Exhibit 10.1


 


December 3, 2008


 


VIA HAND DELIVERY


 


Stanley
T. Crooke


Chairman
and CEO


Isis Pharmaceuticals, Inc.


1896 Rutherford Road


Carlsbad, CA  92008


 


Dear Stan:


 


As you know, in light of
your contribution to Isis Pharmaceuticals, Inc. (“Isis”), Isis offered you
certain severance benefits under the letter dated April 8, 2003, as
amended (the “Original Agreement”).


 


To ensure compliance with
Section 409A of the Internal Revenue Code (“409A”), we now wish to amend
and restate the Original Agreement with the terms of this letter agreement.


 


In the event that your
employment is involuntarily terminated by Isis as a result of a Change in
Control (as defined herein), you will be eligible to receive a lump sum
severance payment equal to thirty-six (36) months of your then current base
salary, less payroll deductions and withholdings.


 


In order to be eligible to
receive the severance payment described herein, you will be required to execute
an Employee Separation Agreement substantially in the form attached hereto as Exhibit A
within the applicable time period set forth therein, but in no event later than
forty-five (45) days following your termination.  Your severance payment will be due and
payable on or before the fifth (5th) business day following the
effective date of the Employee Separation Agreement.


 


For purposes of
this letter agreement, Change in Control will be defined as follows:  (i) a sale of all or substantially all
of the assets of Isis; (ii) a merger or consolidation in which Isis is not
the surviving corporation and in which beneficial ownership of securities of
Isis representing at least fifty percent (50%) of the combined voting power
entitled to vote in the election of Directors has changed; (iii) a reverse
merger in which Isis is the surviving corporation but the shares of Common
Stock outstanding immediately preceding the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise, and in which beneficial ownership of securities of Isis representing
at least fifty percent (50%) of the 


 

















 


combined voting
power entitled to vote in the election of Directors has changed; or (iv) an
acquisition by any person, entity or group within the meaning of Section 13(d) or
14(d) of the Exchange Act, or any comparable successor provisions
(excluding any employee benefit plan, or related trust, sponsored or maintained
by Isis or subsidiary of Isis or other entity controlled by Isis) of the
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act, or comparable successor rule) of securities of Isis
representing at least fifty percent (50%) of the combined voting power entitled
to vote in the election of Directors.


 


Notwithstanding the
foregoing, you will only be entitled to receive the severance payment if the
termination of your employment constitutes a “separation from service” (as such
term is defined in Treasury Regulation Section 1.409A-1(h)).  For the avoidance of doubt, it is intended
that the severance payment satisfy the exemption from the application of Section 409A
provided under Treasury Regulation Section 1.409A-1(b)(4).


 


Please keep in mind that
this letter agreement is not intended to change your status as an at-will
employee with Isis.  As with all
employees at Isis, you or Isis may terminate your employment at any time, for
any reason whatsoever, with or without cause or advance notice subject to the
provisions set forth herein.


 


If you have any questions
or comments regarding the terms and conditions of this letter, please do not
hesitate to contact me.


 


Very truly yours,


 


	
  Isis
  Pharmaceuticals, Inc.

  
	
   

  
	
   

  
	
  /s/ Spencer R.
  Berthelsen, M.D.

  	
   

  
	
  Spencer R. Berthelsen,
  M.D.

  
	
  Chairman of the
  Compensation Committee

  



 


 


Acknowledged and Agreed:


 


 


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

  	
   

  
	
   

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

  



 

















 


EXHIBIT A


SEPARATION
AGREEMENT


 


This
SEPARATION AGREEMENT (“Agreement”) is
made and entered into by and between                                         
(“Employee”) and                                               
(“the Company”) as of the Effective Date of this Agreement, as defined in
paragraph 10 below.


 


WHEREAS, the
Company wishes to provide Employee with certain benefits in consideration of
Employee’s service to the Company and the promises and covenants of Employee as
contained herein;


 


NOW, THEREFORE,
in consideration of the mutual promises and covenants contained herein, it is
hereby agreed by and between the parties hereto as follows:


 


1.             SEVERANCE PAYMENTS.  On                                     
(“Separation Date”), Employee shall cease to be an employee or officer of the
Company for all purposes.  In return for
executing this Agreement, Employee will receive a lump sum severance payment
equal to thirty-six (36) months of your then current base salary, less payroll
deductions and withholdings.  This
severance payment will be due and payable on or before the fifth (5th)
business day following the Effective Date.


 


2.             ACCRUED SALARY AND
PAID TIME OFF.  On or about the Separation Date, the Company
will pay Employee all accrued salary, and all accrued and unused vacation,
subject to standard payroll deductions and withholdings.  Employee is entitled to these payments
regardless of whether or not Employee signs this Agreement.


 


3.             EMPLOYMENT SEARCH SUPPORT. 
Commencing on the Separation Date, the Company will provide Employee
offsite employment search support through Right Management Associates as
outlined in Exhibit A attached hereto.


 


4.             HEALTH
INSURANCE.  To the extent
permitted by law and by the Company’s current group health insurance policies,
after the Separation Date, Employee will be eligible to continue receiving
health insurance benefits under the federal or state COBRA law at Employee’s
own expense and later to convert to an individual policy if desired.  Employee will be provided with a separate
notice regarding COBRA benefits.  If
Employee elects continued coverage under COBRA, the Company will reimburse
Employee’s COBRA premiums for one (1) month as part of this
Agreement.  In addition, to the extent
permitted by law and by the Company’s current vision and dental insurance
policies, after the Separation Date, the Company will reimburse Employee’s
vision and dental benefit premiums for one (1) month.


 


5.             STOCK
OPTIONS. Pursuant to the Company’s 199_ Equity Incentive Plan (the “Plan”)
and Employee’s Stock Option Agreement (a copy of which is attached hereto as Exhibit B),
vesting of Employee’s stock options will cease on the Separation Date.  Employee’s rights to exercise Employee’s
option as to any vested shares will be as set forth in the Plan and Employee’s
Stock Option Agreement.


 

















 


6.             OTHER BENEFITS.  Except
as expressly provided herein, Employee acknowledges that Employee will not
receive (nor is entitled to receive) any additional compensation or benefits.


 


7.             RETURN OF COMPANY
PROPERTY.  By three (3) days after the Separation
Date, Employee will return to the Company all Company documents (and all copies
thereof) and other Company property and materials in Employee’s possession, or
control, including, but not limited to, Company files, notes, memoranda,
correspondence, lists, drawings, records, plans and forecasts, financial
information, personnel information, customer and customer prospect information,
sales and marketing information, product development and pricing information,
specifications, computer-recorded information, tangible property, equipment,
credit cards, entry cards, identification badges and keys; and any materials of
any kind which contain or embody any proprietary or confidential information of
the Company (and all reproductions thereof).


 


8.             PROPRIETARY
INFORMATION OBLIGATIONS.  Employee acknowledges that nothing herein
shall impair the covenants and obligations set forth in Employee’s Proprietary
Information and Inventions Agreement, a copy of which is attached hereto as Exhibit C.


 


9.             EMPLOYEE’S
RELEASE OF CLAIMS. Except as
otherwise set forth in this Agreement, in exchange for consideration under this
Agreement to which Employee would not otherwise be entitled, Employee hereby
releases, acquits and forever discharges the Company, its parents and
subsidiaries, and their officers, directors, agents, servants, employees,
attorneys, shareholders, successors, assigns and affiliates, of and from any
and all claims, liabilities, demands, causes of action, costs, expenses,
attorneys fees, damages, indemnities and obligations of every kind and nature,
in law, equity, or otherwise, known and unknown, suspected and unsuspected,
disclosed and undisclosed, arising out of or in any way related to agreements,
events, acts or conduct at any time prior to and including the execution date
of this Agreement, including but not limited to:  all such claims and demands directly or
indirectly arising out of or in any way connected with Employee’s employment
with the Company or the termination of that employment; claims or demands
related to salary, bonuses, commissions, stock, stock options, or any other
ownership interests in the Company, vacation pay, fringe benefits, expense
reimbursements, severance pay, or any other form of compensation; claims
pursuant to any federal, state or local law, statute, or cause of action
including, but not limited to, the federal Civil Rights Act of 1964, as
amended; the federal Americans with Disabilities Act of 1990; the federal Age
Discrimination in Employment Act of 1967, as amended (“ADEA”); the California
Fair Employment and Housing Act, as amended; tort law; contract law; wrongful
discharge; discrimination; harassment; fraud; defamation; emotional distress;
and breach of the implied covenant of good faith and fair dealing.


 


10.           ADEA WAIVER. Employee acknowledges that Employee knowingly
and voluntarily waives and releases any rights Employee may have under the
ADEA, as amended.  Employee also
acknowledges that the consideration given for the waiver and release in the
preceding paragraph hereof is in addition to anything of value to which
Employee was already entitled.  Employee
further acknowledges that Employee has been advised by this writing, as
required by the ADEA, that:  (a) Employee’s
waiver and release do not apply to any rights or claims that may arise after
the execution date of this Agreement; (b) Employee has the right to
consult with an attorney prior to executing this Agreement; (c) Employee
has forty-five (45) days 


 

















 


to consider this Agreement (although Employee may choose to voluntarily
execute this Agreement earlier); (d) Employee has seven (7) days
following the execution of this Agreement by the parties to revoke the
Agreement; and (e) this Agreement shall not be effective until the date
upon which the revocation period has expired, which shall be the eighth day
after this Agreement is executed by Employee, provided that the Company has
also executed this Agreement by that date (“Effective Date”).


 


11.           SECTION 1542
WAIVER.  Employee acknowledges reading and
understanding Section 1542 of the Civil Code of the State of California:


 


A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor.


 


Employee
hereby expressly waives and relinquishes all rights and benefits under that
section and any law or legal principle of similar effect in any jurisdiction
with respect to the release of unknown and unsuspected claims granted in this
Agreement.


 


12.           ARBITRATION.  To ensure rapid and economical resolution of
any and all disputes that may arise in connection with the Agreement, the
parties agree that any and all disputes, claims, causes of action, in law or
equity, arising from or relating to this Agreement or its enforcement,
performance, breach, or interpretation, with the sole exception of those
disputes that may arise from Employee’s Proprietary Information and Inventions
Agreement, will be resolved by final and binding confidential arbitration held
in San Diego, California and conducted by the American Arbitration Association
(“AAA”) under its then-existing Rules and Procedures.  Nothing in this paragraph is intended to
prevent either party from obtaining injunctive relief in court to prevent
irreparable harm pending the conclusion of any such arbitration.


 


13.           ENTIRE AGREEMENT.  This
Agreement, including all exhibits, constitutes the complete, final and
exclusive embodiment of the entire agreement between Employee and the Company
with regard to the subject matter hereof. 
It supersedes any and all agreements entered into by and between
Employee and the Company where such other agreement may conflict with this
agreement.  It is entered into without
reliance on any promise or representation, written or oral, other than those
expressly contained herein.  It may not
be modified except in a writing signed by Employee and a duly authorized officer
of the Company.  The parties have
carefully read this Agreement, have been afforded the opportunity to be advised
of its meaning and consequences by their respective attorneys, and signed the
same of their own free will.


 


14.           MISCELLANEOUS.  This
Agreement shall bind the heirs, personal representatives, successors, assigns,
executors and administrators of each party, and inure to the benefit of each
party, its heirs, successors and assigns. This Agreement shall be deemed to
have been entered into and shall be construed and enforced in accordance with
the laws of the State of California as applied to contracts made and to be
performed entirely within California.  If
an arbitrator or court of competent jurisdiction determines that any term or
provision of this Agreement is invalid or unenforceable, in whole or in part,
then the remaining terms and provisions hereof shall be unimpaired, the invalid
or unenforceable term or provision shall be modified or replaced so as to
render it valid and enforceable in a manner which represents the 


 

















 


parties’ intention with respect to the invalid or
unenforceable term or provision insofar as possible. This Agreement may be
executed in two counterparts, each of which shall be deemed an original, all of
which together shall constitute one and the same instrument.


 


IN WITNESS WHEREOF, the parties have duly authorized and caused this Agreement to be
executed as follows:


 


 


	
  EMPLOYEE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: