EXHIBIT 10.22
TERMINATION AND SETTLEMENT AGREEMENT
This Termination and Settlement Agreement (the "TERMINATION AGREEMENT")
is entered into effective as of the 22nd day of December, 1999, by and between
Astra AB, a Swedish corporation ("ASTRA"), and Salix Pharmaceuticals, Inc., a
California corporation ("SALIX").
W I T N E S S E T H:
WHEREAS, Astra and Salix are parties to that certain Co-Participation
Agreement dated as of April 30, 1993 (the "CO-PARTICIPATION AGREEMENT"), as
amended from time to time in accordance with its terms or otherwise varied by
agreement between the parties, including, without limitation, Amendment No. 1 to
Co-Participation Agreement dated September 30, 1992, that certain letter
agreement dated October 16, 1998 and that certain letter agreement dated 21st
September, 1992 regarding Clause 6.6 of the Research and Development Agreement
dated 21st September 1992 between Astra and Glycyx Pharmaceuticals, Ltd. (all
such agreements and amendments with respect to the Co-Participation Agreement or
otherwise with respect to Balsalazide and/or products containing Balsalazide in
the United States are hereafter collectively referred to as the "AGREEMENTS"),
and all capitalized terms not otherwise defined herein are used as defined in
the Agreements;
WHEREAS, Salix has given Astra notice under Section 6.5 of the
Co-Participation Agreement that Salix has incurred actual costs in excess of the
total amount under Article 6.1 of the Co-Participation Agreement (US
$5,500,000), and that Salix is unwilling to incur additional expenses in excess
of such amount to complete the Project in accordance with the terms of the
Agreements;
WHEREAS, Astra is unwilling to make available additional funds to
complete the Project;
WHEREAS, under the terms of the Agreements, the Agreements will
consequently terminate;
WHEREAS, the parties hereto wish to clarify their respective rights and
obligations in connection with the termination of the Agreements, including the
provision of mutual releases of claims relating thereto;
NOW, THEREFORE, in consideration of the above mentioned premises, the
mutual covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Termination of the Agreements. The parties hereby agree that the
Agreements and any and all licenses and other rights granted by Salix to Astra
thereunder have terminated in their entirety, effective as of the date hereof;
provided, however that Astra's obligations of confidentiality and non-use set
forth in Section 20.1 of the Co-Participation Agreement shall survive for a
period of ten (10) years from the date hereof.
2. Transfer of Materials. Within ninety (90) days after the date
hereof, Astra shall, at no cost to Salix except as otherwise set forth in
Section 2(c):
(a) provide Salix access to, and one copy of, all information and
data of whatsoever nature developed by or on behalf of Astra
relating to Balsalazide or the Product (other than
correspondence between Salix and Astra) which Astra may have
in its possession or under its control including but not
limited to all scientific, medical and safety data, pricing
analyses, sales forecasts, marketing plans, market research
and other marketing information directly relating to
Balsalazide or the Product, provided that Astra shall be
entitled to delete information subject to applicable
confidentiality privileges and for protection of proprietary
information of Astra that is not related to the development,
formulation, manufacture, commercialization, sale or use of
Balsalazide or the Product;
(b) at the option of Salix, either destroy in a manner
satisfactory to Astra and Salix or return to Salix all Product
Information and confidential information provided by or on
behalf of Salix to Astra pursuant to or in connection with the
Agreements; provided, however, that the general counsel for
Astra may retain one copy of such confidential information in
such counsel's possession solely for archival purposes to
evidence the scope of Astra's confidentiality obligation; and
(c) devote sufficient resources (including personnel) during the
aforementioned ninety (90)-day period to ensure a smooth and
businesslike transfer of any and all such materials; provided
that Salix shall bear any of Astra's reasonable out-of-pocket
costs for travel, hotel and related costs directly incurred in
providing such assistance.
Following the aforementioned ninety (90)-day period, Astra shall forward to
Salix any materials, in the nature of those set forth above, subsequently
received or identified by Astra or its affiliates.
3. Payments. Within two (2) business days after the execution hereof,
Astra shall pay Salix by wire transfer of immediately available funds the sum of
One Million Dollars (US $1,000,000). Such wire transfer shall be made to the
Salix Pharmaceuticals, Inc. General Checking Account, c/o Bank of America,
Account No. 14936-04546,
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Routing No. 121 000 358. All payments made by Astra to Salix under this
Termination Agreement shall be made free and clear of, and shall not be reduced
or offset by any non-US. withholding taxes, which shall be the sole
responsibility of Astra. Astra shall make all such required payments and, upon
request, shall provide Salix with a certificate evidencing payment of any such
withholding tax. The payments set forth in this Section 3 shall be in full
satisfaction of all payment and other obligations of Astra to Salix, and of
Salix to Astra, relating to or arising out of, under, or in connection with the
Agreements, or their termination (except to the extent that such other
obligations specifically survive pursuant to this Termination Agreement).
4. Right to Compete. Subject to the terms of this Termination Agreement
and the Co-Participation Agreement with respect to the use of confidential
information, the parties hereby acknowledge and agree that nothing contained in
this Termination Agreement or the Agreements shall limit or prevent or hinder in
any manner the ability of either party to compete with the other party in the
United States or to pursue any and all activities in connection with the
development and/or commercialization of one or more products that may compete
with Balsalazide or the Product in the United States.
5. Mutual Release of Claims. Each party hereby releases the other
party, its predecessors, successors, assigns, and its present and former
officers, directors, partners, shareholders, employees, agents, parent
companies, affiliates and subsidiaries from any and all past, present and future
claims, demands, obligations, liabilities and causes of action of any kind or
nature, whether known or unknown, accrued or unaccrued (collectively, "CLAIMS")
whatsoever relating to or arising under, out of, or in connection with the
Agreements or their termination; provided, however, that neither party hereby
releases the other from any Claims arising under this Termination Agreement.
6. Covenant Not to Sue. Each party to this Termination Agreement
covenants and agrees not to commence, aid, prosecute or cause to be commenced or
prosecuted any action or other proceeding, based upon any claims, demands,
obligations, or causes of action relating to, arising under, out of, or in
connection with the matters subject to mutual release as set forth in Section 5,
and each party further covenants and agrees to hold harmless and indemnify the
other party in respect of all losses, claims, damages, liabilities, fees,
penalties or related costs or expenses (including, but not limited to, court
costs and attorneys' fees), suffered, sustained, incurred, or required to be
paid by such other party from or in connection with any such action or
proceeding.
7. Compromise Agreement. This Termination Agreement is, in part, a
compromise and settlement of claims and is not intended to be, nor shall be
construed as, any admission of liability or wrongdoing by any party hereto or
any other person or entity.
8. Authorization. Each party represents and warrants to the other that
(i) it has the full right and authority to enter into this Termination Agreement
and perform its obligations hereunder; (ii) it has not assigned, conveyed or
otherwise transferred any or all of such party's rights or obligations under the
Agreements; (iii) it is not under any
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obligation to any entity or person, contractual or otherwise, that is in
conflict with the terms hereof; and (iv) this Termination Agreement has been
duly authorized by all necessary corporate action of such party and is a legal,
valid and binding obligation of such party, enforceable against it in accordance
with the terms hereof.
9. Press Release; Disclosure. Promptly following the execution hereof,
Salix shall issue to major newswires a press release substantially in the form
of Exhibit A attached hereto, announcing the termination of the Agreements. No
other public disclosure about the content or termination of the Agreements shall
be made by either party without the prior written approval of the other party,
which approval shall not be unreasonably withheld or delayed; provided that
nothing herein contained shall preclude a party from disclosing information:
(a) which is contained in Exhibit A,
(b) which the parties agree in writing may be disclosed,
(c) which is in the public domain otherwise than as the result of
any breach of obligation of confidentiality by such party,
(d) which is required to be disclosed by law or by any regulatory
body or recognised stock-exchange, or
(e) which Salix wishes to disclose to any licensor, investor or
potential investor in Salix or any affiliate of Salix where
such third party shall have accepted obligations of
confidentiality in respect of the information disclosed.
Notwithstanding the foregoing, each party may publicly disclose without the
prior written approval of the other party that the Agreements were terminated
because Astra elected not to make available additional funds to complete the
Project.
10. Transfers. Astra shall in connection with this Termination
Agreement and in the future execute any agreements or instruments of assignment
or transfer reasonably requested by Salix relating to the transfer to Salix of
property developed by or on behalf of Astra, or its affiliates or assigns, which
is or was transferable to Salix under the terms of the Agreements or this
Termination Agreement.
11. Successors and Assigns. The provisions of this Termination
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
12. Entire Agreement. This Termination Agreement embodies the entire
agreement of the parties hereto with respect to the subject matter hereof, and
supersedes all prior agreements with respect thereto.
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13. Governing Law. This Termination Agreement shall be governed by and
construed in accordance with the laws of the State of New York, excluding any
choice of law rules which may direct the application of the law of any other
jurisdiction.
14. Counterparts. This Termination Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
15. No Waiver. Failure to insist on compliance with any term, covenant
or condition contained in this Termination Agreement shall not be deemed a
waiver of that term, covenant or condition, nor shall any waiver or
relinquishment of any right or power contained in this Termination Agreement at
any one time or more times be deemed a waiver or relinquishment of any right or
power at any other time or times.
16. Amendment. This Termination Agreement may not be modified or
terminated orally and no modification, termination or waiver shall be valid
unless in writing and signed by all of the parties hereto.
17. Notices. All notices or other communications which are required or
permitted hereunder shall be in writing in English and sufficient if delivered
personally, sent by telecopier (and promptly confirmed by personal delivery,
registered or certified mail or overnight courier), sent by nationally
recognized overnight courier or sent by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
If to Salix, to: Salix Pharmaceuticals, Inc.
7808 Hardwick Drive
Raleigh, NC 27615
Telecopier No.: 919-676-6859
ATTN: President
With a copy to: Salix Pharmaceuticals, Inc.
3600 West Bayshore, #205
Palo Alto, CA 94303
Telecopier No.: 650-856-1555
ATTN: Randy W. Hamilton
If to Astra, to: c/o AstraZeneca LP
725 Chesterbrook Blvd.
Wayne, PA 19087-5677
Telecopier No.: 610-644-0418
ATTN: Russell L. Gantt
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With a copy to: c/o AstraZeneca LP
1800 Concord Pike
P.O. Box 15438
Wilmington, DE 19850
Telecopier No.: 302-886-1578
ATTN: General Counsel
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Any such
communication shall be deemed to have been given when delivered if personally
delivered or sent by telecopier on a business day, on the business day after
dispatch if sent by nationally-recognized overnight courier and on the third
business day following the date of mailing if sent by mail.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Termination Agreement as of the date first set forth above.
ASTRA AB SALIX PHARMACEUTICALS, INC.
(publ)
By: _____________________________ By: _____________________________
Name: __________________________ Name: __________________________
Title: ___________________________ Title: ___________________________
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FOR IMMEDIATE RELEASE CONTACT: Robert P. Ruscher
650-849-5900
SALIX PHARMACEUTICALS, LTD. ANNOUNCES RETURN OF COLAZIDE(R)
MARKETING AND DISTRIBUTION RIGHTS FROM ASTRAZENECA
PALO ALTO, CA, DECEMBER 22, 1999 - Salix Pharmaceuticals, Ltd. (TSE: SLX ) today
announced the return to Salix of the marketing and distribution rights for
Colazide(R) (balsalazide disodium) previously held by AstraZeneca. Under prior
agreements, AstraZeneca had held marketing and distribution rights to the
product worldwide, excluding Italy, Spain, Portugal, Greece, Japan, Korea and
Taiwan.
AstraZeneca will continue to distribute the product in the United Kingdom,
Sweden and Denmark for an interim period while Salix pursues alternatives for
marketing and distribution in these countries. AstraZeneca will return to Salix
all rights, intellectual property and information relating to Colazide, and
future milestone payments from AstraZeneca will be terminated. AstraZeneca has
agreed to make a US$1 million payment to Salix, representing previously earned
research and development funding, and to make a loan to Salix of up to
US$500,000 under certain conditions.
"AstraZeneca has been a good partner throughout our relationship. Nevertheless,
we believe termination of the Colazide distribution arrangement presents an
unexpected opportunity for Salix," stated Robert Ruscher, President and Chief
Executive Officer of Salix. "We have regained the rights to Colazide throughout
most of the world, which opens new partnering possibilities for Salix."
As of December 15, 1999, Salix had cash, cash equivalents and short term
investments of approximately US$1,588,000. Salix believes that its cash
reserves, together with projected funds from product sales and corporate
partners, should be sufficient to satisfy the cash requirements of Salix's
operations through at least June 2000.
Salix Pharmaceuticals, Ltd. develops and markets prescription pharmaceutical
products for the treatment of gastrointestinal diseases. Salix's strategy is to
in-license proprietary therapeutic drugs with an existing database of positive,
late-stage clinical data in humans, complete the development and market these
products. Salix's lead product is Colazide, a treatment for ulcerative colitis.
The product was first approved by the United Kingdom Medicines Control Agency in
July 1997 as a treatment for acute ulcerative colitis and has since also been
approved for use in the maintenance of remission of ulcerative colitis. Colazide
has also been approved in Argentina, Austria, Belgium, Czech Republic, Denmark,
Italy, Luxembourg, Norway, Sweden and Switzerland. Salix submitted a New Drug
Application (NDA) to the United States FDA for the use of balsalazide disodium
as a treatment for acute ulcerative colitis and received an approvable letter
from the FDA in June 1998.
Additionally, Salix is in Phase III clinical development of rifaximin, a
broad-spectrum gastrointestinal specific antibiotic, licensed from Alfa
Wassermann, S.p.A., an Italian company. Rifaximin has been marketed in Italy by
Alfa Wassermann for several years and is used for several gastrointestinal
conditions including hepatic encephalopathy, infectious diarrhea and prophylaxis
prior to bowel surgery.
The statements in this press release that are not purely statements of
historical fact are forward-looking statements, and actual results may differ
materially from those anticipated. With respect to Salix, important factors that
could cause results to differ include risks associated with funding of
operations, product development and commercialization activities, and regulatory
decisions. These and other factors are described in more detail in Salix's
reports on Form 10-K, Form 10-Q and Form 8-K filed with the Securities and
Exchange Commission. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. Salix
assumes no obligation to update the information in this release.
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