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                                                                   EXHIBIT 10.46

                              TERMINATION AGREEMENT

        This TERMINATION AGREEMENT (the "Termination Agreement") is made as of
this 14th day of December 2000, by and between SONUS PHARMACEUTICALS, INC., a
Delaware corporation ("Sonus") and ABBOTT LABORATORIES, an Illinois corporation
("Abbott").

                                 R E C I T A L S

        A. Abbott and Sonus previously entered into that certain QW3600 Contrast
Agent Development and Supply Agreement dated May 6, 1993, as amended by (i) an
Amendment dated August 22, 1995, (ii) an Amendment 1 dated May 29, 1996, (iii)
Amendment 2 dated May 15, 1997 and (iv) a letter agreement dated February 3,
2000 (collectively, the "Supply Agreement").

        B. Abbott and Sonus desire to terminate the Supply Agreement and to set
forth herein all of the outstanding obligations of either party to the other.

        NOW, THEREFORE, in consideration of the foregoing and the mutual terms
and conditions hereinafter set forth, Sonus and Abbott agree as follows:

        1. TERMINATION OF SUPPLY AGREEMENT. The Supply Agreement is hereby
terminated effective upon the date hereof. Except as otherwise specifically
provided herein, neither party shall have any further duty, liability or
obligation to the other party in connection with the Supply Agreement.

        2. OWNERSHIP OF EQUIPMENT AND OTHER PERSONAL PROPERTY. Abbott shall
retain possession and full and complete title to all equipment, tooling and
other personal property relating to the development and manufacture of the
Product and/or the Trays (as such terms are defined in the Supply Agreement)
pursuant to the Supply Agreement, including without limitation all manufacturing
equipment, tooling, inventory, raw materials, work in process and materials and
supplies related thereto (except for the Product and Sonus raw materials to be
delivered to Sonus as provided in Section 3 below), and Sonus hereby confirms
that it has no right, title and interest in and to any such equipment, tooling,
inventory, raw materials, work in process or materials or supplies.

        3. OUTSTANDING OBLIGATIONS.

                (a) The outstanding obligations of Sonus to Abbott shall consist
solely of (i) the obligation of Sonus to pay Abbott Twenty Four Thousand Dollars
($24,000.00) pursuant to Abbott invoice number 319008 for labeling development;
(ii) the obligation of Sonus to pay Abbott for the Product in the amount of
Ninety Three Thousand Four Hundred Sixty Five Dollars and Forty Nine Cents
($93,465.49) in the quantities specified in Sonus purchase order 200427; and
(iii) the obligation of Sonus to pay Abbott Twenty Six Thousand Six Hundred
Seventy Six Dollars and Fifty Nine Cents ($26,676.59) for commodities purchased
pursuant to purchase order 200427, provided, however, that Abbott shall retain
possession and full and complete title to such commodities. Sonus shall pay to
Abbott Twenty Four Thousand Dollars ($24,000.00) pursuant to clause (i) above,
Ninety Three Thousand Four Hundred Sixty Five and Forty Nine Cents ($93,465.49)
pursuant to clause (ii)

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above, and Twenty Six Thousand Six Hundred Seventy Six Dollars and Fifty Nine
Cents ($26,676.59) pursuant to clause (iii) above within thirty (30) days
following delivery of the Product and Sonus raw materials pursuant to paragraph
3(b) below. Except as expressly provided above, Sonus shall have no further
duty, liability or obligation to Abbott.

                (b) The outstanding obligations of Abbott to Sonus shall consist
solely of the obligation of Abbott to deliver to Sonus (i) the Product referred
in clause (ii) of paragraph (a) above, and (ii) the DDFP and PEG Telomer B raw
materials on hand which were previously supplied by Sonus to Abbott. Abbott
shall deliver to Sonus such Product and Sonus raw materials at the Bothell,
Washington headquarters of Sonus promptly, but in any event within (30) days,
following execution and delivery of the executed Termination Agreement to
Abbott. Such delivery shall be F.O.B. Abbott's manufacturing site and Sonus
shall be responsible for all freight charges, risk of loss, or damage after
delivery by Abbott to the carrier at such F.O.B. point.

        4. MUTUAL RELEASE. Each of Abbott on behalf of itself and its
representatives, officers, directors, successors, assigns and agents on the one
hand, and Sonus on behalf of itself and its representatives, officers,
directors, successors, assigns and agents on the other hand, do hereby fully
release forever discharge the other party and its representatives, officers,
directors, successors, assigns and agents of and from any and all manner of
actions, suits, liens, debts, damages, claims, obligations, liabilities and
demands of every nature, kind and description whatsoever, whether known or
unknown and whether suspected or unsuspected, either at law, in equity or
otherwise, which such party has, has had or may have or may claim to have,
against the other party, its representatives, officers, directors, successors,
assigns or agents. The parties intend that the foregoing shall be a general
mutual release and shall extend to all claims which the other party does not
know of or suspect to exist in its favor. In connection therewith, each party
waives the benefits afforded by any statute or regulation in connection
therewith.

        5. GENERAL.

                (a) Each of the parties represents and warrant to the other
party that it has not assigned or transferred to any person, corporation or
other entity, any claim, liability or cause of action based on or arising out
of, or in connection with any matter, claim or cause of action which is being
released pursuant to the provisions of this Termination Agreement.

                (b) This Termination Agreement shall be binding upon, and shall
inure to the benefit of the parties hereto and their respective heirs,
successors, representatives and assigns.

                (c) This Termination Agreement shall be governed and construed
by the laws of the State of Illinois.

                (d) This Termination Agreement sets forth the entire agreement
between the parties with respect to the subject matter hereof and supercedes all
other agreements or understanding with respect to the subject matter hereof.

                (e) The terms of this Termination Agreement may be amended,
modified or eliminated only upon the mutual written agreement of the parties
hereto. The waiver by either party hereto of any breach of any of the terms or
provisions of this Agreement shall not be construed as a waiver of any
subsequent breach.

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                (f) Each of the parties of this Termination Agreement represents
and warrants that that the persons executing this Agreement are authorized and
empowered to enter and to execute this Agreement for and on behalf of such
party.

                (g) This Termination Agreement may be executed in one or more
counterparts, each of which shall be deemed an original all of which together
shall be deemed one in the same agreement.

        IN WITNESS WHEREOF, the undersigned have executed this Termination
Agreement as of the date herein first above written.

                                            SONUS PHARMACEUTICALS, INC.

                                            By: /s/ Michael A. Martino
                                               ---------------------------------
                                            Its: President and CEO

                                            ABBOTT LABORATORIES

                                            By: /s/ Christopher B. Begley
                                               ---------------------------------
                                            Its: Corporate Senior Vice President
                                                 President, Hospital Products
                                                 DivisionSPECIAL OFFICER RETIREE MEDICAL PLAN

SPECIAL OFFICER RETIREE MEDICAL PLAN

 

ARTICLE 1

Eligibility and Benefits

	
1.01
	
Purpose. The purpose of the Special Officer Retiree Medical Plan ("Plan") is to provide lifetime retiree medical benefits to eligible elected officers of Northrop Grumman Corporation ("the Company") and their spouses.

	
1.02
	
Eligibility. Eligibility for benefits under this Plan will be limited to those elected officers of the Company listed in Exhibit A. Officers may be added or removed from Exhibit A in accordance with the amendment provisions of the
Plan.

	
(a)
	
An elected officer listed in Exhibit A is a "Participant" under the Plan.

	
(b)
	
A Participant will become an "Eligible Participant" under the Plan if he or she has either five years of service as an elected officer or 30 years of total service with the Company and its affiliates.

	
1.03
	
Benefits. The Company will provide an Eligible Participant with a continuation of medical benefits.

	
(a)
	
The benefits will be provided for the life of the Eligible Participant and the life of his or her surviving spouse, if any. (The only spouse covered will be a surviving spouse who is married to the Eligible Participant both at the time of
termination of employment with the Company and its affiliates and at the time of the Eligible Participant's death.)

	
(b)
	
The benefits provided will be a continuation of the medical benefits the Eligible Participant was eligible to receive from the Company as of December 31, 1998. In particular, the following will remain frozen as of that date:

 

	
(1)
	
Participant contributions

 

	
(2)
	
Copayments

 

	
(3)
	
Deductibles

 

	
(4)
	
Medical benefit coverage

 

	
(c)
	
Following the death of the Eligible Participant or his or her spouse, the participant contributions, copayments and deductibles will be adjusted to what they would have been for the Eligible Participant for individual coverage as of
December 31, 1998.

	
(d)
	
The benefits under the Plan will be coordinated with and paid secondary to any benefits that the Eligible Participant or his or her spouse receives from another plan of the Company or another employer or from Medicare. (For this purpose,
Medicare benefits are deemed to include any benefits the Eligible Participant and his or her spouse would receive from Medicare if they made proper application for benefits.)

 
ARTICLE 2

General Provisions

	
2.01
	
Amendment and Plan Termination. The Company may amend or terminate the Plan with respect to any Participant only with the consent of the Participant or, after the Participant's death, with the consent of his or her spouse.
Otherwise, the Company may amend the Plan at any time.

	
2.02
	
Assignment of Benefits. An Eligible Participant or surviving spouse may not, either voluntarily or involuntarily, assign, anticipate, alienate, commute, sell, transfer, pledge or encumber any benefits to which he or she is or may
become entitled under the Plan, nor may Plan benefits be subject to attachment or garnishment by any of their creditors or to legal process.

	
2.03
	
Nonduplication of Benefits. This Section applies if, despite Section 2.02, with respect to any Eligible Participant (or his or her spouse), the Company is required to make payments under this Plan to a person or entity other than
the payees described in the Plan. In such a case, any coverage due the Participant (or his or her spouse) under the Plan will be reduced by the actuarial value of the coverage extended or payments made to such other person or entity.

	
2.04
	
Funding. Participants have the status of general unsecured creditors of the Company and the Plan constitutes a mere promise by the Company to make benefit payments in the future. Any funding of benefits under this Plan will be in
the Company's sole discretion.

	
2.05
	
Construction. The Company shall have full discretionary authority to determine eligibility and to construe and interpret the terms of the Plan, including the power to remedy possible ambiguities, inconsistencies or omissions.

	
2.06
	
Governing Law. This Plan shall be governed by the law of the State of California, except to the extent superseded by federal law.

	
2.07
	
Actions By Company. Any powers exercisable by the Company under the Plan shall be utilized by written resolution adopted by the Board of Directors of the Company or its delegate. The Board may, by written resolution, delegate any
of the Company's powers under the Plan and any such delegations may provide for subdelegations, also by written resolution.

 

 

THIRD AMENDMENT TO THE

SPECIAL OFFICER RETIREE MEDICAL PLAN

Effective December 20, 2000, Exhibit A is amended to read as follows:

 

EXHIBIT A

	

	
Eligible Officer
	
Election Date

	
 
	
K. Kresa
	
01/01/90

	
 
	
R. Molleur
	
02/04/91

	
 
	
N. Gibbs
	
06/01/91

	
 
	
M. Elkin
	
05/20/92

	
 
	
J. Roche
	
05/20/92

	
 
	
R. Waugh
	
11/18/92

	
 
	
R. Helm
	
12/15/93

	
 
	
R. Crosby
	
06/15/94

	
 
	
H. Anderson
	
12/21/94

	
 
	
A. Myers
	
12/21/94

	
 
	
J. Mullan
	
02/17/99

	
 
	
J. M. Hateley
	
01/01/00

	
 
	
R. O'Brien
	
08/16/00

	
 
	
W. B. Terry
	
08/16/00

	
 
	
R. B. Spiker
	
12/20/00

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