Termination And Asset Sale And Purchase Agreement

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:


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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.


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(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


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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


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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).


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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


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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);


[...***...]


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.


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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


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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


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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:


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[...***...]


(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


...