Exhibit 10.1
Execution
Copy
AMENDMENT NO. 3 TO FUNDING
AGREEMENT
This Amendment No. 3 (this “
Amendment ”) to the Funding Agreement dated August 8,
2000, as amended July 14, 2003 and September 1, 2005 (together, the
“ Funding Agreement ”), between Targeted
Genetics Corporation, a Washington corporation (“
Targeted ”), and Biogen Idec MA Inc., a Massachusetts
corporation (“ Biogen ”), is made as of November
7, 2006.
AGREEMENT
1.
Definitions . Capitalized terms used but not defined in this
Amendment shall have the meanings given to them in the Funding
Agreement.
2.
Amendments . The Funding Agreement is hereby amended as
follows:
(a) The complete
text of the definition of “ Final Maturity Date
” in “Article One, Definitions” is hereby amended
and restated as follows:
“
Final Maturity Date ” means August 1, 2008, the date
on which the final installment of principal and final payment of
interest is due and payable under the Note. If the Final Maturity
Date falls on a day that is not a business day, then the Final
Maturity Date shall be extended to the next succeeding business
day.”
(b) The
following shall be added as a new definition in alphabetical order
to “Article One, Definitions”:
“
Change of Control ” means either of the following
events:
(a)
consummation of any merger or consolidation of Targeted in which
Targeted is a party and in which Targeted is not the surviving
entity or the shareholders of Targeted control less than fifty
percent of the voting power of Targeted or the surviving entity; or
(b) consummation of any sale, lease, exchange or other transfer in
one transaction or a series of related transactions of all or
substantially all of Targeted’s assets or outstanding
securities, other than a transfer of Targeted’s assets or
securities to a majority-owned subsidiary of
Targeted.”
(c) The complete
text of “Article Two, The Loan, Section 2.1 Terms of the
Loan, Subsection 2.1.5 Repayment” is hereby deleted and
replaced in its entirety to read as follows:
“Accrued
and unpaid interest on the Loan shall be paid annually on each
August 31 (provided, that if such date would fall on a day that is
not a business day, then the interest payment date shall be
extended to the next succeeding business day) and on the Final
Maturity Date. All outstanding principal of the Loan shall be due
and payable in cash according to the following schedule:
In addition,
Targeted agrees to pay Biogen, no later than the 10th business day
following receipt thereof, an amount equal to one-third of any
Milestone Payments received by Targeted or any of its subsidiaries
(each such payment, a “ Mandatory Pre-Payment
”). Any Mandatory Pre-Payment shall be applied (i) first to
the payment of any accrued and unpaid interest on the principal
being repaid, and (ii) second to the payment of outstanding
principal in reverse order of maturity ( i.e. , starting
with the outstanding principal due on the latest payment date set
forth on the above table).
Targeted
further agrees that upon any Change of Control of Targeted, the
payment of $1,000,000 of outstanding principal under the Loan due
on August 1, 2007 shall accelerate and become due and payable in
full to Biogen no later than the 30 th business day
following such Change of Control.”
3. Additional
Agreements. The parties further agree as follows:
(a) Partial
Cancellation of Indebtedness . Biogen hereby agrees effective
as of the date hereof to: (i) cancel in full the outstanding
principal amount of $650,000 due under the Amended and Restated
Promissory Note, dated September 1, 2005 (the “ Second
Note ”); (ii) cancel in full outstanding principal amount
of $5,000,000 of the Loan maturing on August 1, 2008 (such
cancellation of an aggregate of $5,650,000 of outstanding
indebtedness being the “ Forgiven Debt ”); and
(iii) accept payment for the final $2,500,000 due under the Loan
according to the schedule set forth in Section 2(c)
hereof.
(b) Biogen
acknowledges receipt as of the date hereof of: (i) $500,000 cash
from Targeted in payment of principal under the Loan pursuant to
the schedule set forth in Section 2(c) hereof, and (ii) an Amended
and Restated Promissory Note (the “ Note ”) from
Targeted further amending and restating that certain Amended and
Restated Promissory Note dated September 1, 2005 (the “
September 2005 Note ”) and evidencing Targeted’s
aggregate outstanding indebtedness to Biogen, following the
repayment described in clause (i) above, of $2,000,000. Except for
the indebtedness of Targeted to Biogen evidenced by the Note,
Biogen hereby acknowledges that performance by Targeted of the
actions contemplated by this Amendment shall constitute full
repayment and satisfaction of the Forgiven Debt and that Targeted
shall have no further obligation to Biogen to repay the Forgiven
Debt.
(c) Issuance
of the Common Shares . In consideration of the Forgiven Debt,
Targeted hereby agrees to issue 1,000,000 shares of its
unregistered common stock (the “ Common Shares
”) to Biogen within two (2) business days of the execution
and delivery of this Amendment and the delivery of the September
2005 Note and the Second Note to Targeted for
cancellation.
(d)
Representations and Warranties .
(i) Biogen represents and warrants to Targeted,
as of the date of this Amendment, as follows:
(1) Access
to Information . Biogen has had access to Targeted’s
recent public filings with the SEC which provide all material
information regarding Targeted including, in particular, the
current financial condition of Targeted and the risks associated
therewith. Biogen has been provided reasonable opportunity to ask
questions of, and receive answers from, management of Targeted
concerning the terms and conditions of the issuance of the Common
Shares and any additional information, documents, book and records
relating to the business, assets, financial condition, results of
operations and liabilities of Targeted that it deemed necessary and
to reach an informed and knowledgeable decision to accept the
Common Shares on the terms set forth herein.
(2)
Restricted Securities . Biogen understands that the Common
Shares are characterized under the Securities Act as
“restricted securities” and, therefore, the Common
Shares cannot be sold or transferred unless they are subsequently
registered under the Securities Act or an exemption from such
registration is available. Biogen further understands that it must
hold the Common Shares indefinitely unless a subsequent disposition
thereof is registered or qualified under the Securities Act and
applicable state securities laws or is exempt from registration,
and that Targeted is under no obligation to register or qualify any
of the Common Shares or to t
