Document:

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                                                                   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
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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

* 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

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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:

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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

                  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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               (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
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          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;

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               (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
<PAGE>

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

                                       i
<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.

                                      ii
<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,

                                      iii
<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.

                                      iv
<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:

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          (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

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<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

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<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

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<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

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                                  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

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<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
     -------------------------------                 ----------------------

                                      18
<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.<PAGE>

                                EXHIBIT 10(13)
                  Business Loan Agreement between Registrant
             and Bank of America, Texas, N.A., dated June 28, 1996
<PAGE>

================================================================================

                            BUSINESS LOAN AGREEMENT
                          (RECEIVABLES AND INVENTORY)

                                    between

                         BANK OF AMERICA, TEXAS, N.A.

                                      and

                            AZTEC MANUFACTURING CO.

                                     dated

                                 28 June 1996

================================================================================
<PAGE>

                              TABLES OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                           Page
                                                                                                           ----
<S>                                                                                                        <C>
1.  DEFINITIONS.........................................................................................     1

2.  LOAN AMOUNTS AND TERMS..............................................................................     4
             2.1      Line of Credit Amount.............................................................     4
             2.2      Availability Period...............................................................     4
             2.3      Conditions to Each Extension of Credit............................................     4
             2.4      Repayment Terms...................................................................     4
             2.5      Letters of Credit.................................................................     4
             2.6      Term Loan.........................................................................     5
             2.7      Availability Period...............................................................     5
             2.8      Purpose...........................................................................     5
             2.9      Term Loan Repayment Terms; Prepayment.............................................     5
             2.10     Interest Rate.....................................................................     6
             2.11     Optional Interest Rates; Payment of Interest......................................     6
             2.12     Additional Costs; Acknowledgment of Prepayment Fees...............................     7
             2.13     Long Term Rate....................................................................     7
             2.14     Libor Rate........................................................................     8

3.  FEES, EXPENSES AND DEPOSITS.........................................................................    10
             3.2      Expenses..........................................................................    10
             3.3      Deposits Accounts.................................................................    10
             3.4      No Excess Fees....................................................................    11

4.  COLLATERAL..........................................................................................    11
             4.1      Personal Property.................................................................    11
             4.2      Personal Property Supporting Guaranty.............................................    11
             4.3      Additional Property Upon Default..................................................    11

5.  DISBURSEMENTS, PAYMENTS AND COSTS...................................................................    12
             5.1      Requests for Credit...............................................................    12
             5.2      Disbursements and Payments........................................................    12
             5.3      Direct Debit (Pre-Billing)........................................................    12
             5.4      Banking Days......................................................................    13
             5.5      Taxes.............................................................................    13
             5.6      Additional Costs..................................................................    13
             5.7      Interest Calculation..............................................................    14
             5.8      Default Rate......................................................................    14
             5.9      Overdrafts........................................................................    14

6.  CONDITIONS..........................................................................................    14
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                                        <C>
             6.1      Authorizations....................................................................    14
             6.2      Security Agreements...............................................................    14
             6.3      Evidence of Priority..............................................................    14
             6.4      Consent to Removal................................................................    14
             6.5      Insurance.........................................................................    15
             6.6      Environmental Questionnaire.......................................................    15
             6.7      Guaranty..........................................................................    15
             6.8      Legal Opinion.....................................................................    15
             6.9      Existence, Good Standing, and Foreign Qualification...............................    15
             6.10     Other Items.......................................................................    15

7.  REPRESENTATIONS AND WARRANTIES......................................................................    15
             7.1      Organization of Borrower..........................................................    15
             7.2      Authorization.....................................................................    15
             7.3      Enforceable Agreement.............................................................    15
             7.4      Good Standing.....................................................................    15
             7.5      No Conflicts......................................................................    16
             7.6      Financial Information.............................................................    16
             7.7      Lawsuits..........................................................................    16
             7.8      Collateral........................................................................    16
             7.9      Permits, Franchises...............................................................    16
             7.10     Other Obligations.................................................................    16
             7.11     Income Tax Returns................................................................    16
             7.12     No Event of Default...............................................................    16
             7.13     Merchantable Inventory............................................................    16
             7.14     ERISA Plans.......................................................................    17

8.  COVENANTS...........................................................................................    18
             8.1      Use of Proceeds...................................................................    18
             8.2      Financial Information.............................................................    18
             8.3      Quick Ratio.......................................................................    19
             8.4      Tangible Net Worth................................................................    19
             8.5      Debt to Tangible Net Worth........................................................    19
             8.6      Cash Flow Ratio...................................................................    19
             8.7      Other Debts.......................................................................    19
             8.8      Other Liens.......................................................................    20
             8.9      Capital Expenditures..............................................................    20
             8.10     Dividends.........................................................................    20
             8.11     Treasury Stock....................................................................    20
             8.12     Loans to Officers.................................................................    20
             8.13     Notices to Bank...................................................................    21
             8.14     Books and Records.................................................................    21
             8.15     Audits............................................................................    21
             8.16     Compliance with Laws..............................................................    21
             8.17     Maintenance of Properties.........................................................    21
             8.18     Preservation of Rights............................................................    21
</TABLE>

                                      ii
<PAGE>

<TABLE>
<S>                                                                                                        <C>
             8.19     Perfection of Liens...............................................................    21
             8.20     Cooperation.......................................................................    21
             8.21     Insurance.........................................................................    21
                               (a)     Insurance Covering Collateral....................................    21
                               (b)     General Business Insurance.......................................    22
                               (c)     Evidence of Insurance............................................    22
             8.22     Additional Negative Covenants.....................................................    22
             8.23     ERISA Plans.......................................................................    23

9.  HAZARDOUS WASTE INDEMNIFICATION.....................................................................    23
             9.1      ..................................................................................    23
    INDEMNIFICATION.....................................................................................    23
             9.2      Representation and Warranty Regarding Hazardous Substances........................    24
             9.3      Compliance Regarding Hazardous Substances.........................................    24
             9.4      Notices Regarding Hazardous Substances............................................    24
             9.5      Site Visits, Observations and Testing.............................................    24
             9.6      Continuation of Indemnity.........................................................    25

10. DEFAULT.............................................................................................    25
             10.1     Failure to Pay....................................................................    25
             10.2     Lien Priority.....................................................................    25
             10.3     False Information.................................................................    25
             10.4     Bankruptcy........................................................................    26
             10.5     Receivers.........................................................................    26
             10.6     Lawsuits..........................................................................    26
             10.7     Judgments.........................................................................    26
             10.8     Government Action.................................................................    26
             10.9     Material Adverse Change...........................................................    26
             10.10    Cross-default.....................................................................    26
             10.11    Default under Guaranty or Subordination Agreement.................................    26
             10.12    Other Bank Agreements.............................................................    26
             10.13    ERISA Plans.......................................................................    26
             10.14    Other Breach Under Agreement......................................................    27
             10.15    Change of Control.................................................................    27
             10.16    Change in Management..............................................................    27

11. ENFORCING THIS AGREEMENT; MISCELLANEOUS.............................................................    27
             11.1     GAAP..............................................................................    27
             11.2     Governing Law.....................................................................    27
             11.3     Successors and Assigns............................................................    27
             11.4     ARBITRATION.......................................................................    27
             11.5     Severability; Waivers.............................................................    29
             11.6     Costs.............................................................................    29
             11.7     Attorneys' Fees...................................................................    29
             11.8     Indemnification...................................................................    29
             11.9     Notices...........................................................................    29
</TABLE>

                                      iii
<PAGE>

<TABLE>
<S>                                                                                                        <C>
             11.10    Headings..........................................................................    29
             11.11    Counterparts......................................................................    29
             11.12    Usury Laws........................................................................    30
             11.13    NO ORAL AGREEMENTS................................................................    30
</TABLE>

                                      iv
<PAGE>

                                INDEX TO EXHIBITS
                                -----------------

         Exhibit A                                  Borrowing Certificate
         Exhibit B                                  Borrowing Base Certificate

                               INDEX TO SCHEDULES
                               ------------------

         Schedule 7.8                               Liens encumbering Collateral
         Schedule 8.7                               Existing Debt
         Schedule 8.8                               Existing Liens

                                      vii
<PAGE>

                            BUSINESS LOAN AGREEMENT
                          (RECEIVABLES AND INVENTORY)

     This Agreement ("Agreement") dated as of June 28, 1996, is between Bank of
                      ---------
America, Texas, N.A. (the "Bank") and Aztec Manufacturing Co. (the "Borrower").
                           ----                                     --------

1.   DEFINITIONS

In addition to the terms which are defined elsewhere in this Agreement, the
following terms have the meanings indicated for the purposes of this Agreement:

     1.1  "Borrowing Base" means the lesser of:
           --------------

          (1)  Ten Million Dollars ($10,000,000.00), or

          (2)  the sum of:

               (1) Eighty percent (80%) of the balance due on Acceptable
          Receivables, plus

               (2) Fifty percent (50%) of the value of Acceptable Inventory
          consisting of raw materials (excluding the inventory of zinc) and
          finished goods; plus

               (3) Sixty percent (60%) of the value of Acceptable Inventory
          consisting of raw zinc.

In determining the value of Acceptable Inventory to be included in the Borrowing
Base, the Bank will use the lowest of (i) a Pledging Party's cost as determined
in accordance with generally accepted accounting principles applied on a
consistent basis, (ii) a Pledging Party's estimated market value, or (iii) the
Bank's independent determination of the resale value of such inventory in such
quantities and on such terms as the Bank deems appropriate.

     1.2  "Acceptable Receivable" means an account receivable which satisfies
           ---------------------
the following requirements:

          (1) The account has resulted from the sale of goods or the performance
     of services by a Pledging Party in the ordinary course of the Pledging
     Party's business.

          (2) There are no conditions which must be satisfied before the
     Pledging Party is entitled to receive payment of the account.  Accounts
     arising from COD sales, consignments or guaranteed sales are not
     acceptable.

                                    Page 1
<PAGE>

          (3)  The debtor upon the account does not claim any defense to payment
     and has not asserted any counterclaims against the Pledging Party.

          (4)  The account represents a genuine obligation of the debtor for
     goods sold and accepted by the debtor, or for services performed for and
     accepted by the debtor.

          (5)  The Pledging Party has sent an invoice to the debtor in the
     amount of the account.

          (6)  The account is owned by the Pledging Party free of any title
     defects or any liens or interests of others except the security interest in
     favor of the Bank.

          (7)  The debtor upon the account is not any of the following:

               (1) an employee, affiliate, parent or subsidiary of any Pledging
          Party, or an entity which has common officers or directors with any
          Pledging Party.

               (2) the United States government or any agency or department of
          the United States government unless the Bank agrees in writing to
          accept the account and the Pledging Party complies with the procedures
          in the Federal Assignment of Claims Act of 1940 with respect to the
          account.

               (3) any state, county, city, town or municipality unless no law
          or contractual provision exists restricting the applicable Pledging
          Party's right to assign the applicable account or the applicable
          Pledging Party has complied with  the requirements of such law or
          contractual provision permitting the assignment to the Bank.

               (4) any person or entity located in a foreign country unless the
          account is supported by a letter of credit issued by a bank acceptable
          to the Bank.

               (5) any person or entity to whom the Pledging Party is obligated
          for goods purchased by the Pledging Party or for services performed
          for the Pledging Party.  This will not exclude accounts upon which any
          such debtor is obligated to the extent that the accounts exceed the
          amount of the Pledging Party's obligation to such debtor.

          (8) The account is not in default.  An account will be considered in
     default if any of the following occur:

                                    Page 2
<PAGE>

              (1) The account is not paid within the ninety (90) day period
          starting on its invoice date;

              (2) The debtor obligated upon the account suspends business,
          makes a general assignment for the benefit of creditors, or fails to
          pay its debts generally as they come due; or

              (3) Any petition is filed by or against the debtor obligated upon
          the account under any bankruptcy law or any other law or laws for the
          relief of debtors;

          (9) The account, when added to all other accounts that are obligations
     of the same debtor, does not cause that debtor's total obligations to all
     Pledging Parties to exceed 20% of the balance due on all of the Pledging
     Parties accounts, but if it does cause the debtor's total obligations to
     the Pledging Parties to exceed such 20%, only the amount of excess shall be
     excluded from the "Acceptable Receivables".
                        ----------------------

          (10) The account is not the obligation of a debtor who is in default
     (as defined above) on 25% or more of the accounts upon which such debtor is
     obligated, such 25% calculated based on the dollar amount of all such
     accounts.

          (11) The account does not arise from the sale of goods which remain in
     a Pledging Party's possession or under a Pledging Party's control.

          (12) The account does not arise from the sale of minerals (including
     oil and gas) at the wellhead or minehead.

          (13) The account is not evidenced by a promissory note or chattel
     paper.

     1.3  "Acceptable Inventory" means inventory which satisfies the following
           --------------------
requirements:

          (1) The inventory is owned by a Pledging Party free of any title
     defects or any liens or interests of others except the security interest in
     favor of the Bank.

          (2) The inventory is permanently located at locations which a Pledging
     Party has disclosed to the Bank and which are acceptable to the Bank.  If
     the inventory is covered by a negotiable document of title (such as a
     warehouse receipt) that document must be delivered to the Bank.  Inventory
     which is in transit is not acceptable unless it is covered by a commercial
     letter of credit and the seller of the inventory is required to present
     shipping or title documents as a condition to obtaining payment.

                                    Page 3
<PAGE>

          (3) The inventory is held for sale in the ordinary course of a
     Pledging Party business and is of good and merchantable quality.  Inventory
     which is obsolete, unsalable, damaged, defective or discontinued or which
     has been returned by the buyer, is not acceptable.  Display items and
     packing and shipping materials are not acceptable.

          (4) The inventory is not placed on consignment.

          (5) The inventory is otherwise acceptable to the Bank.

     1.4  "Pledging Party" means Borrower and each of its subsidiaries who has
           --------------
executed a security agreement in favor of Bank pledging to the Bank such
subsidiaries accounts, inventory, equipment and other related assets.

2.   LOAN AMOUNTS AND TERMS

     2.1  Line of Credit Amount.
          ---------------------

          (1) During the availability period described below, the Bank will
     provide a line of credit to the Borrower.  The amount of the line of credit
     is equal to the amount of the Borrowing Base.

          (2) This is a revolving line of credit for advances with a within line
     facility for letters of credit.  During the availability period, the
     Borrower may repay principal amounts and reborrow them.

          (3) Each advance must be for at least One Hundred Thousand Dollars
     ($100,000.00) or an integral multiple thereof, or for the amount of the
     remaining available line of credit, if less.

          (4) The Borrower agrees not to permit the outstanding principal
     balance of the line of credit plus the outstanding amounts of any letters
     of credit, including amounts drawn on letters of credit and not yet
     reimbursed, to exceed the Borrowing Base.  If on any day such outstandings
     exceed the Borrowing Base, then within five (5) days of such day the
     Borrower will pay the excess to the Bank.  The Bank may apply payments
     received from the Borrower under this Paragraph to the obligations of the
     Borrower to the Bank in the order and the manner as the Bank, in its
     discretion, may determine.

     2.2  Availability Period.  The line of credit is available between the date
          -------------------
of this Agreement and July 1, 1999 (the "Expiration Date") unless the Borrower
                                         ---------------
is in default.

     2.3  Conditions to Each Extension of Credit.  Before each extension of
          --------------------------------------
credit under the line of credit, including the first, the Borrower will deliver
a Borrowing Certificate in the form of Exhibit A hereto completed in a manner
satisfactory to the Bank by

                                    Page 4
<PAGE>

telecopy at the telecopy number set forth on the signature pages hereto.

     2.4  Repayment Terms.  The Borrower will repay in full all principal and
          ---------------
any unpaid interest or other charges outstanding under this line of credit no
later than the Expiration Date.

     2.5  Letters of Credit.  This line of credit may be used for financing
          -----------------
standby letters of credit with a maximum maturity not to extend beyond the
Expiration Date.  The amount of the letters of credit outstanding at any one
time (including amounts drawn on letters of credit and not yet reimbursed) may
not exceed Seven Hundred Fifty Thousand Dollars ($750,000.00).  The Borrower
agrees:

          (1) any sum drawn under a letter of credit may, at the option of the
     Bank, be added to the principal amount outstanding under the line of credit
     pursuant to this Agreement.  Such amount will bear interest and be due as
     described elsewhere in this Agreement;

          (2) if there is a default under this Agreement, to immediately prepay
     and make the Bank whole for any outstanding letters of credit;

          (3) the issuance of any letter of credit and any amendment to a letter
     of credit is subject to the Bank's written approval and must be in form and
     content satisfactory to the Bank and in favor of a beneficiary.

          (4) to sign the Bank's form Application and Agreement for Standby
     Letter of Credit in connection with and as a condition to the issuance of
     each letter of credit;

          (5) to pay any issuance and/or other fees that the Bank notifies the
     Borrower will be charged for issuing and processing letters of credit for
     the Borrower;

          (6) to allow the Bank to automatically charge its checking account for
     applicable fees, discounts, and other charges arising or accrued in respect
     of the Letters of Credit; and

          (7) to pay the Bank a non-refundable fee equal to 1% per annum of the
     outstanding undrawn amount of each standby letter of credit, payable
     quarterly in advance, calculated on the basis of the face amount
     outstanding on the day the fee is calculated.

     2.6  Term Loan.  The Bank agrees to provide a term loan to the Borrower in
          ---------
the amount of Ten Million Dollars ($10,000,000.00) (the "Term Commitment").
                                                         ---------------

                                    Page 5
<PAGE>

     2.7  Availability Period.  The Term Commitment is available in one
          -------------------
disbursement from the Bank between the date of this Agreement and June 30, 1996.

     2.8  Purpose.  The term loan shall be used to refinance existing
          -------
indebtedness, to finance capital expenditures previously made and for working
capital.

     2.9  Term Loan Repayment Terms; Prepayment.
          -------------------------------------

          (1) The Borrower will repay the principal amount of the term loan in
     seventy-one (71) successive monthly installments of One Hundred Thirty-
     Eight Thousand Eight Hundred Eighty-Nine Dollars ($138,889.00) starting
     August 1, 1996.  On July 1, 2002, the Borrower will repay the remaining
     principal balance of the term loan.
          (2) The Borrower may prepay the term loan in full or in part at any
     time in an amount not less than One Hundred Thousand Dollars ($100,000.00)
     or an integral multiple thereof.  The prepayment will be applied to the
     most remote installment of principal due under this Agreement.

     2.10 Interest Rate.  Unless the Borrower elects an optional interest rate
          -------------
as described below, the interest rate for the loans made hereunder is the lesser
of (a) the maximum lawful rate of interest permitted under applicable usury
laws, now or hereafter enacted (the "Maximum Rate") or (b) the rate that is
                                     ------------
equal to the Bank's Reference Rate.  Notwithstanding the foregoing, if at any
time the Reference Rate shall exceed the Maximum Rate and thereafter the
Reference Rate shall become less than the Maximum Rate, the rate of interest
payable shall be the Maximum Rate until the Bank shall have received the amount
of interest it otherwise would have received if the interest payable had not
been limited by the Maximum Rate during the period of time the Reference Rate
exceeded the Maximum Rate.  The "Reference Rate" is the rate of interest
                                 --------------
publicly announced from time to time by the Bank in Irving, Texas, as its
Reference Rate.  The Reference Rate is set by the Bank based on various factors,
including the Bank's costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans.  The
Bank may price loans to its customers at, above, or below the Reference Rate.
Any change in the Reference Rate shall take effect at the opening of business on
the day specified in the public announcement of a change in the Bank's Reference
Rate.  Borrower and Bank agree that Tex. Rev. Civ. Stat. Ann. art. 5069 Ch. 15
(which regulates certain revolving loan accounts and revolving tri-party
accounts) shall not apply to the line of credit under this Agreement.  To the
extent that the line of credit under this Agreement is deemed an open end
account as such term is defined in Article 5069-1.01(f) of the Texas Revised
Civil Statutes, as amended, the Bank retains the right to modify the interest
rate in accordance with applicable law.  Borrower represents and warrants to
Bank and to all other owners and holders of any indebtedness evidenced hereby
that all

                                    Page 6
<PAGE>

loans evidenced by this Agreement are for business, commercial or other similar
purpose and not primarily for personal, family, household or agricultural use,
as such terms are used or defined in Texas Revised Civil Statutes, Article 5069-
1.04, Texas Credit Code and Regulation Z promulgated by the Board of Governors
of the Federal Reserve System and under Titles I and V of the Consumer Credit
Protection Act. In no event shall the provisions of Tex. Rev. Civ. Stat. Ann.
arts. 5069-2.01 through 5069-8.06, or 5069-15.01 through 5069-15.11, be
applicable to the loans evidenced hereby. To the extent that Texas law
determines the maximum lawful rate of interest, such rate shall be determined by
utilizing the indicated rate (weekly) ceiling from time to time in effect
pursuant to Tex. Rev. Civ. Stat. Ann. art. 5069-1.04, as amended.

     2.11 Optional Interest Rates; Payment of Interest.  Instead of the
          --------------------------------------------
Reference Rate, the Borrower may elect to have all or portions of each loan bear
interest at the rate(s) described below during an interest period agreed to by
the Bank and the Borrower; provided, however, that the Borrower shall not have
                           --------  -------
the option or right to elect to have all or any portion of a loan bear interest
at the rate described below when such rate exceeds the Maximum Rate.  Each
interest rate is a rate per year.  Interest (calculated based on the Reference
Rate or at the optional rates described below) will be paid on the first day of
each month commencing August 1, 1996 and on the last day of each interest
period.  At the end of any interest period, the interest rate will revert to the
Reference Rate, unless the Borrower has designated another optional interest
rate for the portion.

     2.12 Additional Costs; Acknowledgment of Prepayment Fees.  The Borrower
          ---------------------------------------------------
acknowledges that prepayment of all or any portion of the advances bearing
interest at an optional interest rate may result in the Bank incurring
additional costs, expenses and/or liabilities.  The Borrower therefore agrees to
pay the prepayment fees described herein if all or any portion of the optional
interest rate advances are prepaid.  The Borrower further acknowledges that the
Bank's willingness to offer an optional interest rate to the Borrower is
sufficient and independent consideration for this agreement to pay the fee.

     2.13 Long Term Rate.  The Borrower may elect to have all or portions of the
          --------------
principal balance of the term loan bear interest at a rate equal to the lesser
of (a) the Maximum Rate or (b) the Long Term Rate, subject to the following
requirements:

          (1) The interest period during which the Long Term Rate will be in
     effect will be for the remaining term of the term loan.

          (2) The "Long Term Rate" means a fixed interest rate equal to the
                   --------------
     Bank's Cost of Funds Rate in existence at the time the Long Term Rate is
     selected plus one and one-quarter percent (1.25%).  "Cost of Funds Rate"
                                                          ------------------
     means the rate then quoted by the Bank at

                                    Page 7
<PAGE>

     which the Bank can acquire United States dollars in any domestic market for
     a period equal to the applicable interest period and in an amount of the
     term loan subject thereto, adjusted for such reserves as the Bank may deem
     appropriate.

          (3) Each Long Term Rate portion will be for an amount not less than
     Two Hundred Fifty Thousand Dollars ($250,000.00).

          (4) Any portion of the term loan bearing interest at the Long Term
     Rate will not be converted to a different rate during the applicable
     interest period.

          (5) The Borrower may prepay the Long Term Rate portion in whole or in
     part in the minimum amount of One Hundred Thousand Dollars ($100,000.00).
     The Borrower will give the Bank irrevocable written notice of the
     Borrower's intention to make the prepayment, specifying the date and amount
     of the prepayment.  The notice must be received by the Bank at least 5
     banking days in advance of the prepayment.  All prepayments of principal on
     the Long Term Rate portion will be applied on the most remote principal
     installment or installments of the term loan then unpaid.

          (6) Each prepayment of a Long Term Rate portion will be accompanied by
     payment of all accrued interest on the amount of the prepayment and a
     prepayment fee  (as calculated by the Bank in its discretion) to be equal
     to the present value of the amount (if any) by which:

              (1) the additional interest which would have been payable on the
          amount prepaid had it not been prepaid exceeds

              (2) the amount of interest which would accrue on the amount paid
          if it were reinvested from the date of prepayment through its original
          maturity at a  then prevailing rate equal to the interest rate yield
          on like term U.S. Government Treasury securities determined by the
          Bank based on information from either the Telerate or Reuters
          information services, The Wall Street Journal, or other information
                                -----------------------
          sources the Bank deems appropriate.

     The Bank is under no obligation to actually reinvest any prepayment.

          (7) If at any time during any applicable interest period the Long Term
     Rate shall exceed the Maximum Rate and thereafter the Long Term Rate shall
     become less than the Maximum Rate, the rate of interest payable shall be
     the Maximum Rate until the Bank shall have received the amount of interest
     it otherwise would have received if the interest

                                    Page 8
<PAGE>

     payable had not been limited by the Maximum Rate during the period of time
     the Long Term Rate exceeded the Maximum Rate.

     2.14 Libor Rate.  The Borrower may elect to have all or portions of the
          ----------
principal balance of either loan bear interest at the rate equal to the lesser
of (i) the Maximum Rate or (ii) the Libor Rate plus (i) one percent (1%) with
respect to the line of credit or (ii) one and one-quarter percent (1.25%) with
respect to the term loan (the "Eurodollar Rate"), subject to the following
                               ---------------
requirements:

          (1) The interest period during which the Eurodollar Rate will be in
     effect will be (i) 1, 2, 3 or 6 months with respect to the line of credit
     or (ii) 1, 2, 3, 6 or 12 months with respect to the term loan.  The last
     day of the interest period will be determined by the Bank using the
     practices of the London interbank market.

          (2) Each Eurodollar Rate portion under a loan will be for an amount
     not less than Five Hundred Thousand Dollars ($500,000.00) or an integral
     multiple thereof.

          (3) The Borrower shall irrevocably request a Eurodollar Rate portion
     no later than 9:00 a.m. San Francisco time two (2) banking days before the
     commencement of the interest period.

          (4) The "LIBOR Rate" means the interest rate determined by the
                   ----------
     following formula, rounded upward to the nearest 1/100 of one percent.
     (All amounts in the calculation will be determined by the Bank as of the
     first day of the interest period.)

                         LIBOR Rate =           London Rate
                                          ---------------------------
                                          (1.00 - Reserve Percentage)
               Where,

               (1) "London Rate" means the interest rate (rounded upward to the
                    -----------
          nearest 1/16th of one percent) at which the Bank's London Branch,
          London, Great Britain, would offer U.S. dollar deposits for the
          applicable interest period to other major banks in the London
          interbank market at approximately 11:00 a.m. London time two (2)
          banking days prior to the commencement of the interest period.

               (2) "Reserve Percentage" means the total of the maximum reserve
                    ------------------
          percentages for determining the reserves to be maintained by member
          banks of the Federal Reserve System for Eurocurrency Liabilities, as
          defined in Federal Reserve Board Regulation D, rounded upward to the
          nearest 1/100 of one percent.  The percentage will be expressed as a
          decimal, and will include, but not be

                                    Page 9
<PAGE>

          limited to, marginal, emergency, supplemental, special, and other
          reserve percentages.

          (5)  The Borrower may not elect an Eurodollar Rate with respect to any
     portion of the principal balance of either loan which is scheduled to be
     repaid before the last day of the applicable interest period.

          (6)  Any portion of the principal balance of a loan already bearing
     interest at the Eurodollar Rate will not be converted to a different rate
     during its interest period.

          (7)  Each prepayment of an Eurodollar Rate portion will be accompanied
     by the amount of accrued interest on the amount prepaid, and a prepayment
     fee equal to the amount (if any) by which

               (1) the additional interest which would have been payable on the
          amount prepaid had it not been paid until the last day of the interest
          period, exceeds

               (2) the interest which would have been recoverable by the Bank by
          placing the amount prepaid on deposit in the London interbank market
          for a period starting on the date on which it was prepaid and ending
          on the last day of the interest period for such portion.

          (8)  The Bank will have no obligation to accept an election for an
     Eurodollar Rate portion if any of the following described events has
     occurred and is continuing:

               (1) Dollar deposits in the principal amount, and for periods
          equal to the interest period, of an Eurodollar Rate portion are not
          available in the London interbank market; or

               (2) The Eurodollar Rate does not accurately reflect the cost of
          an Eurodollar Rate portion.

          (9)  If at any time during any applicable interest period the
     Eurodollar Rate shall exceed the Maximum Rate and thereafter the Eurodollar
     Rate shall become less than the Maximum Rate, the rate of interest payable
     shall be the Maximum Rate until the Bank shall have received the amount of
     interest it otherwise would have received if the interest payable had not
     been limited by the Maximum Rate during the period of time the Eurodollar
     Rate exceeded the Maximum Rate.

3.   FEES, EXPENSES AND DEPOSITS

     3.1  Unused commitment fee.  Subject to the provisions of Section 11.12
          ---------------------
hereof, the Borrower agrees to pay a fee on any difference between Ten Million
Dollars ($10,000,000) and the amount

                                    Page 10
<PAGE>

of the line of credit it actually uses, determined by the average loan balance
maintained during the specified period. The fee will be calculated at one-
quarter of one percent (0.25%) per year. This fee is due on October 1, 1996 and
on the first day of each following January, April, July and October until the
Expiration Date.

     3.2  Expenses.
          --------

          (1) The Borrower agrees to repay the Bank within ten (10) days of the
     receipt of the Bank's written notice for expenses that include, but are not
     limited to, filing, recording and search fees, appraisal fees, title report
     fees, documentation fees, and any other similar fees.  The Bank's written
     notice shall be accompanied by documentation evidencing the amount and
     nature of such expenses.

          (2) The Borrower agrees to reimburse the Bank for any expenses it
     incurs in the preparation of this Agreement and any agreement or instrument
     required by this Agreement.  Expenses include, but are not limited to,
     reasonable attorneys' fees (not to exceed $35,000.00 for the initial
     closing of the transaction contemplated hereby and the initial preparation
     of this Agreement) plus out-of-pocket costs and expenses incurred by the
     Bank's attorneys.

          (3) The Borrower agrees to reimburse the Bank for the cost of periodic
     audits of the collateral securing this Agreement; provided that, prior to
     the occurrence of a default, such audits are not conducted more than once a
     year and the costs of such audits do not exceed $2,500 plus all out-of-
     pocket expenses of the Bank.  The audits may be performed by employees of
     the Bank or by independent auditors.

     3.3  Deposits Accounts.   The Borrower acknowledges that the interest rates
          -----------------
and other fees provided by the Bank to the Borrower hereunder have been provided
to the Borrower based on the Bank's understanding that by December 1, 1996, the
Borrower and each Guarantor (as hereafter defined in Section 4.2) have agreed to
move all of their deposit accounts to the Bank. Borrower and Guarantor
acknowledge that but for such agreement, the rates and fees changed hereunder
would be higher.  If by December 1, 1996 the deposit accounts of Borrower and
the Guarantors are not held with the Bank, the Borrower acknowledges that the
Bank may automatically and with 5 days written notice to Borrower, increase the
interest rates and fees hereunder to an amount that will compensate the Bank for
the fact that such deposit accounts are not held at the Bank.

     3.4  No Excess Fees.  Notwithstanding anything to the contrary in this
          --------------
Section 3, in no event shall any sums payable under this Section 3 (to the
extent, if any, constituting interest under any applicable laws), together with
all amounts constituting interest

                                    Page 11
<PAGE>

under applicable laws and payable in connection with the credit evidenced
hereby, exceed the Maximum Rate or the maximum amount of interest permitted to
be charged, taken, reserved, received or contracted for under applicable usury
laws.

4.   COLLATERAL

     4.1  Personal Property.  The Borrower's obligations to the Bank under this
          -----------------
Agreement will be secured by all equipment, fixtures, inventory, accounts,
receivables and related assets the Borrower now owns or will own in the future,
as further defined in a security agreement executed by the Borrower.  In
addition, all collateral securing this Agreement shall also secure all other
present and future obligations of the Borrower to the Bank.  All collateral
securing any other present or future obligations of the Borrower to the Bank
shall also secure this Agreement.

     4.2  Personal Property Supporting Guaranty.  The obligations of Aztec
          -------------------------------------
Industries, Inc., Aztec Industries, Inc. - Moss Point, Automatic Processing,
Incorporated, The Calvert Company, Inc., Gulf Coast Galvanizing, Inc., Arkgalv,
Inc., Arbor-Crowley, Inc., Aztec Group Company, Aztec Holdings, Inc., Aztec
Manufacturing Partnership, Ltd., Aztec Manufacturing-Waskom Partnership, Ltd.,
Rig-A-Lite Partnership, Ltd., Atkinson Industries, Inc., and Arizona
Galvanizing, Inc. (the "Guarantors") to the Bank will be secured by all
                        ----------
equipment, fixtures, inventory, accounts, receivables and related assets the
Guarantors now own or will own in the future, as further defined in the security
agreement executed by the Guarantors.

     4.3  Additional Property Upon Default.  If a default (as described in
          --------------------------------
Section 10) or any event that with the giving of notice or lapse of time or both
would be such a default occurs, within twenty (20) days of the request of the
Bank, Borrower shall grant liens and security interest (and cause each Guarantor
to grant liens and security interest) to Bank to secure all present and future
obligations of the Borrower and Guarantors, respectively, in all real and
personal property of Borrower and each Guarantor in which the Bank does not
already have a lien pursuant to such documentation as the Bank may request
(including, without limitation, deeds of trust, security agreements, pledge
agreements, and financing statements) and, in connection with the foregoing,
Borrower shall, and shall cause each Guarantor to, provide such other
documentation as the Bank may reasonably require including surveys,
environmental audits, title insurance policies, exception documents, lien
waivers or subordinations and appraisals.

5.   DISBURSEMENTS, PAYMENTS AND COSTS

     5.1  Requests for Credit.  Each request for an extension of credit will be
          -------------------
made in writing by means of a Borrowing Certificate in the form of Exhibit A
hereto.

                                    Page 12
<PAGE>

     5.2  Disbursements and Payments.  Each disbursement by the Bank and each
          --------------------------
payment by the Borrower will be:

          (1) made at the Bank's branch (or other location) selected by the Bank
     from time to time;

          (2) made for the account of the Bank's branch selected by the Bank
     from time to time;

          (3) made in immediately available funds, or such other type of funds
     selected by the Bank; and

          (4) evidenced by records kept by the Bank.  In addition, the Bank may,
     at its discretion, require the Borrower to sign one or more promissory
     notes.

     5.3  Direct Debit (Pre-Billing).
          --------------------------

          (a) The Borrower agrees that the Bank will debit the Borrower's
     deposit account number 2605100154 (the "Designated Account") on the date
                                             ------------------
     each payment of principal, interest or any fees from the Borrower become
     due (the "Due Date").  If the Due Date is not a banking day, the Designated
               --------
     account will be debited on the next banking day.

          (b) Approximately 15 days prior to each Due Date, the Bank will mail
     to the Borrower a statement of the amounts that will be due on that Due
     Date (the "Billed Amount").  The calculation will be made on the assumption
                -------------
     that no new extensions of credit or payments will be made between the date
     of the billing statement and the Due Date, and that there will be no
     changes in the application interest rate.

          (c) The Bank will debit the Designated Account for the Billed Amount,
     regardless of the actual amount due on that date (the "Accrued Amount").
                                                            --------------
     If the Billed Amount debited to the Designated Account differs from the
     Accrued Amount, the discrepancy will be treated as follows:

               (i)  If the Billed Amount is less than the Accrued Amount, the
          Billed Amount for the following Due Date will be increased by the
          amount of the discrepancy. The Borrower will not be in default by
          reason of any such discrepancy.

               (ii) If the Billed Amount is more than the Accrued Amount, the
          Billed Amount for the following Due Date will be decreased by the
          amount of the discrepancy.

          Regardless of any such discrepancy, interest will continue to accrue
     based on the actual amount of principal

                                    Page 13
<PAGE>

     outstanding without compounding. The Bank will not pay the Borrower
     interest on any overpayment.

          (d) The Borrower will maintain sufficient funds in the Designated
     Account to cover each debit.  If there are insufficient funds in the
     Designated Account on the date the Bank enters any debit authorized by this
     Agreement, the debit will be reversed.

     5.4  Banking Days.  Unless otherwise provided in this Agreement, a banking
          ------------
day is a day other than a Saturday or a Sunday on which the Bank is open for
business in Texas.  For amounts bearing interest at a Eurodollar Rate (if any),
a banking day is a day other than a Saturday or a Sunday on which the Bank is
open for business in Texas and Bank of America, National Trust and Savings
Association is open for business in California and dealing in the London
interbank market for dollar deposits.  All payments and disbursements which
would be due on a day which is not a banking day will be due on the next banking
day.  All payments received on a day which is not a banking day will be applied
to the credit on the next banking day.

     5.5  Taxes.  The Borrower will not deduct any taxes from any payments it
          -----
makes to the Bank.  If any government authority imposes any taxes on any
payments made by the Borrower, the Borrower will pay the taxes and will also pay
to the Bank, at the time interest is paid, any additional amount which the Bank
specifies as necessary to preserve the after-tax yield the Bank would have
received if such taxes had not been imposed.  Upon request by the Bank, the
Borrower will confirm that it has paid the taxes by giving the Bank official tax
receipts (or notarized copies) within 30 days after the due date.  However, the
Borrower will not pay the Bank's net income taxes.

     5.6  Additional Costs.  Subject to the provisions of Section 11.12 hereof,
          ----------------
the Borrower will pay the Bank, on demand, for the Bank's costs or losses
arising from any statute or regulation, or any request or requirement of a
regulatory agency which is applicable to all national banks or a class of all
national banks.  The costs and losses will be allocated to the loan in a manner
determined by the Bank, using any reasonable method.  The costs include the
following:

          (1) any reserve or deposit requirements; and

          (2) any capital requirements relating to the Bank's assets and
     commitments for credit.

     Notwithstanding the foregoing, (A) the Bank shall notify the Borrower after
(i) an event has occurred which resulted in it incurring any such costs or
losses and (ii) the Bank has determined to charge Borrower for such costs or
losses, (B) Borrower will have no obligation to pay the Bank any such costs or
losses which arose

                                    Page 14
<PAGE>

for periods prior to the date which is thirty (30) days prior to the date on
which the Borrower received the notice from the Bank, and (C) in no event shall
any sum payable under this Section 5.7 (to the extent, if any, constituting
interest under applicable laws), together with all amounts constituting interest
under applicable laws and payable in connection with the credit evidenced
hereby, exceed the Maximum Rate or the maximum amount permitted to be charged,
taken, reserved, received or contracted for by any applicable usury laws.

     5.7  Interest Calculation.  Except as otherwise stated in this Agreement,
          --------------------
all interest and fees, if any, will be computed on the basis of a 360-day year
and the actual number of days elapsed.  This results in more interest or a
higher fee than if a 365-day year is used.

     5.8  Default Rate.  Upon the occurrence and during the continuation of any
          ------------
default under this Agreement, advances under this Agreement will, at the option
of the Bank, bear interest at the lesser of (a) the Maximum Rate or (b) a rate
per annum which is two (2) percentage points higher than the Reference Rate (the
"Default Rate").
 ------------

     5.9  Overdrafts.  At the Bank's sole option in each instance, the Bank may
          ----------
make advances under this Agreement to prevent or cover an overdraft on any
account of the Borrower with the Bank.  Each such advance will accrue interest
from the date of the advance or the date on which the account is overdrawn,
whichever occurs first, at the Reference Rate.

6.   CONDITIONS

     The Bank must receive the following items, in form and content acceptable
to the Bank, before it is required to extend any credit to the Borrower under
this Agreement:

     6.1  Authorizations.  Evidence that the execution, delivery and performance
          --------------
by the Borrower and each Guarantor of this Agreement and any instrument or
agreement required under this Agreement have been duly authorized.

     6.2  Security Agreements.  Signed original security agreements,
          -------------------
assignments, financing statements and fixture filings (together with collateral
in which the Bank requires a possessory security interest), which the Bank
requires.

     6.3  Evidence of Priority.  Evidence that security interests and liens in
          --------------------
favor of the Bank are valid, enforceable, and prior to all others' rights and
interests, except those the Bank consents to in writing; provided that, except
as provided in the security agreements executed by the Borrower and Guarantors,
no title documents for motor vehicles need to show the Bank's interests.

                                    Page 15
<PAGE>

     6.4  Consent to Removal.  For any personal property collateral located on
          ------------------
real property which is subject to a mortgage or deed of trust or which is not
owned by the Borrower, a Consent to Removal from the owner of the real property
and the holder of any mortgage or deed of trust must be received in a form
acceptable to the Bank.

     6.5  Insurance.  Evidence of insurance coverage, as required in the
          ---------
"Covenants" section of this Agreement.

     6.6  Environmental Questionnaire.  A completed Bank form Environmental
          ---------------------------
Questionnaire and Disclosure Statement.

     6.7  Guaranty.  A Guaranty signed by each of the Guarantors, in a form
          --------
acceptable to the Bank.

     6.8  Legal Opinion.  A written opinion from the Borrower's legal counsel,
          -------------
covering such matters as the Bank's legal counsel, Jenkens & Gilchrist, a
Professional Corporation, may require.  The legal counsel and the terms of the
opinion must be acceptable to the Bank.

     6.9  Existence, Good Standing, and Foreign Qualification.  Certificates of
          ---------------------------------------------------
existence, good standing, and foreign qualification for the Borrower and each
Guarantor from its state of incorporation or organization and from any other
state in which the Borrower or such Guarantor is required to qualify to conduct
its business.

     6.10 Other Items.  Any other items that the Bank, or its legal counsel may
          -----------
reasonably request.

7.   REPRESENTATIONS AND WARRANTIES

     When the Borrower signs this Agreement, and until the Bank is repaid in
full, the Borrower makes the following representations and warranties and the
representations and warranties contained in Section 9 hereof.  Each request for
an extension of credit constitutes a renewed representation:

     7.1  Organization of Borrower.  The Borrower is a corporation duly
          ------------------------
incorporated and validly existing under the laws of the state of its
incorporation.

     7.2  Authorization.  This Agreement, and any instrument or agreement
          -------------
required hereunder, are within the Borrower's powers, have been duly authorized,
and do not conflict with any of its organizational papers.

     7.3  Enforceable Agreement.  This Agreement is a legal, valid and binding
          ---------------------
agreement of the Borrower, enforceable against the Borrower in accordance with
its terms, and any instrument or agreement required hereunder, when executed and
delivered, will be similarly legal, valid, binding and enforceable.

                                    Page 16
<PAGE>

     7.4  Good Standing.  In each state in which the Borrower does business, it
          -------------
is properly licensed, in good standing, and, where required, in compliance with
fictitious name statutes.

     7.5  No Conflicts.  This Agreement does not conflict with any law,
          ------------
agreement, or obligation by which the Borrower is bound.

     7.6  Financial Information.  All financial and other information that has
          ---------------------
been or will be supplied to the Bank, including the Borrower's financial
statement dated as of February 29, 1996, is:

          (1) sufficiently complete to give the Bank accurate knowledge of the
     Borrower's (and each Guarantor's) financial condition.

          (2) in form and content required by the Bank.

          (3) in compliance with all government regulations that apply.

Since the date of the financial statement specified above, there has been no
material adverse change in the assets or the financial condition of the Borrower
or any Guarantor.

     7.7  Lawsuits.  There is no lawsuit, tax claim or other dispute pending or
          --------
threatened against the Borrower which, if lost, would impair the Borrower's
financial condition or ability to repay the loan.

     7.8  Collateral.  All collateral required in this Agreement is owned by the
          ----------
grantor of the security interest free of any title defects or any liens or
interests of others, except those which are listed on Schedule 7.8 hereto.

     7.9  Permits, Franchises.  The Borrower possesses all permits, memberships,
          -------------------
franchises, contracts and licenses required and all trademark rights, trade name
rights, patent rights and fictitious name rights necessary to enable it to
conduct the business in which it is now engaged.

     7.10 Other Obligations.  The Borrower is not in default on any obligation
          -----------------
for borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation.

     7.11 Income Tax Returns.  The Borrower has no knowledge of any pending
          ------------------
assessments or adjustments of its income tax for any year.

     7.12 No Event of Default.  There is no set of circumstances and no event
          -------------------
has occurred which is, or with notice or lapse of time or both would be, a
default under this Agreement and each

                                    Page 17
<PAGE>

representation or warranty given by Borrower and each Guarantor in connection
with this Agreement is true and correct.

     7.13 Merchantable Inventory.  All inventory which is included in the
          ----------------------
Borrowing Base is of good and merchantable quality and free from material
defects.

     7.14 ERISA Plans.
          -----------

          (1) The Borrower has fulfilled its obligations, if any, under the
     minimum funding standards of ERISA and the Code with respect to each Plan
     and is in compliance in all material respects with the presently applicable
     provisions of ERISA and the Code, and has not incurred any liability with
     respect to any Plan under Title IV of ERISA.

          (2) No reportable event has occurred under Section 4043(b) of ERISA
     for which the PBGC requires 30 day notice.

          (3) No action by the Borrower to terminate or withdraw from any Plan
     has been taken and no notice of intent to terminate a Plan has been filed
     under Section 4041 of ERISA.

          (4) No proceeding has been commenced with respect to a Plan under
     Section 4042 of ERISA, and no event has occurred or condition exists which
     might constitute grounds for the commencement of such a proceeding.

          (5) The following terms have the meanings indicated for purposes of
     this Agreement:

               (1) "Code" means the Internal Revenue Code of 1986, as amended
                    ----
          from time to time.

               (2) "ERISA" means the Employee Retirement Income Security Act of
                    -----
          1974, as amended from time to time.

               (3) "PBGC" means the Pension Benefit Guaranty Corporation
                    ----
          established pursuant to Subtitle A of Title IV of ERISA.

               (4) "Plan" means any employee pension benefit plan maintained or
                    ----
          contributed to by the Borrower and insured by the Pension Benefit
          Guaranty Corporation under Title IV of ERISA.

     7.15 Solvency.  Borrower and each Guarantor, both individually and on a
          --------
consolidated basis: (a) owns and will own assets the fair saleable value of
which are (i) greater than the total amount of its liabilities (including
contingent liabilities) and (ii) greater than the amount that will be required
to pay probable liabilities of then existing debts as they become absolute and
matured considering all financing alternatives and potential asset sales

                                    Page 18
<PAGE>

reasonably available to it; (b) has capital that is not unreasonably small in
relation to its business as presently conducted; and (c) does not intend to
incur and does not believe that it will incur debts beyond its ability to pay
such debts as they become due.

     7.16 Benefit Received.  Borrower and each Guarantor will receive reasonably
          ----------------
equivalent value in exchange for the obligations incurred under the documents to
which each is a party.  Borrower and each Guarantor will derive substantial
benefit from the consummation of the transaction contemplated hereby in an
amount at least equal to its obligations under such documents to which it is a
party.

8.   COVENANTS

     The Borrower agrees, so long as credit is available under this Agreement
and until the Bank is repaid in full:

     8.1  Use of Proceeds.  To use the proceeds of the line of credit only for
          ---------------
the general working capital needs of the Borrower and its subsidiaries and to
finance acquisitions permitted hereby.

     8.2  Financial Information.  To provide the following financial information
          ---------------------
and statements and such additional information as requested by the Bank from
time to time:

          (1) Within ninety (90) days of the Borrower's fiscal year end, the
     Borrower's and its subsidiaries' annual financial statements.  These
     financial statements must be audited (with an unqualified opinion) by a
     Certified Public Accounting firm acceptable to the Bank.  The audited
     statements shall be prepared on a consolidated basis.  Within ninety (90)
     days of the Borrower's fiscal year end, the Borrower's internally prepared
     annual financial statement on a consolidated and consolidating basis.

          (2) Within forty-five days of the period's end, the Borrower's and its
     subsidiaries' quarterly financial statements.  These financial statements
     may be prepared by the Borrower.  The statements shall be prepared on a
     consolidated basis.

          (3) Copies of the Borrower's Form 10-K Annual Report, Form 10-Q
     Quarterly Report and Form 8-K current Report within 10 days after the date
     of filing with the Securities and Exchange Commission.

          (4) A borrowing base certificate in substantially the form of Exhibit
     B hereto setting forth the respective amounts of Acceptable Receivables and
     Acceptable Inventory as of the last day of each month within thirty (30)
     days after each month end and statements showing an aging and
     reconciliation

                                    Page 19
<PAGE>

     of the Borrower's receivables within thirty (30) days after the end of each
     month.

          (5) Annual operating forecasts of the Borrower and its subsidiaries
     prepared on a consolidated and consolidating basis and delivered to the
     Bank by May 31 of each year.

          (6) Promptly upon the Bank's request, such other statements, lists of
     property and accounts, budgets, forecasts or reports as to the Borrower and
     as to each Guarantor as the Bank may request.

     8.3  Quick Ratio.  To maintain on a consolidated basis a ratio of Quick
          -----------
Assets to Current Liabilities of at least 0.5:1.0.  As used herein, the term
"Quick assets" means cash, short-term cash investments, net trade receivables,
-------------
and marketable securities not classified as long-term investments.  As used
herein, the term "Current Liabilities" means current liabilities plus any amount
                  -------------------
of the line of credit which would otherwise not be included in current
liabilities.

     8.4  Tangible Net Worth.  To maintain on a consolidated basis Tangible Net
          ------------------
Worth equal to at least Sixteen Million Dollars ($16,000,000.00).  As used
herein, the term "Tangible Net Worth" means the gross book value of the
                  ------------------
Borrower's assets (excluding goodwill, patents, trademarks, trade names,
organization expense, treasury stock, unamortized debt discount and expense,
deferred research and development costs, deferred marketing expenses, and other
like intangibles, and monies due from affiliates, officers, directors or
shareholders of the Borrower)  less total liabilities, including but not limited
to accrued and deferred income taxes, and any reserves against assets.

     8.5  Debt to Tangible Net Worth.  To maintain on a consolidated basis a
          --------------------------
ratio of Total Liabilities to Tangible Net Worth not exceeding 1.75:1.0.  As
used herein, the term "Total Liabilities" means the sum of current liabilities
                       -----------------
plus long term liabilities.

     8.6  Cash Flow Ratio.  To maintain on a consolidated basis a Cash Flow
          ---------------
Ratio of at least 1.6:1.0.  As used herein, the term "Cash Flow Ratio" means the
                                                      ---------------
ratio of Cash Flow to the current portion of long term debt plus interest
expense.  "Cash Flow" is defined as net income from operations (before
           ---------
extraordinary or nonrecurring gains or losses), after taxes, plus depreciation,
amortization and other non-cash charges, plus interest expense, minus dividends.
This ratio will be calculated at the end of each fiscal quarter, using the
results of that quarter and each of the 3 immediately preceding quarters.  The
current portion of long term debt will be measured as of the last day of the
fiscal quarter preceding the date of calculation.

     8.7  Other Debts.  Not, and not permit any Guarantor, to have outstanding
          -----------
or incur any direct or contingent debts or lease

                                    Page 20
<PAGE>

obligations (other than those to the Bank), or become liable for the debts of
others without the Bank's written consent. This does not prohibit:

          (1) Acquiring goods, supplies, or merchandise on normal trade credit.

          (2) Endorsing negotiable instruments received in the usual course of
     business.

          (3) Obtaining surety bonds in the usual course of business.

          (4) Existing debt and lease obligations disclosed on Schedule 8.7.

          (5) Additional debts and lease obligations for the acquisition of
     fixed or capital assets, not to exceed One Million Dollars ($1,000,000.00)
     in the aggregate outstanding at any time.

          (6) Debt arising from lawsuits and judgments that do not otherwise
     constitute a default hereunder.

     8.8  Other Liens.  Not, and not permit any Guarantor, to create, assume, or
          -----------
allow any security interest or lien (including judicial liens) on property the
Borrower or any Guarantor now or later owns, except:

          (1) Security interests and liens in favor of the Bank.

          (2) Liens for taxes not yet due.

          (3) Liens outstanding on the date of this Agreement disclosed on
     Schedule 8.8 hereto.

          (4) Liens granted as purchase money security interests in equipment
     acquired after the date of this Agreement, provided that the obligations
     incurred otherwise meet the requirements of Section 8.7(e) and such liens
     only encumber the equipment acquired.

     8.9  Capital Expenditures.  Not, and not permit any Guarantor, without the
          --------------------
Bank's prior written consent, to spend or incur obligations (including the total
amount of any capital leases) for more than Four Million Dollars ($4,000,000.00)
in the aggregate for Borrower and all Guarantors in any single fiscal year to
acquire fixed or capital assets, excluding from such aggregate amount any such
expenditures financed pursuant to Section 8.7(d).

     8.10 Dividends.  Not to declare or pay any dividends on any of its shares,
          ---------
except (a) annual dividends not in excess of fifty percent (50%) of net income
for any year as long as no default

                                    Page 21
<PAGE>

exists or would result therefrom, or (b) payable in capital stock of the
Borrower.

     8.11 Treasury Stock.  Not to purchase, redeem, or otherwise acquire for
          --------------
value any of its shares, or create any sinking fund in relation thereto;
provided that, Borrower may purchase or otherwise acquire for value its shares
for an aggregate purchase price not to exceed in any fiscal year the sum of (a)
Two Hundred Fifty Thousand Dollars ($250,000.00) plus (b) the proceeds of any
key man life insurance policy provided for the purpose of funding the repurchase
of its shares.

     8.12 Loans to Officers.  Not, and not permit any Guarantor, to make any
          -----------------
loans, advances or other extensions of credit to any of its executives,
officers, directors, shareholders or affiliates (or any relatives of any of the
foregoing) in an aggregate amount exceeding Two Hundred Fifty Thousand Dollars
($250,000) for Borrower and the Guarantors in the aggregate for the entire term
of this Agreement; provided that, in addition to the foregoing, Borrower may
make advances to the Guarantors from proceeds of the line of credit hereunder in
an amount for each Guarantor not to exceed at anytime outstanding the value of
such Guarantor's assets included in the Borrowing Base.

     8.13 Notices to Bank.  To promptly notify the Bank in writing of:
          ---------------

          (1) any lawsuit containing a claim or seeking damages over One Hundred
     Thousand Dollars ($100,000) against the Borrower or any Guarantor;

          (2) any substantial dispute between the Borrower or any Guarantor and
     any government authority;

          (3) any failure to comply with or default under this Agreement; and

          (4) any material adverse change in the Borrower's or any Guarantor's
     financial condition or operations.

     8.14 Books and Records.  To maintain adequate books and records.
          -----------------

     8.15 Audits.  To allow the Bank and its agents to inspect the Borrower's
          ------
and the Guarantors' properties and examine, audit and make copies of books and
records at any reasonable time.  If any of the Borrower's or any Guarantor's
properties, books or records are in the possession of a third party, the
Borrower authorizes the third party to permit the Bank or its agents to have
access to perform inspections or audits and to respond to the Bank's requests
for information concerning such properties, books and records.

                                    Page 22
<PAGE>

     8.16 Compliance with Laws.  To comply with the laws (including any
          --------------------
fictitious name statute), regulations, and orders of any government body with
authority over the Borrower's or any Guarantor's business.

     8.17 Maintenance of Properties.  To make any repairs, renewals, or
          -------------------------
replacements to keep the Borrower's or any Guarantor's properties in good
working condition.

     8.18 Preservation of Rights.  To maintain and preserve all rights,
          ----------------------
privileges, and franchises the Borrower or any Guarantor now has.

     8.19 Perfection of Liens.  To help the Bank perfect and protect its
          -------------------
security interests and liens, and reimburse it for related costs it incurs to
protect its security interests and liens.

     8.20 Cooperation.  To take any action reasonably requested by the Bank to
          -----------
carry out the intent of this Agreement.

     8.21 Insurance.
          ---------

          (1) Insurance Covering Collateral.  To maintain, and cause the
              -----------------------------
     Guarantor's to maintain, all risk property damage insurance policies
     covering the tangible property comprising the collateral.  Each insurance
     policy must be for the full replacement cost of the collateral and include
     a replacement cost endorsement.  The insurance must be issued by an
     insurance company acceptable to the Bank and must include a lender's loss
     payable endorsement in favor of the Bank in a form acceptable to the Bank.

          (2) General Business Insurance.  To maintain, and to cause each
              --------------------------
     Guarantor to maintain, insurance as is usual and customary for similarly
     situated businesses in the Borrower's industry.

          (3) Evidence of Insurance.  Upon the request of the Bank, to deliver
              ---------------------
     to the Bank a copy of each insurance policy, or, if permitted by the Bank,
     a certificate of insurance listing all insurance in force.

     8.22 Additional Negative Covenants.  Not to, and not to permit any
          -----------------------------
Guarantor to, without the Bank's written consent (which consent will not be
unreasonably withheld, with such reasonableness to be determined based on the
Bank's business perspective):

          (1) engage in any business activities substantially different from the
     Borrower's or any Guarantor's present business.

          (2) liquidate or dissolve the Borrower's or any Guarantor's business.

                                    Page 23
<PAGE>

          (3) enter into any consolidation, merger, pool, joint venture,
     syndicate, or other combination or purchase or acquire all or substantially
     all the assets of another business, except for such transaction if (i) the
     Borrower or applicable Guarantor is the surviving entity; (ii) no default
     exists hereunder or would result therefrom and before, and after giving
     effect to, the proposed acquisition, the representations and warranties set
     forth herein shall be true and correct; (iii) Borrower delivers to the Bank
     an Environmental Questionnaire and Disclosure Statement in form and
     disclosing such information as is acceptable to the Bank relating to the
     assets or entity to be acquired prior to the acquisition; and (iv) the
     aggregate cash consideration paid in connection with all such transactions
     does not exceed Five Million Dollars ($5,000,000) for Borrower and the
     Guarantors in the aggregate during the entire term of this Agreement.

          (4) sell, lease, or otherwise dispose of all or a substantial part of
     the Borrower's or any Guarantor's business or the Borrower's or any
     Guarantor's assets except assets with a fair market value that does not
     exceed in the aggregate for Borrower and all Guarantors an amount equal to
     Five Hundred Thousand Dollars ($500,000.00) in any calendar year; provided,
     however, the Borrower's sale of its Houston real property and related
     assets will not be included for purposes of the Five Hundred Thousand
     Dollars ($500,000.00) limitation and such property may be sold or otherwise
     disposed of free of the restrictions set forth in this paragraph.

          (5) sell or otherwise dispose of any assets for less than fair market
     value or enter into any sale and leaseback agreement covering any of its
     fixed or capital assets.

          (6) voluntarily suspend its business for more than three (3) days in
     any thirty (30) day period.

          (7) make any capital contribution to or investment in, or purchase or
     own any stock, bonds, notes, debentures, or other securities of any entity,
     except:

               (1) readily marketable direct obligations of the United States of
          America;

               (2) fully insured certificates of deposit with maturities of one
          year or less from the date of acquisition of any commercial bank
          operating in the United States having capital and surplus in excess of
          $50,000,000.00;

               (3) other debt securities if at the time of purchase such debt
          securities are rated in one of the two highest rating categories of
          Standard and Poor's Corporation or Moody's Investors Service; and

                                    Page 24
<PAGE>

               (4) the Borrower may repurchase its own shares in accordance with
          the permissions set out in Section 8.11.

     8.23 ERISA Plans.  As relates to the Borrower or any Guarantor, to give
          -----------
prompt written notice to the Bank of:

          (1) The occurrence of any reportable event under Section 4043(b) of
     ERISA for which the PBGC requires 30 day notice.

          (2) Any action by the Borrower to terminate or withdraw from a Plan or
     the filing of any notice of intent to terminate under Section 4041 of
     ERISA.

          (3) Any notice of noncompliance made with respect to a Plan under
     Section 4041(b) of ERISA.

          (4) The commencement of any proceeding with respect to a Plan under
     Section 4042 of ERISA.

9.   HAZARDOUS WASTE INDEMNIFICATION.

     9.1  INDEMNIFICATION.  THE BORROWER WILL INDEMNIFY AND HOLD HARMLESS THE
          ---------------
BANK FROM ANY LOSS OR LIABILITY DIRECTLY OR INDIRECTLY ARISING OUT OF THE USE,
GENERATION, MANUFACTURE, PRODUCTION, STORAGE, RELEASE, THREATENED RELEASE,
DISCHARGE, DISPOSAL OR PRESENCE OF A HAZARDOUS SUBSTANCE.  THIS INDEMNITY WILL
APPLY WHETHER THE HAZARDOUS SUBSTANCE IS ON, UNDER OR ABOUT THE BORROWER'S OR
ANY GUARANTOR'S PROPERTY OR OPERATIONS OR PROPERTY LEASED TO THE BORROWER OR ANY
GUARANTOR.  THE INDEMNITY INCLUDES BUT IS NOT LIMITED TO ATTORNEYS' FEES
(INCLUDING THE REASONABLE ESTIMATE OF THE ALLOCATED COST OF IN-HOUSE COUNSEL AND
STAFF).  THE INDEMNITY EXTENDS TO THE BANK, ITS PARENT, SUBSIDIARIES AND ALL OF
THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SUCCESSORS, ATTORNEYS AND ASSIGNS.
FOR PURPOSES OF THIS AGREEMENT, THE TERM "HAZARDOUS SUBSTANCES" MEANS ANY
SUBSTANCE WHICH IS OR BECOMES DESIGNATED AS "HAZARDOUS" OR "TOXIC" UNDER ANY
FEDERAL, STATE OR LOCAL LAW.  THIS INDEMNITY WILL SURVIVE REPAYMENT OF THE
BORROWER'S OBLIGATIONS TO THE BANK.

     9.2  Representation and Warranty Regarding Hazardous Substances.  Prior to
          ----------------------------------------------------------
entering into this Agreement, the Borrower has researched and inquired into the
previous uses and ownership of all property constituting its or its
subsidiaries' real property.  Based on that due diligence, the Borrower
represents and warrants that to the best of its knowledge, no hazardous
substance has been disposed of or released or otherwise exists in, on, under or
onto the Borrower's or any of its subsidiaries' real property, except as the
Borrower has disclosed to the Bank in writing pursuant to the Environmental
Questionnaire and Disclosure Statement prepared by the Borrower.

     9.3  Compliance Regarding Hazardous Substances.  The Borrower and each of
          -----------------------------------------
its subsidiaries has complied, and will comply with all

                                    Page 25
<PAGE>

laws, regulations and ordinances governing or applicable to hazardous substances
as well as the recommendations of any qualified environmental engineer or other
expert which apply or pertain to such real property or the operations of the
Borrower and its subsidiaries.

     9.4  Notices Regarding Hazardous Substances.  Until full repayment of the
          --------------------------------------
loan, the Borrower will promptly notify the Bank if it knows, suspects or
believes there may be any hazardous substance in or around its or any of its
subsidiaries' real property, or in the soil, groundwater or soil vapor on or
under such real property, or that the Borrower, any subsidiary or any of their
real property may be subject to any threatened or pending investigation by any
governmental agency under any law, regulation or ordinance pertaining to any
hazardous substance.

     9.5  Site Visits, Observations and Testing.  The Bank and its agents and
          -------------------------------------
representatives will have the right at any reasonable time to enter and visit
the Borrower's or any of its subsidiaries' real property and any other place
where any property is located for the purposes of observing such real property,
taking and removing soil or groundwater samples, and conducting tests on any
part of the real property.  The Bank is under no duty, however, to visit or
observe such real property or to conduct tests, and any such acts by the Bank
will be solely for the purposes of protecting the Bank's security and preserving
the Bank's rights under this Agreement.  No site visit, observation or testing
by the Bank will result in a waiver of any default of the Borrower or impose any
liability on the Bank.  In no event will any site visit, observation or testing
by the Bank be a representation that hazardous substances are or are not present
in, on or under any real property, or that there has been or will be compliance
with any law, regulation or ordinance pertaining to hazardous substances or any
other applicable governmental law. Neither the Borrower, its subsidiaries, nor
any other party is entitled to rely on any site visit, observation or testing by
the Bank.  The Bank owes no duty of care to protect the Borrower, its
subsidiaries, or any other party against, or to inform the Borrower, its
subsidiaries, or any other party of, any hazardous substances or any other
adverse condition affecting the real property.  The Bank will disclose to the
Borrower upon its request, any report or findings made as a result of, or in
connection with, any site visit, observation or testing by any third party
engaged by the Bank unless such reports or findings are protected by attorney
client privilege.  As provided above, the Borrower shall have no right to rely
on any such report or finding and the Bank will not incur any liability to
Borrower or any other party for an matter disclosed in such report or finding.
In each instance, the Bank will give the Borrower or such subsidiary reasonable
notice before entering its real property or any other place the Bank is
permitted to enter under this Paragraph.  The Bank will make reasonable efforts
to avoid interfering with the Borrower's and its subsidiaries' use of their
respective real property or any other property in exercising any rights provided
in this paragraph.

                                    Page 26
<PAGE>

     9.6  Continuation of Indemnity.  The Borrower's indemnity obligations to
          -------------------------
the Bank under Section 9.1, shall survive termination of this Agreement and
repayment of the Borrower's obligations to the Bank under this Agreement, and
shall also survive as unsecured obligations after any acquisition by the Bank of
the collateral securing this Agreement, including any real property or any part
of it, by foreclosure or any other means.

10.  DEFAULT

     If any of the following events occur, the Bank may do one or more of the
following: (i) declare the Borrower in default, (ii) stop making any additional
credit available to the Borrower, (iii) exercise any and all rights and remedies
as may be available to the Bank under the terms of any collateral documents,
security instruments, debt instruments or any other document or instrument
executed in connection herewith or in any way related hereto, (iv) exercise any
and all rights and remedies as may be available to the Bank at law or in equity,
and (v) declare the entire debt created and evidenced hereby to be immediately
due and payable in full, whereupon the entire unpaid principal indebtedness
evidenced hereby, and all accrued unpaid interest thereon, shall at once mature
and become due and payable without presentment, demand, protest, grace or notice
of any kind (including, without limitation, notice of intent to accelerate,
notice of acceleration or notice of protest), all of which are hereby severally
waived by the Borrower.  If a bankruptcy petition is filed with respect to the
Borrower, the entire debt outstanding under this Agreement will automatically be
immediately due.

     10.1 Failure to Pay.  The Borrower fails to make a principal or interest
          --------------
payment under this Agreement when due or shall fail to make any other payment
under this Agreement within ten (10) days of the date due.

     10.2 Lien Priority.  The Bank fails to have an enforceable first lien
          -------------
(except for any prior liens set forth on Schedule 7.8) on or security interest
in any property given as security for the loans to be advanced to the Borrower
pursuant to this Agreement.

     10.3 False Information.  The Borrower or any Guarantor has given the Bank
          -----------------
materially false or materially misleading information or representations.

     10.4 Bankruptcy.  The Borrower or any Guarantor files a bankruptcy
          ----------
petition, a bankruptcy petition is filed against the Borrower or any Guarantor,
or the Borrower or any Guarantor makes a general assignment for the benefit of
creditors.  The default will be deemed cured if any bankruptcy petition filed
against the Borrower or any Guarantor is dismissed within a period of sixty (60)
days after the filing; provided, however, that the Bank will not be obligated to
extend any additional credit to the Borrower during that period.

                                    Page 27
<PAGE>

     10.5 Receivers.  A receiver or similar official is appointed for the
          ---------
Borrower's or any Guarantor's business, or the business is terminated.

     10.6 Lawsuits.  Any lawsuit or lawsuits are filed on behalf of one or more
          --------
trade creditors against the Borrower or any Guarantor in an aggregate amount of
Five Hundred Thousand Dollars ($500,000) or more in excess of any insurance
coverage.

     10.7 Judgments.  Any judgments or arbitration awards are entered against
          ---------
the Borrower or any Guarantor, or the Borrower or any Guarantor enters into any
settlement agreements with respect to any litigation or arbitration, in an
aggregate amount of Five Hundred Thousand Dollars ($500,000) or more in excess
of any insurance coverage.

     10.8   Government Action.  Any government authority takes any action that
            -----------------
the Bank reasonably believes materially adversely affects the Borrower's or any
Guarantor's financial condition or ability to perform or repay its obligations
hereunder.

     10.9   Material Adverse Change.  A material adverse change occurs in the
            -----------------------
Borrower's or any Guarantor's financial condition, properties or prospects, or
ability to repay the loan or perform its obligations under this Agreement or any
other loan document.

     10.10  Cross-default.  Any default occurs under any agreement in
            -------------
connection with any credit the Borrower or any Guarantor has obtained from
anyone else or which the Borrower or any Guarantor has guaranteed which in
either case exceeds an aggregate principal amount (either individually or in the
aggregate) equal to Two Hundred Fifty Thousand Dollars ($250,000.00).

     10.11  Default under Guaranty or Subordination Agreement.  Any guaranty,
            -------------------------------------------------
subordination agreement, security agreement, deed of trust, or other document
required by this Agreement is violated or no longer in effect.

     10.12  Other Bank Agreements.  The Borrower or any Guarantor fails to
            ---------------------
meet the conditions of, or fails to perform any obligation under any other
agreement the Borrower or any Guarantor has with the Bank or any affiliate of
the Bank.

     10.13  ERISA Plans.  The occurrence of any one or more of the following
            -----------
events with respect to the Borrower or any of its subsidiaries, provided such
event or events could reasonably be expected, in the judgment of the Bank, to
subject the Borrower or such subsidiary to any tax, penalty or liability (or any
combination of the foregoing) which, in the aggregate, could have a material
adverse effect on the financial condition of the Borrower or any subsidiary with
respect to a Plan:

                                    Page 28
<PAGE>

            (1) A reportable event shall occur with respect to a Plan which is,
     in the reasonable judgment of the Bank likely to result in the termination
     of such Plan for purposes of Title IV of ERISA; or

            (2) Any Plan termination (or commencement of proceedings to
     terminate a Plan) or the Borrower's full or partial withdrawal from a Plan.

     10.14  Other Breach Under Agreement.  The Borrower fails to meet the
            ----------------------------
conditions of this Agreement or fails to perform any obligation under Sections
4.3 or 8.2 through 8.13 of this Agreement to the extent not otherwise
specifically referred to in this Article.  The Borrower fails to perform any
obligations under this Agreement, other than those described in the preceding
sentence and those specifically referred to in this Article, and such failure
shall continue for a period of twenty (20) days.

     10.15  Change of Control.  If any persons or entities acquires after the
            -----------------
date hereof more than fifty-one percent (51%) of the outstanding capital stock
of Borrower entitled (without regard to any contingency) to vote in the election
of the directors of Borrower.

     10.16  Change in Management. The Borrower's or any Guarantor's executive
            --------------------
management. shall change.

11.  ENFORCING THIS AGREEMENT; MISCELLANEOUS

     11.1   GAAP.  Except as otherwise stated in this Agreement, all financial
            ----
information provided to the Bank and all financial covenants will be made
according to generally accepted accounting principles applied on a consistent
basis.

     11.2   Governing Law.  This Agreement is governed by Texas law.
            -------------

     11.3   Successors and Assigns.  This Agreement is binding on the Borrower's
            ----------------------
and the Bank's successors and assignees.  The Borrower agrees that it may not
assign this Agreement without the Bank's prior consent.  The Bank may sell
participations in or assign this loan, and may exchange financial information
about the Borrower with actual or potential participants or assignees.  If a
participation is sold or the loan is assigned, the purchaser will have the right
of set-off against the Borrower.

     11.4   ARBITRATION.
            -----------

            (1) This paragraph concerns the resolution of any controversies or
     claims between the Borrower and the Bank, including but not limited to
     those that arise from:

                (1) This Agreement (including any renewals, extensions or
          modifications of this Agreement);

                                    Page 29
<PAGE>

              (2) Any document, agreement or procedure related to or delivered
          in connection with this Agreement;

              (3) Any violation of this Agreement; or

              (4) Any claims for damages resulting from any business conducted
          between the Borrower and the Bank, including claims for injury to
          persons, property or business interests (torts).

          (2) AT THE REQUEST OF THE BORROWER OR THE BANK, ANY SUCH CONTROVERSIES
     OR CLAIMS WILL BE SETTLED BY ARBITRATION IN ACCORDANCE WITH THE UNITED
     STATES ARBITRATION ACT.  THE UNITED STATES ARBITRATION ACT WILL APPLY EVEN
     THOUGH THIS AGREEMENT PROVIDES THAT IT IS GOVERNED BY TEXAS LAW.

          (3) Arbitration proceedings will be administered by the American
     Arbitration Association and will be subject to its commercial rules of
     arbitration.  The arbitration will be conducted within Dallas County,
     Texas.

          (4) For purposes of the application of the statute of limitations, the
     filing of an arbitration pursuant to this paragraph is the equivalent of
     the filing of a lawsuit, and any claim or controversy which may be
     arbitrated under this paragraph is subject to any applicable statute of
     limitations.  The arbitrators will have the authority to decide whether any
     such claim or controversy is barred by the statute of limitations and, if
     so, to dismiss the arbitration on that basis.

          (5) If there is a dispute as to whether an issue is arbitrable, the
     arbitrators will have the authority to resolve any such dispute.

          (6) The decision that results from an arbitration proceeding may be
     submitted to any authorized court of law to be confirmed and enforced.

          (7) This provision does not limit the right of the Borrower or the
     Bank to:

              (1) exercise self-help remedies such as setoff;

              (2) foreclose against or sell any real or personal property
          collateral; or

              (3) act in a court of law, before, during or after the
          arbitration proceeding to obtain:

                  (1) an interim remedy; and/or

                  (2) additional or supplementary remedies.

                                    Page 30
<PAGE>

            (8) The pursuit of, or a successful action for, interim, additional
     or supplementary remedies, or the filing of a court action, does not
     constitute a waiver of the right of the Borrower or the Bank, including the
     suing party, to submit the controversy or claim to arbitration if the other
     party contests the lawsuit.

     11.5   Severability; Waivers.  If any part of this Agreement is not
            ---------------------
enforceable, the rest of the Agreement may be enforced.  The Bank retains all
rights, even if it makes a loan after default.  If the Bank waives a default, it
may enforce a later default.  Any consent or waiver under this Agreement must be
in writing.

     11.6   Costs.  If the Bank incurs any expenses in connection with
            -----
administering or enforcing this Agreement, or if the Bank takes collection
action under this Agreement, it is entitled to costs and reasonable attorneys'
fees, including any allocated costs of in-house counsel.

     11.7   Attorneys' Fees. In the event of a lawsuit or arbitration
            ---------------
proceeding, the prevailing party is entitled to recover costs and reasonable
attorneys' fees (including any allocated costs of in-house counsel) incurred in
connection with the lawsuit or arbitration proceeding, as determined by the
court or arbitrator.

     11.8   Indemnification.  THE BORROWER AGREES TO INDEMNIFY THE BANK AGAINST,
            ---------------
AND HOLD THE BANK HARMLESS FROM, ALL CLAIMS, ACTIONS, LOSSES, COSTS AND EXPENSES
(INCLUDING ATTORNEYS' FEES AND ALLOCATED COSTS FOR IN-HOUSE LEGAL SERVICES)
INCURRED BY THE BANK AND ARISING FROM ANY CONTENTION, WHETHER WELL-FOUNDED OR
OTHERWISE, THAT THERE HAS BEEN A FAILURE TO COMPLY WITH ANY LAW REGULATING THE
BORROWER'S OR ANY SUBSIDIARIES' SALES OR LEASES TO OR PERFORMANCE OF SERVICES
FOR DEBTORS OBLIGATED UPON THE BORROWER'S OR ANY SUBSIDIARIES' ACCOUNTS
RECEIVABLE AND DISCLOSURES IN CONNECTION THEREWITH.  THIS INDEMNITY WILL SURVIVE
REPAYMENT OF THE BORROWER'S OBLIGATIONS TO THE BANK AND TERMINATION OF THIS
AGREEMENT.

     11.9   Notices.  All notices required under this Agreement shall be
            -------
personally delivered or sent by first class mail, postage prepaid, to the
addresses on the signature pages hereto, or to such other addresses as the Bank
and the Borrower may specify from time to time in writing.

     11.10  Headings.  Article and paragraph headings are for reference only
            --------
and shall not affect the interpretation or meaning of any provisions of this
Agreement.

     11.11  Counterparts.  This Agreement may be executed in as many
            ------------
counterparts as necessary or convenient, and by the different parties on
separate counterparts each of which, when so executed, shall be deemed an
original but all such counterparts shall constitute but one and the same
agreement.

                                    Page 31
<PAGE>

     11.12  Usury Laws.  It is the intention of the parties hereto to comply
            ----------
with applicable usury laws; accordingly, it is agreed that notwithstanding any
provisions to the contrary in this Agreement or in any of the documents
evidencing or securing payment hereof or otherwise relating hereto, in no event
shall this Agreement or such instruments or documents require or permit the
payment, charging, taking, reserving or receiving of any sums constituting
interest, as defined under applicable usury laws, in excess of the maximum
amount permitted by such laws.  If any such excess of interest is contracted
for, paid, charged, taken, reserved or received under this Agreement or under
the terms of any of the documents evidencing or securing payment hereof or
otherwise relating hereto, or in any communication by Bank or any other person
to Borrower or any other party liable for the payment of the indebtedness
evidenced hereby, or if the maturity of the indebtedness is accelerated in whole
or in part, or in the event that all or part of the principal or interest shall
be prepaid, so that under any of such circumstances or under any other
circumstances whatsoever, the amount of interest contracted for, paid, charged,
taken, reserved or received under this Agreement or under any of the documents
securing payment hereof or otherwise relating hereto, on the amount of principal
actually outstanding from time to time shall exceed the maximum amount of
interest permitted by applicable usury laws, then in any such event (i) the
provisions of this Section shall govern and control, (ii) any such excess shall
be canceled automatically to the extent of such excess, and shall not be
collected or collectible, (iii) any such excess which is or has been received
shall be credited against the then unpaid principal balance hereof or refunded
to Borrower, at the Bank's option, and (iv) the effective rate of interest shall
be automatically reduced to the maximum lawful rate allowed under applicable
laws as construed by courts having jurisdiction hereof or thereof.  It is
further agreed that, without limitation of the foregoing, all calculations of
the rate of interest contracted for, paid charged, taken, reserved or received
under this Agreement or under such other documents or instruments that are made
for the purpose of determining whether such rate exceeds the maximum lawful rate
of interest, shall be made, to the extent permitted by applicable usury laws, by
amortizing, prorating, allocating and spreading in equal parts during the period
of the full stated term of the indebtedness, all interest at any time contracted
for, paid, charged, taken, reserved or received from the Borrower or otherwise
by the holder or holders thereof.  The terms of this Section shall be deemed to
be incorporated in every loan document, security instrument, debt instrument and
communication relating to this Agreement and the loan evidenced hereby.  The
term "applicable usury laws" shall mean such laws of the State of Texas or the
laws of the United States, whichever laws allow the higher rate of interest, as
such laws now exist; provided, however, that if such laws shall hereafter allow
                     --------  -------
higher rates of interest, then the applicable usury laws shall be the laws
allowing the higher rates, to be effective as of the effective date of such
laws.

                                    Page 32
<PAGE>

     11.13  NO ORAL AGREEMENTS. This Agreement and any related security or
            ------------------
other agreements required by this Agreement, collectively:

            (1) represent the sum of the understandings and agreements between
     the Bank and the Borrower concerning the subject matter hereof;

            (2) replace any prior oral or written agreements between the Bank
     and the Borrower concerning the agreement between the Bank and the Borrower
     as evidenced hereby; and

            (3) are intended by the Bank and the Borrower as the final, complete
     and exclusive statement of the terms agreed to by the Bank and the
     Borrower.

In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail.

     THIS WRITTEN AGREEMENT AND THE INSTRUMENTS AND DOCUMENTS EXECUTED IN
CONNECTION HEREWITH, REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.

          THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

This Agreement is executed as of the date stated at the top of the first page.

BANK OF AMERICA, TEXAS, N.A.                 AZTEC MANUFACTURING CO.

By:  /s/ Donald P. Hellman                   By:  /s/ L. C. Martin
   ----------------------------                  ----------------------------
     Donald P. Hellman                            L. C. Martin
     Vice President                               President

Address where notices to                     Address where notices to
the Bank are to be sent:                     the Borrower are to be sent:

P.O. Box 619005                              P.O. Box 668
Dallas, Texas 75261-9005                     Crowley, Texas 76036
Telecopy No.:  214-444-7167

                                    Page 33

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