Document:

Settlement and Termination Agreement, dated December 19, 2002

 
EXHIBIT 10.40

Settlement and Termination Agreement 
 
This Settlement and Termination Agreement, dated December 19, 2002 (the “Agreement”), is made by
and between 
 
Celltech Pharmaceuticals Inc.
(formerly known as Medeva Pharmaceuticals Inc.), a corporation organized under the laws of Delaware (“Celltech”) and Medeva Limited (Formerly known as Medeva plc) a company organized under the laws of England (“Medeva”) and an
affiliate of Celltech; and 
 
Targeted Genetics
Corporation, a corporation organized under the laws of Washington state (“Targeted”). 
 
Celltech, Medeva and Targeted may be referred to herein collectively as the “Parties”. Defined terms used herein and not otherwise defined shall have the meanings ascribed to such terms in
the Master Agreement. 
 
Recitals

 
A.    Celltech and Targeted
are parties to a master agreement dated September 23, 1998 (the “Master Agreement”). Pursuant to the Master Agreement, the Celltech and Targeted agreed to collaborate in the further development and commercialization of a CFTR gene therapy
product for the treatment of cystic fibrosis. In connection with entering into the Master Agreement, Celltech and Targeted are parties to a license and collaboration agreement dated November 23, 1998 (the “License Agreement”) and a supply
agreement dated November 23, 1998 (the “Supply Agreement”). 
 
B.    In connection with the Master Agreement, Medeva and Targeted enter into a credit agreement, dated November 23, 1998 (the “Credit Agreement”). Pursuant the Credit Agreement, Targeted issued
a promissory note, dated November 23, 1998, in favor of Medeva in the aggregate principal amount of Two Million United States Dollars (US$2,000,000) which is due and payable on August 23, 2003 (the “Note”). 
 
C.    The Master Agreement, the License
Agreement, the Supply Agreement and the Credit Agreement are referred to herein collectively as “the Agreements”. 
 
D.    Pursuant to the License Agreement, Targeted has invoiced Celltech costs of approximately US$1,423,000 related to
development and clinical evaluation of CFTR gene therapy product which are unpaid, and has incurred or may incur additional product clinical development, patent prosecution and expenses that have not yet been billed to Celltech (collectively, the
“Development Costs”). 
 
E.    On November 27, 2002, Celltech gave notice, in accordance with Article 8.6 and Article 5.2.1 of the Master Agreement, to Targeted terminating the Master Agreement, the License Agreement and the Supply
Agreement. 

 
F.    Celltech and Targeted seek to avoid the burdens and uncertainties of litigation and wish, by this Agreement, to compromise and settle the claims and/or causes of action against one another arising out of or
related to the Development Costs and the Note as specifically set forth in this Agreement. 
 
Agreement 
 
Now therefore, in consideration of the promises and releases herein contained, the Parties agree as follows: 
 
1.    Note Cancellation.  Concurrently with the execution of this Agreement and in consideration of
Targeted’s full and complete release of Celltech from any and all claims and demands for the Development Costs that have been or may be incurred by Targeted, Medeva agrees that such release constitutes payment in full of all amounts that are or
may be owed by Targeted to Medeva under the Note. 
 
2.    Release of Development Costs Claim.  Concurrently with the execution of this Agreement and in consideration of Medeva’s full and complete release of Targeted from any and all claims and
demands for payment of all amounts that are or may be owed by Targeted to Medeva under the Note, Targeted agrees that such release constitutes payment in full of all amounts that are or may be owed by Medeva to Targeted for the Development Costs.

 
3.    Termination of the
Master Agreement.  The Parties agree that the Master Agreement, the License Agreement and the Supply Agreement are terminated immediately pursuant to Section 5.2 of the Master Agreement and Targeted waives the required one hundred
eighty (180) day notice period under the Master Agreement. 
 
4.    Termination of the Credit Agreement.  The Parties agree that the Credit Agreement shall be terminated in its entirety and shall be of no further force or effect from the date of this
Agreement. 
 
5.    Mutual
Release.  In consideration of the benefits described herein, Celltech and Targeted hereby release one another from any and all claims, demands, rights, and causes of action of any kind and nature arising out of the Note and/or the
Development Costs. 
 
6.    Execution of Documents.  The Parties agree to sign, execute and deliver, or cause to be done, all such other acts and things as may be necessary to carry out the provisions and intent of
this Agreement, including the delivery of the Note marked “Paid in Full” to Targeted by Celltech. 
 
7.    Successors.  This Agreement shall be binding on, and shall inure to the benefit of, the Parties
and their respective successors. 

 
8.
    Interpretation and Construction.  This Agreement has been reviewed and approved by each of the Parties and their attorneys. In the event it should be determined that any provision of this Agreement is
uncertain or ambiguous, the language in all parts of this Agreement shall be in all cases construed as a whole according to its fair meaning and not strictly construed for or against any Party. 
 
9.    Waiver of
Breach.  The failure of either Party to enforce its rights under this Agreement at any time for any period shall not be construed as a waiver of such rights. 
 
10.    Governing Law.  The Governing Law provisions of Article 7.1 and
the Courts Law provisions of Article 7.3 of the Master Agreement will govern this Agreement. 
 
11.    Nonadmission of Liability.  This Agreement shall not be construed as an admission of wrongdoing by either party. 
 
12.    Survival.  Other
than the foregoing changes, the terms of the Master Agreement, the License Agreement and the Supply Agreement intended to survive their termination under Article 5.8 of the Master Agreement shall remain unchanged. 
 
13.    Final
Agreement.  This Agreement terminates and supersedes all prior understandings or agreements on the subject matter hereof, no changes or modifications or waivers to this Agreement will be effective unless in writing and signed by both
parties. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provisions contained herein and any present or future statute, law, ordinance or
regulation contrary to which the parties have no legal right to contract, the latter shall prevail; but the provision of this Agreement which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements
of the law. 
 
IN WITNESS WHEREOF, the parties
hereto have executed this Agreement as of the date written above. 
 
AGREED AND ACCEPTED: 
 

	 CELLTECH PHARMACEUTICALS
INC.
	 	 	 	 TARGETED GENETICS
CORPORATION.

	
	 By:
	 	 /s/    Ingelise Saunders

	 	 	 	 By:
	 	 /s/    Todd E. Simpson

	 Print Name: Ingelise Saunders
	 	 	 	 Print Name: Todd E. Simpson

	 Its: President
	 	 	 	 Its: Chief Financial Officer

 

	 MEDEVA LIMITED
	 	 	 	 
	
	 By:
	 	 /s/    Peter V. Allen

	 	 	 	 	 	 
	 Print Name: Peter V. Allen
	 	 	 	 	 	 
	 Its: Chief Financial OfficerAmendment No. 1 to Product, Development and Supply Agreements

 
EXHIBIT
10.41 
 
TO 
 
TARGETED GENETICS CORPORATION’S 
 
ANNUAL REPORT ON FORM 10-K 
 
“[ * ]” = Portions of this exhibit have been omitted
based on a request for confidential treatment filed with the Securities and Exchange Commission. The omitted material has been filed separately with the SEC. 

 
AMENDMENT
NO. 1 
 
TO 
 
PRODUCT, DEVELOPMENT AND SUPPLY AGREEMENT 
 
This First Amendment (the “Amendment”) to the
Product Development Agreement between Genetics Institute, Inc. and Targeted Genetics Corporation dated as of November 9, 2000 (the “Agreement”) is by and between Genetics Institute LLC, formerly known as Genetics Institute, Inc.
(“GI”) and Targeted Genetics Corporation (“TGC”) and is dated as of February 24, 2003. 
 
GI and TGC agree as follows: 
 
1.    Capitalized terms used in this Amendment and not otherwise defined in this Amendment shall have the meaning
given to them in the Agreement. 
 
2.    The Agreement has been terminated by GI under Section 8.3 of the Agreement. 
 
3.    The effective date of such termination shall be deemed to be January 31, 2003, notwithstanding any other
provision of the Agreement to the contrary. The parties also expressly acknowledge and agree that the Supply Agreement has been terminated as of such date, and that neither party has or shall have any obligation whatsoever to the other party under
the Supply Agreement. 
 
4.    GI shall pay to TGC with ten business days of the date of this Amendment Three Million, Two Hundred and Twenty Thousand Dollars ($3,220,000). 
 
5.    GI shall have no obligation to make any other payment to TGC under the provisions
of Article 2 or Article 3 or Section 8.6.3 of the Agreement. 
 
6.    Section 8.6.4(a) of the Agreement is amended to read in its entirety “[ * ] upon written notice to GI by TGC exercising its rights under Section 4.4;”. 
 
7.    Section 4.4 of the Agreement is
amended by replacing the final sentence of such section with the following sentence: “TGC may exercise the TGC Option by providing written notification thereof to GI at any time prior to July 31, 2004.” 
 
8.    GI has executed and delivered in
connection with this Amendment a Release in favor of TGC in the form attached hereto as Exhibit No. 1. 
 
9.    TGC has executed and delivered in connection with this Amendment a Release in favor of GI in the form attached
hereto as Exhibit No. 2. 

10.    Except as expressly provided herein, the Agreement (including,
without limitation, the provisions of the Agreement which apply following termination of the Agreement) remains in effect. 
 
11.    This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. 
 
IN WITNESS WHEREOF, the parties have executed this Amendment by their proper and duly authorized officers, as of the date and year first written above. 
 

	 TARGETED GENETICS CORPORATION

	
	 By:
	 	   /s/ H. Stewart Parker

	 Name:  H. Stewart Parker
 Title:    President and CEO

 
 
 

	 GENETICS INSTITUTE LLC
  
 formerly known as
  
 GENETICS INSTITUTE, INC.

	
	 By:
	 	   /s/ Jeffrey S. Sherman

	 Name:  Jeffrey S. Sherman
 Title:    Vice President

 
Exhibit 1

 
GI RELEASE OF TGC 
 
THIS RELEASE by Genetics Institute LLC, a Delaware limited
liability company, formerly known as Genetics Institute, Inc., a Delaware corporation (“GI”), in favor of Targeted Genetics Corporation, a Delaware corporation (“TGC”) is dated as of February 24, 2003. 
 
As used herein the term “Affiliate” means as to any
person or entity, any other person or entity which is directly or indirectly controlling, controlled by or under common control with the person or entity in question, and shall also mean and include, without limitation and without regard to whether
such persons or entities would be included in the foregoing definition, any director, partner, shareholder, agent, officer or employee of the person or entity in question or of any “Affiliate” of such person or entity. 
 
For good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, GI, on its own behalf and for its successors and assigns, hereby unconditionally and irrevocably releases, remises and forever discharges TGC and its Affiliates, of and from all debts, demands, actions,
causes of action, suits, accounts, covenants, contracts, agreements, damages, judgments, executions, orders and any and all claims, demands and liabilities whatsoever, of every name and nature, both in law and in equity, whether known or unknown
(collectively, “Liabilities”), which GI now has or may ever have against TGC or its Affiliates or their respective heirs, assigns and successors arising out of any obligation of TGC to GI under (i) Article 2 or Article 3 or Section 8.6.3
of that certain Product Development Agreement by and between TGC and GI dated as of November 9, 2000 or (ii) that certain Supply Agreement by and between TGC and GI dated as of the same date. 
 
This Release shall be governed by and construed in accordance
with the internal laws of the State of New York. 
 
IN WITNESS WHEREOF, GI has caused this Release to be executed by its duly authorized representative effective as of the day and year first above written. 
 
 

	 GENETICS INSTITUTE LLC
 formerly known as:
 GENETICS INSTITUTE, INC.

	
	 By:
	 	   /s/ Jeffrey S. Sherman

 
Exhibit 2

 
TGC RELEASE OF GI 
 
THIS RELEASE by Targeted Genetics Corporation, a Delaware
corporation (“TGC”), in favor of Genetics Institute LLC, a Delaware limited liability company, formerly known as Genetics Institute, Inc., a Delaware corporation (“GI”) is dated as of February 24, 2003. 
 
As used herein the term “Affiliate” means as to any
person or entity, any other person or entity which is directly or indirectly controlling, controlled by or under common control with the person or entity in question, and shall also mean and include, without limitation and without regard to whether
such persons or entities would be included in the foregoing definition, any director, partner, shareholder, agent, officer or employee of the person or entity in question or of any “Affiliate” of such person or entity. 
 
For good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, TGC, on its own behalf and for its successors and assigns, hereby unconditionally and irrevocably releases, remises and forever discharges GI and its Affiliates, of and from all debts, demands, actions,
causes of action, suits, accounts, covenants, contracts, agreements, damages, judgments, executions, orders and any and all claims, demands and liabilities whatsoever, of every name and nature, both in law and in equity, whether known or unknown
(collectively, “Liabilities”), which TGC now has or may ever have against GI or its Affiliates or their respective heirs, assigns and successors arising out of any obligation of GI to TGC under (i) Article 2 or Article 3 or Section 8.6.3
of that certain Product Development Agreement by and between GI and TGC dated as of November 9, 2000 or (ii) that certain Supply Agreement by and between TGC and GI dated as of the same date. 
 
This Release shall be governed by and construed in accordance
with the internal laws of the State of New York. 
 
IN WITNESS WHEREOF, TGC has caused this Release to be executed by its duly authorized representative effective as of the day and year first above written. 
 
 

	 TARGETED GENETICS CORPORATION

	
	 By:
	 	   /s/ H. Stewart Parker

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