinical and clinical, in vivo and in vitro study
data, characterization, biochemistry, enzymology, toxicology,
pharmacology and other information relating to safety and
efficacy;
(iv) Investigational New Drug Applications, New Drug
Applications and Drug Master Files, as such terms are defined
under the Act; and
(v) any other information relating thereto, or to
formulations, designs, practices or methods of administration or
use.
(b) "Abbott Patent Rights" shall mean the patents and patent
--------------------
applications set forth in Exhibit A-1, and any continuation, division,
continuation-in-part, and any provisional applications, and any
substitutions, extensions, registrations, confirmations, re-
examinations, reissues or renewals of such patents.
(c) "Act" shall mean the United States Food, Drug and Cosmetic
---
Act, as amended, and all regulations thereunder.
2
<PAGE>
(d) "Affiliate" shall mean, with respect to each party, any
---------
legal entity that controls, is controlled by, or is under common
control with such party. For purposes of this definition, a party
shall be deemed to be in control of another entity if the former
entity owns or controls, directly or indirectly, more than fifty
percent (50%) of the outstanding voting equity of the other entity (or
other comparable ownership interest for an entity other than a
corporation).
(e) "Anesta Non-Patent Rights" shall have the meaning set forth
------------------------
in the Original Agreements.
(f) "Anesta Patent Rights" shall have the meaning set forth
--------------------
in the Original Agreements.
(g) "Anesta Technology" shall have the meaning set forth in
-----------------
the Original Agreements.
(h) "Assets" shall mean all of Seller's right, title and
------
interest in and to the property described in Exhibit A.
(i) "Books and Records" shall mean all: (i) Financial Books and
-----------------
Records; (ii) Manufacturing and Regulatory Books and Records; (iii)
Marketing Books and Records; and (iv) any other records and data used
in connection with the Assets or the manufacture, sale and
distribution of Products or Licensed Products in the Territory, but
excluding any records, data or other items covered by (i)-(iii) above
to the extent such records, data or other items pertain to property
that is not an Asset, a Product or a Licensed Product.
(j) "Closing" shall mean the consummation of the transactions
-------
contemplated by this Agreement, as more particularly described in
Article IV.
(k) "Closing Date" shall mean March 30, 2000, or such other date
------------
as the parties may mutually agree to in writing, but in no event later
than March 31, 2000, such that the Closing actually takes place
consistent with Section 4.4.
(l) "Confidential Information" shall mean any and all
------------------------
information including, but not limited to, ideas, proposals, plans,
know-how, reports, drawings, designs, data, discoveries, inventions,
improvements, suggestions, specifications, products, samples,
components and materials relating to the
3
<PAGE>
Products, including all information relating to the manufacture,
formulation, analysis, stability, clinical data, clinical studies,
clinical effects, marketing and distribution plans and data and
indications for use of the Products which a party discloses to the
other party, except any portion thereof which:
(i) is known to the receiving party or its Affiliates at
the time of disclosure, is documented by written records made
prior to the date of disclosure, and is not disclosed under a
confidential obligation or the Original Agreement;
(ii) is disclosed to the receiving party by an independent
third party other than an Affiliate who has a right to make such
disclosure;
(iii) becomes patented, published or otherwise part of the
public domain through no fault of the receiving party or its
Affiliates; or
(iv) is independently developed by or for the receiving
party without access to Confidential Information disclosed
hereunder or under the Original Agreement, as evidenced by its
written records.
(m) "Contracts" shall mean all agreements, contracts, purchase
and sale orders, commitments, licenses and enforceable arrangements to
which Seller is a party that are related to the Anesta Technology or
the manufacture, marketing, sale and distribution of Products or
Licensed Products. Such Contracts are listed on Exhibit A-2.
(n) "DEA" shall mean the United States Drug Enforcement
---
Administration.
(o) "Effective Date" shall mean the date of full execution of
--------------
this Agreement.
(p) "FDA" shall mean the United States Food and Drug
---
Administration or any successor entity thereto.
(q) "Field" shall have the meaning set forth in the Original
-----
Agreement.
(r) "Financial Books and Records" shall mean shall mean all
---------------------------
books of account, records, files and invoices, including all
accounting records; inventory records; sales and chargeback data; and
pricing information to
4
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wholesalers/distributors, relating to the Assets, the Licensed
Products or the Products, as more fully set forth in Exhibit A-3.
(s) "Fully Burdened Manufacturing Costs" shall have the meaning
----------------------------------
set forth in the Original Agreements.
(t) "Liabilities" shall mean all of the liabilities of Seller
-----------
described in Exhibit B.
(u) "Licensed Marks" shall have the meaning set forth in the
--------------
Trademark License Agreement between the parties dated June 11, 1999.
(v) "Licensed Products" shall have the meaning set forth in the
-----------------
Original Agreements.
(w) "Manufacturing and Regulatory Books and Records" shall mean
----------------------------------------------
all regulatory data, correspondence, files and reports; quality
control records and manuals; research and development files, including
clinical research records; records and laboratory books, including
product claims; patent disclosures; correspondence; litigation files;
production and equipment maintenance data; and any other records or
data generated in connection with the development or manufacture of
Licensed Products or Products in the Territory, as more fully set
forth in Exhibit A-4.
(x) "Manufacturing Equipment" shall mean Seller's manufacturing
-----------------------
equipment dedicated to the production of Products set forth in Exhibit
C.
(y) "Marketing Books and Records" shall mean all sales
---------------------------
promotional data and materials, advertising and marketing materials,
sales training materials, and educational support program materials;
market research; customer lists; pricing information for third party
payors; supplier lists; business plans; and catalogs relating to the
Products, as more fully set forth in Exhibit A-5.
(z) "Net Sales" shall have the meaning set forth in the Original
---------
Agreements, except where the name Abbott appears, Purchaser shall be
substituted.
(aa) "Products" shall mean the oral transmucosal fentanyl citrate
--------
products known as Actiq(R) and Fentanyl Oralet(R).
5
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(bb) "Purchase Price" shall have the meaning as specified in
--------------
Section 2.3.
(cc) "Targeted Sales Force" shall mean the employees of Seller
--------------------
that are dedicated to the sales and promotion of Products, identified
in Exhibit D .
(dd) "Trademarks" shall mean the trademarks and their respective
----------
registrations set forth in Exhibit A-6, together with the goodwill of
the business symbolized by such trademarks.
(ee) "Transitional Activities" shall mean the additional
-----------------------
activities with respect to Products that Seller shall perform on
behalf of Purchaser during the Transition Period, which activities
shall include: [...***...]
(ff) "Transition Period" shall mean the period from the Closing
-----------------
Date until such time as Purchaser has assumed, or has caused a third
party to assume, full control of the Transitional Activities, but,
which in no event, shall be later than December 31, 2000.
(gg) "Territory" shall mean the fifty (50) states of the United
---------
States, including its territories and possessions.
1.2 Interpretation Words and phrases denoting the singular number include
--------------
the plural and vice versa.
ARTICLE II
TERMINATION OF THE ORIGINAL AGREEMENT AND
-----------------------------------------
SALE AND PURCHASE OF ASSETS
---------------------------
2.1 Termination of Original Agreement. Upon the terms and subject to
---------------------------------
the conditions of this Agreement and for the consideration herein provided,
Seller and Purchaser shall terminate the Original Agreement effective on the
Closing Date, and except as otherwise provided herein, neither party shall have
any further obligations to the other thereunder. Effective upon such
* Confidential treatment requested
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termination, all of the licenses granted under the Original Agreements shall
terminate, and Seller shall have no further right to manufacture, promote,
market or sell the Licensed Products, or to use or practice the Anesta
Technology, except (a) as provided in the Supply Agreement described in Section
3.1, and (b) as necessary for the orderly transition of the Transitional
Activities from Seller to Purchaser during the Transition Period, as further
described in Article VIII.
2.2 Sale and Purchase of Assets. Upon the terms and subject to the
---------------------------
conditions of this Agreement and for the consideration herein provided, on the
Closing Date, Seller shall sell, assign, transfer and convey all of its right,
title and interest in and to the Assets and the Books and Records to Purchaser,
and Purchaser shall purchase all of the Assets and Books and Records from
Seller. At the Closing, Seller shall deliver to Purchaser, and Purchaser shall
accept and receive from Seller all of the Assets and the Marketing Books and
Records. The remaining Books and Records shall be delivered in accordance with
Section 8.8.
2.3 Consideration. Upon the terms and subject to the conditions of this
-------------
Agreement, Purchaser shall make payments to Seller as follows:
(a) Closing Cash Payment. Purchaser shall deliver to Seller at the
--------------------
Closing in partial payment for the termination of the Original Agreement
(the "Fee") and the sale, assignment, conveyance, transfer and delivery of
---
the Assets and the Marketing Books and Records, immediately available funds
in the amount of Five Million Dollars ($5,000,000.00);
(b) Second Cash Payment. Purchaser shall deliver to Seller no later
-------------------
than May 1, 2000, in partial payment for the Fee and the sale, assignment,
conveyance, transfer and delivery of the Manufacturing and Regulatory Books
and Records, immediately available funds in the amount of Fourteen Million
Dollars ($14,000,000.00);
(c) Final Cash Payment. Purchaser shall deliver to Seller no later
------------------
than May 15, 2000, as the final cash payment for the Fee and the sale,
assignment, conveyance, transfer and delivery of the Financial Books and
Records and such other Books and Records as have not been delivered
previously, immediately available funds in the amount of Five Million
Dollars ($5,000,000.00), less One Hundred Fifty Thousand Dollars
($150,000.00), the agreed-upon value of the Product returns; and
(d) Earn-out Payments. Purchaser shall make earn-out payments to
-----------------
Seller starting from the Closing Date and ending on May 1, 2005. These
payments shall equal six percent (6%) of Purchaser's or its Affiliate's or
designated third party's Net Sales of Actiq to unrelated third parties in
the Territory and shall be made to Seller on a calendar quarterly basis
payable sixty (60) days after the end of each such quarter; provided,
however, such payments shall be subject to the guaranteed annual maximum
and minimum payment amounts set forth in Exhibit A-7.
The items described in Subsections 2.3(a) through (d) collectively shall
constitute the Fee and the purchase price for the Assets and the Books and
Records ("Purchase Price").
2.4 Allocation. The parties agree that within forty-five (45) days after
----------
Closing, the Purchase Price shall be allocated among the Fee, the Assets and the
Books and Records in accordance with the fair market value of the Fee, the
Assets and the Books and Records, respectively. Further, the parties agree to
prepare, execute and file an Internal Revenue Service Form 8594 in a timely
fashion in accordance with the rules under Internal Revenue Code Section 1060
reflecting such allocation. This allocation shall be binding on the parties for
all tax reporting purposes.
* Confidential treatment requested
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2.5 Assumption of Liabilities. At the Closing, except as otherwise set
-------------------------
forth herein, Purchaser shall assume the Liabilities pursuant to an Assumption
of Liabilities in the form attached as Exhibit B-1, and the parties shall each
execute and deliver to the other an Assignment and Assumption of Contracts in
the form attached as Exhibit B-2. The parties do not intend to confer any
benefit under this Agreement on anyone other than the parties and nothing
contained herein shall be deemed to confer any such benefit on any such other
person. The previous sentence, however, shall not be deemed to alter or diminish
Purchaser's indemnity obligations to Seller under Article VII hereof.
ARTICLE III
ADDITIONAL COVENANTS
--------------------
3.1 Manufacturing and Supply Agreement. At the Closing, Seller and
----------------------------------
Purchaser shall enter into a manufacturing, supply and shipping agreement
("Supply Agreement"), in substantially the form attached hereto as Exhibit F,
----------------
whereby Seller shall manufacture, supply and ship such quantities of Products as
Purchaser may order from time to time for sale by Purchaser in the Territory.
The Supply Agreement shall have a term of twenty-four (24) months, with
Purchaser having an option, exercisable at Purchaser's sole discretion upon six
(6) months prior written notice to Seller, to extend the term for up to twelve
(12) additional months. The firm price per unit of Product sold to Purchaser
under the Supply Agreement shall be Fully Burdened Manufacturing Costs
[...***...] In the event of an unanticipated increase in raw material costs or
other unanticipated circumstances which cause the Fully Burdened Manufacturing
Costs [...***...] the parties shall negotiate an appropriate adjustment to the
maximum price per unit for the affected Product.
3.2 Solicitation of Targeted Sales Force. For the period starting from
------------------------------------
the Effective Date and ending on March 28, 2000, Purchaser shall be entitled to
directly or indirectly solicit and hire the Targeted Sales Force, as more fully
described in Subsection 8.5(c). Concurrent with such activity of Purchaser,
Seller may, at its election, directly or indirectly take reasonable steps to
retain the Targeted Sales Force; provided, however, that Seller shall not object
to or otherwise
* Confidential Treatment Requested
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interfere with Purchaser's efforts under this Section 3.2. The Targeted Sales
Force shall be under no obligation to Purchaser with respect to Purchaser's
efforts to solicit and/or hire the Targeted Sales Force. Each Targeted Sales
Force member shall be free to accept or not accept any offer of employment made
by Purchaser.
3.3 Non-Solicitation. For the period starting from March 29, 2000, and
----------------
ending on December 31, 2000, Purchaser and its Affiliates shall not directly or
indirectly solicit for employment any member of the Targeted Sales Force. The
terms of this Section 3.3 shall not preclude Purchaser or its Affiliates from
hiring a member of the Targeted Sales Force who initiates the contact with
Purchaser during the six (6)-month period described above.
3.4 Non-Compete. Except as otherwise provided in the Supply Agreement,
-----------
for the period starting on the Closing Date and ending on [...***...], Seller
shall not develop, manufacture, market, sell, promote or distribute in the
Territory any oral transmucosal product that contains fentanyl citrate as an
active ingredient contained in a solid matrix or other form secured to a handle
or other similar device.
3.5 Purchase and Sale of Manufacturing Equipment. Upon the expiration
--------------------------------------------
or termination of the Supply Agreement, Seller shall sell, assign, transfer,
convey and deliver to Purchaser and Purchaser shall purchase, accept and receive
from Seller the Manufacturing Equipment. The purchase price for the
Manufacturing Equipment shall be the then-current net book value of the
Manufacturing Equipment, calculated in accordance with generally accepted
accounting principles consistently applied and estimated [...***...] Seller
shall cause the Manufacturing Equipment to be shipped and delivered, at
Purchaser's expense, to the destination specified by Purchaser.
3.6 Non-Exclusive License. At the Closing, Seller and Purchaser shall
---------------------
enter into a non-exclusive license agreement ("License Agreement"), in
-----------------
substantially the form attached hereto as Exhibit G, whereby Seller shall grant
to Purchaser and its Affiliates a worldwide, non-exclusive, fully paid and
royalty free license, with the right to sublicense, under the Abbott Patent
Rights and Abbott Non-Patent Rights to make, have made, use, offer for sale,
sell and import Licensed Product in the Field. Further, the parties acknowledge
and agree that in the event Seller makes or obtains rights to any improvements
or innovations with respect to Abbott
* Confidential Treatment Requested
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Patent Rights or Abbott Non-Patent Rights, then Seller shall negotiate in good
faith with Purchaser a license to such improvements or innovations on
commercially reasonable terms.
ARTICLE IV
CLOSING
-------
4.1 Closing. The Closing shall occur at Seller's offices in Abbott Park,
-------
Illinois on the Closing Date, unless another place or date is agreed to in
writing by Purchaser and Seller.
4.2 Items to be Delivered by Seller. Seller shall deliver to Purchaser or
-------------------------------
Purchaser's agent at or immediately prior to the Closing, the following items:
(a) Bill of Sale. A bill of sale for all of the Assets
------------
constituting personal property in the form attached hereto as Exhibit
H;
(b) Other Instruments of Conveyance. Such other instruments of
-------------------------------
conveyance and transfer as shall be effective to vest in Purchaser
title to the Assets to be sold, conveyed, transferred and delivered
hereunder, including, without limitation, instruments for recordation
or assignments and other similar instruments which evidence the
transfer of title (to include an assignment of the Trademarks in the
forms attached hereto as Exhibit I);
(c) Assignment and Assumption of Contracts. A signature page to
--------------------------------------
the Assignment and Assumption of Contracts executed by an authorized
representative of Seller;
(d) License Agreement. A signature page to the License Agreement
-----------------
executed by an authorized representative of Seller;
(e) Supply Agreement. A signature page to the Supply Agreement
----------------
executed by an authorized representative of Seller; and
(f) Business Records. All original Marketing Books and Records.
4.3 Items to be Delivered by Purchaser. Purchaser shall deliver to Seller
----------------------------------
at the Closing, the following:
(a) Cash Payment. The portion of the Purchase Price described in
------------
Subsection 2.3(a) by wire transfer, such wire transfer to be directed
to:
10
<PAGE>
[...***...]
(b) Assumption of Liabilities. An Assumption of Liabilities
-------------------------
pursuant to the provisions of Section 2.5 hereof in the form attached
hereto as Exhibit B-l and a signature page to the Assignment and
Assumption of Contracts executed by an authorized representative of
Purchaser;
(c) Supply Agreement. A signature page to the Supply Agreement
----------------
executed by an authorized representative of Purchaser;
(d) License Agreement. A signature page to the License Agreement
-----------------
executed by an authorized representative of Purchaser; and
(e) Board Approval. A Certificate signed by Purchaser's
--------------
Corporate Secretary evidencing approval by Purchaser's Board of
Directors of the transactions contemplated herein in the form attached
hereto as Exhibit J.
4.4 Consummation of Closing. All acts, deliveries and confirmations
-----------------------
comprising the Closing, regardless of chronological sequence, shall be deemed to
occur contemporaneously and simultaneously upon the occurrence of the last act,
delivery, or confirmation of the Closing, and none of such acts, deliveries or
confirmations shall be effective unless and until the last of same shall have
occurred.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND DISCLAIMERS
-------------------------------------------
5.1 Representations and Warranties by Seller. Seller represents and
----------------------------------------
warrants to Purchaser as of the Effective Date and as of the Closing Date that:
(a) Organization and Power. Seller is a corporation duly
----------------------
organized, validly existing and in good standing under the laws of the
State of Illinois, and has all requisite power to execute, deliver and
perform this Agreement and consummate the transactions contemplated
hereby;
* Confidential Treatment Requested
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<PAGE>
(b) Authorization of Agreement, Enforceability. This Agreement
------------------------------------------
has been duly and validly authorized, executed and delivered by
Seller, constitutes a valid and binding obligation of Seller and is
enforceable against Seller in accordance with its terms;
(c) Effect of Agreement. The execution, delivery and performance
-------------------
by Seller of this Agreement and the consummation of the transactions
contemplated hereby will not: (i) violate the charter or by-laws of
Seller or any provision of any law, statute, rule, regulation,
judgment or decree to which Seller or any of the Assets are subject or
bound; or (ii) result in the breach of or conflict with any material
term, covenant, condition or provision of any agreement of Seller or
by which Seller or any of the Assets are subject or bound;
(d) Government and Other Consents. To the best of Seller's
-----------------------------
knowledge, no consent, authorization, license, permit, registration or
approval of, or exemption or other action by any governmental or
public body or authority is required in connection with Seller's
execution, delivery or performance of this Agreement;
(e) Title to Assets. Seller has and is transferring to Purchaser
---------------
good and marketable title to the Assets, free and clear of all liens
and encumbrances and all rights, title and interest in third parties;
(f) Litigation. To the best of Seller's knowledge, there are no:
----------
(i) outstanding orders, judgments, injunctions, awards or decrees of
any court or arbitrator or other governmental regulatory body; or (ii)
actions, suits, personal injury or product liability claims, legal
administrative or arbitration proceedings or governmental
investigations that are either in effect or pending or threatened
against or relating to the Assets, Licensed Products or the Products,
or affects Seller's ability to perform its obligations pursuant to
this Agreement or any ancillary agreement hereto;
(g) Contracts. Exhibit A-2 identifies all of the Contracts.
---------
Seller has made available to Purchaser an accurate and complete copy
of each Contract, including all amendments thereto, and has disclosed
to Purchaser all amounts
12
<PAGE>
owed thereunder. With respect to each Contract: (i) each such Contract
is a valid and binding agreement of Seller, is in full force and
effect in all material respects, and is enforceable in accordance with
its terms subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors; (ii) there has been
no material default under such Contracts which not default has not
been cured or waived; (iii) Seller has not received any notice or
other communication, whether written or oral, regarding any actual,
alleged or potential violation or breach of or default under any
Contract; (iv) no event has occurred, and no circumstance or condition
exists, that could reasonably be expected to result in a violation or
other breach of any of the provisions of the Contracts, or give any
person the right to declare a default or exercise any remedy under the
Contracts or give any person the right to accelerate the maturity or
performance of the Contracts or terminate the Contracts; and (v)
Seller has not waived any of its rights under the Contracts. The
representations and warranties in Subsections 5.1(g)(i), (ii) and (iv)
are being made hereunder to the best of Seller's knowledge;
(h) Original Agreement. Seller has not sublicensed, assigned,
------------------
conveyed or otherwise transferred to any third party any rights under
the Anesta Patents Rights or Anesta Non-Patent Rights;
(i) Brokerage and Finder's Fees. Neither Seller, nor any
---------------------------
officer, director or agent of Seller has employed any broker, finder,
or agent with respect to this Agreement or the transactions
contemplated hereby;
(j) Abbott Patents and Trademarks Enforcement. In the last three
-----------------------------------------
(3) years, no third party has asserted any claim of infringement,
misappropriation or misuse against Seller with respect to the
Products, the Licensed Products or the Trademarks. In the last three
(3) years, Seller has not asserted any claim of infringement,
misappropriation or misuse against any third party as to the Anesta
Patent Rights, Anesta Non-Patent Rights, Abbott Patent Rights, Abbott
Non-Patent Rights, Licensed Marks or Trademarks and to the best of
Seller's knowledge, knows of no such infringement, misappropriation or
misuse respecting same that is currently ongoing;
13
<PAGE>
(k) Books and Records. Seller is transferring to Purchaser the
-----------------
true and correct original copy of the Books and Records. To the best
of Seller's knowledge, other than the Books and Records, Seller has
not created or caused to be created any books or records relating to
work performed under, or products covered by, the licenses granted
pursuant to the Original Agreements;
(l) Development Work. To the best of Seller's knowledge, Seller
----------------
has not performed any research, development or other work pursuant to
the licenses granted under the Original Agreements with respect to
Licensed Products other than the Products;
(m) Abbott Patents. Except as set forth on Exhibit A-1 or in the
--------------
licenses granted under the Original Agreements, there are no issued
patents or pending patent applications owned by or licensed to Abbott
with a right of sublicense, claiming an invention embodied or used in
connection with any Product, or any intermediate composition or
material therefore, or the methods of making or using the same; and
(n) Third Party Royalties. To the best of Seller's knowledge,
---------------------
Seller has not incurred and does not have any obligation to make
royalty payments to any third party with respect to Products or
Licensed Products.
5.2 Disclaimers. PURCHASER ACKNOWLEDGES THAT SELLER IS
-----------
TRANSFERRING ALL ASSETS "AS IS" "WHERE IS". EXCEPT FOR THE WARRANTIES EXPRESSLY
STATED ABOVE, SELLER MAKES NO OTHER REPRESENTATIONS OR WARRANTIES OF ANY KIND
RESPECTING THE ASSETS, THE PRODUCTS OR THEIR COMMERCIAL VIABILITY. SPECIFICALLY,
AND NOT BY WAY OF LIMITATION: (a) SELLER MAKES NO WARRANTIES, REPRESENTATIONS,
OR PROJECTIONS RESPECTING FUTURE COSTS, SALES, OR PROFITABILITY OF PRODUCTS; (b)
EXCEPT AS SET FORTH IN SUBSECTION 5.1(j), SELLER MAKES NO REPRESENTATION OR
WARRANTY OF ANY KIND WITH THE RESPECT TO THE TRADEMARKS, OR THAT THE TRADEMARKS
CAN BE USED, SOLD, OR PRACTICED WITHOUT INFRINGEMENT OF ANY RIGHTS OWNED OR
POSSESSED BY ANY THIRD PARTY; AND (c) SELLER MAKES NO WARRANTY OR REPRESENTATION
OF ANY
14
<PAGE>
KIND WITH THE RESPECT TO THE TRADEMARKS, OR THAT THE TRADEMARKS CAN BE USED,
SOLD, OR PRACTICED WITHOUT INFRINGEMENT OF ANY RIGHTS OWNED OR POSSESSED BY ANY
THIRD PARTY; AND (c) SELLER MAKES NO WARRANTY OR REPRESENTATION OF ANY KIND AS
TO THE VALIDITY OF THE TRADEMARKS. EXCEPT FOR THE WARRANTIES EXPRESSLY STATED
ABOVE, SELLER DISCLAIMS ALL OTHER REPRESENTATIONS AND WARRANTIES OF ANY KIND,
EXPRESSED OR IMPLIED, ORAL OR WRITTEN, INCLUDING BUT NOT LIMITED TO THE IMPLIED
WARRANTIES OF NONINFRINGEMENT, MERCHANTABILITY, AND FITNESS FOR A PARTICULAR OR
SPECIAL PURPOSE.
5.3 Representations and Warranties by Purchaser. Purchaser represents and
-------------------------------------------
warrants to Seller as of the Effective Date and as of the Closing Date that:
(a) Organization and Power. Purchaser is a corporation duly
----------------------
organized, validly existing and in good standing under the laws of
Delaware, and has all requisite corporate power and authority to
execute this Agreement and consummate the transactions contemplated
hereby. Purchaser's Board of Directors has approved execution of this
Agreement and consummation of the transactions contemplated hereby;
(b) Authorization of Agreement. This Agreement has been duly and
--------------------------
validly authorized, executed and delivered by Purchaser, constitutes a
valid and binding obligation of Purchaser and is enforceable against
Purchaser in accordance with its terms;
(c) Effect of Agreement. The execution, delivery and performance
-------------------
of this Agreement and the consummation of the transactions
contemplated hereby will not: (i) violate the charter or by-laws of
Purchaser or any provision of any law, statute, rule, regulation,
judgment or decree to which Purchaser is subject or bound; or (ii)
result in the breach of or conflict with any term, covenant,
conditions or provision of any agreement of Purchaser or by which
Purchaser or any of its properties are subject or bound;
(d) Government and Other Consents. To the best of Purchaser's
-----------------------------
knowledge, no consent, authorization, license, permit, registration or
approval of, or exemption or other action by any governmental or
public body or authority is required in connection with Purchaser's
execution, delivery or performance of this Agreement; and
15
<PAGE>
(e) Brokerage and Finder's Fees. Neither Purchaser nor any
---------------------------
officer, director or agent of Purchaser has employed any broker,
finder or agent with respect to this Agreement or the transactions
contemplated hereby.
ARTICLE VI
OTHER AGREEMENTS OF THE PARTIES
-------------------------------
6.1 Additional Documents. To the extent Seller discovers additional
--------------------
documents after the Closing that Seller reasonably believes would have been
transferred as part of the Books and Records had they been discovered prior to
the Closing, Seller shall promptly notify Purchaser in writing of such discovery
and shall accord Purchaser ninety (90) days to advise Seller of how Purchaser
wishes to handle such documents. During such ninety (90) day period, Seller
shall, upon advanced written notice from Purchaser, provide Purchaser reasonable
access to the documents. Purchaser may, at its expense, instruct Seller to
deliver any or all of such documents to a specified destination, and Seller
shall have no obligation with respect to such documents after delivery in
accordance with Purchaser's instructions. If Purchaser does not respond to
Seller's notice within such ninety (90)-day period, Seller may dispose of such
documents in its sole discretion and thereafter, Seller shall have no obligation
with respect to such documents.
6.2 Covenant of Further Assurances. In addition to and not in limitation
------------------------------
of other provisions of this Agreement, Seller agrees to execute such
instruments, at Purchaser's expense, as Purchaser reasonably determines to be
necessary to effect, perfect or confirm of record or otherwise, in Purchaser,
full right, title and interest in and to the Assets.
ARTICLE VII
GENERAL INDEMNIFICATION
-----------------------
7.1 Obligation of Seller to Indemnify. Seller agrees to indemnify, defend
---------------------------------
and hold harmless Purchaser (and its directors, officers, employees, Affiliates,
successors and assigns) from and against all losses, personal injuries,
liabilities, damages, deficiencies, costs or expenses
16
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including, without limitation, reasonable attorneys' fees and disbursements
("Losses"), based upon, arising out of or otherwise in respect of:
------
(a) any breach of any representation and warranty of Seller
contained in Section 5.1 of this Agreement (other than the
representations and warranties contained in Subsections 5.1(e) and
5.1(h)) asserted in writing by Purchaser (or any Affiliate thereof)
within twelve (12) months after the Closing Date;
(b) the operations of Seller with respect to the development,
manufacture, marketing, packaging, distribution, use or sale of
Products by or on behalf of Seller prior to the Closing Date;
(c) the operations of Seller with respect to packaging,
distribution and administrative processing of Products by or on behalf
of Seller from the Closing Date to the end of the Transition Period;
(d) any breach of the representations and warranties of Seller
contained in Subsections 5.1(e) and 5.1(h) or any failure of Seller to
comply with any of its obligations, covenants or agreements set forth
in this Agreement;
(e) any and all obligations or liabilities arising or resulting
from Seller's obligations under the Original Agreement, other than
those described in subsection (b) above, prior to the Closing Date;
(f) claims made by members of the Targeted Sales Force who accept
employment with Purchaser, which claims arise from acts or omissions
by Seller occurring prior to the expiration of their employment with
Seller; and
(g) any liabilities of Seller, other than the Liabilities, which
arise out of the Anesta Technology or the Assets, Products, or
Licensed Products.
7.2 Obligation of Purchaser to Indemnify. Purchaser agrees to indemnify,
------------------------------------
defend and hold harmless Seller (and its directors, officers, employees,
Affiliates, successors and assigns) from and against all Losses based upon,
arising out of or otherwise in respect of:
(a) any breach of any representation and warranty of Purchaser
contained in Section 5.3 of this Agreement (other than the
representations and warranties contained in Subsections 5.3(b) and
5.3(c)) asserted in writing by Seller (or any Affiliate thereof)
within twelve (12) months after the Closing Date;
17
<PAGE>
(b) the operations of Purchaser with respect to or the
development, manufacture, marketing, packaging, distribution, use or
sale of Products by or on behalf of Purchaser on or after the Closing
Date, except to the extent covered by Subsection 7.1(c);
(c) any breach of the representations and warranties of Purchaser
contained in Subsections 5.3(b) and/or 5.3(c) or any Liability of
Seller assumed by Purchaser pursuant to Section 2.4 or any failure by
Purchaser to comply with any of its obligations, covenants or
agreements under this Agreement; and
(d) any and all obligations or liabilities arising or resulting
from Purchaser's obligations set forth in the Original Agreement prior
to the Closing Date.
18
<PAGE>
7.3 Legal Proceedings.
-----------------
(a) Notice of Claim. If any legal proceedings shall be
---------------
instituted, or any claim or demand made, against an indemnified party
in respect of which an indemnifying party may be liable hereunder, or
if either party hereto for any reason shall believe that it has a
claim against the other pursuant to the indemnity provisions set forth
in this Agreement, then the indemnified party or the party believing
it has a claim against the other, as the case may be (in either case,
the "Indemnified Party"), shall give prompt written notice hereunder
-----------------
to the indemnifying party or the party against whom the party giving
notice believes it has a claim, as the case may be (in either case,
the "Indemnifying Party") and shall use best efforts to send such
------------------
notice no later than fifteen (15) days of the Indemnified Party's own
notice of such claim; provided, however, that the failure to provide
such prompt notice shall not affect the Indemnifying Party's
obligation to indemnify except to the extent of the Indemnifying
Party's actual damages caused by such failure. Such notice shall
specify in reasonable detail the date such underlying claim or belief
first was asserted or arose, the nature of the loss(es) for which
payment is claimed, and the amount payable in respect thereto.
(b) Opportunity to Defend. If an Indemnifying Party receives
---------------------
notice pursuant to Subsection 7.3(a) hereof, the Indemnifying Party
may, at its sole option, elect to defend against the claims,
liabilities and/or losses which are the subject of such notice, except
that Seller shall have no authority to adjust, compromise or settle
any claim involving any right of Purchaser to ownership or use of any
of the Assets or to defend any claim which, if adversely determined,
would materially impair the commercial prospects of the Products. If
the Indemnifying Party elects to defend, then the Indemnified Party
shall have the right to participate in such defense at its own
expense, trial counsel shall be chosen by the Indemnifying Party and
such trial counsel shall be reasonably satisfactory to the Indemnified
Party, the costs of which shall be borne by the
19
<PAGE>
Indemnifying Party, and the Indemnified Party agrees to cooperate with
the Indemnifying Party in such defense.
(c) Reimbursement. If the amount of any actual loss indemnified
-------------
against hereunder shall at any time subsequent to payment of any
indemnity payable hereunder, be reduced by any recovery, settlement or
other payment, then the amount of such reduction, less any expense
incurred by the party receiving such recovery, settlement or other
payment in connection therewith, shall be repaid promptly to the
Indemnifying Party.
7.4 Further Conditions. In no event shall a party seeking indemnity
------------------
hereunder, compromise or otherwise settle any such claim without the
Indemnifying Party's prior written consent, which consent shall not be
unreasonably withheld.
7.5 Survival. Except as otherwise provided herein, the provisions of
--------
Article VII hereof shall survive the Closing in accordance with their terms.
7.6 Purchaser's Insurance. Purchaser shall obtain and keep in force
---------------------
during the term of its indemnity obligations to Seller under this Agreement
insurance policies providing the following minimum levels of coverage: general
comprehensive liability insurance covering each occurrence of bodily injury and
property damage in an amount of not less than One Million Dollars ($
1,000,000.00) per occurrence with an aggregate of Two Million Dollars
($2,000,000.00) in any calendar year with the special endorsement providing
coverage for Product and Completed Operations Liability in an amount of not less
than Ten Million Dollars ($10,000,000.00); and an umbrella policy in an amount
not less than Four Million Dollars ($4,000,000.00). The insurance policy shall
be endorsed to provide for written notification to Seller by the insurer not
less than thirty (30) days prior to cancellation, expiration, or modification. A
certificate of insurance evidencing compliance with this Section and referencing
this Agreement shall be furnished to Seller by Purchaser within ten (10) days of
the Closing, Date, or, in the event of insurance renewal, within ten (10) days
of such renewal.
20
<PAGE>
ARTICLE VIII
PRE-CLOSING AND POST-CLOSING TRANSACTIONS
-----------------------------------------
8.1 Use of Names. As soon as practicable following the Closing,
------------
Purchaser shall use commercially reasonable efforts to seek the appropriate
approvals to market and sell the Products bearing labeling and using literature
not containing the name "Abbott Laboratories." Prior to Purchaser receiving such
approval, Seller shall use commercially reasonable efforts to exhaust its
then-current supply of labels containing the name Abbott Laboratories. Promptly
upon receipt of such approval and in accordance with any deadlines or other
timing requirements contained therein, Seller shall use commercially reasonable
efforts to make the transition to literature and labels consistent with such
approval. Nothing herein shall be construed as a grant of any rights to
Purchaser to the name "Abbott Laboratories", except that Purchaser may use
Seller's existing inventories of literature for Products that bear such name (so
long as Purchaser maintains its insurance and indemnity obligations hereunder).
8.2 Notification of Third Parties. Seller and Purchaser shall cooperate
-----------------------------
with one another in the notification to customers, regulatory agencies
(including but not limited to FDA and DEA), vendors, key opinion leaders,
clinicians, pharmacists, wholesalers and the Rocky Mountain Poison Control
Center of the transactions contemplated by this Agreement. Such notification
shall be in such form as is reasonably satisfactory to Seller and Purchaser.
8.3 Customer Inquiries. For a period of one (1) year after the Closing
------------------
Date, Seller shall refer customer telephone inquiries respecting the Products to
Purchaser.
8.4 Public Announcements. Upon the execution of this Agreement,
--------------------
Purchaser shall issue a press release substantially in the form attached as
Exhibit K and during the first one hundred eighty (180) days after the Effective
Date, each party shall obtain the written consent of the other party prior to
making any other written public statement concerning this Agreement and the
transactions contemplated hereby, which consent shall not be unreasonably
withheld. Except as provided in Section 8.1, Purchaser and Seller shall not use
the name of the other party in any marketing or advertising materials without
prior written approval of the other party. The foregoing shall not be deemed to
prevent either party from: (a) making any public disclosure which may be
required of either party or its Affiliates at any time under the federal
securities
21
<PAGE>
laws or by the rules and regulations of any national securities exchange upon
which the securities of either party or its Affiliates are traded; provided,
however, that the party required to make such disclosure shall, except where
impracticable, give reasonable advance notice to the other party of such
disclosure and use commercially reasonable efforts to secure confidential
treatment of such information; or (b) disclosing the substance or details of
this Agreement to its financial advisors, legal advisors, bona fide potential
corporate partners or any person or entity who has a bona fide interest in
investing in or acquiring substantially all of the assets or securities of such
party, provided that such party has used commercially reasonable efforts in good
faith to obtain a binder of confidentiality.
8.5 Pre-Closing and Transition Period.
---------------------------------
(a) Seller's Operations Prior to Closing. During the period
------------------------------------
between the Effective Date and the Closing Date, except as otherwise
contemplated by this Agreement, Seller shall continue to perform its
obligations under the Original Agreements in the ordinary and usual
course in a manner consistent with its performance of such obligations
prior to the Effective Date.
(b) Seller's Covenants Prior to Closing. During the period
-----------------------------------
between the Effective Date and the Closing Date, Seller shall not,
outside the ordinary course of business and without Purchaser's prior
written consent, which consent shall not be unreasonably withheld: (i)
take any actions that can reasonably be expected to increase the
amounts due by Seller under the Contracts; (ii) become a party to an
acquisition transaction specifically pertaining to Products; (iii)
commence a legal proceeding with respect to the Assets, the Anesta
Technology, the Products or the Licensed Products; or (iv) enter into
any transaction or take any other action outside the ordinary course
of business with respect to the Products or Licensed Products.
(c) Purchaser's Communication with Targeted Sales Force. On or
---------------------------------------------------
about March 13, 2000, Purchaser shall, in cooperation with Seller,
provide a written communication package to the Targeted Sales Force
describing the employment opportunities with Purchaser. Thereafter, on
or about March 21 and March 22, 2000, Purchaser shall conduct on-site
interviews in Salt Lake City with
22
<PAGE>
those interested members of the Targeted Sales Force. On or about
March 23, 2000, Purchaser shall send out by express mail services
offers for employment to those members of the Targeted Sales Force
that Purchaser selects. Such offers shall remain open until 5:00 p.m.
CST on March 28, 2000. Thereafter, Purchaser shall be subject to the
terms and conditions of Section 3.3.
(d) Transitional Activities. During the Transition Period, in
-----------------------
addition to the manufacture and shipping obligations of Seller under
the Supply Agreement, Seller also shall perform the Transitional
Activities on behalf of Purchaser. On a quarterly basis during the
Transition Period, Seller shall reconcile the net amount owed
Purchaser from the sale of Products to third parties. Such
reconciliation shall be performed in a manner consistent with the
reconciliation example set forth in Exhibit L. Seller shall pay
Purchaser all amounts due according to such reconciliation not later
than thirty (30) days after the end of the quarter for which such
reconciliation was performed. Such payment shall be made by wire
transfer to the First Security Bank of Utah, or such other bank as
Anesta shall specify from time to time. Concurrent with such wire
transfer, Seller shall transmit to Purchaser a report summarizing the
calculations performed pursuant to the reconciliation. The parties
shall cooperate to effect the orderly transition of the Transitional
Activities from Seller to Purchaser.
(e) Assistance. During the Transition Period, if requested by
----------
Purchaser, Seller shall provide Purchaser reasonable levels of non-
technical assistance in the transfer to Purchaser of Seller's business
and operations relating to the Assets, the Products and the Licensed
Products. Seller shall provide such assistance to Purchaser in
specific areas and functions, including, without limitation, those
areas and functions set forth in Exhibit M. Seller shall remain
responsible for the salaries of Seller's personnel participating in
such assistance efforts, but Purchaser shall reimburse Seller for all
travel, lodging and meals expenses incurred by such personnel.
8.6 Returns. The parties acknowledge and agree that Product returns shall
-------
be administered in accordance with the following:
23
<PAGE>
(a) Pre-Closing. For all Products sold prior to the Closing Date
-----------
and returned thereafter, the liability for such returns shall be fixed
[...***...] and shall be deducted from the final payment due by
Purchaser to Seller on [...***...] After the Closing Date, the cost of
all returns of Products shall be the sole responsibility of Purchaser.
(b) Transition Period. For all Products returned during the
-----------------
Transition Period, Seller shall administer such returns in accordance
with its Hospital Products Division's standard return goods policy.
The cost of these returns shall be charged to Purchaser in accordance
with the reconciliation example set forth in Exhibit L.
(c) Post-Transition Period. For all Products sold after the
----------------------
expiration of the Transition Period, except as otherwise provided in
the Supply Agreement, Purchaser shall be solely responsible for all
administrative and financial obligations associated with any return of
such Products.
(d) Out-Dated Product. The parties shall accord the following
-----------------
financial treatment with respect to finished Product in inventory at
Abbott facilities as of the Closing Date ("Abbott Inventory"): (i) the
----------------
cost of any Abbott Inventory that becomes out-dated during the
Transition Period shall be [...***...]and such charge shall be
recognized as part of the quarterly reconciliation; and (ii) on or
about December 31, 2000, the parties shall meet and mutually agree on
a final settlement regarding future out-dated Abbott Inventory, taking
into consideration the then-current level of Abbott Inventory and the
then-current market demand for Products. This final settlement shall
be recognized as part of the final reconciliation of the Transition
Period.
8.7 Limitations. All assistance provided pursuant to Subsection 8.5(e)
-----------
shall be provided subject to the availability of Seller's appropriate personnel.
SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED, RESPECTING
THE ASSISTANCE TO BE PROVIDED BY IT PURSUANT TO THIS ARTICLE VIII OR THE QUALITY
THEREOF.
* Confidential Treatment Requested
24
<PAGE>
8.8 Post-Closing Transfers. Pursuant to Subsections 2.3 (b) and (c), on
----------------------
the date specified in such Subsections, Seller shall deliver to Purchaser the
original Manufacturing and Regulatory Books and Records and the original
Financial Books and Records, respectively, and Purchaser shall deliver to Seller
the appropriate cash payments, respectively, by wire transfer in accordance with
the wire instruction set forth in Subsection 4.3(a).
ARTICLE IX
----------
CONDITIONS TO CLOSING
---------------------
9.1 General Conditions. The obligations of Seller and Purchaser to
------------------
consummate the transactions contemplated by this Agreement shall be subject to
the satisfaction that, at or prior to the Closing, no order, statute, rule,
regulation, executive order, injunction, stay, decree or restraining order shall
have been enacted, entered, promulgated or enforced by any court of competent
jurisdiction or governmental or regulatory authority or instrumentality that
prohibits the consummation of the transactions contemplated hereby, and no
proceeding by any governmental or regulatory authority or instrumentality shall
be pending or threatened, which seeks to prohibit or declare illegal the
transactions contemplated by this Agreement.
9.2 Conditions to Obligations of Seller. The obligations of Seller to
-----------------------------------
consummate the transactions contemplated by this Agreement shall be subject to
the satisfaction by Purchaser or waiver by Seller at or prior to the Closing of
each of the following conditions:
(a) Purchaser shall have performed in all material respects its
obligations required under this Agreement to be performed by it at or
prior to Closing;
(b) The representations and warranties of Purchaser contained
herein shall be true and correct in all material respects at and as of
the Effective Date and at and as of the Closing Date as though
restated on and as of such date (except in the case of any
representation and warranty that by its terms is made as of a date
specified therein, in which case such representation and warranty
shall be true and correct in all material respects as of such date);
25
<PAGE>
(c) Seller shall have received from Purchaser the portion of the
Purchase Price and the documents referred to in Section 4.3; and
(d) Seller shall have received from Purchaser a certificate
signed by an appropriate officer of Purchaser as to Purchaser's
compliance with the conditions set forth in paragraphs (a) and (b) of
this Section 9.2.
9.3 Conditions to Obligations of Purchaser. The obligations of Purchaser
--------------------------------------
to consummate the transactions contemplated by this Agreement shall be subject
to the satisfaction by Seller or waiver by Purchaser at or prior to the Closing
of each of the following conditions:
(a) Seller shall have performed in all material respects its
obligations required under this Agreement to be performed by it at or
prior to Closing;
(b) The representations and warranties of Seller contained
herein shall be true and correct in all material respects at and as of
the Effective Date and at and as of the Closing Date as though
restated on and as of such date (except in the case of any
representation and warranty that by its terms is made as of a date
specified therein, in which case such representation and warranty
shall be true and correct in all material respects as of such date);
(c) Purchaser shall have received from Seller the documents
referred to in Section 4.2;
(d) Contracts shall have been assigned to Purchaser, any
required consents under such Contracts permitting such assignment
shall have been obtained and Purchaser shall be reasonably satisfied
that such Contracts are in full force and effect and that Purchaser
shall be entitled to the full rights and benefits of Seller under each
such Contract without any material adverse modification therein; and
(e) Purchaser shall have received from Seller a certificate
signed by an appropriate officer of Seller as to Seller's compliance
with the conditions set forth in paragraphs (a), (b) and (d) of this
Section 9.3.
26
<PAGE>
ARTICLE X
---------
TERMINATION
-----------
This Agreement may be terminated by either Seller or Purchaser in the event
of a material breach by other party that remains uncured after having received
sixty (60) days prior written notice thereof from the non-breaching party.
Notwithstanding the foregoing, in the event Purchaser fails to make the cash
payments to Seller specified in Sections 2.3(b) or (c) by the specific dates
stated therein and does not cure such breach after receiving two (2) business
days prior written notice from Seller, Seller may immediately take any or all of
the following actions: (a) terminate this Agreement and reinstate in its
entirety the Original Agreements; (b) terminate the Supply Agreement; and (c)
terminate the License Agreement. In the event Seller elects to terminate this
Agreement and reinstate the Original Agreements, Purchaser shall not be entitled
to be reimbursed for any payments made to date to Seller pursuant to this
Agreement.
ARTICLE XI
GENERAL PROVISIONS
------------------
11.1 Survival of Representations. Except where and to the extent expressly
---------------------------
stated otherwise, all representations, warranties, covenants and agreements set
forth herein shall survive the execution and delivery of this Agreement and the
transfer of Assets hereunder and shall be effective regardless of any
investigations that may have been made at any time by or on behalf of the non-
breaching party.
11.2 Notices. All communications under the Agreement attached hereto shall
-------
be in writing and shall either be faxed, sent by courier (Federal Express or
equivalent) or mailed by first class mail, postage prepaid, to the facsimile
number and/or address specified below. If faxed, such communication shall be
deemed to be given when sent; provided, however, that such fax shall be
confirmed by sending a hard copy by courier or first class mail (by methods
specified herein) within one (1) working day of the sending of such fax. If sent
by courier or mailed by first class mail as specified herein, such communication
shall be deemed to be given either two (2) business days after sending (for
communications sent by courier) or five (5)
27
<PAGE>
business days after mailing (for communications sent by mail). All
communications hereunder shall be sent:
(a) if to Seller, at its address shown below or such other
address as it may give to Purchaser by notice hereunder:
Abbott Laboratories
200 Abbott Park Road
Abbott Park, IL 60064-3537
Attention: Senior Vice President, Hospital Products
Telefax: [...***...]
With a copy to:
Legal Division
Abbott Laboratories
100 Abbott Park Road
Abbott Park, IL 60064-3500
Attention: Divisional Vice President, D-322
Telefax: [...***...]
(b) if to Purchaser, at its address shown below or such other
address as it may give to Seller by notice hereunder:
Anesta Corp.
4745 Wiley Post Way
Salt Lake City, Utah 84116
Attention: President and CEO
Telefax: (801) 595-1406
With a copy to:
Cooley Godward LLP
2595 Canyon Blvd.
Suite 250
Boulder, CO 80302-6737
Attention: James C. Linfield, Esq.
Telefax: (303) 546-4099
11.3 Confidentiality of Information. During the term of this Agreement it
------------------------------
may be necessary for a party or its Affiliate(s) to disclose to the other
certain Confidential Information. In addition, the parties acknowledge that
certain Confidential Information was disclosed between the parties pursuant to
the Original Agreements. Except to the extent expressly authorized by this
* Confidential treatment requested
28
<PAGE>
Agreement or otherwise agreed in writing by the parties, the parties agree that
from the Effective Date until May 1, 2008, the receiving party shall keep
confidential and shall not publish or otherwise disclose and shall not use for
any purpose other than as provided for in this Agreement any Confidential
Information furnished to it by the other party pursuant to this Agreement or the
Original Agreements. No Confidential Information shall be disclosed to any
employee, agent, consultant, Affiliate, or sublicensee who does not have a need
for such information, and then only after the disclosing party has a standing
arrangement with or has obtained prior agreement from such person or entity to
whom disclosure is to be made to hold in confidence and not make use of such
information for any purpose other than those permitted by this Agreement. Each
party will use at least the same standard of care as it uses to protect its own
Confidential Information of a similar nature to ensure that such employees,
agents, consultants, Affiliates and sublicensees do not disclose or make any
unauthorized use of such Confidential Information, but no less than reasonable
care. Each party will promptly notify the other upon discovery of any
unauthorized use or disclosure of the Confidential Information. Nothing in this
Section 11.3 shall prohibit Purchaser from disclosing Confidential Information
in connection with its applications for, or maintenance or enforcement of,
patent protection.
11.4 Amendment and Modifications. This Agreement may be amended, modified
---------------------------
or supplemented only by written agreement of the parties hereto.
11.5 Assignment. The rights and obligations of Purchaser and Seller under
----------
this Agreement and the agreements provided for herein shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, but may not be assigned by either party without the prior written
consent of the other, except either party may assign its rights or obligations
hereunder to an Affiliate of said party without the other party's consent,
provided, that no such assignment in such instance shall relieve the assigning
party of its obligations hereunder, and provided further that either party may
make such an assignment without the other party's consent to a successor to all
or substantially all of the assets or business of such party to which this
Agreement relates, whether in a merger, sale of stock, sale of assets or other
transaction.
11.6 Expenses. Except as otherwise provided herein, Purchaser and Seller
--------
agree that each of the parties hereto shall bear its own expenses incurred in
connection with the execution
29
<PAGE>
and delivery of this Agreement and the consummation of the transactions
contemplated hereby. Purchaser will pay all recording fees (including, but not
limited to, fees and expenses associated with recording of patent and trademark
assignments) and all sales and use taxes payable in connection with the sale,
transfer, delivery and assignment to be made to Purchaser hereunder.
11.7 Headings. All headings in this Agreements are for convenience only
--------
and shall not affect the interpretation or meaning or any provision hereof.
11.8 Waiver and Preservation of Remedies. No delay on the part of either
-----------------------------------
of the parties hereto in exercising any right, power or privilege hereunder
shall operate as a waiver thereof; nor shall any waiver on the part of either
party of any such right, power or privilege, nor any single or partial exercise
of any such right, power or privilege, preclude any further exercise thereof or
the exercise of any other such right, power or privilege. The rights and
remedies of each party based on, arising out of, or otherwise in respect of any
inaccuracy in or breach of any representation, warranty, covenant or agreement
contained in this Agreement shall in no way be limited by the fact that the act,
omission, occurrence upon which any claims of any such inaccuracy or breach is
based may also be the subject matter of any other representation, warranty,
covenant or agreement contained in this Agreement (or in any other agreement
between the parties) as to which there is no inaccuracy or breach.
11.9 Exhibits. The Exhibits are a part of this Agreement as if fully set
--------
forth herein. All references herein to paragraphs, subparagraphs, sections,
subsections, clauses, and exhibits shall be deemed references to such parts of
this Agreement, unless the context otherwise requires.
11.10 Severability. If any provision of this Agreement is found or
------------
declared to be invalid or unenforceable by any court or other competent
authority having jurisdiction, such finding or declaration shall not invalidate
any other provision hereof, and this Agreement shall thereafter continue in full
force and effect except that such invalid or unenforceable provision shall be
reformed by a court of competent jurisdiction so as to effect insofar as is
practicable the intention of the parties as set forth in this Agreement,
provided that if such court is unable or unwilling to effect such reformation,
the invalid or unenforceable provision shall be deemed deleted to the same
extent as if it had never existed.
11.11 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Illinois, without regard choice of law
principles.
30
<PAGE>
11.12 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 constitute one and the same instrument.
11.13 Government Clearances. Purchaser shall bear the responsibility
---------------------
and expense of notifying any appropriate governmental agency of this Agreement
or transactions under this Agreement and obtaining any legally necessary
approvals thereto. Seller shall assist Purchaser to the extent reasonably
necessary to notify all such appropriate governmental agencies and shall execute
such documents as Purchaser may reasonably request Seller to execute in such
regard, at Purchaser's expense.
11.14 Alternative Dispute Resolution. Any controversy or claim arising out
------------------------------
of or relating to this Agreement, or the breach thereof, shall be resolved
through the alternative dispute resolution procedure set forth in Exhibit N.
11.15 Entirety of Agreement. This Agreement constitutes the entire
---------------------
agreement of the parties, merges all prior negotiations, agreements and
understandings, and states in full all representations and warranties which have
induced this Agreement, there being no representations or warranties other than
those herein stated.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the Effective Date.
ANESTA CORP. ABBOTT LABORATORIES
By: /s/ Thomas B. King By: /s/ Richard A. Gonzalez
----------------------- -----------------------
Thomas B. King Richard A. Gonzalez
President and Chief Senior Vice President,
Executive Officer Hospital Products
Date: 3/13/00 Date: 3/13/00
--------------------- ---------------------
31
<PAGE>
EXHIBIT A
---------
ASSETS
Subject to the provisions of Section 6.1, the Assets are as follows:
1. All Contracts identified on Exhibit A-2.
2. All Financial Books and Records identified on Exhibit A-3.
3. All Manufacturing Books and Records identified on Exhibit A-4.
4. All Marketing Books and Records identified on Exhibit A-5.
5. All such other Books and Records not identified on Exhibits A-3, A-4 or A-5.
6. All Trademarks identified on A-6.
<PAGE>
EXHIBIT A-1
-----------
ABBOTT PATENT RIGHTS
5041 Family:
- -----------
US D-338,956 issued August 31, 1993 (expires August 31, 2007)
5042 Family:
- -----------
US D-336,955 issued June 29, 1993 (expires June 29, 2007)
5049 Family:
- -----------
US 5,490,989 issued February 13, 1996 (expires February 13, 2013)
US 5,296,234 issued March 22, 1994 (expires October 11, 2011)
[...***...]
5433 Family:
- -----------
US 5,419,911 issued May 30, 1995 (expires September 28, 2013)
Australia Patent No. 682720 issued February 5, 1998 (expires September
14, 2014)
[...***...]
* Confidential Treatment Requested
<PAGE>
EXHIBIT A-2
-----------
CONTRACTS
[...***...]
* Confidential Treatment Requested
<PAGE>
EXHIBIT A-3
-----------
FINANCIAL BOOKS AND RECORDS
. Detailed breakdown of fully-burdened manufacturing costs
. Detail of shipments to wholesalers (amount, shipping, address, etc)
. Detail of OTFC- related property, plant and equipment, including accumulated
depreciation (original equipment cost, depreciation method, useful lives and
salvage value)
. Sales and Royalty Data
. Actual Gross Units and Sales
. Return Units and Dollars
. Wholesaler Chargebacks
. Cash Discounts
. Customer Rebates
. Administration Fees
. Managed Care Rebates
. Medicaid and State Rebates
. Any other Deduction to Sales
. Detail of product returns by month and reason (i.e. expired, damaged, etc)
for 1998 and 1999 along with a copy of the returned goods policy.
. Updated 2000 sales forecast by month including any available YTD
information.
<PAGE>
EXHIBIT A-4
-----------
MANUFACTURING AND REGULATORY BOOKS AND RECORDS
. Manufacturing/QA
. A copy of letter of reference to [...***...] DMF
. Specifications for the bulk drug and finished product
. A complete list of all stability protocols for the finished product
[...***...]
. Quantity of bulk drug available
. Outstanding DEA quota issued to Abbott
. When was each lot manufactured, originally tested, retested, and what
were the results of the testing
. All annual updates to any regulatory submissions since approval
. Master Batch records for Actiq and Oralet
. SOPs for OTFC manufacturing operations
. Equipment development history, including functional requirement and
factory acceptance testing
. Validation reports - equipment and facilities qualification, process
validation, cleaning validation and any related computer validation
Master production plan and materials plan for Actiq and Oralet FLTS
release documentationo Annual product reviews
. Audit reports of approved vendors
. Approved supplier list and supplier certifications
. Any product out of specification or technical complaint investigation
reports
. Design patent for Oralet/Handle/Overcap
. R & D/Medical
. Files related to Oralet Phase IV work [...***...]
. Any DDMAC materials not previously forwarded
. All adverse event reporting files
. Proposals, protocols, and measurement instruments in development
related to Health Economics and Outcomes/Quality of Life for Actiq
. Current and historical functional requirements documents
. A list of all scientific reports by number and title not submitted
. Any product development history reports not submitted to Anesta's IND
or NDA
. Any scientific reports not submitted to Anesta's IND or NDA
. Any product methods development reports not submitted to Anesta's IND
or NDA
. Copies of all related test methods
. All Risk Management Materials
[...***...]
. All RMP related files for Oralet, [...***...]
* Confidential treatment requested
<PAGE>
EXHIBIT A-5
-----------
MARKETING BOOKS AND RECORDS
. Market Research
[...***...]
. Records of shipments to wholesalers -
. Reports from launch retail telemarketing distribution program activities
. Package and Patient leaflet
. Mechanical artwork related to patient leaflet
. Existing inventories of PI and patient leaflet
. All existing inventory and location, mechanical artwork, tape masters, and
filed related to all promotional materials, including sales materials,
journal advertisements, giveaways, etc
[...***...]
* Confidential treatment requested
i
<PAGE>
. Files and full status report on launch of CD ROM project
. Existing inventory and location of all reprints
[...***...]
. Medica Education materials, [...***...]
. Current and historical physician target lists and up to date
activity/status report on each physician/practice
. Activity reports completed by the AOS and sales management
. Sales experiency by territory including key physician targets [...***...]
. Any sales information from the Risk Management plan
[...***...]
. Territory alignment and files for sales representative location [...***...]
. Harrison & Star and Goble Actiq product files [...***...]
. Convention display translites and other convention displays ( table top
units, intermediate size displays)
. Copies of all marketing plans, market analysis work i.e. by physician,
region, group, etc.
. Detailed account and review of all marketing commitments for 2000
. List of all advocates by specialty [...***...]
. Review status of all publication activities
. Review status of all public relation activities
. Review status of all contracts
[...***...]
. Any pharmacoeconomic data or research data on Actiq
. All Sales training materials and files for the 1/99 initial training and the
Fall training sessions [...***...]
. 1-800# medical affairs activities [...***...]
. Listing of fulfillment, including name and address and materials sent
[...***...]
* Confidential treatment requested
ii
<PAGE>
EXHIBIT A-6
-----------
TRADEMARKS
United States Trademark Registration Number 1,763,593, ORALET
<PAGE>
EXHIBIT A-7
-----------
GUARANTEED EARN-OUT MAXIMUMS AND MINIMUMS
Year Min ($000) Max ($000) LRP ($000)
---- --------- --------- ---------
[...***...]
*Prorated for 9 months.
**Prorated for 4 months
* Confidential Treatment Requested
<PAGE>
EXHIBIT B
---------
LIABILITIES
1. Seller's obligations under the Contracts after the Closing Date relating to
the Product.
2. Product returns after the Closing Date.
3. United States governmental rebates and reimbursements for Product sold
after the Closing Date.
4. Any third party royalty obligation after the Closing Date arising from the
manufacture, use or sale of Product.
<PAGE>
EXHIBIT B-1
FORM OF ASSUMPTION OF LIABILITIES
<PAGE>
ASSUMPTION OF LIABILITIES
Reference is made to the Termination and Asset Sale and Purchase Agreement
dated as of March 13, 2000 ("Agreement") between Abbott Laboratories ("Seller")
and Anesta Corp. ("Purchaser"). (Note: any capitalized terms used herein and not
otherwise defined shall have the respective meanings as set forth in the
Agreement.)
Purchaser hereby confirms that effective as of the Closing Date, Purchaser
shall:
1) assume responsibility for payment of all United States government
rebates and reimbursements relating to Products;
2) assume responsibility for the Product returns pursuant to Section
8.6(a) of the Agreement;
3) assume responsibility for the Contracts assigned to Purchaser as
specified in the Agreement, with respect to the period from and after
the Closing Date; and
4) assume responsibility for payment of third party royalty
obligations arising from the manufacture, use or sale of Products.
In Witness Whereof, Purchaser has executed this Assumption of
Liabilities as of the date set forth below.
ANESTA CORP.
By:_____________________________
Name:___________________________
Title:__________________________
Date:___________________________
<PAGE>
EXHIBIT B-2
-----------
ASSIGNMENT AND ASSUMPTION OF CONTRACTS
<PAGE>
ASSIGNMENT AND ASSUMPTION OF CONTRACTS
Reference is made to the Termination and Asset Sale and Purchase Agreement
dated as of March 13, 2000 ("Agreement") between Abbott Laboratories ("Seller")
and Anesta Corp. ("Purchaser"). (Note: any capitalized terms used herein and not
otherwise defined shall have the respective meanings as set forth in the
Agreement.)
Effective as of the Closing Date, Seller hereby assigns to Purchaser all of
Seller's right, title, and interest in and to the Contracts as referenced for
assignment on Exhibit A-2 of the Agreement.
Purchaser hereby confirms that effective as of the Closing Date, Purchaser
shall assume all responsibility for the Contracts assigned to Purchaser under
the Agreement.
In Witness Whereof, Seller and Purchaser have executed this document as
of the date set forth below.
ABBOTT LABORATORIES ANESTA CORP.
By:______________________________ By:______________________________
Name:____________________________ Name:____________________________
Title:___________________________ Title:___________________________
Date:____________________________ Date:____________________________
<PAGE>
EXHIBIT C
---------
MANUFACTURING EQUIPMENT
Asset
Number Asset Description Comment
[...***...]
* Confidential Treatment Requested
<PAGE>
EXHIBIT D
---------
TARGETED SALES FORCE
<PAGE>
ABBOTT ALTERNATE SITE ORGANIZATION AREA LISTING
-----------------------------------------------
ACTIQ - EAST DISTRICT
---------------------
[...***...]
* Confidential Treatment Requested
<PAGE>
EXHIBIT E
---------
ALLOCATION OF PURCHASE PRICE
Intentionally Omitted
<PAGE>
EXHIBIT F
---------
SUPPLY AGREEMENT
<PAGE>
EXHIBIT G
---------
FORM OF PATENT LICENSE
<PAGE>
EXHIBIT H
---------
FORM OF BILL OF SALE
<PAGE>
BILL OF SALE
Reference is made to the Termination and Asset Sale and Purchase Agreement
dated as of March 13, 2000 ("Agreement") between Abbott Laboratories ("Seller")
and Anesta Corp. ("Purchaser"). (Note: any capitalized terms used herein and not
otherwise defined shall have the respective meanings as set forth in the
Agreement.) Pursuant to and in accordance with the Agreement, and for valuable
consideration receipt of which is hereby acknowledged by Abbott, Abbott hereby
sells, transfers and assigns to Anesta Corp. all of Abbott's right, title and
interest in and to the Assets, to have and hold said Assets unto Anesta Corp.,
its successors and assigns forever.
In Witness Whereof, this Bill of Sale has been duly executed on behalf of
Abbott as of the _____ day of March, 2000.
ABBOTT LABORATORIES
By:_____________________________
Name:___________________________
Title:__________________________
<PAGE>
EXHIBIT I
---------
ASSIGNMENT OF TRADEMARKS
<PAGE>
TRADEMARK ASSIGNMENT
WHEREAS, Abbott Laboratories, a corporation existing under the laws of the
state of Illinois, is the owner of the United States Trademark Registration
Number 1,763,593, ORALET; and
WHEREAS, Anesta, a corporation existing under the laws of the state of
Delaware, is desirous of acquiring all right, title and interest in and to said
trademark registration; and
WHEREAS, Abbott is willing to assign any and all of its right to the said
trademark registration,
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, Abbott does hereby sell, transfer, convey and assign to
Anesta any and all of its right, title and interest in and to the trademark and
its registration, including the goodwill of the business symbolized by the
trademark.
Dated this day of March, 2000.
ABBOTT LABORATORIES
By:
Title:
<PAGE>
EXHIBIT J
---------
CERTIFICATE OF CORPORATE SECRETARY
<PAGE>
ANESTA CORP.
SECRETARY'S CERTIFICATE
In connection with the Termination and Asset Sale and Purchase Agreement
dated March ___, 2000 (the "Agreement"), between Anesta Corp., a Delaware
corporation ("Anesta"), and Abbott Laboratories, an Illinois corporation
("Abbott"), pursuant to which the parties will terminate that certain Research
and Development, License, Supply and Distribution Agreement dated December 27,
1989, as amended August 12, 1991 and December 30, 1992, a letter agreement dated
August 31, 1995, and a Trademark License Agreement dated June 11, 1999
(collectively, the "Original Agreements"), the undersigned, Theodore H. Stanley,
M.D., hereby certifies that he is the duly authorized and elected Secretary of
Anesta, and that the facts set forth below are true, complete and correct.
Capitalized terms used herein shall have the same meaning as defined in the
Agreement unless otherwise stated herein.
This Certificate is made with the knowledge that it will be delivered to
Abbott at the Closing pursuant to the terms of the Agreement.
At a meeting of Anesta's Board of Directors on February 29, 2000, the Board
adopted resolutions approving the Agreement on substantially the terms set forth
in the term sheet dated February 3, 2000, and further authorizing the President
and Chief Executive Officer of Anesta to negotiate with Abbott, and, in this
connection, to execute and deliver the Termination Agreement among the Company
and Abbott in substantially the form presented to the directors, with such
changes as the President and Chief Executive Officer, in his discretion, deems
necessary or advisable. The resolutions adopted by the Board on February 29,
2000 have not been revoked, modified or amended, and are in full force and
effect.
The statements, lists and descriptions contained or referred to herein are
true and correct and do not set forth facts which are false or misleading, nor
do they omit to set forth facts in the absence of which would make such
statements, lists and descriptions false or misleading.
In Witness Whereof, the undersigned has executed this Certificate on March
___, 2000.
------------------------------
Theodore H. Stanley, M.D.
Secretary
<PAGE>
EXHIBIT K
---------
PRESS RELEASE
<PAGE>
EXHIBIT L
---------
TRANSITION PERIOD RECONCILIATION EXAMPLE
[...***...]
*assumes Seller will be responsible for administering these payments related to
sales that occur in the Transition Period.
* Confidential Treatment Requested
<PAGE>
EXHIBIT M
---------
ABBOTT ASSISTANCE
-----------------
Order Processing/Distribution:
- ------------------------------
[...***...]
Pricing/Invoicing:
- ------------------
[...***...]
Customer Service:
- -----------------
[...***...]
Technical/Systems staffing/ability/needs:
- -----------------------------------------
[...***...]
* Confidential treatment requested
<PAGE>
EXHIBIT N
---------
ALTERNATIVE DISPUTE RESOLUTION PROCEDURE
The parties recognize that bona fide disputes as to certain matters may
arise from time to time during the term of this Agreement which relate to either
party's rights and/or obligations. To have such a dispute resolved by this
Alternative Dispute Resolution ("ADR") provision, a party first must send
written notice of the dispute to the other party for attempted resolution by
good faith negotiations between their respective presidents (or their
equivalents) of the affected subsidiaries, divisions, or business units within
twenty-eight (28) days after such notice is received (all references to "days"
in this ADR provision are to calendar days).
If the matter has not been resolved within twenty-eight (28) days of the
notice of dispute, or if the parties fail to meet within such twenty-eight (28)
days, either party may initiate an ADR proceeding as provided herein. The
parties shall have the right to be represented by counsel in such a proceeding.
1. To begin an ADR proceeding, a party shall provide written notice to the
other party of the issues to be resolved by ADR. Within fourteen (14) days
after its receipt of such notice, the other party may, by written notice to
the party initiating the ADR, add additional issues to be resolved within
the same ADR.
2. Within twenty-one (21) days following receipt of the original ADR notice,
the parties shall select a mutually acceptable neutral to preside in the
resolution of any disputes in this ADR proceeding. If the parties are
unable to agree on a mutually acceptable neutral within such period, either
party may request the President of the CPR Institute for Dispute Resolution
("CPR"), 366 Madison Avenue, 14th Floor, New York, New York 10017, to
select a neutral pursuant to the following procedures:
(a) The CPR shall submit to the parties a list of not less than five (5)
candidates within fourteen (14) days after receipt of the request,
along with a Curriculum Vitae for each
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<PAGE>
candidate. No candidate shall be an employee, director, or
shareholder of either party or any of their subsidiaries or
affiliates.
(b) Such list shall include a statement of disclosure by each candidate
of any circumstances likely to affect his or her impartiality.
(c) Each party shall number the candidates in order of preference (with
the number one (1) signifying the greatest preference) and shall
deliver the list to the CPR within seven (7) days following receipt
of the list of candidates. If a party believes a conflict of
interest exists regarding any of the candidates, that party shall
provide a written explanation of the conflict to the CPR along with
its list showing its order of preference for the candidates. Any
party failing to return a list of preferences on time shall be
deemed to have no order of preference.
(d) If the parties collectively have identified fewer than three (3)
candidates deemed to have conflicts, the CPR immediately shall
designate as the neutral the candidate for whom the parties
collectively have indicated the greatest preference. If a tie should
result between two candidates, the CPR may designate either
candidate. If the parties collectively have identified three (3) or
more candidates deemed to have conflicts, the CPR shall review the
explanations regarding conflicts and, in its sole discretion, may
either (i) immediately designate as the neutral the candidate for
whom the parties collectively have indicated the greatest
preference, or (ii) issue a new list of not less than five (5)
candidates, in which case the procedures set forth in subparagraphs
2(a) - 2(d) shall be repeated.
3. No earlier than twenty-eight (28) days or later than fifty-six (56) days
after selection, the neutral shall hold a hearing to resolve each of the
issues identified by the parties. The ADR proceeding shall take place at a
location agreed upon by the parties. If the parties cannot agree, the
neutral shall designate a location other than the principal place of
business of either party or any of their subsidiaries or affiliates.
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<PAGE>
4. At least seven (7) days prior to the hearing, each party shall submit the
following to the other party and the neutral:
(a) a copy of all exhibits on which such party intends to rely in any
oral or written presentation to the neutral;
(b) a list of any witnesses such party intends to call at the hearing,
and a short summary of the anticipated testimony of each witness;
(c) a proposed ruling on each issue to be resolved, together with a
request for a specific damage award or other remedy for each issue.
The proposed rulings and remedies shall not contain any recitation of
the facts or any legal arguments and shall not exceed one (1) page
per issue.
(d) a brief in support of such party's proposed rulings and remedies,
provided that the brief shall not exceed twenty (20) pages. This page
limitation shall apply regardless of the number of issues raised in
the ADR proceeding.
Except as expressly set forth in subparagraphs 4(a) - 4(d), no discovery
shall be required or permitted by any means, including depositions,
interrogatories, requests for admissions, or production of documents.
5. The hearing shall be conducted on two (2) consecutive days and shall be
governed by the following rules:
(a) Each party shall be entitled to five (5) hours of hearing time to
present its case. The neutral shall determine whether each party has
had the five (5) hours to which it is entitled.
(b) Each party shall be entitled, but not required, to make an opening
statement, to present regular and rebuttal testimony, documents or
other evidence, to cross-examine witnesses,
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<PAGE>
and to make a closing argument. Cross-examination of witnesses shall
occur immediately after their direct testimony, and cross-
examination time shall be charged against the party conducting the
cross-examination.
(c) The party initiating the ADR shall begin the hearing and, if it
chooses to make an opening statement, shall address not only issues
it raised but also any issues raised by the responding party. The
responding party, if it chooses to make an opening statement, also
shall address all issues raised in the ADR. Thereafter, the
presentation of regular and rebuttal testimony and documents, other
evidence, and closing arguments shall proceed in the same sequence.
(d) Except when testifying, witnesses shall be excluded from the hearing
until closing arguments.
(e) Settlement negotiations, including any statements made therein,
shall not be admissible under any circumstances. Affidavits prepared
for purposes of the ADR hearing also shall not be admissible. As to
all other matters, the neutral shall have sole discretion regarding
the admissibility of any evidence.
6. Within seven (7) days following completion of the hearing, each party may
submit to the other party and the neutral a post-hearing brief in support
of its proposed rulings and remedies, provided that such brief shall not
contain or discuss any new evidence and shall not exceed ten (10) pages.
This page limitation shall apply regardless of the number of issues raised
in the ADR proceeding.
7. The neutral shall rule on each disputed issue within fourteen (14) days
following completion of the hearing. Such ruling shall adopt in its
entirety the proposed ruling and remedy of one of the parties on each
disputed issue but may adopt one party's proposed rulings and remedies on
some issues and the other party's proposed rulings and remedies on other
issues. The neutral shall not issue any written opinion or otherwise
explain the basis of the ruling.
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<PAGE>
8. The neutral shall be paid a reasonable fee plus expenses. These fees and
expenses, along with the reasonable legal fees and expenses of the
prevailing party (including all expert witness fees and expenses), the fees
and expenses of a court reporter, and any expenses for a hearing room,
shall be paid as follows:
(a) If the neutral rules in favor of one party on all disputed issues in
the ADR, the losing party shall pay 100% of such fees and expenses.
(b) If the neutral rules in favor of one party on some issues and the
other party on other issues, the neutral shall issue with the
rulings a written determination as to how such fees and expenses
shall be allocated between the parties. The neutral shall allocate
fees and expenses in a way that bears a reasonable relationship to
the outcome of the ADR, with the party prevailing on more issues, or
on issues of greater value or gravity, recovering a relatively
larger share of its legal fees and expenses.
9. The rulings of the neutral and the allocation of fees and expenses shall be
binding, non-reviewable, and non-appealable, and may be entered as a final
judgment in any court having jurisdiction.
10. Except as provided in paragraph 9 or as required by law, the existence of
the dispute, any settlement negotiations, the ADR hearing, any submissions
(including exhibits, testimony, proposed rulings, and briefs), and the
rulings shall be deemed Confidential Information. The neutral shall have
the authority to impose sanctions for unauthorized disclosure of
Confidential Information.
11. All disputes referred to ADR, the statute of limitations, and the remedies
for any wrong that may be found, shall be governed by the laws of the State
of Illinois.
v
<PAGE>
12. The neutral may not award punitive damages. The parties hereby waive the
right to punitive damages.
13. The hearings shall be conducted in the English language.
14. The parties shall not have ex parte communications with the neutral during
the pendancy of the ADR proceeding before such neutral.
vi
<PAGE>
SUPPLY AGREEMENT
between
Anesta Corp.
and
Abbott Laboratories
This Agreement, dated this _____ day of March 2000 ("Effective Date"), is
by and between Anesta Corp., a Delaware corporation having its principle place
of business at 4745 Wiley Post Way, Salt Lake City, Utah 84116 ("Anesta") and
Abbott Laboratories, an Illinois corporation, having its principle place of
business at 100 Abbott Park Road, Abbott Park, IL 60064-3500 ("Abbott").
WITNESSETH:
-----------
WHEREAS, Anesta owns rights to the proprietary drug Actiq(R) and Fentanyl
Oralet(R), and desires Abbott to manufacture and sell to and distribute for
Anesta, Anesta's total United States requirements of such products; and
WHEREAS, Abbott desires to manufacture and sell to and distribute for
Anesta, Anesta's total United States requirements of Actiq(R) and Fentanyl
Oralet(R).
NOW THEREFORE, in consideration of the premises and the mutual promises and
agreements contained herein, Anesta and Abbott agree as follows:
ARTICLE I
The following words and phrases, when capitalized and used in this
Agreement, shall have the following meanings:
1.1 "Confidential Information" shall mean all information disclosed
------------------------
hereunder or under the Original Agreements (as defined in the Termination
Agreement) and identified as being confidential except any portion thereof
which:
1
<PAGE>
(a) is known to the recipient before receipt thereof under this
Agreement, as evidenced by its written records;
(b) is disclosed in good faith to the recipient after acceptance of
this Agreement by a third person lawfully in possession of such
information and not under an obligation of nondisclosure;
(c) is or becomes part of the public domain through no fault of the
recipient;
(d) is developed by or for the recipient independently of
information disclosed hereunder as evidenced by the recipient's
written records or other competent evidence; or
(e) is required by law to be disclosed.
1.2 "Contract Year" shall mean the twelve (12)-month period commencing on
-------------
April 1, 2000.
1.3 "DEA" shall mean the United States Drug Enforcement Administration.
---
1.4 "Fully Burdened Manufacturing Costs" shall have the meaning set forth
----------------------------------
in the Original Agreements.
1.5 "Product" shall mean Fentanyl Oralet(R)or Actiq(R)that meets the
-------
respective Product Specifications.
1.6 "Product Specifications" shall mean a detailed description of the
----------------------
respective Product set forth in [...***...] in effect as of the Effective Date,
or as modified according to applicable laws and regulations or as otherwise
mutually agreed in writing by the parties.
1.7 "Termination Agreement" shall mean that certain Termination and Asset
---------------------
Sale and Purchase Agreement between Abbott and Anesta dated March 13, 2000.
1.8. "Transition Period" shall have the meaning set forth in the
-----------------
Termination Agreement.
* Confidential treatment requested
2
<PAGE>
ARTICLE II
MANUFACTURE AND SUPPLY OF PRODUCT
---------------------------------
2.1 Purchase and Sale of Product. Abbott shall manufacture, sell and
----------------------------
deliver Product pursuant to Section 2.6 and Anesta shall purchase Anesta's total
United States requirements of Product exclusively from Abbott, subject to the
provisions of Section 4.3(a). The firm price per unit of Product sold to
Purchaser hereunder be [...***...] In the event of an unanticipated increase in
raw material costs or other unanticipated circumstances which cause the Fully
Burdened Manufacturing Costs to exceed [...***...] the parties shall negotiate
an appropriate adjustment to the maximum price per unit for the affected
Product. [...***...]
2.2 Minimum Orders. The minimum quantity of Product ordered hereunder in
--------------
any one order shall be the minimum batch size of the Abbott manufacturing
facility based upon a single shift production run.
2.3 Manufacture of Product
----------------------
2.3.1 Product Manufacture; Access to Drug Master Files; Labeling.
----------------------------------------------------------
Abbott shall manufacture Product in accordance with the Product Specifications
and current Good Manufacturing Practices ("cGMP") of the United States Food and
Drug Administration ("FDA") and other applicable rules and regulations of the
FDA and other United States governmental or regulatory agencies with
jurisdiction over the manufacture, use or sale of the Product as then in effect.
To the extent permissible under applicable laws and regulations, Abbott shall
grant Anesta reference rights to all Drug Master Files ("DMFs") necessary to
support Anesta's New Drug Applications ("NDAs") for Product and to enable Anesta
to assume manufacture of the Product upon expiration or earlier termination of
this Agreement. Abbott shall keep its DMFs up-to-date and shall inform Anesta
prior to any modifications that affect Product in order to permit Anesta to
amend or supplement any affected regulatory applications and files for Product.
Abbott shall label Product in accordance with label copy that Anesta provides.
Abbott shall maintain label artwork masters current with Anesta-approved Product
labeling. Anesta shall provide Abbott advance review of Product labeling changes
initiated by Anesta. Further, Anesta shall have final approval of any Product
labeling changes initiated by Abbott. Such copy may be
* Confidential Treatment Requested
3
<PAGE>
modified from time to time by agreement of the parties. Anesta shall reimburse
Abbott for Abbott's actual costs of making any label copy changes. During the
term of this Agreement, Abbott shall submit to the DEA bulk drug quantity
requests required to support Anesta's forecasts of Product.
2.3.2 Quality Control. Abbott shall apply its quality control procedures
---------------
and in-plant quality control checks on the manufacture of Product for Anesta in
the same manner as Abbott applies such procedures and checks to products that
Abbott manufactures and sells for its own account. In addition, Abbott shall
test and release Product in accordance with the test methods described in the
documents referenced in Section 1.6 to ensure that Product conforms to the
Product Specifications. The parties each acknowledge that the documents
referenced in Section 1.6 establish procedures to obtain mutual consent for any
changes to Product Specifications to assure cGMP compliance, and each party
hereby agrees to abide by the procedures set forth therein.
2.3.3 Audits. Anesta quality assurance and regulatory affairs personnel
------
shall have the right, upon reasonable written notice to Abbott, to conduct
during normal business hours a general quality assurance audit and inspection of
Abbott's quality assurance and regulatory records and production facilities
relating to the manufacture of Product, and special follow-up audits as
necessary. The general quality assurance audits and inspections may be conducted
once each calendar year. Visits by Anesta to Abbott's production facilities may
involve the transfer of Confidential Information and shall be subject to the
terms of Article V hereof. The results of such audits and inspections shall be
considered Confidential Information under Article V and shall not be disclosed
to third persons, including, but not limited to, the FDA and other government
regulatory agencies, unless required by law. Anesta shall use its commercially
reasonable efforts to provide Abbott with prior written notice of such legally
required disclosure, but if the circumstances of such disclosure make prior
notice impracticable, Anesta shall notify Abbott in writing of such disclosure
promptly thereafter.
2.3.4 Product Disposition. Abbott shall appropriately and fully
-------------------
document the validation, manufacturing, testing (incoming, in-process, release
and stability) and all process deviations and material nonconformances according
to approved batch records, test methods, protocols, quality action limits and
Product Specifications. Abbott shall provide to Anesta a
4
<PAGE>
certificate of analysis, not later than ten (10) days after the release of each
batch or lot, confirming that such batch or lot meets the Product
Specifications.
2.3.5 Notification of Complaints; Adverse Event Reporting. Anesta shall
---------------------------------------------------
be responsible for complaint receipt, opening, investigation (excluding
manufacturing related issues), customer response, closure and any subsequent
required Adverse Event reporting to the FDA. Abbott, as the manufacturer of the
Product, shall provide reasonable assistance in failure analysis and complaint
investigation. Abbott shall forward to Anesta any Product complaint Abbott
receives within one (1) business day of Abbott's receipt and knowledge of such
complaint. Anesta shall notify Abbott of any Product complaints that may involve
issues of Abbott's manufacturing or packaging of Product in sufficient time to
allow Abbott to evaluate the complaints and assist Anesta in responding to such
complaints.
2.3.6 Commercial Stability. Abbott shall test Product lots (in any
--------------------
strength) kept on stability for compliance with the applicable Product stability
protocols contained in the Product NDAs. Abbott shall submit the data and
records of any applicable investigations for review and approval by Anesta prior
to incorporating such information into any internal or external reports. Abbott
shall communicate to Anesta that a Product lot does not meet Product
Specifications within three (3) business of days of learning of such confirmed
results so that Anesta may consider and determine the appropriate regulatory
action. Abbott shall reasonably cooperate with Anesta in taking all appropriate
and required actions under applicable regulations with respect to such Product
lots. Abbott shall invoice Anesta for the atypical (non-planned) stability
maintenance costs incurred by Abbott as a result of additional requirements
initiated by or attributable to Anesta. Further, the parties acknowledge that
Abbott has been conducting a thirty-six (36) month stability program for Actiq
commenced prior to the Effective Date and scheduled to be completed by June 30,
2000, and commenced performing, prior to the Effective Date, stability testing
of the first six (6) lots of each strength of Actiq. Abbott shall continue the
ongoing thirty-six (36) month stability program for Actiq through June 30, 2000,
and will continue the ongoing stability testing for the first six (6) lots of
each strength of Actiq during the term of this Agreement.
2.3.7 Sample Retention. Abbott shall retain samples of each lot or batch of
----------------
Products in compliance with applicable Abbott Standard Operating Procedures.
5
<PAGE>
2.3.8 Compliance with Laws. Abbott shall use commercially reasonable
--------------------
efforts to comply with all applicable present orders, regulations, requirements
and laws of any and all United States in connection with the manufacture of the
Product, including, without limitation, all laws and regulations applicable to
the transportation, storage, use, handling and disposal of hazardous materials
resulting from or relating to the manufacture of Products.
2.4 Exclusive Shipping. For the term of this Agreement, Abbott shall be
------------------
solely responsible for shipping finished Product only to Anesta customers that
have the appropriate authorization from the DEA, including, without limitation,
primary wholesalers and hospitals in the United States, as provided in Section
2.6. Notwithstanding the foregoing in this Section 2.4, Abbott shall not be
obligated to ship Product to customers in the retail pharmacy trade.
2.5 Price and Payment
-----------------
2.5.1 Price. Anesta shall have sole authority to set and change the Product
-----
price charged to wholesalers, hospitals, pharmacies and other customers.
2.5.2 Payment. During the Transition Period, payment for Product
-------
manufactured and supplied hereunder shall be governed by Section 8.5 of the
Termination Agreement. Upon expiration of the Transition Period and thereafter,
Abbott shall invoice Anesta monthly for Product delivered pursuant to Section
2.6. Anesta shall make payment net thirty (30) days from the date of receipt of
Abbott's invoice. A late payment service charge of one and one-half percent
(1.5%) per month (or the highest amount allowed by law, if lower than 1.5%)
shall be paid by Anesta on all past due accounts. Abbott shall provide notice to
Anesta of past due amounts at least ten (10) days prior to the application of
any late payment service charge.
2.5.3 Taxes. Anesta shall pay any federal, state, county or municipal sales
-----
or use tax, excise, customs charges, duties or similar charge, or any other tax
assessment (other than that assessed against income), license, fee or other
charge lawfully assessed or charged on the manufacture, sale or transportation
of Product sold pursuant to this Agreement.
2.6 Delivery. Abbott shall deliver Product to Anesta, F.C.A. Abbott's
--------
plant or other facility at Abbott Park, Illinois or other facility the parties
may agree to in writing, packaged and labeled for shipment to such third parties
as Anesta designates in its purchase orders or otherwise in writing from time to
time. Shipment shall be via an Anesta-approved carrier, and title and risk of
loss to the Products shall pass to Anesta upon delivery to such carrier. All
shipments shall be subject to applicable regulations and documentation
requirements promulgated by the DEA.
6
<PAGE>
2.7 Orders and Forecasts
--------------------
2.7.1 First Order Estimate. Anesta shall provide Abbott with a written
--------------------
estimate of Anesta's monthly requirements for Product for the [...***...]
following the expiration of the Transition Period (the "Initial Forecast
Period") not later [...***...] Such estimate shall be a rolling forecast and
Anesta shall provide a quarterly update to such rolling forecast not later than
ninety (90) days prior to the beginning of the next quarterly period. Subject to
Subsection 2.7.3 below, Abbott acknowledges that such quantities are estimates
only. Within twenty (20) days of receipt of the initial rolling forecast and
each quarterly update, Abbott shall confirm in writing that it shall be able to
manufacture the quantities of Product listed in each rolling forecast, or if
Abbott cannot so confirm, Abbott shall advise Anesta in writing of the quantity
of Product Abbott shall be able to manufacture for the period of such forecast.
Notwithstanding the foregoing, Abbott shall use commercially reasonable efforts
to manufacture one hundred percent (100%) of the quantities of Product listed in
Anesta's rolling forecast, and after confirming that it shall be able to
manufacture a particular quantity of Product, Abbott shall not revoke such
confirmation or revise such quantity downward. If Abbott determines that it
cannot manufacture a quantity of Product previously confirmed by Abbott, the
parties shall meet and confer to discuss the circumstances giving rise to
Abbott's determination and the appropriate means to address them.
2.7.2 Scheduling. Abbott and Anesta shall cooperate fully in estimating
----------
and scheduling production for Product.
2.7.3 First Firm Order. The Product quantities reflected in the first
----------------
[...***...] of Anesta's initial forecast provided pursuant to Subsection 2.7.1
shall constitute a firm order and shall be accompanied by Anesta's standard
purchase order, subject to Subsection 2.7.5 below.
2.7.4. Subsequent Firm Orders. Anesta shall place a firm order for the
----------------------
second quarter of the Initial Forecast Period prior to the expiration of the
first quarter of the Initial Forecast Period. Thereafter, the [...***...] of the
then-current rolling forecast shall constitute a firm order, and Anesta shall
place such firm orders on a quarterly basis, no later than ninety (90) days
prior to the commencement of each succeeding [...***...] period.
* Confidential Treatment Requested
7
<PAGE>
2.7.5 Purchase Orders. Each purchase order for Product shall be governed by
---------------
the terms of this Agreement and none of the provisions of such purchase order
shall be applicable, except those specifying quantity ordered, delivery dates,
special shipping instructions and invoice information. Abbott may reject
Anesta's purchaser order only if: (a) such purchase order sets forth shipping
instructions, delivery dates, invoice information or other material information
which are inconsistent with this Agreement; or (b) the total amount in such
purchase order exceeds the forecast for the relevant quarter by more than
[...***...] If either of such conditions occurs, Abbott shall notify Anesta of
such rejection and the basis for it within thirty (30) days of receipt of
Anesta's purchase order.
2.8 Guarantees and Warranties
-------------------------
2.8.1 Abbott's Guarantee. Abbott guarantees to Anesta that Product Abbott
------------------
delivers hereunder pursuant to this Agreement at the time of delivery shall not
be adulterated or misbranded within the meaning of the Federal Food, Drug and
Cosmetic Act, as amended, or within the meaning of any applicable state or
municipal law in which the definitions of adulteration and misbranding are
substantially the same as those contained in the Federal Food, Drug and Cosmetic
Act, as such Act and such laws are constituted and effective at the time of
delivery and will not be an article which may not under the provisions of
Sections 404 and 505 of such Act be introduced into interstate commerce.
2.8.2 Abbott's Product Warranty. Abbott represents and warrants to Anesta
-------------------------
that Product shall be free from defects in material and workmanship and shall be
manufactured: (a) in accordance with and conformity to the Product
Specifications; and (b) in compliance with all applicable statutes, laws, rules
or regulations, including those relating to the environment, food or drugs and
occupational health and safety, including, without limitation, those enforced or
promulgated by the FDA. Abbott further represents and warrants to Anesta that
the performance of its obligations under this Agreement shall not result in a
violation or breach of, and shall not conflict with or constitute a default
under, its Certificate of Incorporation or corporate bylaws or any agreement,
contract, commitment or obligation to which Abbott or any of its affiliates is a
party or by which it is bound.
* Confidential Treatment Requested
8
<PAGE>
2.8.3 Exceptions to Abbott's Product Warranty. Subject to Subparagraph
---------------------------------------
2.8.4, the replacement provisions of Subparagraph 2.8.1 shall be Anesta's sole
and exclusive remedy for non-conforming or defective Product. ABBOTT MAKES NO
OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO PRODUCT. ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY
DISCLAIMED BY ABBOTT. Neither party shall be liable to the other for indirect,
incidental or consequential damages resulting from any breach of this Agreement.
2.8.4 Abbott Indemnification. Abbott shall indemnify and hold harmless
----------------------
Anesta, its affiliates, officers, directors and employees from and against all
claims, causes of action, settlement costs, including reasonable attorneys'
fees, losses or liabilities of any kind related to this Agreement and asserted
by third persons that arise out of or are attributable to: (a) any intentional,
wrongful or negligent act or omission on the part of Abbott's employees, agents
or representatives; or (b) the lack of safety or efficacy of the Product
supplied by Abbott resulting from Abbott's failure to manufacture Product in
accordance with the terms hereunder.
2.8.5 Anesta Indemnification. Anesta shall indemnify and hold harmless
----------------------
Abbott, its affiliates, officers, directors and employees from and against all
claims, causes of action, settlement costs, including reasonable attorneys'
fees, losses or liabilities of any kind related to this Agreement and asserted
by third persons which arise out of or are attributable to: (a) any intentional,
wrongful or negligent act or omission on the part of Anesta's employees, agents
or representatives; (b) the use of or lack of safety or efficacy of Product,
except to the extent resulting from Abbott's failure to manufacture Product in
accordance with the terms hereunder; or (c) Anesta's proprietary rights relating
to the Product; provided, however, that in the event Abbott seeks
indemnifications from Anesta pursuant to subpart (c) of this Section, then: (i)
Anesta's obligation to indemnify Abbott shall be Abbott's sole remedy against
Anesta for such claims; and (ii) Anesta shall have the right, in its sole
discretion, to obtain for Abbott the right to: (A) continue to manufacture the
Product; (B) replace or modify the relevant Product so as to make the Product
non-infringing; or (C) terminate the Agreement, with no further liability to
Abbott for such termination.
2.8.6 Notice of Indemnity Claim. Each indemnified party agrees to give the
-------------------------
indemnifying party prompt written notice of any matter upon which such
indemnified party
9
<PAGE>
intends to base a claim for indemnification (an "Indemnity Claim") under this
Section. The indemnifying party shall have the right to participate jointly with
the indemnified party in the indemnified party's defense, settlement or other
disposition of any Indemnity Claim.
2.8.7 Settlement of Indemnity Claims. With respect to any Indemnity Claim
------------------------------
relating solely to the payment of money damages and which could not result in
the indemnified party becoming subject to injunctive or other equitable relief
or otherwise adversely affect the business of the indemnified party in any
manner, and as to which the indemnifying party shall have acknowledged in
writing the obligation to indemnify the indemnified party hereunder, the
indemnifying party shall have the sole right to defend, settle or otherwise
dispose of such Indemnity Claim, on such terms as the indemnifying party, in its
sole discretion, shall deem appropriate; provided, that, the indemnifying party
shall provide reasonable evidence of its ability to pay any damages claimed and
with respect to any such settlement shall have obtained the written release of
the indemnified party from the Indemnity Claim. The indemnifying party shall
obtain written consent from the indemnified party (which such consent shall not
be unreasonably withheld) prior to ceasing to defend, settle or otherwise
dispose of any Indemnity Claim if, as a result thereof, the indemnified party
would become subject to injunctive or other equitable relief or the business of
the indemnified party would be adversely affected in any manner.
2.9 Product Recalls and Withdrawals.
-------------------------------
2.9.1 Responsibilities. In the event (a) any United States governmental or
----------------
regulatory authority issues a request, directive or order that a Product be
recalled or withdrawn, (b) a court of competent jurisdiction orders such recall
or withdrawal or (c) Anesta determines, after consultation with Abbott, that a
recall or withdrawal is necessary or advisable (each a "Recall"), Anesta shall,
at Anesta's sole cost and expense, conduct any Recall, unless the Recall was
caused by the manufacture, packaging, storage, or handling of the recalled
Product by Abbott. In the event the Recall was caused by Abbott as described
above, Abbott promptly shall reimburse Anesta for all direct costs of the Recall
upon submission to Abbott by Anesta of an itemized statement thereof. However,
as circumstances giving rise to the Recall are identified, the parties shall
meet to: (v) jointly review the appropriateness and/or scope of the Recall; (w)
determine which party should initiate the Recall with the FDA and the customer
base; (x) mutually agree to the impacted customer population; (y) determine the
timing and logistics of the Recall; and (z)
10
<PAGE>
mutually agree to the language used in any recall letter, telephone script and
media or other public announcement. For purposes of this Section 2.9, the
expenses of Recall shall include, but not be limited to, the expenses of
notification and destruction or return of the recalled Product and all other
costs incurred in connection with such Recall.
2.9.2 Recall Dispute. If the parties do not agree as to the circumstances
--------------
giving rise to the Recall, and those circumstances are specifically and solely
related to disputed test results, then representative samples of the Product
subject to Recall shall be submitted to a mutually acceptable third party
laboratory, which shall determine whether such recalled Product meets the
Product Specifications. The parties agree that such laboratory's determination
shall be final and determinative. The party against whom the third party tester
rules shall bear the reasonable costs of the third party testing. If the third
party tester rules that the batch meets the Product Specifications, Anesta shall
bear the costs of the recall. If the third-party tester rules that the batch
does not meet Product Specifications, Abbott shall bear the costs of the Recall.
2.10 Purchase of Manufacturing Equipment. Upon the expiration or earlier
-----------------------------------
termination of this Agreement, Abbott shall sell, assign, transfer, convey and
deliver to Anesta and Anesta shall purchase, accept and receive from Abbott the
manufacturing equipment set forth on Exhibit A (the "Manufacturing Equipment").
[...***...] Abbott shall cause the Manufacturing Equipment to be removed,
packaged, shipped and delivered, at Anesta's sole cost and expense, to the
destination specified by Anesta. To the extent requested in writing by Anesta,
Abbott shall provide Anesta reasonable technical assistance installing and
operating the Manufacturing Equipment. Such technical assistance shall be
offered at the rate of [...***...], plus travel expenses.
2.11 Returned Product. Abbott shall notify Anesta in writing promptly upon
----------------
receipt of any Product returned from a third party customer. Anesta shall be
solely responsible for the costs associated for all such returns. Abbott shall
handle, and if appropriate, dispose of, such Product returns in accordance with
the applicable regulations and documentation requirements promulgated by the
DEA.
* Confidential Treatment Requested
11
<PAGE>
ARTICLE III
NO GRANT OF EXPRESS OR IMPLIED LICENSE
--------------------------------------
3.1 Abbott's Proprietary Rights. Except as otherwise provided in the
---------------------------
Termination Agreement, Abbott has granted no license, express or implied, to
Anesta to use Abbott proprietary technology, know-how or rights relating to the
manufacturing and packaging technology used with respect to the manufacture and
packaging of Product. If Abbott, in its sole discretion, deems patentable any
improvement or invention related to Abbott's proprietary technology, know-how or
rights relating to the Product made or reduced to practice in the course of this
Agreement (the "Technology"), then Abbott shall notify Anesta in writing of such
Technology and Abbott shall be entitled to apply for patent protection on such
improvements or inventions at Abbott's expense and risk. The parties shall
negotiate in good faith mutually agreeable terms under which Anesta may obtain a
license to such Technology in the Field, as that term is defined in the
Termination Agreement. During the period of such negotiations, Abbott shall not
convey to a third party the right to practice such Technology; provided, however
that if the parties do not reach an agreement as to the terms under which Anesta
may obtain a license to practice such Technology within ninety (90) days after
Abbott's notice to Anesta, then Abbott shall be free to convey rights to such
Technology to a third party in its sole discretion.
3.2 Anesta's Proprietary Rights. No license, express or implied, is
---------------------------
granted to Abbott to use Anesta's proprietary technology, know-how or rights
relating to the Product, other than for the purposes of this Agreement. If
Anesta, in its sole discretion, deems patentable any improvement or invention
related to Anesta's proprietary technology, know-how or rights relating to the
Product, then Anesta shall be entitled to apply for patent protection on such
improvements or inventions at its expense and risk.
ARTICLE IV
TERM AND TERMINATION
--------------------
4.1 Term. This Agreement shall commence on the date first above written
----
and the initial term shall expire at the end of the second Contract Year;
provided, however, Anesta may, at its sole discretion upon six (6) months prior
written notice to Abbott, extend the term of this Agreement for up to an
additional twelve (12) months.
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<PAGE>
4.2 General Termination Rights. Either party may terminate
----------------------------
this Agreement by giving to the other party sixty (60) days prior written notice
as follows:
(a) Upon the bankruptcy or the insolvency of the other party;
(b) Upon the breach of any warranty or any other material
provision of this Agreement by the other party if the breach is not
cured within sixty (60) days after written notice thereof to the party
in default; or
(c) Upon the breach of Sections 2.3(b) or (c) of the
Termination Agreement by the other party if the breach is not cured in
accordance with the terms and conditions thereunder.
4.3 Strategic Termination. Anesta may terminate this Agreement
----------------------
as follows:
(a) by giving Abbott ninety (90) days written notice, if
Anesta determines, in its sole discretion, that Anesta's manufacturing
capacity is sufficient to meet its United States supply requirements
for Actiq and Fentanyl Oralet, whether manufactured according to the
Product Specifications or using other specifications; or
(b) [...***...]
4.4 Reimbursement Upon Termination. Upon termination pursuant to
------------------------------
this Article IV, Anesta shall reimburse Abbott for Abbott's cost of all supplies
purchased and on hand or on order, if such supplies were ordered by Abbott based
on firm purchase orders or Anesta's rolling forecast of Product and such
supplies cannot be reasonably used by Abbott for other purposes. Abbott shall
invoice for amounts due hereunder. Payment shall be made pursuant to
Subparagraph 2.5.2.
4.5 Return of Inventory. In the event of any termination, Abbott
-------------------
shall return any remaining inventory of Product to Anesta at Anesta's expense,
unless such termination shall have been as a result of a breach of this
Agreement by Abbott, in which case such inventory shall be returned at Abbott's
expense. Prior to the effective date of such termination, the parties shall meet
in good faith and confer in order to determine the amount of money Anesta shall
pay Abbott for such inventory.
* Confidential Treatment Requested
13
<PAGE>
ARTICLE V
CONFIDENTIAL INFORMATION
------------------------
5.1 Non-Disclosure. The parties recognize that, during the term of
--------------
this Agreement, each party may exchange Confidential Information. Abbott shall
not disclose to third persons Confidential Information received from Anesta, and
shall not use Confidential Information disclosed to it by Anesta for Abbott's
benefit (other than in the performance of its obligation hereunder) or for the
benefit of any third person. Anesta shall not disclose to third persons
Confidential Information received from Abbott, and Anesta shall not use
Confidential Information disclosed to it by Abbott for Anesta's benefit (other
than in the performance of its obligations hereunder) or for the benefit of any
third person. For the purposes of this Agreement, the terms and conditions of
this Agreement shall be considered as Confidential Information.
5.2 Limited Rights to Disclosed Confidential Information.
----------------------------------------------------
Notwithstanding the above, nothing contained in this Agreement shall preclude
Anesta or Abbott from utilizing Confidential Information as may be necessary in
prosecuting patent rights, obtaining governmental marketing approvals, or in
manufacturing Product pursuant to this Agreement. The obligations of the parties
relating to Confidential Information shall expire five (5) years after the
termination of this Agreement.
5.3 Requests for Disclosure of Confidential Information. If either
---------------------------------------------------
party is requested to disclose any Confidential Information in connection with a
legal or administrative proceeding, such party shall give the other party prompt
notice of such request. The other party may seek an appropriate protective order
or other remedy and/or waive compliance with the provisions of this Agreement.
If such party seeks a protective order or other remedy, the other party shall
cooperate. If such party fails to obtain a protective order or waive compliance
with the relevant provisions of this Agreement, the disclosing party shall
disclose only that portion of the Confidential Information which its legal
counsel determines it is required to disclose.
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<PAGE>
ARTICLE VI
MISCELLANEOUS
-------------
6.1 Force Majeure. Any delay in the performance of any of the
-------------
duties or obligations of either party hereto (except the payment of money) shall
not be considered a breach of this Agreement and the time required for
performance shall be extended for a period equal to the period of such delay,
provided that such delay has been caused by or is the result of any acts of God,
acts of the public enemy, insurrections, riots, embargoes, labor disputes,
including strikes, lockouts, job actions, boycotts, fires, explosions, floods,
shortages of material or energy, or other unforeseeable causes beyond the
control and without the fault or negligence of the party so affected. The
affected party shall give prompt notice to the other party of such cause, and
shall take promptly whatever reasonable steps necessary to relieve the effect of
such cause. If Abbott becomes subject to an event of force majeure or problems
are encountered which interfere with production of Product at Abbott's Lake
County, Illinois plant, the parties shall agree mutually on implementation of an
agreed upon action plan to transfer production to another Abbott plant. Parties
shall meet, after the execution of this Agreement and at the request of either
party, to discuss and define such an action plan.
6.2 Notice. All notices hereunder shall be delivered either: (a)
------
personally; (b) by facsimile and confirmed by first class mail (postage
prepaid); (c) by registered or certified mail (postage prepaid); or (d) by
overnight courier, to the following addresses of the respective parties:
If to Anesta:
Anesta Corp.
4745 Wiley Post Way
Salt Lake City, Utah 84116
Facsimile Number: (801) 595-1406
Attention: President and Chief Executive Officer
With copy to:
Cooley Godward LLP
2595 Canyon Boulevard
Suite 250
Boulder, CO 80302-6737
Attention: James C. Linfield, Esq.
15
<PAGE>
Facsimile Number:(303) 546-4099
If to Abbott: Abbott Laboratories
200 Abbott Park Road
Abbott Park, Illinois 60064-3537.
Facsimile Number: [...***...]
Attention: President, Hospital Products Division
With copy to: Divisional Vice President, Domestic Legal
Operations 100 Abbott Park Road, D-322 AP6D Abbott
Park, Illinois 60064-3500 Facsimile Number:
[...***...]
Notices shall be effective upon receipt if personally delivered or
delivered by facsimile, or on the third business day following the date of
mailing or on the day following dispatch by courier. A party may change its
address listed above by written notice to the other party.
6.3 Choice of Law. This Agreement shall be construed,
-------------
interpreted and governed by the laws of the State of Illinois, without regard to
its choice of law rules.
6.4 Alternative Dispute Resolution. The parties recognize that
------------------------------
bona fide disputes may arise which relate to the parties' rights and obligations
under this Agreement. The parties agree that any such dispute shall be resolved
by the alternative dispute resolution procedure set forth in Exhibit C.
6.5 Assignment. Neither party shall assign this Agreement nor any
----------
part thereof without the prior written consent of the other party; provided,
however, that: (a) either party may assign this Agreement to one of its
subsidiaries without the other party's consent; or (b) either party, without
such consent, may assign or sell the same in connection with the transfer or
sale of substantially all of its business to which this Agreement pertains or in
the event of its merger or consolidation with another company. Any permitted
assignee shall assume all obligations of its assignor under this Agreement. No
assignment shall relieve any party of responsibility for the performance of any
accrued obligation that such party then has hereunder.
6.6 Entire Agreement. This Agreement and its exhibits and the
----------------
Termination Agreement constitutes the entire understanding between the parties
concerning the subject matter hereof and supersede all written or oral prior
agreements or understandings with respect thereto. No course of dealing or usage
of trade shall be used to modify the terms and conditions hereof.
* Confidential treatment requested
16
<PAGE>
6.7 Severability. This Agreement is subject to the restrictions,
------------
limitations, terms and conditions of all applicable laws, governmental
regulations, approvals and clearances. If, for any reason, any term or provision
of this Agreement shall be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other term or provision hereof, and this Agreement shall be interpreted and
construed as if such term or provision, to the extent the same shall have been
held to be invalid, illegal or unenforceable, had never been contained herein.
6.8 Waiver - Modification of Agreement. No waiver or modification
----------------------------------
of any of the terms of this Agreement shall be valid unless in writing and
signed by authorized representatives of each party. Failure by either party to
enforce any such rights under this Agreement shall not be construed as a waiver
of such rights nor shall a waiver by either party in one or more instances be
construed as constituting a continuing waiver or as a waiver in other instances.
6.9 Insurance. Both parties shall obtain and maintain, at its sole
---------
expense, insurance sufficient in both its nature and amount, to cover its
performance and obligation under this Agreement. Each party shall provide the
other with evidence of such insurance coverage upon request.
6.10 Survival. Termination, expiration, cancellation or abandonment
--------
of this Agreement through any means and for any reason shall not relieve the
parties of any obligation accruing prior thereto and shall be without prejudice
to the rights and remedies of either party with respect to any antecedent breach
of any of the provisions of this Agreement.
6.11 Binding Effect. This Agreement shall be binding upon and
---------------
inure to the benefit of each of the parties and is successors and permitted
assigns.
17
<PAGE>
IN WITNESS WHEREOF, the parties intending to be bound by the terms and
conditions hereof have caused this Agreement to be signed by their duly
authorized representatives on the date first above written.
ABBOTT LABORATORIES ANESTA CORP.
By: /s/ Richard A. Gonzalez By: /s/ Thomas B. King
--------------------------------- ------------------------
Richard A. Gonzalez Thomas B. King
Senior Vice President, Hospital Products President and Chief Executive
Officer
Date: 3/13/00 Date: 3/13/00
------------------------------- ----------------------
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<PAGE>
Supply Agreement
Anesta
and
Abbott Laboratories
Exhibit A
Manufacturing Equipment
-----------------------
Asset
Number Asset Description Comment
[...***...]
* Confidential Treatment Requested
<PAGE>
Supply Agreement
Anesta
and
Abbott Laboratories
Exhibit B
Abbott Long Range Plan
----------------------
Year Forecasted Units of Products
---- ----------------------------
[...***...]
* Prorate for portion of Contract Year if applicable
* Confidential treatment requested
<PAGE>
Supply Agreement
Anesta
and
Abbott Laboratories
Exhibit C
Alternative Dispute Resolution
------------------------------
The parties recognize that bona fide disputes as to certain matters may arise
from time to time during the term of this Agreement which relate to either
party's rights and/or obligations. To have such a dispute resolved by this
Alternative Dispute Resolution ("ADR") provision, a party first must send
written notice of the dispute to the other party for attempted resolution by
good faith negotiations between their respective presidents (or their
equivalents) of the affected subsidiaries, divisions, or business units within
twenty-eight (28) days after such notice is received (all references to "days"
in this ADR provision are to calendar days).
If the matter has not been resolved within twenty-eight (28) days of the notice
of dispute, or if the parties fail to meet within such twenty-eight (28) days,
either party may initiate an ADR proceeding as provided herein. The parties
shall have the right to be represented by counsel in such a proceeding.
1. To begin an ADR proceeding, a party shall provide written notice to the
other party of the issues to be resolved by ADR. Within fourteen (14)
days after its receipt of such notice, the other party may, by written
notice to the party initiating the ADR, add additional issues to be
resolved within the same ADR.
2. Within twenty-one (21) days following receipt of the original ADR notice,
the parties shall select a mutually acceptable neutral to preside in the
resolution of any disputes in this ADR proceeding. If the parties are
unable to agree on a mutually acceptable neutral within such period,
either party may request the President of the CPR Institute for Dispute
Resolution ("CPR"), 366 Madison Avenue, 14th Floor, New York, New York
10017, to select a neutral pursuant to the following procedures:
<PAGE>
(a) The CPR shall submit to the parties a list of not less than five
(5) candidates within fourteen (14) days after receipt of the
request, along with a Curriculum Vitae for each candidate. No
candidate shall be an employee, director, or shareholder of either
party or any of their subsidiaries or affiliates.
(b) Such list shall include a statement of disclosure by each
candidate of any circumstances likely to affect his or her
impartiality.
(c) Each party shall number the candidates in order of preference
(with the number one (1) signifying the greatest preference) and
shall deliver the list to the CPR within seven (7) days following
receipt of the list of candidates. If a party believes a conflict
of interest exists regarding any of the candidates, that party
shall provide a written explanation of the conflict to the CPR
along with its list showing its order of preference for the
candidates. Any party failing to return a list of preferences on
time shall be deemed to have no order of preference.
(d) If the parties collectively have identified fewer than three (3)
candidates deemed to have conflicts, the CPR immediately shall
designate as the neutral the candidate for whom the parties
collectively have indicated the greatest preference. If a tie
should result between two candidates, the CPR may designate either
candidate. If the parties collectively have identified three (3)
or more candidates deemed to have conflicts, the CPR shall review
the explanations regarding conflicts and, in its sole discretion,
may either (i) immediately designate as the neutral the candidate
for whom the parties collectively have indicated the greatest
preference, or (ii) issue a new list of not less than five (5)
candidates, in which case the procedures set forth in
subparagraphs 2(a) - 2(d) shall be repeated.
3. No earlier than twenty-eight (28) days or later than fifty-six (56) days
after selection, the neutral shall hold a hearing to resolve each of the
issues identified by the parties. The ADR proceeding shall take place at
a location agreed upon by the parties. If the parties cannot agree, the
neutral shall designate a location other than the principal place of
business of either party or any of their subsidiaries or affiliates.
<PAGE>
4. At least seven (7) days prior to the hearing, each party shall submit the
following to the other party and the neutral:
(a) a copy of all exhibits on which such party intends to rely in any
oral or written presentation to the neutral;
(b) a list of any witnesses such party intends to call at the hearing,
and a short summary of the anticipated testimony of each witness;
(c) a proposed ruling on each issue to be resolved, together with a
request for a specific damage award or other remedy for each
issue. The proposed rulings and remedies shall not contain any
recitation of the facts or any legal arguments and shall not
exceed one (1) page per issue.
(d) a brief in support of such party's proposed rulings and remedies,
provided that the brief shall not exceed twenty (20) pages. This
page limitation shall apply regardless of the number of issues
raised in the ADR proceeding.
Except as expressly set forth in subparagraphs 4(a) - 4(d), no discovery
shall be required or permitted by any means, including depositions,
interrogatories, requests for admissions, or production of documents.
5. The hearing shall be conducted on two (2) consecutive days and shall be
governed by the following rules:
(a) Each party shall be entitled to five (5) hours of hearing time to
present its case. The neutral shall determine whether each party
has had the five (5) hours to which it is entitled.
<PAGE>
(b) Each party shall be entitled, but not required, to make an opening
statement, to present regular and rebuttal testimony, documents or
other evidence, to cross-examine witnesses, and to make a closing
argument. Cross-examination of witnesses shall occur immediately
after their direct testimony, and cross-examination time shall be
charged against the party conducting the cross-examination.
(c) The party initiating the ADR shall begin the hearing and, if it
chooses to make an opening statement, shall address not only
issues it raised but also any issues raised by the responding
party. The responding party, if it chooses to make an opening
statement, also shall address all issues raised in the ADR.
Thereafter, the presentation of regular and rebuttal testimony and
documents, other evidence, and closing arguments shall proceed in
the same sequence.
(d) Except when testifying, witnesses shall be excluded from the
hearing until closing arguments.
(e) Settlement negotiations, including any statements made therein,
shall not be admissible under any circumstances. Affidavits
prepared for purposes of the ADR hearing also shall not be
admissible. As to all other matters, the neutral shall have sole
discretion regarding the admissibility of any evidence.
6. Within seven (7) days following completion of the hearing, each party may
submit to the other party and the neutral a post-hearing brief in support
of its proposed rulings and remedies, provided that such brief shall not
contain or discuss any new evidence and shall not exceed ten (10) pages.
This page limitation shall apply regardless of the number of issues
raised in the ADR proceeding.
7. The neutral shall rule on each disputed issue within fourteen (14) days
following completion of the hearing. Such ruling shall adopt in its
entirety the proposed ruling and remedy of one of the parties on each
disputed issue but may adopt one party's proposed rulings and remedies on
some
<PAGE>
issues and the other party's proposed rulings and remedies on other
issues. The neutral shall not issue any written opinion or otherwise
explain the basis of the ruling.
8. The neutral shall be paid a reasonable fee plus expenses. These fees and
expenses, along with the reasonable legal fees and expenses of the
prevailing party (including all expert witness fees and expenses), the
fees and expenses of a court reporter, and any expenses for a hearing
room, shall be paid as follows:
(a) If the neutral rules in favor of one party on all disputed issues in
the ADR, the losing party shall pay 100% of such fees and expenses.
(b) If the neutral rules in favor of one party on some issues and the
other party on other issues, the neutral shall issue with the rulings
a written determination as to how such fees and expenses shall be
allocated between the parties. The neutral shall allocate fees and
expenses in a way that bears a reasonable relationship to the outcome
of the ADR, with the party prevailing on more issues, or on issues of
greater value or gravity, recovering a relatively larger share of its
legal fees and expenses.
9. The rulings of the neutral and the allocation of fees and expenses shall
be binding, non-reviewable, and non-appealable, and may be entered as a
final judgment in any court having jurisdiction.
10. Except as provided in paragraph 9 or as required by law, the existence of
the dispute, any settlement negotiations, the ADR hearing, any
submissions (including exhibits, testimony, proposed rulings, and
briefs), and the rulings shall be deemed Confidential Information. The
neutral shall have the authority to impose sanctions for unauthorized
disclosure of Confidential Information.
11. All disputes referred to ADR, the statute of limitations, and the
remedies for any wrong that may be found, shall be governed by the laws
of the State of Illinois.
<PAGE>
12. The neutral may not award punitive damages. The parties hereby waive the
right to punitive damages.
13. The hearings shall be conducted in the English language.
14. The parties shall not have ex parte communications with the neutral
during the pendancy of the ADR proceeding before such neutral.
<PAGE>
NON-EXCLUSIVE LICENSE AGREEMENT
-------------------------------
This Non-Exclusive License Agreement (the "Agreement") is dated this
---------
___ day of March, 2000 and is entered into by and between Abbott Laboratories,
an Illinois corporation having a principal place of business at 100 Abbott Park
Road, Abbott Park, Illinois, 60064-3500 ("Abbott"), and Anesta Corp., a Delaware
------
corporation having a principal place of business at 4745 Wiley Post Way, Salt
Lake City, Utah 84116 ("Anesta").
------
BACKGROUND
----------
WHEREAS, Abbott is the owner of certain patent rights related to the
manufacturing and packaging processes of certain oral transmucosal fentanyl
citrate products;
WHEREAS, Anesta is in the business of marketing and selling such oral
transmucosal fentanyl citrate products; and
WHEREAS, Anesta desires a non-exclusive license under Patent Rights (as
defined below), and Abbott is willing to grant such license.
NOW, THEREFORE, in consideration of the recitals and the mutual
covenants and obligations contained herein, Abbott and Anesta agree as follows:
1. DEFINITIONS
-----------
1.1 "Affiliate" shall mean, with respect to each Party, any legal
---------
entity which controls, is controlled by, or is under common control with such
Party. For
<PAGE>
purposes of this definition, a Party shall be deemed to be in control
of another entity if the former entity owns or controls, directly or indirectly,
more than fifty percent (50%) of the outstanding voting equity of the other
entity (or other comparable ownership interest for an entity other than a
corporation).
1.2 "Effective Date" shall mean the last date on which a Party executes
--------------
this Agreement.
1.3 "Field" shall mean any and all uses (including, without limitation,
-----
pre-medication, sedation, analgesia, diagnostic procedure, emergency room, post-
op pain, burn treatment and all cancer-related pain management use) in
hospitals, surgi-centers and emergency health care facilities which are owned,
operated, affiliated or associated with hospitals, and any and all uses in the
home care and alternate site markets.
1.4 "Licensed Product" shall mean oral transmucosal products within the
----------------
scope of Patent Rights and Non-Patent Rights, that consists of: (a) the unique
patented dosage form for the oral transmucosal administration in the Field of
the opioid, fentanyl citrate; (b) an opioid or other central nervous
system-acting drug with pre-medication, sedation, analgesic, diagnostic
procedure, emergency room, post-op pain, burn treatment, or cancer-related pain
management use; or (c) any intermediate composition or material therefor.
1.5 "Non-Patent Rights" shall mean all rights, other than Abbott Patent
-----------------
Rights, that are owned by or licensed to Abbott with the right to sublicense,
and that arise out of work done with, or refer or relate to Licensed Products,
any intermediate
<PAGE>
composition or material therefore, or the methods of making or using the same,
including, but not limited to, any and all rights which relate to:
(i) trade secrets, know-how, show-how, computer software,
unpatented and unpatentable inventions, discoveries and ideas;
(ii) manufacturing, technical and technological information,
methods, processes and techniques, whether relating to successful or
unsuccessful work;
(iii) preclinical and clinical, in vivo and in vitro study data,
------- -- -----
characterization, biochemistry, enzymology, toxicology, pharmacology
and other information relating to safety and efficacy;
(iv) Investigational New Drug Applications, New Drug
Applications and Drug Master Files, as such terms are defined under
the Act; and
(v) any other information relating thereto, or to formulations,
designs, practices or methods of administration or use.
1.6 "Party" shall mean either Abbott or Anesta and "Parties" shall
----- -------
mean both Abbott and Anesta.
1.7 "Patent Rights" shall mean the patents and patent applications
-------------
set forth in Exhibit A, and any continuation, division, continuation-in-part,
and any provisional applications, and any substitutions, extensions,
registrations, confirmations, re-examinations, re-issues or renewals of such
patents.
1.8 "Termination Agreement" shall mean that certain Termination and
---------------------
Asset Sale and Purchase Agreement between the Parties dated March 13, 2000.
<PAGE>
1.9 "Third Party" shall mean a natural person, corporation,
-----------
partnership, joint venture, trust, any governmental authority or other business
entity or organization, and any other recognized organization other than the
Parties and/or their Affiliates.
2. RIGHTS GRANTED
--------------
2.1 License Grant. In partial consideration of the Purchase Price (as
-------------
that term is defined in the Termination Agreement, Abbott hereby grants to
Anesta and its Affiliates, subject to the terms and conditions set forth herein,
a perpetual, worldwide, royalty-free, non-exclusive right and license, with the
right to sublicense, under Patent Rights and Non-Patent Rights to make, have
made, offer for sale, sell and use Licensed Products in the Field. In the event
this Agreement is terminated pursuant to Section 5.3 herein, the license granted
to Anesta under this Article 2 shall be revoked contemporaneously to such
termination.
2.2 Disclosure. It is the intent of the Parties that the Books and
----------
Records, as that term is defined in the Termination Agreement, contain
sufficient information to enable Anesta to make or have made Licensed Products.
To the extent Anesta reasonably believes it does not have sufficient information
to make or have made Licensed Products, Anesta may request additional
information from Abbott. Upon receipt of such request, Abbott shall conduct a
reasonable inquiry to identify such information, and to the extent such
information exists and is identified, Abbott shall promptly disclose it to
Anesta.
<PAGE>
3. REPRESENTATIONS AND WARRANTIES
------------------------------
3.1 Abbott Representations and Warranties. Abbott represents and
-------------------------------------
warrants to Anesta the following:
(a) Abbott is the owner of the patents within Patent Rights and the
technology and intellectual property within the Non-Patent
Rights;
(b) Abbott has the right to license patents within Patent Rights and
the technology and intellectual property within the Non-Patent
Rights; and
(c) Abbott has the necessary corporate authority to enter into this
Agreement.
3.2 Anesta Representations and Warranties. Anesta represents and
-------------------------------------
warrants to Abbott the following:
(a) Anesta has the necessary corporate authority to enter into this
Agreement; and
(b) Anesta will at all times during the terms of this Agreement and
for so long as it shall sell Licensed Products, comply with all
local, state or federal laws that may control the sale of
Licensed Products or any other activity undertaken pursuant to
this Agreement.
3.3 Disclaimer. The Parties recognize that nothing in this Agreement
----------
shall be construed as a representation or warranty by Abbott:
(a) concerning the validity or scope of any patent within Patent
Rights;
(b) regarding the right to practice the technology covered by any
patent within Patent Rights;
<PAGE>
(c) imposing an obligation on the part of Abbott to bring or
prosecute infringement actions against Third Parties for
infringement of any patent within Patent Rights; or
(d) conferring to Anesta by implication, estoppel or otherwise, any
licenses, immunities or rights to any other patents or patent
applications owned or controlled by Abbott.
ABBOTT MAKES NO WARRANTIES, EXPRESSED OR IMPLIED, OTHER THAN THOSE MADE
HEREIN. ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE ARE HEREBY DISCLAIMED BY ABBOTT.
4. PUBLIC ANNOUNCEMENTS AND NON-PUBLICITY
--------------------------------------
Public announcements, press releases and other public statements
concerning this Agreement shall be governed by Section 8.4 of the Termination
Agreement.
5. TERM AND TERMINATION
--------------------
5.1 Term Regarding Patent Rights. This Agreement shall commence on the
----------------------------
Effective Date and shall have a perpetual term, unless otherwise terminated
earlier by operation of law or by acts of the Parties in accordance with the
terms of this Agreement.
5.2 Termination for Cause. Either Party may terminate this Agreement
---------------------
upon written notice to the other Party in the event the other Party (a)
materially breaches this Agreement and fails to cure such breach within sixty
(60) days after receipt of written
<PAGE>
notice of breach from the non-breaching Party, or (b) makes a general assignment
for the benefit of creditors, has a receiver appointed on it's behalf, files or
otherwise becomes subject to bankruptcy or insolvency proceedings which
continues unstayed and in effect for a period of sixty (60) days.
5.3 Termination by Abbott. Abbott may terminate this Agreement upon
---------------------
written notice to Anesta in the event Anesta materially breaches its obligations
to make the payments due to Abbott under Section 2.3 of the Termination
Agreement and fails to cure such breach in accordance with the terms and
conditions thereof.
5.4 Accrued Rights and Obligations. The termination, expiration,
------------------------------
cancellation or abandonment of this Agreement through any means and for any
reason shall not relieve the Parties of any obligations accruing prior thereto
and shall be without prejudice to the rights and remedies of either Party with
respect to the antecedent breach of any of the provisions of this Agreement.
6. INDEMNIFICATION
---------------
6.1 Indemnification by Anesta. Anesta shall indemnify, defend and
-------------------------
hold harmless Abbott and its officers, directors, employees, agents and
representatives ("Abbott Indemnitees") from and against any and all liabilities,
------------------
claims, demands, actions, suits, losses, damages, costs and expenses (including
reasonable attorneys' fees) based upon or arising out of:
(a) Anesta's negligence, willful or deliberate misconduct,
recklessness, or breach of any covenant, agreement,
representation or warranty made by Anesta in this Agreement; or
<PAGE>
(b) Anesta's manufacture, offer to sell, sale or use of Licensed
Product.
6.2 Indemnification by Abbott. Abbott shall indemnify, defend and
-------------------------
hold harmless Anesta and its officers, directors, employees, agents and
representatives ("Anesta Indemnitees") from and against any and all liabilities,
------------------
claims, demands, actions, suits, losses, damages, costs and expenses (including
reasonable attorneys' fees) based upon or arising out of Abbott's negligence,
willful or deliberate misconduct, recklessness, or breach of any covenant,
agreement, representation or warranty made by Abbott in this Agreement.
6.3 Conditions of Indemnification. If Abbott proposes to seek
-----------------------------
indemnification from Anesta under the provisions of this Article 6, Abbott shall
notify Anesta within thirty (30) days of receipt of notice of any such claim or
suit and shall cooperate fully with Anesta in the defense of such claims or
suits. No settlement or compromise shall be binding on Abbott hereto without
Abbott's prior written consent.
7. MARKETING
---------
Anesta shall properly mark all Licensed Products and any advertising
for Licensed Products with appropriate notice of patent coverage. In no event
shall Anesta use Abbott's name or any Abbott trademark.
8. MISCELLANEOUS
-------------
8.1 Entire Agreement. This Agreement, together with the exhibits,
----------------
constitutes the entire agreement between the Parties concerning the subject
matter
<PAGE>
hereof and supersedes all written or oral prior agreements or understandings
with respect thereto.
8.2 Amendment or Modification. No Party shall claim any amendment,
-------------------------
modification or release from any provision hereof by mutual agreement, unless in
writing signed by an authorized representative of each Party.
8.3 Severability. If any term or provision of this Agreement shall
------------
for any reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other term or
provision hereof, and this Agreement shall be interpreted and construed as if
such term or provision, to the extent the same shall have been held to be
invalid, illegal or unenforceable, had never been contained herein.
8.4 Assignment. Anesta shall not assign this Agreement, in whole or
----------
in part, without the prior written consent of Abbott; provided, however, that
Anesta may make such an assignment without Abbott's consent to a successor to
all or substantially all of the assets or business of Anesta to which this
Agreement relates, whether in a merger, sale of stock, sale of assets or other
transaction. Any permitted assignee shall assume all of Anesta's obligations
under this Agreement. No permitted assignment shall relieve Anesta of
responsibility for the performance of any accrued obligation which Anesta then
has hereunder.
8.5 Relationship of the Parties. The relationship of the Parties
---------------------------
under this Agreement is that of independent contractors. Nothing contained in
this Agreement is intended or is to be construed so as to constitute the Parties
as partners, joint ventures, or either party as an agent or employee of the
other. Neither Party has any express or
<PAGE>
implied right under this Agreement to assume or create any obligation on behalf
of, or in the name of, or to bind the other Party to any contract, agreement or
undertaking with any Third Party, and no conduct of the Parties shall be deemed
to infer such right.
8.6 Notices. All notices hereunder shall be given in writing and
-------
shall be given by mail, air courier, facsimile, or hand delivery properly
addressed. Until otherwise notified, notices shall be addressed as follows:
If to Anesta: Anesta Corp.
4745 Wiley Post Way
Salt Lake City, Utah 84116
Attention: Chief Executive Officer
Telefax:(801) 595-1406
With a copy to:
Cooley Godward LLP
2595 Canyon Boulevard
Suite 250
Boulder, CO 80302-6737
Attention: James C. Linfield, Esq.
Telefax:(303) 546-4099
If to Abbott: Senior Vice President
Hospital Products Division
200 Abbott Park Road
Abbott Park, Illinois 60064-3537
With copy to: Divisional Vice President
Legal Division D-322
100 Abbott Park Road
Abbott Park, Illinois 60064-6050
Notices shall be effective upon receipt if personally delivered, on the third
business day following the date of mailing if sent by certified or registered
mail, and on the second business day following the date of delivery to the
express mail service if sent
<PAGE>
by express mail, or the date of transmission if sent by facsimile. A Party may
change its address listed above by notice to the other Party.
8.7 Force Majeure. Any delay in the performance of any of the duties
-------------
or obligations of either Party under this Agreement caused by an event outside
the affected Party's reasonable control shall not be considered a breach of this
Agreement, and the time required for performance shall be extended for a period
equal to the period of such delay. Such events shall including, without
limitation: acts of God; riots; embargoes; labor disputes, including strikes,
lockouts, job actions, or boycotts; fires; explosions; earthquakes; floods;
shortages of material or energy; or other unforeseeable causes beyond the
reasonable control and without the fault or negligence of the Party so affected.
The Party so affected shall give prompt notice to the other Party of such cause
and shall take whatever reasonable steps are necessary to relieve the effect of
such cause as rapidly as possible.
8.8 Limitation of Liability. In no event shall either party be liable
-----------------------
to the other for any incidental or consequential damages, including lost
profits, arising out of any breach of this Agreement.
8.9 Governing Law. This Agreement shall be construed, interpreted and
-------------
governed by the laws of the State of Illinois, without regard to conflicts of
law principles.
8.10 Dispute Resolution. Any controversy or claim arising out of or
------------------
relating to this Agreement, or the breach thereof, shall be resolved through the
alternative dispute resolution described in Exhibit B.
<PAGE>
8.11 Binding Effect. This Agreement shall be binding upon and shall inure
--------------
to the benefit of the Parties hereto and their respective assigns and successors
in interest.
8.12 Waiver. No waiver or modification of any of the terms of this
------
Agreement shall be valid unless in writing and signed by an authorized
representative of the Parties. Failure by either Party to enforce any rights
under this Agreement shall not be construed as a waiver of such rights, nor
shall a waiver by either Party in one or more instances be construed as
constituting a continuing waiver or as a waiver in other instances.
8.13 Exhibits. All exhibits that are attached to this Agreement are
--------
incorporated herein by reference.
8.14 Headings. The headings used in this Agreement are for convenience
--------
reference purposes only and shall not affect the meaning or interpretation
of this Agreement.
8.15 Counterparts. This Agreement may be executed in two (2) original
------------
counterparts, each of which shall be deemed an original, but both of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each Party has caused this Agreement to be executed on
its behalf by its duly authorized officer as of the Effective Date.
ABBOTT LABORATORIES ANESTA CORP.
By: /s/ Richard A. Gonzalez By: /s/ Thomas B. King
-------------------------- ---------------------------
Richard A. Gonzalez Thomas B. King
Senior Vice President, President and Chief
Hospital Products Executive Officer
Date: 3/13/00 Date: 3/13/00
----------------------- -------------------------
<PAGE>
Non-Exclusive License Agreement
Anesta
and
Abbott Laboratories
Exhibit A
Patent Rights
-------------
5041 Family:
- -----------
US D-338,956 issued August 31, 1993 (expires August 31, 2007)
5042 Family:
- -----------
US D-336,955 issued June 29, 1993 (expires June 29, 2007)
5049 Family:
- ------------
US 5,490,989 issued February 13, 1996 (expires February 13, 2013)
US 5,296,234 issued March 22, 1994 (expires October 11, 2011)
[...***...]
5433 Family:
- -----------
US 5,419,911 issued May 30, 1995 (expires September 28, 2013)
Australia Patent No. 682720 issued February 5, 1998 (expires September
14, 2014)
[...***...]
*Confidential Treatment Requested
<PAGE>
Non-Exclusive License Agreement
Anesta
and
Abbott Laboratories
Exhibit B
Alternative Dispute Resolution
------------------------------
The parties recognize that bona fide disputes as to certain matters may arise
from time to time during the term of this Agreement which relate to either
party's rights and/or obligations. To have such a dispute resolved by this
Alternative Dispute Resolution ("ADR") provision, a party first must send
written notice of the dispute to the other party for attempted resolution by
good faith negotiations between their respective presidents (or their
equivalents) of the affected subsidiaries, divisions, or business units within
twenty-eight (28) days after such notice is received (all references to "days"
in this ADR provision are to calendar days).
If the matter has not been resolved within twenty-eight (28) days of the notice
of dispute, or if the parties fail to meet within such twenty-eight (28) days,
either party may initiate an ADR proceeding as provided herein. The parties
shall have the right to be represented by counsel in such a proceeding.
1. To begin an ADR proceeding, a party shall provide written notice to the
other party of the issues to be resolved by ADR. Within fourteen (14) days
after its receipt of such notice, the other party may, by written notice to
the party initiating the ADR, add additional issues to be resolved within
the same ADR.
2. Within twenty-one (21) days following receipt of the original ADR notice,
the parties shall select a mutually acceptable neutral to preside in the
resolution of any disputes in this ADR proceeding. If the parties are
unable to agree on a mutually acceptable neutral within such period, either
party may request the President of the CPR Institute for Dispute Resolution
("CPR"), 366 Madison Avenue, 14th Floor, New York, New York 10017, to
select a neutral pursuant to the following procedures:
<PAGE>
(a) The CPR shall submit to the parties a list of not less than five (5)
candidates within fourteen (14) days after receipt of the request,
along with a Curriculum Vitae for each candidate. No candidate shall
be an employee, director, or shareholder of either party or any of
their subsidiaries or affiliates.
(b) Such list shall include a statement of disclosure by each candidate of
any circumstances likely to affect his or her impartiality.
(c) Each party shall number the candidates in order of preference (with
the number one (1) signifying the greatest preference) and shall
deliver the list to the CPR within seven (7) days following receipt of
the list of candidates. If a party believes a conflict of interest
exists regarding any of the candidates, that party shall provide a
written explanation of the conflict to the CPR along with its list
showing its order of preference for the candidates. Any party failing
to return a list of preferences on time shall be deemed to have no
order of preference.
(d) If the parties collectively have identified fewer than three (3)
candidates deemed to have conflicts, the CPR immediately shall
designate as the neutral the candidate for whom the parties
collectively have indicated the greatest preference. If a tie should
result between two candidates, the CPR may designate either candidate.
If the parties collectively have identified three (3) or more
candidates deemed to have conflicts, the CPR shall review the
explanations regarding conflicts and, in its sole discretion, may
either (i) immediately designate as the neutral the candidate for whom
the parties collectively have indicated the greatest preference, or
(ii) issue a new list of not less than five (5) candidates, in which
case the procedures set forth in subparagraphs 2(a) - 2(d) shall be
repeated.
3. No earlier than twenty-eight (28) days or later than fifty-six (56) days
after selection, the neutral shall hold a hearing to resolve each of the
issues identified by the parties. The ADR proceeding shall take place at a
location agreed upon by the parties. If the parties cannot
<PAGE>
agree, the neutral shall designate a location other than the principal
place of business of either party or any of their subsidiaries or
affiliates.
4. At least seven (7) days prior to the hearing, each party shall submit the
following to the other party and the neutral:
(a) a copy of all exhibits on which such party intends to rely in any oral
or written presentation to the neutral;
(b) a list of any witnesses such party intends to call at the hearing, and
a short summary of the anticipated testimony of each witness;
(c) a proposed ruling on each issue to be resolved, together with a
request for a specific damage award or other remedy for each issue.
The proposed rulings and remedies shall not contain any recitation of
the facts or any legal arguments and shall not exceed one (1) page per
issue.
(d) a brief in support of such party's proposed rulings and remedies,
provided that the brief shall not exceed twenty (20) pages. This page
limitation shall apply regardless of the number of issues raised in
the ADR proceeding.
Except as expressly set forth in subparagraphs 4(a) - 4(d), no discovery
shall be required or permitted by any means, including depositions,
interrogatories, requests for admissions, or production of documents.
5. The hearing shall be conducted on two (2) consecutive days and shall be
governed by the following rules:
<PAGE>
(a) Each party shall be entitled to five (5) hours of hearing time to
present its case. The neutral shall determine whether each party has
had the five (5) hours to which it is entitled.
(b) Each party shall be entitled, but not required, to make an opening
statement, to present regular and rebuttal testimony, documents or
other evidence, to cross-examine witnesses, and to make a closing
argument. Cross-examination of witnesses shall occur immediately after
their direct testimony, and cross-examination time shall be charged
against the party conducting the cross-examination.
(c) The party initiating the ADR shall begin the hearing and, if it
chooses to make an opening statement, shall address not only issues it
raised but also any issues raised by the responding party. The
responding party, if it chooses to make an opening statement, also
shall address all issues raised in the ADR. Thereafter, the
presentation of regular and rebuttal testimony and documents, other
evidence, and closing arguments shall proceed in the same sequence.
(d) Except when testifying, witnesses shall be excluded from the hearing
until closing arguments.
(e) Settlement negotiations, including any statements made therein, shall
not be admissible under any circumstances. Affidavits prepared for
purposes of the ADR hearing also shall not be admissible. As to all
other matters, the neutral shall have sole discretion regarding the
admissibility of any evidence.
6. Within seven (7) days following completion of the hearing, each party may
submit to the other party and the neutral a post-hearing brief in support
of its proposed rulings and remedies, provided that such brief shall not
contain or discuss any new evidence and shall not exceed ten (10) pages.
This page limitation shall apply regardless of the number of issues raised
in the ADR proceeding.
<PAGE>
7. The neutral shall rule on each disputed issue within fourteen (14) days
following completion of the hearing. Such ruling shall adopt in its
entirety the proposed ruling and remedy of one of the parties on each
disputed issue but may adopt one party's proposed rulings and remedies on
some issues and the other party's proposed rulings and remedies on other
issues. The neutral shall not issue any written opinion or otherwise
explain the basis of the ruling.
8. The neutral shall be paid a reasonable fee plus expenses. These fees and
expenses, along with the reasonable legal fees and expenses of the
prevailing party (including all expert witness fees and expenses), the fees
and expenses of a court reporter, and any expenses for a hearing room,
shall be paid as follows:
(a) If the neutral rules in favor of one party on all disputed issues in
the ADR, the losing party shall pay 100% of such fees and expenses.
(b) If the neutral rules in favor of one party on some issues and the
other party on other issues, the neutral shall issue with the rulings
a written determination as to how such fees and expenses shall be
allocated between the parties. The neutral shall allocate fees and
expenses in a way that bears a reasonable relationship to the outcome
of the ADR, with the party prevailing on more issues, or on issues of
greater value or gravity, recovering a relatively larger share of its
legal fees and expenses.
9. The rulings of the neutral and the allocation of fees and expenses shall be
binding, non-reviewable, and non-appealable, and may be entered as a final
judgment in any court having jurisdiction.
10. Except as provided in paragraph 9 or as required by law, the existence of
the dispute, any settlement negotiations, the ADR hearing, any submissions
(including exhibits, testimony, proposed rulings, and briefs), and the
rulings shall be deemed Confidential Information. The neutral shall have
the authority to impose sanctions for unauthorized disclosure of
Confidential Information.
<PAGE>
11. All disputes referred to ADR, the statute of limitations, and the remedies
for any wrong that may be found, shall be governed by the laws of the State
of Illinois.
12. The neutral may not award punitive damages. The parties hereby waive the
right to punitive damages.
13. The hearings shall be conducted in the English language.
14. The parties shall not have ex parte communications with the neutral during
the pendancy of the ADR proceeding before such neutral.
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