Exhibit 10.3

 

EXECUTION COPY

 

CONFIDENTIAL TREATMENT REQUESTED

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

 

 

 

REGISTRATION RIGHTS AGREEMENT

 

between

 

 

ISIS PHARMACEUTICALS, INC.

 

 

and

 

 

SYMPHONY GENISIS HOLDINGS LLC

 

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Dated as of April 7, 2006

 

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Table of Contents

 

 

Section

 

 

Page

 

 

 

 

Section 1.

 

Definitions

1

 

 

 

 

Section 2.

 

Registration

2

 

 

 

 

Section 3.

 

Related Obligations

3

 

 

 

 

Section 4.

 

Obligations of the Investor(s)

7

 

 

 

 

Section 5.

 

Expenses of Registration

7

 

 

 

 

Section 6.

 

Indemnification

8

 

 

 

 

Section 7.

 

Contribution

12

 

 

 

 

Section 8.

 

Reports Under The Exchange Act

12

 

 

 

 

Section 9.

 

Assignment of Registration Rights

12

 

 

 

 

Section 10.

 

Amendment of Registration Rights

13

 

 

 

 

Section 11.

 

Miscellaneous

13

 

Exhibit A – Form of Selling Stockholder Questionnaire

 

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REGISTRATION RIGHTS AGREEMENT

 

REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of April 7, 2006, by
and between ISIS PHARMACEUTICALS, INC., a Delaware corporation (“Isis”), and
SYMPHONY GENISIS HOLDINGS LLC, a Delaware limited liability company (together
with its permitted successors, assigns and transferees, “Holdings”).

 

RECITALS:

 

WHEREAS, in connection with the exercise by Isis of the Purchase Option under
the Purchase Option Agreement, by and among Isis, Holdings and Symphony GenIsis,
Inc., a Delaware corporation (“Symphony GenIsis”), of even date herewith (the
“Purchase Option Agreement”), Isis may elect to issue shares of Isis’ common
stock, par value $0.001 per share (“Isis Common Stock”) (such shares of Isis
Common Stock when and if issued, the “Purchase Option Shares”) to Holdings in
partial payment of the Purchase Price in accordance with the terms of the
Purchase Option Agreement;

 

WHEREAS, in connection with the Warrant Purchase Agreement by and between the
parties hereto of even date herewith (the “Warrant Purchase Agreement”), Isis
has agreed, upon the terms and subject to the conditions of the Warrant Purchase
Agreement, to issue and sell on the date hereof to Holdings certain warrants
(the “Warrants”) which will be exercisable to purchase shares of Isis Common
Stock (such shares of Isis Common Stock as exercised, the “Warrant Shares”) in
accordance with the terms of the Warrants; and

 

WHEREAS, to induce Holdings to execute and deliver the Purchase Option Agreement
and the Warrant Purchase Agreement, Isis has agreed to provide certain
registration rights under the Securities Act of 1933, as amended (the
“Securities Act”), and applicable state securities laws with respect to the
Purchase Option Shares;

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Isis and Holdings (the “Parties”)
hereby agree as follows:

 

Section 1.               Definitions.

 

(a)           Capitalized terms used but not defined herein are used as defined
in the Purchase Option Agreement (including Annex A thereto).

 

(b)           As used in this Agreement, the following terms shall have the
following meanings:

 

(i)            “Effective Registration Date” means the date that the
Registration Statement (as defined below) is first declared effective by the
SEC.

 

(ii)           “Investor(s)” means Holdings, any transferee or assignee thereof
to whom Holdings assigns its rights under this Agreement and who agrees to
become bound by the provisions of this Agreement in accordance with Section 9
and any transferee or assignee

 

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thereof to whom a transferee or assignee assigns its rights under this Agreement
and who agrees to become bound by the provisions of this Agreement in accordance
with Section 9.

 

(iii)          “Purchase Option Related Registrable Securities” means (i) the
Purchase Option Shares, and (ii) any Isis Common Stock issued with respect to
the Purchase Option Shares as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise.

 

(iv)          “register,” “registered,” and “registration” refer to a
registration effected by preparing and filing one or more Registration
Statements in compliance with the Securities Act and pursuant to Rule 415, and
the declaration or ordering of effectiveness of such Registration Statement(s)
by the SEC.

 

(v)           “Registrable Securities” means, collectively, the Warrant Related
Registrable Securities and the Purchase Option Related Registrable Securities;
provided, however, that such securities will cease to be Registrable Securities
on the earlier of (A) the date as of which the Investor(s) may sell such
securities without restriction pursuant to Rule 144(k) (or successor thereto)
promulgated under the Securities Act, or (B) the date on which the Investor(s)
shall have sold all such securities.

 

(vi)          “Registration Statement” means a registration statement or
registration statements of Isis filed under the Securities Act covering the
Registrable Securities.

 

(vii)         “Rule 144” has the meaning set forth in Section 8 of this
Agreement.

 

(viii)        “Rule 415” means Rule 415 under the Securities Act or any
successor rule providing for offering securities on a continuous or delayed
basis.

 

(ix)           “Warrant Related Registrable Securities” means (i) the Warrant
Shares issued or issuable upon exercise of the Warrants; and (ii) any shares of
capital stock issued or issuable with respect to the Warrant Shares or the
Warrants as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise, and in the case of the Warrants, without
regard to any limitations on exercise.

 

Section 2.               Registration.

 

(a)           Right to Registration.

 

(i)            Purchase Option Related Registration.  In the event Isis elects
to exercise the Purchase Option as set forth in the Purchase Option Agreement,
and in so doing elects to issue Purchase Option Related Registrable Securities,
Isis shall prepare and, in accordance with Section 2(a)(ii)(A) of the Purchase
Option Agreement, file with the SEC a Registration Statement on Form S-3
covering the resale of the Purchase Option Related Registrable Securities.  The
Registration Statement prepared pursuant hereto shall register for resale that
number of shares of Isis Common Stock equal to the number of Purchase Option
Related Registrable Securities as would be issued pursuant to the terms of the
Purchase Option Agreement.  Isis shall use commercially reasonable efforts to

 

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have the Registration Statement declared effective by the SEC as soon as
practicable following the Purchase Option Exercise Date.

 

(ii)           Warrant Related Registration.  Isis shall prepare, and, as soon
as practicable but in no event later than [***] days after the Closing Date,
file with the SEC a Registration Statement on Form S-3 covering the resale of
all of the Warrant Related Registrable Securities.  The Registration Statement
prepared pursuant hereto shall register for resale at least that number of
shares of Isis Common Stock equal to the number of Warrant Related Registrable
Securities as of the trading day immediately preceding the date the Registration
Statement is initially filed with the SEC, subject to adjustment as provided in
Section 2(c).  Isis shall use commercially reasonable efforts to have the
Registration Statement declared effective by the SEC as soon as practicable
following the Closing Date.

 

(b)           Ineligibility for Form S-3.  In the event that Form S-3 is not
available for the registration of the resale of Registrable Securities
hereunder, Isis shall (i)  register the resale of the Registrable Securities on
another appropriate form reasonably acceptable to Holdings (which acceptable
forms shall include Form S-1) (in the case of the resale of Purchase Option
Related Registrable Securities, in accordance with Section 2(a)(ii)(A) of the
Purchase Option Agreement); and (ii) undertake to register the Registrable
Securities on Form S-3 as soon as such form is available; provided that Isis
shall maintain the effectiveness of the Registration Statement then in effect
until such time as a Registration Statement on Form S-3 covering the Registrable
Securities has been declared effective by the SEC.

 

(c)           Sufficient Number of Shares Registered.  In the event the number
of shares available under a Registration Statement filed pursuant to Section
2(a) is insufficient to cover all of the Registrable Securities required to be
covered by such Registration Statement, Isis shall amend the applicable
Registration Statement, or file a new Registration Statement (on the short form
available therefor, if applicable), or both, so as to cover at least 100% of the
number of such Registrable Securities as of the trading day immediately
preceding the date of the filing of such amendment or new Registration
Statement, in each case, as soon as practicable, but in any event not later than
fifteen (15) days after Isis becomes aware of the necessity therefor.  Isis
shall use commercially reasonable efforts to cause such amendment and/or new
Registration Statement to become effective as soon as practicable following the
filing thereof.  For purposes of the foregoing provision, the number of shares
available under a Registration Statement shall be deemed “insufficient to cover
all of the Registrable Securities” if at any time the number of shares of Isis
Common Stock available for resale under such Registration Statement is less than
the number of Registrable Securities.  The calculation set forth in the
foregoing sentence shall be made without regard to any limitations on the
exercise of the Warrants and such calculation shall assume that the Warrants are
then exercisable into shares of Isis Common Stock.

 

Section 3.               Related Obligations.  At such time as Isis is obligated
to file a Registration Statement with the SEC pursuant to Section 2(a), 2(b) or
2(c), Isis will use commercially reasonable efforts to effect the registration
of the Registrable Securities in accordance with the intended method of
disposition thereof and, pursuant thereto (except at such times as Isis may be
required to suspend the use of a prospectus forming a part of the Registration
Statement pursuant to Section 3(l), at which time Isis’ obligations under
Sections 3(a), (b), (c), (d), (i) and (k) may also be suspended, as required),
Isis shall have the following

 

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obligations:

 

(a)           Isis shall keep each Registration Statement effective pursuant to
Rule 415 at all times until the earlier of (i) the date as of which the
Investor(s) may sell all of the Registrable Securities covered by such
Registration Statement without restriction pursuant to Rule 144(k) (or successor
thereto) promulgated under the Securities Act, or (ii) the date on which the
Investor(s) shall have sold all the Registrable Securities covered by such
Registration Statement (the “Registration Period”).

 

(b)           Isis shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such Registration Statement
as may be necessary to keep such Registration Statement effective at all times
during the Registration Period, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of Isis covered by such Registration Statement until such
time as all of such Registrable Securities shall have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in such Registration Statement.  In the case of amendments
and supplements to a Registration Statement which are required to be filed
pursuant to this Agreement (including pursuant to this Section 3(b)) by reason
of Isis filing a report on Form 10-K, Form 10-Q or Form 8-K or any analogous
report under the Exchange Act, Isis shall have incorporated such report by
reference into such Registration Statement, if applicable, or shall file such
amendments or supplements with the SEC on the same day on which the Exchange Act
report is filed which created the requirement for Isis to amend or supplement
such Registration Statement.

 

(c)           Isis shall furnish to each Investor whose Registrable Securities
are included in any Registration Statement, without charge, (i) promptly after
the same is prepared and filed with the SEC, at least one copy of such
Registration Statement and any amendment(s) thereto, including financial
statements and schedules, and each preliminary prospectus; (ii) upon the
effectiveness of any Registration Statement, ten (10) copies of the prospectus
included in such Registration Statement and all amendments and supplements
thereto (or such other number of copies as such Investor may reasonably
request); and (iii) such other documents, including copies of any preliminary or
final prospectus, as such Investor may reasonably request from time to time in
order to facilitate the disposition of the Registrable Securities owned by such
Investor.

 

(d)           Isis shall use commercially reasonable efforts to (i) register and
qualify, unless an exemption from registration and qualification applies, the
resale by Investor(s) of the Registrable Securities covered by a Registration
Statement under such other securities or “blue sky” laws of such jurisdictions
in the United States as Investor(s) reasonably request; (ii) prepare and file in
those jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period; and (iii)
take such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period; provided,
however, that Isis shall not be required in connection therewith or as a
condition thereto to (x) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(d), (y)
subject itself to general taxation in any such jurisdiction, or (z) file a
general consent to service of process in any such jurisdiction.  Isis shall
promptly notify each Investor who holds Registrable Securities of the receipt by
Isis of

 

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any notification with respect to the suspension of the registration or
qualification of any of the Registrable Securities for sale under the securities
or “blue sky” laws of any jurisdiction in the United States or its receipt of
actual notice of the initiation or threatening of any proceeding for such
purpose.

 

(e)           Isis shall notify each Investor in writing of the happening of any
event, as promptly as practicable after becoming aware of such event, as a
result of which the prospectus included in a Registration Statement, as then in
effect, includes an untrue statement of a material fact or omission to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and, subject to Section 3(l) hereof, promptly prepare a supplement
or amendment to such Registration Statement to correct such untrue statement or
omission.  Isis shall also promptly notify each Investor in writing when a
prospectus or any prospectus supplement or post-effective amendment has been
filed, and when a Registration Statement or any post-effective amendment has
become effective.

 

(f)            Isis shall use commercially reasonable efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment.

 

(g)           In the event that any Investor is deemed to be an “underwriter”
with respect to the Registrable Securities, upon the written request of such
Investor in connection with such Investor’s due diligence requirements, if any,
Isis shall make available for inspection by (i) such Investor, and (ii) any
legal counsel, accountants or other agents retained by the Investor
(collectively, “Inspectors”), all pertinent financial and other records, and
pertinent corporate documents and properties of Isis (collectively, “Records”),
as shall be reasonably deemed necessary by each Inspector, and cause Isis’
officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that each Inspector and such Investor
shall agree in writing to hold in strict confidence and shall not make any
disclosure (except with respect to an Inspector, to the relevant Investor) or
use of any Record or other information which Isis determines in good faith to be
confidential, and of which determination the Inspectors are so notified, unless
the release of such Records is ordered pursuant to a final, non-appealable
subpoena or order from a court or government body of competent jurisdiction. 
Each Investor agrees that it shall, upon learning that disclosure of such
Records is required or is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to Isis and
allow Isis, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential.  Nothing herein (or in any other confidentiality agreement between
Isis and any Investor) shall be deemed to limit the Investor(s)’ ability to sell
Registrable Securities in a manner which is otherwise consistent with applicable
laws and regulations.

 

(h)           Isis shall hold in confidence and not make any disclosure of
information concerning an Investor provided to Isis unless (i) disclosure of
such information is necessary to comply with federal or state securities laws or
the rules of any securities exchange or trading market on which the Isis Common
Stock is listed or traded, (ii) the disclosure of such information is necessary
to avoid or correct a misstatement or omission in any Registration

 

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Statement, or (iii) the release of such information is ordered pursuant to a
subpoena or other final, non-appealable order from a court or governmental body
of competent jurisdiction.  Isis agrees that it shall, upon learning that
disclosure of such information concerning an Investor is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt written notice to such Investor and allow such Investor, at the
Investor’s expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, such information.

 

(i)            Isis shall use commercially reasonable efforts either to (i)
cause all the Registrable Securities covered by a Registration Statement to be
listed on each securities exchange on which securities of the same class or
series issued by Isis are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange, or
(ii) secure designation and quotation of all the Registrable Securities covered
by a Registration Statement on the NASDAQ National Market.  Isis shall pay all
fees and expenses in connection with satisfying its obligation under this
Section 3(i).

 

(j)            Isis shall cooperate with the Investor(s) who hold Registrable
Securities being offered and, to the extent applicable, facilitate the timely
preparation and delivery of certificates representing the Registrable Securities
to be offered pursuant to a Registration Statement and enable such certificates
to be in such denominations or amounts, as the case may be, as the Investor(s)
may reasonably request and registered in such names as the Investor(s) may
request.

 

(k)           If requested by an Investor, Isis shall (i) as soon as practicable
incorporate in a prospectus supplement or post-effective amendment such
information as an Investor reasonably requests to be included therein relating
to the sale and distribution of Registrable Securities, including, without
limitation, information with respect to the number of Registrable Securities
being offered or sold, the purchase price being paid therefor and any other
terms of the offering of the Registrable Securities to be sold in such offering
and (ii) as soon as practicable make all required filings of such prospectus
supplement or post-effective amendment after being notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment.

 

(l)            Notwithstanding anything to the contrary herein, at any time
after the Registration Statement has been declared effective by the SEC, Isis
may delay the disclosure of material, non-public information concerning Isis the
disclosure of which at the time is not, in the good faith opinion of Isis, in
the best interest of Isis (a “Grace Period”); provided, that Isis shall promptly
notify the Investor(s) in writing of the existence of a Grace Period in
conformity with the provisions of this Section 3(l) and the date on which the
Grace Period will begin (such notice, a “Commencement Notice”); and, provided
further, that no Grace Period shall exceed [***] days during any [***] day
period and during any [***] day period such Grace Periods shall not exceed an
aggregate of [***] days.  For purposes of determining the length of a Grace
Period above, the Grace Period shall begin on and include the date specified by
Isis in the Commencement Notice and shall end on and include the date the
Investor(s) receive written notice of the termination of the Grace Period by
Isis (which notice may be contained in the Commencement Notice).  The provisions
of Section 3(f) hereof shall not be applicable during any Grace Period.  Upon
expiration of the Grace Period, Isis shall again be bound by the first sentence
of Section 3(e) with respect to the information giving rise thereto unless such
material,

 

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non-public information is no longer applicable.  Notwithstanding anything to the
contrary, Isis shall cause its transfer agent to deliver unlegended shares of
Isis Common Stock to a transferee of an Investor in accordance with the terms of
the Warrant Purchase Agreement in connection with any sale of Registrable
Securities with respect to which an Investor has entered into a contract for
sale, and delivered a copy of the prospectus included as part of the applicable
Registration Statement, prior to the Investor’s receipt of the notice of a Grace
Period and for which the Investor has not yet settled.

 

Section 4.               Obligations of the Investor(s).

 

(a)           At least [***] Business Days prior to the first anticipated filing
date of a Registration Statement, Isis shall notify each Investor in writing of
the information Isis requires from each such Investor if such Investor elects to
have any of such Investor’s Registrable Securities included in such Registration
Statement and provide each such Investor with a copy of Isis’ then-current
selling stockholder questionnaire (a copy of which is attached hereto as Exhibit
A hereto, a “Selling Stockholder Questionnaire”).  It shall be a condition
precedent to the obligations of Isis to complete the registration pursuant to
this Agreement with respect to the Registrable Securities of a particular
Investor that such Investor shall furnish to Isis a completed Selling
Stockholder Questionnaire, along with such other information regarding itself,
the Registrable Securities held by it and the intended method of disposition of
the Registrable Securities held by it as may reasonably be required to effect
the effectiveness of the registration of such Registrable Securities, and shall
execute other such documents in connection with such registration as Isis may
reasonably request.

 

(b)           Each Investor, by such Investor’s acceptance of the Registrable
Securities, agrees to cooperate with Isis as reasonably requested by Isis in
connection with the preparation and filing of any Registration Statement
hereunder, unless such Investor has notified Isis in writing of such Investor’s
election to exclude all of such Investor’s Registrable Securities from such
Registration Statement.

 

(c)           Each Investor agrees that, upon receipt of any notice from Isis of
the happening of any event of the kind described in Section 3(f) or the first
sentence of Section 3(e), such Investor will immediately discontinue disposition
of Registrable Securities pursuant to any Registration Statement(s) covering
such Registrable Securities until such Investor’s receipt of the copies of the
supplemented or amended prospectus contemplated by the second sentence of
Section 3(e) or receipt of notice that no supplement or amendment is required.

 

(d)           Each Investor covenants and agrees that it will comply with any
applicable prospectus delivery requirements of the Securities Act as applicable
to it in connection with sales of Registrable Securities pursuant to a
Registration Statement.

 

Section 5.               Expenses of Registration.  All reasonable expenses,
other than underwriting discounts and commissions, incurred in connection with
registrations, filings or qualifications pursuant to Sections 2 and 3 hereof,
including, without limitation, all registration, listing and qualifications
fees, printers and accounting fees, and fees and disbursements of counsel for
Isis shall be paid by Isis.  All underwriting discounts and selling commissions
applicable to the sale of the Registrable Securities shall be paid by the
Investor(s), provided, however, that Isis shall reimburse the Investor(s) for
the reasonable actual fees and

 

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disbursements of one legal counsel designated by the holders of at least a
majority of the Registrable Securities in connection with registration, filing
or qualification pursuant to Sections 2 and 3 of this Agreement, which amount
shall be limited to [***] in total over the term of this Agreement.

 

Section 6.               Indemnification.  In the event any Registrable
Securities are included in a Registration Statement under this Agreement:

 

(a)           To the fullest extent permitted by law, Isis will, and hereby
does, indemnify and hold harmless each Investor, the directors, officers,
partners, members, employees, agents, representatives of, and each Person, if
any, who controls any Investor within the meaning of the Securities Act or the
Exchange Act (each, an “Investor Indemnified Person”), against any losses,
claims, damages, liabilities, judgments, fines, penalties, charges, costs,
reasonable attorneys’ fees, amounts paid in settlement or expenses, joint or
several with an aggregate value of at least [***] (as determined by the
applicable Indemnified Parties acting in good faith), (collectively, “Claims”),
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or
before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an Indemnified
Person is or may be a party thereto (“Indemnified Damages”), to which any of
them may become subject to the extent that such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon:  (i) any untrue statement or alleged untrue statement of a
material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other “blue sky” laws of any jurisdiction in
which Registrable Securities are offered (“Blue Sky Filing”), or the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the Effective Registration Date of such
Registration Statement, or contained in the final prospectus (as amended or
supplemented, if Isis files any amendment thereof or supplement thereto with the
SEC) or the omission or alleged omission to state therein any material fact
necessary to make the statements made therein, in the light of the circumstances
under which the statements therein were made, not misleading; (iii) any
violation or alleged violation by Isis of any federal, state or common law, rule
or regulation applicable to Isis in connection with any Registration Statement,
prospectus or any preliminary prospectus, any amendment or supplement thereto,
or the issuance of  any Registrable Securities to Holdings; or (iv) any material
violation of this Agreement (the matters in the foregoing clauses (i) through
(iv) being, collectively, “Violations”).  Subject to Section 6(c), Isis shall
reimburse the Investor Indemnified Persons, promptly as such expenses are
incurred and are due and payable, for any legal fees or other reasonable
expenses incurred by them in connection with investigating or defending any such
Claim.  Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a):  (A) shall not apply
to a Claim by an Investor Indemnified Person arising out of or based upon a
Violation that occurs in reliance upon and in conformity with information
furnished in writing to Isis by or on behalf of any such Investor Indemnified
Person expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto if such
information was timely made available by Isis pursuant to Section 3(c); (B) with
respect to any preliminary prospectus, shall not inure to the benefit of any
such Person from whom the Person asserting any such Claim purchased the
Registrable Securities that are the

 

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subject thereof (or to the benefit of any Person controlling such Person) if the
untrue statement or omission of material fact contained in the preliminary
prospectus was corrected in the prospectus, as then amended or supplemented, if
such prospectus was timely made available by Isis pursuant to Section 3(d), and
the Investor Indemnified Person was promptly advised in writing not to use the
incorrect prospectus prior to the use giving rise to a violation and such
Investor Indemnified Person, notwithstanding such advice, used it or failed to
deliver the correct prospectus as required by the Securities Act and such
correct prospectus was timely made available pursuant to Section 3(d); (C) shall
not be available to the extent such Claim is based on a failure of the Investor
Indemnified Person to deliver or to cause to be delivered the prospectus made
available by Isis, including a corrected prospectus, if such prospectus or
corrected prospectus was timely made available by Isis pursuant to Section 3(d);
and (D) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of Isis, which consent
shall not be unreasonably withheld or delayed.  Such indemnity shall remain full
force and effect regardless of any investigation made by or on behalf of the
Investor Indemnified Person and shall survive the transfer of the Registrable
Securities by the Investor(s) pursuant to Section 9.

 

(b)           In connection with any Registration Statement in which an Investor
is participating, each such Investor agrees to severally and not jointly
indemnify, and hold harmless, to the same extent and in the same manner as is
set forth in Section 6(a), Isis, each of its directors, each of its officers who
signs the Registration Statement, each Person, if any, who controls Isis within
the meaning of the Securities Act or the Exchange Act, and Isis’ general counsel
to the extent that such counsel delivers one or more legal opinions in
conjunction with the preparation and filing of the Registration Statement (each,
a “Company Indemnified Person”), against any Claim or Indemnified Damages to
which any of them may become subject, under the Securities Act, the Exchange Act
or otherwise, insofar as such Claim or Indemnified Damages arise out of or are
based upon any Violation, in each case to the extent, and only to the extent,
that such Violation occurs in reliance upon and in conformity with written
information furnished to Isis by such Investor expressly for use in connection
with such Registration Statement; and, subject to Section 6(d), such Investor
will reimburse, promptly as such expenses are incurred and are due and payable,
any legal or other expenses reasonably incurred by a Company Indemnified Person
in connection with investigating or defending any such Claim; provided, however,
that the indemnity agreement contained in this Section 6(b) and the agreement
with respect to contribution contained in Section 7 shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of such Investor, which consent shall not be unreasonably
withheld or delayed; provided, further, however, that an Investor shall be
liable under this Section 6(b) for only that amount of a Claim or Indemnified
Damages as does not exceed the net proceeds to such Investor as a result of the
sale of Registrable Securities pursuant to such Registration Statement.  Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Company Indemnified Person and shall survive the
transfer of the Registrable Securities by the Investor(s) pursuant to Section
9.  Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Company Indemnified
Person if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.

 

(c)           If either an Investor Indemnified Person or a Company Indemnified

 

9

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Person (an “Indemnified Person”) proposes to assert a right to be indemnified
under this Section 6, such Indemnified Person shall notify either Isis or the
relevant Investor(s), as applicable (the “Indemnifying Person”), promptly after
receipt of notice of commencement of any action, suit or proceeding against such
Indemnified Person (an “Indemnified Proceeding”) in respect of which a Claim is
to be made under this Section 6, or the incurrence or realization of any
Indemnified Damages in respect of which a Claim is to be made under this Section
6, of the commencement of such Indemnified Proceeding or of such incurrence or
realization, enclosing a copy of all relevant documents, including all papers
served and claims made, but the omission to so notify the applicable
Indemnifying Person promptly of any such Indemnified Proceeding or incurrence or
realization shall not relieve (x) such Indemnifying Person from any liability
that it may have to such Indemnified Person under this Section 6 or otherwise,
except, as to such Indemnifying Person’s liability under this Section 6, to the
extent, but only to the extent, that such Indemnifying Person shall have been
prejudiced by such omission, or (y) any other Indemnifying Person from liability
that it may have to any Indemnified Person under the Operative Documents.

 

(d)           In case any Indemnified Proceeding shall be brought against any
Indemnified Person and it shall notify the applicable Indemnifying Person of the
commencement thereof as provided by Section 6(c) and such Indemnifying Person
shall be entitled to participate in, and provided such Indemnified Proceeding
involves a claim solely for money damages and does not seek an injunction or
other equitable relief against the Indemnified Person and is not a criminal or
regulatory action, to assume the defense of, such Indemnified Proceeding with
counsel reasonably satisfactory to such Indemnified Person, and after notice
from such Indemnifying Person to such Indemnified Person of such Indemnifying
Person’s election so to assume the defense thereof and the failure by such
Indemnified Person to object to such counsel within ten (10) Business Days
following its receipt of such notice, such Indemnifying Person shall not be
liable to such Indemnified Person for legal or other expenses related to such
Indemnified Proceedings incurred after such notice of election to assume such
defense except as provided below and except for the reasonable costs of
investigating, monitoring or cooperating in such defense subsequently incurred
by such Indemnified Person reasonably necessary in connection with the defense
thereof.  Such Indemnified Person shall have the right to employ its counsel in
any such Indemnified Proceeding, but the fees and expenses of such counsel shall
be at the expense of such Indemnified Person unless:

 

(i)            the employment of counsel by such Indemnified Person at the
expense of the applicable Indemnifying Person has been authorized in writing by
such Indemnifying Person;

 

(ii)           such Indemnified Person shall have reasonably concluded in its
good faith (which conclusion shall be determinative unless a court determines
that such conclusion was not reached reasonably and in good faith) that there is
or may be a conflict of interest between the applicable Indemnifying Person and
such Indemnified Person in the conduct of the defense of such Indemnified
Proceeding or that there are or may be one or more different or additional
defenses, claims, counterclaims, or causes of action available to such
Indemnified Person (it being agreed that in any case referred to in this clause
(ii) such Indemnifying Person shall not have the right to direct the defense of
such Indemnified Proceeding on behalf of the Indemnified Person);

 

10

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(iii)          the applicable Indemnifying Person shall not have employed
counsel reasonably acceptable to the Indemnified Person, to assume the defense
of such Indemnified Proceeding within a reasonable time after notice of the
commencement thereof; provided, however, that (A) this clause (iii) shall not be
deemed to constitute a waiver of any conflict of interest that may arise with
respect to any such counsel, and (B) an Indemnified Person may not invoke this
clause (iii) if such Indemnified Person failed to timely object to such counsel
pursuant to the first paragraph of this Section 6(d) above (it being agreed that
in any case referred to in this clause (iii) such Indemnifying Party shall not
have the right to direct the defense of such Indemnified Proceeding on behalf of
the Indemnified Party); or

 

(iv)          any counsel employed by the applicable Indemnifying Person shall
fail to timely commence or reasonably conduct the defense of such Indemnified
Proceeding, and such failure has prejudiced (or is in immediate danger of
prejudicing) the outcome of such Indemnified Proceeding (it being agreed that in
any case referred to in this clause (iv) such Indemnifying Party shall not have
the right to direct the defense of such Indemnified Proceeding on behalf of the
Indemnified Party);

 

in each of which cases the fees and expenses of counsel for such Indemnified
Person shall be at the expense of such Indemnifying Person.  Only one counsel
shall be retained by all Indemnified Persons with respect to any Indemnified
Proceeding, unless counsel for any Indemnified Person reasonably concludes in
good faith (which conclusion shall be determinative unless a court determines
that such conclusion was not reached reasonably and in good faith) that there is
or may be a conflict of interest between such Indemnified Person and one or more
other Indemnified Persons in the conduct of the defense of such Indemnified
Proceeding or that there are or may be one or more different or additional
defenses, claims, counterclaims, or causes or action available to such
Indemnified Person.

 

(e)           Without the prior written consent of such Indemnified Person, such
Indemnifying Person shall not settle or compromise, or consent to the entry of
any judgment in, any pending or threatened Indemnified Proceeding, unless such
settlement, compromise, consent or related judgment (i) includes an
unconditional release of such Indemnified Person from all liability for Losses
arising out of such claim, action, investigation, suit or other legal
proceeding, (ii) provides for the payment of money damages as the sole relief
for the claimant (whether at law or in equity), (iii) involves no finding or
admission of any violation of law or the rights of any Person by the Indemnified
Person, and (iv) is not in the nature of a criminal or regulatory action.  No
Indemnified Person shall or compromise, or consent to the entry of any judgment
in, any pending or threatened Indemnified Proceeding (A) in respect of which any
payment would result hereunder or under any other Operative Document, (B)  which
includes an injunction that will adversely affect any Indemnifying Person, (C)
which involves a finding or admission of any violation of law or the rights of
any Indemnifying Person, or (D) which is in the nature of a criminal or
regulatory action, without the prior written consent of the Indemnifying Person,
such consent not to be unreasonably conditioned, withheld or delayed.

 

(f)            The indemnification required by this Section 6 shall be made by
periodic payments of the amount of Claims during the course of the investigation
or defense, as and when Indemnified Damages are incurred.

 

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Section 7.               Contribution.  To the extent any indemnification by an
Indemnifying Person is prohibited or limited by law, such Indemnifying Person
agrees to make the maximum contribution with respect to any amounts for which it
would otherwise be liable under Section 6 to the fullest extent permitted by
law; provided, however, that:  (i) no Person involved in the sale of Registrable
Securities which Person is guilty of fraudulent misrepresentation (within the
meaning Section 11(f) of the Securities Act) in connection with such sale shall
be entitled to contribution from any Person involved in such sale of Registrable
Securities who was not guilty of fraudulent misrepresentation; and (ii)
contribution by any seller of Registrable Securities shall be limited in amount
to the net amount of proceeds received by such seller from the sale of such
Registrable Securities pursuant to such Registration Statement.

 

Section 8.               Reports Under The Exchange Act.  With a view to making
available to the Investor(s) the benefits of Rule 144 promulgated under the
Securities Act or any other similar rule or regulation of the SEC that may at
any time permit the Investor(s) to sell securities of Isis to the public without
registration (“Rule 144”), Isis agrees to use commercially reasonable efforts
to:

 

(a)           make and keep public information available, as those terms are
understood and defined in Rule 144;

 

(b)           file with the SEC in a timely manner all reports and other
documents required of Isis under the Securities Act and the Exchange Act so long
as Isis remains subject to such requirements and the filing of such reports and
other documents is required for the applicable provisions of Rule 144; and

 

(C)           FURNISH TO EACH INVESTOR SO LONG AS SUCH INVESTOR OWNS REGISTRABLE
SECURITIES, PROMPTLY UPON REQUEST, (I) A WRITTEN STATEMENT BY ISIS, IF TRUE,
THAT IT HAS COMPLIED WITH THE REPORTING REQUIREMENTS OF RULE 144, THE SECURITIES
ACT AND THE EXCHANGE ACT, (II) A COPY OF THE MOST RECENT ANNUAL OR QUARTERLY
REPORT OF ISIS AND SUCH OTHER REPORTS AND DOCUMENTS SO FILED BY ISIS, AND (III)
SUCH OTHER INFORMATION AS MAY BE REASONABLY REQUESTED TO PERMIT THE INVESTOR(S)
TO SELL SUCH SECURITIES PURSUANT TO RULE 144 WITHOUT REGISTRATION.

 

Section 9.               Assignment of Registration Rights.  The rights under
this Agreement with respect to the Warrant Related Registrable Securities shall
be automatically assignable by the Investor(s) to any transferee of all or at
least [***] shares of such Investor’s Registrable Securities (or if an Investor
shall hold less than [***] such shares, then a transfer of all such shares) if:
(i) the Investor agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to Isis within a
reasonable time after such assignment; (ii) Isis is, within a reasonable time
after such transfer or assignment, furnished with written notice of (A) the name
and address of such transferee or assignee, and (B) the securities with respect
to which such registration rights are being transferred or assigned; (iii)
immediately following such transfer or assignment the further disposition of
such securities by the transferee or assignee is restricted under the Securities
Act and applicable state securities laws; (iv) at or before the time Isis
receives the written notice contemplated by clause (ii) of this sentence the
transferee or assignee agrees in writing with Isis to be bound by all of the
provisions contained herein and has provided Isis with a completed Selling
Stockholder Questionnaire; and (v) such transfer shall have been made in
accordance with the applicable transfer requirements set forth in Article VI  of
the Warrant Purchase Agreement.

 

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Section 10.             Amendment.

 

(a)           The terms of this Agreement shall not be altered, modified,
amended, waived or supplemented in any manner whatsoever except by a written
instrument signed by each of (i) Isis and (ii) Investor(s) holding a majority of
the Registrable Securities (other than in the case of any alteration,
modification, amendment, waiver or supplement which affects any individual
Investor in a manner that is less favorable or more detrimental to such Investor
than to the other Investor(s) solely based on the face of such alteration,
modification, amendment, waiver or supplement and without regard to the number
of Registrable Securities held by such Investor, in which case, such alteration,
modification, amendment, waiver or supplement must also be approved by such less
favorably or more detrimentally treated Investor).

 

(b)           Notwithstanding Section 10(a), any party hereto may waive, solely
with respect to itself, any one or more of its rights hereunder without the
consent of any other party hereto; provided that no such waiver shall be
effective unless set forth in a written instrument executed by the party against
whom such waiver is to be effective.

 

Section 11.             Miscellaneous.

 

(a)           A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities.  If Isis receives conflicting instructions, notices or elections
from two or more Persons with respect to the same Registrable Securities, Isis
shall act upon the basis of instructions, notice or election received from the
such record owner of such Registrable Securities.

 

(b)           Any notice, request, demand, waiver, consent, approval or other
communication which is required or permitted to be given to any party hereto
shall be in writing and shall be deemed given only if delivered to the party
personally or sent to the party by facsimile transmission (promptly followed by
a hard-copy delivered in accordance with this Section 11(b)), by next Business
Day delivery by a nationally recognized courier service, or by registered or
certified mail (return receipt requested), with postage and registration or
certification fees thereon prepaid, addressed to the party at its address set
forth below:

 

If to Isis:

 

Isis Pharmaceuticals, Inc.
1896 Rutherford Road

Carlsbad, CA 92008-7208

Attn: B. Lynne Parshall

Fax: (760) 603-4652

 

with a copy to:

 

Isis Pharmaceuticals, Inc.
1896 Rutherford Road

Carlsbad, CA 92008-7208

Attn: General Counsel

Fax: (760) 268-4922

 

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If to Holdings:

 

Symphony GenIsis Holdings LLC

7361 Calhoun Place, Suite 325

Rockville, MD 20850

Attn: Joseph P. Clancy

Facsimile: (301) 762-6154

 

with a copy to:

 

Symphony Capital Partners, L.P.

875 Third Avenue, 18th Floor

New York, NY 10022

Facsimile:  (212) 632-5401

 

and

 

Symphony Strategic Partners, LLC

875 Third Avenue, 18th Floor

New York, NY 10022

Facsimile:  (212) 632-5401

 

or to such other address as such party may from time to time specify by notice
given in the manner provided herein to each other party entitled to receive
notice hereunder.

 

(c)           This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York; except to the extent that this
Agreement pertains to the internal governance of Holdings, and to such extent
this Agreement shall be governed and construed in accordance with the laws of
the State of Delaware.

 

(d)           Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court, any Delaware State court or federal court of the United
States of America sitting in The City of New York, Borough of Manhattan or
Wilmington, Delaware, and any appellate 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 hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State
court, any such Delaware State court or, to the fullest extent permitted by law,
in such federal court.  Each of the parties hereto agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law.  Nothing in this Agreement shall affect any right that any party hereto may
otherwise have to bring any action or proceeding relating to this Agreement.

 

(e)           Each of the parties hereto irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any New York State or
federal court, or any Delaware State or Federal court.

 

14

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Each of the parties hereto hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.  Each of the parties hereby consent
to service of process by mail.

 

(f)            WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT.

 

(g)           Entire Agreement.  This Agreement (including any Annexes,
Schedules, Exhibits or other attachments hereto) constitutes the entire
agreement between the parties hereto with respect to the matters covered hereby
and supersedes all prior agreements and understandings with respect to such
matters between the parties hereto.

 

(h)           Successors; Assignment; Counterparts.

 

(i)            Nothing expressed or implied herein is intended or shall be
construed to confer upon or to give to any Person, other than the parties
hereto, any right, remedy or claim under or by reason of this Agreement or of
any term, covenant or condition hereof, and all the terms, covenants,
conditions, promises and agreements contained herein shall be for the sole and
exclusive benefit of the parties hereto and their successors and permitted
assigns provided, however, that, subject to the requirements of Section 9, this
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.

 

(ii)           This Agreement may be executed in one or more counterparts, each
of which, when executed, shall be deemed an original but all of which taken
together shall constitute one and the same Agreement.

 

(i)            Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as any other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

 

(j)            All consents and other determinations required to be made by the
Investor(s) pursuant to this Agreement shall be made, unless otherwise specified
in this Agreement, by Investor(s) holding at least a majority of the Registrable
Securities.

 

[SIGNATURES FOLLOW ON NEXT PAGE]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers or other representatives thereunto duly authorized,
as of the date first above written.

 

 

 

ISIS PHARMACEUTICALS, INC.

 

 

 

 

 

 

By:

  /s/ B. Lynne Parshall, J.D.

 

 

 

Name:

B. Lynne Parshall, J.D.

 

 

Title:

Executive Vice President, Chief Financial
Officer 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:

 

/s/ Mark Kessel

 

 

 

Name:

Mark Kessel

 

 

Title:

Managing Member

 

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EXHIBIT A

 

FORM OF SELLING STOCKHOLDER QUESTIONNAIRE

 

NOTICE

 

The undersigned beneficial owner (the “Selling Securityholder”) of Registrable
Securities hereby gives notice to Isis Pharmaceuticals, Inc. (the “Company”) of
its intention to sell or otherwise dispose of Registrable Securities
beneficially owned by it and listed below in Item 3 (unless otherwise specified
under such Item 3) pursuant to the Registration Statement, pursuant to the terms
of the Registration Rights Agreement (the “Registration Rights Agreement”) dated
as of April 7, 2006, by and between Isis and Symphony GenIsis Holdings LLC
(“Holdings”).  Capitalized terms used but not defined herein are used as defined
in Registration Rights Agreement.

 

The undersigned hereby gives notice to the Company of its intention to sell the
Registrable Securities listed in Item 3 below, pursuant to the Registration
Statement and, provides the following information to the Company and represents
and warrants that such information is accurate and complete:

 

QUESTIONNAIRE

 

1.     (a)   Full legal name of Selling Securityholder: 
                                                                                                      

 

(b)   Full legal name of registered holder of the Registrable Securities (if not
the same as (a) above) through which Registrable Securities listed in Item 3
below are held: 
                                                                                                      

 

(c)   Full legal name of DTC participant (if applicable and if not the same as
(b) above) through which Registrable Securities listed in Item 3 below are
held: 
                                                                                                                       

 

(d)   Status (yes/no) of Selling Securityholder as a registered broker-dealer or
an affiliate of a registered broker-dealer (please describe to the extent
applicable): 
                                                                                                                  

 

2.     Address for notices to Selling Securityholder: 
                                                                                                      

 

Telephone:                                                  

 

Fax:                                                             

 

Contact Person:                                           

 

3.     Beneficial Ownership of Registrable Securities:

 

(a)   Type and number of Registrable Securities beneficially owned: 
                                                                     

 

(b)   CUSIP No(s). of such Registrable Securities beneficially owned: 
                                                                  

 

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4.     Beneficial ownership of other securities of the Company owned by the
Selling Securityholder.

 

Except as set forth below in this Item 4, the undersigned is not the beneficial
or registered owner of any securities of the Company other than the Registrable
Securities listed above in Item 3.

 

(a)   Type and amount of other securities beneficially owned by the Selling
Securityholder:                                  

 

(b)   CUSIP No(s). of such other securities beneficially owned: 
                                                                             

 

5.     Relationships with the Company:

 

Except as set forth below, neither the undersigned nor any of its affiliates,
officers, directors or principal equity holders (owners of 5% or more of the
equity securities of the undersigned) has held any position or office or has had
any other material relationship with the Company (or its predecessors or
affiliates) during the past three years.

 

State any exceptions here:

 

 

 

6.     Plan of Distribution:

 

Except as set forth below, the undersigned (including its donees, distributees
or pledgees) intends to distribute the Registrable Securities listed above in
Item 3 pursuant to the Registration Statement only as follows (if at all).  Such
Registrable Securities may be sold from time to time directly by the undersigned
or, alternatively, through underwriters, broker-dealers or agents.  If the
Registrable Securities are sold through underwriters, broker-dealers or agents,
the Selling Securityholder will be responsible for any related underwriting
discounts or commissions or agents’ commissions.  Such Registrable Securities
may be sold in one or more transactions at fixed prices, at prevailing market
prices at the time of sale, at varying prices determined at the time of sale or
at negotiated prices.  The selling stockholders may sell their shares by one or
more of, or a combination of, the following methods: (i) purchases by a
broker-dealer as principal and resale by such broker-dealer for its own account
pursuant to this prospectus; (ii) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; (iii) block trades in
which the broker-dealer so engaged will attempt to sell the shares as agent but
may position and resell a portion of the block as principal to facilitate the
transaction; (iv) an over-the-counter distribution in accordance with the rules
of the Nasdaq National Market; (v) in privately negotiated transactions; and
(vi) in options transactions.  The undersigned may also sell Registrable
Securities short and deliver Registrable Securities to close out short
positions, or loan or pledge Registrable Securities to broker-dealers that in
turn may sell such securities.

 

A - 2

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State any exceptions here:

 

 

Note:  In no event will such method(s) of distribution take the form of an
underwritten offering of the Registrable Securities without the prior agreement
of the Company.

 

The undersigned acknowledges its obligation to comply with the provisions of the
Exchange Act and the rules thereunder relating to stock manipulation,
particularly Regulation M thereunder (or any successor rules or regulations), in
connection with any offering of Registrable Securities pursuant to the
Registration Rights Agreement.  The undersigned agrees that neither it nor any
person acting on its behalf will engage in any transaction in violation of such
provisions.

 

In the event that the Selling Securityholder transfers all or a portion of the
Registrable Securities listed in Item 3 above after the date on which such
information is provided to the Company, the Selling Securityholder agrees to
notify the transferee(s) at the time of the transfer of its rights and
obligations under this Questionnaire and the Registration Rights Agreement.

 

The Selling Securityholder hereby acknowledges its obligations under the
Registration Rights Agreement to indemnify and hold harmless certain persons as
set forth therein.

 

Pursuant to the Registration Rights Agreement, the Company has agreed under
certain circumstances to indemnify the Selling Securityholder against certain
liabilities.

 

In accordance with the undersigned’s obligation under the Registration Rights
Agreement to provide such information as may be required by law for inclusion in
the Registration Statement, the undersigned agrees to promptly notify the
Company of any inaccuracies or changes in the information provided herein that
may occur subsequent to the date hereof at any time while the Registration
Statement remains effective, including, without limitation, any change in the
undersigned’s beneficial ownership of Registrable Securities.

 

All notices hereunder and pursuant to the Registration Rights Agreement shall be
made in writing to the Selling Securityholder at the address set forth in
Section 2 above, and to the Company at the address set forth below.

 

By signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 6 above and the inclusion of
such information in the Registration Statement and the related prospectus.  The
undersigned understands that such information will be relied upon by the Company
in connection with the preparation or amendment of the Registration Statement
and the related prospectus.

 

Once this Questionnaire is executed by the Selling Securityholder and delivered
to the Company, the terms of this Questionnaire, and the representations and
warranties contained

 

A - 3

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herein, shall be binding on, shall inure to the benefit of and shall be
enforceable by the respective successors, heirs, personal representatives and
assigns of the Company and the Selling Securityholder (with respect to the
Registrable Securities beneficially owned by such Selling Securityholder and
listed in Item 3 above).  This Agreement shall be governed in all respects by
the laws of the State of New York.

 

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Questionnaire to be executed and delivered either in person or by its duly
authorized agent.

 

 

Dated:

 

 

Beneficial Owner:

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

 

 

Title:

 

 

 

PLEASE RETURN THE COMPLETED AND EXECUTED QUESTIONNAIRE
TO ISIS PHARMACEUTICALS, INC. AT:

 

1896 Faraday Avenue

Carlsbad, California 92008

Attn:  General Counsel

 

WITH A COPY TO:

 

1896 Faraday Avenue

Carlsbad, California 92008

Attn:  Chief Financial Officer

 

A - 4

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