Exhibit 10.1

 

EXECUTION COPY

 

 

 

 

CONFIDENTIAL TREATMENT REQUESTED  

 

UNDER 17 C.F.R. §§ 200.80(b)4, AND 240.24b-2  

 

 

 

 

 

 

COLLABORATION AND LICENSE AGREEMENT

 

between

 

ISIS PHARMACEUTICALS, INC.

 

and

 

ORTHO MCNEIL, INC.

 

 

 

 

 

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COLLABORATION AND LICENSE AGREEMENT

 

THIS COLLABORATION AND LICENSE AGREEMENT (the “Agreement”) is made and entered
into this September 12, 2007 (the “Execution Date”), by and between Ortho
McNeil, Inc., a New Jersey Corporation (“OMI”) having a place of business at
1000 US Route 202, Raritan, New Jersey, 08869 and Isis Pharmaceuticals, Inc., a
Delaware Corporation (“Isis”) having a place of business at 1896 Rutherford
Road, Carlsbad, California 92008. OMI and Isis each may be referred to herein
individually as a “Party,” or collectively as the “Parties.”

 

WHEREAS, Isis possesses certain patent rights, know-how and technology with
respect to certain oligonucleotide based therapeutic compounds;

 

WHEREAS, Isis and OMI each desire to collaborate (the “Collaboration”) to
conduct:

 

•                                                                  a Development
Program to advance ISIS 325568 and ISIS 377131 through human clinical trials and
ultimately Commercialize them as Products; and

 

•                                                                  a Research
Program to (i) [***] and (ii) at OMI’s option [***], in each case for OMI to
advance into human clinical trials and ultimately Commercialize as Products.

 

WHEREAS, OMI will have exclusive rights to ISIS 325568 and ISIS 377131 and
Products in the Research Program and (unless otherwise specified in the R&D
Plan) will be solely responsible for the clinical development and
Commercialization of Products worldwide, in each case on the terms set forth in
this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, the Parties do hereby agree as follows.

 

ARTICLE 1 - DEFINITIONS

 

THE TERMS USED IN THIS AGREEMENT WITH INITIAL LETTERS CAPITALIZED, WHETHER USED
IN THE SINGULAR OR THE PLURAL, WILL HAVE THE MEANING SET FORTH IN APPENDIX 1, OR
IF NOT LISTED IN APPENDIX 1, THE MEANING DESIGNATED IN PLACES THROUGHOUT THE
AGREEMENT.

 

ARTICLE 2 -
GRANT OF RIGHTS; EXCLUSIVITY

 

SECTION
2.1                                                                                  
LICENSE GRANTS TO OMI.

 

(a)                                                                                                                                 
Exclusive License. Subject to the terms and conditions of this Agreement, Isis
hereby grants to OMI a worldwide, exclusive license, with the right to grant
sublicenses as set forth in Section 2.2(a) below, under the Product Specific
Patents and Product Specific Know-How to research, develop, make, have made,
use, gain regulatory approval, commercialize, sell, offer for sale, have sold,
export and import Compounds and Products for all uses.

 

(b)                                                                                                                                
Nonexclusive License. Subject to the terms and conditions of this Agreement and
the limitations set forth in Section 2.4 below, Isis hereby grants to OMI a
worldwide, nonexclusive license, with the right to grant sublicenses as set
forth in Section 2.2 below, under the Isis Know-How, Isis Program Patents, the
Isis Core Technology Patents and the Isis Manufacturing and Analytical Patents
to research, develop, make, have made, use, gain regulatory approval,
commercialize, sell, offer for sale, have sold, export and import Compounds and
Products for all uses.

 

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(C)                                                                                                                                 
NONEXCLUSIVE LICENSE TO MANUFACTURING IMPROVEMENTS. SUBJECT TO THE TERMS AND
CONDITIONS OF THIS AGREEMENT, THE PARTIES GRANT TO EACH A NONEXCLUSIVE LICENSE
TO THOSE MANUFACTURING IMPROVEMENTS PROVIDED IN SECTIONS 4.7.1 AND 4.7.2,
SUBJECT TO THE TERMS AND RESTRICTIONS SET FORTH THEREIN.

 

SECTION
2.2                                                                                  
SUBLICENSES.

 

(A)                                                                                                                                 
ALL SUBLICENSES. THE LICENSES GRANTED TO OMI UNDER SECTION 2.1 ARE SUBLICENSABLE
ONLY IN CONNECTION WITH A SUBLICENSE OF A COMPOUND OR PRODUCT TO ANY AFFILIATE
OF OMI OR TO ANY THIRD PARTY, IN EACH CASE FOR THE CONTINUED RESEARCH,
DEVELOPMENT AND COMMERCIALIZATION OF SUCH COMPOUND OR PRODUCT IN ACCORDANCE WITH
THE TERMS OF THIS AGREEMENT.

 

(B)                                                                                                                                
ISIS MANUFACTURING AND ANALYTICAL TECHNOLOGY. IN ADDITION, OMI (OR ITS AFFILIATE
OR LICENSEE) MAY ONLY SUBLICENSE THE ISIS MANUFACTURING AND ANALYTICAL
TECHNOLOGY, IF OMI (OR ITS AFFILIATE OR LICENSEE) (I) USES APPROPRIATE
PRECAUTIONS AND INCLUDES PROVISIONS IN SUCH SUBLICENSE TO PROTECT THE ISIS
KNOW-HOW OR PRODUCT SPECIFIC KNOW-HOW SUCH THAT THE SUBLICENSEE WILL NOT USE ANY
ISIS KNOW HOW OR PRODUCT SPECIFIC KNOW-HOW TO MANUFACTURE ANY OTHER COMPOUNDS OR
PRODUCTS FOR THIRD PARTIES AND (II) PROMPTLY NOTIFIES ISIS IN WRITING
SPECIFICALLY IDENTIFYING THE ISIS MANUFACTURING AND ANALYTICAL TECHNOLOGY TO BE
DISCLOSED TO SUCH THIRD PARTY AND IDENTIFYING BY NAME SUCH THIRD PARTY. AT ISIS’
REASONABLE REQUEST, OMI WILL ENFORCE THE PROVISIONS CONTEMPLATED BY CLAUSE (I)
ABOVE AGAINST ANY SUBLICENSEE WHO IS IN BREACH OF SUCH PROVISIONS.

 

SECTION
2.3                                                                                  
EXCLUSIVITY. DURING THE COLLABORATION TERM AND CONTINUING THEREAFTER SO LONG AS
THE EXCLUSIVE LICENSE GRANTED TO OMI UNDER SECTION 2.1(A) IS IN EFFECT AND
SUBJECT TO THE LIMITATIONS SET FORTH IN SECTION 2.4 BELOW, ISIS AGREES THAT IT
WILL NOT WORK INDEPENDENTLY OF THIS AGREEMENT FOR ITSELF OR ANY THIRD PARTY
(INCLUDING THE GRANT OF ANY LICENSE TO ANY THIRD PARTY) WITH RESPECT TO
DISCOVERY, RESEARCH, DEVELOPMENT AND/OR COMMERCIALIZATION ACTIVITIES WITH
RESPECT TO ASOS WHOSE PRIMARY MECHANISM OF ACTION IS THROUGH ITS HYBRIDIZATION
TO  COLLABORATION GENE TARGET MRNA OR PRE-MRNA OR PRODUCTS CONTAINING SUCH ASOS.
ISIS AGREES THAT IT WILL NOT WORK WITH A THIRD PARTY ON RESEARCH AND DEVELOPMENT
RELATING TO (I) A COLLABORATION GENE TARGET OR (II) DURING THE RESEARCH TERM, A
GENE TARGET THAT IS PART OF THE TARGET POOL, IN EACH CASE, UNLESS SUCH WORK IS
CONDUCTED IN PERFORMANCE OF THE R&D PLAN.

 

SECTION
2.4                                                                                  
LICENSE CONDITIONS; LIMITATIONS.

 

(A)                                                                                                                                 
DURING THE RESEARCH TERM, IN ORDER TO MAINTAIN THE LICENSE GRANTED TO OMI UNDER
SECTION 2.1, OMI MUST MEET ITS OBLIGATIONS TO FUND AND PERFORM ITS OBLIGATIONS
UNDER THE RESEARCH PROGRAM AND DEVELOPMENT PROGRAM IN ACCORDANCE WITH SECTION
3.5 AND 6.2. IF OMI FAILS TO MEET SUCH OBLIGATIONS, ISIS WILL HAVE THE RIGHT,
CONSISTENT WITH AND PURSUANT TO THE PROVISIONS OF SECTION 10.3, TO TERMINATE THE
AGREEMENT, INCLUDING THE LICENSES GRANTED TO OMI UNDER SECTION 2.1.

 

(B)                                                                                                                                
AFTER THE EXPIRATION OF THE COLLABORATION TERM, IN ORDER TO MAINTAIN THE LICENSE
GRANTED TO OMI UNDER SECTION 2.1, ON A COMPOUND-BY-COMPOUND OR
PRODUCT-BY-PRODUCT BASIS, OMI MUST MEET ITS OBLIGATIONS TO USE COMMERCIALLY
REASONABLE EFFORTS UNDER SECTION 5.1 FOR THE APPLICABLE COMPOUND OR PRODUCT. IF
OMI FAILS TO MEET ITS OBLIGATIONS TO USE COMMERCIALLY REASONABLE EFFORTS UNDER
SECTION 5.1 FOR A PARTICULAR COMPOUND OR PRODUCT, ISIS WILL HAVE THE RIGHT,
CONSISTENT WITH AND PURSUANT TO THE PROVISIONS OF SECTION 10.4, TO TERMINATE THE
AGREEMENT WITH RESPECT TO SUCH COMPOUND OR PRODUCT, INCLUDING THE LICENSES
GRANTED TO OMI UNDER SECTION 2.1.

 

(C)                                                                                                                                 
THE NONEXCLUSIVE LICENSE AND EXCLUSIVITY GRANTED UNDER SECTION 2.1(B) AND 2.3
ARE SUBJECT TO AND LIMITED BY THE (I) ISIS IN-LICENSE AGREEMENTS AND (II) PRIOR
THIRD PARTY AGREEMENTS, EACH AS LISTED IN APPENDIX 6 ATTACHED HERETO.

 

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(D)                                                                                                                                
IN ADDITION, NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, ISIS RETAINS
THE RIGHT TO GRANT PERMITTED LICENSES.

 

ARTICLE 3 -
COLLABORATION

 

SECTION
3.1                                                                                  
OBJECTIVE. THE PARTIES WILL COLLABORATE IN CARRYING OUT A PROGRAM TO DEVELOP
COMPOUNDS DIRECTED TO THE COLLABORATION GENE TARGETS AND ULTIMATELY
COMMERCIALIZE THEM AS PRODUCTS. THE DEVELOPMENT PROGRAM IS OUTLINED IN THE R&D
PLAN AND INCLUDES THE CONDUCT OF THE [***] FOR GCGR AND THE [***] FOR GCCR (THE
“DEVELOPMENT PROGRAM”). IN ADDITION, THE PARTIES WILL COLLABORATE IN CARRYING
OUT A RESEARCH PROGRAM TO (I) [***] AND (II) AT OMI’S OPTION, TO [***] AS
PROVIDED FOR IN THE R&D PLAN  (THE “RESEARCH PROGRAM”).

 

SECTION
3.2                                                                                  
R&D PLAN. THE COLLABORATION WILL BE CARRIED OUT IN ACCORDANCE WITH A WRITTEN
RESEARCH AND DEVELOPMENT PLAN (THE “R&D PLAN”) AND CORRESPONDING WRITTEN
RESEARCH AND DEVELOPMENT BUDGET (THE “R&D BUDGET”). THE INITIAL R&D PLAN AND R&D
BUDGET, THAT HAVE BEEN AGREED TO BY THE PARTIES AS OF THE EFFECTIVE DATE (AS
EVIDENCED BY SEPARATE SIGNATURE OF EACH PARTY ON THE COVER PAGE OF THE R&D PLAN)
ARE HEREBY INCORPORATED BY REFERENCE INTO THIS AGREEMENT. THE PURPOSE OF THE R&D
PLAN IS TO DETAIL THE RESPONSIBILITIES AND ACTIVITIES OF ISIS AND OMI WITH
RESPECT TO CARRYING OUT THE RESEARCH PROGRAM AND THE DEVELOPMENT PROGRAM. THE
R&D PLAN WILL INCLUDE A DESCRIPTION OF THE SPECIFIC ACTIVITIES TO BE PERFORMED
BY THE PARTIES IN SUPPORT OF THE COLLABORATION, THE ESTIMATED NUMBER OF ISIS
FTES TO PERFORM SUCH ACTIVITIES AND PROJECTED TIMELINES FOR COMPLETION OF SUCH
ACTIVITIES. THE R&D PLAN WILL INCLUDE A LIST OF SUBCONTRACTORS AND CONSULTANTS
THAT ISIS PLANS TO USE TO FULFILL ITS OBLIGATIONS UNDER THE R&D PLAN. THE R&D
BUDGET WILL CONTAIN THE ESTIMATED COSTS ([***]) ASSOCIATED WITH THE TASKS
OUTLINED IN THE R&D PLAN. THE R&D PLAN AND R&D BUDGET MAY ONLY BE AMENDED WITH
THE UNANIMOUS APPROVAL OF THE R&D COMMITTEE (AS PERMITTED BY THE R&D COMMITTEE
CHARTER). THE R&D PLAN AND R&D BUDGET WILL BE UPDATED AND AMENDED FROM TIME TO
TIME, BUT AT LEAST ANNUALLY. THEREFORE, [***] OF EACH YEAR OF THE COLLABORATION
TERM ([***]), THE R&D COMMITTEE WILL REVIEW AND UPDATE THE R&D PLAN AND R&D
BUDGET. IN THE EVENT THAT THE PARTIES CANNOT AGREE TO UPDATES OR AMENDMENTS TO
THE R&D PLAN AND R&D BUDGET, THE PARTIES WILL FIRST PURSUE THE DISPUTE
RESOLUTION PROVISIONS OF THE [***] APPENDIX 5 AND THEREAFTER FOLLOW THE
PROVISIONS OF SECTION 14.4.1.

 

SECTION
3.3                                                                                  
COLLABORATION TERM.

 

3.3.1                                                                                                                    
THE DEVELOPMENT PROGRAM WILL BEGIN ON THE EFFECTIVE DATE AND WILL END [***] FROM
THE EFFECTIVE DATE (THE “DEVELOPMENT PROGRAM TERM”). IN THE EVENT THAT ISIS HAS
NOT COMPLETED ITS RESPONSIBILITIES UNDER THE DEVELOPMENT PROGRAM WITHIN THE
DEVELOPMENT PROGRAM TERM, OMI, AT ITS SOLE DISCRETION, MAY ELECT TO TAKE SOLE
RESPONSIBILITY FOR THE DEVELOPMENT OF COMPOUNDS AND ISIS WILL COOPERATE FULLY IN
THE TRANSFER OF DATA, PROTOCOLS AND THE LIKE TO FACILITATE OMI’S ACTIVITIES. THE
RESEARCH PROGRAM WILL BE CARRIED OUT DURING THE PERIOD FOLLOWING THE EFFECTIVE
DATE AND ENDING ON THE [***] OF THE EFFECTIVE DATE (THE “RESEARCH TERM”).

 

3.3.2                                                                                                                    
OMI WILL HAVE THE OPTION TO EXTEND THE RESEARCH TERM FOR [***] OF THE EFFECTIVE
DATE UNLESS EXTENDED PER SECTION 3.3.4 OR 3.6.2. FOR EACH EXTENSION OF THE
RESEARCH TERM, THE PARTIES WILL NEGOTIATE IN GOOD FAITH A MUTUALLY AGREED
AMENDMENT AND RESTATEMENT OF THE R&D PLAN AND R&D BUDGET. FOR EACH EXTENSION, IF
THE PARTIES FAIL TO REACH AGREEMENT ON A MUTUALLY AGREED AMENDMENT AND
RESTATEMENT OF THE R&D PLAN AND R&D BUDGET BY THE END OF THE THEN EFFECTIVE
RESEARCH TERM, THERE WILL BE NO FURTHER EXTENSION TO THAT RESEARCH TERM.

 

3.3.3                                                                                                                    
IN ORDER TO EXERCISE ITS OPTION TO EXTEND THE RESEARCH TERM, OMI MUST PROVIDE
ISIS A WRITTEN NOTICE EXERCISING OMI’S RIGHT TO EXTEND THE RESEARCH TERM AT
LEAST [***]S PRIOR TO THE SCHEDULED EXPIRATION OF THE RESEARCH TERM. IF OMI DOES
NOT PROVIDE SUCH WRITTEN NOTICE, THE RESEARCH TERM WILL END WHEN SCHEDULED. IN
ADDITION, NO EARLIER THAN THE [***] PRIOR TO THE SCHEDULED EXPIRATION OF THE
RESEARCH TERM, ISIS MAY REQUEST IN WRITING FROM OMI A NONBINDING, GOOD FAITH
INDICATION OF WHETHER OR NOT OMI INTENDS TO EXTEND THE RESEARCH TERM. IN

 

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SUCH EVENT, OMI WILL PROVIDE SUCH NONBINDING, GOOD FAITH INDICATION TO ISIS AT
LEAST [***] PRIOR TO THE SCHEDULED EXPIRATION OF THE RESEARCH TERM.

 

3.3.4                                                                                                                    
IN ADDITION, IF A NEW GENE TARGET IS DESIGNATED A SELECTED GENE TARGET, AS
DEFINED IN SECTION 3.6 OF THIS AGREEMENT THE PARTIES WILL NEGOTIATE IN GOOD
FAITH AN AMENDMENT AND RESTATEMENT OF THE R&D PLAN AND R&D BUDGET, INCLUDING IF
NECESSARY AN EXTENSION OF THE RESEARCH TERM TO ALLOW FOR COMPLETION OF THE
PLANNED RESEARCH ON SUCH NEW SELECTED GENE TARGET. IF NO AGREEMENT IS REACHED ON
THE AMENDMENT AND RESTATEMENT OF THE R&D PLAN AND R&D BUDGET UNDER THIS SECTION
3.3.4 THEN THE R&D PLAN PROPOSED BY OMI WILL TAKE EFFECT; HOWEVER, IN NO EVENT
WILL ISIS BE REQUIRED TO ALLOCATE RESOURCES FROM THE CURRENT R&D PLAN FOR THE
BENEFIT OF THE AMENDMENT AND RESTATEMENT OF THE R&D PLAN AND R&D BUDGET. IN ANY
EVENT, IF ISIS DOES NOT WISH TO PARTICIPATE IN A DEVELOPMENT PROGRAM FOR THE
SELECTED GENE TARGET, OMI MAY, AT ITS SOLE OPTION, CONTINUE TO WORK ON THE
SELECTED GENE TARGET THROUGH THE END OF THE DEVELOPMENT PROGRAM TERM AND PROCEED
CONSISTENT WITH THE PROVISIONS OF SECTION 3.6.6.

 

SECTION
3.4                                                                                  
R&D COMMITTEE. THE PARTIES WILL ESTABLISH AND MAINTAIN A JOINT RESEARCH AND
DEVELOPMENT COMMITTEE (THE “R&D COMMITTEE”) TO OVERSEE THE CONDUCT OF THE
COLLABORATION, INCLUDING, BUT NOT LIMITED TO APPROVING ANY CHANGES TO THE R&D
PLAN AND R&D BUDGET. THE R&D COMMITTEE WILL BE ESTABLISHED, OPERATED AND
GOVERNED IN ACCORDANCE WITH THE POLICIES AND PROCEDURES SET FORTH IN APPENDIX 5
ATTACHED HERETO [***] MAY BE AMENDED WITH THE UNANIMOUS APPROVAL OF THE R&D
COMMITTEE MEMBERS.

 

As needed, the R&D Committee will establish subcommittees and working groups
that will report to the R&D Committee to further the objectives of the
Collaboration.

 

The R&D Committee and any subcommittees and working groups established by the
R&D Committee will dissolve at the end of the Collaboration Term.

 

SECTION
3.5                                                                                  
COLLABORATION STAFFING; FUNDING; AND RESOURCES.

 

3.5.1                                                                                                                    
STAFFING. OMI WILL FUND AT THE FTE RATE, AND ISIS WILL SUPPLY, ISIS FTES DURING
THE COLLABORATION TERM TO PERFORM ACTIVITIES IN SUPPORT OF AND IN ACCORDANCE
WITH THE THEN-CURRENT R&D PLAN.

 

3.5.2                                                                                                                    
FUNDING; EXPENSES.

 

(A)                                                                                                                                 
WITHIN [***] OF RECEIPT OF INVOICE FROM ISIS IN THE FORM PROVIDED AS APPENDIX 7,
BUT NOT SOONER THAN THE EFFECTIVE DATE, OMI WILL PAY ISIS $[***] TO REIMBURSE
ISIS FOR THE [***]. IN ADDITION, OMI WILL REIMBURSE ISIS FOR ANY [***] (SUCH
REIMBURSEMENTS TO BE ADDED TO AND PAID FOR UNDER THE INVOICE UNDER SECTION
3.5.2(B) BELOW).

 

(B)                                                                                                                                
WITHIN [***] OF RECEIPT OF AN INVOICE FROM ISIS IN THE FORM PROVIDED AS APPENDIX
7, BUT NOT SOONER THAN THE EFFECTIVE DATE, OMI WILL PAY ISIS FOR THE OMI-FUNDED
ISIS FTES ASSIGNED TO THE R&D PLAN IN ACCORDANCE WITH SECTION 3.5.1 FOR THE
PERIOD OF TIME COMMENCING ON THE EFFECTIVE DATE AND ENDING ON THE LAST DAY OF
THE THIRD CALENDAR QUARTER OF [***].

 

(C)                                                                                                                                 
THEREAFTER, NO EARLIER THAN [***] BEFORE THE [***] OF ANY CALENDAR QUARTER
DURING THE COLLABORATION TERM, ISIS WILL INVOICE OMI IN THE FORM PROVIDED AS
APPENDIX 7, AND WITHIN [***] OF RECEIPT OF SUCH INVOICE FROM ISIS, OMI WILL PAY
ISIS FOR THE OMI-FUNDED ISIS FTES ASSIGNED TO THE R&D PLAN IN ACCORDANCE WITH
SECTION 3.5.1 FOR SUCH CALENDAR QUARTER (A PRORATED AMOUNT WILL BE PAYABLE FOR
ANY PORTION OF A CALENDAR QUARTER). SUCH FTE PAYMENT OBLIGATION OF OMI WILL BE
SUBJECT TO ISIS PROVIDING SUCH QUALIFIED FTE SCIENTISTS. NO LATER THAN [***]
FOLLOWING THE END OF EACH CALENDAR QUARTER, ISIS WILL PROVIDE OMI WITH A REPORT
OF THE NUMBER OF FTES ASSIGNED TO THE COLLABORATION WITH A SUMMARY OF THEIR
ACTIVITIES. ANY OVERPAYMENT BY OMI MAY BE APPLIED BY OMI TO THE FUNDING OF ISIS
FTES IN A SUBSEQUENT CALENDAR QUARTER.

 

(D)                                                                                                                                
ISIS WILL BEAR ITS OWN COSTS, INCLUDING COSTS RELATED TO RESEARCH SUPPLIES,
CONSUMABLES AND [***], IN PERFORMING ITS OBLIGATIONS UNDER THE R&D PLAN,
PROVIDED THAT OMI WILL REIMBURSE ISIS FOR (I) [***] EXPENSES IDENTIFIED IN THE
R&D BUDGET (“PROGRAM COSTS”) AND

 

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(II) THE COSTS OF [***]. THE PROGRAM COSTS MAY INCLUDE, FOR EXAMPLE, [***], BUT
WILL NOT INCLUDE ROUTINE LABORATORY SUPPLIES. FOR EACH PROJECT UNDER THE R&D
PLAN, THE R&D COMMITTEE WILL SET A BUDGET FOR THE PROGRAM COSTS. AT THE END OF
EACH CALENDAR QUARTER DURING THE RESEARCH TERM, ISIS WILL INVOICE OMI IN THE
FORM PROVIDED AS APPENDIX 7 FOR THE PROGRAM COSTS INCURRED DURING SUCH CALENDAR
QUARTER, PROVIDED, HOWEVER, THAT (X) FOR ANY PARTICULAR ITEM OF SUCH COST IN
EXCESS OF [***] OF THE AMOUNT ALLOCATED FOR SUCH ITEM IN THE BUDGET WILL REQUIRE
THE WRITTEN APPROVAL OF OMI PRIOR TO BEING INCURRED AND (Y) OMI WILL NOT BE
RESPONSIBLE FOR PAYMENT FOR THOSE ITEMS OF SUCH COST IN EXCESS OF [***] OF THE
AMOUNT ALLOCATED FOR SUCH ITEM IN THE BUDGET THAT ARE INCURRED BY ISIS WITHOUT
OMI’S PRIOR WRITTEN CONSENT (WHICH CONSENT CAN BE MADE BY THE R&D COMMITTEE, AS
EVIDENCED BY WRITTEN MINUTES). OMI WILL PAY ANY CORRECT INVOICES WITHIN [***]
AFTER RECEIPT THEREOF. NOTWITHSTANDING THE FOREGOING, IN NO EVENT SHALL THE R&D
BUDGET EXCEED [***] OF THE BUDGETED COSTS IN A CALENDAR QUARTER WITHOUT THE R&D
COMMITTEE’S APPROVAL, EXCEPT TO THE EXTENT ANY PROGRAM COSTS SPECIFICALLY
ALLOCATED TO A DIFFERENT CALENDAR QUARTER IN THE R&D BUDGET ARE ACTUALLY
INCURRED IN THE CALENDAR QUARTER IN QUESTION.

 

SECTION
3.6                                                                                  
TARGET POOL. THE TARGET POOL, AS DEFINED HEREIN (“TARGET POOL”),  IDENTIFIES UP
TO [***] GENE TARGETS INCLUDING THE GENE TARGETS SELECTED FOR COLLABORATIVE
RESEARCH, DEVELOPMENT AND COMMERCIALIZATION UNDER THE RESEARCH PROGRAM (EACH
SUCH GENE TARGET IS A “SELECTED GENE TARGET”). THE NUMBER OF SELECTED GENE
TARGETS IS INITIALLY LIMITED TO [***], BUT THIS LIMIT MAY BE INCREASED AS
CONTEMPLATED BY CLAUSE (III) OF SECTION 3.6.2 BELOW OR UPON MUTUAL WRITTEN
AGREEMENT OF THE PARTIES. THE GENE TARGETS THAT ARE PART OF THE TARGET POOL
(INCLUDING WHICH OF SUCH GENE TARGETS ARE THE SELECTED GENE TARGETS AND WHETHER
SUCH GENE TARGET IS IN “STAGE 1” OR “STAGE 2” UNDER THE R&D PLAN) WILL BE LISTED
ON APPENDIX 12, WHICH MAY BE UPDATED FROM TIME TO TIME BY THE PARTIES IN
ACCORDANCE WITH THIS AGREEMENT. OMI WILL HAVE [***] FOLLOWING THE EFFECTIVE DATE
TO DESIGNATE THE INITIAL GENE TARGETS IT WANTS TO PLACE IN THE TARGET POOL. IN
ADDITION, OMI, AT A MINIMUM, MUST SELECT THE FIRST [***] SELECTED GENE TARGETS
ON OR BEFORE THE EFFECTIVE DATE.

 

3.6.1                                                                                                                    
TARGET SUBSTITUTION PROCEDURES. AT ANY TIME DURING THE RESEARCH TERM THE PARTIES
MAY MUTUALLY AGREE IN WRITING TO SUBSTITUTE AND REPLACE A GENE TARGET FROM THE
TARGET POOL FOR AN EXISTING SELECTED GENE TARGET. IN ADDITION, OMI CAN
UNILATERALLY (I.E. WITHOUT ISIS’ AGREEMENT) SUBSTITUTE A GENE TARGET FROM THE
TARGET POOL FOR AN EXISTING SELECTED GENE TARGET AT ANY TIME DURING THE RESEARCH
TERM; PROVIDED HOWEVER, THAT OMI IS ONLY ALLOWED ONE SUCH UNILATERAL
SUBSTITUTION IN ANY [***] PERIOD UNLESS OMI IS MAKING A SUBSTITUTION PURSUANT TO
AN INQUIRY RESPONSE UNDER SECTION 3.6.2 BELOW OR OMI IS SUBSTITUTING TO REPLACE
A SELECTED GENE TARGET FOR WHICH OMI HAS DESIGNATED A CLINICAL CANDIDATE
(COLLECTIVELY, THE “SUBSTITUTION CONDITIONS”). OMI WILL PROVIDE ISIS WITH
WRITTEN NOTICE OF ITS INTENT TO SUBSTITUTE, INDICATING WHICH SELECTED GENE
TARGET IT WISHES TO SUBSTITUTE OUT AND WHICH NEW GENE TARGET FROM THE TARGET
POOL (THE “PROPOSED SUBSTITUTION TARGET”) IT WISHES TO SUBSTITUTE IN. PROVIDED
OMI HAS SATISFIED THE SUBSTITUTION CONDITIONS, AT SUCH TIME, THE PROPOSED
SUBSTITUTION TARGET WILL BECOME A SELECTED GENE TARGET AND THE GENE TARGET
SUBSTITUTED OUT WILL NO LONGER BE CONSIDERED PART OF THE TARGET POOL OR A
COLLABORATION GENE TARGET, ISIS’ OBLIGATIONS (INCLUDING BUT NOT LIMITED TO
SECTION 2.3) AND OMI’S LICENSES UNDER THIS AGREEMENT WITH RESPECT TO SUCH GENE
TARGET AND ANY ASOS TARGETING SUCH GENE TARGETS WILL TERMINATE. IN SUCH EVENT,
OMI WILL BE ABLE TO ADD A NEW GENE TARGET TO THE TARGET POOL IN ACCORDANCE WITH
SECTION 3.6.3 BELOW.

 

3.6.2                                                                                                                    
THIRD PARTY INQUIRIES. IF DURING THE RESEARCH TERM, ISIS RECEIVES A [***] FROM A
THIRD PARTY TO OBTAIN A LICENSE FROM OR COLLABORATE WITH ISIS REGARDING A GENE
TARGET THAT IS IN THE TARGET POOL BUT IS NOT A SELECTED GENE TARGET (A
“REQUESTED TARGET”), ISIS WILL PROMPTLY NOTIFY OMI IN WRITING REGARDING SUCH
REQUEST (WITHOUT ANY REQUIREMENT TO IDENTIFY SUCH THIRD PARTY) (AN “INQUIRY
NOTICE”). OMI WILL HAVE [***] FROM RECEIVING AN INQUIRY NOTICE TO NOTIFY ISIS IN
WRITING WHETHER OMI WISHES TO (I) REMOVE SUCH REQUESTED TARGET FROM THE TARGET
POOL, (II) SUBSTITUTE OUT A SELECTED GENE TARGET FOR SUCH REQUESTED TARGET IN
ACCORDANCE WITH SECTION 3.6.1 ABOVE, OR (III) MUTUALLY AGREE WITH ISIS UPON AN
APPROPRIATE EXPANSION TO THE R&D PLAN AND

 

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R&D BUDGET SUCH THAT THE R&D PLAN INCLUDES SUCH REQUESTED TARGET AS A [***] (OR
[***], AS THE CASE MAY BE) SELECTED TARGET (EACH SUCH NOTICE, AN “INQUIRY
RESPONSE”). IF OMI PROVIDES ISIS WITH AN INQUIRY RESPONSE CONTEMPLATED BY
SUBPART (I) ABOVE OR FAILS TO PROVIDE ISIS WITH AN INQUIRY RESPONSE WITHIN [***]
OF RECEIVING AN INQUIRY NOTICE, THE REQUESTED TARGET WILL NO LONGER BE PART OF
THE TARGET POOL, WILL NO LONGER BE CONSIDERED A COLLABORATION GENE TARGET, ISIS’
OBLIGATIONS UNDER THIS AGREEMENT WITH RESPECT TO SUCH REQUESTED TARGET
(INCLUDING BUT NOT LIMITED TO SECTION 2.3) WILL TERMINATE AND OMI WILL BE ABLE
TO ADD A NEW GENE TARGET TO THE TARGET POOL IN ACCORDANCE WITH SECTION 3.6.3
BELOW. IF OMI PROVIDES ISIS WITH AN INQUIRY RESPONSE CONTEMPLATED BY SUBPART
(III) ABOVE, ISIS AND OMI WILL MUTUALLY AGREE UPON AN APPROPRIATE EXPANSION TO
THE R&D PLAN AND R&D BUDGET SUCH THAT THE R&D PLAN INCLUDES SUCH REQUESTED
TARGET, IN WHICH EVENT THE REQUESTED TARGET WILL BE CONSIDERED A SELECTED GENE
TARGET.

 

3.6.3                                                                                                                    
ADDING TARGETS TO TARGET POOL. IF DURING THE RESEARCH TERM AND AS A RESULT OF
SECTIONS 3.6.1 OR 3.6.2 ABOVE OR BECAUSE OMI HAS DESIGNATED AS A CLINICAL
CANDIDATE A COMPOUND TO A SELECTED GENE TARGET, THE TARGET POOL HAS LESS THAN
[***] GENE TARGETS, OMI MAY ADD A NEW GENE TARGET TO THE TARGET POOL BY
PROVIDING ISIS WITH A WRITTEN NOTICE (THE “REQUEST NOTICE”) OF THE GENE TARGET
IT WISHES TO ADD TO THE TARGET POOL (THE “PROPOSED TARGET”). THE REQUEST NOTICE
WILL INCLUDE THE GENE NAME, THE NCBI ACCESSION NUMBER OR NUCLEIC ACID SEQUENCE
FOR THE PROPOSED TARGET. WITHIN [***] OF RECEIPT OF THE REQUEST NOTICE, ISIS
WILL GIVE OMI WRITTEN NOTICE (I) STATING IF ANY OF THE CRITERIA SET FORTH IN
CLAUSES (A) THROUGH (C) BELOW APPLIED TO SUCH PROPOSED TARGET AT THE TIME OF
ISIS’ RECEIPT OF THE REQUEST NOTICE AND (II) FULLY DISCLOSING ALL RELEVANT ISIS
IN-LICENSED AGREEMENTS AND PRIOR THIRD PARTY AGREEMENTS AND OTHER POTENTIAL
ENCUMBRANCES KNOWN BY ISIS AND RELATED TO THE PROPOSED TARGET (“TARGET
ENCUMBRANCES”). IF, AT SUCH TIME, THE PROPOSED TARGET IS (A) SUBJECT TO ISIS’
OWN INTERNAL PROGRAM PURSUANT TO WHICH ISIS HAS IDENTIFIED A LEAD COMPOUND, (B)
ENCUMBERED BY A CONTRACTUAL OBLIGATION BETWEEN ISIS AND A THIRD PARTY THAT WOULD
PRECLUDE ISIS FROM COLLABORATING WITH OMI UNDER THIS AGREEMENT OR FROM GRANTING
A LICENSE UNDER SECTION 2.1 WITH RESPECT TO THE PROPOSED TARGET, OR (C) THE
SUBJECT OF A [***] ISIS HAS RECEIVED FROM A THIRD PARTY REGARDING A POTENTIAL
LICENSE OR COLLABORATION, THEN, IN EACH CASE, THE PROPOSED TARGET WILL BE
REJECTED AND WILL NOT BECOME A PART OF THE TARGET POOL. IF THE PROPOSED TARGET
IS REJECTED, OMI CAN REQUEST ANOTHER GENE TARGET IN ACCORDANCE WITH THE TERMS OF
THIS SECTION 3.6.3. IF THE PROPOSED TARGET IS NOT REJECTED, THE PROPOSED TARGET
WILL BECOME A MEMBER OF THE TARGET POOL; PROVIDED, HOWEVER, THAT IF THE PROPOSED
TARGET HAS ANY TARGET ENCUMBRANCES (AND ISIS HAS FULLY DISCLOSED SUCH TARGET
ENCUMBRANCES TO OMI), BEFORE SUCH PROPOSED TARGET CAN BECOME A SELECTED GENE
TARGET, OMI MUST AGREE IN WRITING (WITHIN [***] OF RECEIVING FROM ISIS THE
DESCRIPTION OF SUCH TARGET ENCUMBRANCES) TO ASSUME ALL APPLICABLE TARGET
ENCUMBRANCES FOR SUCH PROPOSED GENE TARGET. TARGET ENCUMBRANCES ASSUMED BY OMI
UNDER THIS SECTION WILL BE CONSIDERED ISIS THIRD PARTY PAYMENTS UNDER SECTION
6.5.2. IN ADDITION, WHENEVER A GENE TARGET BECOMES PART OF THE TARGET POOL, THE
R&D COMMITTEE WILL AGREE WHETHER A COMPOUND TARGETING SUCH GENE TARGET IS IN
[***] AS SET FORTH IN THE R&D PLAN.

 

3.6.4                                                                                                                    
LAPSE OF THIRD PARTY INTEREST. NOTWITHSTANDING THE PROVISIONS OF SECTION 3.6.2
AND 3.6.3, IF ANY GENE TARGET IS EITHER REMOVED FROM THE TARGET POOL PURSUANT TO
CLAUSE (I) OF SECTION 3.6.2 OR NOT INCLUDED IN THE TARGET POOL PURSUANT TO
CLAUSE (C) OF SECTION 3.6.3 AND THE PROPOSED TRANSACTION/NEGOTIATION HAS NOT,
WITHIN [***] OF SUCH REMOVAL OR REJECTION RESULTED IN A SIGNED AGREEMENT
PREVENTING ISIS FROM INCLUDING SUCH GENE TARGET IN THE TARGET POOL, ISIS WILL
NOTIFY OMI IN WRITING. IN SUCH EVENT, BUT WITHIN THE [***] FOLLOWING RECEIPT OF
SUCH NOTICE, OMI WILL HAVE THE RIGHT TO INCLUDE SUCH GENE TARGET IN THE TARGET
POOL IN ADDITION TO THE GENE TARGETS ALREADY IN THE TARGET POOL EVEN IF IT
INCREASES THE SIZE OF THE TARGET POOL ABOVE [***] GENE TARGETS.

 

3.6.5                                                                                                                    
CONFIDENTIALITY. THE FACT THAT OMI HAS INCLUDED A PARTICULAR GENE TARGET IN THE
TARGET POOL OR HAS SELECTED A GENE TARGET AS A SELECTED GENE TARGET IS
CONFIDENTIAL INFORMATION OF OMI.

 

3.6.6                                                                                                                    
END OF RESEARCH TERM. UPON THE EXPIRATION OF THE RESEARCH TERM, ANY GENE TARGETS
IN THE TARGET POOL THAT ARE NOT SELECTED GENE TARGETS WILL NO LONGER BE
CONSIDERED A COLLABORATION GENE TARGET AND ISIS’ OBLIGATIONS UNDER THIS
AGREEMENT WITH RESPECT TO SUCH GENE

 

7

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TARGETS (INCLUDING BUT NOT LIMITED TO SECTION 2.3) WILL TERMINATE. IN ADDITION,
WITHIN [***] FOLLOWING THE END OF THE RESEARCH TERM, IF A RESEARCH COMPOUND
TARGETING A SELECTED GENE TARGET HAS NOT SATISFIED THE DESIGNATION OF A COMPOUND
AS CLINICAL CANDIDATE, THEN SUCH SELECTED GENE TARGET WILL NO LONGER BE
CONSIDERED A COLLABORATION GENE TARGET. ISIS’ OBLIGATIONS (INCLUDING BUT NOT
LIMITED TO SECTION 2.3) AND OMI’S LICENSES UNDER THIS AGREEMENT WITH RESPECT TO
SUCH GENE TARGET AND ANY ASOS TARGETING SUCH GENE TARGET WILL THEN TERMINATE,
AND, SUBJECT TO ARTICLE 11, ISIS WILL OWN ANY DATA GENERATED UNDER THE R&D PLAN
FOR SUCH GENE TARGET AND ANY ASOS TARGETING SUCH GENE TARGET. OMI WILL HAVE THE
RIGHT TO USE ANY DATA GENERATED UNDER THE R&D PLAN FOR ITS OWN INTERNAL RESEARCH
PURPOSES THAT ARE UNRELATED TO ANY DISCONTINUED PRODUCTS.

 

SECTION
3.7                                                                                  
COLLABORATION RECORDS. EACH PARTY AND ITS CONTRACTORS WILL MAINTAIN COMPLETE AND
ACCURATE RECORDS OF ALL WORK CONDUCTED IN THE PERFORMANCE OF THE COLLABORATION
AND ALL RESULTS, DATA, INVENTIONS AND DEVELOPMENTS MADE IN THE PERFORMANCE OF
THE COLLABORATION. SUCH RECORDS WILL BE IN SUFFICIENT DETAIL AND IN GOOD
SCIENTIFIC MANNER APPROPRIATE FOR PATENT AND REGULATORY PURPOSES. ISIS WILL
MAINTAIN APPROPRIATE RECORDS SUFFICIENT TO DOCUMENT THE WORK PERFORMED BY EACH
OF THE INDIVIDUALS COMPRISING THE FTES WORKING IN SUPPORT OF THE COLLABORATION
AND THE TIME SUCH INDIVIDUALS SPENT WORKING IN SUPPORT OF THE COLLABORATION.
UPON REASONABLE PRIOR WRITTEN NOTICE, ISIS WILL PROVIDE OMI THE RIGHT TO INSPECT
SUCH RECORDS, AND WILL PROVIDE COPIES OF ALL REQUESTED RECORDS, TO THE EXTENT
REASONABLY REQUIRED FOR THE PERFORMANCE OF OMI’S RIGHTS AND OBLIGATIONS UNDER
THIS AGREEMENT. UPON REASONABLE PRIOR WRITTEN NOTICE, AND SOLELY WITH RESPECT TO
DISCONTINUED PRODUCTS, OMI WILL PROVIDE ISIS THE RIGHT TO INSPECT SUCH RECORDS,
AND WILL PROVIDE COPIES OF ALL REQUESTED RECORDS, TO THE EXTENT REASONABLY
REQUIRED FOR THE PERFORMANCE OF ISIS’ RIGHTS AND OBLIGATIONS UNDER THIS
AGREEMENT. IN EACH CASE, EACH PARTY WILL MAINTAIN SUCH RECORDS AND THE
INFORMATION IT RECEIVES FROM THE OTHER PARTY IN CONFIDENCE IN ACCORDANCE WITH
ARTICLE 8 HEREOF AND WILL NOT USE SUCH RECORDS OR INFORMATION EXCEPT TO THE
EXTENT OTHERWISE PERMITTED BY THIS AGREEMENT.

 

SECTION
3.8                                                                                  
DISCLOSURE OF RESULTS OF RESEARCH PROGRAM AND DEVELOPMENT PROGRAM.  THE RESULTS
OF ALL WORK PERFORMED BY THE PARTIES AS PART OF THE COLLABORATION WILL BE
PROMPTLY DISCLOSED TO THE OTHER PARTY IN A REASONABLE MANNER AS SUCH RESULTS ARE
OBTAINED. IN ADDITION, ISIS WILL PERIODICALLY PROVIDE OMI WITH WRITTEN REPORTS
OF THE WORK PERFORMED UNDER THE COLLABORATION AND THE RESULTS ACHIEVED BY ISIS.
ISIS AND OMI WILL PROVIDE REPORTS AND ANALYSES AT EACH R&D COMMITTEE MEETING,
AND MORE FREQUENTLY ON REASONABLE REQUEST BY THE R&D COMMITTEE, DETAILING THE
CURRENT STATUS OF THE RESEARCH PROGRAM AND DEVELOPMENT PROGRAM. IN ADDITION, ON
REASONABLE REQUEST BY A PARTY, THE OTHER PARTY WILL MAKE PRESENTATIONS OF ITS
ACTIVITIES IN THE PERFORMANCE OF THE COLLABORATION TO INFORM SUCH PARTY OF THE
DETAILS OF THE WORK DONE IN THE PERFORMANCE OF THE COLLABORATION. THE RESULTS,
REPORTS, ANALYSES AND OTHER INFORMATION REGARDING THE COLLABORATION DISCLOSED BY
ONE PARTY TO THE OTHER PARTY PURSUANT HERETO MAY BE USED ONLY IN ACCORDANCE WITH
THE RIGHTS GRANTED AND OTHER TERMS AND CONDITIONS UNDER THIS AGREEMENT. UPON
REASONABLE REQUEST BY OMI, ISIS WILL PROVIDE OMI WITH ADDITIONAL DATA, RESULTS
AND OTHER INFORMATION WITH RESPECT TO THE WORK PERFORMED BY ISIS IN THE
PERFORMANCE OF THE COLLABORATION. ANY REPORTS REQUIRED, EXCLUDING REPORTS NEEDED
FOR SUBMISSION TO A REGULATORY AGENCY, UNDER THIS SECTION 3.8 MAY TAKE THE FORM
OF AND BE RECORDED IN MINUTES OF THE R&D COMMITTEE THAT WILL CONTAIN COPIES OF
ANY SLIDES RELATING TO THE RESULTS AND PRESENTED TO THE R&D COMMITTEE. REPORTS
NEEDED TO SUPPORT REGULATORY SUBMISSIONS AND UPDATES TO A REGULATORY AGENCY WILL
BE PROVIDED [***] AND IN A FORMAT AS AGREED UPON BY THE R&D COMMITTEE OR
DESIGNATED SUB COMMITTEE.

 

IN ADDITION, WITHIN [***] OF OMI’S REQUEST, ISIS WILL TRANSFER TO OMI COPIES OF
ALL DATA, RESULTS, AND INFORMATION RELATED TO TESTING AND STUDIES OF THE
COMPOUNDS (INCLUDING ANALYTICAL TEST RESULTS AND NON-CLINICAL PHARMACOLOGY AND
SAFETY DATA) IN THE POSSESSION OF ISIS TO THE EXTENT SUCH DATA, RESULTS AND/OR
INFORMATION IS NECESSARY OR USEFUL FOR THE CONTINUED

 

8

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Development and Commercialization of Products, including but not limited to any
and all information directly relating to manufacturing methods (including
related analytical methods) of the Compounds or Products.

 

SECTION
3.9                                                                                  
RESEARCH EFFORTS; RESOURCES, SCIENTIFIC MANNER. EACH PARTY WILL USE COMMERCIALLY
REASONABLE EFFORTS TO PERFORM THE COLLABORATION, INCLUDING ITS RESPONSIBILITIES
UNDER THE R&D PLAN.

 

3.9.1                                                                                                                    
THROUGHOUT THE COLLABORATION TERM, ISIS WILL ASSIGN NO LESS THAN THE NUMBER OF
FTE QUALIFIED SCIENTISTS SPECIFIED IN THE R&D PLAN TO PERFORM THE WORK SET FORTH
IN THE THEN-APPLICABLE R&D PLAN. THE MIXTURE OF SKILLS AND LEVELS OF SUCH FTES
WILL BE APPROPRIATE TO THE SCIENTIFIC OBJECTIVES OF THE RESEARCH PROGRAM OR
DEVELOPMENT PROGRAM (AS APPLICABLE).

 

3.9.2                                                                                                                    
EACH PARTY WILL MAINTAIN LABORATORIES, OFFICES, ADMINISTRATIVE SUPPORT AND ALL
OTHER FACILITIES AT ITS OWN EXPENSE AND RISK NECESSARY TO CARRY OUT ITS
RESPONSIBILITIES UNDER THE COLLABORATION PURSUANT TO THE R&D PLAN. EACH PARTY
AGREES TO MAKE ITS EMPLOYEES REASONABLY AVAILABLE AT THEIR RESPECTIVE PLACES OF
EMPLOYMENT TO CONSULT WITH THE OTHER PARTY ON ISSUES ARISING DURING THE
PERFORMANCE OF THE COLLABORATION. OMI AND ISIS WILL COOPERATE WITH EACH OTHER IN
CARRYING OUT THE COLLABORATION, AND EACH PARTY WILL CONTRIBUTE ITS RELEVANT
KNOW-HOW AND EXPERIENCE NECESSARY TO CARRY OUT THE COLLABORATION.

 

3.9.3                                                                                                                    
THE COLLABORATION WILL BE CONDUCTED BY EACH PARTY IN GOOD SCIENTIFIC MANNER, AND
IN COMPLIANCE WITH ALL APPLICABLE GCP, GLP AND GMP, AND APPLICABLE LEGAL
REQUIREMENTS, TO ATTEMPT TO ACHIEVE EFFICIENTLY AND EXPEDITIOUSLY THE OBJECTIVES
OF THE COLLABORATION. EACH PARTY WILL COMPLY WITH ALL APPLICABLE LAWS, IN THE
PERFORMANCE OF WORK UNDER THIS AGREEMENT.

 

3.9.4                                                                                                                    
ISIS WILL NOT PERFORM ANY OF ITS OBLIGATIONS UNDER THE R&D PLAN THROUGH ONE OR
MORE SUBCONTRACTORS OR CONSULTANTS, WITHOUT THE PRIOR WRITTEN APPROVAL OF OMI,
SUCH APPROVAL NOT TO BE UNREASONABLY WITHHELD. OMI WILL PROMPTLY NOTIFY ISIS
REGARDING ANY THIRD PARTY OMI USES TO CONDUCT RESEARCH UNDER THE R&D PLAN OR
THAT OMI TRANSFERS COMPOUNDS OR PRODUCTS TO, INCLUDING IDENTIFYING SUCH THIRD
PARTY.

 

SECTION
3.10                                                                           
MATERIALS TRANSFER. IN ORDER TO FACILITATE THE COLLABORATION, EITHER PARTY MAY
PROVIDE TO THE OTHER PARTY CERTAIN MATERIALS FOR USE BY THE OTHER PARTY IN
FURTHERANCE OF THE COLLABORATION. ALL SUCH MATERIALS WILL BE USED BY THE
RECEIVING PARTY IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS AGREEMENT
SOLELY FOR PURPOSES OF PERFORMING ITS RIGHTS AND OBLIGATIONS UNDER THIS
AGREEMENT, AND THE RECEIVING PARTY WILL NOT TRANSFER SUCH MATERIALS TO ANY THIRD
PARTY UNLESS EXPRESSLY CONTEMPLATED BY THIS AGREEMENT OR UPON THE WRITTEN
CONSENT OF THE SUPPLYING PARTY. ANY MATERIALS PROVIDED BY OMI TO ISIS IN SUPPORT
OF THE COLLABORATION, INCLUDING BUT NOT LIMITED TO ANY BIOLOGICAL MATERIALS WITH
RESPECT TO SCREENING ASSAYS, INCLUDING ANY PROGENY, EXPRESSION PRODUCTS,
MUTANTS, REPLICATES, TISSUE SAMPLES, CELLS, DERIVATIVES AND MODIFICATIONS
THEREOF, (SUCH MATERIALS BEING INDIVIDUALLY AND COLLECTIVELY REFERRED TO AS THE
“OMI MATERIALS”) WILL BE USED BY ISIS SOLELY FOR PURPOSES OF PERFORMING THE
COLLABORATION AND FOR NO OTHER PURPOSE, AND ANY REMAINING OMI MATERIALS
(INCLUDING, AS APPLICABLE, ANY PROGENY, EXPRESSION PRODUCTS, MUTANTS,
REPLICATES, TISSUE SAMPLES, CELLS, DERIVATIVES AND MODIFICATIONS THEREOF) WILL
BE RETURNED TO OMI (OR DESTROYED AS MAY BE REQUESTED BY OMI IN WRITING) PROMPTLY
FOLLOWING THE END OF THE RESEARCH TERM OR EARLIER UPON REQUEST BY OMI. ALL
INFORMATION RELATED TO SUCH OMI MATERIALS WILL BE OMI CONFIDENTIAL INFORMATION.
ALL SUCH MATERIALS MUST BE USED WITH PRUDENCE AND APPROPRIATE CAUTION IN ANY
EXPERIMENTAL WORK, SINCE ALL OF THEIR CHARACTERISTICS MAY NOT BE KNOWN. ISIS
RECOGNIZES THAT OMI’S OBLIGATIONS UNDER THE R&D PLAN WILL NECESSARILY INVOLVE
THE TRANSFER OF MATERIALS TO THIRD PARTY CONTRACTORS AND THAT IS EXPRESSLY
CONTEMPLATED BY THIS AGREEMENT.

 

9

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SECTION
3.11                                                                           
SAFETY DATABASE

 

3.11.1              OMI SHALL ESTABLISH THE GLOBAL SAFETY DATABASE OF ADVERSE
EVENTS AND PREGNANCY REPORTS FOR THE COMPOUND/PRODUCT THAT WILL BE USED FOR
REGULATORY REPORTING AND RESPONSES TO SAFETY QUERIES FROM REGULATORY
AUTHORITIES. ISIS SHALL PROMPTLY TRANSFER ALL CLINICAL ADVERSE EVENT AND DRUG
EXPOSURE DURING PREGNANCY DATA THAT IT HAS REGARDING THE COMPOUNDS OR PRODUCTS
TO OMI FOR ENTRY INTO THE GLOBAL SAFETY DATABASE UPON REQUEST FROM OMI.

 

3.11.2              [***] A DATABASE THAT INCLUDES INFORMATION REGARDING THE
SAFETY AND TOLERABILITY OF [***] DRUG COMPOUNDS, INDIVIDUALLY AND AS A CLASS,
INCLUDING INFORMATION DISCOVERED DURING PRE-CLINICAL AND CLINICAL DEVELOPMENT
(THE “[***] DATABASE”).

 

(A)                                                                                                                                 
IN AN EFFORT TO MAXIMIZE UNDERSTANDING OF THE [***] WILL COOPERATE IN CONNECTION
WITH POPULATING THE [***] DATABASE. IN ACCORDANCE WITH APPLICABLE LAW AND ANY
APPLICABLE INFORMED CONSENTS OR OTHER THIRD PARTY OBLIGATIONS, [***] WITH COPIES
OF [***] SERIOUS ADVERSE EVENT FINAL REPORTS RELATED TO [***]. IN ADDITION, IN
CONNECTION WITH ANY REPORTED SERIOUS ADVERSE EVENT (INCLUDING ANY FOLLOW-UP OR
AMENDED REPORTS), IN ACCORDANCE WITH APPLICABLE LAW AND ANY APPLICABLE INFORMED
CONSENTS OR OTHER THIRD PARTY OBLIGATIONS AND TO THE EXTENT [***] HAS COLLECTED
SUCH DATA, [***], THE FOLLOWING [***]  ALL SUCH INFORMATION [***] IN CONNECTION
WITH THIS SECTION WILL BE [***] CONFIDENTIAL INFORMATION; PROVIDED, HOWEVER,
THAT [***] ANY THIRD PARTY SO LONG AS [***] DOES NOT DISCLOSE TO ANY THIRD PARTY
THE [***] IN CONNECTION WITH ANY SUCH DISCLOSURE.

 

(B)                                                                                                                                
FROM TIME TO TIME, [***] THE INFORMATION IN THE [***] DATABASE TO CONDUCT
ANALYSES TO KEEP [***] INFORMED REGARDING CLASS GENERIC PROPERTIES OF [***],
INCLUDING WITH RESPECT TO SAFETY. AS SUCH, IF AND WHEN [***] THAT MAY BE
RELEVANT TO A COMPOUND OR PRODUCT (INCLUDING POTENTIAL CLASS-RELATED TOXICITY
LIABILITIES), [***] OF SUCH ISSUES, AND IF REQUESTED, PROVIDE THE DATA
SUPPORTING [***] REGARDING SUCH ISSUES.

 

(C)                                                                                                                                 
[***]

 

(D)                                                                                                                                
IN ADDITION, EACH PARTY WILL NOTIFY THE OTHER PARTY IN WRITING IF SUCH PARTY
CONFIRMS THAT A SERIOUS ADVERSE EVENT WITH RESPECT TO A PRODUCT HAS OCCURRED.
SUCH NOTICE WILL BE PROVIDED WITHIN [***] OF CONFIRMING THE SERIOUS ADVERSE
EVENT.

 

ARTICLE 4 -
MANUFACTURING

 

SECTION
4.1                                                                                  
SUPPLY OF ASO FOR RESEARCH PROGRAM. ISIS AGREES TO MANUFACTURE AND SUPPLY ALL
ASOS FOR USE IN SUPPORT OF THE RESEARCH PROGRAM. [***] WILL BEAR ITS OWN COSTS
FOR THE MANUFACTURE OF ALL ASO NEEDED FOR RESEARCH THROUGH THE [***] UNDER THE
R&D PLAN. ONCE A SELECTED GENE TARGET HAS [***] UNDER THE R&D PLAN, OMI WILL
ORDER ADDITIONAL QUANTITIES OF API FOR RESEARCH COMPOUNDS DIRECTED TO SUCH
SELECTED GENE TARGET IN [***] INCREMENTS. ISIS AGREES TO SUPPLY SUCH QUANTITIES
WHICH WILL BE SUPPLIED OUTSIDE THE CLINICAL MANUFACTURING & SUPPLY AGREEMENT;
PROVIDED, HOWEVER, THAT ISIS WILL NOT CHARGE FOR API USED TO [***]. THE COST TO
MANUFACTURE SUCH ADDITIONAL QUANTITIES OF ASOS WILL BE NEGOTIATED AND AGREED TO
IN GOOD FAITH BY THE PARTIES, BUT WILL NOT EXCEED $[***] PER [***] FOR MOE
GAPMERS.

 

SECTION
4.2                                                                                  
SUPPLY OF EXISTING DEVELOPMENT COMPOUNDS. WITHIN [***] OF RECEIPT OF INVOICE
FROM ISIS IN THE FORM PROVIDED AS APPENDIX 7, THE INVOICE RECEIVED NO SOONER
THAN THE EFFECTIVE DATE, OMI WILL PAY ISIS $[***] FOR THE [***] THAT IS IN ISIS’
POSSESSION ON [***]. THE $[***] REPRESENTS ISIS’ OUT-OF-POCKET EXPENSES INCURRED
IN CONNECTION WITH MANUFACTURING SUCH [***]). SUCH API AND DRUG PRODUCT WILL BE
USED AS OUTLINED IN THE R&D PLAN. THE PARTIES ACKNOWLEDGE AND AGREE THAT SUCH
API AND DRUG PRODUCT MAY BE USED BETWEEN [***] TO CONDUCT ACTIVITIES OUTLINED IN
THE R&D PLAN. ISIS SHALL DELIVER SUCH API AS GOVERNED BY THE R&D PLAN OR AS
OTHERWISE REQUESTED BY OMI WITHIN A REASONABLE PERIOD OF TIME AFTER SUCH
REQUEST.

 

SECTION
4.3                                                                                  
CLINICAL SUPPLY OF API THROUGH COMPLETION OF [***]. ISIS AND OMI WILL ENTER INTO
A MANUFACTURE AND SUPPLY AGREEMENT(S) FOR THE [***] (A “CLINICAL SUPPLY
AGREEMENT”) FOR EACH DESIGNATION OF A COMPOUND AS A CLINICAL CANDIDATE. EACH
CLINICAL SUPPLY

 

10

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AGREEMENT WILL INCLUDE CUSTOMARY TERMS AND CONDITIONS TO BE NEGOTIATED IN GOOD
FAITH AND THE CLINICAL SUPPLY AGREEMENT IS ATTACHED HERETO AS APPENDIX 8 FOR
ISIS 325568 AND ISIS 377131, WHICH WILL SERVE AS A TEMPLATE FOR FUTURE CLINICAL
SUPPLY AGREEMENTS.

 

SECTION
4.4                                                                                  
OPTION TO SUPPLY GCGR AND GCCR COMPOUNDS. AT ANY TIME (INCLUDING, BUT NOT
LIMITED TO IF OMI DETERMINES THAT ISIS IS UNABLE OR UNLIKELY TO MEET ISIS’
SUPPLY OBLIGATIONS), AT OMI’S WRITTEN REQUEST AND CONSISTENT WITH THE SUPPLY
AGREEMENT, ISIS WILL TRANSFER TO OMI OR A THIRD PARTY MANUFACTURER SELECTED BY
OMI ALL DOCUMENTATION AND INFORMATION, INCLUDING ISIS MANUFACTURING AND
ANALYTICAL TECHNOLOGY AND PERMIT OMI TO REFERENCE AND USE ANY REGULATORY
FILINGS, AND OTHERWISE FULLY COOPERATE WITH OMI TO ENABLE OMI TO MAKE OR HAVE
MADE API FOR USE BY OMI IN ACCORDANCE WITH THIS AGREEMENT.

 

SECTION
4.5                                                                                  
[***] AND COMMERCIAL MANUFACTURING AND SUPPLY OF COMPOUND AND PRODUCT.

 

4.5.1                     PRODUCT MANUFACTURING RESPONSIBILITY. EXCEPT AS
OTHERWISE PROVIDED IN THIS AGREEMENT, THE PARTIES ACKNOWLEDGE AND AGREE THAT OMI
WILL BE SOLELY RESPONSIBLE FOR THE MANUFACTURING OF COMPOUND AND PRODUCT FOR
[***] AND COMMERCIAL SUPPLY, INCLUDING MANAGEMENT OF THE OVERALL MANUFACTURING
STRATEGY AND TACTICS, FORMULATION, INTERNAL OR CONTRACT MANUFACTURER SELECTION
FOR API AND FINISHED PRODUCT, ASSOCIATED AUDITS, STABILITY TESTING, PRICING,
RELATIONSHIP WITH CONTRACT MANUFACTURER(S) AND ANY WORK PROPOSALS OR CONTRACT
NEGOTIATIONS OR CONTRACTS THEMSELVES.

 

4.5.2                     CLINICAL SUPPLY OF ISIS 325568 AND ISIS 377131 API FOR
[***]. SOLELY AT THE DISCRETION OF OMI, OMI WILL NOTIFY ISIS OF OMI’S INTENT TO
REQUIRE ISIS TO SUPPLY QUANTITIES OF ISIS 325568 AND ISIS 377131 AS IS NECESSARY
TO FULFILL OMI’S PRODUCT REQUIREMENTS FOR [***] STUDIES. OMI WILL NOTIFY ISIS OF
ITS INTENT, LEAVING A REASONABLE TIME TO PERMIT THE PARTIES TO NEGOTIATE A [***]
CLINICAL SUPPLY AGREEMENT, SUCH THAT THE SUPPLY AGREEMENT IS IN PLACE NO LATER
THAN [***] PRIOR TO THE PLANNED DELIVERY DATE FOR SUCH API.

 

4.5.3                     TRANSFER OF MANUFACTURING AND ANALYTICAL TECHNOLOGY.

 

(A)                                                                                                                                 
AS SOON AS IS PRACTICABLE AFTER ISIS RECEIVES A WRITTEN REQUEST FROM OMI TO
TRANSFER ANY ISIS MANUFACTURING AND ANALYTICAL TECHNOLOGY TO OMI, BUT NOT LATER
THAN 30 DAYS AFTER RECEIPT OF SUCH REQUEST, ISIS WILL INITIATE TRANSFER TO OMI,
OR AT OMI’S OPTION, TO SUCH THIRD PARTY MANUFACTURER, THE ISIS MANUFACTURING AND
ANALYTICAL TECHNOLOGY. FOR SUCH PURPOSE, ISIS WILL TRANSFER TO OMI OR SUCH THIRD
PARTY MANUFACTURER ALL DOCUMENTATION AND INFORMATION, AND PERMIT OMI TO
REFERENCE AND USE ANY REGULATORY FILINGS, AND OTHERWISE FULLY COOPERATE WITH OMI
TO ENABLE OMI TO MAKE OR HAVE MADE API AND FINISHED DRUG PRODUCT FOR USE BY OMI
IN ACCORDANCE WITH THIS AGREEMENT AT NO COST TO OMI. IN ADDITION, UPON REQUEST
BY OMI, ISIS WILL PROVIDE OMI WITH A REASONABLE LEVEL OF TECHNICAL ASSISTANCE
AND CONSULTATION IN CONNECTION WITH THE TRANSFER OF SUCH MANUFACTURING AND
ANALYTICAL TECHNOLOGY TO HELP ENABLE OMI OR SUCH THIRD PARTY MANUFACTURER (AS
APPLICABLE) TO MANUFACTURE AND RELEASE SUCH API AND FINISHED DRUG PRODUCT. FOR
SUCH PURPOSE ISIS WILL PROVIDE OMI WITH REASONABLE ACCESS BY TELECONFERENCE OR
IN-PERSON AT ISIS’ FACILITIES TO ISIS PERSONNEL INVOLVED IN THE MANUFACTURING
AND RELEASE OF API AND FINISHED DRUG PRODUCT, PROVIDED THAT IF OMI REQUESTS SUCH
TECHNICAL ASSISTANCE IN EXCESS OF [***] OF TECHNICAL ASSISTANCE, [***]. SUCH
PAYMENT WILL BE MADE TO ISIS WITHIN [***] AFTER OMI’S RECEIPT OF AN INVOICE BY
ISIS IN THE FORM PROVIDED AS APPENDIX 7 REASONABLY DETAILING ISIS’ TIME
EXPENDED, TOGETHER WITH REASONABLE SUBSTANTIATION OF ANY OUT-OF-POCKET EXPENSES
INCURRED.

 

(B)                                                                                                                                
OMI AND/OR ITS THIRD PARTY MANUFACTURER WILL USE ANY ISIS KNOW-HOW OR PRODUCT
SPECIFIC KNOW-HOW AND OTHER DOCUMENTATION AND INFORMATION TRANSFERRED PURSUANT
TO SECTION 4.4 AND ARTICLE 4.5  SOLELY FOR THE PURPOSE OF MANUFACTURING API AND
PRODUCT FOR OMI’S (OR ITS AFFILIATE’S OR LICENSEE’S) BENEFIT PURSUANT TO THE
EXERCISE OF OMI’S RIGHTS UNDER THIS AGREEMENT, AND FOR NO OTHER PURPOSE. OMI
ACKNOWLEDGES AND AGREES THAT ANY SUCH TRANSFER OF SUCH MANUFACTURING TECHNOLOGY
TO A THIRD PARTY MANUFACTURER MUST SATISFY THE CONDITIONS SET FORTH IN SECTION
2.2(B) AND WILL BE SUBJECT TO A WRITTEN AGREEMENT BETWEEN SUCH THIRD PARTY

 

11

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MANUFACTURER AND OMI THAT CONTAINS OBLIGATIONS OF CONFIDENTIALITY SUBSTANTIALLY
EQUIVALENT TO THOSE OF THIS AGREEMENT.

 

SECTION
4.6                                                                                  
SUPPLY OF FINISHED DRUG PRODUCT. EXCEPT AS OTHERWISE SPECIFIED IN THE R&D PLAN
OR CLINICAL MANUFACTURING AND SUPPLY AGREEMENT, THE PARTIES ACKNOWLEDGE AND
AGREE THAT [***] WILL BE SOLELY RESPONSIBLE FOR THE MANUFACTURING, STABILITY
TESTING AND SUPPLY OF FINISHED DRUG PRODUCT.

 

SECTION
4.7                                                                                  
MANUFACTURING IMPROVEMENTS.

 

4.7.1                     THE ENTIRE RIGHT, TITLE, AND INTEREST IN AND TO ALL
MANUFACTURING IMPROVEMENTS DEVELOPED OR INVENTED SOLELY BY EMPLOYEES, OR
CONSULTANTS OF OMI DURING THE TERM WILL BE THE SOLE AND EXCLUSIVE PROPERTY OF
OMI. OMI HEREBY GRANTS ISIS A [***] LICENSE TO PRACTICE UNDER OMI’S RIGHTS TO
ANY KNOW-HOW OR PATENT CLAIMING MANUFACTURING IMPROVEMENTS TO [***] AND TO THE
EXTENT THAT SUCH MANUFACTURING IMPROVEMENTS ARE UNDER THE CONTROL OF OMI.
NOTWITHSTANDING THE FOREGOING, ISIS RECOGNIZES THAT OMI MAY NOT OWN OR CONTROL
MANUFACTURING IMPROVEMENTS DEVELOPED OR INVENTED BY A CONTRACT MANUFACTURER. THE
LICENSE GRANTED UNDER THIS SECTION 4.7.1 FALLS WITHIN THE RESTRICTIONS [***].

 

4.7.2                     THE ENTIRE RIGHT, TITLE, AND INTEREST IN AND TO ALL
MANUFACTURING IMPROVEMENTS DEVELOPED OR INVENTED SOLELY BY EMPLOYEES, OR
CONSULTANTS OF ISIS DURING THE TERM WILL BE THE SOLE AND EXCLUSIVE PROPERTY OF
ISIS. ISIS HEREBY GRANTS OMI [***] LICENSE TO PRACTICE UNDER ISIS’ RIGHTS TO ANY
KNOW-HOW, PRODUCT SPECIFIC KNOW-HOW OR PATENT CLAIMING SUCH MANUFACTURING
IMPROVEMENTS TO MAKE AND HAVE MADE PRODUCTS. THE LICENSE GRANTED UNDER THIS
SECTION 4.7.2 WILL BE SUBLICENSABLE BY OMI SOLELY IN CONNECTION WITH THE GRANT
OF A LICENSE TO DEVELOP, MAKE, USE, IMPORT, OFFER FOR SALE AND SELL A PRODUCT.

 

4.7.3                     The entire right, title, and interest in and to all
Manufacturing Improvements developed or invented jointly by employees or
consultants of Isis and OMI during the Term will be the joint property of Isis
and OMI. Each Party will have an undivided joint ownership interest in such
Manufacturing Improvements, and may license its rights under such Manufacturing
Improvements for its own account and without the consent of the other Party,
subject to the exclusivity granted to OMI under Section 2.3.

 

4.7.4                     DURING THE FIRST [***], IF REQUESTED BY A PARTY, THE
PARTIES WILL MEET ANNUALLY TO REVIEW MANUFACTURING IMPROVEMENTS DEVELOPED BY
EITHER OF THE PARTIES [***] OF THE COLLABORATION. AT SUCH TIME, THE PARTIES WILL
DISCLOSE ALL SUCH MANUFACTURING IMPROVEMENTS CONTROLLED BY SUCH PARTY IN
REASONABLE DETAIL AS TO ENABLE THE OTHER PARTY TO [***] WILL HAVE THE RIGHT TO
[***] WITH RESPECT TO THE COMMERCIALIZATION OF ONE OR MORE [***]

 

SECTION
4.8                                                                                  
ISIS REGULATORY INSPECTIONS. ISIS WILL COOPERATE IN GOOD FAITH WITH RESPECT TO
THE CONDUCT OF ANY INSPECTIONS BY ANY REGULATORY AUTHORITY OF AN ISIS SITE OR A
CONTRACTOR’S SITE AND FACILITIES IF SUCH INSPECTION CONCERNS WORK BEING
PERFORMED UNDER THE R&D PLAN AND THE CLINICAL MANUFACTURING AND SUPPLY
AGREEMENT. OMI SHALL BE GIVEN THE OPPORTUNITY TO ATTEND ANY INSPECTIONS BY ANY
REGULATORY AUTHORITY OF ISIS’ OR ISIS’ CONTRACTOR’S SITE AND FACILITIES IF SUCH
INSPECTIONS CONCERN WORK BEING PERFORMED UNDER THE R&D PLAN AND THE CLINICAL
MANUFACTURING AND SUPPLY AGREEMENT, AND THE SUMMARY (OR WRAP UP) MEETING WITH A
REGULATORY AUTHORITY AT THE CONCLUSION OF SUCH SITE INSPECTION. IN THE EVENT
THAT DURING AN INSPECTION OF THE ISIS FACILITIES, THE FACILITIES ARE FOUND BY A
REGULATORY AUTHORITY TO BE NON-COMPLIANT WITH ONE OR MORE GLP, GMP, GCP OR
CURRENT STANDARDS FOR PHARMACOVIGILANCE PRACTICE COMPLIANCE STANDARDS AND SUCH
FACILITIES ARE BEING USED TO CONDUCT WORK UNDER THE R&D PLAN AND THE CLINICAL
MANUFACTURING AND SUPPLY AGREEMENT, ISIS WILL PROMPTLY NOTIFY OMI OF SUCH
FINDING AND WILL SUBMIT A PROPOSED RECOVERY/CORRECTIVE ACTION PLAN, INCLUDING A
TIME LINE FOR IMPLEMENTATION OF THE PLAN, WITHIN [***] OF SUCH NOTIFICATION OF
NON-COMPLIANCE.

 

12

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SECTION
4.9                                                                                  
QUALITY AGREEMENT. A QUALITY AGREEMENT (THE “QUALITY AGREEMENT”) WILL BE
NEGOTIATED SIMULTANEOUSLY WITH THE PRESENT AGREEMENT AND IS ATTACHED HERETO AS
APPENDIX 9.

 

ARTICLE 5 -
DEVELOPMENT & COMMERCIALIZATION

 

SECTION
5.1                                                                                  
DEVELOPMENT, COMMERCIALIZATION AND REGULATORY RESPONSIBILITIES. OTHER THAN ISIS’
RESPONSIBILITIES UNDER THE R&D PLAN, OMI WILL HAVE SOLE RESPONSIBILITY,
INCLUDING WITHOUT LIMITATION SOLE RESPONSIBILITY FOR ALL FUNDING, RESOURCING AND
DECISION-MAKING, FOR ALL FURTHER DEVELOPMENT AND COMMERCIALIZATION WITH RESPECT
TO THE COMPOUNDS AND PRODUCTS. OMI HEREBY ASSUMES ALL REGULATORY
RESPONSIBILITIES IN CONNECTION WITH COMPOUNDS AND PRODUCTS, INCLUDING SOLE
RESPONSIBILITY FOR ALL REGULATORY DOCUMENTATION AND FOR OBTAINING ALL APPROVALS.
OMI WILL COMPLY WITH ALL APPLICABLE LAWS IN CONNECTION WITH THE DEVELOPMENT AND
COMMERCIALIZATION OF COMPOUNDS AND PRODUCTS. OMI (BY ITSELF OR THROUGH ITS
AFFILIATES, LICENSEES, (SUB)CONTRACTORS OR AGENTS, AS APPLICABLE) WILL USE
COMMERCIALLY REASONABLE EFFORTS TO DEVELOP AND COMMERCIALIZE AT LEAST ONE
COMPOUND OR PRODUCT FOR EACH COLLABORATION GENE PRODUCT. FOR CLARITY, IT IS
UNDERSTOOD AND ACKNOWLEDGED THAT COMMERCIALLY REASONABLE EFFORTS IN THE
DEVELOPMENT OF A PRODUCT IN A PARTICULAR COUNTRY MAY INCLUDE SEQUENTIAL
IMPLEMENTATION OF CLINICAL TRIALS AND/OR INTERVALS BETWEEN CLINICAL TRIALS FOR
DATA INTERPRETATION AND CLINICAL PROGRAM PLANNING AND APPROVAL, TO THE EXTENT
SUCH IMPLEMENTATION IS CONSISTENT WITH THE SCIENTIFIC, TECHNICAL AND COMMERCIAL
FACTORS RELEVANT TO DEVELOPMENT OF SUCH PRODUCT IN SUCH COUNTRY. ALL INDS, NDAS,
MAAS AND OTHER REGULATORY FILINGS AND APPROVALS FOR PRODUCTS WILL BE OWNED BY
OMI. IN ADDITION, UPON REASONABLE NOTICE BY OMI AND DURING NORMAL BUSINESS
HOURS, ISIS WILL PROVIDE OMI WITH A REASONABLE LEVEL OF ASSISTANCE IN THE
PREPARATION OF REGULATORY FILINGS FOR PRODUCTS AND IN INTERACTIONS WITH ANY
REGULATORY AUTHORITY IN CONNECTION WITH THE DEVELOPMENT OF PRODUCTS; PROVIDED
THAT IF OMI REQUESTS SUCH ASSISTANCE IN EXCESS OF [***] OF ASSISTANCE, [***]
AFTER RECEIPT BY OMI OF AN INVOICE BY ISIS IN THE FORM PROVIDED AS APPENDIX 7
REASONABLY DETAILING ISIS’ TIME EXPENDED, TOGETHER WITH REASONABLE
SUBSTANTIATION OF ANY OUT-OF-POCKET EXPENSES INCURRED.

 

SECTION
5.2                                                                                  
REPORTS BY OMI AFTER THE COLLABORATION TERM. AFTER THE COLLABORATION TERM WITH
RESPECT TO ANY COMPOUND OR PRODUCT THAT OMI IS DEVELOPING, AT ISIS’ REQUEST, OMI
WILL PROVIDE A REPORT TO ISIS SUMMARIZING OMI’S ACTIVITIES OVER THE [***] WITH
RESPECT TO THE IDENTIFIED COMPOUND OR PRODUCT AND AN APPROPRIATE NUMBER OF
REPRESENTATIVES FROM EACH PARTY WILL MEET AT LEAST [***] TO REVIEW DEVELOPMENT
ACTIVITIES. OMI WILL CONSIDER ISIS’ INPUT REGARDING SUCH ACTIVITIES. THE REPORTS
PROVIDED BY OMI UNDER THIS SECTION 5.2 WILL CONTAIN SUFFICIENT INFORMATION TO
ALLOW ISIS TO REASONABLY DETERMINE WHETHER OMI IS IN COMPLIANCE WITH ITS
OBLIGATIONS TO USE COMMERCIALLY REASONABLE EFFORTS UNDER SECTION 5.1.

 

SECTION
5.3                                                                                  
PRODUCT DEVELOPMENT PLANS; INTEGRATED PRODUCT PLANS. FOR EACH PRODUCT THAT OMI
IS CLINICALLY DEVELOPING UNDER THIS AGREEMENT, OMI WILL PREPARE A DEVELOPMENT
PLAN OUTLINING KEY ASPECTS OF THE CLINICAL DEVELOPMENT OF SUCH PRODUCT THROUGH
APPROVAL. EACH DEVELOPMENT PLAN WILL CONTAIN INFORMATION CUSTOMARILY CONTAINED
IN OMI’S DEVELOPMENT PLANS FOR ITS SIMILAR PRODUCTS AT SIMILAR STAGES OF
DEVELOPMENT (EACH A “PRODUCT DEVELOPMENT PLAN”). IN ADDITION, PRIOR TO THE
LAUNCH OF A PRODUCT, OMI WILL PREPARE A GLOBAL INTEGRATED PRODUCT PLAN OUTLINING
THE KEY ASPECTS OF MARKET LAUNCH AND COMMERCIALIZATION (THE “INTEGRATED PRODUCT
PLAN” OR “IPP”). THE INTEGRATED PRODUCT PLAN WILL CONTAIN INFORMATION
CUSTOMARILY CONTAINED IN OMI’S COMMERCIALIZATION PLANS. EACH PRODUCT DEVELOPMENT
PLAN AND IPP WILL BE UPDATED ANNUALLY BY OMI. OMI WILL PROVIDE TO ISIS A COPY OF
THE FINAL DRAFT OF THE PRODUCT DEVELOPMENT PLANS AND IPPS (ORIGINAL AND UPDATES)
FOR EACH OF THE [***], IF AVAILABLE. OMI AND ISIS WILL MEET ON [***] TO DISCUSS
THE DRAFT OF EACH PRODUCT DEVELOPMENT PLAN AND IPP AND OMI WILL CONSIDER, IN ITS
SOLE DISCRETION, ANY PROPOSALS AND COMMENTS MADE BY ISIS FOR INCORPORATION IN
THE FINAL

 

13

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PRODUCT DEVELOPMENT PLAN OR IPP (AS THE CASE MAY BE). FURTHERMORE, TO THE EXTENT
OMI INTENDS TO MAKE ANY CLAIMS IN A PRODUCT LABEL THAT ARE CLASS GENERIC TO MOE
GAPMERS, OMI WILL PROVIDE SUCH CLAIMS TO ISIS IN ADVANCE AND WILL CONSIDER, IN
ITS SOLE DISCRETION, ANY PROPOSALS AND COMMENTS MADE BY ISIS.

 

ARTICLE 6 -
FINANCIAL PROVISIONS

 

SECTION
6.1                                                                                  
UP-FRONT PAYMENT. IN PARTIAL CONSIDERATION FOR THE LICENSES AND OTHER RIGHTS
GRANTED UNDER THIS AGREEMENT, WITHIN [***] FOLLOWING THE EFFECTIVE DATE, OMI
WILL PAY ISIS [***] $45,000,000.

 

SECTION
6.2                                                                                  
COLLABORATION FUNDING. OMI WILL PROVIDE COLLABORATION FUNDING TO ISIS AS SET
FORTH IN SECTION 3.5.2.

 

SECTION
6.3                                                                                  
MILESTONE PAYMENTS BY OMI. OMI WILL GIVE ISIS NOTICE PROMPTLY UPON ACHIEVEMENT
OF EACH MILESTONE EVENT PROVIDED IN TABLE 1. UPON RECEIPT OF AN INVOICE, AS SET
FORTH IN APPENDIX 7, OMI WILL PAY ISIS THE FOLLOWING MILESTONE PAYMENTS WITHIN
[***] AFTER RECEIPT OF SUCH NOTICE, WITH THE PROVISO THAT WITH RESPECT TO THE
[***] MILESTONE FOR GCGR, PAYMENT SHALL BE DUE [***] AFTER NOTICE AND INVOICE BY
ISIS OF ACHIEVEMENT OF SUCH MILESTONE.:

 

6.3.1                                                                                                                    
DEVELOPMENT MILESTONES.

 

(a)                                                                                                                                 
For each Selected Gene Target, the milestone payments under Column 1 of Table 1
below will be payable by OMI to Isis for the first achievement of the specified
milestone events by OMI, its Licensees or their Affiliates for the first
Research Compound or Research Product that targets such Selected Gene Target to
reach the specified milestone event.

 

(b)                                                                                                                                
The milestone payments under Column 2 of Table 1 below will be payable as set
forth below for the first achievement of the specified milestone events by OMI,
its Licensees or their Affiliates for the first GCGR Compound or GCGR Product to
reach the specified milestone event.

 

(c)                                                                                                                                 
The milestone payments under Column 3 of Table 1 below will be payable as set
forth below after the first achievement of the specified milestone events by
OMI, its Licensees or their Affiliates for the first GCCR Compound or GCCR
Product to reach the specified milestone event.

 

Table 1

 

 

 

Column 1

 

Column 2

 

Column 3

 

Milestone Event

 

Payment for First
Research Compound Per
Selected Gene Target

 

Payment for First
GCGR Compound

 

Payment for First
GCCR Compound

 

[***]

 

 

 

 

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

 

 

 

 

 

 

 

6.3.2                                                                                                                    
APPROVAL MILESTONES.

 

(a)                                  For each Selected Gene Target, the
milestone payments under Column 1 of Table 2 below will be payable by OMI to
Isis for the first achievement of the specified milestone events by OMI, its
Licensees or their Affiliates for the first Research Compound or Research
Product that target such Selected Gene Target to reach the specified milestone
event.

 

14

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(b)                                 The milestone payments under Column 2 of
Table 2 below will be payable as set forth below after the first achievement of
the specified milestone events by OMI, its Licensees or their Affiliates for the
first GCGR Compounds or GCGR Products to reach the specified milestone event.

 

(c)                                  The milestone payments under Column 3 of
Table 2 below will be payable as set forth below after the first achievement of
the specified milestone events by OMI, its Licensees or their Affiliates for the
first GCCR Compounds or GCCR Products to reach the specified milestone event.

 

Table 2

 

 

 

Column 1

 

Column 2

 

Column 3

 

Milestone Event

 

Payment for First
Research Compound Per
Selected Gene Target

 

Payment for First
GCGR Compound

 

Payment for First
GCCR Compound

 

[***]

 

 

 

 

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

 

 

 

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

 

IN THE EVENT THAT AN ORIGINAL COMPOUND OR PRODUCT FOR A COLLABORATION GENE
TARGET FAILS IN DEVELOPMENT AND IS REPLACED BY OMI WITH A BACK-UP COMPOUND OR
PRODUCT TARGETING THE SAME COLLABORATION GENE TARGET, ANY MILESTONE PAYMENTS
PREVIOUSLY PAID WITH RESPECT TO SUCH ORIGINAL COMPOUND OR PRODUCT SHALL BE FULLY
CREDITABLE TOWARD THE SAME MILESTONE DUE WITH RESPECT TO THE BACK-UP COMPOUND OR
PRODUCT, AND OMI SHALL NOTIFY ISIS IN WRITING OF THE SELECTION OF THE BACK-UP
COMPOUND OR PRODUCT. THE PARTIES ACKNOWLEDGE THAT, AFTER THE APPROVAL MILESTONE
PAYMENTS FOR A SECOND INDICATION ARE PAID TO ISIS, OMI SHALL NOT BE OBLIGATED TO
MAKE ANY ADDITIONAL APPROVAL MILESTONE PAYMENTS WITH RESPECT TO A PRODUCT
COMPRISING THE SAME COMPOUND OR PRODUCT OR ITS BACK-UP COMPOUND OR PRODUCT,
REGARDLESS OF THE NUMBER OF ADDITIONAL INDICATIONS FOR WHICH SUCH COMPOUND OR
PRODUCT IS DEVELOPED. THE PARTIES ALSO ACKNOWLEDGE THAT DIFFERENT FORMULATIONS
(E.G., DOSAGE STRENGTH, DELIVERY FORMS) OF A COMPOUND OR PRODUCT (BACK-UP
COMPOUND OR PRODUCT) OR BIOEQUIVALENTS THEREFORE (I.E., SALTS, ESTERS,
POLYMORPHS) SHALL BE DEEMED THE SAME COMPOUND OR PRODUCT, AND ALL MILESTONES DUE
SHALL BE PAYABLE ONE TIME ONLY PER COMPOUND OR PRODUCT.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

15

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SECTION
6.4                                                                                  
ROYALTY PAYMENTS BY OMI. IN CONSIDERATION OF THE LICENSES GRANTED TO OMI BY ISIS
HEREUNDER AND THE ASSIGNMENTS MADE PURSUANT TO SECTION 9.2.3 (B) OMI WILL PAY
ISIS ROYALTY PAYMENTS ON PRODUCTS AS FOLLOWS:  SUBJECT TO THE OTHER PROVISIONS
OF THIS AGREEMENT, OMI WILL PAY TO ISIS THE ROYALTY RATE UNDER COLUMN 1 OF TABLE
3 BELOW FOR EACH RESEARCH PRODUCT. SUBJECT TO THE OTHER PROVISIONS OF THIS
AGREEMENT, OMI WILL PAY TO ISIS THE ROYALTY RATE UNDER COLUMN 2 OF TABLE 3 BELOW
FOR EACH GCGR PRODUCT. SUBJECT TO THE OTHER PROVISIONS OF THIS AGREEMENT, OMI
WILL PAY TO ISIS THE ROYALTY RATE UNDER COLUMN 3 OF TABLE 3 BELOW FOR EACH GCCR
PRODUCT. THE ROYALTY RATE PAYABLE WITH RESPECT TO EACH PARTICULAR PRODUCT WILL
BE BASED ON THE LEVEL OF ANNUAL WORLDWIDE NET SALES OF SUCH PRODUCT IN A GIVEN
CALENDAR YEAR PERIOD BY OMI, ITS AFFILIATES AND LICENSEES, WITH THE ROYALTY RATE
TIERED BASED UPON THE LEVEL OF SUCH WORLDWIDE NET SALES IN SUCH CALENDAR YEAR
PERIOD AS SET FORTH IN THE TABLE BELOW.

 

TABLE 3

 

COLUMN 1

 

COLUMN 2

 

COLUMN 3

 

 

ROYALTY RATE
RESEARCH
PRODUCT

 

ROYALTY RATE
GCGR
PRODUCT

 

ROYALTY RATE
GCCR
PRODUCT

 

ANNUAL WORLDWIDE NET SALES

[***]%

 

[***]%

 

[***]%

 

OF ANNUAL WORLDWIDE NET SALES LESS THAN OR EQUAL TO $[***]

[***]%

 

[***]%

 

[***]%

 

OF ANNUAL WORLDWIDE NET SALES GREATER THAN $[***] AND LESS THAN OR EQUAL TO
$[***]

[***]%

 

[***]%

 

[***]%

 

OF ANNUAL WORLDWIDE NET SALES GREATER THAN $[***]

 

For example, in the instance of a full Calendar Year, if annual OMI Net Sales of
GCGR Product in such Calendar Year worldwide are $[***], the amount due will be
$[***] ([***]% of the [***] (or $[***]) in the first increment, plus [***]% of
the next $[***] (or $[***]) in the second increment, plus [***]% of the
remaining $[***] (or $[***]) in the third increment).

 

SECTION
6.5                                                                                  
THIRD PARTY PAYMENT OBLIGATIONS.

 

6.5.1                                                                                                                    
ISIS IN-LICENSE AGREEMENTS.

 

(A)                                                                                                                                 
CERTAIN OF THE ISIS PATENT RIGHTS CONTROLLED BY ISIS AS OF THE EFFECTIVE DATE
THAT ARE LICENSED TO OMI UNDER SECTION 2.1 ARE IN-LICENSED OR WERE ACQUIRED BY
ISIS UNDER AGREEMENTS WITH THIRD PARTY LICENSORS OR SELLERS, AND CERTAIN
MILESTONE AND/OR ROYALTY PAYMENTS MAY BECOME PAYABLE BY ISIS TO SUCH THIRD PARTY
UNDER SUCH LICENSE OR PURCHASE AGREEMENTS BASED ON THE DEVELOPMENT AND
COMMERCIALIZATION OF A COMPOUND AND PRODUCT BY OMI UNDER THIS AGREEMENT (SUCH
LICENSE OR PURCHASE AGREEMENTS IN EFFECT AS OF THE EFFECTIVE DATE BEING THE
“ISIS IN-LICENSE AGREEMENTS”). THE PARTIES ACKNOWLEDGE THAT WHETHER A MILESTONE
AND/OR ROYALTY PAYMENT BECOMES PAYABLE BY ISIS TO SUCH THIRD PARTY LICENSOR
DEPENDS ON THE TERMS AND CONDITIONS OF THE ISIS IN-LICENSE AGREEMENT.

 

(B)                                                                                                                                 
ISIS WILL BE RESPONSIBLE FOR PAYING [***]% OF THE ISIS SUPPORTED PAYMENTS AS
THEY APPLY TO ANY COMPOUND OR PRODUCT.

 

6.5.2                                                                                                                    
ADDITIONAL THIRD PARTY AGREEMENTS.

 

(A)                                                                                                                                 
AFTER THE EFFECTIVE DATE, ISIS MAY WISH TO IN-LICENSE OR ACQUIRE RIGHTS TO
KNOW-HOW OR THIRD PARTY PATENTS (SUCH A THIRD PARTY IN-LICENSE OR ACQUISITION
AGREEMENT BEING AN “ADDITIONAL THIRD PARTY AGREEMENT”) WHICH, IF SO LICENSED OR
ACQUIRED, MAY BE INCLUDED IN THE ISIS PATENT RIGHTS LICENSED TO OMI UNDER
SECTION 2.1. IN SUCH EVENT (AND TO THE EXTENT PERMITTED BY ISIS’ CONFIDENTIALITY
AGREEMENT WITH THE APPLICABLE THIRD PARTY), ISIS WILL NOTIFY OMI REGARDING THE
NATURE OF THE TECHNOLOGY AND STATUS OF NEGOTIATIONS RELATED TO THE ADDITIONAL
THIRD PARTY AGREEMENT THROUGH THE R&D COMMITTEE. ONCE ISIS HAS EXECUTED SUCH
ADDITIONAL THIRD

 

16

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PARTY AGREEMENT, ISIS WILL OFFER SUCH THIRD PARTY PATENTS OR KNOW-HOW TO OMI
(INCLUDING A DESCRIPTION OF THE PAYMENTS PAID OR POTENTIALLY PAYABLE BY ISIS
THEREUNDER). AT SUCH TIME, IF OMI WISHES TO INCLUDE SUCH THIRD PARTY PATENTS
UNDER THE LICENSES GRANTED UNDER SECTION 2.1, OMI WILL NOTIFY ISIS OF ITS DESIRE
TO DO SO [***], IF APPROPRIATE. AS PART OF THIS [***], ISIS WILL SHARE WITH OMI,
IN REASONABLE DETAIL, THE [***]. IF OMI DOES NOT [***], AND TO [***] AS SET
FORTH BELOW, THEN [***] WILL NOT BE [***] UNDER THIS AGREEMENT.

 

(B)                                                                                                                                 
IN THE EVENT THAT A MILESTONE PAYMENT OR A PAYMENT ON NET SALES OF PRODUCT
BECOMES PAYABLE BY ISIS TO A THIRD PARTY UNDER AN ADDITIONAL THIRD PARTY
AGREEMENT, AND SUCH MILESTONE OR PAYMENT OBLIGATION IS BASED ON [***]. (SUCH
MILESTONE AND/OR PAYMENTS BEING THE “ISIS THIRD PARTY PAYMENT”), THEN [***] WILL
BE RESPONSIBLE FOR THE PAYMENT OF SUCH ISIS THIRD PARTY PAYMENT OBLIGATION AS
LONG AS [***]. IN THE EVENT THAT A MILESTONE PAYMENT OR A ROYALTY PAYMENT ON NET
SALES OF PRODUCT BECOMES PAYABLE BY ISIS TO A THIRD PARTY UNDER AN ADDITIONAL
THIRD PARTY AGREEMENT, AND SUCH MILESTONE OR ROYALTY PAYMENT OBLIGATION IS BASED
ON [***], THEN AS LONG AS [***] WILL BE RESPONSIBLE FOR THE PAYMENT OF SUCH ISIS
THIRD PARTY PAYMENT OBLIGATION. IN BOTH CASES [***] UNDER THIS AGREEMENT.

 

(C)                                                                                                                                 
ANY PASS THROUGH OBLIGATIONS OMI IS RESPONSIBLE FOR PAYING UNDER THIS SECTION
6.5.2 WILL BE [***] AND OMI WILL SATISFY SUCH OBLIGATION BY PAYING ISIS
DIRECTLY.

 

6.5.3                                                                                                                    
OMI THIRD PARTY LICENSES. OMI WILL BE RESPONSIBLE FOR NEGOTIATING AND ENTERING
INTO ANY THIRD PARTY LICENSES THAT OMI DETERMINES MAY BE NECESSARY OR USEFUL OR
MAY RELATE TO THE DEVELOPMENT OR COMMERCIALIZATION OF PRODUCTS. IF OMI, IN ITS
REASONABLE JUDGMENT, IS REQUIRED TO OBTAIN A LICENSE FROM ANY THIRD PARTY UNDER
ANY PATENT COVERING TECHNOLOGY NECESSARY OR USEFUL FOR THE DEVELOPMENT OR
COMMERCIALIZATION OF A PRODUCT, AND THE INFRINGEMENT OF SUCH PATENT CANNOT
REASONABLY BE AVOIDED BY OMI, AND IF OMI IS REQUIRED TO PAY TO SUCH THIRD PARTY
IN CONSIDERATION FOR SUCH LICENSE FOR A PRODUCT ANY ROYALTY PAYMENT CALCULATED
ON SALES OF A PRODUCT (SUCH ROYALTY PAYMENTS COLLECTIVELY BEING A “OMI THIRD
PARTY ROYALTY PAYMENT”) THEN OMI MAY REDUCE THE ROYALTY PAYABLE TO ISIS UNDER
SECTION 6.4 BY UP TO [***]% OF THE AMOUNT OF THE OMI THIRD PARTY ROYALTY,
SUBJECT TO THE LIMITATION SET FORTH IN SECTION 6.5.4. NOTWITHSTANDING THE
FOREGOING, NO REDUCTION OF THE ROYALTIES PAYABLE TO ISIS UNDER SECTION 6.4 WILL
BE PERMITTED WITH RESPECT TO OMI THIRD PARTY PAYMENTS WITH RESPECT TO ANY THIRD
PARTY PATENT COVERING (X) METHODS OR MATERIALS USED IN THE [***], (Y) ANY [***]
WHICH IS NOT A COMPOUND (I.E., A NON-COMPOUND ACTIVE INGREDIENT IN A COMBINATION
PRODUCT) OR (Z) [***].

 

6.5.4                                                                                                                    
FOR ANY ADDITIONAL ROYALTY RATE PAYMENTS PAYABLE BY OMI UNDER SECTION 6.5.2 OR
6.5.3, OMI MAY REDUCE ITS OBLIGATION TO PAY ISIS ROYALTY PAYMENTS UNDER SECTION
6.4 BY [***]% OF THE AMOUNT OF SUCH ADDITIONAL PAYMENTS PAYABLE BY OMI AS SET
FORTH IN SECTIONS 6.5.2 AND 6.5.3; PROVIDED, HOWEVER THAT NO SUCH REDUCTION(S)
IN THE AGGREGATE WILL REDUCE THE ROYALTY PAYMENTS PAYABLE TO ISIS UNDER SECTION
6.4 IN ANY GIVEN CALENDAR QUARTER PERIOD BELOW [***] OF ISIS’ [***] ROYALTY
UNDER SECTION 6.4 (I.E. [***]% MULTIPLIED BY [***] OF THE APPLICABLE ROYALTY
RATE UNDER SECTION 6.4 [***] THE ROYALTY PAYMENTS PAYABLE BY ISIS UNDER SECTION
6.5.1(B)). FOR EXAMPLE, ROYALTY PAYMENTS PAYABLE FOR GCGR MAY NOT BE REDUCED
BELOW [***]% (IN THE FIRST INCREMENT) [***]% (HYPOTHETICAL EXAMPLE OF ISIS
SUPPORTED PAYMENTS UNDER SECTION 6.5.1(B)) MULTIPLIED BY [***]%, OR [***]%
([***]% - [***]% = [***]% X [***]% = [***]%). IN THIS INSTANCE, ROYALTY PAYMENTS
PAYABLE IN THE FIRST INCREMENT FOR GCGR WOULD NOT BE REDUCED BELOW [***]%
([***]% + [***]% = [***]%).

 

SECTION
6.6                                                                                  
[***]. IF THE PORTION OF [***] (CALCULATED IN ACCORDANCE WITH APPENDIX 16
ATTACHED HERETO) FOR THE [***] SOLD IN THE US AND EU (THE “[***]”) EXCEEDS
[***]% OF ANNUAL NET SALES IN THE U.S. AND EU IN A GIVEN YEAR, THEN THE ROYALTY
RATE PROVIDED IN SECTION 6.4, TABLE 3 PAYABLE FOR WORLDWIDE SALES OF SUCH
PRODUCT FOR SUCH YEAR WILL BE [***]. NOTWITHSTANDING THE FOREGOING, AT NO TIME
WILL, AS THE RESULT OF THIS CALCULATION AND ALLOWANCE, THE ROYALTY RATE PROVIDED
IN SECTION 6.4, TABLE 3 BE REDUCED BELOW [***]. THE PARTIES WILL USE
COMMERCIALLY REASONABLE EFFORTS AND WORK IN GOOD FAITH TO [***]

 

17

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SECTION
6.7                                                                                  
THE ROYALTY RATES UNDER SECTION 6.4 WILL BE SUBJECT TO THE FOLLOWING CONDITIONS:

 

(a)  that only one royalty rate will be due to Isis hereunder with respect to
the same unit of Product;

 

(b)  that no royalty payment will be due upon the sale or other transfer of a
Product among OMI, its Affiliates or Licensees, but in such cases a royalty
payment will be due and calculated upon OMI’s or its Affiliate’s or Licensee’s
sale of Product to the first unaffiliated Third Party customer, where Net Sales
is as defined in APPENDIX 1;

 

(c)  no royalty payments will be due on the disposition of Product in reasonable
quantities by OMI, its Affiliates or Licensees as part of an Expanded Access
Program to include compassionate use, named patients or other similar use or as
part of Phase 4 Trials or as bona fide samples or as donations to non-profit
institutions or government agencies for non-commercial purposes, provided, in
each case, that neither OMI, its Affiliate or Licensees receives any payment or
other in-kind consideration for such Product;[***]

 

(d)  a Product will only be eligible for the full royalty rate designated under
Section 6.4 in a given country, if, as of the date of the First Commercial Sale
of such Product in such country, the making, using or selling of such Product
(or the Compound contained in such Product) in that country is [***];

 

(e)  if, as of the date of the First Commercial Sale of a Product in a given
country, the making, using or selling of such Product (or the Compound contained
in such Product) in that country is either (i) not [***] or (ii) only [***],
then the Net Sales in that country will be reduced by [***]% before adding such
Net Sales to the Net Sales of all of the other countries used in arriving at the
aggregate annual Net Sales upon which the royalty is based;

 

(f)  If no royalty payment is due in a country on a Product but a royalty
payment is still payable by Isis under the Isis Supported Payments or as the
result of any Target Encumbrance under 3.6.3, then OMI will pay Isis a royalty
equal to the amount the applicable royalty under the Isis Supported Payments and
Target Encumbrances for so long as and in the amount that such royalty payment
is owing. Once a Product is determined to be eligible for the applicable base
royalty payment under part (d) or (e) above, it will continue to be eligible at
such base rate for the applicable Royalty Term, subject to the other terms and
conditions of this Agreement (including but not limited to any applicable
adjustment under Section 6.5, 6.6 or 6.8).

 

SECTION
6.8                                                                                  
GENERIC COMPETITION. SOLELY WITH RESPECT TO PRODUCTS FOR WHICH THE FULL ROYALTY
APPLIES UNDER PART (D) OF SECTION 6.6 ABOVE, IF THERE ARE ONE OR MORE
UNAUTHORIZED THIRD PARTIES SELLING A GENERIC PRODUCT, THEN THE NET SALES IN THAT
COUNTRY WILL BE REDUCED BY [***]% BEFORE ADDING SUCH NET SALES TO THE NET SALES
OF ALL OF THE OTHER COUNTRIES USED IN ARRIVING AT THE AGGREGATE ANNUAL NET SALES
UPON WHICH THE ROYALTY IS BASED ; PROVIDED, HOWEVER, THAT, IN NO EVENT WILL THE
ROYALTIES PAYABLE TO ISIS UNDER 6.4 ABOVE BE REDUCED BELOW [***].

 

SECTION
6.9                                                                                  
ROYALTY TERM. ROYALTIES PAYABLE UNDER SECTION 6.4 (SUBJECT TO AND INCLUDING ANY
REDUCTION SET FORTH IN SECTIONS 6.5, 6.6 AND 6.7) WILL BE PAYABLE FOR EACH
PRODUCT ON A PRODUCT-BY-PRODUCT AND COUNTRY-BY-COUNTRY BASIS FROM THE FIRST
COMMERCIAL SALE OF THE APPLICABLE PRODUCT IN SUCH COUNTRY UNTIL THE DATE THAT IS
THE LATER OF (I) [***] AFTER THE FIRST COMMERCIAL SALE OF THE PRODUCT IN SUCH
COUNTRY OR (II) THE EXPIRATION OF THE LAST TO EXPIRE VALID CLAIM WITHIN THE
PRODUCT SPECIFIC PATENTS OR ISIS CORE TECHNOLOGY PATENTS WHICH WOULD BE
INFRINGED BY THE SALE OF THE APPLICABLE PRODUCT IN THE APPLICABLE COUNTRY BY AN
UNAUTHORIZED PARTY OR (III) THE EXPIRATION OF ANY APPLICABLE PERIOD OF
EXCLUSIVITY AS CONTEMPLATED UNDER SECTION 9.6 FOR THE PRODUCT IN THE APPLICABLE
COUNTRY. SUCH PERIOD DURING WHICH ROYALTIES ARE PAYABLE WITH RESPECT TO A
PRODUCT IN A COUNTRY IS REFERRED TO HEREIN AS THE “ROYALTY TERM” IN SUCH COUNTRY
WITH RESPECT TO SUCH PRODUCT.

 

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SECTION
6.10                                                                           
ROYALTY REPORT AND PAYMENT. DURING THE TERM FOLLOWING THE FIRST COMMERCIAL SALE
OF ANY PRODUCT, WITHIN [***] AFTER THE END OF EACH CALENDAR QUARTER, OMI WILL
PAY TO ISIS ROYALTY PAYMENTS PAYABLE FOR SUCH CALENDAR QUARTER AND PROVIDE A
ROYALTY REPORT SHOWING, ON A PRODUCT-BY-PRODUCT AND COUNTRY-BY-COUNTRY BASIS:

 

(a)                                  the Net Sales of Products sold by OMI, its
Licensees and their respective Affiliates during such Calendar Quarter reporting
period; and

 

(b)                                 the royalties which will have accrued
hereunder with respect to such Net Sales.

 

In addition, during the Term following the First Commercial Sale of any Product,
within [***] after the end of each Calendar Quarter, OMI will provide Isis a
preliminary non-binding quarterly royalty report showing the total Net Sales of
Product and royalty payable for such Calendar Quarter. Furthermore, OMI agrees
to supply Isis the information Isis reasonably requires to comply with any Pass
Through Obligations.

 

If no royalty or payment is due for any royalty period hereunder, OMI will so
report. OMI will keep, and will require its Licensees and their respective
Affiliates to keep (all in accordance with GAAP, consistently applied), complete
and accurate records in sufficient detail to properly reflect the Net Sales and
to enable the royalties payable hereunder to be determined. Upon reasonable
request by Isis (but no more frequently than once in any 12-month period), OMI
will report to Isis the quantity of Product not subject to royalties distributed
by OMI, its Affiliates or Licensees as part of an Expanded Access Program to
include compassionate use, named patients or other similar use or as part of
Phase 4 Trials or as bona fide samples or as donations to non-profit
institutions or government agencies for non-commercial purposes. All information
disclosed by OMI to Isis under this Section 6.9 will be OMI Confidential
Information.

 

SECTION
6.11                                                                           
MANNER OF PAYMENT AND EXCHANGE RATE. ALL PAYMENTS TO BE MADE BY OMI TO ISIS
HEREUNDER WILL BE MADE BY DEPOSIT OF [***] BY WIRE TRANSFER IN IMMEDIATELY
AVAILABLE FUNDS IN THE REQUISITE AMOUNT TO SUCH BANK ACCOUNT ISIS MAY FROM TIME
TO TIME DESIGNATE BY NOTICE TO OMI. [***]

 

SECTION
6.12                                                                           
AUDITS, INCLUDING AUDITS  OF ROYALTY REPORTS.

 

6.12.1 AUDITS OF ROYALTY REPORTS. UPON THE WRITTEN REQUEST OF ISIS AND NOT MORE
THAN ONCE IN EACH CALENDAR YEAR, OMI WILL PERMIT AN INDEPENDENT CERTIFIED PUBLIC
ACCOUNTING FIRM OF NATIONALLY RECOGNIZED STANDING SELECTED BY ISIS AND
REASONABLY ACCEPTABLE TO OMI, AT ISIS’ EXPENSE AND UPON EXECUTION OF A
CONFIDENTIALITY AGREEMENT WITH OMI, TO HAVE ACCESS DURING NORMAL BUSINESS HOURS
TO SUCH RECORDS OF OMI AND/OR ITS AFFILIATES AS MAY BE REASONABLY NECESSARY TO
VERIFY THE ACCURACY OF THE ROYALTY REPORTS HEREUNDER FOR ANY CALENDAR YEAR
ENDING NOT MORE THAN [***] PRIOR TO THE DATE OF SUCH REQUEST. THESE AUDIT RIGHTS
(BUT NOT ANY OBLIGATION TO PAY UNPAID ROYALTIES FOR SUCH PERIODS) WITH RESPECT
TO ANY CALENDAR YEAR WILL TERMINATE [***] AFTER THE END OF ANY SUCH CALENDAR
YEAR. ISIS WILL PROVIDE OMI WITH A COPY OF THE ACCOUNTING FIRM’S WRITTEN REPORT
WITHIN [***] OF COMPLETION OF SUCH REPORT.

 

IF SUCH ACCOUNTING FIRM CONCLUDES THAT AN OVERPAYMENT OR UNDERPAYMENT WAS MADE,
THEN THE OWING PARTY WILL PAY THE AMOUNT DUE WITHIN [***] OF THE DATE ISIS
DELIVERS TO OMI SUCH ACCOUNTING FIRM’S WRITTEN REPORT SO CORRECTLY CONCLUDING.
ISIS WILL BEAR THE FULL COST OF SUCH AUDIT UNLESS SUCH AUDIT CORRECTLY DISCLOSES
THAT THE ADDITIONAL PAYMENT PAYABLE BY OMI FOR THE AUDITED PERIOD IS MORE THAN
[***]% OF THE AMOUNT OF THE ROYALTIES PAID FOR THAT AUDITED PERIOD, IN WHICH
CASE OMI WILL PAY THE REASONABLE FEES AND EXPENSES CHARGED BY THE ACCOUNTING
FIRM. HOWEVER, IF THE RESULT OF THE AUDIT IS CONTESTED, THEN THE PARTIES AGREE
TO RETAIN A MUTUALLY ACCEPTABLE INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM OR
EQUIVALENT THEREOF WITHIN [***] TO REVIEW THE RELEVANT BOOKS AND RECORDS AND TO
SUBMIT TO THE PARTIES ITS WRITTEN DETERMINATION AS TO THE AMOUNT IN DISPUTE AND
THE BASIS FOR ITS DETERMINATION. THE DETERMINATION BY THE ACCOUNTING FIRM WILL
BE BINDING ON THE PARTIES ABSENT MANIFEST ERROR. IF SUCH ACCOUNTING FIRM
DETERMINES THAT

 

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the result of the original audit was correct (within a margin of error of
[***]%) then the Party who contested the original audit will pay the fees and
expenses of the accounting firm for such determination and vice versa.

 

OMI WILL INCLUDE IN EACH SUBLICENSE GRANTED BY IT TO ANY LICENSEE A PROVISION
REQUIRING THE LICENSEE TO MAINTAIN RECORDS OF SALES MADE PURSUANT TO SUCH
LICENSE AND TO GRANT ACCESS TO SUCH RECORDS BY OMI’S INDEPENDENT ACCOUNTANT TO
THE SAME EXTENT AND UNDER THE SAME OBLIGATIONS AS REQUIRED OF OMI UNDER THIS
AGREEMENT. OMI WILL ADVISE ISIS IN ADVANCE OF EACH AUDIT OF ANY LICENSEE WITH
RESPECT TO PRODUCT SALES. OMI WILL PROVIDE ISIS WITH A SUMMARY OF THE RESULTS
RECEIVED FROM THE AUDIT AND, IF ISIS SO REQUESTS, A COPY OF THE AUDIT REPORT
WITH RESPECT TO PRODUCT SALES. OMI WILL PAY THE REASONABLE FEES AND EXPENSES
CHARGED BY THE ACCOUNTING FIRM, EXCEPT THAT ISIS WILL PAY FOR ALL ADDITIONAL
SERVICES REQUESTED EXCLUSIVELY BY ISIS FROM OMI’S INDEPENDENT ACCOUNTANT UNLESS
THE AUDIT DISCLOSES THAT THE ADDITIONAL PAYMENTS PAYABLE TO ISIS FOR THE AUDITED
PERIOD DIFFER BY MORE THAN [***]% FROM THE AMOUNT OF THE ROYALTIES OTHERWISE
PAID.

 

ALL FINANCIAL INFORMATION SUBJECT TO REVIEW UNDER THIS SECTION OR UNDER ANY
LICENSE AGREEMENT WITH A LICENSEE WILL BE OMI CONFIDENTIAL INFORMATION AND WILL
BE TREATED IN ACCORDANCE WITH THE CONFIDENTIALITY PROVISIONS OF THIS AGREEMENT.
AS A CONDITION PRECEDENT TO ISIS’ AUDIT RIGHTS UNDER THIS SECTION, ISIS’
ACCOUNTING FIRM WILL ENTER INTO A CONFIDENTIALITY AGREEMENT WITH OMI OBLIGATING
IT TO TREAT ALL SUCH FINANCIAL INFORMATION IN CONFIDENCE PURSUANT TO SUCH
CONFIDENTIALITY AGREEMENT. ISIS MAY PROVIDE THIRD PARTIES TO WHICH ISIS OWES
PASS THROUGH ROYALTIES ON PRODUCTS INFORMATION IN SUCH AUDIT REPORT THAT ARE
RELEVANT AND REQUIRED TO COMPLY WITH SUCH THIRD PARTY’S AUDIT RIGHTS UNDER THE
APPLICABLE LICENSE AGREEMENT BETWEEN ISIS AND SUCH THIRD PARTY, PROVIDED THAT
SUCH THIRD PARTY AGREES IN WRITING TO KEEP SUCH INFORMATION CONFIDENTIAL UNDER
TERMS NO LESS RESTRICTIVE THAN ISIS’ OBLIGATIONS OF CONFIDENTIALITY UNDER THIS
AGREEMENT.

 

6.12.2 AUDIT BY OMI. OMI SHALL HAVE THE RIGHT TO AUDIT ISIS’ BOOKS AND RECORDS,
AND THE RECORDS OF ANY SUCCESSORS HERETO FOR THE PURPOSE OF ACCURATE ACCOUNTING
AND COMPLIANCE WITH THE TERMS OF THIS AGREEMENT INCLUDING ITS ACTIVITIES UNDER
THE R&D PLAN. ISIS SHALL MAINTAIN COMPLETE AND ACCURATE RECORDS IN ACCORDANCE
WITH GAAP, WHICH ARE RELEVANT TO COSTS, EXPENSES AND PAYMENTS UNDER THIS
AGREEMENT AND SUCH RECORDS SHALL BE MADE AVAILABLE TO OMI UPON ITS REASONABLE
REQUEST BUT NO MORE THAN [***], DURING REASONABLE BUSINESS HOURS FOR A PERIOD OF
[***] FROM CREATION OF INDIVIDUAL RECORDS, FOR EXAMINATION AT OMI’S EXPENSE BY
AN INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM SELECTED BY OMI AND ACCEPTABLE
TO ISIS FOR THE SOLE PURPOSE OF VERIFYING THE CORRECTNESS OF CALCULATIONS OR
SUCH COSTS, EXPENSES OR PAYMENTS MADE UNDER THIS AGREEMENT. IN THE ABSENCE OF
MATERIAL DISCREPANCIES (IN EXCESS OF [***] PERCENT ([***]%) IN ANY AUDIT PERIOD
RESULTING FROM SUCH AUDIT, THE ACCOUNTING EXPENSE SHALL BE PAID BY OMI. IF SUCH
MATERIAL DISCREPANCIES DO RESULT, ISIS SHALL BEAR THE REASONABLE AUDIT EXPENSE
AND SHALL PROMPTLY PAY THE AMOUNT OF DISCREPANCY. ALL FINANCIAL INFORMATION
SUBJECT TO REVIEW UNDER THIS SECTION WILL BE ISIS CONFIDENTIAL INFORMATION AND
WILL BE TREATED IN ACCORDANCE WITH THE CONFIDENTIALITY PROVISIONS OF THIS
AGREEMENT.

 

SECTION
6.13                                                                           
TAXES.

 

(A)  OMI WILL MAKE ALL PAYMENTS TO ISIS UNDER THIS AGREEMENT WITHOUT DEDUCTION
OR WITHHOLDING FOR TAXES EXCEPT TO THE EXTENT THAT ANY SUCH DEDUCTION OR
WITHHOLDING IS REQUIRED BY LAW IN EFFECT AT THE TIME OF PAYMENT.

 

(B)  ANY TAX REQUIRED TO BE WITHHELD ON AMOUNTS PAYABLE UNDER THIS AGREEMENT
WILL PROMPTLY BE PAID BY OMI ON BEHALF OF ISIS TO THE APPROPRIATE GOVERNMENTAL
AUTHORITY, AND OMI WILL FURNISH ISIS WITH PROOF OF PAYMENT OF SUCH TAX. ANY SUCH
TAX REQUIRED TO BE WITHHELD WILL BE AN EXPENSE OF AND BORNE BY ISIS.

 

(C)  OMI AND ISIS WILL COOPERATE WITH RESPECT TO ALL DOCUMENTATION REQUIRED BY
ANY TAXING AUTHORITY OR REASONABLY REQUESTED BY OMI TO SECURE A REDUCTION IN THE
RATE OF APPLICABLE WITHHOLDING TAXES.

 

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IF OMI HAD A DUTY TO WITHHOLD TAXES IN CONNECTION WITH ANY PAYMENT IT MADE TO
ISIS UNDER THIS AGREEMENT BUT OMI FAILED TO WITHHOLD, AND SUCH TAXES WERE
ASSESSED AGAINST AND PAID BY OMI, THEN ISIS WILL INDEMNIFY AND HOLD HARMLESS OMI
FROM AND AGAINST SUCH TAXES (INCLUDING INTEREST BUT EXCLUDING ANY PENALTIES).

 

SECTION
6.14                                                                           
BLOCKED CURRENCY. IN EACH COUNTRY WHERE THE LOCAL CURRENCY IS BLOCKED AND CANNOT
BE REMOVED FROM THE COUNTRY, ROYALTIES ACCRUED IN THAT COUNTRY WILL BE PAID TO
ISIS IN THE COUNTRY IN LOCAL CURRENCY BY DEPOSIT IN A LOCAL BANK DESIGNATED BY
ISIS, UNLESS THE PARTIES OTHERWISE AGREE.

 

SECTION
6.15                                                                           
SUBLICENSES. IN THE EVENT OMI GRANTS LICENSES OR SUBLICENSES TO A LICENSEE TO
SELL PRODUCTS WHICH ARE SUBJECT TO ROYALTIES UNDER SECTION 6.4, SUCH LICENSES OR
SUBLICENSES WILL INCLUDE AN OBLIGATION FOR THE LICENSEE TO ACCOUNT FOR AND
REPORT ITS SALES OF PRODUCTS ON THE SAME BASIS AS IF SUCH SALES WERE NET SALES
BY OMI.

 

SECTION
6.16                                                                           
INTEREST. IF OMI FAILS TO MAKE ANY PAYMENT DUE TO ISIS UNDER THIS AGREEMENT,
THEN INTEREST WILL ACCRUE ON A [***]; PROVIDED, HOWEVER, THAT IF OMI CURES SUCH
LATE PAYMENT AS PROVIDED FOR IN ARTICLE 10 AND OMI HAS NOT BEEN LATE WITH
RESPECT TO ANY OTHER PAYMENT UNDER THIS AGREEMENT IN THE SAME CALENDAR YEAR,
THEN NO SUCH INTEREST WILL ACCRUE DURING THE APPLICABLE CURE PERIOD FOR SUCH
FIRST LATE PAYMENT.

 

ARTICLE 7 -
PRESS RELEASES & PUBLICATIONS

 

SECTION
7.1                                                                                  
PRESS RELEASES; PUBLIC DISCLOSURE.

 

7.1.1                                                                                                                    
UPON EXECUTION OF THIS AGREEMENT, THE PARTIES MAY ISSUE A PRESS RELEASE
ANNOUNCING THE EXISTENCE OF THIS AGREEMENT IN A FORM AND SUBSTANCE MUTUALLY
AGREED TO IN WRITING, IN ADVANCE OF THE EXECUTION DATE, BY THE PARTIES. EACH
PARTY AGREES NOT TO ISSUE ANY OTHER PRESS RELEASE OR OTHER PUBLIC STATEMENT
DISCLOSING OTHER INFORMATION RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER PARTY, WHICH
CONSENT WILL NOT BE UNREASONABLY WITHHELD OR DELAYED, PROVIDED HOWEVER, THAT
EACH PARTY MAY MAKE DISCLOSURES PERMITTED BY, AND IN ACCORDANCE WITH, ARTICLE 8.
EACH PARTY AGREES TO PROVIDE TO THE OTHER PARTY A COPY OF ANY PUBLIC
ANNOUNCEMENT REGARDING THIS AGREEMENT OR THE SUBJECT MATTER THEREOF AS SOON AS
REASONABLY PRACTICABLE UNDER THE CIRCUMSTANCES PRIOR TO ITS SCHEDULED RELEASE.
EXCEPT UNDER EXTRAORDINARY CIRCUMSTANCES, EACH PARTY WILL PROVIDE THE OTHER WITH
AN ADVANCE COPY OF ANY SUCH ANNOUNCEMENT AT LEAST [***] PRIOR TO ITS SCHEDULED
RELEASE. EACH PARTY WILL HAVE THE RIGHT TO EXPEDITIOUSLY REVIEW AND RECOMMEND
CHANGES TO ANY SUCH ANNOUNCEMENT AND, EXCEPT AS OTHERWISE PERMITTED BY ARTICLE
8, THE PARTY WHOSE ANNOUNCEMENT HAS BEEN REVIEWED WILL REMOVE ANY INFORMATION
THE REVIEWING PARTY REASONABLY DEEMS TO BE INAPPROPRIATE FOR DISCLOSURE. THE
CONTENTS OF ANY ANNOUNCEMENT OR SIMILAR PUBLICITY WHICH HAS BEEN REVIEWED,
APPROVED AND RELEASED BY THE REVIEWING PARTY CAN BE RE-RELEASED BY EITHER PARTY
WITHOUT A REQUIREMENT FOR RE-APPROVAL. NOTWITHSTANDING THE FOREGOING AND SUBJECT
TO ARTICLE 8, THE PARTIES AGREE THAT SUCH PUBLIC DISCLOSURES SHALL MINIMIZE THE
DISCLOSURE OF FINANCIAL INFORMATION.

 

7.1.2                                                                                                                    
EACH PARTY WILL IMMEDIATELY NOTIFY (AND PROVIDE AS MUCH ADVANCE NOTICE AS
POSSIBLE TO) THE OTHER OF ANY EVENT MATERIALLY RELATED TO PRODUCTS (INCLUDING
ANY REGULATORY APPROVAL) SO THAT THE PARTIES MAY ANALYZE THE NEED TO OR
DESIRABILITY OF PUBLICLY DISCLOSING OR REPORTING SUCH EVENT. NOTWITHSTANDING
SECTION 7.1.1 ABOVE, ANY PRESS RELEASE OR OTHER SIMILAR PUBLIC COMMUNICATION BY
EITHER PARTY RELATED TO A PRODUCT’S EFFICACY OR SAFETY DATA AND/OR RESULTS, WILL
BE SUBMITTED TO THE OTHER PARTY FOR REVIEW AND APPROVAL AT LEAST [***] [***] IN
ADVANCE OF SUCH PROPOSED PUBLIC DISCLOSURE. EXCEPT AS PERMITTED BY ARTICLE 8,
SUCH PUBLIC DISCLOSURES SHALL BE PERMITTED AT THE SOLE DISCRETION OF OMI.

 

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SECTION
7.2                                                                                  
PUBLICATION OF RESEARCH RESULTS. DURING THE COLLABORATION TERM, NEITHER PARTY
WILL PUBLISH, PRESENT OR OTHERWISE DISCLOSE TO THE PUBLIC THE RESEARCH RESULTS
EXCLUSIVELY LICENSED TO OMI HEREUNDER OR INFORMATION RELATING TO COLLABORATION
GENE TARGETS, EXCEPT AS SPECIFICALLY APPROVED BY THE R&D COMMITTEE. THE R&D
COMMITTEE WILL AGREE UPON THE FORM AND TIMING OF ANY PUBLICATION OR PRESENTATION
OR OTHER DISCLOSURE (SUCH AS AN ABSTRACT, MANUSCRIPT OR PRESENTATION) TO THE
PUBLIC OF THE RESEARCH RESULTS EXCLUSIVELY LICENSED TO OMI HEREUNDER OR
INFORMATION RELATING TO COLLABORATION GENE TARGETS. FOR CLARIFICATION, THIS
SECTION 7.2 WILL NOT APPLY WITH RESPECT TO THE USE AND DISCLOSURE OF
CONFIDENTIAL INFORMATION AS SPECIFICALLY PROVIDED FOR IN SECTION 7.1 OR ARTICLE
8 (I.E., A DISCLOSURE EXPRESSLY PERMITTED AND MADE IN ACCORDANCE WITH SECTION
7.1 OR ARTICLE 8). AT THE TERMINATION OF THE COLLABORATION TERM AND SOLELY WITH
RESPECT TO SELECTED GENE TARGETS FOR WHICH OMI HAS DESIGNATED A COMPOUND AS A
CLINICAL CANDIDATE, OMI MAY PUBLISH, PRESENT OR OTHERWISE DISCLOSE RESEARCH
RESULTS TO THE PUBLIC AT ITS SOLE DISCRETION SUBJECT TO ARTICLE 8; HOWEVER, OMI
WILL NOTIFY ISIS [***] IN ADVANCE OF THE PUBLICATION.

 

ARTICLE 8 -
CONFIDENTIALITY

 

SECTION
8.1                                                                                  
DISCLOSURE AND USE RESTRICTION. EACH PARTY AGREES THAT, FOR SO LONG AS THIS
AGREEMENT IS IN EFFECT AND FOR A PERIOD OF [***] THEREAFTER, A PARTY (THE
“RECEIVING PARTY”) RECEIVING CONFIDENTIAL INFORMATION OF THE OTHER PARTY (THE
“DISCLOSING PARTY”) WILL (I) MAINTAIN IN CONFIDENCE SUCH CONFIDENTIAL
INFORMATION USING NOT LESS THAN THE EFFORTS SUCH RECEIVING PARTY USES TO
MAINTAIN IN CONFIDENCE OTHER PROPRIETARY INDUSTRIAL INFORMATION OF SIMILAR KIND
AND VALUE, (II) NOT DISCLOSE SUCH CONFIDENTIAL INFORMATION EXCEPT TO THE
RECEIVING PARTY’S EMPLOYEES, OR AFFILIATES OF THE RECEIVING PARTY HAVING A
NEED-TO-KNOW SUCH CONFIDENTIAL INFORMATION SOLELY FOR PURPOSES OF PERFORMING
RECEIVING PARTY’S OBLIGATIONS UNDER THIS AGREEMENT, (III) NOT DISCLOSE SUCH
CONFIDENTIAL INFORMATION TO ANY THIRD PARTY WITHOUT THE PRIOR WRITTEN CONSENT OF
THE DISCLOSING PARTY, EXCEPT FOR DISCLOSURES EXPRESSLY PERMITTED BY THIS
AGREEMENT, AND (IV) NOT USE SUCH CONFIDENTIAL INFORMATION FOR ANY PURPOSE EXCEPT
THOSE EXPRESSLY PERMITTED BY THIS AGREEMENT. FOR AVOIDANCE OF DOUBT, ISIS WILL
BE PERMITTED TO USE THE OMI CONFIDENTIAL INFORMATION SOLELY FOR PURPOSES OF
PERFORMING THE RESEARCH PROGRAM IN ACCORDANCE WITH THE R&D PLAN AND FOR NO OTHER
PURPOSE. UPON COMPLETION OF THE RESEARCH PROGRAM OR EARLIER UPON WRITTEN REQUEST
BY OMI, ISIS WILL RETURN TO OMI OR DESTROY ANY OMI CONFIDENTIAL INFORMATION.

 

SECTION
8.2                                                                                  
AUTHORIZED DISCLOSURE. TO THE EXTENT (AND ONLY TO THE EXTENT) THAT IT IS
REASONABLY NECESSARY OR APPROPRIATE TO FULFILL ITS OBLIGATIONS OR EXERCISE ITS
RIGHTS UNDER THIS AGREEMENT, A PARTY MAY DISCLOSE CONFIDENTIAL INFORMATION
BELONGING TO THE OTHER PARTY IN THE FOLLOWING INSTANCES:

 

(a)                                  filing or prosecuting patent applications
in accordance with this Agreement;

 

(b)                                 communicating with the Regulatory
Authorities as necessary for the Development or Commercialization of a Product
in a country, as required in connection with any filing, application or request
for Approval, and including any marketing or promotional information related to
the Product; provided, however, that reasonable measures will be taken to assure
confidential treatment of such information;

 

(c)                                  prosecuting or defending litigation;

 

(d)                                 complying with applicable governmental laws
and regulations (including, without limitation, the rules and regulations of the
Securities and Exchange Commission or any national securities exchange, and
compliance with tax laws and regulations) and with judicial process, if (i) in
the reasonable opinion of the Receiving Party’s counsel, such disclosure is
necessary for such compliance and (ii) such disclosure is made in accordance
with Section 8.3 or 8.4 as applicable; and

 

(e)                                  disclosure, in connection with the
performance of this Agreement and solely on a need-to-know basis,  potential or
actual collaborators (including potential Licensees), potential or

 

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actual investment bankers, investors, lenders, or acquirers, or employees,
independent contractors (including without limitation consultants and clinical
investigators) or agents, each of whom prior to disclosure must be bound by
written obligations of confidentiality and non-use no less restrictive than the
obligations set forth in this Article 8; provided, however, that the Receiving
Party will remain responsible for any failure by any Person who receives
Confidential Information pursuant to this Article 8 to treat such Confidential
Information as required under this Article 8.

 

If and whenever any Confidential Information is disclosed in accordance with
this Section 8.2, such disclosure will not cause any such information to cease
to be Confidential Information except to the extent that such permitted
disclosure results in a public disclosure of such information (other than by
breach of this Agreement). Where reasonably possible and subject to Sections 8.3
and 8.4, the Receiving Party will notify the Disclosing Party of the Receiving
Party’s intent to make such disclosure pursuant to clauses (a) through (d) of
this Section 8.2 sufficiently prior to making such disclosure so as to allow the
Disclosing Party adequate time to take whatever action it may deem appropriate
to protect the confidentiality of the information.

 

FOR PURPOSES OF THIS ARTICLE 8, DURING THE COLLABORATION TERM, THE RESEARCH
RESULTS WILL BE TREATED AS CONFIDENTIAL INFORMATION OF BOTH PARTIES. AFTER THE
EXPIRATION OF THE COLLABORATION TERM, THE RESEARCH RESULTS WILL BE TREATED AS
CONFIDENTIAL INFORMATION OF OMI (UNLESS SUCH RESEARCH RESULTS ARE TRANSFERRED TO
ISIS UNDER ARTICLE 11).

 

SECTION
8.3                                                                                  
REQUIRED DISCLOSURE. A RECEIVING PARTY MAY DISCLOSE CONFIDENTIAL INFORMATION
PURSUANT TO INTERROGATORIES, REQUESTS FOR INFORMATION OR DOCUMENTS, SUBPOENA,
CIVIL INVESTIGATIVE DEMAND ISSUED BY A COURT OR GOVERNMENTAL AGENCY OR AS
OTHERWISE REQUIRED BY LAW; PROVIDED HOWEVER, THAT THE RECEIVING PARTY WILL
NOTIFY THE DISCLOSING PARTY PROMPTLY UPON RECEIPT THEREOF, GIVING (WHERE
PRACTICABLE) THE DISCLOSING PARTY SUFFICIENT ADVANCE NOTICE TO PERMIT IT TO
OPPOSE, LIMIT OR SEEK CONFIDENTIAL TREATMENT FOR SUCH DISCLOSURE, AND TO FILE
FOR PATENT PROTECTION IF RELEVANT; AND PROVIDED, FURTHER, THAT THE RECEIVING
PARTY WILL FURNISH ONLY THAT PORTION OF THE CONFIDENTIAL INFORMATION WHICH IT IS
ADVISED BY COUNSEL IS LEGALLY REQUIRED WHETHER OR NOT A PROTECTIVE ORDER OR
OTHER SIMILAR ORDER IS OBTAINED BY THE DISCLOSING PARTY.

 

SECTION
8.4                                                                                  
SECURITIES FILINGS. IN THE EVENT EITHER PARTY PROPOSES TO FILE WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES REGULATORS OF ANY STATE OR
OTHER JURISDICTION A REGISTRATION STATEMENT, PERIODIC REPORT, OR ANY OTHER
DISCLOSURE DOCUMENT WHICH DESCRIBES OR REFERS TO THIS AGREEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, THE SECURITIES EXCHANGE ACT, OF 1934, AS
AMENDED, OR ANY OTHER APPLICABLE SECURITIES LAW, THE PARTY WILL NOTIFY THE OTHER
PARTY OF SUCH INTENTION AND WILL PROVIDE SUCH OTHER PARTY WITH A COPY OF
RELEVANT PORTIONS OF THE PROPOSED FILING NOT LESS THAN THREE (3) BUSINESS DAYS
PRIOR TO SUCH FILING (PROVIDED THAT, WHENEVER PRACTICABLE, SUCH PORTIONS WILL BE
PROVIDED NOT LESS THAN 5 BUSINESS DAYS PRIOR TO SUCH FILING) (AND ANY MATERIAL
REVISIONS TO SUCH PORTIONS OF THE PROPOSED FILING A REASONABLE TIME PRIOR TO THE
FILING THEREOF), INCLUDING ANY EXHIBITS THERETO RELATING TO THE AGREEMENT, AND
WILL OBTAIN CONFIDENTIAL TREATMENT OF ANY INFORMATION CONCERNING THE AGREEMENT
THAT SUCH OTHER PARTY REQUESTS BE KEPT CONFIDENTIAL (EXCEPT TO THE EXTENT
ADVISED BY COUNSEL THAT CONFIDENTIAL TREATMENT IS NOT AVAILABLE FOR SUCH
INFORMATION), AND WILL ONLY DISCLOSE CONFIDENTIAL INFORMATION WHICH IT IS
ADVISED BY COUNSEL IS LEGALLY REQUIRED TO BE DISCLOSED. NO SUCH NOTICE WILL BE
REQUIRED UNDER THIS SECTION 8.4 IF THE SUBSTANCE OF THE DESCRIPTION OF OR
REFERENCE TO THIS AGREEMENT CONTAINED IN THE PROPOSED FILING HAS BEEN INCLUDED
IN ANY PREVIOUS FILING MADE BY THE EITHER PARTY HEREUNDER OR OTHERWISE APPROVED
BY THE OTHER PARTY.

 

SECTION
8.5                                                                                  
TERMS OF AGREEMENT. THE EXISTENCE AND THE TERMS AND CONDITIONS OF THE AGREEMENT
THAT THE PARTIES HAVE NOT SPECIFICALLY AGREED TO DISCLOSE PURSUANT TO ARTICLE 6
OR SECTION 8.4 WILL BE CONSIDERED CONFIDENTIAL INFORMATION OF BOTH PARTIES.
EITHER PARTY MAY DISCLOSE SUCH TERMS TO A BONA FIDE POTENTIAL LICENSEE,
INVESTOR, INVESTMENT BANKER, ACQUIRER,

 

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MERGER PARTNER OR OTHER POTENTIAL FINANCIAL PARTNER, AND THEIR ATTORNEYS AND
AGENTS, PROVIDED THAT EACH SUCH PERSON TO WHOM SUCH INFORMATION IS TO BE
DISCLOSED IS INFORMED OF THE CONFIDENTIAL NATURE OF SUCH INFORMATION AND HAS
ENTERED INTO A WRITTEN AGREEMENT WITH THE PARTY REQUIRING SUCH PERSON TO KEEP
SUCH INFORMATION CONFIDENTIAL.

 

SECTION
8.6                                                                                  
INJUNCTIVE RELIEF. THE PARTIES HERETO UNDERSTAND AND AGREE THAT REMEDIES AT LAW
MAY BE INADEQUATE TO PROTECT AGAINST ANY BREACH OF ANY OF THE PROVISIONS OF THIS
ARTICLE 8 BY EITHER PARTY OR THEIR EMPLOYEES, AGENTS, OFFICERS OR DIRECTORS OR
ANY OTHER PERSON ACTING IN CONCERT WITH IT OR ON ITS BEHALF. ACCORDINGLY, EACH
PARTY MAY BE ENTITLED TO SEEK INJUNCTIVE RELIEF BY A COURT OF COMPETENT
JURISDICTION AGAINST ANY ACTION THAT CONSTITUTES ANY SUCH BREACH OF THIS ARTICLE
8.

 

ARTICLE 9 -
PATENTS

 

SECTION
9.1                                                                                  
OWNERSHIP OF INVENTIONS AND PATENTS.

 

(A)                                  TITLE TO INVENTIONS, DISCOVERIES,
IMPROVEMENTS AND OTHER TECHNOLOGY, WHETHER OR NOT PATENTABLE, CONCEIVED, MADE OR
REDUCED TO PRACTICE IN THE PERFORMANCE OF THE RESEARCH PROGRAM AND DEVELOPMENT
PROGRAM UNDER THIS AGREEMENT (COLLECTIVELY, THE “PROGRAM INVENTIONS”) AND ANY
PATENTS CLAIMING SUCH PROGRAM INVENTIONS (“PROGRAM PATENTS”), ARE RETAINED BY
THE PARTY THAT IS THE EMPLOYER OF THE INVENTOR (OR, IN THE CASE OF CONSULTANTS
AND (SUB)CONTRACTORS, THE PARTY FOR WHICH THE CONSULTANT OR (SUB)CONTRACTOR IS
PROVIDING ITS SERVICES). THE PARTIES AGREE THAT THE UNITED STATES FEDERAL PATENT
LAW ON INVENTORSHIP WILL DETERMINE THE INVENTORSHIP OF ANY INVENTION AND THE
NAMES OF THE INVENTORS ON ANY PATENT FILINGS, WHETHER SOLE OR JOINT INVENTIONS,
WHICH ARISE IN CONNECTION WITH ACTIVITIES CONDUCTED PURSUANT TO THIS AGREEMENT.
OMI WILL OWN PROGRAM INVENTIONS, INCLUDING THOSE INVENTIONS DESCRIBED IN SECTION
4.7.1, INVENTED SOLELY BY EMPLOYEES, CONSULTANTS AND/OR (SUB)CONTRACTORS OF OMI
(THE “OMI INVENTIONS”) AND ANY PATENTS CLAIMING SUCH PROGRAM INVENTIONS (THE
“OMI PROGRAM PATENTS”). ISIS WILL OWN PROGRAM INVENTIONS, INCLUDING THOSE
INVENTIONS DESCRIBED IN SECTION 4.7.2, INVENTED SOLELY BY EMPLOYEES, CONSULTANTS
AND/OR (SUB)CONTRACTORS OF ISIS (THE “ISIS INVENTIONS”) AND ANY PATENTS CLAIMING
SUCH PROGRAM INVENTIONS (THE “ISIS PROGRAM PATENTS”). ISIS AND OMI WILL OWN
JOINTLY SUCH PROGRAM INVENTIONS, INCLUDING THOSE INVENTIONS DESCRIBED IN SECTION
4.7.3, INVENTED JOINTLY BY EMPLOYEES, CONSULTANTS AND/OR (SUB)CONTRACTORS OF
ISIS AND OMI (THE “JOINT INVENTIONS”) AND ANY PATENTS CLAIMING SUCH PROGRAM
INVENTIONS (THE “JOINT PATENTS”). ISIS WILL PROMPTLY DISCLOSE TO OMI ANY SUCH
ISIS INVENTION OR JOINT INVENTION, AND OMI WILL PROMPTLY DISCLOSE TO ISIS ANY
OMI INVENTION OR JOINT INVENTION, ARISING FROM OR MADE IN THE PERFORMANCE OF THE
RESEARCH PROGRAM AND ANY PATENT OR PATENT APPLICATION CLAIMING SUCH PROGRAM
INVENTION.

 

(B)                                 THIS AGREEMENT WILL BE UNDERSTOOD TO BE A
JOINT RESEARCH AGREEMENT TO DISCOVER COMPOUNDS AND ASSOCIATED USES AND TO
DEVELOP PRODUCTS IN ACCORDANCE WITH 35 U.S.C. § 103(C)(3).

 

SECTION
9.2                                                                                  
FILING, PROSECUTION AND MAINTENANCE OF PATENTS.

 

9.2.1                                                                                                                    
SOLELY OWNED PATENTS. SUBJECT TO THE OTHER SECTIONS OF THIS ARTICLE 9, INCLUDING
THE OTHER SUBSECTIONS OF THIS SECTION 9.2 BELOW, EACH PARTY WILL HAVE THE SOLE
RIGHT, AT ITS COST AND EXPENSE AND AT ITS SOLE DISCRETION, TO PREPARE, FILE,
PROSECUTE (INCLUDING, WITHOUT LIMITATION, TO CONTROL ANY INTERFERENCES, REISSUE
PROCEEDINGS, OPPOSITIONS AND REEXAMINATIONS), MAINTAIN, ENFORCE AND DEFEND
THROUGHOUT THE WORLD ANY PATENTS SOLELY OWNED OR CONTROLLED BY SUCH PARTY,
INCLUDING WITH RESPECT TO ISIS, THE ISIS CORE TECHNOLOGY PATENTS AND THE ISIS
MANUFACTURING AND ANALYTICAL PATENTS.

 

9.2.2                                                                                                                    
FILING, PROSECUTION AND MAINTENANCE OF ISIS CORE TECHNOLOGY PATENTS AND ISIS
MANUFACTURING AND ANALYTICAL PATENTS.

 

(A)                                  AS BETWEEN ISIS AND OMI, ISIS WILL BE
RESPONSIBLE FOR THE PREPARATION, FILING, PROSECUTION (INCLUDING, WITHOUT
LIMITATION, ANY INTERFERENCES, REISSUE PROCEEDINGS, OPPOSITIONS AND
REEXAMINATIONS) AND MAINTENANCE OF ISIS CORE TECHNOLOGY PATENTS AND ISIS

 

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MANUFACTURING AND ANALYTICAL PATENTS, AND ISIS WILL BE RESPONSIBLE FOR ALL COSTS
INCURRED BY ISIS WITH RESPECT TO SUCH PREPARATION, FILING, PROSECUTION AND
MAINTENANCE OF ISIS CORE TECHNOLOGY PATENTS AND ISIS MANUFACTURING AND
ANALYTICAL PATENTS. AT OMI’S REASONABLE REQUEST, ISIS, OR ITS OUTSIDE COUNSEL,
WILL PROMPTLY PROVIDE OMI WITH AN UPDATE OF THE FILING, PROSECUTION AND
MAINTENANCE STATUS FOR EACH OF THE ISIS CORE TECHNOLOGY PATENTS AND ISIS
MANUFACTURING AND ANALYTICAL PATENTS, INCLUDING WITHOUT LIMITATION AN UPDATE OF
APPENDIX 3 AND 4.

 

9.2.3                                                                                                                    
FILING, PROSECUTION AND MAINTENANCE OF PRODUCT SPECIFIC PATENTS.

 

(A)                                                                                                                                 
[***]. IN ACCORDANCE WITH THIS SECTION 9.2.3 AND SUBJECT TO SECTION 9.2.4, FOR
PRODUCT SPECIFIC PATENTS RELATED TO SELECTED GENE TARGETS THAT OMI HAS [***]
ISIS WILL HAVE LEAD RESPONSIBILITY (USING INTERNAL OR OUTSIDE COUNSEL SELECTED
BY ISIS) FOR PREPARING, FILING, PROSECUTING (INCLUDING, WITHOUT LIMITATION, ANY
INTERFERENCES, REISSUE PROCEEDINGS, OPPOSITIONS AND REEXAMINATIONS) AND
MAINTAINING SUCH PRODUCT SPECIFIC PATENTS AT ISIS’ EXPENSE. IN ADDITION, WITHIN
[***], FOR EACH SELECTED GENE TARGET, ISIS WILL HAVE FILED A PATENT APPLICATION
CLAIMING AT A MINIMUM THE SPECIFIC COMPOSITION OF MATTER OF THE RESEARCH
COMPOUND(S) TARGETING SUCH SELECTED GENE TARGET. OMI WILL COOPERATE WITH ISIS IN
THE FILING AND PROSECUTION OF SUCH PATENT APPLICATIONS, INCLUDING CONSULTING
WITH AND ASSISTING ISIS AND ITS PATENT COUNSEL IN DRAFTING PATENT APPLICATIONS
AND RESPONSES. AT OMI’S REASONABLE REQUEST, ISIS, OR ITS OUTSIDE COUNSEL, WILL
PROMPTLY PROVIDE OMI WITH AN UPDATE OF THE FILING, PROSECUTION AND MAINTENANCE
STATUS FOR EACH OF THE PRODUCT SPECIFIC PATENTS [***].

 

(B)                                                                                                                                
[***]. IN ACCORDANCE WITH THIS SECTION 9.2.3, FOR PRODUCT SPECIFIC PATENTS
RELATED TO SELECTED GENE TARGETS THAT OMI [***], ISIS WILL ASSIGN TO OMI, IN THE
FORM PROVIDED AS PROVIDED IN APPENDIX 17, ALL OF ISIS’ RIGHTS, TITLE AND
INTEREST IN ALL PRODUCT SPECIFIC PATENTS, RESEARCH RESULTS AND DATA FROM THE R&D
PLAN THAT RELATE TO SUCH COMPOUND OR PRODUCT.

 

(C)                                                                                                                                 
COOPERATION.                           IN EACH CASE UNDER SECTION 9.2.3
SUBPARAGRAPH (A) OR (B) ABOVE, UPON REQUEST BY THE PARTY PROSECUTING PRODUCT
SPECIFIC PATENTS (THE “PROSECUTING PARTY”), THE OTHER PARTY WILL PROVIDE SUCH
ASSISTANCE AND EXECUTE SUCH DOCUMENTS AS ARE REASONABLY NECESSARY TO PERMIT THE
FILING, PROSECUTION AND/OR MAINTENANCE OF SUCH PRODUCT SPECIFIC PATENTS OR THE
ISSUANCE, MAINTENANCE AND/OR EXTENSION OF ANY RESULTING PATENT OR PERMIT
ENFORCEMENT OF SUCH PATENT APPLICATION OR ANY SUCH PATENT. AT THE REQUEST OF THE
OTHER PARTY, THE PROSECUTING PARTY, OR ITS OUTSIDE COUNSEL, WILL PROVIDE THE
OTHER PARTY WITH AN UPDATE OF THE FILING, PROSECUTION AND MAINTENANCE STATUS FOR
EACH OF THE PRODUCT SPECIFIC PATENTS ON A PERIODIC BASIS FOR WHICH THE
PROSECUTING PARTY ASSUMES LEAD RESPONSIBILITY AND WILL REASONABLY CONSULT WITH
AND COOPERATE WITH THE OTHER PARTY WITH RESPECT TO THE PREPARATION, FILING,
PROSECUTION AND MAINTENANCE OF SUCH PRODUCT SPECIFIC PATENTS. IF REQUESTED IN
WRITING BY THE OTHER PARTY, THE PROSECUTING PARTY, OR ITS OUTSIDE COUNSEL, WILL
PROVIDE TO THE OTHER PARTY COPIES OF ANY PAPERS RELATING TO THE FILING,
PROSECUTION AND MAINTENANCE OF SUCH PRODUCT SPECIFIC PATENTS PROMPTLY UPON THEIR
BEING FILED OR RECEIVED.

 

(D)                                                                                                                                
ELECTION NOT TO FILE, PROSECUTE, OR MAINTAIN PRODUCT SPECIFIC PATENTS. IN THE
EVENT THAT THE PROSECUTING PARTY ELECTS NOT TO PURSUE OR CONTINUE THE FILING,
PROSECUTION (INCLUDING ANY MATERIAL REDUCTION IN CLAIM SCOPE) OR MAINTENANCE OF
ANY PATENTS OR SUBJECT MATTER INCLUDED IN SUCH PRODUCT SPECIFIC PATENTS IN ANY
COUNTRY, IT WILL PROVIDE THE OTHER PARTY WITH AN OPPORTUNITY TO ASSUME
RESPONSIBILITY AND COSTS FOR SUCH FILING, PROSECUTION OR MAINTENANCE OF SUCH
PRODUCT SPECIFIC PATENTS AS SET FORTH IN THIS SECTION 9.2.3. THE PROSECUTING
PARTY WILL NOT KNOWINGLY PERMIT ANY SUCH PRODUCT SPECIFIC PATENT TO BE ABANDONED
IN ANY COUNTRY, OR ELECT NOT TO FILE A NEW PATENT APPLICATION CLAIMING PRIORITY
TO A PATENT APPLICATION WITHIN SUCH PRODUCT SPECIFIC PATENTS EITHER BEFORE SUCH
PATENT APPLICATION’S ISSUANCE OR WITHIN THE TIME PERIOD REQUIRED FOR THE FILING
OF AN INTERNATIONAL (I.E., PATENT COOPERATION TREATY), REGIONAL (INCLUDING
EUROPEAN PATENT OFFICE) OR NATIONAL APPLICATION, WITHOUT THE OTHER PARTY’S
WRITTEN CONSENT OR THE OTHER PARTY OTHERWISE FIRST BEING GIVEN AN OPPORTUNITY TO
ASSUME FULL RESPONSIBILITY (AT THE ASSUMING PARTY’S EXPENSE) FOR THE CONTINUED
PROSECUTION AND MAINTENANCE OF SUCH PRODUCT SPECIFIC PATENTS, OR THE FILING OF
SUCH NEW PATENT APPLICATION. ACCORDINGLY, THE PROSECUTING PARTY, OR ITS OUTSIDE
COUNSEL, WILL, TO THE EXTENT THAT IT IS ABLE, PROVIDE THE OTHER PARTY WITH
NOTICE OF THE

 

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ALLOWANCE AND EXPECTED ISSUANCE DATE OF ANY PATENT WITHIN THE PRODUCT SPECIFIC
PATENTS, OR ANY OF THE AFOREMENTIONED FILING DEADLINES, AND THE OTHER PARTY WILL
PROVIDE THE PROSECUTING PARTY WITH PROMPT NOTICE AS TO WHETHER THE OTHER PARTY
DESIRES THE PROSECUTING PARTY TO FILE ANY SUCH NEW PATENT APPLICATION.

 

(E)                                                                                                                                 
NATIONAL PHASE FILING DECISIONS FOR PRODUCT SPECIFIC PATENTS. AT THE TIME THAT A
PRODUCT SPECIFIC PATENT IS READY TO ENTER NATIONAL PHASE OUTSIDE OF THE UNITED
STATES, THE PROSECUTING PARTY SHALL PROVIDE NOTICE TO THE OTHER PARTY AT LEAST
30 BUSINESS DAYS PRIOR TO THE NATIONAL PHASE DEADLINE THAT AN ELECTION OF
COUNTRIES IS REQUIRED. OMI WILL PROVIDE NOTICE TO ISIS OF THE COUNTRIES IT
INTENDS TO ELECT AND OMI SHALL BEAR THE REASONABLE COSTS OF SUCH ELECTION.. AT A
MINIMUM, OMI MUST ELECT THE COUNTRIES IN WHICH OMI TYPICALLY ENTERS NATIONAL
PHASE FOR OMI’S PRODUCTS (COLLECTIVELY, THE “MINIMUM OMI COUNTRIES”). THE
MINIMUM OMI COUNTRIES AS OF THE EXECUTION DATE ARE SET FORTH IN APPENDIX 13
ATTACHED HERETO. ISIS SHALL HAVE THE RIGHT AND OPTION TO ELECT OTHER COUNTRIES
FOR NATIONAL PHASE ENTRY IN WRITING WITH NOTICE TO OMI. UPON SUCH NOTICE TO
ISIS, ISIS SHALL PROMPTLY NOTIFY OMI OF ITS ELECTION AND OMI WILL USE
COMMERCIALLY REASONABLE EFFORTS TO COMPLY WITH ISIS’ ELECTION. EACH PARTY SHALL
BEAR THE COSTS OF THEIR RESPECTIVE ELECTIONS AND PROSECUTION. IN THE CASE WHERE
A PARTY WISHES TO PURSUE SUBJECT MATTER THE PROSECUTING PARTY (UNDER
SUBPARAGRAPH (A) OR (B) ABOVE AS THE CASE MAY BE) HAS DELETED FROM A CLAIM
(WHERE SUCH PROSECUTING PARTY HAS ELECTED TO NOT OTHERWISE PURSUE THE SUBJECT
MATTER OF SUCH CLAIM IN THE SAME OR ANOTHER APPLICATION), THE OTHER PARTY MAY
PURSUE AT ITS OWN COST (INCLUDING COSTS ASSOCIATED WITH TRANSFER, FILING,
PROSECUTION OR MAINTENANCE) SUCH SUBJECT MATTER IN A CORRESPONDING CONTINUATION
OR DIVISIONAL APPLICATION (WHERE PERMISSIBLE UNDER LAW) IN ACCORDANCE WITH AND
SUBJECT TO THIS SECTION 9.2.3.

 

(F)                                                                                                                                   
FILING, PROSECUTION AND MAINTENANCE OF PRODUCT SPECIFIC PATENTS BY OMI.. FOR SO
LONG AS OMI RETAINS LEAD RESPONSIBILITY UNDER THIS SECTION 9.2.3 WITH RESPECT TO
A PARTICULAR PRODUCT SPECIFIC PATENT, OMI WILL NOT KNOWINGLY TAKE ANY ACTION OR
KNOWINGLY FAIL TO TAKE ANY ACTION DURING THE FILING, PROSECUTION AND/OR
MAINTENANCE OF SUCH PRODUCT SPECIFIC PATENTS THAT WOULD RESULT IN CLAIMS THAT NO
LONGER COVER THE PRODUCT. IN THE CASE WHERE OMI ASSUMES RESPONSIBILITY, UNDER
SUBSECTION (B) OF THIS SECTION, FOR THE PREPARATION, FILING, PROSECUTION OR
MAINTENANCE OF ANY PATENT OR PATENT APPLICATION AS SET FORTH ABOVE, AND HAS USED
ALL GOOD FAITH, REASONABLE EFFORTS TO COMPLY WITH ITS OBLIGATIONS TO PROVIDE
NOTICE AND INFORMATION AS SET FORTH IN THIS SECTION 9.2.3, OMI WILL NOT BE
LIABLE TO ISIS IN ANY WAY WITH RESPECT TO ITS HANDLING OF, OR THE RESULTS
OBTAINED FROM, THE FILING, PROSECUTION, ISSUANCE, EXTENSION OR MAINTENANCE OF
SUCH APPLICATION OR ANY RESULTING PATENT OR ANY FAILURE BY IT TO SO FILE,
PROSECUTE, EXTEND OR MAINTAIN.

 

(G)                                                                                                                                
FILING, PROSECUTION AND MAINTENANCE OF PRODUCT SPECIFIC PATENTS BY ISIS. FOR SO
LONG AS ISIS RETAINS LEAD RESPONSIBILITY UNDER SECTION 9.2.3 WITH RESPECT TO A
PARTICULAR PRODUCT SPECIFIC PATENT, ISIS WILL NOT KNOWINGLY TAKE ANY ACTION OR
KNOWINGLY FAIL TO TAKE ANY ACTION DURING THE FILING, PROSECUTION AND/OR
MAINTENANCE OF SUCH PRODUCT SPECIFIC PATENTS THAT WOULD MATERIALLY ADVERSELY
AFFECT SUCH PRODUCT SPECIFIC PATENTS (INCLUDING ANY MATERIAL REDUCTION IN CLAIM
SCOPE), WITHOUT PROVIDING OMI WRITTEN NOTICE AND INFORMATION AS SET FORTH ABOVE.
IN THE CASE WHERE ISIS ASSUMES RESPONSIBILITY, UNDER SUBSECTION (A) OF THIS
SECTION, FOR THE PREPARATION, FILING, PROSECUTION OR MAINTENANCE OF ANY PATENT
OR PATENT APPLICATION AS SET FORTH ABOVE, AND HAS USED ALL GOOD FAITH,
REASONABLE EFFORTS TO COMPLY WITH ITS OBLIGATIONS TO PROVIDE NOTICE AND
INFORMATION AS SET FORTH IN THIS SECTION 9.2.3, ISIS WILL NOT BE LIABLE TO OMI
IN ANY WAY WITH RESPECT TO ITS HANDLING OF, OR THE RESULTS OBTAINED FROM, THE
FILING, PROSECUTION, ISSUANCE, EXTENSION OR MAINTENANCE OF SUCH APPLICATION OR
ANY RESULTING PATENT OR ANY FAILURE BY IT TO SO FILE, PROSECUTE, EXTEND OR
MAINTAIN.

 

9.2.4                     FILING, PROSECUTION AND MAINTENANCE OF CERTAIN PROGRAM
PATENTS, INCLUDING JOINT PATENTS.

 

(A)                                                                                                                                 
THIS SECTION 9.2.4 WILL APPLY TO PROGRAM PATENTS THAT ARE NOT PRODUCT SPECIFIC
PATENTS (THE PREPARATION, FILING, PROSECUTION AND MAINTENANCE OF THE PROGRAM
PATENTS THAT ARE PRODUCT SPECIFIC PATENTS ARE GOVERNED BY SECTION 9.2.3) AND TO
JOINT PATENTS UNDER SECTION 9.1(A). EACH PARTY WILL HAVE LEAD RESPONSIBILITY FOR
PROGRAM PATENTS INVENTED SOLELY BY ITS OWN

 

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EMPLOYEES AS PROVIDED IN SECTION 9.1(A), AND OMI WILL COOPERATE FULLY, WITH
RESPECT TO THE PREPARATION, FILING, PROSECUTION (INCLUDING, WITHOUT LIMITATION,
ANY INTERFERENCES, REISSUE PROCEEDINGS, OPPOSITIONS AND REEXAMINATIONS) AND
MAINTENANCE OF THE PROGRAM PATENTS WITH RESPECT TO JOINT PATENTS CLAIMING
PROGRAM INVENTIONS FOR THE TERM. EACH PARTY WILL BE RESPONSIBLE FOR ALL OF ITS
OWN OUT-OF-POCKET COSTS WITH RESPECT TO SUCH PREPARATION, FILING, PROSECUTION
AND MAINTENANCE OF PROGRAM PATENTS THAT ARE NOT PRODUCT SPECIFIC PATENTS.

 

(B)                                                                                                                                
WITH RESPECT TO JOINT INVENTIONS CLAMING PROGRAM PATENTS THAT ARE NOT PRODUCT
SPECIFIC PATENTS, PURSUANT TO 9.1(A), OMI WILL PROMPTLY DISCLOSE TO ISIS SUCH
JOINT INVENTIONS, AND ISIS WILL HAVE THE RIGHT, AND BEAR THE COSTS, IN
ACCORDANCE WITH THIS SECTION 9.2.4 TO FILE AND PROSECUTE ANY NEW PATENT
APPLICATION CLAIMING SUCH INVENTIONS. OMI WILL COOPERATE WITH ISIS IN THE FILING
AND PROSECUTION OF SUCH PATENT APPLICATIONS, INCLUDING CONSULTING WITH AND
ASSISTING ISIS AND ITS PATENT COUNSEL IN DRAFTING PATENT APPLICATIONS AND
RESPONSES. IN ADDITION, UPON REQUEST BY ISIS, OMI WILL PROVIDE SUCH ASSISTANCE
AND EXECUTE SUCH DOCUMENTS AS ARE REASONABLY NECESSARY TO PERMIT THE FILING,
PROSECUTION OR MAINTENANCE OF SUCH PATENT OR PATENT APPLICATION OR THE ISSUANCE,
MAINTENANCE OR EXTENSION OF ANY RESULTING PATENT OR PERMIT ENFORCEMENT OF SUCH
PATENT APPLICATION OR ANY SUCH PATENT. ISIS, OR ITS OUTSIDE COUNSEL, WILL
PROVIDE OMI WITH AN UPDATE OF THE FILING, PROSECUTION AND MAINTENANCE STATUS FOR
EACH OF THE PROGRAM PATENTS ON A PERIODIC BASIS FOR WHICH ISIS ASSUMES LEAD
RESPONSIBILITY AND WILL REASONABLY CONSULT WITH AND COOPERATE WITH OMI WITH
RESPECT TO THE PREPARATION, FILING, PROSECUTION AND MAINTENANCE OF SUCH JOINT
PATENTS, INCLUDING PROVIDING OMI WITH DRAFTS OF PROPOSED FILINGS IN SUFFICIENT
TIME TO ALLOW OMI’S REVIEW AND COMMENT BEFORE SUCH FILINGS ARE DUE. ISIS, OR ITS
OUTSIDE COUNSEL, WILL PROVIDE TO OMI COPIES OF ANY PAPERS RELATING TO THE
FILING, PROSECUTION AND MAINTENANCE OF SUCH JOINT PATENTS PROMPTLY UPON THEIR
BEING FILED OR RECEIVED. IN THE EVENT THAT ISIS ELECTS NOT TO PURSUE OR CONTINUE
THE FILING, PROSECUTION OR MAINTENANCE OF ANY JOINT PATENTS IN ANY COUNTRY, ISIS
WILL PROVIDE OMI WITH AN OPPORTUNITY TO ASSUME RESPONSIBILITY FOR SUCH FILING,
PROSECUTION OR MAINTENANCE OF SUCH PATENTS TO THE SAME MANNER AND UNDER THE SAME
CONDITIONS THAT ISIS IS ABLE TO ASSUME RESPONSIBILITY FOR PRODUCT SPECIFIC
PATENTS FROM OMI AS PROVIDED IN SECTION 9.2.3, SUCH THAT SUCH PROGRAM PATENT
RIGHTS WILL BE TREATED IN THE SAME MANNER AS PRODUCT SPECIFIC PATENTS UNDER
SECTION 9.2.3. IN THE CASE WHERE EITHER PARTY ASSUMES RESPONSIBILITY FOR THE
PREPARATION, FILING, PROSECUTION OR MAINTENANCE OF ANY PATENT OR PATENT
APPLICATION AS SET FORTH ABOVE, AND HAS USED GOOD FAITH, REASONABLE EFFORTS TO
COMPLY WITH ITS OBLIGATIONS TO PROVIDE NOTICE AND INFORMATION AS SET FORTH IS
THIS SECTION 9.2.4, THAT PARTY WILL NOT BE LIABLE TO THE OTHER PARTY IN ANY WAY
WITH RESPECT TO ITS HANDLING OF, OR THE RESULTS OBTAINED FROM, THE FILING,
PROSECUTION, ISSUANCE, EXTENSION OR MAINTENANCE OF SUCH APPLICATION OR ANY
RESULTING PATENT OR ANY FAILURE BY IT TO SO FILE, PROSECUTE, EXTEND OR MAINTAIN.

 

9.2.5                     COOPERATION. IN ACCORDANCE WITH THE FOREGOING, EACH
PARTY WILL COOPERATE REASONABLY IN THE PREPARATION, FILING, PROSECUTION, AND
MAINTENANCE OF THE PRODUCT SPECIFIC PATENTS AND PROGRAM PATENT RIGHTS. SUCH
COOPERATION INCLUDES (A) PROMPTLY EXECUTING ALL PAPERS AND INSTRUMENTS AND
REQUIRING EMPLOYEES (AND OTHER PERSONS UNDER OBLIGATION TO ASSIGN PATENTS TO
SUCH PARTY) TO EXECUTE SUCH PAPERS AND INSTRUMENTS AS REASONABLE AND APPROPRIATE
SO AS TO ENABLE SUCH OTHER PARTY, TO PREPARE, FILE, PROSECUTE, AND MAINTAIN SUCH
PATENTS IN ANY COUNTRY; AND (B) PROMPTLY INFORMING SUCH OTHER PARTY OF MATTERS
THAT MAY AFFECT THE PREPARATION, FILING, PROSECUTION, OR MAINTENANCE OF ANY SUCH
PATENTS.

 

SECTION
9.3                                                                                  
PATENT TERM EXTENSION. ISIS AND OMI WILL EACH COOPERATE WITH ONE ANOTHER AND
WILL USE COMMERCIALLY REASONABLE EFFORTS IN OBTAINING PATENT TERM RESTORATIONS
AND/OR EXTENSIONS (INCLUDING WITHOUT LIMITATION, ANY PEDIATRIC EXCLUSIVITY
EXTENSIONS AS MAY BE AVAILABLE) OR SUPPLEMENTAL PROTECTION CERTIFICATES OR THEIR
EQUIVALENTS IN ANY COUNTRY WITH RESPECT TO PATENT RIGHTS COVERING THOSE PRODUCTS
LICENSED BY OMI HEREUNDER. IF ELECTIONS WITH RESPECT TO OBTAINING SUCH PATENT
TERM EXTENSIONS OR SUPPLEMENTAL PROTECTION ARE TO BE MADE, OMI WILL HAVE

 

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THE RIGHT TO MAKE SUCH ELECTION, PROVIDED THAT SUCH ELECTION WILL BE MADE IN
ACCORDANCE WITH APPLICABLE LAW SO AS TO MAXIMIZE THE PERIOD OF MARKETING
EXCLUSIVITY FOR THE PRODUCT.

 

SECTION
9.4                                                                                  
ENFORCEMENT OF PATENTS

 

9.4.1                     ENFORCEMENT BY OMI OF PRODUCT SPECIFIC PATENTS. IN THE
EVENT THAT ISIS OR OMI BECOMES AWARE OF A SUSPECTED INFRINGEMENT OF ANY PRODUCT
SPECIFIC PATENT, OR ANY SUCH PRODUCT SPECIFIC PATENT IS CHALLENGED IN ANY ACTION
OR PROCEEDING (OTHER THAN ANY INTERFERENCES, REISSUE PROCEEDINGS, OPPOSITIONS OR
REEXAMINATIONS, WHICH ARE ADDRESSED ABOVE), SUCH PARTY WILL NOTIFY THE OTHER
PARTY PROMPTLY, AND FOLLOWING SUCH NOTIFICATION, THE PARTIES WILL CONFER. OMI
WILL HAVE THE RIGHT, BUT WILL NOT BE OBLIGATED, TO DEFEND ANY SUCH ACTION OR
PROCEEDING OR BRING AN INFRINGEMENT ACTION WITH RESPECT TO SUCH INFRINGEMENT TO
THE EXTENT RELEVANT TO OMI’S EXCLUSIVE RIGHTS HEREUNDER AT ITS OWN EXPENSE, IN
ITS OWN NAME AND ENTIRELY UNDER ITS OWN DIRECTION AND CONTROL, OR SETTLE ANY
SUCH ACTION, PROCEEDING OR DISPUTE BY LICENSE (TO THE EXTENT SUCH SUBLICENSE IS
PERMITTED UNDER THIS AGREEMENT), SUBJECT TO THE FOLLOWING. ISIS WILL REASONABLY
ASSIST OMI IN ANY ACTION OR PROCEEDING BEING DEFENDED OR PROSECUTED IF SO
REQUESTED, AND WILL LEND ITS NAME TO SUCH ACTIONS OR PROCEEDINGS IF REASONABLY
REQUESTED BY OMI OR REQUIRED BY APPLICABLE LAW. OMI WILL REIMBURSE ISIS FOR THE
DOCUMENTED OUT-OF-POCKET COSTS ISIS REASONABLY INCURS IN PROVIDING SUCH
ASSISTANCE AS SPECIFICALLY REQUESTED IN WRITING BY OMI. IN THE EVENT ISIS IS A
REQUIRED PARTY TO THE PROCEEDING OR ACTION, ISIS WILL HAVE THE RIGHT TO BE
REPRESENTED BY ITS OWN COUNSEL (SUCH SELECTION TO BE SUBJECT TO OMI’S APPROVAL,
SUCH APPROVAL NOT TO BE UNREASONABLY WITHHELD), AND OMI WILL REIMBURSE ISIS FOR
THE DOCUMENTED EXTERNAL COSTS ISIS REASONABLY INCURS THAT ARE REASONABLY RELATED
TO THE PROCEEDING OR ACTION, INCLUDING ATTORNEYS FEES, PROVIDED THAT OMI WILL
RETAIN OVERALL RESPONSIBILITY FOR THE PROSECUTION OF SUCH ACTION OR PROCEEDING
IN SUCH EVENT. IN THE EVENT THAT ISIS IS NOT A NECESSARY PARTY TO THE PROCEEDING
OR ACTION, ISIS WILL HAVE THE RIGHT TO PARTICIPATE AND BE REPRESENTED IN ANY
SUCH SUIT BY ITS OWN COUNSEL AT ITS OWN EXPENSE, PROVIDED THAT OMI WILL RETAIN
OVERALL RESPONSIBILITY FOR THE PROSECUTION OF SUCH ACTION OR PROCEEDINGS IN SUCH
EVENT. NO SETTLEMENT OF ANY SUCH ACTION OR PROCEEDING WHICH RESTRICTS THE SCOPE,
OR ADVERSELY AFFECTS THE ENFORCEABILITY, OF AN ISIS PATENT RIGHT, OR WHICH COULD
BE REASONABLY EXPECTED TO HAVE A MATERIAL ADVERSE FINANCIAL IMPACT ON ISIS, MAY
BE ENTERED INTO BY OMI WITHOUT THE PRIOR WRITTEN CONSENT OF ISIS, WHICH CONSENT
WILL NOT BE UNREASONABLY WITHHELD, DELAYED OR CONDITIONED.

 

9.4.2                     ENFORCEMENT BY ISIS. IF OMI ELECTS NOT TO SETTLE,
DEFEND OR BRING ANY ACTION FOR INFRINGEMENT DESCRIBED IN SECTION 9.4.1 AND SO
NOTIFIES ISIS, INCLUDING FOLLOWING ANY REQUEST BY ISIS TO DO SO, THEN ISIS MAY
DEFEND OR BRING SUCH ACTION AT ITS OWN EXPENSE, IN ITS OWN NAME, PROVIDED
HOWEVER THAT, ISIS AGREES NOT TO SO SETTLE, DEFEND OR BRING ANY ACTION FOR
INFRINGEMENT OF A PRODUCT SPECIFIC PATENT RIGHT UPON OMI’S REQUEST BASED ON
OMI’S GOOD FAITH REASONABLE DETERMINATION, THE BASIS FOR WHICH WILL BE PROVIDED
TO ISIS, THAT IT IS NOT IN THE BEST INTEREST OF THE PARTIES TO SO SETTLE, DEFEND
OR BRING SUCH ACTION FOR INFRINGEMENT. IN THE CASE WHERE ISIS PROCEEDS TO
SETTLE, DEFEND OR BRING AN ACTION FOR SUCH INFRINGEMENT, THE FOLLOWING WILL
APPLY. OMI WILL REASONABLY ASSIST ISIS IN ANY ACTION OR PROCEEDING BEING
DEFENDED OR PROSECUTED IF SO REQUESTED, AND WILL LEND ITS NAME TO SUCH ACTIONS
OR PROCEEDINGS IF REQUESTED BY ISIS OR REQUIRED BY APPLICABLE LAW. ISIS WILL
REIMBURSE OMI FOR THE DOCUMENTED EXTERNAL COSTS OMI REASONABLY INCURS, INCLUDING
ATTORNEYS FEES, IN PROVIDING SUCH ASSISTANCE AS SPECIFICALLY REQUESTED IN
WRITING BY ISIS. OMI WILL HAVE THE RIGHT TO PARTICIPATE AND BE REPRESENTED IN
ANY SUCH SUIT BY ITS OWN COUNSEL AT ITS OWN EXPENSE, PROVIDED THAT ISIS WILL
RETAIN OVERALL RESPONSIBILITY FOR THE PROSECUTION OF SUCH SUIT OR PROCEEDINGS IN
SUCH EVENT. NO SETTLEMENT OF ANY ACTION OR PROCEEDING DEFENDED OR BROUGHT BY
ISIS WITH RESPECT TO A PRODUCT SPECIFIC PATENT, WHICH RESTRICTS THE SCOPE, OR
ADVERSELY AFFECTS THE ENFORCEABILITY, OF A PRODUCT SPECIFIC PATENT, OR WHICH
COULD BE REASONABLY EXPECTED TO HAVE A MATERIAL ADVERSE FINANCIAL IMPACT ON OMI,
MAY BE ENTERED INTO BY ISIS WITHOUT THE PRIOR WRITTEN CONSENT OF OMI, WHICH
CONSENT WILL NOT BE UNREASONABLY WITHHELD, DELAYED OR CONDITIONED. IN ADDITION,
IF OMI ELECTS NOT TO SETTLE, DEFEND OR BRING ANY ACTION FOR INFRINGEMENT AGAINST
AN INFRINGING THIRD PARTY DESCRIBED IN SECTION 9.4.1, THEN ANY INFRINGING
PRODUCTS SOLD BY

 

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such Third Party will not be included in the calculation of sales of Generic
Products under Section 6.7.

 

9.4.3                     WITHDRAWAL. IN ADDITION TO SECTION 9.4.2, IF EITHER
PARTY BRINGS AN ACTION OR PROCEEDING UNDER THIS SECTION 9.4 AND SUBSEQUENTLY
CEASES TO PURSUE OR WITHDRAWS FROM SUCH ACTION OR PROCEEDING, IT WILL PROMPTLY
NOTIFY THE OTHER PARTY AND THE OTHER PARTY MAY SUBSTITUTE ITSELF FOR THE
WITHDRAWING PARTY AND PURSUE SUCH ACTION OR PROCEEDING IN ACCORDANCE WITH THE
TERMS OF THIS SECTION 9.4 (INCLUDING BUT NOT LIMITED TO THE PROVISO IN THE FIRST
SENTENCE OF SECTION 9.4.2).

 

9.4.4                     ENFORCEMENT AND DEFENSE OF JOINT PATENT RIGHTS. WITH
RESPECT TO INFRINGEMENT OF A JOINT PATENT THAT IS NOT A PRODUCT SPECIFIC PATENT,
THE PARTY RESPONSIBLE FOR FILING, PROSECUTION AND MAINTENANCE OF SUCH JOINT
PATENT UNDER SECTION 9.2.5 WILL HAVE THE FIRST RIGHT TO BRING AND CONTROL ANY
ENFORCEMENT ACTION OR PROCEEDING WITH RESPECT TO SUCH JOINT PATENT, AND WILL
BEAR ALL EXPENSES THEREOF, AND THE OTHER PARTY WILL HAVE THE RIGHT, AT ITS OWN
EXPENSE, TO BE REPRESENTED IN ANY SUCH ACTION.

 

9.4.5                     COOPERATION. THE PARTY NOT ENFORCING THE APPLICABLE
PATENT WILL PROVIDE REASONABLE ASSISTANCE TO THE OTHER PARTY (AT SUCH OTHER
PARTY’S EXPENSE), INCLUDING PROVIDING ACCESS TO RELEVANT DOCUMENTS AND OTHER
EVIDENCE, MAKING ITS EMPLOYEES AVAILABLE AT REASONABLE BUSINESS HOURS, AND
JOINING THE ACTION TO THE EXTENT NECESSARY TO ALLOW THE ENFORCING PARTY TO
MAINTAIN THE ACTION.

 

9.4.6                     DAMAGES. IN THE EVENT THAT EITHER PARTY EXERCISES THE
RIGHTS CONFERRED IN THIS SECTION 9.4 AND RECOVERS ANY DAMAGES OR OTHER SUMS IN
SUCH ACTION, SUIT OR PROCEEDING OR IN SETTLEMENT THEREOF, SUCH DAMAGES OR OTHER
SUMS RECOVERED WILL FIRST BE APPLIED TO ALL OUT-OF-POCKET COSTS AND EXPENSES
INCURRED BY THE PARTIES IN CONNECTION THEREWITH, INCLUDING, WITHOUT LIMITATION,
ATTORNEYS FEES. EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION 9.4, EACH PARTY
WILL BEAR ITS OWN EXPENSES WITH RESPECT TO ANY SUIT OR OTHER PROCEEDING AGAINST
AN INFRINGER. IF SUCH RECOVERY IS INSUFFICIENT TO COVER ALL SUCH COSTS AND
EXPENSES OF BOTH PARTIES, IT WILL BE SHARED PRO RATA IN PROPORTION TO THE TOTAL
OF SUCH COSTS AND EXPENSES INCURRED BY EACH PARTY. IF AFTER SUCH REIMBURSEMENT
ANY FUNDS WILL REMAIN FROM SUCH DAMAGES OR OTHER SUMS RECOVERED, SUCH FUNDS WILL
BE DIVIDED AS FOLLOWS: (I) AS TO ORDINARY DAMAGES BASED ON LOST SALES OR PROFIT,
OMI WILL RETAIN SUCH FUNDS AND SUCH FUNDS WILL BE TREATED AS NET SALES AND
ROYALTIES WILL BE PAYABLE BY OMI TO ISIS WITH RESPECT TO SUCH NET SALES IN
ACCORDANCE WITH THIS AGREEMENT AND (II) AS TO SPECIAL OR PUNITIVE DAMAGES, THE
PARTY THAT BROUGHT THE ENFORCEMENT ACTION AT ITS EXPENSE WILL RECEIVE [***]% OF
THE AMOUNT OF SUCH SPECIAL OR PUNITIVE DAMAGES AND THE OTHER PARTY WILL RECEIVE
[***]% OF THE AMOUNT OF SUCH SPECIAL OR PUNITIVE DAMAGES.

 

9.4.7                     ENFORCEMENT OF ISIS CORE TECHNOLOGY PATENTS AND ISIS
MANUFACTURING AND ANALYTICAL PATENTS BY OMI. IN THE EVENT THAT ISIS OR OMI
BECOMES AWARE OF A SUSPECTED INFRINGEMENT OF ANY ISIS CORE TECHNOLOGY PATENTS
AND ISIS MANUFACTURING AND ANALYTICAL PATENTS BY A THIRD PARTY WHERE SUCH
INFRINGEMENT INVOLVES THE MANUFACTURE, USE OR SALE OF AN ASO TARGETING A
COLLABORATION GENE TARGET (INCLUDING BUT NOT LIMITED TO INFRINGEMENT WHICH IS
THE SUBJECT OF A NOTICE UNDER SECTION 9.5), THE PARTIES WILL CONFER AND DISCUSS
IN GOOD FAITH AN ENFORCEMENT STRATEGY WITH RESPECT TO SUCH ISIS CORE TECHNOLOGY
PATENTS AND ISIS MANUFACTURING AND ANALYTICAL PATENTS AGAINST SUCH THIRD PARTY,
AND ISIS WILL CONSIDER IN GOOD FAITH AND NOT UNREASONABLY DENY OR DELAY OMI’S
REQUEST TO ENFORCE SUCH ISIS CORE TECHNOLOGY PATENTS AND ISIS MANUFACTURING AND
ANALYTICAL PATENTS IN THE SAME MANNER AS A PRODUCT SPECIFIC PATENT AS SET FORTH
ABOVE IN THIS ARTICLE 9.

 

SECTION
9.5                                                                                  
NOTIFICATION OF PATENT CERTIFICATION. ISIS WILL NOTIFY AND PROVIDE OMI WITH
COPIES OF ANY ALLEGATIONS OF ALLEGED PATENT INVALIDITY, UNENFORCEABILITY OR
NON-INFRINGEMENT OF AN ISIS PATENT RIGHT COVERING A COMPOUND OR PRODUCT
(INCLUDING METHODS OF USE THEREOF) PURSUANT TO A PARAGRAPH IV PATENT
CERTIFICATION BY A THIRD PARTY FILING AN ABBREVIATED NEW DRUG APPLICATION, AN
APPLICATION UNDER §505(B)(2) OR OTHER SIMILAR PATENT CERTIFICATION BY A THIRD
PARTY, AND ANY FOREIGN EQUIVALENT THEREOF FOR A GENERIC PRODUCT. SUCH
NOTIFICATION AND COPIES WILL BE

 

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PROVIDED TO OMI BY ISIS AS SOON AS PRACTICABLE AND AT LEAST WITHIN FIVE (5) DAYS
AFTER ISIS RECEIVES SUCH CERTIFICATION, AND WILL BE SENT BY FACSIMILE AND
OVERNIGHT COURIER TO THE ADDRESS SET FORTH BELOW:

 

ORTHO MCNEIL, INC.

1000 US ROUTE 202

RARITAN, NEW JERSEY, 08869

Attention:  President

Facsimile:  908-707-9757

 

With copy to:

 

Johnson & Johnson Chief Patent Counsel

Johnson & Johnson

1 Johnson & Johnson Plaza

New Brunswick, NJ 08933

Facsimile:  732-524-5575

 

SECTION
9.6                                                                                  
DATA EXCLUSIVITY AND ORANGE BOOK LISTINGS. WITH RESPECT TO DATA EXCLUSIVITY
PERIODS (SUCH AS THOSE PERIODS LISTED IN THE FDA’S ORANGE BOOK (INCLUDING
WITHOUT LIMITATION ANY AVAILABLE PEDIATRIC EXTENSIONS) OR PERIODS UNDER NATIONAL
IMPLEMENTATIONS OF ARTICLE 11.1(A)(III) OF DIRECTIVE 2001/EC/83, OR SIMILAR
PERIODS AS MAY BE APPLICABLE TO A BIOLOGIC, AND ALL INTERNATIONAL EQUIVALENTS),
OMI WILL USE COMMERCIALLY REASONABLE EFFORTS CONSISTENT WITH ITS OBLIGATIONS
UNDER APPLICABLE LAW (INCLUDING ANY APPLICABLE CONSENT ORDER) TO SEEK, MAINTAIN
AND ENFORCE ALL SUCH DATA EXCLUSIVITY PERIODS AVAILABLE FOR THE PRODUCTS
EXCLUSIVELY LICENSED BY OMI HEREUNDER. WITH RESPECT TO FILINGS IN THE FDA ORANGE
BOOK OR OTHER SIMILAR FILINGS OR LISTINGS AS MAY BE APPLICABLE (AND FOREIGN
EQUIVALENTS) FOR ISSUED PATENTS FOR A PRODUCT, UPON REASONABLE REQUEST BY OMI,
ISIS WILL PROVIDE REASONABLE COOPERATION TO OMI IN FILING AND MAINTAINING ANY
SUCH LISTING AND FILINGS. ALL LISTING AND FILING DECISIONS SHALL BE AT THE SOLE
DISCRETION OF OMI; PROVIDED ,HOWEVER THAT OMI WILL NOT LIST ISIS CORE TECHNOLOGY
PATENTS IN THE FDA ORANGE BOOK WITHOUT ISIS’ PRIOR WRITTEN CONSENT, SUCH CONSENT
NOT TO BE UNREASONABLY WITHHELD OR DELAYED. IN NO EVENT WILL ISIS WITHHOLD OR
DELAY SUCH CONSENT WHERE THE LISTING OF SUCH ISIS CORE TECHNOLOGY PATENT IS
REQUIRED UNDER APPLICABLE LAW.

 

SECTION
9.7                                                                                  
FURTHER ACTIONS. EACH PARTY WILL, UPON THE REASONABLE REQUEST OF THE OTHER
PARTY, PROVIDE SUCH ASSISTANCE AND EXECUTE SUCH DOCUMENTS AS ARE REASONABLY
NECESSARY FOR SUCH PARTY TO EXERCISE ITS RIGHTS AND/OR PERFORM ITS OBLIGATIONS
PURSUANT TO THIS ARTICLE 9; PROVIDED HOWEVER, THAT NEITHER PARTY WILL BE
REQUIRED TO TAKE ANY ACTION PURSUANT TO ARTICLE 9 THAT SUCH PARTY REASONABLY
DETERMINES IN ITS SOLE JUDGMENT AND DISCRETION CONFLICTS WITH OR VIOLATES ANY
APPLICABLE COURT OR GOVERNMENT ORDER OR DECREE.

 

SECTION
9.8                                                                                  
INFRINGEMENT CLAIMS; OPPOSITIONS. OMI AND ISIS WILL PROMPTLY INFORM THE OTHER IN
WRITING OF ANY WRITTEN NOTICE TO IT OF ALLEGED INFRINGEMENT OR MISAPPROPRIATION,
BASED ON THE RESEARCH, DEVELOPMENT, MAKING, USING, IMPORTING, EXPORTING OR
SELLING OF A COMPOUND OR PRODUCT, OF A THIRD PARTY’S INTELLECTUAL PROPERTY
RIGHTS OF WHICH IT WILL BECOME AWARE. THE PARTIES WILL CONFER ON THE HANDLING OF
SUCH MATTER. ISIS WILL NOT ACKNOWLEDGE TO A THIRD PARTY THE VALIDITY OF ANY SUCH
ALLEGATION OR ADMIT LIABILITY WITHOUT THE PRIOR WRITTEN CONSENT OF OMI, AND OMI
WILL NOT ACKNOWLEDGE TO A THIRD PARTY THE VALIDITY OF ANY SUCH ALLEGATION OR
ADMIT LIABILITY WITHOUT THE PRIOR WRITTEN CONSENT OF ISIS TO THE EXTENT SUCH
ACTION WOULD REASONABLY BE EXPECTED TO CREATE ANY LIABILITY FOR ISIS. OMI AND
ISIS WILL EACH KEEP THE OTHER ADVISED OF ALL MATERIAL DEVELOPMENTS IN THE
CONDUCT OF ANY PROCEEDINGS IN DEFENDING ANY CLAIM OF SUCH ALLEGED INFRINGEMENT
OR

 

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MISAPPROPRIATION AND WILL COOPERATE WITH THE OTHER IN THE CONDUCT OF SUCH
DEFENSE. IN NO EVENT MAY EITHER PARTY SETTLE ANY SUCH INFRINGEMENT OR
MISAPPROPRIATION CLAIM IN A MANNER THAT WOULD LIMIT THE RIGHTS OF THE OTHER
PARTY OR IMPOSE ANY OBLIGATION ON THE OTHER PARTY, WITHOUT SUCH OTHER PARTY’S
PRIOR WRITTEN CONSENT, SUCH CONSENT NOT TO BE UNREASONABLY WITHHELD OR DELAYED.

 

OMI AND ISIS WILL PROMPTLY INFORM THE OTHER IN WRITING OF ANY WRITTEN NOTICE TO
IT OF ACTUAL OR THREATENED OPPOSITION RELATED TO THE PRODUCT SPECIFIC PATENTS.
THE PARTIES WILL CONFER ON THE HANDLING OF SUCH MATTER AND SUCH MATTERS WILL BE
HANDLED IN ACCORDANCE WITH SECTION 9.2.3 AND 9.2.4 ABOVE.

 

SECTION 9.9                            RECORDS REGARDING ISIS PATENTS. EACH
PARTY WILL ASSIGN PATENT COUNSEL REPRESENTATIVES WHO WILL BE RESPONSIBLE FOR
COORDINATING ACTIVITIES BETWEEN THE PARTIES IN ACCORDANCE WITH THIS ARTICLE 9.
SUCH REPRESENTATIVES WILL USE COMMERCIALLY REASONABLE EFFORTS TO MAINTAIN A
REPORT LISTING THE ISIS PATENTS THAT ARE SUBJECT TO THE LICENSE GRANTED TO OMI
UNDER SECTION 2.1. SUCH REPORT WILL BE USED TO FACILITATE THE IDENTIFICATION AND
TRACKING OF THE ISIS PATENTS LICENSED UNDER THIS AGREEMENT, BUT WILL NOT, UNLESS
SPECIFICALLY AGREED TO IN A SEPARATE WRITTEN AGREEMENT SIGNED BY AUTHORIZED
REPRESENTATIVES OF BOTH PARTIES, BE CONSIDERED TO BE A THEN-CURRENT COMPLETE AND
BINDING LIST OF THE ISIS PATENTS LICENSED UNDER THIS AGREEMENT.

 

ARTICLE 10 -
TERM AND TERMINATION

 

SECTION 10.1                         TERM. THE TERM OF THIS AGREEMENT (THE
“TERM”) COMMENCES UPON THE EXECUTION DATE AND, UNLESS EARLIER TERMINATED IN
ACCORDANCE WITH THE PROVISIONS OF THIS ARTICLE 10 OR ARTICLE 11, WILL CONTINUE
UNTIL (I) THE EXPIRATION OF ALL OBLIGATIONS TO PAY ROYALTIES ON ALL PRODUCTS TO
ISIS (INCLUDING ANY PASS THROUGH ROYALTIES) AND (II) THE MAKING, USING OR
SELLING OF A COMPOUND OR PRODUCT IS NOT COVERED BY A VALID CLAIM WITHIN ANY ISIS
PATENT RIGHT, PROVIDED, HOWEVER, THAT IN ACCORDANCE WITH SECTION 14.13, CERTAIN
PROVISIONS OF THIS AGREEMENT WILL ONLY BECOME EFFECTIVE AND BINDING ON THE
PARTIES AS OF THE EFFECTIVE DATE UPON THE SATISFACTION OF THE CONDITIONS SET
FORTH IN SECTION 14.13(C).

 

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SECTION 10.2

OMI RIGHT TO TERMINATE.

 

(A)           AT ANY TIME PRIOR TO THE EFFECTIVE DATE, OMI MAY TERMINATE THIS
AGREEMENT IN ACCORDANCE WITH THE TERMS OF SECTION 14.13(F) OF THIS AGREEMENT.

 

(B)           AFTER THE EXPIRATION OF THE COLLABORATION TERM, OMI MAY TERMINATE
THIS AGREEMENT (INCLUDING ITS LICENSE RIGHTS UNDER THIS AGREEMENT) IN FULL (BUT
NOT IN PART), EFFECTIVE UPON [***] PRIOR WRITTEN NOTICE. FOR PURPOSES OF
CLARIFICATION, MILESTONE AND ROYALTY PAYMENTS WILL BE DUE ON MILESTONES ACHIEVED
AND PRODUCTS SOLD DURING THE PERIOD BETWEEN NOTICE OF TERMINATION AND THE
EFFECTIVE DATE OF TERMINATION.

 

(C)           AT ANY TIME DURING THE COLLABORATION TERM, BUT FOLLOWING PAYMENT
BY OMI OF THE TECHNOLOGY ACCESS FEE UNDER SECTION 6.1, OMI SHALL BE ENTITLED TO
TERMINATE THIS AGREEMENT (INCLUDING ITS LICENSE RIGHTS UNDER THIS AGREEMENT) IN
FULL (BUT NOT IN PART) IN THE EVENT OF THE DETECTION IN A TEST POPULATION OF
ADVERSE EXPERIENCES ASSOCIATED WITH THE ADMINISTRATION OF MOE GAPMERS AS A
GENERIC CLASS OF COMPOUNDS THAT ARE SIGNIFICANT, SERIOUS OR LIFE THREATENING TO
THE PATIENT OR DEMONSTRATE SIGNIFICANT TOXICOLOGICAL EFFECT(S) OF MOE GAPMERS AS
A GENERIC CLASS ON ONE OR MORE BODY TISSUES THAT ARE NOT BALANCED BY A
COUNTERVAILING BENEFIT TO THE PATIENT. THE SAFETY OF MOE GAPMERS WILL BE
DETERMINED BY OMI IN VIEW OF THE RISK TO BENEFIT RELATIONSHIP OF SUCH MOE
GAPMERS IN THE RELEVANT PATIENT POPULATION.

 

(D)           OMI SHALL BE ENTITLED TO TERMINATE THIS LICENSE AT ANY TIME ON A
PRODUCT BY PRODUCT BASIS FOR SAFETY REASONS, INCLUDING THE DETECTION IN A TEST
POPULATION OF ADVERSE EXPERIENCES ASSOCIATED WITH THE ADMINISTRATION OF THE
PRODUCT THAT ARE SIGNIFICANT, SERIOUS OR LIFE THREATENING TO THE PATIENT OR
DEMONSTRATE SIGNIFICANT TOXICOLOGICAL EFFECT(S) OF SUCH PRODUCT ON ONE OR MORE
BODY TISSUES THAT ARE NOT BALANCED BY A COUNTERVAILING BENEFIT TO THE PATIENT.
THE SAFETY OF A PRODUCT WILL BE DETERMINED BY OMI IN VIEW OF THE RISK TO BENEFIT
RELATIONSHIP OF SUCH PRODUCT IN THE RELEVANT PATIENT POPULATION.

 

SECTION 10.3                         MATERIAL BREACH.

 

(A)           IF EITHER PARTY BELIEVES THAT THE OTHER IS IN MATERIAL BREACH OF
THIS AGREEMENT (OTHER THAN WITH RESPECT TO A BREACH OF OMI’S OBLIGATIONS UNDER
SECTION 5.1, WHICH IS GOVERNED BY SECTION 10.4), THEN THE NON-BREACHING PARTY
MAY DELIVER NOTICE OF SUCH BREACH TO THE OTHER PARTY. IN SUCH NOTICE THE
NON-BREACHING PARTY WILL IDENTIFY THE ACTIONS OR CONDUCT THAT IT WISHES SUCH
PARTY TO TAKE FOR AN ACCEPTABLE AND PROMPT CURE OF SUCH BREACH (OR WILL
OTHERWISE STATE ITS GOOD FAITH BELIEF THAT SUCH BREACH IS INCURABLE); PROVIDED
THAT SUCH IDENTIFIED ACTIONS OR CONDUCT WILL NOT BE BINDING UPON THE OTHER PARTY
WITH RESPECT TO THE ACTIONS THAT IT MAY NEED TO TAKE TO CURE SUCH BREACH. IF THE
BREACH IS CURABLE, THE ALLEGEDLY BREACHING PARTY WILL HAVE [***] TO EITHER CURE
SUCH BREACH (EXCEPT TO THE EXTENT SUCH BREACH INVOLVES THE FAILURE TO MAKE A
PAYMENT WHEN DUE, WHICH BREACH MUST BE CURED WITHIN [***] FOLLOWING SUCH NOTICE)
OR, IF A CURE CANNOT BE REASONABLY EFFECTED WITHIN SUCH [***] PERIOD, TO DELIVER
TO THE NON-BREACHING PARTY A PLAN FOR CURING SUCH BREACH WHICH IS REASONABLY
SUFFICIENT TO EFFECT A CURE WITHIN A REASONABLE PERIOD. IF THE BREACHING PARTY
FAILS TO (I) CURE SUCH BREACH WITHIN THE [***] PERIOD OR (II) USE COMMERCIALLY
REASONABLE EFFORTS TO CARRY OUT THE PLAN AND CURE THE BREACH, THE NON-BREACHING
PARTY MAY TERMINATE THIS AGREEMENT ON A PRODUCT-BY-PRODUCT BASIS BY PROVIDING
WRITTEN NOTICE TO THE BREACHING PARTY.

 

(b)           Notwithstanding the foregoing, if the allegedly breaching Party
disputes in good faith the existence, materiality, or failure to cure of any
such breach which is not a payment breach, and provides notice to the
non-breaching Party (the “Other Party”) of such dispute within such [***]
period, the Other Party will not have the right to terminate this Agreement in
accordance with this Section 10.3 unless and until it has been determined in
accordance with Section 14.4 that this Agreement was materially breached by the
allegedly breaching Party and

 

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that Party fails to cure such breach within [***] following such determination.
It is understood and acknowledged that during the pendency of such a dispute,
all of the terms and conditions of this Agreement will remain in effect and the
Parties will continue to perform all of their respective obligations hereunder.

 

(c)           This Section 10.3 will be subject to and will not limit the
provisions of Section 10.4 and Section 10.5.

 

SECTION 10.4                         TERMINATION BY ISIS FOR FAILURE OF OMI TO
USE COMMERCIALLY REASONABLE EFFORTS.

 

(A)                                           SUBJECT TO SECTION 10.4(B) AND
10.4(C), AT ANY TIME AFTER THE EXPIRATION OF THE COLLABORATION TERM, ISIS WILL
HAVE THE RIGHT TO TERMINATE THE LICENSE GRANTED UNDER SECTION 2.1 ON A
COUNTRY-BY-COUNTRY BASIS, IF OMI IS IN BREACH OF ITS OBLIGATIONS TO USE
COMMERCIALLY REASONABLE EFFORTS AS SET FORTH IN SECTION 5.1, PROVIDED HOWEVER,
THAT THE AGREEMENT WILL NOT SO TERMINATE UNLESS (I) OMI IS GIVEN [***] PRIOR
WRITTEN NOTICE BY ISIS OF ISIS’S INTENT TO TERMINATE, STATING THE REASONS AND
JUSTIFICATION FOR SUCH TERMINATION AND RECOMMENDING STEPS WHICH OMI SHOULD TAKE,
AND (II) OMI, OR ITS LICENSEE, HAS NOT USED GOOD FAITH COMMERCIALLY REASONABLE
EFFORTS DURING THE [***] PERIOD FOLLOWING SUCH NOTICE TO DILIGENTLY PURSUE THE
DEVELOPMENT AND/OR COMMERCIALIZATION OF AT LEAST ONE COMPOUND OR PRODUCT FOR
EACH COLLABORATION GENE TARGET. ANY SUCH TERMINATION WILL BE LIMITED IN FORCE
AND EFFECT TO THE COUNTRY OR COUNTRIES AND PRODUCTS TO WHICH SUCH BREACH
RELATES. FOR CLARITY, IT IS UNDERSTOOD AND ACKNOWLEDGED THAT COMMERCIALLY
REASONABLE EFFORTS IN THE DEVELOPMENT OF A PRODUCT IN A PARTICULAR COUNTRY MAY
INCLUDE SEQUENTIAL IMPLEMENTATION OF CLINICAL TRIALS AND/OR INTERVALS BETWEEN
CLINICAL TRIALS FOR DATA INTERPRETATION AND CLINICAL PROGRAM PLANNING AND
APPROVAL, TO THE EXTENT SUCH IMPLEMENTATION IS CONSISTENT WITH THE SCIENTIFIC,
TECHNICAL AND COMMERCIAL FACTORS RELEVANT TO DEVELOPMENT OF SUCH PRODUCT IN SUCH
COUNTRY.

 

(B)                                           IT IS UNDERSTOOD AND ACKNOWLEDGED
THAT IF OMI (BY ITSELF OR THROUGH ITS AFFILIATES OR LICENSEES) USES COMMERCIALLY
REASONABLE EFFORTS TO DEVELOP A PRODUCT IN EACH AND EVERY MAJOR MARKET COUNTRY,
OMI WILL BE DEEMED TO BE IN COMPLIANCE WITH ITS OBLIGATION UNDER SECTION 5.1 TO
USE COMMERCIALLY REASONABLE EFFORTS TO DEVELOP A PRODUCT WITH RESPECT TO ALL
COUNTRIES IN THE WORLD. TERMINATION UNDER THIS SECTION 10.4 WILL APPLY TO ALL
COMPOUNDS AND PRODUCTS THAT TARGET THE APPLICABLE COLLABORATION GENE TARGET, BUT
ONLY FOR THE AFFECTED COUNTRY OR COUNTRIES.

 

(C)                                           IF OMI DISPUTES IN GOOD FAITH THE
EXISTENCE OR MATERIALITY OF AN ALLEGED BREACH SPECIFIED IN A NOTICE PROVIDED BY
ISIS PURSUANT TO SECTION 10.4(A), AND PROVIDES NOTICE TO ISIS OF SUCH DISPUTE
WITHIN THE [***] FOLLOWING SUCH NOTICE PROVIDED BY ISIS, ISIS WILL NOT HAVE THE
RIGHT TO TERMINATE THIS AGREEMENT UNLESS AND UNTIL THE EXISTENCE OF SUCH
MATERIAL BREACH OR FAILURE BY OMI HAS BEEN DETERMINED IN ACCORDANCE WITH SECTION
14.4 AND OMI FAILS TO CURE SUCH BREACH WITHIN [***] FOLLOWING SUCH
DETERMINATION. IT IS UNDERSTOOD AND ACKNOWLEDGED THAT DURING THE PENDENCY OF
SUCH A DISPUTE, ALL OF THE TERMS AND CONDITIONS OF THIS AGREEMENT WILL REMAIN IN
EFFECT AND THE PARTIES WILL CONTINUE TO PERFORM ALL OF THEIR RESPECTIVE
OBLIGATIONS HEREUNDER.

 

SECTION 10.5                         CONSEQUENCES OF TERMINATION.

 

10.5.1                                     LICENSES. UPON TERMINATION OF THIS
AGREEMENT IN ITS ENTIRETY BY EITHER PARTY PURSUANT TO THIS ARTICLE 10, THE
LICENSES GRANTED BY ISIS TO OMI HEREUNDER WILL TERMINATE.

 

10.5.2                                     RETURN OF INFORMATION AND MATERIALS.
UPON TERMINATION OF THIS AGREEMENT IN ITS ENTIRETY BY EITHER PARTY PURSUANT TO
THIS ARTICLE 10, THE PARTIES WILL RETURN (OR DESTROY, AS DIRECTED BY THE OTHER
PARTY) ALL DATA, FILES, RECORDS AND OTHER MATERIALS CONTAINING OR COMPRISING THE
OTHER PARTY’S CONFIDENTIAL INFORMATION. NOTWITHSTANDING THE FOREGOING, THE
PARTIES WILL BE PERMITTED TO RETAIN ONE COPY OF SUCH DATA, FILES, RECORDS, AND
OTHER MATERIALS FOR ARCHIVAL PURPOSES.

 

SECTION 10.6                         ACCRUED RIGHTS; SURVIVING OBLIGATIONS.

 

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10.6.1                                     ACCRUED RIGHTS. TERMINATION OR
EXPIRATION OF THIS AGREEMENT FOR ANY REASON WILL BE WITHOUT PREJUDICE TO ANY
RIGHTS OR FINANCIAL COMPENSATION THAT WILL HAVE ACCRUED TO THE BENEFIT OF A
PARTY PRIOR TO SUCH TERMINATION OR EXPIRATION. SUCH TERMINATION OR EXPIRATION
WILL NOT RELIEVE A PARTY FROM OBLIGATIONS THAT ARE EXPRESSLY INDICATED TO
SURVIVE THE TERMINATION OR EXPIRATION OF THIS AGREEMENT. FOR CLARIFICATION, NO
MILESTONE PAYMENTS OR ROYALTY PAYMENTS UNDER ARTICLE 5 WILL BE PAYABLE BY OMI
FOLLOWING TERMINATION OF THIS AGREEMENT, EXCEPT TO THE EXTENT THAT THE MILESTONE
EVENT WAS ACHIEVED (IN THE CASE OF MILESTONE PAYMENTS) OR THE PRODUCT WAS SOLD
(IN THE CASE OF ROYALTY PAYMENTS) PRIOR TO SUCH TERMINATION.

 

10.6.2                                     SURVIVAL. ARTICLES 7, 8, 9, 10, 11,
12 AND 14, AND SECTION 6.11, 6.15 AND SECTION 13.4 OF THIS AGREEMENT WILL
SURVIVE EXPIRATION OR TERMINATION OF THIS AGREEMENT FOR ANY REASON. FURTHERMORE,
ISIS HEREBY GRANTS TO OMI A WORLDWIDE NON-EXCLUSIVE LICENSE, WITH THE RIGHT TO
GRANT SUBLICENSES UNDER SECTION 2.2, TO ISIS KNOW-HOW EXISTING NOW OR IN THE
FUTURE AND DISCLOSED TO OMI DURING THE TERM, SOLELY FOR THE FURTHER MANUFACTURE
AND SALE OF COMPOUNDS AND PRODUCTS AFTER THE EXPIRATION OF THE TERM. ISIS
FURTHER ACKNOWLEDGES AND AGREES THAT UPON THE EXPIRATION OF THE TERM, (I) OMI
WILL NO LONGER HAVE AN OBLIGATION TO PAY ROYALTIES TO ISIS ON ANY PRODUCT, AND
(II) THE MAKING, USING OR SELLING OF A COMPOUND OR PRODUCT WILL NOT BE COVERED
BY A VALID CLAIM WITHIN ANY ISIS PATENT RIGHT.

 

SECTION 10.7                         RIGHTS IN BANKRUPTCY. ALL RIGHTS AND
LICENSES GRANTED UNDER OR PURSUANT TO THIS AGREEMENT BY ISIS OR OMI ARE, AND
WILL OTHERWISE BE DEEMED TO BE, FOR PURPOSES OF SECTION 365(N) OF THE U.S.
BANKRUPTCY CODE (I.E., TITLE 11 OF THE U.S. CODE) OR ANALOGOUS PROVISIONS OF
APPLICABLE LAW OUTSIDE THE UNITED STATES, LICENSES OF RIGHTS TO “INTELLECTUAL
PROPERTY” AS DEFINED UNDER SECTION 101 OF THE U.S. BANKRUPTCY CODE OR ANALOGOUS
PROVISIONS OF APPLICABLE LAW OUTSIDE THE UNITED STATES. THE PARTIES AGREE THAT
EACH PARTY, AS LICENSEE OF SUCH RIGHTS UNDER THIS AGREEMENT, WILL RETAIN AND MAY
FULLY EXERCISE ALL OF ITS RIGHTS AND ELECTIONS UNDER THE U.S. BANKRUPTCY CODE OR
ANY OTHER PROVISIONS OF APPLICABLE LAW OUTSIDE THE UNITED STATES THAT PROVIDE
SIMILAR PROTECTION FOR ‘INTELLECTUAL PROPERTY.’  THE PARTIES FURTHER AGREE THAT,
IN THE EVENT OF THE COMMENCEMENT OF A BANKRUPTCY PROCEEDING BY OR AGAINST A
PARTY UNDER THE U.S. BANKRUPTCY CODE OR ANALOGOUS PROVISIONS OF APPLICABLE LAW
OUTSIDE THE UNITED STATES, THE PARTY THAT IS NOT SUBJECT TO SUCH PROCEEDING WILL
BE ENTITLED TO A COMPLETE DUPLICATE OF (OR COMPLETE ACCESS TO, AS APPROPRIATE)
SUCH INTELLECTUAL PROPERTY AND ALL EMBODIMENTS OF SUCH INTELLECTUAL PROPERTY,
WHICH, IF NOT ALREADY IN THE NON SUBJECT PARTY’S POSSESSION, WILL BE PROMPTLY
DELIVERED TO IT UPON THE NON SUBJECT PARTY’S WRITTEN REQUEST THEREFOR. ANY
AGREEMENTS SUPPLEMENTAL HERETO WILL BE DEEMED TO BE “AGREEMENTS SUPPLEMENTARY
TO” THIS AGREEMENT FOR PURPOSES OF SECTION 365(N) OF THE U.S. BANKRUPTCY CODE.

 

ARTICLE 11 -
ISIS REVERSION RIGHT

 

SECTION 11.1                         ISIS REVERSION RIGHTS.

 

11.1.1     IF (I) OMI TERMINATES THE AGREEMENT UNDER SECTION 10.2, (II) OMI
MAKES A SUBSTITUTION UNDER SECTION 3.6.1, OR (III) ISIS TERMINATES THE AGREEMENT
UNDER SECTION 10.3 OR 10.4, ISIS MAY ELECT TO CONTINUE TO DEVELOP AND
COMMERCIALIZE ANY COMPOUND OR PRODUCT THAT IS THE SUBJECT OF SUCH TERMINATION OR
SUBSTITUTION (A “DISCONTINUED PRODUCT”) BY NOTICE IN WRITING TO OMI WITHIN [***]
OF SUCH TERMINATION (AN “ELECTION NOTICE”) THAT ISIS IS EXERCISING ITS RIGHTS
UNDER THIS SECTION 11.1, IN WHICH CASE OMI WILL (X) GRANT TO ISIS A FULLY-PAID,
SUBLICENSABLE, WORLDWIDE LICENSE OR SUBLICENSE, AS THE CASE MAY BE, TO [***] AS
OF THE DATE OF THE ELECTION NOTICE SOLELY AS THEY ARE [***] TO MAKE, HAVE MADE,
USE, SELL, OFFER FOR SALE, HAVE SOLD AND IMPORT DISCONTINUED PRODUCTS, AND (Y)
TRANSFER TO ISIS, FOR ISIS’ USE WITH RESPECT TO THE DEVELOPMENT AND
COMMERCIALIZATION OF THE DISCONTINUED PRODUCTS, ANY DATA, RESULTS, REGULATORY
INFORMATION AND FILES IN THE POSSESSION OF OMI AS OF THE DATE OF THE ELECTION
NOTICE THAT RELATE TO SUCH

 

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DISCONTINUED PRODUCTS. FURTHER, ANY PRODUCT SPECIFIC PATENTS ASSIGNED TO OMI
PURSUANT TO 9.2.3 (C) SHALL BE REASSIGNED BACK TO ISIS.

 

11.1.2     IN CONSIDERATION FOR THE RIGHTS GRANTED BY OMI TO ISIS UNDER PARTS
(X) AND (Y) OF SECTION  11.1.1, ISIS WILL PAY A ROYALTY ON NET SALES OF EACH
DISCONTINUED PRODUCT BY ISIS, ITS AFFILIATES AND LICENSEES AS FOLLOWS: (I)
[***]% OF NET SALES OF SUCH DISCONTINUED PRODUCT IF THE ELECTION NOTICE OCCURS
AFTER THE APPLICABLE COMPOUND OR PRODUCT ACHIEVED THE [***] MILESTONE, AND OMI
MAKES THE CORRESPONDING PAYMENT TO ISIS UNDER SECTION 6.3, (II) [***]% OF NET
SALES OF SUCH DISCONTINUED PRODUCT IF THE ELECTION NOTICE OCCURS AFTER THE
APPLICABLE COMPOUND OR PRODUCT ACHIEVED THE [***] MILESTONE, AND OMI MAKES THE
CORRESPONDING PAYMENT TO ISIS UNDER SECTION 6.3. SUCH ROYALTY PAYMENT OBLIGATION
WILL BE GOVERNED BY SECTIONS 6.8 THROUGH 6.15 (AND THE DEFINITION OF NET SALES)
WHICH SHALL APPLY TO ISIS IN THE SAME WAY AS THEY APPLIED TO OMI PRIOR TO SUCH
TERMINATION OF THE AGREEMENT.

 

ARTICLE 12 -

 

INDEMNIFICATION, INSURANCE AND LIMITATION OF LIABILITY

 

SECTION 12.1                         INDEMNIFICATION OF ISIS. OMI AGREES TO
DEFEND ISIS, ITS AFFILIATES AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES
AND AGENTS, AND THEIR RESPECTIVE SUCCESSORS, HEIRS AND ASSIGNS (COLLECTIVELY,
THE “ISIS INDEMNITEES”), AND WILL INDEMNIFY AND HOLD HARMLESS THE ISIS
INDEMNITEES, FROM AND AGAINST ANY LIABILITIES, LOSSES, COSTS, DAMAGES, FEES OR
EXPENSES PAYABLE TO A THIRD PARTY, AND REASONABLE ATTORNEYS’ FEES AND OTHER
LEGAL EXPENSES WITH RESPECT THERETO (COLLECTIVELY, “LOSSES”) ARISING OUT OF ANY
CLAIM, ACTION, LAWSUIT OR OTHER PROCEEDING BY A THIRD PARTY (COLLECTIVELY,
“THIRD PARTY CLAIMS”) BROUGHT AGAINST ANY ISIS INDEMNITEE AND RESULTING FROM OR
OCCURRING AS A RESULT OF: (A)  THE DEVELOPMENT, MANUFACTURE, USE, HANDLING,
STORAGE, SALE OR OTHER COMMERCIALIZATION OR DISPOSITION OF ANY COMPOUND OR
PRODUCT IN THE TERRITORY BY OMI OR ITS AFFILIATES, LICENSEES OR CONTRACTORS, (B)
ANY BREACH BY OMI OF ANY OF ITS REPRESENTATIONS OR WARRANTIES PURSUANT TO THIS
AGREEMENT OR ANY OF THE AGREEMENTS OR COVENANTS IN THIS AGREEMENT THAT
CONTEMPLATE PERFORMANCE OR COMPLIANCE BY OMI ON OR PRIOR TO THE EFFECTIVE DATE
OR (C) TO THE EXTENT RESULTING FROM THE  NEGLIGENCE OR WILLFUL MISCONDUCT OF OMI
OR ANY OMI AFFILIATE OR LICENSEE IN CONNECTION WITH THIS AGREEMENT; EXCEPT IN
ANY SUCH CASE TO THE EXTENT SUCH LOSSES RESULT FROM: (I) THE NEGLIGENCE OR
WILLFUL MISCONDUCT OF ANY ISIS INDEMNITEE OR (SUB)CONTRACTOR OF ISIS, (II) ANY
BREACH BY ISIS OF ANY OF ITS REPRESENTATIONS, WARRANTIES, COVENANTS OR
OBLIGATIONS PURSUANT TO THIS AGREEMENT OR UNDER ANY AGREEMENT WITH A THIRD
PARTY, OR (III) ANY BREACH OF APPLICABLE LAW BY ANY ISIS INDEMNITEE OR
(SUB)CONTRACTOR OF ISIS.

 

SECTION 12.2                         INDEMNIFICATION OF OMI. ISIS AGREES TO
DEFEND OMI, ITS AFFILIATES, LICENSEES AND THEIR RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS, AND THEIR RESPECTIVE SUCCESSORS, HEIRS AND ASSIGNS
(COLLECTIVELY, THE “OMI INDEMNITEES”), AND WILL INDEMNIFY AND HOLD HARMLESS THE
OMI INDEMNITEES, FROM AND AGAINST ANY LOSSES AND THIRD PARTY CLAIMS BROUGHT
AGAINST ANY OMI INDEMNITEE AND RESULTING FROM OR OCCURRING AS A RESULT OF: (A)
ANY BREACH BY ISIS OF ANY OF ITS REPRESENTATIONS OR WARRANTIES PURSUANT TO THIS
AGREEMENT OR ANY OF THE AGREEMENTS OR COVENANTS IN THIS AGREEMENT THAT
CONTEMPLATE PERFORMANCE OR COMPLIANCE BY ISIS ON OR PRIOR TO THE EFFECTIVE DATE
OR (B) TO THE EXTENT RESULTING FROM THE NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY
ISIS INDEMNITEE OR ANY (SUB)CONTRACTOR OF OMI IN CONNECTION WITH THIS AGREEMENT;
EXCEPT IN ANY SUCH CASE TO THE EXTENT SUCH LOSSES RESULT FROM: (I) THE
NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY OMI INDEMNITEE OR (SUB)CONTRACTOR OF
OMI, (II) ANY BREACH BY OMI OF ANY OF ITS REPRESENTATIONS, WARRANTIES, COVENANTS
OR OBLIGATIONS PURSUANT TO THIS AGREEMENT OR UNDER ANY AGREEMENT WITH A THIRD
PARTY, OR (III) ANY BREACH OF APPLICABLE LAW BY ANY OMI INDEMNITEE OR
(SUB)CONTRACTOR OF OMI.

 

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SECTION 12.3                         NOTICE OF CLAIM. ALL INDEMNIFICATION CLAIMS
PROVIDED FOR IN SECTIONS 12.1 AND 12.2 WILL BE MADE SOLELY BY SUCH PARTY TO THIS
AGREEMENT (THE “INDEMNIFIED PARTY”). THE INDEMNIFIED PARTY WILL GIVE THE
INDEMNIFYING PARTY PROMPT WRITTEN NOTICE (AN “INDEMNIFICATION CLAIM NOTICE”) OF
ANY LOSSES OR THE DISCOVERY OF ANY FACT UPON WHICH THE INDEMNIFIED PARTY INTENDS
TO BASE A REQUEST FOR INDEMNIFICATION UNDER SECTION 12.1 OR 12.2, BUT IN NO
EVENT WILL THE INDEMNIFYING PARTY BE LIABLE FOR ANY LOSSES TO THE EXTENT SUCH
LOSSES RESULT FROM ANY DELAY IN PROVIDING SUCH NOTICE. EACH INDEMNIFICATION
CLAIM NOTICE MUST CONTAIN A DESCRIPTION OF THE CLAIM AND THE NATURE AND AMOUNT
OF SUCH LOSS (TO THE EXTENT THAT THE NATURE AND AMOUNT OF SUCH LOSS IS KNOWN AT
SUCH TIME). THE INDEMNIFIED PARTY WILL FURNISH PROMPTLY TO THE INDEMNIFYING
PARTY COPIES OF ALL PAPERS AND OFFICIAL DOCUMENTS RECEIVED IN RESPECT OF ANY
LOSSES AND THIRD PARTY CLAIMS.

 

SECTION 12.4                         DEFENSE, SETTLEMENT, COOPERATION AND
EXPENSES.

 

(A)           CONTROL OF DEFENSE. AT ITS OPTION, THE INDEMNIFYING PARTY MAY
ASSUME THE DEFENSE OF ANY THIRD PARTY CLAIM BY GIVING WRITTEN NOTICE TO THE
INDEMNIFIED PARTY WITHIN 30 CALENDAR DAYS AFTER THE INDEMNIFYING PARTY’S RECEIPT
OF AN INDEMNIFICATION CLAIM NOTICE. THE ASSUMPTION OF THE DEFENSE OF A THIRD
PARTY CLAIM BY THE INDEMNIFYING PARTY WILL NOT BE CONSTRUED AS AN ACKNOWLEDGMENT
THAT THE INDEMNIFYING PARTY IS LIABLE TO INDEMNIFY THE INDEMNIFIED PARTY IN
RESPECT OF THE THIRD PARTY CLAIM, NOR WILL IT CONSTITUTE A WAIVER BY THE
INDEMNIFYING PARTY OF ANY DEFENSES IT MAY ASSERT AGAINST THE INDEMNIFIED PARTY’S
CLAIM FOR INDEMNIFICATION. UPON ASSUMING THE DEFENSE OF A THIRD PARTY CLAIM, THE
INDEMNIFYING PARTY MAY APPOINT AS LEAD COUNSEL IN THE DEFENSE OF THE THIRD PARTY
CLAIM ANY LEGAL COUNSEL SELECTED BY THE INDEMNIFYING PARTY. IN THE EVENT THE
INDEMNIFYING PARTY ASSUMES THE DEFENSE OF A THIRD PARTY CLAIM, THE INDEMNIFIED
PARTY WILL AS SOON AS IS REASONABLY POSSIBLE DELIVER TO THE INDEMNIFYING PARTY
ALL ORIGINAL NOTICES AND DOCUMENTS (INCLUDING COURT PAPERS) RECEIVED BY THE
INDEMNIFIED PARTY IN CONNECTION WITH THE THIRD PARTY CLAIM. SHOULD THE
INDEMNIFYING PARTY ASSUME THE DEFENSE OF A THIRD PARTY CLAIM, EXCEPT AS PROVIDED
IN SECTION 12.4(B), THE INDEMNIFIED PARTY WILL BE RESPONSIBLE FOR THE LEGAL
COSTS OR EXPENSES SUBSEQUENTLY INCURRED BY SUCH INDEMNIFIED PARTY IN CONNECTION
WITH THE ANALYSIS, DEFENSE OR SETTLEMENT OF THE THIRD PARTY CLAIM. IN THE EVENT
THAT IT IS ULTIMATELY DETERMINED THAT THE INDEMNIFYING PARTY IS NOT OBLIGATED TO
INDEMNIFY, DEFEND OR HOLD HARMLESS THE INDEMNIFIED PARTY FROM AND AGAINST THE
THIRD PARTY CLAIM, THE INDEMNIFIED PARTY WILL REIMBURSE THE INDEMNIFYING PARTY
FOR ANY AND ALL COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES AND COSTS OF SUIT)
AND ANY THIRD PARTY CLAIMS INCURRED BY THE INDEMNIFYING PARTY SOLELY ATTRIBUTED
TO THE DEFENSE OF THE THIRD PARTY CLAIM ON BEHALF OF THE INDEMNIFIED PARTY (BUT
NOT THOSE COSTS AND EXPENSES OTHERWISE ATTRIBUTABLE TO THE DEFENSE OF THE
INDEMNIFYING PARTY).

 

(B)           RIGHT TO PARTICIPATE IN DEFENSE. WITHOUT LIMITING SECTION 12.4(A),
ANY INDEMNIFIED PARTY WILL BE ENTITLED TO PARTICIPATE IN, BUT NOT CONTROL, THE
DEFENSE OF SUCH THIRD PARTY CLAIM AND TO EMPLOY COUNSEL OF ITS CHOICE FOR SUCH
PURPOSE; PROVIDED, HOWEVER, THAT SUCH EMPLOYMENT WILL BE AT THE INDEMNIFIED
PARTY’S OWN COST AND EXPENSE UNLESS (I) THE EMPLOYMENT THEREOF HAS BEEN
SPECIFICALLY AUTHORIZED BY THE INDEMNIFYING PARTY IN WRITING, (II) THE
INDEMNIFYING PARTY HAS FAILED TO ASSUME THE DEFENSE AND EMPLOY COUNSEL IN
ACCORDANCE WITH SECTION 12.4(A) (IN WHICH CASE THE INDEMNIFIED PARTY WILL
CONTROL THE DEFENSE) OR (III) THE INTERESTS OF THE INDEMNIFIED PARTY AND THE
INDEMNIFYING PARTY WITH RESPECT TO SUCH THIRD PARTY CLAIM ARE SUFFICIENTLY
ADVERSE TO PROHIBIT THE REPRESENTATION BY THE SAME COUNSEL OF BOTH PARTIES UNDER
APPLICABLE LAW, ETHICAL RULES OR EQUITABLE PRINCIPLES IN WHICH CASE THE
INDEMNIFYING PARTY WILL BE RESPONSIBLE FOR ANY SUCH COSTS AND EXPENSES OF
COUNSEL FOR THE INDEMNIFIED PARTY.

 

(C)           SETTLEMENT. WITH RESPECT TO ANY THIRD PARTY CLAIMS RELATING SOLELY
TO THE PAYMENT OF MONEY DAMAGES IN CONNECTION WITH A THIRD PARTY CLAIM AND THAT
WILL NOT ADMIT LIABILITY OR VIOLATION OF LAW ON THE PART OF THE INDEMNIFIED
PARTY OR RESULT IN THE INDEMNIFIED PARTY’S BECOMING SUBJECT TO INJUNCTIVE OR
OTHER RELIEF OR OTHERWISE ADVERSELY AFFECTING THE BUSINESS OF THE INDEMNIFIED
PARTY IN ANY MANNER (SUCH AS GRANTING A LICENSE OR ADMITTING THE INVALIDITY OF A
PATENT CONTROLLED BY AN INDEMNIFIED PARTY), AND AS TO WHICH THE INDEMNIFYING
PARTY WILL HAVE

 

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ACKNOWLEDGED IN WRITING THE OBLIGATION TO INDEMNIFY THE INDEMNIFIED PARTY
HEREUNDER, THE INDEMNIFYING PARTY WILL HAVE THE SOLE RIGHT TO CONSENT TO THE
ENTRY OF ANY JUDGMENT, ENTER INTO ANY SETTLEMENT OR OTHERWISE DISPOSE OF SUCH
LOSS, ON SUCH TERMS AS THE INDEMNIFYING PARTY, IN ITS SOLE DISCRETION, WILL DEEM
APPROPRIATE. WITH RESPECT TO ALL OTHER LOSSES IN CONNECTION WITH THIRD PARTY
CLAIMS, WHERE THE INDEMNIFYING PARTY HAS ASSUMED THE DEFENSE OF THE THIRD PARTY
CLAIM IN ACCORDANCE WITH SECTION 12.4(A), THE INDEMNIFYING PARTY WILL HAVE
AUTHORITY TO CONSENT TO THE ENTRY OF ANY JUDGMENT, ENTER INTO ANY SETTLEMENT OR
OTHERWISE DISPOSE OF SUCH LOSS PROVIDED IT OBTAINS THE PRIOR WRITTEN CONSENT OF
THE INDEMNIFIED PARTY (WHICH CONSENT WILL NOT BE UNREASONABLY WITHHELD). THE
INDEMNIFYING PARTY WILL NOT BE LIABLE FOR ANY SETTLEMENT OR OTHER DISPOSITION OF
A LOSS BY AN INDEMNIFIED PARTY THAT IS REACHED WITHOUT THE WRITTEN CONSENT OF
THE INDEMNIFYING PARTY. REGARDLESS OF WHETHER THE INDEMNIFYING PARTY CHOOSES TO
DEFEND OR PROSECUTE ANY THIRD PARTY CLAIM, NO INDEMNIFIED PARTY WILL ADMIT ANY
LIABILITY WITH RESPECT TO OR SETTLE, COMPROMISE OR DISCHARGE, ANY THIRD PARTY
CLAIM WITHOUT THE PRIOR WRITTEN CONSENT OF THE INDEMNIFYING PARTY, SUCH CONSENT
NOT TO BE UNREASONABLY WITHHELD.

 

(D)           COOPERATION. REGARDLESS OF WHETHER THE INDEMNIFYING PARTY CHOOSES
TO DEFEND OR PROSECUTE ANY THIRD PARTY CLAIM, THE INDEMNIFIED PARTY WILL, AND
WILL CAUSE EACH OTHER INDEMNIFIED PARTY TO, COOPERATE IN THE DEFENSE OR
PROSECUTION THEREOF AND WILL FURNISH SUCH RECORDS, INFORMATION AND TESTIMONY,
PROVIDE SUCH WITNESSES AND ATTEND SUCH CONFERENCES, DISCOVERY PROCEEDINGS,
HEARINGS, TRIALS AND APPEALS AS MAY BE REASONABLY REQUESTED IN CONNECTION
THEREWITH. SUCH COOPERATION WILL INCLUDE ACCESS DURING NORMAL BUSINESS HOURS
AFFORDED TO INDEMNIFYING PARTY TO, AND REASONABLE RETENTION BY THE INDEMNIFIED
PARTY OF, RECORDS AND INFORMATION THAT ARE REASONABLY RELEVANT TO SUCH THIRD
PARTY CLAIM, AND MAKING INDEMNIFIED PARTIES AND OTHER EMPLOYEES AND AGENTS
AVAILABLE ON A MUTUALLY CONVENIENT BASIS TO PROVIDE ADDITIONAL INFORMATION AND
EXPLANATION OF ANY MATERIAL PROVIDED HEREUNDER, AND THE INDEMNIFYING PARTY WILL
REIMBURSE THE INDEMNIFIED PARTY FOR ALL ITS REASONABLE OUT-OF-POCKET COSTS AND
EXPENSES IN CONNECTION THEREWITH.

 

(E)           COSTS AND EXPENSES. EXCEPT AS PROVIDED ABOVE IN THIS SECTION 12.4,
THE COSTS AND EXPENSES, INCLUDING ATTORNEYS’ FEES AND EXPENSES, INCURRED BY THE
INDEMNIFIED PARTY IN CONNECTION WITH ANY CLAIM WILL BE REIMBURSED ON A CALENDAR
QUARTER BASIS BY THE INDEMNIFYING PARTY, WITHOUT PREJUDICE TO THE INDEMNIFYING
PARTY’S RIGHT TO CONTEST THE INDEMNIFIED PARTY’S RIGHT TO INDEMNIFICATION AND
SUBJECT TO REFUND IN THE EVENT THE INDEMNIFYING PARTY IS ULTIMATELY HELD NOT TO
BE OBLIGATED TO INDEMNIFY THE INDEMNIFIED PARTY.

 

SECTION 12.5                         INSURANCE. OMI WILL MAINTAIN AT ITS COST
AND EXPENSE, ADEQUATE LIABILITY INSURANCE (INCLUDING PRODUCT LIABILITY INSURANCE
COVERING OMI’S PRODUCTS UNDERGOING CLINICAL TRIALS AND COMMERCIALIZED PRODUCTS)
TO PROTECT AGAINST POTENTIAL LIABILITIES AND RISK ARISING OUT OF ACTIVITIES TO
BE PERFORMED BY OMI UNDER THIS AGREEMENT AND ANY AGREEMENT RELATED HERETO AND
UPON SUCH TERMS (INCLUDING COVERAGES, DEDUCTIBLE LIMITS AND SELF-INSURED
RETENTIONS) AS ARE CUSTOMARY IN THE U.S. PHARMACEUTICAL INDUSTRY FOR THE
ACTIVITIES TO BE CONDUCTED BY  OMI UNDER THIS AGREEMENT. OMI WILL PROMPTLY
NOTIFY ISIS OF ANY MATERIAL CHANGE IN INSURANCE OR SELF-INSURANCE COVERAGE OR
LAPSE IN COVERAGE IN THAT REGARD. FURTHERMORE, OMI WILL PROVIDE ISIS THE
INFORMATION ISIS REASONABLY REQUESTS TO ALLOW ISIS TO MAINTAIN ISIS’ CLINICAL
TRIAL INSURANCE COVERING THE CLINICAL TRIALS FOR COMPOUNDS OR PRODUCTS CONDUCTED
BY OMI. ISIS AGREES TO PROCURE AND MAINTAIN IN FULL FORCE AND EFFECT DURING THE
TERM, VALID AND COLLECTIBLE INSURANCE POLICIES AS OUTLINED IN APPENDIX 14. UPON
WRITTEN REQUEST, ISIS SHALL PROVIDE OMI WITH CERTIFICATES OF INSURANCE
EVIDENCING THE REQUIRED COVERAGE.

 

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ARTICLE 13 -
REPRESENTATIONS AND WARRANTIES

 

SECTION 13.1                         REPRESENTATIONS, WARRANTIES AND COVENANTS.
EACH PARTY HEREBY REPRESENTS AND WARRANTS AS OF BOTH THE EXECUTION DATE AND
EFFECTIVE DATE AND COVENANTS TO THE OTHER PARTY THAT:

 

(a)  it has the power and authority and the legal right to enter into this
Agreement and perform its obligations hereunder, and that it has taken all
necessary action on its part required to authorize the execution and delivery of
this Agreement and the performance of its obligations hereunder;

 

(b)  this Agreement has been duly executed and delivered on behalf of such Party
and constitutes a legal, valid and binding obligation of such Party and is
enforceable against it in accordance with its terms subject to the effects of
bankruptcy, insolvency or other laws of general application affecting the
enforcement of creditor rights and judicial principles affecting the
availability of specific performance and general principles of equity, whether
enforceability is considered a proceeding at law or equity;

 

(c)  all necessary consents, approvals and authorizations of all Regulatory
Authorities and other parties required to be obtained by such Party in
connection with the execution and delivery of this Agreement and the performance
of its obligations hereunder have been obtained; and

 

(d)  the execution and delivery of this Agreement and the performance of such
Party’s obligations hereunder (i) do not conflict with or violate any
requirement of Applicable Law or any provision of the articles of incorporation,
bylaws or any similar instrument of such Party, as applicable, in any material
way, and (ii) do not conflict with, violate, or breach or constitute a default
or require any consent not already obtained under, any contractual obligation or
court or administrative order by which such Party is bound.

 

SECTION 13.2                         ISIS REPRESENTATIONS, WARRANTIES, AND
COVENANTS. ISIS’ REPRESENTATIONS AND WARRANTIES UNDER THIS AGREEMENT REGARDING
GENE TARGETS ARE LIMITED TO GCCR, GCGR ON BOTH THE EXECUTION DATE AND EFFECTIVE
DATE AND THE GENE TARGETS THAT ARE PART OF THE TARGET POOL ON THE EXECUTION
DATE. SIMILARLY, ISIS’ REPRESENTATIONS AND WARRANTIES UNDER THIS AGREEMENT
REGARDING COMPOUNDS ARE LIMITED TO (I) COMPOUNDS THAT INHIBIT GCCR AND GCGR
COMPOUNDS IDENTIFIED AND KNOWN BY ISIS BOTH ON THE EXECUTION DATE AND EFFECTIVE
DATE AND (II) COMPOUNDS THAT INHIBIT THE GENE TARGETS THAT ARE PART OF THE
TARGET POOL ON THE EXECUTION DATE. AS SUCH, ISIS HEREBY REPRESENTS AND WARRANTS
AS OF THE EXECUTION DATE AND, WHERE INDICATED, AS OF THE EFFECTIVE DATE AND
COVENANTS TO OMI THAT:

 

(a)           subject to the limitations set forth in Appendix 6, Isis has the
sufficient legal and/or beneficial title and ownership or right to license (or
sublicense as the case may be) with respect to the Isis Patents as is necessary
to fulfill its obligations under this Agreement and further, that, with respect
to the Compounds, the grant of the licenses (or sublicenses as the case may be)
to OMI pursuant to this Agreement does not, and as of the Effective Date will
not, violate any right known to Isis of any agreement Isis has with a Third
Party;

 

(b)           with respect to agreements between Isis and any Third Party
existing on the Execution Date, the only financial Pass Through Obligations for
ISIS 325568 and ISIS 377131 are the Isis Supported Payments and further that
Isis is not aware of any other Third Party Patents that are necessary for OMI to
make, use or sell ISIS 325568 and ISIS 377131 other than those provided in
Appendix 6. Any existing Pass Through Royalties encumbering the Compounds or
gene targets in the Target Pool are listed in Appendix 6;

 

(c)           to the best of Isis’ knowledge, no actions, suits, claims,
disputes, or proceedings concerning the Isis Patents licensed or to be licensed,
hereunder are currently pending or are threatened, that if determined adversely
to Isis would have a material adverse effect on the Research Program,
Development Program or Isis’ ability to perform its obligations or to grant the
licenses to OMI under this Agreement, or that would have a material adverse
effect on or would impair OMI’s right to practice under the licenses granted or
to be granted under this Agreement by Isis to OMI;

 

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(d)           subject to the limitations set forth in Appendix 6, it has, and as
of the Effective Date, will have, the ability to grant to OMI the licenses
granted or to be granted by Isis under this Agreement on the terms set forth
herein;

 

(e)           subject to the limitations set forth in Appendix 6, it is not
currently, and as of the Effective Date will not be, subject to any agreement
with any Third Party or to any outstanding order, judgment or decree of any
court or administrative agency that restricts it in any way from granting to OMI
the licenses granted by Isis under this Agreement on the terms set forth herein
or the right of OMI to exercise such license rights;

 

(F)            IT HAS NOT GRANTED, OR PERMITTED TO BE ATTACHED, AND IT WILL NOT
GRANT OR PERMIT TO BE ATTACHED DURING THE TERM, ANY LIEN, SECURITY INTEREST OR
OTHER ENCUMBRANCE WITH RESPECT TO THE ISIS TECHNOLOGY, RESEARCH RESULTS OR
PROGRAM INVENTIONS WHICH WOULD ADVERSELY EFFECT THE RIGHTS GRANTED TO OMI
HEREUNDER;

 

(g)           during the Term, Isis will use commercially reasonable efforts to
maintain and not to breach any agreements with Third Parties that provide a
grant of rights from such Third Party to Isis that are Controlled by Isis and
are licensed or become subject to a license from Isis to OMI under this
Agreement; as of the Execution Date, Isis is in compliance in all material
respects with any aforementioned agreements with Third Parties;

 

(h)           it has not granted, as of the Effective Date will not have
granted, any license, option or other rights to any other Third Party with
respect to any Product Specific Patents (with the exception of the material
transfer agreements listed as numbers 20-29 in Appendix 6);

 

(i)            subject to the limitations set forth in Appendix 6, it has not
granted, and as of the Effective Date will not have granted, any right, license
or interest in or to, or an option to acquire any of the foregoing with respect
to, the intellectual property rights licensed to OMI hereunder that is in
conflict with the rights or licenses granted or to be granted to OMI under this
Agreement;

 

(J)            THE ISIS IN-LICENSE AGREEMENTS THAT ISIS CONSIDERS IN GOOD FAITH
TO BE MOST RELEVANT TO THE MANUFACTURE, USE OR SALE OF COMPOUNDS AND PRODUCTS AS
CONTEMPLATED UNDER THE INITIAL R&D PLAN (TOGETHER WITH ANY ASSOCIATED POTENTIAL
PASS THROUGH OBLIGATIONS) ARE INCLUDED IN THE LIST OF AGREEMENTS IDENTIFIED IN
APPENDIX 6;

 

(K)           ISIS OWNS OR POSSESSES ADEQUATE LICENSES OR OTHER RIGHTS TO USE
ALL EXISTING RESEARCH TOOLS THAT IT USES OR HAS USED TO IDENTIFY THE COMPOUNDS;

 

(L)            UNLESS DISCLOSED IN WRITING BETWEEN THE PARTIES TO THIS AGREEMENT
OR THEIR RESPECTIVE AGENTS, TO ISIS’ KNOWLEDGE, (I) THERE ARE NO ISSUED PATENTS
OF A THIRD PARTY THAT WOULD BE INFRINGED BY OMI’S MANUFACTURE, USE OR SALE OF
THE COMPOUNDS AND (II)  NO THIRD PARTY IS CURRENTLY INFRINGING ANY PRODUCT
SPECIFIC PATENTS LICENSED HEREUNDER;

 

(M)          THE LICENSE AND/OR TRANSFER OF ANY DATA RELATED TO THE COMPOUNDS
THAT IS PART OF THE ISIS KNOW-HOW AND PRODUCT SPECIFIC KNOW-HOW UNDER THIS
AGREEMENT WILL NOT VIOLATE THE TERMS OF ANY AGREEMENT ISIS HAS WITH A THIRD
PARTY;

 

(N)           ISIS HAS WRITTEN EVIDENCE THAT [***];

 

(O)           ISIS IS NOT AWARE OF ANY THIRD PARTY PATENTS, APART FROM THOSE
ENCOMPASSED IN THE LICENSES LISTED IN APPENDIX 6 THAT ARE NECESSARY FOR OMI TO
MAKE, USE OR SELL ASOS DIRECTED TO GENE TARGETS THAT ARE PART OF THE TARGET
POOL; AND

 

(P)           ON OR PRIOR TO THE EFFECTIVE DATE, ISIS WILL HAVE EXERCISED THE
PURCHASE OPTION, CONSUMMATED THE PURCHASE OPTION CLOSING AND TERMINATED THE
TECHNOLOGY LICENSE AGREEMENT (AS SUCH TERMS ARE DEFINED IN SECTION 14.13 HEREIN)
AND RE-ACQUIRED ISIS’ GCCR PROGRAM AND GCGR PROGRAMS PURSUANT TO THE PURCHASE
OPTION AGREEMENT SUCH THAT NEITHER SYMPHONY GENISIS INC. NOR SYMPHONY GENISIS
HOLDINGS LLC WILL HAVE ANY RIGHTS THAT WOULD PREVENT OR ENCUMBER OR OTHERWISE
LIMIT THE LICENSES GRANTED BY ISIS TO OMI UNDER THIS AGREEMENT OR ISIS’ ABILITY
TO PERFORM ITS OBLIGATIONS UNDER THE R&D PLAN.

 

SECTION 13.3                         OMI REPRESENTATION AND COVENANT. OMI HEREBY
REPRESENTS AND WARRANTS AS OF BOTH THE EXECUTION DATE AND THE EFFECTIVE DATE AND
COVENANTS TO ISIS THAT:

 

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(a)           OMI has the requisite personnel, facilities, equipment, expertise,
experience and skill to perform its obligations under this Agreement;

 

(b)           OMI’s sales representatives will perform in a professional,
timely, competent and efficient manner in the performance of its rights and
obligations under this Agreement; and

 

(c)           OMI, its Affiliates, and its Licensees will at all times comply
with all Applicable Laws in the performance of its rights and obligations under
this Agreement.

 

(d)           certain OMI Affiliate employee(s) were previously employed by Isis
and may work on the subject matter of this Agreement; therefore OMI represents
that, while the employee(s) Know-How learned at Isis may be employed to the
benefit of this Collaboration, such information shall remain Confidential
pursuant to Article 8 herein.

 

SECTION 13.4                         DISCLAIMER OF WARRANTY. EXCEPT FOR THE
EXPRESS WARRANTIES SET FORTH IN THIS ARTICLE 13, OMI AND ISIS MAKE NO
REPRESENTATIONS AND GRANT NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR
BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND OMI AND ISIS EACH SPECIFICALLY
DISCLAIM ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL, OR EXPRESS OR IMPLIED,
INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
USE OR PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF ANY PATENTS OR THE
NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

 

ARTICLE 14 -
MISCELLANEOUS

 

SECTION 14.1                         ASSIGNMENT; OMI AFFILIATES. EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, WITHOUT THE PRIOR WRITTEN CONSENT OF THE
OTHER PARTY HERETO, NEITHER PARTY WILL SELL, TRANSFER, ASSIGN, DELEGATE, PLEDGE
OR OTHERWISE DISPOSE OF, WHETHER VOLUNTARILY, INVOLUNTARILY, BY OPERATION OF LAW
OR OTHERWISE, THIS AGREEMENT OR ANY OF ITS RIGHTS OR DUTIES HEREUNDER; PROVIDED,
HOWEVER, THAT (I) EITHER PARTY HERETO MAY ASSIGN OR TRANSFER THIS AGREEMENT OR
ANY OF ITS RIGHTS OR OBLIGATIONS HEREUNDER WITHOUT THE CONSENT OF THE OTHER
PARTY TO ANY THIRD PARTY WITH WHICH IT HAS MERGED OR CONSOLIDATED, OR TO WHICH
IT HAS TRANSFERRED ALL OR SUBSTANTIALLY ALL OF ITS ASSETS OR STOCK TO WHICH THIS
AGREEMENT RELATES IF IN ANY SUCH EVENT THE THIRD PARTY ASSIGNEE OR SURVIVING
ENTITY ASSUMES IN WRITING ALL OF THE ASSIGNING PARTY’S OBLIGATIONS UNDER THIS
AGREEMENT OR (II) ISIS MAY ASSIGN OR TRANSFER ITS RIGHTS UNDER ARTICLE 6 (BUT NO
LIABILITIES) TO A THIRD PARTY IN CONNECTION WITH A ROYALTY FACTORING
TRANSACTION. ANY PURPORTED ASSIGNMENT OR TRANSFER IN VIOLATION OF THIS SECTION
14.1 WILL BE VOID AB INITIO AND OF NO FORCE OR EFFECT. ISIS ACKNOWLEDGES AND
AGREES THAT CERTAIN OF OMI’S RESPONSIBILITIES AND OBLIGATIONS MAY BE PERFORMED
BY ONE OR MORE OF OMI’S AFFILIATES; PROVIDED, HOWEVER, THAT OMI WILL CONTINUE TO
BE LIABLE TO ISIS FOR ANY BREACH OF THIS AGREEMENT BY ANY OF OMI’S AFFILIATES.

 

SECTION 14.2                         SEVERABILITY. IF ANY PROVISION OF THIS
AGREEMENT IS HELD TO BE ILLEGAL, INVALID OR UNENFORCEABLE BY A COURT OF
COMPETENT JURISDICTION, SUCH ADJUDICATION WILL NOT AFFECT OR IMPAIR, IN WHOLE OR
IN PART, THE VALIDITY, ENFORCEABILITY, OR LEGALITY OF ANY REMAINING PORTIONS OF
THIS AGREEMENT. ALL REMAINING PORTIONS WILL REMAIN IN FULL FORCE AND EFFECT AS
IF THE ORIGINAL AGREEMENT HAD BEEN EXECUTED WITHOUT THE INVALIDATED,
UNENFORCEABLE OR ILLEGAL PART.

 

SECTION 14.3                         GOVERNING LAW; JURISDICTION. THIS AGREEMENT
WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, USA WITHOUT REFERENCE TO ANY RULES OF CONFLICTS OF LAWS.
EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF
AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY FEDERAL COURT OF THE
UNITED STATES OF AMERICA SITTING IN THE CITY OF CHICAGO, ILLINOIS AND ANY
APPELLATE

 

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COURT FROM ANY JURISDICTION THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES
THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH FEDERAL COURT IN CHICAGO. FOR CLARIFICATION, ANY DISPUTE
RELATING TO THE SCOPE, VALIDITY, ENFORCEABILITY OR INFRINGEMENT OF ANY PATENTS
WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE PATENT
LAWS OF THE APPLICABLE JURISDICTION.

 

SECTION 14.4                         DISPUTE RESOLUTION.

 

14.4.1                                     RESOLUTION BY SENIOR REPRESENTATIVES.
THE PARTIES WILL SEEK TO SETTLE AMICABLY ANY AND ALL DISPUTES, CONTROVERSIES OR
CLAIMS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT. ANY DISPUTE WITHIN
THE R&D COMMITTEE’S DECISION-MAKING AUTHORITY WILL BE FINALLY DECIDED AS SET
FORTH IN APPENDIX 5. ANY DISPUTE BETWEEN THE PARTIES WHICH IS OUTSIDE THE R&D
COMMITTEE’S DECISION-MAKING AUTHORITY WILL BE PROMPTLY PRESENTED TO EACH PARTY’S
RESPECTIVE CO-CHAIR OF THE R&D COMMITTEE FOR RESOLUTION, AND IF THE CO-CHAIRS OF
THE R&D COMMITTEE ARE UNABLE TO RESOLVE SUCH DISPUTE, SUCH DISPUTE WILL THEN BE
PRESENTED TO THE PRESIDENT, R&D OF OMI AND THE EXECUTIVE VICE PRESIDENT AND CFO
OF ISIS (THE “SENIOR REPRESENTATIVES”), OR THEIR RESPECTIVE DESIGNEES, FOR
RESOLUTION. SUCH SENIOR REPRESENTATIVES, OR THEIR RESPECTIVE DESIGNEES, WILL
MEET IN-PERSON OR BY TELECONFERENCE AS SOON AS REASONABLY POSSIBLE THEREAFTER,
AND USE THEIR GOOD FAITH EFFORTS TO MUTUALLY AGREE UPON THE RESOLUTION OF THE
DISPUTE, CONTROVERSY OR CLAIM. ANY DISPUTE WITHIN THE R&D COMMITTEE’S
DECISION-MAKING AUTHORITY WILL NOT BE SUBJECT TO ARBITRATION.

 

14.4.2                                     ARBITRATION AND MEDIATION. IF AFTER
NEGOTIATING IN GOOD FAITH PURSUANT TO SECTION 14.4.1, AFTER GOOD FAITH
DISCUSSIONS UNDERTAKEN WITHIN REASONABLE PROMPTNESS, TO REACH AN AMICABLE
AGREEMENT WITHIN 90 DAYS, THEN EITHER PARTY MAY UPON WRITTEN NOTICE TO THE OTHER
SUBMIT TO MEDIATION AND BINDING ARBITRATION PURSUANT TO SECTIONS 14.4.2.2 AND
14.4.2.3 BELOW. NO STATEMENTS MADE BY EITHER PARTY DURING SUCH DISCUSSIONS WILL
BE USED BY THE OTHER PARTY OR ADMISSIBLE IN ARBITRATION OR ANY OTHER SUBSEQUENT
PROCEEDING FOR RESOLVING THE DISPUTE.

 

14.4.2.1 Arbitration.

 

a.               Any dispute, claim or controversy arising from or related in
any way to this Agreement or the interpretation, application, breach,
termination or validity thereof, including any claim of inducement of this
Agreement by fraud or otherwise, not resolved under the provisions of Sections
14.4.1 and 14.4.2.3 will be submitted for resolution to arbitration pursuant to
the rules then pertaining of the CPR Institute for Dispute Resolution for
Non-Administered Arbitration (available at www.cpradr.org/arb-rules.htm), or
successor (“CPR”), except where those rules conflict with these provisions, in
which case these provisions control. The arbitration will be held in Chicago,
Illinois.

 

b.              The arbitration panel shall consist of three arbitrators chosen
from the CPR Panels of Distinguished Neutrals (or, by agreement, from another
provider of arbitrators). Unless otherwise agreed by the Parties, each of the
arbitrators will be a lawyer with at least 15 years experience with a law firm
or corporate law department of over 25 lawyers or who was a judge of a court of
general jurisdiction. In the event the aggregate damages sought by the claimant
Party are stated to be less than $[***], and the aggregate damages sought by the
counterclaimant Party are stated to be less than $[***], and neither side seeks
equitable relief, then a single arbitrator shall be chosen, having the same
qualifications and experience specified above. Each arbitrator shall be neutral,
independent, disinterested, and impartial and shall abide by The CPR-Georgetown
Commission Proposed Model Rule for the Lawyer as Neutral available at
www.cpradr.org/cpr-george.html.

 

c.               The Parties agree to cooperate (1) to attempt to select the
arbitrator(s) by agreement within 45 days of initiation of the arbitration,
including jointly interviewing the final candidates, (2) to meet with the
arbitrators within 45 days of selection, and (3) to agree at that meeting or
before upon procedures for discovery and as to the conduct

 

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of the hearing which will result in the hearing being concluded within no more
than nine (9) months after selection of the arbitrators and in the award being
rendered within 60 days of the conclusion of the hearings, or of any
post-hearing briefing, which briefing will be completed by both sides within 45
days after the conclusion of the hearings.

 

d.              In the event the Parties cannot agree upon selection of any
arbitrators, the CPR will select arbitrators as follows: CPR shall provide the
Parties with a list of no less than 25 proposed arbitrators (15 if a single
arbitrator is to be selected) having the credentials referenced above. Within 25
days of receiving such list, the Parties shall rank at least 65% of the proposed
arbitrators on the initial CPR list, after exercising cause challenges. The
Parties may then interview the five candidates (three if a single arbitrator is
to be selected) with the highest combined rankings for no more than one hour
each and, following the interviews, may exercise one peremptory challenge each.
The panel will consist of the remaining three candidates (or one, if one
arbitrator is to be selected) with the highest combined rankings. In the event
these procedures fail to result in selection of the required number of
arbitrators, CPR shall select the appropriate number of arbitrators from among
the members of the various CPR Panels of Distinguished Neutrals, allowing each
side challenges for cause and three peremptory challenges each.

 

e.               In the event the Parties cannot agree upon procedures for
discovery and conduct of the hearing meeting the schedule set forth in paragraph
(c) above, then the arbitrators shall set dates for the hearing, any
post-hearing briefing, and the issuance of the award in accord with the
paragraph (c) schedule. The arbitrators shall provide for discovery according to
those time limits, giving recognition to the understanding of the Parties that
they contemplate reasonable discovery, including document demands and
depositions, but that such discovery be limited so that the paragraph (c)
schedule may be met without difficulty. In no event will the arbitrators, absent
agreement of the Parties, allow more than a total of ten days for the hearing or
permit either side to obtain more than a total of 20 hours of deposition
testimony from all witnesses, including both fact and expert witnesses, or serve
more than 10 individual requests for documents, including subparts, or 10
individual requests for admission or interrogatories, including subparts.
Multiple hearing days will be scheduled consecutively to the greatest extent
possible.

 

f.                 The arbitrators must render their award by application of the
substantive law of Illinois, except regarding any patent disputes or other such
issues where state law is preempted by federal law, in which event US federal
law shall apply, and are not free to apply “amiable compositeur” or “natural
justice and equity.”  The arbitrators shall render a written opinion setting
forth findings of fact and conclusions of law with the reasons therefor stated.
A transcript of the evidence adduced at the hearing shall be made and shall,
upon request, be made available to either Party. The arbitrators shall have
power to exclude evidence on grounds of hearsay, prejudice beyond its probative
value, redundancy, or irrelevance and no award shall be overturned by reason of
such ruling on evidence. To the extent possible, the arbitration hearings and
award will be maintained in confidence.

 

g.              In the event the panel’s award exceeds $[***] in monetary
damages or includes or consists of equitable relief, or rejects a claim in
excess of that amount or for that relief, then the losing Party may obtain
review of the arbitrators’ award or decision by a single appellate arbitrator
(the “Appeal Arbitrator”) selected from the CPR Panels of Distinguished Neutrals
by agreement or, failing agreement within seven working days, pursuant to the
selection procedures specified in paragraph d above. If CPR cannot provide such
services, the Parties will together select another provider of arbitration
services that can. No Appeal Arbitrator shall be selected unless he/she

 

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can commit to rendering a decision within forty-five days following oral
argument as provided in this paragraph. Any such review must be initiated within
thirty (30) days following the rendering of the award referenced in f above.

 

h.              The Appeal Arbitrator will make the same review of the
arbitration panel’s ruling and its basis that the U.S. Court of Appeals of the
Circuit where the arbitration hearings are held would make of findings of fact
and conclusions of law rendered by a district court after a bench trial and then
modify, vacate or affirm the arbitration panel’s award or decision accordingly,
or remand to the panel for further proceedings. The Appeal Arbitrator will
consider only the arbitration panel’s findings of fact and conclusions of law,
pertinent portions of the hearing transcript and evidentiary record as submitted
by the Parties, opening and reply briefs of the Party pursuing the review, and
the answering brief of the opposing Party, plus a total of no more than four (4)
hours of oral argument evenly divided between the Parties. The Party seeking
review must submit its opening brief and any reply brief within seventy-five
(75) and one hundred thirty (130) days, respectively, following the date of the
award under review, whereas the opposing Party must submit its responsive brief
within one hundred ten (110) days of that date. Oral argument shall take place
within five (5) months after the date of the award under review, and the Appeal
Arbitrator shall render a decision within forty-five (45) days following oral
argument. That decision will be final and not subject to further review, except
pursuant to the Federal Arbitration Act.

 

i.                  The Parties consent to the jurisdiction of the State or
Federal District Court for the district in which the arbitration is held for the
enforcement of these provisions and the entry of judgment on any award rendered
hereunder (including after review by the Appeal Arbitrator where such an appeal
is pursued). Should such court for any reason lack jurisdiction, any court with
jurisdiction shall act in the same fashion.

 

j.                  Each Party has the right before or, if the arbitrator(s)
cannot hear the matter within an acceptable period, during the arbitration to
seek from the appropriate court provisional remedies such as attachment,
preliminary injunction, replevin, etc., to avoid irreparable harm, maintain the
status quo, or preserve the subject matter of the arbitration.

 

k.               EACH PARTY HERETO WAIVES ITS RIGHT TO TRIAL OF ANY ISSUE BY
JURY.

 

l.                  EACH PARTY HERETO WAIVES ANY CLAIM TO PUNITIVE, EXEMPLARY OR
MULTIPLIED DAMAGES FROM THE OTHER. EACH PARTY HERETO WAIVES ANY CLAIM OF
CONSEQUENTIAL, INDIRECT  OR INCIDENTAL DAMAGES FROM THE OTHER. EACH PARTY HERETO
WAIVES ANY CLAIM FOR ATTORNEYS’ FEES AND COSTS AND PREJUDGMENT INTEREST FROM THE
OTHER. IN ADDITION, THE RIGHTS OF TERMINATION BY ISIS UNDER SECTION 10.4 AND THE
EFFECT OF SUCH TERMINATION AS SET FORTH IN SECTIONS 10.5 AND 11.1 WILL BE ISIS’
ONLY REMEDY AND OMI’S ONLY LIABILITY WITH RESPECT TO OR RESULTING FROM OMI’S
BREACH OF ITS OBLIGATIONS AS SET FORTH IN SECTION 5.1.

 

14.4.2.2                 Mediation.

 

a.               Any dispute, controversy or claim arising out of or related to
this Agreement, or the interpretation, application, breach, termination or
validity thereof, including any claim of inducement by fraud or otherwise, which
claim would, but for this provision, be submitted to arbitration shall, before
submission to arbitration, first be mediated through non-binding mediation in
accordance with The CPR Mediation Procedure then in effect of the CPR Institute
for Dispute Resolution (CPR) available at www.cpradr.org/m_proced.htm, except
where that procedure conflicts with these provisions, in which case these
provisions control. The mediation shall be conducted

 

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in Chicago, Illinois and shall be attended by a senior executive with authority
to resolve the dispute from each of the Parties.

 

b.              The mediator shall be neutral, independent, disinterested and
shall be selected from a professional mediation firm such as ADR Associates or
JAMS/ENDISPUTE or CPR.

 

c.               The Parties shall promptly confer in an effort to select a
mediator by agreement. In the absence of such an agreement within 10 days of
initiation of the mediation, the mediator shall be selected by CPR as follows:
CPR shall provide the Parties with a list of at least 15 names from the CPR
Panels of Distinguished Neutrals. Each Party shall exercise challenges for
cause, two peremptory challenges, and rank the remaining candidates within 5
working days of receiving the CPR list. The Parties may together interview the
three top-ranked candidates for no more than one hour each and, after the
interviews, may each exercise one peremptory challenge. The mediator shall be
the remaining candidate with the highest aggregate ranking.

 

d.              The mediator shall confer with the Parties to design procedures
to conclude the mediation within no more than 45 days after initiation. Under no
circumstances may the commencement of arbitration under Section 14.3.4.2 above
be delayed more than 45 days by the mediation process specified herein absent
contrary agreement of the Parties.

 

e.               Each Party agrees not to use the period or pendency of the
mediation to disadvantage the other Party procedurally or otherwise. No
statements made by either side during the mediation may be used by the other or
referred to during any subsequent proceedings.

 

f.                 Each Party has the right to pursue provisional relief from
any court, such as attachment, preliminary injunction, replevin, etc., to avoid
irreparable harm, maintain the status quo, or preserve the subject matter of the
arbitration, even though mediation has not been commenced or completed.

 

14.4.3                     DISPUTES REGARDING MATERIAL BREACH. IF THE PARTIES
ARE IN DISPUTE AS TO WHETHER ONE PARTY IS IN MATERIAL BREACH OF THIS AGREEMENT,
THEN THE ARBITRATOR WILL FIRST DETERMINE IF MATERIAL BREACH HAS IN FACT
OCCURRED, AND IF SO, WILL GRANT THE DEFAULTING PARTY THE CURE PERIOD PROVIDED
PURSUANT TO SECTION 10.3 (OR 10.2, AS APPLICABLE). IF THE MATERIAL BREACH IS NOT
CURED WITHIN THE TIME PERIOD PROVIDED PURSUANT TO SECTION 10.3 (OR 10.2, AS
APPLICABLE), THE ARBITRATION WILL CONTINUE AND THE ARBITRATOR WILL, AS PART OF
THE SAME ARBITRATION, AWARD ACTUAL DIRECT DAMAGES TO THE NON-DEFAULTING PARTY.

 

SECTION 14.5                         NOTICES. EXCEPT AS OTHERWISE PROVIDED FOR
IN THIS AGREEMENT, ALL NOTICES OR OTHER COMMUNICATIONS THAT ARE REQUIRED OR
PERMITTED HEREUNDER WILL BE IN WRITING AND DELIVERED PERSONALLY WITH
ACKNOWLEDGEMENT OF RECEIPT, SENT BY FACSIMILE (AND PROMPTLY CONFIRMED BY
PERSONAL DELIVERY, REGISTERED OR CERTIFIED MAIL OR OVERNIGHT COURIER AS PROVIDED
HEREIN), SENT BY NATIONALLY-RECOGNIZED OVERNIGHT COURIER OR SENT BY REGISTERED
OR CERTIFIED MAIL, POSTAGE PREPAID, RETURN RECEIPT REQUESTED, ADDRESSED AS
FOLLOWS:

 

If to OMI, to:

 

Ortho McNeil, Inc.

1000 US Route 202

Raritan, New Jersey, 08869 Attention:  President

Facsimile:  908-707-9757

 

With copy to:

 

Chief Patent Counsel

Johnson & Johnson

One Johnson & Johnson Plaza

 

44

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New Brunswick, New Jersey 08933

Facsimile:  (732) 524-5575

 

If to Isis, to:

Isis Pharmaceuticals, Inc.

1896 Rutherford Road

Carlsbad, California 92008

Attention: Executive Vice President and CFO

Facsimile: (760) 603-4650

 

With a copy to:

Attention:  General Counsel

Facsimile: (760) 268-4922

 

or to such other address as the Party to whom notice is to be given may have
furnished to the other Party in writing in accordance herewith. Any such
communication will be deemed to have been given (i) when delivered, if
personally delivered or sent by facsimile on a Business Day, (ii) on the
Business Day after dispatch, if sent by nationally-recognized overnight courier,
and (iii) on the third Business Day following the date of mailing, if sent by
mail. It is understood and agreed that this Section 14.5 is not intended to
govern the day-to-day business communications necessary between the Parties in
performing their duties, in due course, under the terms of this Agreement.

 

SECTION 14.6                         ENTIRE AGREEMENT; MODIFICATIONS. THIS
AGREEMENT (INCLUDING THE ATTACHED APPENDICES AND THE R&D PLAN) SETS FORTH AND
CONSTITUTES THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND ALL PRIOR AGREEMENTS, UNDERSTANDING,
PROMISES AND REPRESENTATIONS, WHETHER WRITTEN OR ORAL, WITH RESPECT THERETO ARE
SUPERSEDED HEREBY. EACH PARTY CONFIRMS THAT IT IS NOT RELYING ON ANY
REPRESENTATIONS OR WARRANTIES OF THE OTHER PARTY EXCEPT AS SPECIFICALLY SET
FORTH HEREIN. NO AMENDMENT, MODIFICATION, RELEASE OR DISCHARGE WILL BE BINDING
UPON THE PARTIES UNLESS IN WRITING AND DULY EXECUTED BY AUTHORIZED
REPRESENTATIVES OF BOTH PARTIES.

 

SECTION 14.7                         HEADINGS. THE HEADINGS OF ARTICLES AND
SECTIONS OF THIS AGREEMENT ARE FOR EASE OF REFERENCE ONLY AND WILL NOT AFFECT
THE MEANING OR INTERPRETATION OF THIS AGREEMENT IN ANY WAY.

 

SECTION 14.8                         RELATIONSHIP OF THE PARTIES. IT IS
EXPRESSLY AGREED THAT THE PARTIES WILL BE INDEPENDENT CONTRACTORS OF ONE ANOTHER
AND THAT THE RELATIONSHIP BETWEEN THE PARTIES WILL NOT CONSTITUTE A PARTNERSHIP,
JOINT VENTURE OR AGENCY.

 

SECTION 14.9                         WAIVER. ANY TERM OR CONDITION OF THIS
AGREEMENT MAY BE WAIVED AT ANY TIME BY THE PARTY THAT IS ENTITLED TO THE BENEFIT
THEREOF, BUT NO SUCH WAIVER WILL BE EFFECTIVE UNLESS SET FORTH IN A WRITTEN
INSTRUMENT DULY EXECUTED BY OR ON BEHALF OF THE PARTY WAIVING SUCH TERM OR
CONDITION. ANY SUCH WAIVER WILL NOT BE DEEMED A WAIVER OF ANY OTHER RIGHT OR
BREACH HEREUNDER.

 

SECTION 14.10                       COUNTERPARTS. THIS AGREEMENT MAY BE EXECUTED
IN TWO OR MORE COUNTERPARTS, EACH OF WHICH WILL BE DEEMED AN ORIGINAL, BUT ALL
OF WHICH TOGETHER WILL CONSTITUTE ONE AND THE SAME INSTRUMENT.

 

SECTION 14.11                       NO BENEFIT TO THIRD PARTIES. THE
REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS SET FORTH IN THIS
AGREEMENT ARE FOR THE SOLE BENEFIT OF THE PARTIES HERETO AND THEIR

 

45

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SUCCESSORS AND PERMITTED ASSIGNS, AND THEY WILL NOT BE CONSTRUED AS CONFERRING
ANY RIGHTS ON ANY OTHER PARTIES.

 

SECTION 14.12                       FURTHER ASSURANCES. EACH PARTY WILL DULY
EXECUTE AND DELIVER, OR CAUSE TO BE DULY EXECUTED AND DELIVERED, SUCH FURTHER
INSTRUMENTS AND DO AND CAUSE TO BE DONE SUCH FURTHER ACTS AND THINGS, INCLUDING
THE FILING OF SUCH ASSIGNMENTS, AGREEMENTS, DOCUMENTS AND INSTRUMENTS, AS MAY BE
NECESSARY TO CARRY OUT THE PROVISIONS AND PURPOSES OF THIS AGREEMENT.

 

SECTION 14.13                       HSR ACT FILING; SYMPHONY GENISIS PURCHASE
OPTION CLOSING AND TECHNOLOGY LICENSE TERMINATION; EFFECTIVE DATE.

 

(A) THE PARTIES WILL EACH, PRIOR TO OR AS PROMPTLY AS PRACTICABLE AFTER THE
EXECUTION DATE, FILE OR CAUSE TO BE FILED WITH THE U.S. FEDERAL TRADE COMMISSION
AND THE U.S. DEPARTMENT OF JUSTICE (REQUESTING EARLY TERMINATION OF THE WAITING
PERIOD) ANY NOTIFICATIONS REQUIRED TO BE FILED UNDER THE HSR ACT WITH RESPECT TO
THE TRANSACTIONS CONTEMPLATED HEREBY; PROVIDED THAT THE PARTIES WILL EACH FILE
THE NOTIFICATIONS REQUIRED TO BE FILED UNDER THE HSR ACT NO LATER THAN FIVE (5)
BUSINESS DAYS AFTER THE EXECUTION DATE OF THIS AGREEMENT. EACH PARTY WILL BE
RESPONSIBLE FOR ITS OWN COSTS IN CONNECTION WITH SUCH FILING. THE PARTIES WILL
USE COMMERCIALLY REASONABLE EFFORTS TO RESPOND PROMPTLY TO ANY REQUESTS FOR
ADDITIONAL INFORMATION MADE BY EITHER OF SUCH AGENCIES, AND TO CAUSE THE WAITING
PERIODS UNDER THE HSR ACT AND ANY APPLICABLE FOREIGN EQUIVALENT THEREOF TO
TERMINATE OR EXPIRE AT THE EARLIEST POSSIBLE DATE AFTER THE DATE OF FILING.

 

NOTWITHSTANDING THE FOREGOING OR ANY OTHER PROVISION OF THIS AGREEMENT, NEITHER
OMI NOR ANY OF ITS AFFILIATES SHALL BE REQUIRED TO AGREE TO ANY SALE, TRANSFER,
LICENSE, SEPARATE HOLDING, DIVESTITURE OR OTHER DISPOSITION OF, OR TO ANY
PROHIBITION OF, OR ANY LIMITATION ON, THE ACQUISITION, OWNERSHIP, OPERATION,
EFFECTIVE CONTROL OR EXERCISE OF FULL RIGHTS OF OWNERSHIP OF (A “DIVESTITURE”),
ANY ASSET OR ASSETS OF OMI OR ITS AFFILIATES.

 

(B) ISIS WILL, UPON RECEIPT OF NOTICE OF THE EXPIRATION OR EARLIER TERMINATION
OF THE WAITING PERIOD UNDER THE HSR ACT IN THE UNITED STATES WITH RESPECT TO THE
TRANSACTIONS CONTEMPLATED HEREBY (“HSR CLEARANCE”), IMMEDIATELY (I) EXERCISE THE
PURCHASE OPTION PURSUANT TO THE PURCHASE OPTION AGREEMENT, DATED APRIL 7, 2006
(THE “PURCHASE OPTION AGREEMENT”), AMONG ISIS, SYMPONY GENISIS HOLDINGS LLC
(“HOLDINGS”) AND SYMPHONY GENISIS INC. (“SYMPHONY GENISIS”), (II) CONSUMMATE THE
PURCHASE OPTION CLOSING AND RE-ACQUIRE THE RIGHTS TO ISIS’ GCCR PROGRAM AND GCGR
PROGRAM PURSUANT TO THE PURCHASE OPTION AGREEMENT, AND (III) TERMINATE THE
NOVATED AND RESTATED TECHNOLOGY LICENSE AGREEMENT, DATED APRIL 7, 2007 (THE
“TECHNOLOGY LICENSE AGREEMENT”), BETWEEN ISIS, HOLDINGS AND SYMPHONY GENISIS.

 

(C)                                           NOTWITHSTANDING ANYTHING IN THIS
AGREEMENT TO THE CONTRARY, ARTICLES  2, 3,  4, 5, 6, 9, AND 11 OF THIS
AGREEMENT  WILL NOT BECOME EFFECTIVE AND BINDING ON THE PARTIES UNTIL (I)
RECEIPT OF HSR CLEARANCE (II) THE CONSUMMATION OF THE PURCHASE OPTION CLOSING
AND THE TERMINATION OF THE TECHNOLOGY LICENSE AGREEMENT, AND (III) RECEIPT BY
OMI OF A CONFIRMATION OF CLOSING, IN THE FORM SET FORTH IN APPENDIX 15 HERETO,
EXECUTED BY ISIS AND HOLDINGS, A CONFIRMATION OF TERMINATION, IN THE FORM SET
FORTH IN APPENDIX 15 HERETO, EXECUTED BY ISIS AND SYMPHONY GENISIS, AND OTHER
EVIDENCE REASONABLY SATISFACTORY TO OMI THAT THE PURCHASE OPTION CLOSING HAS
BEEN CONSUMMATED AND THE TECHNOLOGY LICENSE AGREEMENT HAS BEEN TERMINATED. THE
DATE OF SATISFACTION OF THE CONDITIONS SET FORTH IN THIS SECTION 14.13(C) IS
REFERRED TO IN THIS AGREEMENT AS THE “EFFECTIVE DATE.”

 

(D)                                           AT OMI’S REQUEST, ISIS WILL
DEPOSIT INTO ESCROW WITH LEGAL COUNSEL MUTUALLY AGREEABLE TO BOTH PARTIES, ALL
DOCUMENTS THAT ARE NECESSARY TO EXERCISE THE PURCHASE OPTION AND REQUIRED BY
ISIS TO CONSUMMATE THE PURCHASE OPTION CLOSING AND TERMINATE THE

 

46

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TECHNOLOGY LICENSE AGREEMENT, WITH INSTRUCTIONS TO DELIVER SUCH DOCUMENTS TO
SYMPHONY GENISIS AND HOLDINGS AND DECLARE SUCH DOCUMENTS AUTOMATICALLY EFFECTIVE
UPON RECEIPT OF HSR CLEARANCE.

 

(E)                                           DEFINED TERMS USED IN THIS SECTION
14.13, BUT NOT OTHERWISE DEFINED IN THIS AGREEMENT, WILL HAVE THE MEANING
ASCRIBED TO THEM IN THE PURCHASE OPTION AGREEMENT.

 

(F)                                            IF THE CONDITIONS SET FORTH IN
SECTION 14.13(C)(II) AND (III) ABOVE SHALL NOT HAVE BEEN SATISFIED WITHIN 10
(TEN) BUSINESS DAYS OF RECEIPT OF HSR CLEARANCE, OMI SHALL HAVE THE UNILATERAL
RIGHT TO TERMINATE THIS AGREEMENT WITHOUT ANY PRIOR NOTICE TO ISIS.

 

(G)                                           IN THE EVENT OF A TERMINATION OF
THIS AGREEMENT UNDER PART (F) ABOVE, NOTWITHSTANDING THE PROVISIONS OF SECTION
10.6.2 HEREIN, ONLY ARTICLES  7, 8, 10, 12 AND 14 AND SECTION 13.4 OF THIS
AGREEMENT SHALL SURVIVE SUCH TERMINATION.

 

SECTION 14.14                       FORCE MAJEURE. NEITHER PARTY WILL BE CHARGED
WITH ANY LIABILITY FOR DELAY IN PERFORMANCE OF AN OBLIGATION UNDER THIS
AGREEMENT TO THE EXTENT SUCH DELAY IS DUE TO A CAUSE BEYOND THE REASONABLE
CONTROL OF THE AFFECTED PARTY, SUCH AS WAR, RIOTS, LABOR DISTURBANCES, FIRE,
EXPLOSION, AND COMPLIANCE IN GOOD FAITH WITH ANY GOVERNMENTAL LAW, REGULATION OR
ORDER. THE PARTY AFFECTED WILL GIVE PROMPT WRITTEN NOTICE TO THE OTHER PARTY OF
ANY MATERIAL DELAY DUE TO SUCH CAUSES.

 

SECTION 14.15                       INTERPRETATION.

 

(A)           EACH OF THE PARTIES ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT
HAS BEEN DILIGENTLY REVIEWED BY AND NEGOTIATED BY AND BETWEEN THEM, THAT IN SUCH
NEGOTIATIONS EACH OF THEM HAS BEEN REPRESENTED BY COMPETENT COUNSEL AND THAT THE
FINAL AGREEMENT CONTAINED HEREIN, INCLUDING THE LANGUAGE WHEREBY IT HAS BEEN
EXPRESSED, REPRESENTS THE JOINT EFFORTS OF THE PARTIES HERETO AND THEIR COUNSEL.
ACCORDINGLY, IN THE EVENT AN AMBIGUITY OR A QUESTION OF INTENT OR INTERPRETATION
ARISES, THIS AGREEMENT WILL BE CONSTRUED AS IF DRAFTED JOINTLY BY THE PARTIES
AND NO PRESUMPTION OR BURDEN OF PROOF WILL ARISE FAVORING OR DISFAVORING ANY
PARTY BY VIRTUE OF THE AUTHORSHIP OF ANY PROVISIONS OF THIS AGREEMENT.

 

(B)           THE DEFINITIONS OF THE TERMS HEREIN WILL APPLY EQUALLY TO THE
SINGULAR AND PLURAL FORMS OF THE TERMS DEFINED. WHENEVER THE CONTEXT MAY
REQUIRE, ANY PRONOUN WILL INCLUDE THE CORRESPONDING MASCULINE, FEMININE AND
NEUTER FORMS. THE WORDS “INCLUDE”, “INCLUDES” AND “INCLUDING” WILL BE DEEMED TO
BE FOLLOWED BY THE PHRASE “WITHOUT LIMITATION”. THE WORD “WILL” WILL BE
CONSTRUED TO HAVE THE SAME MEANING AND EFFECT AS THE WORD “WILL”. THE WORD “ANY”
WILL MEAN “ANY AND ALL” UNLESS OTHERWISE CLEARLY INDICATED BY CONTEXT.

 

(C)           UNLESS THE CONTEXT REQUIRES OTHERWISE, (I) ANY DEFINITION OF OR
REFERENCE TO ANY AGREEMENT, INSTRUMENT OR OTHER DOCUMENT HEREIN WILL BE
CONSTRUED AS REFERRING TO SUCH AGREEMENT, INSTRUMENT OR OTHER DOCUMENT AS FROM
TIME TO TIME AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED (SUBJECT TO ANY
RESTRICTIONS ON SUCH AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS SET FORTH HEREIN
OR THEREIN), (II) ANY REFERENCE TO ANY APPLICABLE LAWS HEREIN WILL BE CONSTRUED
AS REFERRING TO SUCH APPLICABLE LAWS AS FROM TIME TO TIME ENACTED, REPEALED OR
AMENDED, (III) ANY REFERENCE HEREIN TO ANY PERSON WILL BE CONSTRUED TO INCLUDE
THE PERSON’S SUCCESSORS AND ASSIGNS, (IV) THE WORDS “HEREIN”, “HEREOF” AND
“HEREUNDER”, AND WORDS OF SIMILAR IMPORT, WILL BE CONSTRUED TO REFER TO THIS
AGREEMENT IN ITS ENTIRETY AND NOT TO ANY PARTICULAR PROVISION HEREOF, AND (V)
ALL REFERENCES HEREIN TO ARTICLES, SECTIONS OR APPENDICES, UNLESS

 

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OTHERWISE SPECIFICALLY PROVIDED, WILL BE CONSTRUED TO REFER TO ARTICLES,
SECTIONS AND APPENDICES OF THIS AGREEMENT.

 

(D)           REFERENCES TO SECTIONS OF THE CODE OF FEDERAL REGULATIONS AND TO
THE UNITED STATES CODE WILL MEAN THE CITED SECTIONS, AS THESE MAY BE AMENDED
FROM TIME TO TIME.

 

[SIGNATURE PAGE FOLLOWS]

 

48

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the date first above written.

 

 

ISIS PHARMACEUTICALS, INC.

 

 

 

 

 

By:

/s/ B. Lynne Parshall

 

 

Name:

B. Lynne Parshall

 

 

Title:

Executive Vice President & CFO

 

 

 

 

 

 

ORTHO MCNEIL, INC.

 

 

 

 

 

By:

/s/ Michael J. Grissing

 

 

Name:

Michael J. Grissing

 

 

Title:

VP Corporate Development

 

 

 

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List of Appendices

 

Appendix 1:

Definitions

 

 

Appendix 2:

Product Specific Patents

 

 

Appendix 3:

Isis Core Technology Patents

 

 

Appendix 4:

Isis Manufacturing & Analytical Patents

 

 

Appendix 5:

[***]

 

 

Appendix 6:

Isis In-License Agreements & Prior 3rd Party Agreements

 

 

Appendix 7:

Form of Invoice

 

 

Appendix 8:

Clinical Supply Agreement

 

 

Appendix 9:

Clinical Quality Agreement

 

 

Appendix 10:

J&J Universal Calendar

 

 

Appendix 11:

Description of ISIS 325568 & 377131

 

 

Appendix 12:

Target Pool & Selected Gene Targets

 

 

Appendix 13:

Minimum OMI Countries

 

 

Appendix 14:

Isis Insurance Requirements

 

 

Appendix 15:

Symphony GenIsis Confirmation of Closing and Confirmation of Termination

 

 

Appendix 16:

[***]

 

 

Appendix 17:

Assignment of Product Specific Patents

 

50

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APPENDIX 1

 

DEFINITIONS

 

“Additional Third Party Agreement” has the meaning set forth in Section 6.5.2.

 

“Affiliate” of an entity means any other entity that, directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with such first entity. For purposes of this definition only,
“control” (and, with correlative meanings, the terms “controlled by” and “under
common control with”) means the possession, directly or indirectly, of the power
to direct the management or policies of an entity, whether through the ownership
of voting securities or by contract relating to voting rights or corporate
governance.

 

“Agreement” means this Collaboration and License Agreement, together with all
Appendices attached hereto, the R&D Plan and the R&D Budget as the same may be
amended or supplemented from time to time in accordance with the terms of this
Agreement.

 

“Applicable Law” or “Law” means all applicable laws, statutes, rules,
regulations and other pronouncements having the effect of law of any federal,
national, multinational, state, provincial, county, city or other political
subdivision, agency or other body, domestic or foreign, including but not
limited to any applicable rules, regulations, guidelines, or other requirements
of the Regulatory Authorities that may be in effect from time to time, but
excluding patent laws.

 

“Approval” means, with respect to any Product in any regulatory jurisdiction,
approval from the applicable Regulatory Authority sufficient for the
manufacture, distribution, use and sale of the Product in such jurisdiction in
accordance with Applicable Laws. In jurisdictions where the applicable
Regulatory Authority sets the pricing authorizations necessary for a Product,
Approval will be deemed to have occurred even if the final approval to market
and sell the Product is being withheld because OMI (or its Affiliates or
Licensee) and the Regulatory Authority have not yet determined pricing so long
as all other approvals, licenses, registrations or authorizations necessary for
marketing, sale, and/or use of such Product in such jurisdiction have been
obtained.

 

“API” means the bulk active pharmaceutical ingredient Compound manufactured in
accordance with GMP for a Product. References to the weight of a quantity of API
refer to the gross mass of the API after lyophilization.

 

“ASO” [***]

 

 “Business Day” means any day, other than Saturday, Sunday or any statutory
holiday in the United States.

 

“Calendar Quarter” means a Johnson & Johnson Calendar Quarter of the Johnson &
Johnson Calendar Year, based on the Johnson & Johnson Universal Calendar for
that year, a copy of which, for 2007is attached hereto as Appendix 10, and which
is used for OMI’s internal business purposes; provided, however, that wherever
this Agreement refers to the timing of when Isis will provide an invoice to OMI,
any reference to Calendar Quarter will mean the respective periods of three
consecutive calendar months ending on March 31, June 30, September 30 and
December 31.

 

“Calendar Year” shall mean a calendar year based on the J&J Universal Calendar
for that year.

 

“Clinical Supply Agreement” has the meaning set forth in 4.2 and attached in
Appendix 8.

 

“Combination Product” means a Product that includes at least one additional
active ingredient (whether coformulated or copackaged) which is not a Compound.

 

“Commercialize”, “Commercializing” and “Commercialization” means activities
directed to manufacturing, obtaining pricing and reimbursement approvals,
carrying out Phase 4 Trials for, marketing, promoting, distributing, importing
or selling a Product.

 

“Collaboration” has the following meaning. A Development Program to advance ISIS
325568 and ISIS 377131 through human clinical trials and ultimately
Commercialize them as Products; and A Research Program to (i) [***] and (ii) at
OMI’s option [***] in each case for OMI to advance into human clinical trials
and ultimately Commercialize as Products.

 

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“Collaboration Gene Targets” means GCGR, GCCR or a Selected Gene Target. For
purposes of clarification, once a Collaboration Gene Target has been returned to
Isis pursuant to Section 3.6 or Article 11, such gene target will no longer be
considered a Collaboration Gene Target.

 

 “Collaboration Term” means, the period of time beginning on the Effective Date
and ending on the later to expire of the Research Term and the Development
Program Term.

 

“Commercially Reasonable Efforts” means, with respect to a Compound and Product,
the carrying out of discovery, research, Development or Commercialization
activities using the efforts that the applicable Party would reasonably devote
to a compound or product of similar market potential or profit potential at a
similar stage in development or product life resulting from its own research
efforts, based on conditions then prevailing and taking into account, without
limitation, issues of safety and efficacy, regulatory authority-approved
labeling, product profile, the competitiveness of alternative products in the
marketplace, the likely timing of the product’s entry into the market, the
patent and other proprietary position, the likelihood of regulatory approval and
other relevant scientific, technical and commercial factors.

 

“Compound” means a Research Compound, a GCGR Compound and/or a GCCR Compound.

 

“Confidential Information” means all information and Know-How and any tangible
embodiments thereof provided by or on behalf of the Disclosing Party to the
Receiving Party either in connection with the discussions and negotiations
pertaining to this Agreement or in the course of performing this Agreement,
including without limitation data; knowledge; practices; processes; ideas; R & D
Plans plans; engineering designs and drawings; research data; manufacturing
processes and techniques; scientific, manufacturing, marketing and business
plans; and financial and personnel matters relating to the Disclosing Party or
to its present or future products, sales, suppliers, customers, employees,
investors or business; regardless of whether any of the foregoing are marked
“confidential” or “proprietary” or communicated to the other by the Disclosing
Party in oral, written, graphic or electronic form. For all purposes of this
Agreement, the Research Results (for so long as and to the extent OMI has rights
hereunder) will be treated as being Confidential Information of both Parties.
Accordingly, each Party will be considered the Receiving Party with respect to
the Research Results and will be subject to all of the restrictions and
obligations of this Agreement with respect to the disclosure and use of such
Research Results to the same extent as applicable to Confidential Information
disclosed to such Party by the other Party. Nothwithstanding the foregoing, upon
the transfer of the ownership of relevant Research Results and data pursuant to
Section 9.2.3 of this Agreement, such Research Results and data will be the sole
property of OMI and Isis will continue to maintain their confidential nature
pursuant to the terms of Article 8 of this Agreement.

 

NOTWITHSTANDING THE FOREGOING, INFORMATION OR KNOW-HOW OF A PARTY WILL NOT BE
DEEMED CONFIDENTIAL INFORMATION FOR PURPOSES OF THIS AGREEMENT TO THE EXTENT
THAT THE RECEIVING PARTY CAN SHOW BY COMPETENT PROOF THAT SUCH INFORMATION OR
KNOW-HOW:

 

(a)           was already known to the Receiving Party or any of its Affiliates,
without any obligation to the Disclosing Party to keep it confidential or
restricting its use, prior to the time of disclosure to such Receiving Party;

 

(b)           was generally available or known to parties reasonably skilled in
the field to which such information or Know-How pertains, or was otherwise part
of the public domain, at the time of its disclosure to the Receiving Party;

 

(c)           became generally available or known to parties reasonably skilled
in the field to which such information or Know-How pertains, or otherwise became
part of the public domain, after its disclosure to such Receiving Party through
no fault of the Receiving Party, provided, Confidential Information shall not be
deemed to have entered the public domain merely by reason of its having been
filed with any Regulatory Authority;

 

(d)           was disclosed to such Receiving Party or any of its Affiliates by
a Third Party lawfully in possession thereof, and was not obtained indirectly or
directly from the Disclosing Party or in connection with the Research Program;
or

 

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(e)           was independently discovered or developed outside of the Research
Program by employees or (sub)contractors of the Receiving Party or any of its
Affiliates, without the aid, application or use of Confidential Information of
the Disclosing Party.

 

“Control” means, with respect to any Know-How, Patent or other intellectual
property right, possession by a Party (including its Affiliates) of the right
(whether by ownership, license or otherwise) to grant to the other Party access,
ownership, a license, sublicense and/or other right to or under such Know-How,
Patent or other intellectual property right as provided for herein without
violating the terms of any agreement or other arrangement with any Third Party.
Notwithstanding anything to the contrary under this Agreement, with respect to
any Third Party that later becomes an Affiliate of Isis after the Effective Date
(including a Third Party acquirer), no intellectual property of such Third Party
will be included in the licenses granted hereunder by virtue of such Third Party
becoming an Affiliate of Isis.

 

“Cover”, “Covered” or “Covering” means, with respect to a Patent, that, but for
rights granted to a Person under such Patent, the practice by such Person of an
invention claimed in such Patent would infringe a Valid Claim included in such
Patent, or in the case of a Patent that is a patent application, would infringe
a Valid Claim in such patent application if it were to issue as a patent.

 

“Designation of a Compound as a Clinical Candidate” means the designation by an
appropriate committee of OMI of a Compound as ready for the initiation of
IND-Enabling Studies. The initiation of IND-Enabling studies for a Compound for
which a Product Specific Patent filing has been made will together be conclusive
evidence that “Designation of a Compound as a Clinical Candidate” has occurred
for such Compound.

 

“Development” means non-clinical (such as, but not limited to, IND-enabling
toxicology and production of GMP quality Product) and clinical development
activities reasonably related to the development and submission of information
to a Regulatory Authority, including, without limitation,  chemical synthesis,
toxicology, pharmacology, test method development and stability testing,
manufacturing process development, formulation development, delivery system
development, quality assurance and quality control development, manufacturing,
statistical analysis, and clinical studies. When used as a verb, “Develop” means
to engage in Development.

 

“Development Compound” means ISIS 377131 and ISIS 325568.

 

“Development Program” has the meaning set forth in 3.1.

 

“Development Program Term” has the meaning set forth in 3.3.1

 

“Disclosing Party” has the meaning set forth in Section 8.1.

 

“Discontinued Product” has the meaning set forth in 11.1.

 

“Dollars” or “$” means the lawful currency of the United States.

 

“Effective Date” has the meaning set forth in Section 14.13 of this Agreement.

 

 “Election Notice” has the meaning set forth in 11.1.

 

“EMEA” means the European Regulatory Authority known as the European Medicines
Agency and any successor agency thereto.

 

“EU” means the European Union, as its membership may be altered from time to
time, and any successor thereto, and which, as of the Effective Date, consists
of Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany,
Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, The
Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and the United
Kingdom, and that certain portion of Cyprus included in such organization.

 

“Execution Date” has the meaning set forth in the opening paragraph of this
Agreement.

 

“FDA” means the United States Food and Drug Administration and any successor
agency thereto.

 

“First Commercial Sale” means the first sale of a Product by OMI, its Affiliates
or a Licensee to a Third Party in a particular country after Approval of such
Product has been obtained in such country.

 

“FTE” means the equivalent of the work of one (1) employee with appropriate
professional scientific and/or technical or managerial experience, working on a
dedicated full time basis for

 

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one (1) year (consisting of at least a total of [***] hours per year of
dedicated effort, excluding vacations and holidays) of work on or directly
related to the R&D Plan, carried out by an Isis employee, or Third Party
mutually agreed upon by the R&D Committee and expressly stated in the R&D Plan.
Overtime will not be counted toward the number of hours that are used to
calculate the FTE contribution. No one person will be permitted to account for
more than [***] hours of FTE contribution per year. Any person who devotes less
than [***] hours per year will be treated as an FTE on a pro-rata basis, based
upon the actual number of hours worked divided by [***].

 

“FTE Rate” means the rate that OMI will fund Isis FTEs which is $[***] per FTE
for the year ending December 31, 2007. For the year ending December 31, 2008 and
each year thereafter such FTE rate will increase by a factor that reflects the
[***] for such year.

 

“GAAP” means generally accepted accounting principles of the United States
consistently applied.

 

“GCCR” means glucocorticoid receptor (GenBank accession #NM_000176), or any
alternate splice variants, mutants, polymorphisms and fragments thereof.

 

“GCCR Compound” means (i) ISIS 377131 or [***]

 

“GCCR Product” means any pharmaceutical product containing a GCCR Compound
(alone or with other active ingredients), in all forms, presentations,
formulations and dosage forms.

 

“GCGR” means glucagon receptor (GenBank accession #NM_000160), or any alternate
splice variants, mutants, polymorphisms and fragments thereof.

 

“GCGR Compound” means (i) ISIS 325568 or [***]

 

“GCGR Product” means any pharmaceutical product containing a GCGR Compound
(alone or with other active ingredients), in all forms, presentations,
formulations and dosage forms.

 

“Generic Product(s)” means a product or products containing an active ingredient
having the same or substantially the same chemical structure as the applicable
Compound contained in the applicable Product, whether approved under an NDA,
ANDA, an application under 505(b)(2), or any equivalent thereof, or otherwise by
a Regulatory Authority within the Territory.

 

“Good Clinical Practice” or “GCP” shall mean the then current standards for
clinical trials for pharmaceuticals, as set forth in the United States Code of
Federal Regulations, ICH guidelines and applicable regulations, laws or rules as
promulgated thereunder, as amended from time to time, and such standards of good
clinical practice as are required by the European Union and other organizations
and governmental agencies in countries in which a Licensed Product is intended
to be sold to the extent such standards are not less stringent than United
States GCP.

 

“Good Laboratory Practice” or “GLP” shall mean the then current standards for
laboratory activities for pharmaceuticals, as set forth in the FDA’s GLP
regulations and/or ICH guidelines and applicable regulations.

 

“Good Manufacturing Practice(s)” or “GMP” shall mean the regulatory requirements
for current good manufacturing practices promulgated in the United States Code
of Federal Regulations including those rules promulagated by the United States
Food and Drug Administration  under the U.S. Food, Drug and Cosmetic Act, 21
C.F.R. § 210 et seq. (“FD&C Act”) and ICH Guidelines and applicable regulations,
as the same may be amended from time to time.

 

“Holdings” has the meaning set forth in Section 14.13.

 

 “HSR Act” means the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended from time to time, and the rules, regulations, guidance and
requirements promulgated thereunder as may be in effect from time to time.

 

“HSR Clearance” has the meaning set forth in 14.13.

 

“IMS” means IMS America Ltd. of Plymouth Meeting, Pennsylvania or any successor
to thereof, or any other independent pharmaceutical sales auditing firm
reasonably agreed upon by the Parties.

 

“IND” means an Investigational New Drug Application (as defined in the Food,
Drug and Cosmetic Act, as amended) filed with the FDA or its foreign
counterparts.

 

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“IND Acceptance” means the acceptance (or deemed acceptance) of the filing of an
IND by the applicable Regulatory Authority.

 

“Indemnified Party” has the meaning set forth in 12.3.

 

“Indemnification Claim Notice” has the meaning set forth in 12.3.

 

“IND-Enabling Studies” means the pharmacokinetic and toxicology studies required
to meet the regulations for filing an IND.

 

“Initiation of Phase 1 Trial” means the dosing of the [***] human subject in a
Phase 1 Trial.

 

“Initiation of Phase 2b Trial” means the dosing of the [***] human patient in
the first Phase 2b Trial.

 

“Initiation of Phase 3 Trial” means the dosing of the [***] human patient in a
Phase 3 Trial. In the case where a Phase 2b/3 Trial precedes any Phase 3 Trial
for a given Product, the first dosing of such Product in a human patient
following the review of interim data and decision to extend the period of such
Phase 2b/3 Trial in order to provide sufficient evidence of safety and efficacy
to be included as a Phase 3 Trial in filings with Regulatory Authorities will be
deemed to be the “start of Phase 3 Trial” for such Product.

 

“Inquiry Notice” has the meaning set forth in Section 3.6.2.

 

“Inquiry Response” has the meaning set forth in Section 3.6.2.

 

“Integrated Product Plan or IPP” has the meaning set forth in Section 5.3

 

“ISIS 325568” means the compound known as ISIS 325568 as specifically set forth
in Appendix 11.

 

“ISIS 377131” means the compound known as ISIS 377131 as specifically set forth
in Appendix 11.

 

“Isis Core Technology Patents” means Patents Controlled by Isis or its
Affiliates on the Effective Date and/or at any time thereafter, in each case
that are useful or necessary for the Development and Commercialization of
Compound and Products; provided however, that for any such Patents that include
Pass Through Obligations, the provisions of Section 6.5 will govern whether such
Patent will be included as an Isis Core Technology Patent. In addition, Isis
Core Technology Patents will exclude the Product Specific Patents and the Isis
Manufacturing and Analytical Patents. A representative list of the Isis Core
Technology Patents as of the Effective Date is listed in Appendix 3 hereto. For
clarification, any Isis Program Patent Rights or any Joint Patent satisfying the
definition above will be considered an Isis Core Technology Patent.

 

“Isis Database” has the meaning set forth in Section 3.11.

 

“Isis In-License Agreements” has the meaning set forth in Section 6.5.1.

 

“Isis Inventions” has the meaning set forth in Section 9.1.

 

“Isis Know-How” means all Know-How Controlled by Isis or its Affiliates as of
the Effective Date and/or at any time thereafter that is useful for the
Research, discovery, Development, manufacturing and Commercialization of MOE
Gapmers. The Isis Know-How shall not include Product Specific Know-How.

 

“Isis Manufacturing and Analytical Patents” means Patents Controlled by Isis or
its Affiliates on the Effective Date and/or or at any time through the period
ending on the [***] anniversary of the expiration of the Collaboration Term, in
each case that claim methods and materials used in the synthesis of ASOs;
provided however, that for any such Patents that include Pass Through
Obligations, the provisions of Section 6.5 will govern whether such Patent will
be included as an Isis Manufacturing Patent. A representative list of Isis
Manufacturing and Analytical Patents is attached hereto as Appendix 4. Isis
Manufacturing and Analytical Patents will exclude the Product Specific Patents
and the Isis Core Technology Patents. For clarification, any Isis Program Patent
Rights or any Joint Patent satisfying the definition above will be considered an
Isis Manufacturing Patent.

 

“Isis Manufacturing and Analytical Technology” means the Isis Know-How, Product
Specific Know-How and Isis Manufacturing and Analytical Patents claiming
inventions made on or after the Effective Date solely to the extent necessary or
useful to manufacture a Compound and/or Product by or for OMI (or its Affiliate
or Licensee).

 

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“Isis Patents” means the Isis Core Technology Patents, the Product Specific
Patents and the Isis Manufacturing and Analytical Patents (including patents
licensed to Isis under an Isis In-License Agreement in accordance with Section
6.5.1).

 

“Isis Program Patent” has the meaning set forth in Section 9.1.

 

“Isis Supported Payment” means the royalty or milestone obligations of Isis, if
any, applicable with respect to a Compound or Product under Isis’ agreement with
[***].

 

“Isis Technology” means collectively the, Product Specific Know-How and the Isis
Patent.

 

“Isis Third Party Payments” has the meaning set forth in Section 6.5.2.

 

“Johnson & Johnson Universal Calendar” means the universal calendar Johnson &
Johnson uses as part of its financial reporting system, as provided to Isis from
time to time and as consistent with the 2007 universal calendar attached hereto
as Appendix 10.

 

“Joint Invention” has the meaning set forth in Section 9.1

 

“Joint Patent” means any Patent that claims, and only to the extent that it
claims, a Joint Invention(s).

 

“Know-How” means technical information and materials, including without
limitation, technology, software, instrumentation, devices, data, biological
materials, assays, constructs, compounds, inventions, practices, methods,
knowledge, know-how, trade secrets, skill and experience.

 

“Licensee” means any Third Party that is sublicensed by OMI or any of its
Affiliates to market and sell Product, but will not include any wholesaler or
distributor.

 

“Losses” has the meaning set forth in Section 12.1.

 

“Manufacturing Improvements” means any and all scientific and technical data,
information, methods, techniques, protocols, inventions, and processes that are
useful in the manufacture of MOE Gapmer ASO compounds developed by or coming
under Control of a Party after the Collaboration Term. Manufacturing
Improvements will exclude any proprietary or patented methods employed by a
contract manufacturer under contract with OMI to manufacture ASO or Products.

 

“Major European Country” means France, Germany, Italy, Spain or the United
Kingdom.

 

“Major Market Country” means Canada, France, Germany, Italy, Japan, Spain, the
United Kingdom, and the United States.

 

“MAA Approval” will be achieved upon receiving the first Approval for the
applicable Product in any of the Major European Countries.

 

“MAA Filing” means filing with the EMEA of a marketing authorization application
(“MAA”) for the applicable Product under the centralized European procedure. If
the centralized EMEA filing procedure is not used, MAA Filing will be achieved
upon the first filing of an MAA for the applicable Product in any Major European
Country.

 

“MOE Gapmer” means a single stranded ASO of less than [***] nucleotides (i)
wherein all of the backbone linkages are modified by substituting a sulfur at
the non-bridging oxygen (phosphorothioate) and (ii) having a gap region of
unsubstituted 2’ deoxy nucleotides positioned between two wing regions each
composed entirely of 2’-O-(methoxyethyl) substituted nucleotides.

 

“NDA” means a New Drug Application filed with the FDA after completion of
clinical trials to obtain marketing approval for the applicable Product in the
United States.

 

“NDA Approval” means the Approval of an NDA by the FDA for the applicable
Product in the U.S.

 

“NDA Filing” means the acceptance by the FDA of the filing of an NDA for the
applicable Product.

 

“Net Sales” means, with respect to any Product, the amount billed by OMI, an
Affiliate of OMI, or any permitted Licensee for sales of such Product in arm’s
length transactions to Third Parties, after deduction (if not already deducted
in the amount invoiced) of the following items with respect to sales of such
Product:

 

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(a)           trade, cash, and/or quantity discounts, retroactive price
reductions, charge-back payments and rebates actually taken and allowed,
including discounts or rebates to governmental or managed care organizations;

 

(b)           credits or allowances given or recorded for rejection or return of
previously sold Product (including, without limitation, returns of Product in
connection with recalls or withdrawals);

 

(c)           freight out, postage, shipping and insurance charges actually
incurred for delivery of such Product;

 

(d)           any tax, tariff, duty or government charge (including any tax such
as a value added or similar tax or government charge other than an income tax)
levied on the sale, transportation or delivery of a Product and borne by the
seller thereof without reimbursement from any Third Party; and

 

(e)           amounts written off by reason of uncollectible debt.

 

Net Sales and all of the foregoing deductions from the gross invoiced sales
prices of Product will be determined in accordance with OMI’s standard
accounting procedures and in accordance with GAAP. In the event that OMI, its
Affiliates or Licensees make any adjustments to such deductions after the
associated Net Sales have been reported pursuant to this Agreement, the
adjustments will be reported and reconciled with the next report and payment of
any royalties due. In the case of any Combination Product sold in the Territory,
Net Sales for such Combination Product will be calculated by multiplying actual
Net Sales of such Combination Product by the fraction A/(A+B) where A is the
invoice price of the Product if sold separately without the other active
ingredient(s), and B is the total invoice price of the other active
ingredient(s) in the Combination Product, if sold separately. If, on a
country-by-country basis, such other active ingredient(s) in the Combination
Product are not sold separately in said country, Net Sales for the purpose of
determining royalties of the Combination Product will be calculated by
multiplying actual Net Sales of such Combination Product by the fraction A/D,
where A is the invoice price of the Product if sold separately, and D is the
invoice price of the Combination Product. If neither the Product nor such other
active ingredient(s) are sold separately in a given country, the Parties will in
good faith, determine Net Sales for such Combination Product by mutual
agreement.

 

In the event, in a particular country, OMI or any of its Affiliates sells a
Product to an unaffiliated distributor or wholesaler at a price that is less
than an arm’s length price and such distributor or wholesaler pays OMI or its
Affiliates any additional amount related to such sale, then OMI will adjust such
selling price for purposes of calculating Net Sales so as to bring it to an
arm’s length basis.

 

Net Sales will not include (x) any payments among OMI, its Affiliates and
Licensees, unless such paying party is the end user of the relevant Product or
(y) any payments in consideration of supplies of the applicable Product for use
in clinical trials.

 

“OMI Materials” has the meaning set forth in Section 3.10.

 

“OMI Third Party Payment” has the meaning set forth in 6.5.3.

 

“OMI Third Party Royalty Payment” has the meaning set forth in 6.5.3.

 

“OMI Indemnitees” has the meaning set forth in 12.2.

 

“OMI Inventions” has the meaning set forth in 9.1.

 

“OMI Product Specific Patent” means any Patents (including all claims and the
entire scope of claims therein) Controlled by OMI or its Affiliates on the
Effective Date and/or at any time thereafter, in each case claiming (a) the
sequence or a portion thereof corresponding to the GCCR, GCGR or Selected Gene
Target gene sequence or a portion thereof, (b) the specific composition of
matter of a Product, (c) methods of using a Compound or Product as a therapeutic
or (d) methods of using a Compound as a therapeutic).

 

“OMI Program Patents” has the meaning set forth in 9.1.

 

“Other party” has the meaning set forth in 10.3.

 

“Objective” means the objective of the R&D Plan set forth in Section 3.1.

 

“Party (ies)” has the meaning set forth in the opening paragraph of this
Agreement.

 

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“Pass Through Royalties” means any royalty on net sales of Product that becomes
payable by Isis to a Third Party under an Isis In-License Agreement with respect
to a Product Developed and Commercialized by OMI under this Agreement, where
such royalty obligation is based on the manufacture, use or sale of the Product
being Covered by an Isis Patent licensed to OMI under Section 2.1 which Isis
Patent Right is licensed to Isis under such Isis In-License Agreement and
includes any Target Encumbrances assumed by OMI under Section 3.6.3.

 

“Pass Through Obligations” means any development milestone payment or royalty on
net sales of Product that becomes payable by Isis to a Third Party under an Isis
In-License Agreement with respect to a Product Developed and Commercialized by
OMI under this Agreement or any or other non-financial obligation, where such
milestone payment, royalty payment or other obligation is based on the
manufacture, use or sale of the Product being Covered by an Isis Patent Right
licensed to OMI under Section 2.1 which Isis Patent Right is licensed to or
acquired by Isis under such Isis In-License Agreement. Pass Through Obligations
includes any Pass Through Royalties.

 

“Patents” means (a) patents and patent applications in any country or
jurisdiction, (b) all priority applications, divisionals, continuations, and
continuations-in-part of any of the foregoing, and (c) all patents issuing on
any of the foregoing patent applications, together with all registrations,
reissues, renewals, re-examinations, confirmations, supplementary protection
certificates, and extensions of any of (a), (b) or (c).

 

 “Permitted License” means a license granted by Isis to a Third Party (i) under
the Isis Core Technology Patents or the Isis Manufacturing and Analytical
Patents (but not under the Product Specific Patents) to use ASOs (or supply ASOs
to end users) solely to conduct Research, or (ii) under the Isis Manufacturing
and Analytical Patents (but not under the Isis Core Technology Patents or
Product Specific Patents) to enable such Third Party to broadly manufacture or
formulate ASOs, where such Third Party is primarily engaged in providing
contract manufacturing or services and is not engaged in drug discovery,
development or commercialization.

 

“Person” means any individual, firm, corporation, partnership, limited liability
company, trust, business trust, joint venture company, governmental authority,
association or other entity.

 

“Phase 1 Trial” means the initial clinical testing of a Product in humans
(first-in-humans study) with the intention of gaining a preliminary assessment
of the safety of such Product.

 

“Phase 2 Clinical Supply” has the meaning set forth in Section 4.3.

 

“Phase 2 Trial” means a human clinical trial of a Product, the principal purpose
of which is a determination of preliminary short-term safety and efficacy in the
target patient population, as described in 21 C.F.R. 312.21(b) for the United
States, or a similar clinical study prescribed by the Regulatory Authorities in
a foreign country.

 

“Phase 2b Trial” means a Phase 2 Trial, designed to support and immediately
precede the initiation of a Phase 3 Trial program without any further Phase 2
Trials, to evaluate the dose-dependent effectiveness of a pharmaceutical product
for a particular indication or indications in patients with the disease or
condition under study and to determine the common side effects and risks
associated with the pharmaceutical product.

 

“Phase 2b/3 Trial” means a human clinical trial of a Product, the principal
purpose of which is a further determination of efficacy and safety, in the
target population, at the intended clinical dose or doses or range of doses, on
a sufficient number of subjects and for a sufficient period of time to confirm
the optimal manner of use of the Product (dose and dose regimen) prior to
initiation of the pivotal Phase 3 Trials, and which itself provides sufficient
evidence of safety and efficacy to be included as a Phase 3 Trial in filings
with Regulatory Authorities.

 

“Phase 3 Trial” means a human clinical trial of a Product on a sufficient number
of subjects that is designed to establish that a pharmaceutical product is safe
and efficacious for its intended use, and to determine warnings, precautions and
adverse reactions that are associated with such pharmaceutical product in the
dosage range to be prescribed, which trial is intended to support

 

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Approval of a Product, as described in 21 C.F.R. 312.21(c) for the United
States, or a similar clinical study prescribed by the Regulatory Authorities in
a foreign country.

 

“Phase 4 Trial” means a human clinical trial for a Product commenced after
receipt of Approval in the country for which such trial is being conducted and
that is conducted within the parameters of the Approval for the Product. Phase 4
Trials may include, without limitation, epidemiological studies, modeling and
pharmacoeconomic studies, investigator sponsored clinical trials of Product and
post-marketing surveillance studies.

 

“Prior Third Party Agreements” means certain licenses granted prior to the
Effective Date by Isis to Third Parties under a Patent Controlled by Isis under
an agreement included in the agreements listed in Appendix 6.

 

“Product” means any pharmaceutical product containing a Compound (alone or with
other active ingredients), in all forms, presentations, formulations and dosage
forms.

 

“Product Development Plan” has the meaning set forth in Section 5.3

 

“Product Specific Know-How” means all chemical, biological and structure
activity relationship information, technical information and materials,
including without limitation, technology, software, instrumentation, devices,
data, biological materials, assays, constructs, unpatented inventions,
practices, methods, knowledge, know-how, trade secrets, skill and experience
solely related to the Compounds or Products, existing as of the effective date
and anytime thereafter.

 

“Product Specific Patents” means all Patents (including all claims and the
entire scope of claims therein) Controlled by Isis or its Affiliates on the
Effective Date and/or at any time thereafter, including those patents assigned
to OMI pursuant to Article 9 in each case claiming (a) the sequence or a portion
thereof corresponding to the GCCR, GCGR or Selected Gene Target gene sequence or
a portion thereof, (b) the specific composition of matter of a Product, (c)
methods of using a Compound or Product as a therapeutic or (d) methods of using
a Compound as a therapeutic); provided however, that (x) for any such Patents
that include Pass Through Obligations, the provisions of Section 6.5 will govern
whether such Patent will be included as an Product Specific Patent and (y)
unless the Parties otherwise agree in writing, Patents that include claims that
are directed to subject matter and have a scope that is applicable to ASOs in
general, and not specifically directed to a Compound or Product, will be
considered to be Isis Core Technology Patents (or Isis Manufacturing and
Analytical Patents, as applicable). For clarification, any Isis Program Patent
or any Joint Patent satisfying the definition above, will be considered a
Product Specific Patent. The Product Specific Patents as of the Effective Date
are listed in Appendix 2 attached hereto.

 

“Program Costs” has the meaning set forth in Section 3.5.

 

“Program Inventions” has the meaning set forth in Section 9.1.

 

“Program Patents” has the meaning set forth in Section 9.1.

 

“Proposed Substitution Target” has the meaning set forth in Section 3.6.1

 

“Proposed Target” has the meaning set forth in Section 3.6.3

 

“Purchase Option Agreement” has the meaning set forth in Section 14.13

 

“R&D Budget” has the meaning set forth in Section 3.2.

 

“R&D Committee Charter” has the meaning set forth in Section 3.4.

 

“R&D Committee” has the meaning set forth in Section 3.4.

 

“R&D Plan” has the meaning set forth in Section 3.2.

 

“R&D Budget” has the meaning set forth in Section 3.2

 

“R&D Year” means each 12 month period during the Collaboration Term, with the
first R&D Year beginning on the Effective Date.

 

“Receiving Party” has the meaning set forth in Section 8.1.

 

“Regulatory Authority” means any governmental authority, including without
limitation FDA, EMEA or Koseisho (i.e., the Japanese Ministry of Health and
Welfare, or any successor agency thereto), that has responsibility for granting
any licenses or approvals or granting pricing and/or reimbursement approvals
necessary for the marketing and sale of a Product in any country.

 

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“Regulatory Documentation” means all applications, registrations, licenses,
authorizations and approvals (including all Approvals), all correspondence
submitted to or received from Regulatory Authorities (including minutes and
official contact reports relating to any communications with any Regulatory
Authority), all supporting documents and all clinical studies and tests,
including the manufacturing batch records, relating to the Product, and all data
contained in any of the foregoing, including all regulatory drug lists,
advertising and promotion documents, adverse event files and complaint files.

 

“Request Notice” has the meaning set forth in Section 3.6.3.

 

“Requested Target” has the meaning set forth in Section 3.6.2.

 

“Research” means pre-clinical research including gene function, gene expression
and target validation research using cells and animals, which may include small
pilot toxicology studies but excludes IND-Enabling Studies, clinical development
and commercialization.

 

 “Research Compound” means any MOE Gapmer that modulates the expression of a
Selected Gene Target where its primary mechanism of action is through its
hybridization to such Selected Gene Target mRNA or pre-mRNA and that is
identified by Isis as of the Effective Date or during the  Collaboration.

 

“Research Product” means any pharmaceutical product containing a Research
Compound (alone or with other active ingredients), in all forms, presentations,
formulations and dosage forms.

 

“Research Program” has the meaning set forth in Section 3.1.

 

“Research Results” means all data, information, trade secrets, inventions and
Know-How which are discovered, made, reduced to practice, identified or
developed in whole or in part by Isis in the course of the performance of the
Research Program and Development Program.

 

“Research Term” has the meaning set forth in Section 3.3.1.

 

“Royalty Term” has the meaning set forth in Section 6.8.

 

“sNDA” means a Supplemental New Drug Application filed with the FDA after the
first NDA Approval for a Product in the U.S.

 

“sNDA Approval” means the Approval of an sNDA by the FDA for the applicable
Product in the U.S.

 

“Selected Gene Target” has the meaning set forth in Section 3.6.

 

“Senior Representatives” has the meaning set forth in Section 14.4.

 

“Substitution Conditions” has the meaning set forth in Section 3.6.1

 

“Symphony GenIsis” has the meaning provided in Section 14.13.

 

“Target Encumbrances” has the meaning set forth in Section 3.6.3

 

“Target Pool” has the meaning set forth in Section 3.6.

 

“Technology License Agreement” has the meaning set forth in Section 14.13.

 

“Term” has the meaning set forth in Section 10.1.

 

“Territory” means all countries and jurisdictions throughout the world.

 

“Third Party” means any Person other than Isis or OMI or their respective
Affiliates.

 

“Third Party Claims” has the meaning set forth in 12.1.

 

“Valid Claim” means either (a) a claim of an issued and unexpired patent which
has not been held permanently revoked, unenforceable or invalid by a decision of
a court or other governmental agency of competent jurisdiction, unappealable or
unappealed within the time allowed for appeal and that is not admitted to be
invalid or unenforceable through reissue, disclaimer or otherwise (i.e., only to
the extent the subject matter is disclaimed or is sought to be deleted or
amended through reissue), or (b) a claim of a pending patent application that
has not been abandoned, finally rejected or expired without the possibility of
appeal or refiling, provided however, that (x) Valid Claim will exclude any such
pending claim in an application that has not been granted within [***] following
[***] for such application (unless and until such claim is granted) and (y)
Valid Claim will exclude any such pending claim that does not have a reasonable
bona fide basis for patentability (such reasonable bona fide basis to be
determined by outside

 

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counsel selected by the parties the event that the parties disagree as to
whether there is a reasonable bona fide basis for patentability for such a
claim).

 

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APPENDIX 2

 

PRODUCT-SPECIFIC PATENTS
(as of the Effective Date)

 

GCCR Applications

 

[***]

 

GCGR Applications

 

[***]

 

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APPENDIX 3

 

ISIS CORE TECHNOLOGY PATENTS

 

[***]

 

Also includes (x) all U.S. patents and patent applications, (y) any
substitutions, divisions, continuations, continuations-in-part, reissues,
renewals, registrations, confirmations, re-examinations, extensions,
supplementary protection certificates and the like, and any provisional
applications, of any of the above listed patents or patent applications, and (z)
any foreign or international equivalent of any of the above to the extent they
satisfy the definition of Isis Core Technology Patent as set forth in Appendix 1
of the Agreement.

 

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APPENDIX 4

 

ISIS MANUFACTURING & ANALYTICAL PATENTS

 

[***]

 

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APPENDIX 5

 

[***]

 

Purpose

 

The Joint Research Committee is established by Isis and OMI to oversee the
Collaboration under the Agreement.

 

Responsibilities

 

[***]Composition

 

1.                                             The R&D Committee will initially
have eight members, and will at all times have an equal number of members
designated by each Party. Each Party may replace its appointed R&D Committee
representatives at any time upon written notice to the other Party. The size and
composition of the R&D Committee provided herein may not be changed without the
consent of both Isis and OMI.

 

2.                                             Each R&D Committee member will
have the requisite background, experience and training to carry out the duties
and obligations of the R&D Committee.

 

3.                                             Each Party will designate one of
its representatives as co-chairperson of the R&D Committee. Each of the
co-chairpersons will be responsible, on an alternating basis with the OMI
co-chairperson having responsibility with respect to the initial meeting, for
scheduling meetings, preparing and circulating an agenda in advance of each
meeting, and preparing the minutes of each meeting.

 

Decisions

 

4.                                             Each Party’s R&D Committee
members will collectively have 4 votes, regardless of the number of its R&D
Committee members participating in any meeting. No votes will be taken unless
there is at least one R&D Committee member representing each of Isis and OMI
participating in such meeting. Each Party may allocate its 4 votes among its
attending R&D Committee members in any manner, at such Party’s discretion. If
only one R&D Committee member is attending on behalf of a given Party, such R&D
Committee member may cast all the votes allocated to such Party. Unless
otherwise specified herein, all actions taken by the R&D Committee as a
committee will be by majority vote. If the R&D Committee members reach a
deadlock on any vote, then the deadlock will be resolved in accordance with
Paragraph 8 below. Notwithstanding anything to the contrary, no decision by the
R&D Committee will require the other Party to: (i) [***]; (ii) perform [***]; or
(iii) violate any Applicable Law or principles of scientific integrity.

 

5.                                             If the R&D Committee is unable to
decide by a majority vote on any issue within the scope of its authority and
duties, then the R&D Committee will promptly raise such issue to each Parties
co-chairperson on the R&D Committee, and such co-chairs will have [***] to
mutually agree on how to resolve such issue. If the co-chairs are unable to
resolve such issue within the [***] period, then such issue will be brought to
each Party’s Senior Representatives, or their designees. The Senior
Representatives will have [***] to mutually agree on how to resolve such issue.
If the Senior Representatives are unable to resolve such issue within the [***]
period, then, subject to the express limitations set forth in the Agreement and
in Paragraph 9 below, such issue will be finally resolved by the Senior
Representative of OMI, and such resolution will be binding on OMI and Isis.

 

6.                                             [***]

 

Operations; Meetings

 

7.                                             During the Collaboration Term the
R&D Committee will initially meet once per month, unless and until the R&D
Committee determines that such meetings should occur once per Calendar Quarter
(in either case, each a “Scheduled Meeting”). Scheduled Meetings may be held in
person or by audio or video teleconference when appropriate, but at a minimum,
once each year in person (which in-person meeting will be held on an alternating
basis in Spring House, PA and in Carlsbad, CA). In addition, any two members of
the R&D Committee may

 

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jointly call for an ad hoc meeting of the R&D Committee by teleconference at any
time, by giving the other members of the R&D Committee advance written notice of
at least two Business Days (each, an “Ad Hoc Meeting”). An Ad Hoc Meeting may be
called to address any time-sensitive matter.

 

8.                                             Meetings of the R&D Committee
will be effective only if at least one R&D Committee representative of each
Party is present or participating. Each Party will be responsible for all of its
own expenses of participating in the R&D Committee meetings. The Parties will
endeavor to schedule meetings of the R&D Committee with at least 30 days advance
notice.

 

9.                                             Each Party may bring additional
employees to each meeting as non-voting observers.

 

10.                                           The co-chair responsible for each
meeting (the “Responsible Chair”) will, in consultation with other members of
the R&D Committee, develop and set the R&D Committee’s agenda for each Scheduled
Meeting. The Responsible Chair will include on such agenda each item requested
within a reasonable time in advance of such Scheduled Meeting by a R&D Committee
member. The agenda and information concerning the business to be conducted at
each Scheduled Meeting will be communicated in writing to the members of the R&D
Committee within a reasonable time in advance of such Scheduled Meeting to
permit meaningful review. No agenda is required for an Ad Hoc Meeting.

 

11.                                           The Responsible Chair, or such
person as the Responsible Chair may designate, will prepare, and distribute to
all R&D Committee members, draft committee minutes within 2 weeks following each
Scheduled Meeting or Ad Hoc Meeting and such minutes will be finalized by the
R&D Committee promptly thereafter. As part of the agenda of the first Scheduled
Meeting, the R&D Committee members will agree upon a standard procedure for
review and approval of such draft committee minutes by the R&D Committee.

 

APPENDIX 6

 

ISIS IN-LICENSE AGREEMENTS
AND
PRIOR THIRD PARTY AGREEMENTS

 

[***]

 

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APPENDIX 7

 

[***]

 

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APPENDIX 8

 

SUPPLY AGREEMENT

CLINICAL MANUFACTURING AND SUPPLY AGREEMENT

 

This Clinical Manufacturing and Supply Agreement (the “Supply Agreement”) is
entered into as of the      th day of                , 2007 (the “Effective
Date”) by and between Isis Pharmaceuticals, Inc. (“Isis”) and Ortho McNeil, Inc.
(“OMI”). OMI and Isis may each be referred to herein as a “Party” or together as
the “Parties”. Capitalized terms not defined herein will have the meaning given
to such terms in the Collaboration and License Agreement between the Parties
dated                , 2007 (the “License Agreement”). The Parties agree as
follows:

 

WHEREAS, the Parties have signed the License Agreement contemporaneous with the
present Clinical Manufacturing and Supply Agreement;

 

WHEREAS, the License Agreement provides that Isis shall be responsible for the
manufacture of Compound through [***];

 

WHEREAS, the Parties agree that the terms of this Supply Agreement will apply to
all manufactured lots of active pharmaceutical ingredient (API) made and
supplied under this Supply Agreement and further that this Supply Agreement will
be construed in a manner consistent with the License Agreement, including its
defined terms.

 

NOW, THEREFORE in consideration of the premises and mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto agree to this
Agreement as follows:

 

1.              Scope — Isis will produce under cGMP conditions and in
accordance with the Quality Agreement between the Parties and referencing this
Supply Agreement (the “Quality Agreement”), the bulk API for the Compounds and
in the amount specified in the applicable Firm Order for use in preclinical and
clinical Development through the completion of [***]. Isis will use Commercially
Reasonable Efforts to maintain available capacity of facilities and equipment to
meet OMI’s needs at the Isis production facilities.

 

2.              Supply; Forecasting.

 

(a)   Isis and OMI will establish an [***] Calendar Quarter rolling forecast
(the “Rolling Production Forecast”) that sets forth a good faith estimate of the
quantity of API for each Compound OMI expects to receive from Isis within the
following [***] Calendar Quarter period. This Rolling Production Forecast will
be updated on the first business day of each subsequent Calendar Quarter by
OMI’s project manager. The first [***] Calendar Quarters of the Rolling
Production Forecast constitute a firm order (“Firm Order”). OMI will provide
purchase orders for Firm Orders with each new Rolling Production Forecast.
Quarters [***] through [***] are estimated quantities to be used for

 

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planning purposes only. Not later than [***] after the Effective Date, OMI’s
project manager will provide Isis with the first Rolling Production Forecast,
which will initially cover the [***] quarter period beginning October 1, 2007.
The quantities set forth in a Firm Order will be binding on both parties, and
OMI will be obligated to purchase from Isis, and Isis will be obligated to
supply, the specified quantities of API.

 

Notwithstanding the foregoing, the Parties will use commercially reasonable
efforts to deliver the API to support the planned clinical trials starting in
[***] for ISIS 325568 and ISIS 377131. In addition, upon OMI’s Designation of a
Compound as a Clinical Candidate, Isis and OMI will mutually agree on an initial
quantity and delivery date for API for such Compound to support the rapid and
efficient start of IND-Enabling Studies and first human dose for such Compound
(such quantity and delivery dates to be consistent with Isis’ then existing
manufacturing schedule).

 

(b)   Notwithstanding the foregoing, each Firm Order is subject to the following
conditions:

 

•                  Isis will not be required to supply during a Calendar Quarter
more than an aggregate of [***] of API and further that the batch size is no
larger than [***] unless agreed to in advance by Isis.

 

•                  Isis will not be required to supply [***] Compounds during
any Calendar Quarter.

 

•                  For the first order for Compound ordered under this Supply
Agreement, the minimum order is [***].

 

•                  For any subsequent orders of Compounds under this Supply
Agreement, the minimum order is [***] unless agreed to in advance by Isis.

 

•                  Isis will not be required to supply more than [***] of the
API forecasted for a Calendar Quarter when that Calendar Quarter was the [***]
Calendar Quarter of a Rolling Production Forecast.

 

(c)   Isis agrees to use commercially reasonable efforts to supply OMI, upon
request, with quantities in excess of the quantity restrictions described in
this Section 2(b) above.

 

3.              Delivery - For each Calendar Quarter in a Firm Order, Isis will
set the delivery date for the API ordered in such quarter and will promptly
notify OMI of such delivery date (each, a “Delivery Date”). Isis will deliver
the API ordered in each Firm Order by the applicable Delivery Date. The quantity
of API specified in each Firm Order, invoiced and paid for will be [***] the API
after lyophilization [***]. In addition, so long as Isis supplies the quantity
of API specified in the applicable Firm Order for such Compound within [***],
Isis will be deemed to have satisfied the amount specified in the Firm Order and
the full purchase Price specified in the Firm Order will apply to such quantity
of API delivered.

 

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4.              Shortfall

 

(a)   In the event that at any time Isis anticipates that it will be unable to
supply in whole or in part the quantities of API set forth in an agreed-upon
Firm Order for any reason, including without limitation force majeure, Isis will
notify OMI in writing within [***] of the prediction of such non-supply.

 

(b)   If Isis cannot Manufacture as set forth in (a) above, or should OMI
determine at any time after the Effective Date, at its sole discretion that it
shall pursue a different manufacturing source at any time, upon written request
by OMI, Isis will transfer to OMI all documentation and information, and permit
OMI to reference and use any regulatory filings, and otherwise fully cooperate
with OMI to enable OMI to make or have made API for use by OMI in accordance
with the License Agreement. In the event that OMI has elected to pursue a
different manufacturing source, the provisions of 4.5.3 of the License Agreement
shall control.

 

5.              Specifications — For each Firm Order of Compound OMI requests
Isis to supply under this Supply Agreement, Isis and OMI will mutually agree on
the specifications for such API and will attach and/or reference such
specifications (as maintained in the Quality Agreement) in the applicable Firm
Order (the “Specifications”).

 

6.              API Pricing - In [***] of each year, starting [***], Isis will
provide OMI the purchase price (each, a “Purchase Price”) applicable to the
manufacture and supply of API scheduled for delivery in the following calendar
year. Such Purchase Prices will be binding on both Parties; provided, however,
that such price will (i) not exceed [***] of API and (ii) represent Isis’ good
faith estimate of its [***] to manufacture such API [***]. Upon reasonable
request, OMI reserves the right to confirm such methodology annually, not to
exceed one time per year. This price includes [***]  All payments are in US
Dollars. If Isis supplies active pharmaceutical ingredient for another ASO
having similar length and chemistry as the API supplied hereunder to a Third
Party at similar volumes on terms when taken as a whole are more favorable than
the terms provided OMI under this Agreement, OMI will have the right to receive
the clinical supply of API on the same terms offered by Isis to such Third
Party.

 

7.              Terms of Payment —

 

•                  A pre-payment representing [***] of the Purchase Price
contained in a Firm Order from OMI is payable in cash by OMI to Isis by wire
transfer or other customary means within [***] from the date of receipt by OMI
of a corresponding invoice from Isis reflecting said component not prior to
delivery of the applicable Firm Order.

 

•                  The remaining amount of the Purchase Price is due in cash by
OMI to Isis by wire transfer or other customary means within [***] from the

 

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date of receipt of invoice by OMI, following shipment by Isis to OMI or its
designee of the API.

 

•                  In addition to the price stated in this Agreement, OMI will
pay to Isis all taxes and duties (except income tax) imposed upon Isis, in
connection with the API and will reimburse Isis for the insurance and freight
expenses discussed in Section 9 below.

 

8.              Term – This Supply Agreement will remain in effect as long as
Isis and OMI mutually agree for Isis to supply Compounds as described in the
License Agreement.

 

9.              Title & Transportation: Isis will ship the API to OMI when
released by OMI Quality Assurance Department as specified in the Clinical Trial
Material Quality Agreement attached as Appendix 9 in the License Agreement. In
the event that OMI has not concluded its review suitable to release such API
within [***] of Isis’ delivery of all required release documentation (“OMI
Review Period”), Isis will be allowed to invoice for the remaining amounts due
on such API at the expiration of the OMI Review Period. Title to API will
transfer to OMI EXW (Incoterms 2000) Isis’ facility. Isis will insure against
the replacement cost of the API until title transfers. Risk of loss passes
simultaneously with the title. Transportation and transit insurance arrangements
will be made by Isis as specified by OMI. Isis will pay all freight and other
charges for such transportation and transit insurance and add such costs to the
invoice. For the purposes of this Section 9, Incoterms 2000 means the
International Commercial Terms published by the International Chamber of
Commerce, as amended from time to time, codifying the contractual rules for the
interpretation of standardized commercial terms for transactions.

 

10.       Drug Product; Stability Testing

 

Isis will manage the stability testing of any API manufactured under this Supply
Agreement per Isis’ current stability protocol, [***]

 

Isis will perform stability testing on ISIS 325568 finished drug product
pursuant to the protocol [***].

 

Isis will complete the ongoing preparation of final drug product through its
contract manufacturer for the ISIS 377131 drug product that is scheduled to be
completed in the [***]  Isis will notify its contract manufacturer of its
relationship with OMI prior to the manufacturing in the [***] and request its
contract manufacturer to continue its manufacturing relationship with OMI
substantially the same as it currently exists with Isis. Isis will instruct its
contract manufacturer that OMI shall have access to any and all information
connected with the ISIS 377131 drug product manufacturing that is in the
contract manufacturer’s possession. Isis shall transfer or assign any relevant
documents to OMI to support such transfer of the manufacturing relationship.
Isis will perform stability testing on such drug product pursuant to a stability

 

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protocol that is mutually developed and agreed to by OMI and Isis, [***]. Isis
will instruct the contract manufacturer to retain suitable samples for retesting
or other purposes from such production as directed by OMI.

 

The price for the stability testing of the API will be [***]

 

The price for the stability testing of drug product will be [***]. The price for
the stability testing is payable within [***] of the end of the Calendar Quarter
in which such testing was performed.

 

Except as otherwise specified in the R&D Plan or this Supply Agreement, the
Parties acknowledge and agree that OMI will be solely responsible for the
manufacturing, stability testing and supply of finished drug Product.

 

11.       CMC Work – Except as specifically set forth in the R&D Plan, OMI will
be responsible for all CMC work associated with the API and drug product. OMI
may engage Isis to perform CMC work for the API and drug product, including
without limitation support in preparing regulatory filings, in accordance with
Section 5.1 of the License Agreement.

 

12.       Intellectual Property; Technology Transfer — Isis will retain the
rights to any inventions it develops while producing the API. Isis will license
all of its Intellectual Property necessary for the manufacture of the Compounds
and subsequent improvements to OMI as per the terms of the License Agreement.

 

Isis and OMI will perform a technology transfer related to manufacturing
technology in accordance with Section 4.5.3 of the License Agreement. In
addition, OMI shall have the right to observe the manufacturing process at any
time upon giving Isis reasonable advance notice thereof.

 

13.       Hazards; Risk Sharing

 

If after the raw materials for a batch of API [***], Isis encounters any
unforeseen difficulties or hazards during the manufacturing of the API that
prevent Isis from successfully manufacturing such batch of API in accordance
with this Agreement (including but not limited to the failure of such API to
conform to the warranty set forth in Section 14), Isis will use commercially
reasonable efforts to [***], such that OMI receives such API as close to the
originally-scheduled delivery date as possible.

 

For any such [***], the cost of the manufacture will be [***] by OMI and Isis as
follows:  Isis will be responsible for the [***] components for such batch of
API; and, to the extent not [***], OMI will be responsible for the [***]
component; provided, however that OMI will not be responsible if such failure
results from Isis’ gross negligence. For purposes of clarity and assuming none
of the exceptions above apply, the total price payable upon delivery of such API
will equal the price for such API originally quoted in the Firm Order plus the
[***] attributable to the [***]. For purposes of clarity, any batch failures due
to incorrect addition of raw materials or utility failures for any reason or
other pre-solution losses of any kind will be solely for the account of

 

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Isis. Further, Isis will be responsible for the cost of any equipment
replacement, as necessary.

 

14.       Limited Warranty; Certificate of Compliance:  SUBJECT TO THE
LIMITATIONS OF PARAGRAPHS 15, 16 AND 17, Isis warrants, with respect to all the
API, that at the time of the applicable shipment of the API to OMI:  (a) any API
manufactured by Isis meets the applicable Specifications and was manufactured in
accordance with cGMP and the obligations of the Quality Agreement, (b) that the
API is free from BSE/TSE, and (c) the API is conveyed with good and marketable
title, free from any and all security interests, liens or encumbrances.
Furthermore, Isis will include with the API at the time of transfer a
certificate of conformance (or its equivalent) in accordance with the Quality
Agreement.

 

15.       Disclaimer Of Warranties:  THE LIMITED WARRANTIES CONTAINED IN
PARAGRAPH 14 OF THIS DOCUMENT ARE THE SOLE WARRANTIES WITH RESPECT TO THE API
AND ARE MADE EXPRESSLY IN LIEU OF AND EXCLUDE ANY IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND ALL OTHER EXPRESS OR
IMPLIED REPRESENTATIONS AND WARRANTIES PROVIDED BY COMMON LAW OR STATUTE.

 

16.       Limitation Of Remedies: OMI’S EXCLUSIVE REMEDY AND ISIS’ TOTAL
LIABILITY TO OMI FOR CLAIMS BASED UPON SUPPLY OF THE API (OR FAILURE TO SUPPLY)
(INCLUDING, WITHOUT LIMITATION, THOSE ARISING OUT OF STRICT LIABILITY, BREACH OF
WARRANTY AND NEGLIGENCE) IS EXPRESSLY LIMITED TO THE REMEDY SET FORTH IN
SECTIONS 4 AND 13 ABOVE.

 

OMI WAIVES ALL OTHER CLAIMS BY OMI AGAINST ISIS UNDER THIS SUPPLY AGREEMENT WITH
RESPECT TO SUPPLY OF THE API. NEITHER PARTY WILL BE UNDER ANY LIABILITY TO THE
OTHER PARTY FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE
DAMAGES. THE FOREGOING LIMITATION WILL NOT APPLY TO OR BE DEEMED TO LIMIT ANY
CLAIMS FOR INDEMNIFICATION IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF
SECTION 20.

 

17.       Inspection And Notice Of Claims:  Promptly upon receipt of each
shipment of API, OMI will inspect and test (or cause to be inspected and tested
if API is shipped to a third party) such API for any damage, defect or shortage.
ALL CLAIMS (INCLUDING, WITHOUT LIMITATION, THOSE ARISING OUT OF STRICT
LIABILITY, BREACH OF WARRANTY AND NEGLIGENCE) BY OMI WILL BE DEEMED WAIVED
UNLESS MADE BY OMI IN WRITING AND RECEIVED BY ISIS WITHIN [***] OF THE RECEIPT
OF THE API, EXCEPT THAT IN THE CASE OF A LATENT FAILURE OF THE API TO MEET THE

 

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SPECIFICATIONS SUCH TIME LIMIT WILL BE EXTENDED TO [***] OF THE RECEIPT OF THE
API.

 

18.       Quality Systems. If OMI requests changes to Isis’ quality systems or
standard operating procedures, Isis and OMI will mutually agree on the scope and
form of such changes and payment will occur as outlined below. Isis will be
responsible to implement and pay for any modifications that either a Regulatory
Authority requires or the Parties mutually agree are necessary to remain
compliant with GMP or applicable ICH guidelines to manufacture Compounds and OMI
will pay for such modifications specific to the manufacturing of Compounds that
are not required by GMP or applicable ICH guidelines. The costs of
implementation will include out of pocket costs as well as for the FTEs to
implement such changes at the then applicable Isis FTE Rate. The current
billable FTE Rate for Isis employees is [***].

 

19.       Force Majeure: Neither Party will be liable for failures or delays in
performance of any obligation under this Supply Agreement, other than for
payment for API already transferred, to the extent that such failure or delay is
caused by force majeure, being any event, occurrence or circumstance beyond the
control of that Party (a “Force Majeure Event”), including but not limited to
the following: failure or delay caused by or resulting from acts of God,
strikes, earthquakes, fires, floods, accidents, wars, riots, acts of terrorism,
restrictions imposed by any governmental authority (including allocations,
priorities, requisitions quotas and price controls). The Party whose performance
is affected by a Force Majeure Event will give prompt notice to the other Party
stating the details and expected duration of the event.

 

20.       Indemnity. All Sections of Article 12 of the License Agreement will
apply to this Supply Agreement and the matters covered by this Supply Agreement.

 

21.       Assignment:  This Supply Agreement is not assignable or transferable
by either Party without the prior written consent of the other Party; provided
that a Party may assign the Supply Agreement to its successor in interest
pursuant to the acquisition, merger or sale of all or substantially all of the
assets of such Party, so long as such successor assumes in writing all of the
assigning Party’s obligations under this Supply Agreement.

 

22.       Governing Law:  The interpretation, validity, and performance of this
document will be governed by New York law, without regard to any conflict-of-law
rules.

 

23.       Termination. Either Party will have the right to terminate this Supply
Agreement if the other Party materially breaches its obligations under this
Supply Agreement in accordance with Section 10.3 of the License Agreement.

 

24.       Survival:  Sections 12 through 17, 19 through 26, and 28 through 35
will survive expiration or termination of the Agreement. Any expiration or early
termination of this Agreement will be without prejudice to the rights of either
Party against the other accrued or accruing under this Agreement prior to

 

74

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termination. No expiration of this Agreement will relieve a Party of its
obligation to pay fees.

 

25.       Notices:  Any notice required or permitted to be given under this
Supply Agreement by any Party will be in writing and will be (a) delivered
personally, (b) sent by registered mail, return receipt requested, postage
prepaid, (c) sent by a nationally-recognized courier service guaranteeing
next-day or second day delivery, charges prepaid, or (d) delivered by facsimile
(with the original promptly sent by any of the foregoing manners), to the
addresses or facsimile numbers of the other Parties set forth below, or at such
other addresses as may from time to time be furnished by similar notice by any
Party. The effective date of any notice under this Supply Agreement will be the
date of receipt by the receiving Party.

 

26.       Defined Terms. Unless otherwise specified in this Supply Agreement,
the terms used in this Supply Agreement shall have the meaning given to such
terms in the License Agreement.

 

27.       Representations and Warranties.

 

a.               Isis represents and warrants that the execution, delivery and
performance of this Supply Agreement does not conflict with any agreement,
instrument or understanding, oral or written, or Law by which it is bound and
Isis covenants that it will not enter into any such conflicting agreements
during the term of this Agreement.

 

b.              Isis represents, warrants and covenants that neither it nor any
of its employees performing hereunder, have ever been, or are currently the
subject of a proceeding that could lead to it or such employees or agents
becoming, as applicable, a Debarred Entity or Individual, an Excluded Entity or
Individual or Convicted Entity or Individual. Isis further covenants, represents
and warrants that if, during the term of this Supply Agreement, it, or any of
its employees or agents performing hereunder, become or are the subject of a
proceeding that could lead to Isis becoming, as applicable, a Debarred Entity or
Individual, an Excluded Entity or Individual or a Convicted Entity or
Individual, Isis shall immediately notify OMI and OMI shall have the right to
immediately terminate this Supply Agreement. For purposes of this provision, the
following definitions shall apply:

 

i.                  A “Debarred Individual” is an individual who has been
debarred by the FDA pursuant to 21 U.S.C 335(a) or (b) from providing services
in any capacity to a person that has an approved or pending drug product
application.

 

ii.               A “Debarred Entity” is a corporation, partnership or
association that has been debarred by the FDA pursuant to 21 USC 335 (a) or (b)
from submitting or assisting in the submission of any abbreviated drug
application, or a subsidiary or affiliate of a Debarred Entity.

 

75

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iii.            An “Excluded Individual or entity” is (a) an individual or
entity, as applicable who has been excluded, debarred, suspended or is otherwise
ineligible to participate in federal health care programs such as Medicare or
Medicaid by the Office of the Inspector General (OIG/HHS) of the US Department
of Health and Human Services, or (b) is an individual or entity as applicable,
who has been excluded, debarred, suspended or is otherwise ineligible to
participate in federal procurement and non-procurement programs, including those
produced by the US Genearl Services Administration (GSA).

 

iv.           A “Convicted Individual or Entity” is an individual or entity, as
applicable, who has been convicted of a criminal offense that falls within the
ambit of 21 USC 335(a) or 42 USC 1320a-7(a), but has not yet been excluded,
debarred, suspended or otherwise declared ineligible.

 

Notices will be sent to the following addresses or facsimile numbers:

In the case of Isis,

 

Isis Pharmaceuticals, Inc.
1896 Rutherford Road
Carlsbad, CA 92008
Attention:  VP, Manufacturing/Operations
Facsimile:  760-603-4655

 

With a copy to:

 

1.               General Counsel (fax:  760.268.4922); and

2.               Executive Vice President & CFO (fax:  760.603.4650)

 

In the Case of OMI:

 

Ortho McNeil, Inc.
1000 US Route 202
Raritan, New Jersey, 08869
Attention:  President
Facsimile:  908-707-9757

 

With copy to:

 

Chief Patent Counsel
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, New Jersey 08933
Facsimile:  (732) 524-5575

 

76

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28.       Waiver:  No waiver of any term, provision or condition of this Supply
Agreement whether by conduct or otherwise in any one or more instances will be
deemed to be or construed as a further or continuing waiver of any such term,
provision or condition or of any other term, provision or condition of this
Supply Agreement.

 

29.       Counterparts:  This Supply Agreement and any amendment hereto may be
executed in any number of counterparts, each of which will for all purposes be
deemed an original and all of which will constitute the same instrument. This
Supply Agreement will be effective upon full execution by facsimile or original,
and a facsimile signature will be deemed to be and will be as effective as an
original signature

 

30.       Attachments:  All attachments referred to herein form an integral part
of this Supply Agreement and are incorporated into this Supply Agreement by such
reference.

 

31.       Inadvertent or Involuntary Omissions:  The Parties acknowledge that
they have expended substantial effort in preparing this Supply Agreement and
attempting to describe in the Attachments, as thoroughly and precisely as
possible, certain specifications and other information. However, despite these
efforts, the Parties acknowledge the possibility of involuntary or inadvertent
omissions from the Attachments. If the Parties agree in writing regarding any
involuntary or inadvertent omission, the changes will be made to the Attachments
to repair said inadvertent or involuntary omissions and any such written
agreement executed by the Parties will serve as an amendment to this Supply
Agreement.

 

32.       Construction:  Each Party to this Supply Agreement and its counsel
have reviewed and revised this Supply Agreement. The rule of construction to the
effect that any ambiguities are to be resolved against the drafting Party will
not be employed in the interpretation of this Supply Agreement or any amendment
or Attachment to this Supply Agreement.

 

33.       Time:  Time is of the essence in this Supply Agreement.

 

34.       Preference:  Unless otherwise specifically provided for in the
Attachment or the Quality Agreement, the terms of this Supply Agreement will
prevail in the event of a conflict between this Supply Agreement and any such
Attachments or Quality Agreement.

 

35.       Entire Agreement: This Supply Agreement, the related Quality Agreement
and the related License Agreement constitute the full understanding of the
Parties, and is the final, complete and exclusive statement of the terms and
conditions of their agreement regarding the subject matter hereof. All
representations, offers, and undertakings, of the Parties made prior to the
signing of this Agreement are hereby superseded. All amendments or

 

77

--------------------------------------------------------------------------------

 

modifications to this Supply Agreement must be in writing, identified as an
Amendment to this Supply Agreement and signed by an authorized representative of
each Party.

 

The Parties executing this Supply Agreement:

 

ISIS PHARMACEUTICALS, INC.

ORTHO MCNEIL, INC.

 

 

NAME:

 

 

NAME:

 

 

 

 

 

TITLE:

 

 

TITLE:

 

 

 

 

 

SIGNATURE:

 

 

SIGNATURE:

 

 

78

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APPENDIX 9

 

CLINICAL QUALITY AGREEMENT

Isis Pharmaceuticals and Ortho McNeil, Inc.

 

The purpose of this Clinical Quality Agreement is to establish, clarify and
communicate quality expectations primarily for the manufacture and testing of
API performed by Isis Pharmaceuticals, Carlsbad, CA (“Isis”) for Ortho McNeil
Inc.’s (“OMI”) use in clinical trials. For contractual responsibilities, refer
to the Manufacturing and Supply Agreement dated                  , 2007.

 

WHEREAS, the Parties have signed a Collaboration and License Agreement
contemporaneous with the present Clinical Quality Agreement;

 

WHEREAS, the Collaboration and License Agreement provides that Isis shall be
responsible for the manufacture of Compound through [***];

 

WHEREAS, the Parties agree that the terms of this Clinical Quality Agreement
will apply to all manufactured lots of active pharmaceutical ingredient (API)
made and supplied under this Clinical Quality Agreement. All changes to this
agreement must be documented as an addendum to the original agreement, reviewed
and approved by both parties Quality Assurance representatives; and

 

NOW, THEREFORE in consideration of the premises and mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto agree to this
Agreement as follows:

 

1.               Unless otherwise specified in this Agreement, the terms used in
this Agreement shall have the meaning given to such terms in the Collaboration
and License Agreement.

 

2.               Isis will manufacture, produce and test the API in accordance
with U.S. current Good Manufacturing Practices regulations (cGMP), ICH
guidelines, and EMEA guidelines, and all such operations will be fully
documented. OMI will notify Isis if it is conducting a clinical trial that will
require API to be manufactured in accordance with international guidelines that
are more stringent than or different from cGMP or ICH Guidelines and the Parties
will mutually agree on how to manufacture such API in accordance with such more
stringent or different standards.

 

3.               Isis will maintain adequately trained staff and appropriate
records of training and competence. Isis will monitor and maintain records
respecting its compliance with cGMP, including the process of establishment and
implementation of the operating procedures and the training of staff as
necessary to assure such compliance.

 

79

--------------------------------------------------------------------------------

 

4.               Isis will retain, in accordance with cGMP, full records (such
as manufacturing batch records, analytical testing methods, analytical test
results and appropriate reports) related to the APIs being manufactured and
supplied.

 

5.               Isis will provide approval/audit of the API using routine
Quality Assurance (QA) procedures and will keep all appropriate records of such
approval/audit processes conducted.

 

6.               Isis will provide OMI with a copy of batch records, and a
certificate of analysis (COA) which will contain (i) analytical results from
Isis and any associated contract laboratories and (ii) a statement of compliance
with cGMP, and signed by Isis QA. OMI will be responsible for the final review,
approval, and release of the API, and retains full responsibility for the
disposition and release of the API for any purpose.

 

7.               Isis will provide OMI with samples of the API including the
appropriate documentation, if requested by OMI.

 

8.               Original production and laboratory data and records will be
retained and made available for review by OMI or its designees on-site at Isis.

 

9.               Material changes to master batch records, specifications, test
methods, and stability protocols (in each case as they apply to the API) will be
agreed and approved by both parties.

 

10.         Material changes to master batch records, specifications, test
methods, and stability protocols (in each case as they apply to drug product
provided by Isis) will be agreed and approved by both parties.

 

11.         Any raw material and component, which Isis will use for the
production of API, will be tested and released utilizing cGMP compliant and Isis
approved specifications, sampling, testing and release procedures.

 

12.         Isis will document and notify OMI of all significant changes to or
deviations from the process or testing procedures and the investigations
thereof. Documentation on process changes and deviations will be part of the
batch record. A “Significant” change is understood as anything that deviates
from the approved regulatory filing and/or anything reasonably likely to
materially affect Safety, Identity, Strength, Purity or Quality (SISPQ). (This
would not include changes such as use of a different but equivalent room, “like
for like” equipment changes, etc.). In the event of an out of specification
(OOS) result, Isis will promptly notify OMI on first confirmation of the OOS
result.

 

13.         Isis will ship or will arrange for third parties to ship all API
once the lot(s) are released by both parties to OMI or other designated site(s)
with appropriate documentation and in suitable, labeled containers. This will
also include the use of temperature monitoring devices if deemed by OMI
necessary to ensure the quality of the API.

 

14.         Isis will make available to OMI at Isis’ facility copies of all Isis
Standard Operating Procedures used by Isis in connection with the manufacture of
the API.

 

15.         Isis will discuss with OMI in advance if Isis desires to use
Subcontractors (Third Party) outside of Isis’ approved list of subcontractors.
Isis will be responsible for qualification and routine compliance auditing of
suppliers and subcontractors, in accordance with Isis’s current procedures.

 

16.         Isis will inform OMI of a notice and result of any regulatory
investigation by a Regulatory Authority (including any OMI documentation
requested) relating to or impacting any API or service being provided to OMI.
OMI will have the opportunity to review and give input to the response to such
investigations.

 

17.         If Regulatory Authorities audit OMI, make investigations at OMI or
ask questions of OMI about the activities conducted at Isis or third parties
retained by Isis, then Isis will fully

 

80

--------------------------------------------------------------------------------

 

cooperate with OMI to provide adequate answers to and documentation for the
Regulatory Authorities. Isis will have the opportunity to review and give input
to the response to such investigations.

 

18.         Once every [***], a maximum or [***] OMI representatives will be
entitled to visit and inspect (“audit”) the production, manufacturing, quality
control and warehousing facilities Isis is using in connection with the API,
including the corresponding documentation. Such audit may not exceed [***]. Isis
agrees to provide OMI with the necessary assistance and information. OMI will
provide Isis with at least [***] advanced notice of a requested inspection. Isis
will provide corrective action plans to address identified non-compliance
concerns. As necessary, the Parties will mutually agree in good faith to
additional inspections.

 

19.         Subject to applicable law, Isis will inform OMI within [***], and
vice-versa, on any matter which, in Isis’ reasonable judgment, may have a
bearing on drug safety or pharmaceutical quality in relation to the APIs, and
supply all necessary information and co-operation for the investigation of such
events. In cases where patient/subject safety may be concerned, Isis must inform
OMI by telephone and in writing as soon as practicable, and vice-versa.

 

20.         Isis will retain samples ([***]) for all API and other OMI material
produced to date including the API. Isis will retain the samples through a date
specified in writing by OMI, and such date will not exceed [***] after the last
lot produced by Isis of the drug product in which the API was used. Thereafter,
OMI will make arrangements to assume responsibility for storage of such samples.

 

21.         In event of an out of specification (OOS) result encountered in
release or stability testing, Isis QA shall promptly (within [***] of
confirmation) notify OMI QA.

 

22.         All product complaints, as established by principle investigator
entities, clinical monitoring bodies or international authorities (e.g.,
customs) will be handled principally by OMI and supported by Isis in conjunction
with OMI. All complaint events will be shared between both parties within [***]
of receipt.

 

23.         All primary data (or authenticated copies thereof) and result
reports will be maintained in the Isis archives through a date specified in
writing by OMI, which such date will not exceed [***] after the final expiration
date of the drug product in which the API was used. Thereafter, OMI will make
arrangements for continued storage of such data at OMI’s expense as is
necessary.

 

24.         The names of each responsible contact person(s) as of the Effective
Date from Isis and OMI are listed in Appendix A.

 

The Parties Quality Assurance representatives executing this Agreement:

 

 

ISIS PHARMACEUTICALS, INC.

 

OMI

 

 

 

 

 

 

 

 

NAME:

 

 

NAME:

 

 

 

 

 

 

 

 

TITLE:

 

 

TITLE:

 

 

 

 

 

 

 

 

SIGNATURE:

 

 

SIGNATURE:

 

 

 

 

 

 

 

 

DATE:

 

 

DATE:

 

 

 

81

--------------------------------------------------------------------------------

 

APPENDIX 10

 

JOHNSON & JOHNSON UNIVERSAL CALENDAR

 

2007 UNIVERSAL CALENDAR

 

 

 

M

 

T

 

W

 

T

 

F

 

S

 

S

 

 

 

M

 

T

 

W

 

T

 

F

 

S

 

S

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

JAN

 

1

 

2

 

3

 

4

 

5

 

6

 

7

 

JUL

 

2

 

3

 

4

 

5

 

6

 

7

 

8

(4 Weeks)

 

8

 

9

 

10

 

11

 

12

 

13

 

14

 

(4 Weeks)

 

9

 

10

 

11

 

12

 

13

 

14

 

15

 

 

15

 

16

 

17

 

18

 

19

 

20

 

21

 

 

 

16

 

17

 

18

 

19

 

20

 

21

 

22

 

 

22

 

23

 

24

 

25

 

26

 

27

 

28

 

 

 

23

 

24

 

25

 

26

 

27

 

28

 

29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FEB

 

29

 

30

 

31

 

 

 

 

 

 

 

 

 

AUG

 

30

 

31

 

 

 

 

 

 

 

 

 

 

(4 Weeks)

 

 

 

 

 

 

 

1

 

2

 

3

 

4

 

(4 Weeks)

 

 

 

 

 

1

 

2

 

3

 

4

 

5

 

 

5

 

6

 

7

 

8

 

9

 

10

 

11

 

 

 

6

 

7

 

8

 

9

 

10

 

11

 

12

 

 

12

 

13

 

14

 

15

 

16

 

17

 

18

 

 

 

13

 

14

 

15

 

16

 

17

 

18

 

19

 

 

19

 

20

 

21

 

22

 

23

 

24

 

25

 

 

 

20

 

21

 

22

 

23

 

24

 

25

 

26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MAR

 

26

 

27

 

28

 

 

 

 

 

 

 

 

 

SEP

 

27

 

28

 

29

 

30

 

31

 

 

 

 

(5 Weeks)

 

 

 

 

 

 

 

1

 

2

 

3

 

4

 

(5 Weeks)

 

 

 

 

 

 

 

 

 

 

 

1

 

2

 

 

5

 

6

 

7

 

8

 

9

 

10

 

11

 

 

 

3

 

4

 

5

 

6

 

7

 

8

 

9

 

 

12

 

13

 

14

 

15

 

16

 

17

 

18

 

 

 

10

 

11

 

12

 

13

 

14

 

15

 

16

 

 

19

 

20

 

21

 

22

 

23

 

24

 

25

 

 

 

17

 

18

 

19

 

20

 

21

 

22

 

23

 

 

26

 

27

 

28

 

29

 

30

 

31

 

 

 

 

 

24

 

25

 

26

 

27

 

28

 

29

 

30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

APR

 

2

 

3

 

4

 

5

 

6

 

7

 

8

 

OCT

 

1

 

2

 

3

 

4

 

5

 

6

 

7

(4 Weeks)

 

9

 

10

 

11

 

12

 

13

 

14

 

15

 

(4 Weeks)

 

8

 

9

 

10

 

11

 

12

 

13

 

14

 

 

16

 

17

 

18

 

19

 

20

 

21

 

22

 

 

 

15

 

16

 

17

 

18

 

19

 

20

 

21

 

 

23

 

24

 

25

 

26

 

27

 

28

 

29

 

 

 

22

 

23

 

24

 

25

 

26

 

27

 

28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MAY

 

30

 

 

 

 

 

 

 

 

 

 

 

 

 

NOV

 

29

 

30

 

31

 

 

 

 

 

 

 

 

(4 Weeks)

 

 

 

1

 

2

 

3

 

4

 

5

 

6

 

(4 Weeks)

 

 

 

 

 

 

 

1

 

2

 

3

 

4

 

 

7

 

8

 

9

 

10

 

11

 

12

 

13

 

 

 

5

 

6

 

7

 

8

 

9

 

10

 

11

 

 

14

 

15

 

16

 

17

 

18

 

19

 

20

 

 

 

12

 

13

 

14

 

15

 

16

 

17

 

18

 

 

21

 

22

 

23

 

24

 

25

 

26

 

27

 

 

 

19

 

20

 

21

 

22

 

23

 

24

 

25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

JUN

 

28

 

29

 

30

 

31

 

 

 

 

 

 

 

DEC

 

26

 

27

 

28

 

29

 

30

 

 

 

 

(5 Weeks)

 

 

 

 

 

 

 

 

 

1

 

2

 

3

 

(5 Weeks)

 

 

 

 

 

 

 

 

 

 

 

1

 

2

 

 

4

 

5

 

6

 

7

 

8

 

9

 

10

 

 

 

3

 

4

 

5

 

6

 

7

 

8

 

9

 

 

11

 

12

 

13

 

14

 

15

 

16

 

17

 

 

 

10

 

11

 

12

 

13

 

14

 

15

 

16

 

 

18

 

19

 

20

 

21

 

22

 

23

 

24

 

 

 

17

 

18

 

19

 

20

 

21

 

22

 

23

 

 

25

 

26

 

27

 

28

 

29

 

30

 

 

 

 

 

24

 

25

 

26

 

27

 

28

 

29

 

30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

82

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APPENDIX 11

 

DESCRIPTION FOR ISIS 325568 AND ISIS 377131

 

[***]

 

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APPENDIX 12

 

TARGET POOL & SELECTED GENE TARGETS

 

[***]

 

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APPENDIX 13

 

OMI MINIMUM COUNTRIES

 

[***]

 

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APPENDIX 14

 

ISIS INSURANCE REQUIREMENTS

 

Insurance Requirements

 

Isis shall procure and maintain, at all times, and at its own expense, during
the Collaboration Term the types of insurance(s) specified below. For product
liability/completed operations and clinical trials, insurance coverage will
remain in effect through at least [***] after the Term of the Agreement. Isis’
insurance will cover Isis, its contractors, subcontractors and consultants
performing work under the R&D Plan.

 

A.                                    Commercial General Liability

Isis shall provide coverage on a Commercial General Liability Occurrence Form
with the exception of product liability/completed operations and clinical trials
which will be written on a Claims Made Form. The limits will not be less than
$[***] each occurrence and $[***] annual aggregate. Such insurance shall include
worldwide coverage including coverage for USA jurisdiction claims and
occurrences.

 

B.                                    Property Insurance

Isis shall provide Property Insurance in an amount not less than [***], as is
comparable to the insurance reasonably and customarily carried by a company of
similar size, location and business as Isis.

 

C.                                    Miscellaneous

All insurance companies must be rated [***] or better with a financial rating of
[***] or better in the most recent A. M. Best’s Rating Guide.

 

Isis will promptly notify OMI in writing in the event of [***] of an insurance
policy that is the subject of this Appendix.

 

Certificates of insurance for all required coverages shall be provided to OMI
prior to commencement of any work on the project. Failure by OMI to request such
copies or documents shall not waive OMI’s rights to coverage under this
agreement.

 

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APPENDIX 15

PART 1

CONFIRMATION OF CLOSING

               , 2007

 

WHEREAS, Isis Pharmaceuticals, Inc. (“Isis”) and Symphony GenIsis Holdings LLC
(“Holdings”) are parties to the Purchase Option Agreement dated April 7, 2006
(the “Purchase Option Agreement”);

 

WHEREAS, Isis has exercised the Purchase Option, pursuant to which Isis has
purchased all of the outstanding Symphony GenIsis Equity Securities by paying
the Purchase Price to Holdings; and

 

WHEREAS, in connection with the Purchase Option Closing, Isis and Holdings
hereby acknowledge, confirm and agree as follows;

 

1.               The Purchase Option Closing occurred on              , 2007;

 

2.               Holdings has received the full Purchase Price;

 

3.               Title to all of the Symphony GenIsis Equity Securities has been
transferred to Isis;

 

4.               Holdings has removed all directors serving on the Symphony
GenIsis Board, other than the Isis Director from Symphony GenIsis Board;

 

5.               The Development Committee is disbanded and terminated;

 

6.               Holdings consents to the termination of the Novated Technology
License Agreement by Isis and Symphony GenIsis; and

 

7.               Except for the rights and obligations that specifically survive
termination, as set forth in Section 7.3 of the Novated Technology License
Agreement, Holdings has no residual rights in the Licensed Intellectual
Property, including but not limited to any residual royalty interest or
information rights.

 

Capitalized terms used, but not otherwise defined herein will have the meaning
ascribed to them in the Purchase Option Agreement.

 

[SIGNATURES FOLLOW ON NEXT PAGE]

 

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IN WITNESS WHEREOF, the parties hereto have signed this Confirmation of Closing
as of the day and year first above written.

 

 

ISIS PHARMACEUTICALS, INC.

 

 

 

 

 

By:

 

 

 

Name:

B. Lynne Parshall, J.D.

 

 

Title:

Executive Vice President, CFO and

 

 

 

Secretary

 

 

 

 

 

 

 

 

 

SYMPHONY GENISIS HOLDINGS LLC

 

 

 

 

 

By:

Symphony Capital Partners, L.P.,

 

 

its Manager

 

 

 

 

 

By:

Symphony Capital GP, L.P.,

 

 

its general partner

 

 

 

 

By:

Symphony GP, LLC,

 

 

its general partner

 

 

 

 

 

 

 

By:

 

 

 

Name:

Mark Kessel

 

 

Title:

Managing Member

 

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APPENDIX 15

PART 2

CONFIRMATION OF TERMINATION

               , 2007

 

WHEREAS, Isis Pharmaceuticals, Inc. (“Isis”) and Symphony GenIsis, Inc.
(“Symphony GenIsis”) are parties to the Novated and Restated Technology License
Agreement dated April 7, 2006 (the “Technology License Agreement”);

 

WHEREAS, Isis has exercised the Purchase Option, pursuant to which Isis has
purchased all of the outstanding Symphony GenIsis Equity Securities by paying
the Purchase Price to Holdings; and

 

WHEREAS, Isis and Symphony GenIsis hereby acknowledge, confirm and agree that,
notwithstanding Section 7.2, 7.3 or any other provision of the Technology
License Agreement, the Technology License Agreement is terminated in full such
that all of the rights, obligations and other terms of the technology License
Agreement are no longer in force or effect with no survival.

 

Capitalized terms used, but not otherwise defined herein will have the meaning
ascribed to them in the Technology License Agreement.

 

IN WITNESS WHEREOF, the parties hereto have signed this Confirmation of
Termination as of the day and year first above written.

 

 

ISIS PHARMACEUTICALS, INC.

 

 

 

 

 

By:

 

 

 

Name:

B. Lynne Parshall, J.D.

 

 

Title:

Executive Vice President, CFO and

 

 

Secretary

 

 

 

 

 

 

SYMPHONY GENISIS, INC.

 

 

 

 

 

By:

 

 

 

Name:

Stanley T. Crooke, M.D., Ph.D.

 

 

Title:

Sole Director

 

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APPENDIX 16

 

[***]

 

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APPENDIX 17

 

Assignment of Isis Product Specific Patents

 

Isis Pharmaceuticals, Inc. conveys, assigns and transfers its entire right,
title and interest in and to Isis Product Specific Patents, Research results and
data from the R&D Plan that relate to the Designated Compound or Product,
pursuant to Section 9.2.3(b) of the Agreement. In consideration for this
Assignment, Ortho-McNeil, Inc. agrees to pay Isis’ royalties pursuant to the
provisions of Table 3 of Article 6 of the Agreement. In this Assignment, all
defined terms have the same definition as in the Agreement.

 

 

 

 

 

ISIS Pharmaceuticals, Inc.

 

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