**Exhibit10.18**

 

**SETTLEMENTAGREEMENT AND MUTUAL GENERAL RELEASE**

 

ThisSettlement Agreement and Mutual General Release (this “Agreement”) is enteredinto this 18th day of February, 2005 between Tapestry Pharmaceuticals, Inc., a Delaware corporation formerlyknown as Napro BioTherapeutics, Inc. (“Tapestry”), on one hand, and TL VenturesV L.P. and TL Ventures V Interfund L.P (collectively, “TL Ventures”), on theother hand.

 

RECITALS

 

WHEREAS,the parties are engaged in a litigation styled TL VENTURES V L.P. and TLVENTURES V INTERFUND L.P v . NAPRO BIOTHERAPEUTICS, INC. Delaware ChanceryAction No. 110-N, arising from their past commercial dealings; and

 

WHEREAS,Tapestry and TL Ventures desire to settle their dispute and mutually releaseall claims either may have against the other;

 

AGREEMENT

 

NOWTHEREFORE, the parties agree as follows:

 

1.             Upon execution of this Agreement,Tapestry will pay $3,184,136.99 to TL Ventures in immediately available fundspursuant to the wire instructions attached hereto as Exhibit B and deliver twopromissory notes (the “Notes”) to TL Ventures in exchange for the delivery byTL Ventures of the two outstanding 4% Convertible Subordinated Debentures($8,000,000 in principal amount) (the “Debentures”).  The two Notes will have an aggregateprincipal balance of $4,670,000 and will be in the form of the promissory noteattached hereto as Exhibit A.  The cashpayment will be shared, and the principal balance of the Notes will be split,between the two TL Ventures entities in accordance with the principal balanceof the respective Debentures delivered by each of them.

 

2.             Within 10 days after both sideshave executed this Settlement Agreement, the parties will cause papersdismissing all claims and counterclaims with prejudice to be filed in theappropriate court in Delaware in the case TL VENTURES V L.P. and TL VENTURES VINTERFUND L.P v. NAPRO BIOTHERAPEUTICS, INC. C.A.110-N,.

 

3.             In return for good and valuableconsideration, the receipt of which is hereby acknowledged, Tapestry, on behalfof itself and, to the extent Tapestry may lawfully do so, its present andformer affiliates, parents, subsidiaries, successors, predecessors, officers,members, representatives, agents, assigns, employees, directors, shareholders,attorneys, and each of their heirs, executors, administrators, personalrepresentatives, agents, successors and assigns (collectively, the “TapestryEntities”) does hereby release, settle, and forever discharge TL Ventures VL.P. and TL Ventures V Interfund L.P., and each of their present and formeraffiliates, parents, subsidiaries, successors, predecessors, officers, members,representatives, agents, assigns, employees, directors, shareholders,attorneys, and each of their heirs, executors, administrators, personal representatives,agents, successors and assigns (collectively, the “TL

 

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VenturesEntities”) from any and all legal and equitable claims and demands, actions andcauses of action, counterclaims, suits, qui tam actions, judgments, damages,costs, contracts, quasi-contracts, agreements, expenses, liabilities, debts,dues, accounts, sums of money, bonds, bills, covenants, and promises(collectively, the “Claims”), whether the same are now known or unknown, orsuspected or unsuspected.

 

4.             In return for good and valuable consideration, thereceipt of which is hereby acknowledged, TL Ventures, on behalf of themselvesand, to the extent TL Ventures may lawfully do so, the other TL VenturesEntities do hereby release, settle, and forever discharge each of the TapestryEntities from any and all Claims, whether the same are now known or unknown, orsuspected or unsuspected.  As used inthis Paragraph, the terms “TL Ventures Entities,” “Tapestry Entities,” and“Claims” shall have the same meaning as in Paragraph 3 above.

 

5.             Tapestry has all required corporate power and authorityto enter this Agreement and issue the Notes. This Agreement and the Notes executed and delivered by Tapestry pursuanthereto are valid and binding obligations of Tapestry, enforceable in accordancewith their respective terms.  Theexecution, delivery and performance of this Agreement and the Notes executedand delivered by Tapestry pursuant hereto, have been duly authorized by allnecessary corporate or other action of Tapestry.  The execution and delivery of this Agreementand the Notes executed and delivered by Tapestry pursuant hereto, and theperformance of the obligations contemplated by this Agreement and the Notes, donot and will not: (i) violate or result in a violation of, conflict with orconstitute or result in a default (whether after the giving of notice, lapse oftime or both) or loss of benefit under any contract or obligation to whichTapestry or any of its subsidiaries is a party or by which its or any of itssubsidiaries assets are bound, or any provision of the Certificate ofIncorporation or Bylaws, or cause the creation of any lien upon any of theassets of Tapestry; (ii) violate, conflict with or result in a violation of, orconstitute a default (whether after the giving of notice, lapse of time orboth) under, any provision of any law, regulation or rule, or any order of, orany restriction imposed by, any court or governmental agency applicable toTapestry; (iii) except for reports to be filed by it as a company registeredunder the Securities Exchange Act of 1934, as amended, require from Tapestryany notice to, declaration or filing with, or consent or approval of anygovernmental authority or other third party; or (iv) violate or result in aviolation of, or constitute a default (whether after the giving of notice,lapse of time or both) under, accelerate any obligation under, or give rise toa right of termination of, any agreement, permit, license or authorization towhich Tapestry or any of its subsidiaries is a party or by which Tapestry orany of its subsidiaries is bound.

 

6.             Each of TL Ventures V L.P. and TL Ventures V InterfundL.P has all required partnership power and authority to enter thisAgreement.  This Agreement is a valid andbinding obligation of each of TL Ventures V L.P. and TL Ventures V InterfundL.P, enforceable in accordance with its terms. The execution, delivery and performance of this Agreement, has been dulyauthorized by all necessary partnership or other action of each of TL VenturesV L.P. and TL Ventures V Interfund L.P. The execution and delivery of this Agreement, and the performance of theobligations contemplated by this Agreement and the Notes, do not and will not:(i) violate or result in a violation of, conflict with or constitute or resultin a default (whether

 

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afterthe giving of notice, lapse of time or both) or loss of benefit under anycontract or obligation to which each of TL Ventures V L.P. and TL Ventures VInterfund L.P or any of its subsidiaries is a party or by which its or any oftheir respective subsidiaries assets are bound, or any provision of its limitedpartnership agreement, or cause the creation of any lien upon any of the assetsof TL Ventures V L.P. or TL Ventures V Interfund L.P; (ii) violate, conflictwith or result in a violation of, or constitute a default (whether after thegiving of notice, lapse of time or both) under, any provision of any law,regulation or rule, or any order of, or any restriction imposed by, any courtor governmental agency applicable to TL Ventures V L.P. or TL Ventures VInterfund L.P; (iii) require from TL Ventures V L.P. or TL Ventures V InterfundL.P any notice to, declaration or filing with, or consent or approval of anygovernmental authority or other third party; or (iv) violate or result in aviolation of, or constitute a default (whether after the giving of notice,lapse of time or both) under, accelerate any obligation under, or give rise toa right of termination of, any agreement, permit, license or authorization towhich each of TL Ventures V L.P. and TL Ventures V Interfund L.P or any oftheir respective subsidiaries is a party or by which each of TL Ventures V L.P.and TL Ventures V Interfund L.P or any their respective subsidiaries is bound.

 

7.             Each party will use allcommercially reasonable efforts to take, or cause to be taken, all appropriateaction, and execute and deliver such documents, as may be necessary orappropriate to carry out the provisions of this Agreement.

 

8.             Each party will be responsible forits own costs and expenses incurred in connection with the litigation and thisAgreement.

 

9.             It is understood and agreed thatthis Settlement Agreement contains the entire agreement among the parties withregard to the subject hereof and that no party shall be liable or bound to anyother party by any representations, omissions, warranties, covenants, oragreements except as specifically set forth herein or in the Notes.  It is further understood and agreed that thisSettlement Agreement may not be altered, modified or amended, or any of itsprovisions waived, unless by a writing, executed by all parties.

 

10.           Notwithstanding anything herein tothe contrary, (i) the Notes and the obligations of Tapestry thereunder shallsurvive execution and delivery of this Agreement and shall not be releasedhereby, and (ii) the rights or obligations owed to Marc Ostro by Tapestry, orfrom Mr. Ostro to Tapestry, in connection with his service as a director ofTapestry shall survive execution and delivery of this Agreement and shall notbe released hereby, including, without limitation, Tapestry’s obligation toprovide indemnification to Mr. Ostro in accordance with Tapestry’s Certificateof Incorporation and Bylaws, any agreement between Tapestry and Mr. Ostroproviding for indemnification or applicable law.

 

11.           It is understood and agreed that theterms and conditions of this Settlement Agreement shall be kept confidentialand shall not be published, revealed, disclosed, publicized, communicated, orotherwise made public in any manner or form unless required under applicablelaw, or for Tapestry, except as made upon advice of counsel to comply with itsdisclosure obligations as a public company or the listing agreement of TheNasdaq Stock Market, Inc., in which case each party shall grant the other asmuch prior notice and consultation as practicable

 

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prior to issuing anypress release or making any public disclosure. Notwithstanding the foregoing, however, the terms of the SettlementAgreement may be disclosed to the parties’ counsel, auditors, accountants, orfinancial advisors; provided, however, that those to whom disclosure is mademust be advised of and agree to maintain the confidentiality of this SettlementAgreement.

 

12.           This Agreement shall be binding onthe parties and their respective successors and assigns.

 

AGREED this 18th day ofFebruary 2005.

 

 
| TAPESTRY  PHARMACEUTICALS, INC. | TL  VENTURES V L.P.                     |
|---------------------------------|-----------------------------------------|
|                            |                                    |
|                            |                                    |
| By:                             | /s/ Kai Pace Larson                     |   | By: | /s/ Marc J. Ostro |   |
|                            | Title:  Vice President, General Counsel |   | Title:  Managing Partner |
|                            |                                    |
|                            |                                    |
|                            | TL  VENTURES V INTERFUND L.P            |
|                            |                                    |
|                            |                                    |
|                            | By:                                     | /s/ Marc J. Ostro |   |
|                            |                                    | Title:  Managing Partner |
|                                 |                                         |  |  |  |  |

 

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