EXHIBIT
10.41


 


EXECUTION
VERSION


 


CONFIDENTIAL TREATMENT REQUESTED


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


 


 




 





STOCK PURCHASE AGREEMENT


 


by and among


 


IBIS BIOSCIENCES, INC.,


 


ISIS PHARMACEUTICALS, INC.


 


and


 


ABBOTT MOLECULAR INC.




 





 


 


Dated:


 


December 17, 2008


 

















 


TABLE OF
CONTENTS


 


	
   

  	
   

  	
  Page No.

  
	
   

  	
   

  	
   

  
	
  Section 1.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 2.

  	
  Basic Transaction; Purchase
  Price

  	
  14

  
	
  2.1

  	
  Sale and Transfer of
  the Remaining Shares

  	
  14

  
	
  2.2

  	
  Purchase Price

  	
  14

  
	
  2.3

  	
  Earnout Payments

  	
  14

  
	
  2.4

  	
  [Reserved]

  	
  15

  
	
  2.5

  	
  Restricted Assets

  	
  16

  
	
   

  	
   

  	
   

  
	
  Section 3.

  	
  Closing Of The Transaction

  	
  16

  
	
  3.1

  	
  The Closing

  	
  16

  
	
  3.2

  	
  Deliveries at the
  Closing

  	
  16

  
	
   

  	
   

  	
   

  
	
  Section 4.

  	
  Conditions To Obligation To
  Close

  	
  17

  
	
  4.1

  	
  Conditions to
  Obligation of AMI

  	
  17

  
	
  4.2

  	
  Conditions to
  Obligation of Isis

  	
  19

  
	
   

  	
   

  	
   

  
	
  Section 5.

  	
  Representations And Warranties

  	
  20

  
	
  5.1

  	
  Representations and
  Warranties of Isis

  	
  20

  
	
  5.2

  	
  Representations and
  Warranties of AMI

  	
  36

  
	
   

  	
   

  	
   

  
	
  Section 6.

  	
  Reserved

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section 7.

  	
  Pre-Closing Covenants

  	
  37

  
	
  7.1

  	
  General

  	
  37

  
	
  7.2

  	
  Affirmative Covenants
  of Isis and Ibis

  	
  37

  
	
  7.3

  	
  Negative Covenants of
  Isis

  	
  38

  
	
  7.4

  	
  Notices and Consents

  	
  40

  
	
  7.5

  	
  Full Access

  	
  40

  
	
  7.6

  	
  Transition Assistance

  	
  41

  
	
  7.7

  	
  Notice of Developments

  	
  41

  
	
  7.8

  	
  Exclusivity

  	
  41

  
	
  7.9

  	
  Indebtedness and
  Intercompany Accounts

  	
  42

  
	
  7.10

  	
  Distribution of Cash

  	
  42

  
	
  7.11

  	
  [***] and [***]

  	
  42

  
	
  7.12

  	
  Permitted Indebtedness

  	
  42

  
	
  7.13

  	
  Bonus Arrangement
  Payments

  	
  43

  
	
   

  	
   

  	
   

  
	
  Section 8.

  	
  Additional Agreements

  	
  43

  
	
  8.1

  	
  Survival

  	
  43

  
	
  8.2

  	
  Indemnification

  	
  43

  
	
  8.3

  	
  Press Release and
  Announcements

  	
  46

  
	
  8.4

  	
  Expenses

  	
  47

  
	
  8.5

  	
  Setoff

  	
  47

  



 


i

















 


	
  8.6

  	
  Certain Tax Matters

  	
  47

  
	
  8.7

  	
  Further Assurances

  	
  51

  
	
  8.8

  	
  Confidentiality

  	
  51

  
	
  8.9

  	
  Noncompetition and
  Nonsolicitation

  	
  53

  
	
  8.10

  	
  Access to Books and
  Records

  	
  55

  
	
  8.11

  	
  Employee and Related
  Matters

  	
  55

  
	
  8.12

  	
  Consolidated Return

  	
  56

  
	
  8.13

  	
  Isis Intellectual
  Property License

  	
  57

  
	
  8.14

  	
  [***]

  	
  57

  
	
  8.15

  	
  [***]

  	
  57

  
	
  8.16

  	
  Fees for Transition
  Services

  	
  58

  
	
  8.17

  	
  Updated Exhibits

  	
  58

  
	
   

  	
   

  	
   

  
	
  Section 9.

  	
  Termination

  	
  58

  
	
  9.1

  	
  Termination

  	
  58

  
	
  9.2

  	
  Effect of Termination

  	
  58

  
	
   

  	
   

  	
   

  
	
  Section 10.

  	
  Miscellaneous

  	
  59

  
	
  10.1

  	
  No Third Party
  Beneficiaries

  	
  59

  
	
  10.2

  	
  Entire Agreement

  	
  59

  
	
  10.3

  	
  Successors and Assigns

  	
  59

  
	
  10.4

  	
  Counterparts

  	
  59

  
	
  10.5

  	
  Headings

  	
  59

  
	
  10.6

  	
  Notices

  	
  59

  
	
  10.7

  	
  Governing Law

  	
  61

  
	
  10.8

  	
  Alternative Dispute
  Resolution Procedure

  	
  61

  
	
  10.9

  	
  Amendments and Waivers

  	
  61

  
	
  10.10

  	
  Delays or Omissions

  	
  61

  
	
  10.11

  	
  Incorporation of
  Exhibits and Schedules

  	
  61

  
	
  10.12

  	
  Construction

  	
  62

  
	
  10.13

  	
  Remedies

  	
  62

  
	
  10.14

  	
  Severability

  	
  62

  
	
  10.15

  	
  No Other Compensation

  	
  63

  



 


ii

















 


STOCK
PURCHASE AGREEMENT


 


THIS STOCK PURCHASE
AGREEMENT (this “Agreement”) is made and entered into as of the 17th day of December, 2008, by and among Isis
Pharmaceuticals, Inc., a Delaware corporation (“Isis”), Ibis
Biosciences, Inc., a Delaware corporation and Affiliate of Isis (“Ibis”),
and Abbott Molecular Inc., a Delaware corporation (“AMI”) and Affiliate
of Abbott Laboratories, an Illinois corporation (“Abbott”). AMI, Ibis
and Isis are sometimes referred to herein individually as a “Party” and
collectively as the “Parties.”


 


WHEREAS, on January 30,
2008, the Parties entered into the Master Agreement, a Call Option Agreement
and the Investor Rights Agreement, pursuant to which, among other things, AMI
acquired the Shares, the option, exercisable in AMI’s sole discretion, to
purchase the Additional Shares from Ibis and the Call Option, for an aggregate
purchase price of $20,000,000;


 


WHEREAS, as of June 27,
2008, the Parties entered into a Stock Subscription Agreement, pursuant to
which, among other things, AMI acquired the Additional Shares for an aggregate
purchase price of $20,000,000;


 


WHEREAS, Isis owns
1,000,000 shares of Ibis’ Common Stock (the “Remaining Shares”);


 


WHEREAS, on December 12,
2008, pursuant to the terms of the Call Option Agreement, AMI exercised the Call
Option, electing to acquire the Remaining Shares pursuant to the terms hereof;
and


 


WHEREAS, subject to the
terms and conditions set forth in this Agreement, Isis desires to sell to AMI
and AMI desires to acquire from Isis the Remaining Shares.


 


NOW, THEREFORE, in
consideration of the mutual promises, representations, warranties, and
covenants hereinafter set forth and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties
hereby agree as follows:


 


Section 1.              DEFINITIONS. Capitalized
terms used and not otherwise defined herein have the meanings ascribed to such
terms in this Section 1.


 


(a)           “Abbott Transaction Team” means
the individuals listed on Schedule 1(a).


 


(b)           “Additional Shares”
means 114,250 shares of Common Stock acquired by AMI pursuant to the Stock
Subscription Agreement, as may be held from time to time by AMI and its
permitted assigns, which, together with the Shares, represent approximately
18.6% of the issued and outstanding Common Stock.


 


(c)           “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; provided, that, with
respect to Isis, the term “Affiliate” shall specifically exclude [***].


 


(d)           “Applicable Law”
or “Law” means all applicable common law, laws, constitutional
provisions, ordinances, statutes, rules, regulations, administrative rulings,
executive orders 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 Governmental Authorities that may be in effect from time to
time.


 


(e)           “Applicable Rate”
means as of any particular date, the prime rate as quoted in the Money Rates Section of
The Wall Street Journal, plus
[***]%.


 


(f)            [***]


 


(g)           “Bonus Arrangement”
means the Special Bonus Opportunity communicated to Ibis employees, pursuant to
which a bonus pool of [***] will be payable by Ibis to Ibis Employees in the
event the Closing is consummated.


 


(h)           “Business” means
researching, developing, manufacturing, selling, marketing, distributing and
using a system, process or reagents for the identification and/or quantitation
of nucleic acids or the performance of services relating to any of the
foregoing, as conducted by Ibis or by Isis, with respect to the Division, on
and prior to the Closing Date.


 


(i)            “Business Day”
means any day other than a Saturday, Sunday, or a day on which the banks in Chicago,
Illinois are authorized or obligated by Law to close.


 


(j)            “Call Option”
has the meaning ascribed to such term in the Call Option Agreement.


 


(k)           “Call Option
Agreement” means that certain Amended and Restated Call Option Agreement,
dated as of November 18, 2008, by and among Isis, Ibis and AMI.


 


(l)            “Capital Stock”  means all capital stock, equity or
controlling interests and other securities in an issuer, including, without
limitation, options, warrants, depositary receipts, stock appreciation or phantom
stock rights or other agreements or undertakings, including stock or securities
convertible or exchangeable for any shares of capital stock, equity or
controlling interests or other securities in an issuer or containing any profit
participation features or pursuant to which such issuer is or could be bound to
issue or repurchase any capital stock, equity or controlling interests or other
securities.


 


(m)          “Change of Control”
means, with respect to any Person, the occurrence of (i) any consolidation
or merger of such Person with or into any other Person, or any other corporate
reorganization or transaction (including the acquisition of Capital Stock of
such Person (or any rights to acquire, or securities convertible into or
exchangeable for, any such


 


2

















 


Capital Stock)), whether or not such Person is a party
thereto, in which the stockholders or equity-holders of such Person or other
Persons controlling such Person immediately prior to such consolidation,
merger, reorganization or transaction, own Capital Stock either (A) representing
directly, or indirectly through one or more entities, less than fifty percent
(50%) of the economic interests in or voting power of such Person or other
surviving entity immediately after such consolidation, merger, reorganization
or transaction or (B) that does not directly, or indirectly through one or
more entities, have the power to elect a majority of the entire board of
directors or equivalent governing body of such Person or other surviving entity
immediately after such consolidation, merger, reorganization or transaction or (ii) a
sale, lease, license or other disposition of all or a material portion of the
assets of such Person.


 


(n)           “Claim” means
any claim, lawsuit, demand, audit, investigation, charge, suit, hearing, notice
of a violation, litigation, action, proceeding, order, judgment, grievance, or
arbitration, whether civil, criminal, administrative or otherwise, whether at
law or in equity, or any inquiry likely to result in any of the foregoing.


 


(o)           “Code” means the
Internal Revenue Code of 1986, as amended from time to time.


 


(p)           “Common Stock”
means the Common Stock of Ibis, par value $0.001 per share.


 


(q)           “Confidential
Information” means all information and any tangible embodiments thereof
provided by or on behalf of the Disclosing Party to the Receiving Party or to
the Receiving Party’s Representatives either in connection with the discussions
and negotiations pertaining to the Transaction Documents or in the course of
performing the Transaction Documents, including without limitation: know-how;
data; knowledge; practices; processes; research and development 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,
consultants, independent contractors, 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. Notwithstanding the foregoing, information of a Party will not
be deemed Confidential Information to the extent that the Receiving Party can
show by competent proof that such information:


 


(i)            is
or becomes generally available to the public other than as a result of an
unauthorized disclosure by the Receiving Party or its Representatives;


 


(ii)           was
available to the Receiving Party or its Representatives on a non-confidential
basis prior to its disclosure by the Disclosing Party or its Representatives;


 


(iii)          is or becomes available to the Receiving
Party or its Representatives from a Person, other than the Disclosing Party or
its Representatives,


 


3

















 


who is not bound by a confidentiality obligation to the Disclosing
Party or its Representatives; or


 


(iv)          is
independently developed by the Receiving Party or its Representatives without
reference to or use of any Confidential Information of the Disclosing Party.


 


(r)            “Contract”
means any contract, lease, deed, mortgage, license, instrument, note,
commitment, undertaking, understanding, indenture, joint venture, purchase
order, service order and all other agreements and arrangements, whether oral or
written.


 


(s)           “Contribution
Agreement” means the Contribution Agreement, dated as of July 31,
2007, by and between Isis and Ibis.


 


(t)            “Corporate Services
Agreement” means that certain Corporate Services Agreement, dated as of July 31,
2007, by and between Isis and Ibis.


 


(u)           [***]


 


(v)           “Division” means
the Ibis Biosciences division of Isis.


 


(w)          “Earnout Threshold”
means $140 million minus all commercial revenue for the period beginning
on [***], as set forth on Exhibit B, which has been prepared in
accordance with GAAP and Isis’ internal controls and procedures for financial
reporting and delivered pursuant to Section 8.17.


 


(x)            “Employee Pension
Benefit Plan” has the meaning set forth in Section 3(2) of ERISA.


 


(y)           “Employee Welfare
Benefit Plan” has the meaning set forth in Section 3(1) of ERISA.


 


(z)            “Encumbrance”
means any mortgage, covenant, hypothecation, condition, Claim, easement, encroachment,
right of way, restriction, option, lien (statutory or otherwise), pledge,
charge, license, security interest or encumbrance of any nature whatsoever.


 


(aa)         “Environmental Laws”
means any federal, state, local or foreign statutes, ordinances, codes,
treaties, or other Laws (including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act, the Resource
Conservation and Recovery Act, the Clean Air Act, the Clean Water Act, the
Toxic Substances Control Act, the Oil Pollution Prevention Act, the Federal
Insecticide, Fungicide, & Rodenticide Act, the Safe Drinking Water
Act, the Hazardous Materials Transportation Act, the Solid Waste Disposal Act,
the Emergency Planning and Community Right-to-Know Act, the Occupational Safety
and Health Act), including any regulations, rules, plans, other criteria,
policies or guidelines promulgated pursuant to such Laws, and all common law,
orders, judgments, decrees, judicial or agency interpretations now or hereafter
in effect relating to pollution, the generation, production, installation, use,
storage, treatment, transportation, Release, threatened Release, investigation,
monitoring, remediation, cleanup, abatement, removal, or disposal of Hazardous


 


4

















 


Materials, noise control, odor or the protection of
public or workplace health or safety, natural resources, or the environment.


 


(bb)         “ERISA” means the
Employee Retirement Income Security Act of 1974, as amended.


 


(cc)         “Fundamental AMI
Representations” means those representations and warranties of AMI set
forth in Section 5.2(a) (Power and Authority), Section 5.2(b) (Enforceability),
Section 5.2(c) (Governmental Authority; Consents), and Section 5.2(d) (No
Conflicts).


 


(dd)         “Fundamental Isis
Representations” means those representations and warranties of Isis set
forth in Sections 5.1(a) (Power and Authority), 5.1(b) (Enforceability),
5.1(c) (Governmental Authority; Consents), 5.1(d) (No
Conflicts), 5.2(e) (Due Organization; Qualification), 5.1(g) (Capitalization;
Voting Rights), 5.1(j) (Title to Properties and Tangible Assets;
Liens, etc.), 5.1(k) (Sufficiency of Assets), 5.1(m) (Compliance
with Other Instruments), 5.1(t)(ii) (Certain Balance Sheet Items)
and 5.1(v) (Brokers’ Fees).


 


(ee)         “GAAP” means
United States generally accepted accounting principles, applied on a consistent
basis.


 


(ff)           “Governmental
Authority” means any governmental or quasi-governmental agency, department,
bureau, office, center, institute, court, commission or other unit of the
government of the United States of America or of any of its respective States
or local units of government thereof, or of a foreign sovereign or of a
provincial, regional or metropolitan government thereof, including, without
limitation, any Regulatory Authority.


 


(gg)         “[***]” means the
[***] identified on Exhibit C, which has been prepared in
accordance with GAAP and Isis’ internal controls and procedures for financial
reporting, as updated and delivered pursuant to Section 8.17.


 


(hh)         “[***]” means any
payments due to Ibis from a [***] with respect to [***] awarded to Ibis or
Contracts with Ibis, in each case to the extent Ibis has performed the research
or other services described in the [***] or Contract, but not received payment
therefor prior to the Closing Date.


 


(ii)           “Hazardous Materials”
means any substance, chemical, solvent, compound, waste, residue, contaminant
or other material which is regulated by or forms the basis of liability now or
hereafter under any Environmental Law, including, without limitation:  (i) any “solid waste,” “dangerous goods,”
“hazardous waste,” “hazardous substance,” “hazardous material,” “extremely
hazardous waste,” “pollutant,” “contaminant,” “hazardous constituent,” “special
waste,” “universal waste,” “toxic substance,” or any other similar term or
phrase as defined under any Environmental Law; (ii) any petroleum, or
petroleum products, byproducts or breakdown products, including crude oil and
any fraction thereof; (iii) natural synthetic gas usable for fuel; (iv) any
asbestos, lead-based paint, polychlorinated biphenyl, mold, radon gas,
radioactive material or byproduct, isomer of dioxin, or any material or thing
containing or composed of such substance or substances; and (v) any virus,
bacteria, protozoa, parasite, fungi, or other pathogen or any other substance,
chemical, solvent, compound, waste, residue,


 


5

















 


contaminant or other material which is hazardous,
toxic, poisonous, reactive, corrosive or otherwise may present a threat to
human health, safety, natural resources, wildlife or the environment.


 


(jj)           “Ibis Net Sales”
means:


 


(i)            the
gross amount billed  by Ibis or its
Affiliates after the Closing for the sale or other transfer or disposition of
Products to, or performance of Services for, non-Affiliate third parties in
bona fide arms length transactions, less deductions for:


 


A.            discounts, including
cash discounts, customary trade allowances or rebates actually taken, and
promotional discounts;


 


B.            credits or allowances
given or made for rejection, recall or return of previously sold Products and
rebates for previously provided Services;


 


C.            any Tax (including any
Tax such as a value added or similar Tax) levied on the sale, transportation or
delivery of Products when included on the invoice or other written document
between the parties as payable by the purchaser and collectable by Ibis; and


 


D.            freight, postage,
transportation, insurance and duties on shipment of Product when included on
the invoice or written document between the parties as payable by the purchaser
and collectable by Ibis;


 


(ii)           [***];
and


 


(iii)          the amount of any [***].


 


Ibis Net Sales
calculations shall be applied as provided above and modified as appropriate as
follows:


 


1. When a Product is sold
or licensed by Ibis or its Affiliates or a Service is provided to a
non-Affiliate third party with whom Ibis or such Affiliate does not deal at
arms length, Ibis Net Sales for that Product or Service shall equal an average
of Ibis Net Sales for similar quantities of Products sold or Services provided
within the same calendar quarter in an arms length transaction in the same
geographic market and class of purchasers or Service recipients as the non-arms
length purchaser or Service recipient.


 


2. In the event that a
Product is sold or a Service provided in combination with any other product(s) or
service(s), Ibis Net Sales with respect to the Product or Service of the
combination shall be determined by the fraction A over A + B in which “A” is
Ibis Net Sales of the Product or Service portion of the combination when sold
separately during the applicable calendar quarter, and “B” is Ibis Net Sales of
the other product(s) or service(s) of the combination product or
service when sold separately during the applicable calendar quarter.


 


6

















 


3. In the event a Product
or Service is incorporated into a profile in which said Product or Service
contributes only a small proportion of the value of the total package, but the
adjustment set forth in paragraph 2, above is impractical or if similar
quantities of product(s) are not sold or similar quantities of Services
are not provided pursuant to paragraph 1, above, then the Parties shall
negotiate in good faith to establish an equitable adjustment to Ibis Net Sales
for such Product or Service to fairly reflect the proportion of the value of
the profile contributed by the Product or Service or the value of the Product
or Service.


 


(kk)         “Indebtedness”
means (i) all indebtedness or other obligations of Ibis for borrowed
money, whether current, short-term or long-term, secured or unsecured, and all
accrued interest, premiums, penalties and other obligations relating thereto, (ii) all
indebtedness of Ibis for the deferred purchase price of property or services
which is not evidenced by accounts payable incurred in the ordinary course of
business, (iii) all existing lease obligations of Ibis under leases which
are capital leases in accordance with GAAP, (iv) any liability of Ibis
under deferred compensation plans, phantom stock plans, severance or bonus
plans, or any change in control or similar payment or increased cost which is
triggered or made or will be made payable by Ibis as a result of the
transactions contemplated hereby, other than the Bonus Arrangement, (v) any
off balance sheet financing of Ibis, (vi) any payment obligations of Ibis
in respect of banker’s acceptances or letters of credit, (vii) any
liability of Ibis with respect to interest rate swaps, collars, caps and
similar hedging obligations, (viii) all obligations of Ibis arising under
or with respect to any conditional sale or other title retention agreement with
respect to property acquired by Ibis, (ix) past due or deferred rent of
Ibis, (x) the amount of accounts payable owed by Ibis to any Person that
have not been paid within 45 days of the date of invoice thereof (xi) all “cut”
but “uncashed” checks of Ibis outstanding as of the Closing, (xii) any
indebtedness referred to above of any Person which is either guaranteed by, or
secured by a security interest upon any property owned by, Ibis and (xiii)
accrued and unpaid interest of, and prepayment premiums, penalties or similar
contractual charges arising as a result of the discharge of any such foregoing
obligation.


 


(ll)           “Intellectual
Property” means all of the following in any jurisdiction throughout the
world:  (i) patents, patent
applications and patent disclosures and statutory invention registrations,
including reissues, divisions, continuations, continuations in part, extensions
and reexaminations thereof; (ii) trademarks, service marks, trade dress,
trade names, corporate names, logos and slogans (and all translations,
adaptations, derivations and combinations of the foregoing) and Internet domain
names any and all common law rights and registrations and applications for the
registration thereof, and all extensions and renewals of any of the foregoing; (iii) copyrights
and copyrightable works (including Software), registered copyrights and
copyright applications, mask works, net lists and schematics; (iv) confidential
and proprietary information including technology, know-how, trade secrets,
unpatented inventions, ideas, algorithms and processes (including, without
limitation, manufacturing and production processes and techniques, drawings,
specifications, designs, plans, proposals, test data including pharmacological,
biological, chemical, biochemical, toxicological and clinical test data,
analytical and quality control data, stability data and customer and supplier
lists and related information); (v) other intellectual property and
proprietary information and (vi) all copies and tangible embodiments of
the foregoing, such as instruction manuals, laboratory notebooks, prototypes,
samples, specimens, studies and summaries.


 


7
















 


(mm)       “Investment Date”
means January 23, 2008.


 


(nn)         “Investment Documents”
means the Master Agreement, the Call Option Agreement, the Investor Rights
Agreement and the Stock Subscription Agreement.


 


(oo)         “Investor Rights
Agreement” means that certain Investor Rights Agreement, dated as of the
Investment Date, by and among Isis, Ibis and AMI.


 


(pp)         “Isis Licensed
Intellectual Property” means the Intellectual Property set forth on Exhibit D.


 


(qq)         [***]


 


(rr)           “Knowledge” and
terms of similar meaning (including, without limitation, “is aware of”) mean (i) with
respect to Ibis and Isis, the actual knowledge of any of the individuals set
forth on Schedule 1(rr), after due investigation, including, without
limitation, inquiry of Persons with subject matter knowledge, provided that (A) solely for purposes
of Sections 5.1(l)(v), 5.1(l)(vi) and 5.1(l)(ix), “Knowledge”
and terms of similar meaning (including, without limitation, “is aware of”)
mean the actual knowledge of any employee of Ibis or Isis, after due investigation,
including, without limitation, inquiry of Persons with subject matter knowledge
and (B) solely for purposes of Section 5.1(l), inquiry of
Persons with subject matter knowledge shall include inquiry of the outside
counsel involved in the development or prosecution of the Business IP or who
conducted ‘freedom to operate analyses’ identified on Schedule 1(rr) and
(ii) with respect to AMI, the actual knowledge of any of the individuals
set forth on Schedule 1(rr), after due investigation.


 


(ss)         “Licenses” means
all licenses, permits, certificates of authority, variances, authorizations,
approvals, registrations, franchises, orders and similar consents issued by any
Governmental Authority or other Person, provided,
that the term License shall not include any license or other right to use any
Intellectual Property.


 


(tt)           “Loss” means any
loss, liability, demand, Claim, action, cause of action, cost, damage,
diminution in value, deficiency, Tax, penalty, fine or expense (including
interest, penalties, reasonable attorneys’ fees and expenses and all amounts
paid in investigation, defense or settlement of any of the foregoing and the
enforcement of any related rights), whether or not arising out of third party
claims.


 


(uu)         “Management
Presentations” means the Management Presentations of Ibis delivered to AMI
pursuant to Section 2(h) of the Master Agreement.


 


(vv)         “Master Agreement”
means that certain Strategic Alliance Master Agreement, dated as of the
Investment Date, by and among Isis, Ibis and AMI.


 


(ww)       “Multiemployer Plan”
has the meaning set forth in Section 3(37) of ERISA.


 


(xx)          “Offering Memorandum”
means the Offering Memorandum of Ibis, dated November 2006,  as made available to AMI.


 


8

















 


(yy)         “[***]” means any
payments, including, but not limited to royalty payments, license fees and
milestone payments that are made by non-Affiliate third parties to [***] (or
any of its Affiliates) in bona fide arms length transactions in consideration
for one or more license or equivalent agreements that grant such non-Affiliate
third party rights under any [***] (i) make, have made, use, sell, offer
for sale or import any products by [***] to another party for a fee, in each
case, where any of the foregoing conduct by such non-Affiliate third party in
the absence of such rights under license or equivalent agreement would infringe
(directly, contributorily, by inducement or otherwise), misappropriate or
otherwise conflict with any [***].


 


(zz)          “Permitted Encumbrances” means (i) liens for current
property Taxes not yet due and payable, (ii) Encumbrances arising in
connection with and solely as a result of Permitted Indebtedness and (iii) except
with respect to Intellectual Property, other imperfections of title, restrictions
or Encumbrances, if any, which imperfections, restrictions or Encumbrances do
not, individually or in the aggregate, impair the continued use and operation
of the assets used in the operation of the Business and do not affect the
merchantability of the title to such assets to which they relate.


 


(aaa)       “Permitted Indebtedness”
means (i) accounts payable incurred in the ordinary course of business
that are paid within forty-five (45) days of the date of invoice thereof, (ii) Indebtedness
arising from existing and future lease obligations of Ibis under equipment
leases that are capital leases in accordance with GAAP so long as the
collateral for such capital leases is limited to the equipment acquired and the
aggregate amount of such capital leases does not exceed [***] and (iii) Indebtedness
incurred pursuant to the Corporate Services Agreement or the Contribution
Agreement.


 


(bbb)      “Person” means an
individual, a partnership, a corporation, an association, a limited liability
company, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a Governmental Authority (or any department, agency, or
political subdivision thereof).


 


(ccc)       “Pre-Closing Tax Period”
means a Tax period ending on or before the Closing Date and the portion through
the end of the Closing Date for any Tax period that includes (but does not end
on) the Closing Date.


 


(ddd)      “Post-Closing Tax Period”
means a Tax period beginning after the Closing Date and, for any Tax period
that includes (but does not end on) the Closing Date, the portion of such
period beginning after the Closing Date.


 


(eee)       “Products” means the
T5000 Biosensor System (including kits) and any Successor Products.


 


(fff)         “Purchase Offer”
means any proposal or offer from any Person (other than AMI and its Affiliates
in connection with the transactions contemplated hereby) or any agreement or
offer relating to any (i) reorganization, liquidation, dissolution, share
exchange, business combination or recapitalization of Ibis, (ii) merger or
consolidation involving Ibis, (iii) purchase or sale of any assets or
Capital Stock of Ibis (other than the purchase and sale of inventory and
capital equipment in the ordinary course of business), (iv) distribution
of Ibis’


 


9

















 


existing or future products, (v) licensing of any
Business IP from Ibis or (vi) any other transaction or business
combination involving Ibis or its business or assets which would reasonably be
expected to interfere with, impede or materially delay the transactions
contemplated by the Transaction Documents or dilute the benefits thereof to AMI
and its Affiliates.


 


(ggg)      “Real Property” means
the Leased Real Property.


 


(hhh)      “Regulatory Authority”
means any Governmental Authority that has responsibility for granting any
licenses or approvals or granting pricing and/or reimbursement approvals
necessary for the marketing and sale of medical devices or diagnostic products,
including without limitation, the FDA, the European Medicines Agency and the
United States Department of Health and Human Services.


 


(iii)          “Release” means
any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, depositing, disposing or other release
into the environment (including the abandonment or discarding of barrels,
drums, containers or other closed receptacles), including any dispersal,
migration or other movement of any substance through or in air, soil, surface
water, groundwater or property.


 


(jjj)          “Representatives”
means with respect to any Person, such Person’s employees, directors, officers,
Affiliates and authorized agents.


 


(kkk)       “Schedule” means any
of the Disclosure Schedules delivered to AMI herewith and incorporated herein
pursuant to Section 10.11 hereof.


 


(lll)          “SEC” or “Commission”
means the United States Securities and Exchange Commission.


 


(mmm)    “Securities Act” means
the Securities Act of 1933, as amended.


 


(nnn)      “Services” means
using any Business IP to analyze samples containing nucleic acids and providing
the results of such analyses to a third party for a fee.


 


(ooo)      “Shares” means
114,251 shares of Common Stock issued to AMI pursuant to the Master Agreement,
as may be held from time to time by AMI and its permitted assigns, representing
approximately 10.25% of the issued and outstanding Common Stock.


 


(ppp)      “Software” means any
and all (i) computer programs, libraries, firmware and middleware,
including any and all software implementations of algorithms, models and
methodologies, whether in source code or object code, (ii) databases and
compilations, including any and all data and collections of data, whether
machine readable or otherwise, (iii) descriptions, flow-charts and other
work product used to design, plan, organize and develop any of the foregoing and
(iv) all programmer and user documentation, including user manuals and
training materials, relating to any of the foregoing.


 


(qqq)      “Stock Subscription
Agreement” means the Stock Subscription Agreement dated as of June 27,
2008, by and among Ibis, Isis and AMI.


 


10

















 


(rrr)         “Subsidiary”
means, with respect to a Person, any corporation, limited liability company,
partnership, association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election
of directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of such Person or a combination thereof, or (ii) if a limited liability
company, partnership, association or other business entity, a majority of the
partnership or other similar ownership interest thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more Subsidiaries
of such Person or a combination thereof. 
For purposes hereof, a Person shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person shall be allocated a majority of limited
liability company, partnership, association or other business entity gains or
losses or shall be or control any managing director or general partner of such
limited liability company, partnership, association or other business entity.


 


(sss)       “Successor Products”
means any product that (i) relies upon [***] and determination of [***] by
[***] using either the Ibis [***], each as in existence in the Business at the
Closing, including as may be modified subsequently by AMI or (ii) is
described in U.S. Patent No.’s [***].


 


(ttt)         “T5000 Biosensor
System” means the biosensor platform generally known as the T5000 Biosensor
System, together with all equipment, hardware, Software, systems and other
materials required for its use, or provided or recommended by Ibis, Isis or any
of their respective Affiliates for its use, as well as all prior versions of
the T5000 Biosensor System, including such systems known as “TIGER.”


 


(uuu)      “Tax” means any
federal, state, local, or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental, customs and other duties, capital stock, franchise, profits,
withholding, social security, unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not, and including
any obligation to indemnify or otherwise assume or succeed to the Tax liability
of any other Person.


 


(vvv)      “Tax Return” means
any return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.


 


(www)    “Third Party Payments”
means payments, including, but not limited to damage awards, royalty payments,
license fees and milestone payments, that are made by [***] to a third party,
which are based upon making, having made, using, selling, offering for sale or
importing [***], under order of a Governmental Authority or license agreements
or equivalent agreements with the third party to obtain rights under any United
States or foreign copyrights, patent applications or patents that are [***] to
make, have made, use, sell, offer for sale or import any [***].


 


11

















 


(xxx)        “Transaction Documents”
means the Master Agreement, the Investor Rights Agreement, the Stock
Subscription Agreement,  the Call
Option Agreement, the Transition Services Agreement and this Agreement.


 


(yyy)      “Transfer” means,
with respect to Capital Stock, any sale, pledge, hypothecation, assignment,
Encumbrance or other transfer or disposition, whether directly, indirectly,
voluntarily, involuntarily, by operation of Law, pursuant to judicial process
or otherwise and, when the context so requires, the act of doing any of the
foregoing.


 


Section references for definitions of defined
terms defined in the body of this Agreement rather than in this Section 1.


 


	
  Defined Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  “§ 338(h)(10) Election”

  	
   

  	
  8.6(g)

  
	
  “Abbott”

  	
   

  	
  Preamble

  
	
  “ADR”

  	
   

  	
  10.8

  
	
  “Agreement”

  	
   

  	
  Preamble

  
	
  “AMI”

  	
   

  	
  Preamble

  
	
  “AMI Group”

  	
   

  	
  8.2(a)

  
	
  “AMI Proceeding”

  	
   

  	
  8.6(e)(ii)

  
	
  “Applicable AMI Proceeding”

  	
   

  	
  8.6(e)(ii)

  
	
  [***]

  	
   

  	
   

  
	
  “Business IP”

  	
   

  	
  5.1(l)(i)

  
	
  “Closing”

  	
   

  	
  3.1

  
	
  “Closing Date”

  	
   

  	
  3.1

  
	
  “Closing Purchase Price”

  	
   

  	
  2.2

  
	
  “Disclosing Party”

  	
   

  	
  8.8(a)

  
	
  “Disclosure Schedules”

  	
   

  	
  Section 5

  
	
  “Earnout Payments”

  	
   

  	
  2.3(e)

  
	
  “Earnout Period”

  	
   

  	
  2.3(a)

  
	
  “Earnout Rate”

  	
   

  	
  2.3(a)

  
	
  “ERISA Affiliate”

  	
   

  	
  5.1(p)(ii)

  
	
  “ERISA Plans”

  	
   

  	
  5.1(p)(ii)

  
	
  “FDA”

  	
   

  	
  5.1(q)(i)

  
	
  “Financial Statements”

  	
   

  	
  5.1(t)(i)

  
	
  “Government Contracts”

  	
   

  	
  5.1(l)(ii)

  



 


12

















 


	
  “HSR Act”

  	
   

  	
  4.1(d)

  
	
  “Ibis”

  	
   

  	
  Preamble

  
	
  “Ibis Contracts”

  	
   

  	
  5.1(x)(i)

  
	
  “Ibis Employees”

  	
   

  	
  8.11(a)

  
	
  “Indemnified Party”

  	
   

  	
  8.2(e)

  
	
  “Indemnifying Party”

  	
   

  	
  8.2(e)

  
	
  “Insurance Policies”

  	
   

  	
  5.1(y)

  
	
  “IP Contracts”

  	
   

  	
  5.1(l)(ii)

  
	
  “Isis”

  	
   

  	
  Preamble

  
	
  “Isis Proceeding”

  	
   

  	
  8.6(e)(i)

  
	
  “Isis Retirement Plans”

  	
   

  	
  8.11(d)

  
	
  “Leased Real Property”

  	
   

  	
  5.1(w)(ii)

  
	
  “Leasehold Improvements”

  	
   

  	
  5.1(w)(ii)

  
	
  “Leases”

  	
   

  	
  5.1(w)(ii)

  
	
  “Material Adverse Effect”

  	
   

  	
  4.1(j)

  
	
  “Material Licenses”

  	
   

  	
  5.1(q)(ii)

  
	
  “Most Recent Balance Sheet”

  	
   

  	
  5.1(t)(i)

  
	
  “Noncompete Period”

  	
   

  	
  8.9(a)

  
	
  “Nonsolicitation Period”

  	
   

  	
  8.9(c)

  
	
  “Note”

  	
   

  	
  7.12

  
	
  “Parties”

  	
   

  	
  Preamble

  
	
  “Party”

  	
   

  	
  Preamble

  
	
  “Plans”

  	
   

  	
  5.1(p)(ii)

  
	
  “Pre-Existing Business”

  	
   

  	
  8.9(b)

  
	
  [***]

  	
   

  	
   

  
	
  “Purchase Price”

  	
   

  	
  2.2

  
	
  “Rate Reserve Limit”

  	
   

  	
  8.15

  
	
  [***]

  	
   

  	
   

  
	
  “Receiving Party”

  	
   

  	
  8.8(a)

  
	
  “Remaining Shares”

  	
   

  	
  Recitals

  
	
  “Restricted Assets”

  	
   

  	
  2.5

  
	
  “Seller Group”

  	
   

  	
  8.2(b)

  
	
  “Special AMI Claims”

  	
   

  	
  8.2(e)(iii)

  



 


13

















 


	
  “Straddle Period”

  	
   

  	
  8.6(c)(ii)

  
	
  “Third Party Claim”

  	
   

  	
  8.2(e)

  
	
  “Transaction Value”

  	
   

  	
  2.2

  
	
  “Transition Services Agreement”

  	
   

  	
  4.1(k)

  
	
  “WARN Act”

  	
   

  	
  8.11(b)

  



 


Section 2.              BASIC TRANSACTION;
PURCHASE PRICE.


 


2.1           Sale
and Transfer of the Remaining Shares. 
Subject to the terms and conditions of this Agreement, at the Closing,
Isis shall sell, convey, assign, transfer and deliver to AMI all of the
Remaining Shares, free and clear of all Encumbrances, and AMI shall purchase,
acquire and accept the Remaining Shares from Isis.


 


2.2           Purchase
Price.  The purchase price (the “Purchase
Price”) for the Remaining Shares shall be equal to (i) $175,000,000 (the “Transaction
Value”), minus (ii) the amount of any Indebtedness of Ibis as of the
Closing (not including the amount of any Indebtedness that is Permitted
Indebtedness under clauses (i) or (ii) of the Permitted Indebtedness
definition), plus (iii) the Earnout Payments.  The “Closing Purchase Price” is an
amount equal to (x) the Transaction Value, minus (y) the amount of any
Indebtedness of Ibis as of the Closing (not including the amount of any
Indebtedness that is Permitted Indebtedness under clauses (i) or (ii) of the
Permitted Indebtedness definition).


 


2.3           Earnout
Payments.


 


(a)           Subject to Sections
2.3(e) and 2.3(g), from and after the Closing Date until December 31,
2025 (the “Earnout Period”), Ibis will pay to Isis an amount equal to
five percent (5%) (the “Earnout Rate”) of cumulative Ibis Net Sales that
are (i) in excess of the Earnout Threshold and (ii) less than or
equal to $2,100,000,000.  Such amounts
payable to Isis will be reduced by an amount equal to [***] of any [***], but
in no event will such amounts for such Ibis Net Sales be less than two and a
half percent (2.5%) of such cumulative Ibis Net Sales.


 


(b)           For cumulative Ibis Net
Sales during the Earnout Period that are in excess of $2,100,000,000, the
Earnout Rate will reduce from 5% to 3%. 
The corresponding amounts payable to Isis will be reduced by an amount
equal to [***] of any [***], but in no event will such amounts for such Ibis
Net Sales be less than one and a half percent (1.5%) of such cumulative Ibis
Net Sales.


 


(c)           In calculating the
amount of any reduction to the earn-out payments permitted by the second
sentence of either Section 2.3(a) or Section 2.3(b) that
result from any [***] that are [***], the amount of such [***] [***] will be
[***] of the Earnout Period from the date of such [***].  For example, if Ibis makes a [***] in the
form of [***] equal to [***] to [***] which, in AMI’s reasonable judgment was
[***] and such [***] was made in 2015, then, in each calendar quarter, Ibis
would be able to reduce the corresponding amounts


 


14

















 


payable for such quarter by [***], in each case
subject to the applicable 2.5% or 1.5% floor under Section 2.3(a) or
Section 2.3(b).


 


(d)           The earnout amounts
described in Sections 2.3(a) and 2.3(b) will be payable
on a quarterly basis, within [***] days after the last day of each calendar
quarter, by wire transfer of immediately available funds to an account
designated by Isis.  Within [***] [***]
days of the end of each calendar quarter, Ibis will deliver to Isis its
non-binding, preliminary, good faith estimate of Ibis Net Sales for such
calendar quarter.  All amounts included
in Ibis Net Sales shall be in United States funds collectible at par in Chicago,
Illinois.  With respect to Product or Service revenues, [***], or [***]
that are used in the calculation of Ibis Net Sales and are in monies other than
United States dollars, the amount to be used will first be determined in the
foreign currency of the country for such monies and then converted into
equivalent United States funds using the same conversion methodology that
Abbott uses to prepare its financial statements filed with the SEC.


 


(e)           Notwithstanding the
foregoing, Sections 2.3(a) through 2.3(c), (i) the
earnout amounts described in Sections 2.3(a) and 2.3(b) will
be payable only on cumulative Ibis Net Sales in excess of the Earnout
Threshold, (ii) no such earnout amounts will be payable in any calendar
year in which total Ibis Net Sales in such calendar year were less than or
equal to [***], (iii) in any calendar year in which Ibis Net Sales exceed
[***] and cumulative Ibis Net Sales exceed the Earnout Threshold, the earnout
amounts described in Sections 2.3(a) and 2.3(b) will be
payable with respect to all Ibis Net Sales in such calendar year which are in
excess of the Earnout Threshold and (iv) all Ibis Net Sales, regardless of
whether earnout amounts are payable thereon, will be included in cumulative
Ibis Net Sales for purposes of determining the applicable Earnout Rate.  For example, if Ibis Net Sales in each of the
calendar years 1 and 3 are equal to [***] and Ibis Net Sales in each of the
calendar years 2 and 4 are equal to [***], no earnout amounts would be payable
in calendar years 1 through 3, but earnout amounts would be payable with
respect to the entire [***] in Ibis Net Sales in calendar year 4.  The earnout amounts payable by Ibis to Isis
pursuant to this Section 2.3 are referred to herein as the “Earnout
Payments.”


 


(f)            Ibis shall maintain
its books and records used to determine Ibis Net Sales, [***], and [***] for a
period of three (3) years from the date of the Earnout Payment to which
they pertain.  Ibis shall make such books
and records available for inspection by third party representatives of Isis
approved in writing (which approval shall not be unreasonably withheld,
conditioned or delayed) once per calendar year at reasonable times and upon
reasonable written advance notice from Isis. 
All information contained in these books and records shall be
Confidential Information and will be used only for the purpose of determining
the accuracy of Ibis’ calculation of any Earnout Payment.


 


(g)           Notwithstanding any
provision of this Agreement or any other Transaction Document to the contrary,
except with respect to any [***] arising as a result of or in connection with a
breach of the representations and warranties set forth in Section 5.1(l)(v),
the Earnout Payment reductions set forth in Sections 2.3(a) and 2.3(b) will
be the AMI Group’s sole and exclusive remedy for any [***].


 


2.4           [Reserved]


 


15

















 


2.5           Restricted
Assets.  Notwithstanding any other
provision in this Agreement to the contrary, this Agreement shall not
constitute an agreement to assign or transfer any interest in any Contract,
asset, claim, right or benefit the assignment or transfer of which is otherwise
contemplated by the transactions contemplated by this Agreement to the extent
such assignment or transfer (or attempt to make such an assignment or transfer)
without the consent or approval of a third party would constitute a breach or
other contravention of the rights of such third party, or affect adversely the
rights of any Party or their Affiliates thereunder (such assets being
collectively referred to herein as “Restricted Assets”).  Any assignment or transfer of a Restricted
Asset shall be made subject to such consent or approval being obtained.  If any such consent or approval is not
obtained prior to the Closing, (a) the assigning or transferring Party shall
continue to use its commercially reasonable efforts to cooperate with the other
Party in attempting to obtain any such consent or approval and (b) establish
alternative arrangements (such as a license, sublease, subcontract or operating
agreement) until such time as such consent or approval has been obtained which
results in the assignee or transferee Party receiving all the benefits and
bearing all the burdens with respect to any such Restricted Asset (subject to Section
8.4, pursuant to which Isis shall be liable for and pay all out-of-pocket
costs and expenses associated with obtaining third party consents associated
with any Ibis Contract or Restricted Asset in excess of [***] in the
aggregate).


 


Section 3.              CLOSING OF THE
TRANSACTION.


 


3.1           The
Closing.  Subject to the satisfaction
or waiver of the conditions set forth herein, the closing of the transactions
contemplated by this Agreement (the “Closing”) shall take place at the
offices of Kirkland & Ellis LLP in Chicago, Illinois, at 10:00 a.m. Central
Time on the third Business Day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated, or on such other date, time and place as the Parties may mutually
agree in writing (the “Closing Date”), and the Closing shall be deemed
effective as of 12:01 a.m. Pacific Time on the Closing Date.


 


3.2           Deliveries
at the Closing.  At the Closing:


 


(a)           Isis shall deliver to
AMI (i) the various certificates, agreements, instruments and documents
referred to in Section 4.1 below and (ii) such other
instruments of sale, transfer, conveyance and assignment as AMI reasonably may
request;


 


(b)           AMI shall deliver to
Isis (i) the Closing Purchase Price, via wire transfer of immediately
available funds to an account designated in writing by Isis at least five (5) Business
Days prior to the Closing Date, and (ii) the various certificates,
agreements, instruments and documents referred to in Section 4.2
below;


 


(c)           Isis shall deliver to
Ibis all books, records and other materials of Ibis or related to or used by
Ibis in the Business, including the corporate minute book and stock ledger for
Ibis (unless otherwise specifically set forth in the Transition Services
Agreement); and


 


(d)           Isis shall deliver to
AMI one or more compact discs or other electronic media containing the contents
of the electronic dataroom maintained by Isis at [***] as of the date that is
three Business Days prior to the date hereof, together with a certificate of an


 


16

















 


authorized officer certifying that such compact discs
contain true, accurate and complete copies of the materials in such dataroom as
of such date.


 


Section 4.              CONDITIONS TO OBLIGATION TO CLOSE.


 


4.1           Conditions
to Obligation of AMI.  The obligation
of AMI to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:


 


(a)           Each of the
representations and warranties of Isis set forth in this Agreement shall be
true and correct in all material respects at and as of the date hereof and as
of the Closing Date (disregarding any materiality or Material Adverse Effect
qualifications contained therein, other than such qualifications contained in Section 5.1(aa));
provided, that any representation
or warranty of Isis set forth in this Agreement that is made as of any date
other than the date hereof shall be true and correct as of such date in all
material respects (disregarding any materiality or Material Adverse Effect
qualifications contained therein).


 


(b)           Each of Isis and Ibis
shall have performed and complied in all material respects with each of their
covenants hereunder through the Closing.


 


(c)           No Claim shall be
pending before any court, arbitrator, other body or administrative agency of
any Governmental Authority wherein an unfavorable injunction, judgment, order,
decree, ruling or charge would prevent consummation of any of the transactions
contemplated by this Agreement (and no such injunction, judgment, order,
decree, ruling or charge shall be in effect).


 


(d)           All filings with and
authorizations and approvals of Governmental Authorities that are required for
the consummation of the transactions contemplated hereby shall have been duly
made and obtained on terms reasonably satisfactory to AMI.  Without limiting the generality of the
foregoing, all applicable waiting periods (and any extensions thereof) under
the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended (the “HSR
Act”), shall have expired or otherwise been terminated.


 


(e)           Isis shall have
delivered to AMI (i) a certificate from an officer of Isis to the effect
that each of the conditions specified in Section 4.1(a), Section 4.1(b) and,
except for the matters expressly set forth on the Disclosure Schedules, Section 4.1(j),
is satisfied in all respects, (ii) a copy of the resolutions of the
governing body of each of Isis and Ibis approving the transactions contemplated
by this Agreement, certified by an officer of each of Isis and Ibis,
respectively, (iii) certificates from appropriate authorities, dated as of
or about the Closing Date, as to the good standing and qualification to do
business of Ibis in its jurisdiction of incorporation, (iv) such other
documents or instruments as are required to be delivered at the Closing
pursuant to the terms hereof and (v) such other documents or instruments
as AMI reasonably requests to effect the transactions contemplated hereby.  Nothing in this Section 4.1(e) or
the certificate delivered pursuant hereto will limit or otherwise affect AMI’s
rights under Section 4.1(j).


 


(f)            Isis shall tender to
AMI a certificate representing the Remaining Shares duly and validly endorsed
for transfer in favor of AMI or accompanied by a separate


 


17

















 


stock power duly and validly executed by Isis and
otherwise sufficient to vest in AMI legal and beneficial ownership of the
Remaining Shares.


 


(g)           Isis and AMI shall have
received all other authorizations, consents, and approvals of Governmental
Authorities referred to in Sections 5.1(c) and 5.1(d).


 


(h)           Ibis shall have the
benefit of all Licenses necessary to conduct the Business as it had been
conducted prior to the Closing and as contemplated to be conducted immediately
thereafter.


 


(i)            Isis shall have
obtained (A) payoff letters for any Indebtedness of Ibis to be paid by AMI
on behalf of Isis at the Closing and (B) releases of any and all
Encumbrances on the Remaining Shares or the assets of Ibis (except, with
respect to the assets of Ibis, Permitted Encumbrances), all on terms reasonably
satisfactory to AMI.


 


(j)            Since the Investment
Date, there shall have been no occurrence or disclosure of any event,
circumstance or state of facts which has, or would reasonably be expected to
have, a material adverse effect on the business, assets, condition (financial
or otherwise), operations, operating results, employee relations, customer
relations or supplier relations of Ibis (a “Material Adverse Effect”).  Notwithstanding the foregoing or any other
provision in this Agreement to the contrary, the disclosures set forth in the
Disclosure Schedules shall not be considered in determining whether the
condition specified in this Section 4.1(j) has been met.


 


(k)           Isis and Ibis shall
have executed and delivered to AMI the Transition Services Agreement
substantially in the form attached hereto as Exhibit E, the terms
of which shall provide that (i) subject to Section 8.14, in no
event will AMI and Ibis together be required to pay to Isis more than $[***] in
the aggregate for the Initial Services (as defined in the Transition Services
Agreement) provided by Isis thereunder, (ii) Isis will provide only the
categories of services set forth on Exhibit E-1 attached hereto,
and (iii) Ibis will not occupy Isis’ facilities nor will Isis be required
to provide services to Ibis after [***] (the “Transition Services Agreement”),
and the Transition Services Agreement shall be in full force and effect.


 


(l)            Isis shall have
executed and delivered to AMI a non-foreign affidavit dated as of the Closing
Date and in form and substance required under the Treasury Regulations issued
pursuant to Code § 1445 stating that Isis is not a “Foreign Person” as
defined in Code § 1445.


 


(m)          There shall not have
been any material breach of any of the terms and provisions of the Transaction
Documents that has not been waived by AMI.


 


(n)           Except as contemplated
by Section 2.5 and the Transition Services Agreement, Ibis shall be
entitled to fully exercise without restriction or limitation all legal and
beneficial rights under the Ibis Contracts (including the Government Contracts)
and all other assets, properties and rights related to, used in or necessary to
operate and conduct the Business in all respects in the manner conducted on and
prior to the Closing Date and as contemplated to be conducted from and after
the Closing Date.


 


18

















 


[***]AMI may waive any condition specified in this Section 4.1
if it executes a writing so stating at or prior to the Closing.  In the event of any such waiver, AMI shall be
deemed to have waived any claim against Isis for failure to satisfy such
condition; provided that, except
to the extent specifically and expressly set forth in such waiver, any such
waiver shall not limit AMI’s right to recovery hereunder for a breach by either
Isis or Ibis of any other provision of this Agreement.


 


4.2           Conditions
to Obligation of Isis.  The
obligation of Isis to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:


 


(a)           Each of the
representations and warranties of AMI set forth in this Agreement shall be true
and correct in all material respects at and as of the date hereof and as of the
Closing Date.


 


(b)           AMI shall have
performed and complied in all material respects with each of its covenants
hereunder through the Closing;


 


(c)           No Claim shall be
pending before any court, arbitrator, other body or administrative agency of
any Governmental Authority wherein an unfavorable injunction, judgment, order,
decree, ruling or charge would prevent consummation of any of the transactions
contemplated by this Agreement (and no such injunction, judgment, order, decree,
ruling or charge shall be in effect).


 


(d)           All filings with and
authorizations and approvals of Governmental Authorities that are required for
the consummation of the transactions contemplated hereby shall have been duly
made and obtained on terms reasonably satisfactory to Isis.  Without limiting the generality of the
foregoing, all applicable waiting periods (and any extensions thereof) under
the HSR Act shall have expired or otherwise been terminated.


 


(e)           AMI shall have
delivered to Isis a certificate of AMI to the effect that each of the
conditions specified above in Section 4.2(a) and Section 4.2(b) is
satisfied in all respects.


 


(f)            AMI (and any other
Abbott Holders (as defined in the Investor Rights Agreement)) shall have
executed and delivered to Isis a written consent in form reasonably
satisfactory to AMI and Isis, consenting to the transactions contemplated by Section 7.10.


 


Isis may waive any condition specified in this Section 4.2
if it executes a writing so stating at or prior to the Closing.  In the event of any such waiver, Isis shall
be deemed to have waived any claim against AMI for failure to satisfy such
condition; provided that, except
to the extent specifically and expressly set forth in such waiver, any such
waiver shall not limit Isis’ right to recovery hereunder for a breach by AMI of
any other provision of this Agreement.


 


19
















 


Section 5.              REPRESENTATIONS AND WARRANTIES.


 


5.1           Representations
and Warranties of Isis. As a material inducement to AMI to enter into this
Agreement, except as set forth in the corresponding Section of the
Disclosure Schedules delivered to AMI herewith on the date hereof (the “Disclosure
Schedules”), Isis hereby represents and warrants the following
representations and warranties are as of the date hereof, and will be as of the
Closing Date, true and correct:


 


(a)   Power and Authority. Each
of Ibis and Isis (i) has the power, authority and the legal right to enter
into each of the Transaction Documents and to perform its obligations hereunder
and thereunder, and (ii) has taken all necessary action required to
authorize the execution and delivery of each of the Transaction Documents and
the performance of its obligations hereunder and thereunder.


 


(b)   Enforceability. Each of
the Transaction Documents has been duly executed and delivered on behalf of
Ibis and Isis and constitutes a legal, valid and binding obligation of each
such Party and is enforceable against each such Party in accordance with its
terms subject to the effects of bankruptcy, insolvency or other Laws of general
application affecting the enforcement of creditor rights.


 


(c)   Governmental Authority;
Consents. All necessary consents, approvals and authorizations of all
Governmental Authorities and other parties required to be obtained by Ibis and
Isis in connection with the execution and delivery of each of the Transaction
Documents and the performance of their obligations hereunder and thereunder
have been obtained.


 


(d)   No Conflicts. The
execution and delivery of each of the Transaction Documents by each of Ibis and
Isis and the performance of each such Party’s obligations hereunder and
thereunder, with or without the passage of time or giving of notice, (i) do
not and will not conflict with or violate any requirement of Applicable Law or
any provision of the certificate of incorporation, bylaws or any similar
instrument of such Party, as applicable (ii) do not and will not require
any notice, conflict with, violate, or breach or constitute a default or
require any consent or give rise to any termination or acceleration right or
the creation of any Encumbrance on the Shares, the Additional Shares or the
Remaining Shares or any of the properties or assets of Ibis under, any
contractual obligation by which such Party is bound or subject to and (iii) do
not and will not cause the suspension, revocation, impairment, forfeiture or
nonrenewal of any License applicable to Ibis, the Business or any of Ibis’
operations, assets or properties.


 


(e)   Due Organization;
Qualification. Each of Ibis and Isis is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware, with
full corporate power and authority to enter into each of the Transaction
Documents. Except as would not reasonably be expected to have a Material
Adverse Effect, Ibis has obtained and currently maintains all qualifications to
do business as a foreign corporation in all jurisdictions in which the
character of the Business requires it to be so qualified. Ibis has all
requisite power and authority and all authorizations and Licenses necessary to
own, operate or conduct the Business.


 


20

















 


(f)    Subsidiaries. Ibis does
not own or control any Capital Stock or other interest of any Person. Ibis is
not a participant in any joint venture, partnership, limited liability company
or similar arrangement. Since its inception Ibis has not merged with, acquired
all or substantially all of the assets of (except pursuant to the Contribution
Agreement) or acquired the Capital Stock of or any interest in any Person. Ibis
does not hold the right to acquire any Capital Stock or interest in any other
Person or have any obligation to make any investment in any Person and no such
rights, Capital Stock or interests are necessary for the operation of the
Business. Isis does not control or possess the power, directly or indirectly to
control the management, actions or policies of Regulus Therapeutics, LLC.


 


(g)   Capitalization; Voting
Rights.


 


(i)            The
authorized Capital Stock of Ibis consists of 1,228,501 shares of Common
Stock, par value $0.001 per share, 1,228,501 shares of which are issued and
outstanding, 1,000,000 of which are held by Isis and 228,501  shares of which are held by AMI.


 


(ii)           The
issued and outstanding Capital Stock of Ibis as of the Closing will consist
exclusively of the Shares, the Additional Shares and the Remaining Shares. Except
as set forth in the Investor Rights Agreement, Ibis does not have any
obligations to issue or redeem any shares of Capital Stock and Ibis has not
issued any Capital Stock other than the Shares, the Additional Shares and the
Remaining Shares. No Capital Stock issued by Ibis is listed on any stock
exchange or unregulated market. Other than the Transaction Documents, there are
no agreements with Isis or Ibis or any other Person with respect to the voting
or Transfer of the Remaining Shares.


 


(iii)          The Remaining Shares are: (A) duly
authorized, validly issued, fully paid and nonassessable; (B) issued in
compliance with all applicable state and federal Laws concerning the issuance
of Capital Stock; and (C) free and clear of all Encumbrances other than
the Call Option; provided, that the Remaining
Shares may be subject to restrictions on Transfer under state and/or federal
securities Laws as set forth herein or as otherwise required by such Laws at
the time a Transfer is proposed.


 


(iv)          The
sale of the Remaining Shares to AMI
hereunder is not subject to any preemptive rights, rights of first refusal or
similar rights.


 


(h)   Agreements; Liabilities.


 


(i)            There
are no judgments, orders, writs or decrees to which Ibis or Isis is a party
currently pending or, to Isis’ or Ibis’ Knowledge, threatened which would
prevent Ibis or Isis from entering into the Transaction Documents or issuing or
Transferring the Remaining Shares pursuant to the terms of the Transaction
Documents.


 


(ii)           Ibis
has not (A) accrued, declared or paid any dividends, or authorized or made
any distribution upon or with respect to any class or series of its Capital
Stock, (B) incurred or guaranteed any Indebtedness (other than Permitted
Indebtedness), (C) made any loans or advances to any Person, other than
advances for reasonable travel expenses to Ibis employees in the ordinary
course of business, or


 


21

















 


(D) sold, exchanged, licensed or otherwise disposed of any of its
tangible assets, other than the sale of its inventory in the ordinary course of
business.


 


(iii)          Ibis has no material obligations or
liabilities (whether accrued, absolute, or to Isis’ or Ibis’ Knowledge
contingent, unliquidated or otherwise, whether due or to become due and regardless
of when or by whom asserted), including, without limitation, Taxes, except (A) obligations
under the Ibis Contracts made available to AMI or under Contracts entered into
in the ordinary course of business which, because of the dollar thresholds set
forth in Sections 5.1(l) and 5.1(x), are not required
pursuant to Sections 5.1(l) and 5.1(x) below to be
described on Schedules 5.1(l) or 5.1(x) (but not
liabilities for breaches of any such Contracts), (B) liabilities reflected
on the Most Recent Balance Sheet, (C) liabilities and obligations which
have arisen after the date of the Most Recent Balance Sheet in the ordinary
course of business (none of which is material or is a liability for breach of
contract, tort, infringement (directly, contributorily, by inducement or
otherwise), Claim or warranty (other than warranty claims arising in the
ordinary course of business in connection with the sale of Products or under
Ibis Contracts made available to AMI, none of which warranty claims
individually or in the aggregate would reasonably be expected to have a
Material Adverse Effect) and (D) other liabilities and obligations to the
extent expressly disclosed in Schedule 5.1(h)(iii).


 


(i)    Obligations to Related
Parties. There are no obligations of Ibis to Affiliates, officers,
directors or employees of Ibis or Isis other than (i) for payment of
salary to employees of Ibis for services rendered in the ordinary course of
business, (ii) reimbursement to employees of Ibis for reasonable expenses
incurred in the ordinary course of business on behalf of Ibis, (iii) standard
employee benefits made generally available to all employees, pursuant to the
Plans described on Schedule 5.1(p)(ii), (iv) the Bonus Arrangement
or (v) Ibis’ rights and obligations to Isis under the Contribution
Agreement and Corporate  Services
Agreement. To Isis’ and Ibis’ Knowledge, all of the Contracts to which Ibis is
a party or by which the Business or any of its assets is bound have been
negotiated on an arms length basis.


 


(j)    Title to Properties and
Tangible Assets; Liens, Etc. Ibis has good and marketable title to its
properties and tangible assets and good and valid title to its leasehold
estates, in each case subject to no Encumbrance other than (i) Permitted
Encumbrances and (ii) rights of the U.S. federal government in certain
equipment purchased using government funds, as set forth on Schedule 5.1(j).
The tangible assets of Ibis have been maintained in accordance with normal
industry practice and are in good operating condition and repair (except for
ordinary wear and tear).


 


(k)   Sufficiency of Assets.


 


(i)            Except
for the services, funding and facilities provided under the Corporate Services
Agreement, Ibis has all assets, properties and rights used in or necessary to
operate or conduct the Business in all respects.


 


(ii)           Except
the services, funding and facilities provided under the Corporate Services
Agreement and indirectly, via the Remaining Shares, Isis and its Affiliates do
not have any right, title or


 


22

















 


interest in or to any asset, property, title or interest that is used
in or necessary to operate or conduct the Business as conducted on and prior to
the Closing Date or as contemplated to be conducted by Ibis and Isis after the
Closing Date as reflected in the Offering Memorandum and Management
Presentations. Pursuant to the Contribution Agreement, Isis has transferred to
Ibis all assets, properties and rights Isis owned or which are or were used in
or necessary to operate or conduct the Business except the services, funding
and facilities provided under the Corporate Services Agreement. No person
employed by the Division prior to the date of the Contribution Agreement is
currently employed by Isis and no former employee of Ibis or the Division is or
has been employed by Isis.


 


(l)    Intellectual Property.


 


(i)            Schedule
5.1(l)(i) sets forth a complete and correct list of all of the
following Intellectual Property used in or necessary to operate or conduct the
Business (whether owned by Ibis or any other Person), and indicates with
respect to each item, whether Ibis owns or licenses such Intellectual Property
and the owner of any Intellectual Property covered by such license:  (A) patented or registered Intellectual
Property and pending patent applications or other applications for
registrations of Intellectual Property (including jurisdiction, registration
and application number, as applicable, and record owner), (B) registered
and material unregistered trademarks, service marks, trade names, and Internet
domain names, (C) Software (other than unmodified, commercially available,
off-the-shelf Software purchased or licensed for less than an individual cost
of [***] and a total cost of [***] in the aggregate for all such licenses), (D) material
algorithms embodied in the Products and any other material trade secrets; and (E) all
other material Intellectual Property used in or necessary to operate or conduct
the Business (including, without limitation, all Intellectual Property set
forth or required to be set forth in the following Schedules to the
Contribution Agreement: Schedule 2.1 (Ibis Business Assets), Schedule 2.2
(Ibis Business Patents), Schedule 2.5 (Ibis Trademarks) and Schedule 2.6 (Ibis
Business Software)) (all Intellectual Property described in the foregoing, (A) through
(E), collectively, (without regard to whether such Intellectual Property is set
forth on Schedule 5.1(l)(i)) “Business IP”).


 


(ii)           Schedule
5.1(l)(ii) sets forth a complete and correct list of all of the
following Contracts (other than licenses for unmodified, commercially
available, off-the-shelf Software purchased or licensed for less than an
individual cost of [***] and a total cost of [***] in the aggregate for all
such licenses) relating to the Business IP (collectively, the “IP Contracts”):
(A) Contracts in which Ibis or Isis or any of their respective Affiliates
is a licensee or sublicensee of Business IP; (B) Contracts in which Ibis
or Isis or any of their respective Affiliates is a licensor or sublicensor of
Business IP; (C) Contracts to which Ibis or Isis or any of their
respective Affiliates is a party, or by which any of the Business IP is bound,
that give any third party any right, title or interest in or to any such
Business IP; (D) Contracts with any Governmental Authority wherein any
portion of the Business IP was developed or used (“Government Contracts”);
and (E) Contracts that restrict Ibis’ rights in or use or disclosure of
Business IP.


 


23

















 


(iii)          Ibis owns and possesses all right, title and
interest in and to, free and clear of all Encumbrances (other than the rights
of Governmental Authorities under Government Contracts identified in Schedule
5.1(l)(iii) to the Intellectual Property identified in such Schedule)
or has a valid and enforceable license to use (pursuant to a written license
agreement set forth and described in Schedule 5.1(l)(ii) or a
written license for unmodified, commercially available, off-the-shelf Software
purchased or licensed for less than an individual cost of [***] and a total
cost of [***] in the aggregate) the Business IP.


 


(iv)          Neither
Isis nor any of its Affiliates (other than Ibis) has any right, title or
interest in or to any of the Business IP.


 


(v)           To
Isis’ or Ibis’ Knowledge, neither Ibis, nor with respect to the Business, Isis,
has infringed (directly, contributorily, by inducement or otherwise),
misappropriated or otherwise conflicted with, and the operation of the Business
(including the development, manufacture and commercialization of the T5000
Biosensor System, the [***], and the assay kits specifically listed in the
[***]) does not and will not infringe (directly, contributorily, by inducement
or otherwise), misappropriate or otherwise conflict with, the patents, trademarks,
copyrights or trade secrets of any Person, and neither Ibis nor Isis is aware
of any facts that indicate a likelihood of any of the foregoing (including
without limitation, oral or written demands or offers to license any
Intellectual Property from any Person). With respect to whether the operation
or conduct of the Business has or will infringe (directly, contributorily, by
inducement or otherwise), misappropriate or otherwise conflict with patent,
trademark, copyright or trade secrets of any Person (other than Ibis or Isis or
their respective Affiliates), the Parties hereto are relying upon the
representations and warranties contained in this Section 5.1(l)(v) and
not the representations and warranties contained in Sections 5.1(k)(i),  5.1(l)(viii) or 5.1(l)(ix).


 


(vi)          All
of the Business IP is valid and to Isis’ or Ibis’ Knowledge enforceable. Isis
and Ibis have taken all necessary actions to maintain and protect all of the
Business IP, including, without limitation, entering into confidentiality agreements
with each of its employees, consultants and independent contractors, and
customers and vendors as necessary so as not to adversely affect the validity
or enforceability thereof and have complied with disclosure requirements as
provided by any Government Contract. Neither Ibis nor Isis has disclosed any
source code for any Software included in the Business IP to any Person in a
manner that would impair the trade secret or other Intellectual Property
protection of such source code. There are no claims, oppositions or
cancellation proceedings that either were made or brought within the past [***]
years, or are presently pending or, to Isis’ or Ibis’ Knowledge, threatened,
against either Ibis or Isis contesting the validity, use, ownership,
enforceability or registrability of any Business IP. Neither Ibis nor Isis is
aware of any basis for any such claim, opposition or cancellation proceeding,
and neither Ibis nor Isis has received any notices regarding any of the
foregoing. No loss or expiration of any material Business IP is pending or
reasonably foreseeable or, to Isis’ or Ibis’ Knowledge, threatened, except for
patents expiring at the end of their statutory terms (and not as a result of
any act or omission by either Ibis or Isis, including, without limitation, a
failure to pay any required maintenance fees) or limitations to the scope of
claims of any pending patent application


 


24

















 


made during the ordinary course of prosecuting such pending patent
applications. Complete copies of all file histories for issued patents and
pending patent applications of the Business IP owned or held by either Ibis or
Isis have been provided to AMI.


 


(vii)         To Isis’ or Ibis’ Knowledge, (A) no
Person has infringed (directly, contributorily, by inducement or otherwise) or
misappropriated any of the Business IP and (B) no Person is infringing
(directly, contributorily, by inducement or otherwise) or misappropriating any
of the Business IP.


 


(viii)        Ibis has sufficient right,
title and interest in and to the Business IP: (A) to conduct the Business,
including the development, manufacture and commercialization of the T5000
Biosensor System (including the [***] and the assay kits specifically listed in
the [***] on a worldwide basis, with no payment obligation to any Person,
except pursuant to an IP Contract, and (B) to make, have made, import, use,
offer for sale,  or sell any
product (including [***] currently marketed by the Business and the assay kits
specifically listed in the [***] without infringing (directly, contributorily,
by inducement or otherwise), misappropriating or conflicting with any
Intellectual Property rights of any Person. The Business IP is and will be as
of the Closing Date, owned by or available for use by Ibis on terms and
conditions identical to those under which it was owned or used by Ibis and the
Business prior to the date hereof.


 


(ix)           To Isis’ or Ibis’ Knowledge, Ibis has
sufficient right, title and interest in and to the Business IP: (A) to
develop, manufacture and commercialize the [***] on a worldwide basis, with no
payment obligation to any Person, except pursuant to an IP Contract made
available to AMI, and (B) to make, have made, import, use, offer for sale,
or sell the [***] without infringing (directly, contributorily, by inducement
or otherwise), misappropriating or conflicting with any Intellectual Property
rights of any Person.


 


(x)            No
funding, facilities or resources of a Governmental Authority, university,
college, other educational institution or research center or funding from third
parties was used in the development of any of the Business IP and no
Governmental Authority, university, college, other educational institution or
research center has any claim or right in or to any of the Business IP.


 


(xi)           Each
current or former employee of each Isis Party or any of their respective
Affiliates, who was involved in, or who contributed to, the creation or
development of any Business IP, executed the standard form of proprietary
rights agreement set forth in Schedule 5.1(l)(xi) upon commencement of
his or her employment and each such current or former employee and any
consultant or independent contractor who was involved in, or who contributed
to, the creation or development of any Business IP has validly assigned all
right, title and interest in and to such Business IP to Ibis.


 


(xii)          None of the Transaction Documents nor the
transactions contemplated by any of the Transaction Documents would result in
or reasonably be expected to result in:  (A) Ibis,
AMI or any of their respective
Affiliates granting to any Person any right to or with respect to any
Intellectual Property owned by, or licensed to,


 


25

















 


any of them as a result of any Encumbrance or Contract to which, Ibis
or any of their Affiliates is a party or bound by, (B) other than standard
non-solicitation agreements entered into in the ordinary course of business and
made available to AMI, Ibis, AMI
or any of their respective Affiliates being bound by, or subject to, any
non-compete or other material restriction on the operation or scope of their
respective businesses as a result of any Encumbrance or Contract to which Isis,
Ibis or any of their Affiliates is a party or bound by, (C) other than as
contemplated by the Acquisition Agreement, Ibis, AMI or any of their respective Affiliates being obligated to pay
any royalties or other material amounts, to increase or accelerate any royalty
or payment obligation, or to offer any discounts, to any Person as a result of
any Encumbrance or Contract to which Isis, Ibis or any of their Affiliates is a
party or bound by, or (D) any adverse effect on Ibis’ right, title or
interest in and to any of the Business IP.


 


(xiii)         All components of the current version of the T5000
Biosensor System perform in all material respects in accordance with their
currently advertised, displayed, distributed or published specifications. All
services that have been performed in the conduct of the Business were performed
in material conformity with the terms and requirements of the related Contracts
and all Applicable Laws. All Software included in the Business IP is free of
any disabling codes or instructions, timer, copy protection device, clock,
counter or other limiting design or routing and any “back door,” “time bomb,” “Trojan
horse,” “worm,” “drop dead device,” “virus” or other similar disabling codes,
Software routines or hardware components. No open source, public source or
other Software that is licensed pursuant to a license that purports to require
the distribution of, or access to, source code or purports to restrict one’s
ability to charge for distribution of Software (including, without limitation,
any version of any Software licensed pursuant to any GNU general public license
or limited general public license or other Software), was used in, incorporated
into, integrated or bundled with any Software that has been used in the T5000
Biosensor System or any other product that has been distributed or is currently
distributed. Ibis does not have any plans to include any such Software in any
such system or Product. The source code for all Software included in the
Business IP is sufficiently documented such that a software programmer of
ordinary skill would be able to maintain and modify such source code using
reasonable efforts.


 


(xiv)        Without limiting any other representation or
warranty herein, the computer and other information technology systems and
networks owned or contracted for by Ibis have been maintained in accordance
with normal industry practice, are in good operating condition and repair
(except for ordinary wear and tear) and are sufficient for the operation of the
Business. Each of Ibis and Isis has taken all reasonably necessary action to
safeguard the computer and other information technology systems and networks
used in the operation of the Business and there has been no unauthorized
intrusions or breaches of the security of the computer and other information
technology systems and networks used in the Business that have materially
compromised or are currently materially compromising the security, integrity or
operations of such systems or networks.


 


(xv)         The
individuals identified as the outside counsel involved in the development or
prosecution of the Business IP on Schedule 1(rr) represent the


 


26

















 


outside counsel who have provided Isis or Ibis strategic legal and
Intellectual Property advice related to the Business IP and the Ibis Business
during the three (3) years prior to the Closing Date.


 


(m)  Compliance with Other
Instruments. Neither Ibis nor, with respect to the Business, Isis is in
violation or default of any term of its charter documents, each as amended, or
of any provision of any Contract to which it is party or by which the Business
is bound or of any judgment, decree, order or writ.


 


(n)   Litigation. There is no
Claim pending or, to Isis’ or Ibis’ Knowledge, threatened against Ibis or, with
respect to the Business, Isis (or against any Ibis or Isis employee (in their
capacity as such)), at Law or in equity, or before or by any Governmental
Authority, and to Isis’ or Ibis’ Knowledge, there is no reasonable basis for
any of the foregoing. Neither Ibis nor, with respect to the Business, Isis is
subject to any outstanding order, judgment, or decree issued by any
Governmental Authority or any arbitrator. Neither Ibis nor any of its
Affiliates has received any opinion or memorandum or advice from legal counsel
to the effect that Ibis or the Business is or was exposed, from a legal
standpoint, to any material liability.


 


(o)   Tax Matters.


 


(i)            Ibis
has filed all required Tax Returns. All Taxes owed and due by Ibis have been
paid. No claim has ever been made by an authority in any jurisdiction that Ibis
is or may be subject to taxation by that jurisdiction. There are no
Encumbrances on any of the assets used by Ibis that arose in connection with
any failure (or alleged failure) to pay any Tax. Schedule 5.1(o)(i) contains
a list of states, territories and jurisdictions (whether foreign or domestic)
in which Ibis is required to file Tax Returns.


 


(ii)           Ibis
has withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing by Ibis to any employee, independent
contractor, creditor, stockholder, or other third party, and all Forms W-2 and
1099 required with respect thereto have been properly completed.


 


(iii)          There is no dispute or claim concerning any
Tax liability of Ibis either (A) claimed or raised by any Governmental
Authority or (B) as to which Isis or Ibis has Knowledge.


 


(iv)          Neither
Ibis nor, with respect to the Business, Isis, has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.


 


(v)           To
Isis’ or Ibis’ Knowledge based in good faith on advice of Deloitte &
Touche LLP, (A) Ibis and Isis are and will be members of the same
consolidated group, as such term is defined by Treasury Regulation
§ 1.1502-1(h), with Isis being the common parent of such consolidated
group for all taxable years through and including the Closing and (B) unless
the provisions of the Code pertaining to filing Tax Returns as a consolidated
group are amended prior to the Closing, Ibis and Isis will be eligible to file
a consolidated Tax Return in lieu of separate Tax Returns with respect


 


27

















 


to income Tax imposed by Chapter 1 of the Code for all taxable years
through and including the Closing.


 


(vi)          Ibis
is not and will not at the Closing be a party to any oral or written Tax
sharing agreements or arrangements.


 


(p)   Employees.


 


(i)            Neither
Ibis nor, with respect to the Business, Isis, is party to any collective
bargaining agreement. There is no labor union organizing activity pending or,
to Isis’ or Ibis’ Knowledge, threatened with respect to Ibis. Each of Ibis and,
with respect to the Business, Isis has complied with all applicable Laws
relating to the employment of labor and, within the last five (5) years,
neither Ibis nor Isis, with respect to the Business, has experienced any
strike, work stoppage, lockout, grievance, unfair labor practice claim or other
labor relation problem, including, without limitation, any written dispute with
or Claim by former employees regarding termination and/or severance pay. To the
Knowledge of Isis or Ibis, no executive, key employee or group of employees of
Ibis has any plans to terminate employment with Ibis. In the past three (3) years,
Ibis and Isis have complied in all respects with the notification provisions
(or paid severance in lieu thereof) of the WARN Act and applicable similar
state or local laws. No executive, key employee or group of employees of Ibis
or the Business has been terminated or resigned their employment since the
Investment Date.


 


(ii)           Schedule
5.1(p)(ii) contains a true and complete list of each employment (other
than at-will offer letters with no severance, compensation term guarantee or
material benefit), bonus, fringe benefit, deferred compensation, incentive
compensation, stock purchase, stock option, stock appreciation right or other
stock-based incentive, severance, change-in-control, or other termination pay,
hospitalization or other medical, disability, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension, or retirement
plan, program or Contract and each other employee benefit plan, program or
Contract sponsored, maintained or contributed to or required to be contributed
to by Ibis, or by any trade or business, whether or not incorporated (an “ERISA
Affiliate”), that together with Ibis or Isis would be deemed a “single
employer” under Section 414(b), (c), (m) or (o) of the Code, for
the benefit of any current or former employee or director of Ibis (the “Plans”).
Schedule 5.1(p)(ii) identifies each Plan that is an “employee
welfare benefit plan” or “employee pension benefit plan” as such terms are
defined in Sections 3(1) and 3(2) of ERISA (such plans being
hereinafter referred to collectively as the “ERISA Plans”).


 


(iii)          Except as specified in Section 8.11(d),
neither Ibis nor Isis has any formal plan or binding commitment to create any
additional Plan or modify or change any existing Plan that would affect any
current or former employee or director of Ibis, except as required by Applicable
Law or to conform such Plan to the requirements of any Applicable Law. Except
for the Master Agreement and this Agreement, there are no Contracts or
omissions that would prevent or impair any Plan (including any Plan covering
retirees or other former employees) from being amended or terminated by Ibis or
Isis prior to or at the Closing, or, with respect to the Plans listed on Schedule
5.1(p)(xii)


 


28

















 


if any, by Ibis or AMI
(or any successor thereto) on or at any time after the Closing.


 


(iv)          Neither
Isis nor Ibis has incurred and has no reason to expect that either will incur
any liability to the Pension Benefit Guaranty Corporation (other than premium
payments) or otherwise under Title IV of ERISA (including any withdrawal
liability) or under the Code or any Applicable Law with respect to any employee
pension benefit plan that Isis or Ibis, or any other entity that together with
Isis or Ibis is treated as a single employer under Section 414 of the
Code, maintains or ever has maintained or to which it contributes, ever has
contributed, or ever has been required to contribute.


 


(v)           Neither
Ibis nor Isis, nor any of the ERISA Plans, nor any trust created thereunder,
nor to Isis’ or Ibis’ Knowledge, any trustee or administrator thereof has
engaged in a transaction or has taken or failed to take any action in
connection with which Ibis could be subject to any material liability for
either a civil penalty assessed pursuant to Sections 409  or 502(i) of ERISA or a tax imposed
pursuant to Sections 4975, 4976 or 4980B of the Code.


 


(vi)          Each
Plan is in all material respects in compliance, and has been administered in
all material respects in accordance, with the applicable provisions of ERISA,
the Code and all other Applicable Laws, including, but not limited to, medical
continuation under Section 4980B  of
the Code. Neither Isis nor Ibis has (A) engaged in any transaction
prohibited by ERISA or the Code; (B) breached any fiduciary duty owed by
it with respect to the Plans; or (C) failed to file and distribute timely
and properly all reports and information required to be filed or distributed in
accordance with ERISA or the Code.


 


(vii)         Other than routine claims for benefits, there
are no Claims, Internal Revenue Service or Department of Labor compliance
programs or other proceedings pending or, to Isis’ or Ibis’ Knowledge,
threatened against or otherwise involving any Plan.


 


(viii)        Each Plan which is intended to be qualified
under Section 401(a) of the Code (A) has been amended to reflect
all requirements under the Code which are required to be adopted prior to the
end of the applicable remedial amendment period and (B) has received from
the Internal Revenue Service a favorable determination letter which considers
the terms of the Plan as amended for such changes in Law.


 


(ix)           None
of the Plans obligates Isis or Ibis either (A) to pay any separation,
severance, termination or similar benefit to Ibis Employees or (B) to make
an excess parachute payment within the meaning of Code Section 280G.


 


(x)            No
Plan provides benefits, including without limitation death or medical benefits
(whether or not insured), with respect to current or former employees of Ibis
after retirement or other termination of service (other than (A) coverage
mandated by any Applicable Law, (B) death benefits or retirement benefits


 


29

















 


under any employee pension benefit plan or (C) benefits, the full
direct cost of which are borne by the current or former employee (or
beneficiary thereof)).


 


(xi)           To
Isis’ or Ibis’ Knowledge, other than as provided under the terms of the Plans,
neither Ibis nor Isis has made any representation or commitment to, or entered
into any formal or informal understanding with, any Ibis employee with respect
to compensation, benefits, or terms of employment to be provided by AMI or Ibis or any of their respective
Affiliates at or subsequent to the Closing.


 


(xii)          Except for the Bonus Arrangement, Ibis
neither sponsors nor maintains nor has any liability for (A) any of the
Plans or (B) any other employee benefit plans or arrangements.


 


(xiii)         All contributions, premiums or payments under
or with respect to each Plan which are or were due have been paid.


 


(q)   Compliance with Laws;
Licenses.


 


(i)            Ibis,
the Business and, with respect to the Business, Isis are not in material
violation of any Law. Ibis, the Business, and, with respect to the Business,
Isis and Ibis’ and Isis’ Representatives have complied with, and are in
material compliance with, all Applicable Laws, including, without limitation, the federal Food, Drug, and Cosmetic
Act, as amended and regulations promulgated thereunder, and all U.S. Food and
Drug Administration (“FDA”) or its foreign equivalent regulations
governing, among other things, the protection of human subjects and regulations
governing clinical investigators. No governmental orders, permissions,
consents, approvals or authorizations are required to be obtained and no
registrations or declarations are required to be filed in connection with the
execution and delivery of the Transaction Documents or the Transfer of the
Remaining Shares.


 


(ii)           Ibis
holds all Licenses necessary for the operation or conduct of the Business
(including pursuant to Environmental Laws). Schedule 5.1(q)(ii) sets
forth a list of all Licenses material to the Business (the “Material
Licenses”). Ibis is and has been in compliance with all terms and
conditions of such Material Licenses and all Material Licenses may be relied
upon by Ibis immediately following the Closing for the lawful operation of the
Business as conducted on and prior to the date hereof. Each Material License is
valid, binding and in full force and effect and Ibis and the Business have
complied in all material respects with all requirements of and are not in
default under any Material License and have not received written or, to Isis’
or Ibis’ Knowledge, oral notice that the Business or Ibis is in violation of
any of the terms or conditions of such Material License. No loss or suspension
of any License nor any proceeding or investigation which is seeking such a loss
or suspension is pending or, to Isis’ or Ibis’ Knowledge, threatened. Neither
Ibis nor Isis is operating under any written or oral formal or informal
agreement or understanding with any licensing authority, Regulatory Authority
or any other Governmental Authority which restricts the conduct of the Business
or requires Ibis or, with respect to the Business, Isis, to take or refrain
from taking any actions.


 


30

















 


(r)    Environment, Health and
Safety. Ibis and the Business have at all times materially complied with
and are in material compliance with all Environmental Laws, including, without
limitation, all Licenses and other authorizations that are required pursuant to
Environmental Laws for the ownership and occupation of the assets used by Ibis
and the operation of the Business. Neither Ibis nor Isis, with respect to the
Business is aware of or has reason to be aware of or has received any notice,
request for information, report, order, directive, communication or other
information, written or oral, regarding any actual or alleged violation of
Environmental Laws, or any Claims or other liabilities or potential liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise) arising
under Environmental Laws, relating to the Business, the Real Property or Ibis,
which has not been resolved without liability to Ibis. Neither Ibis nor its
Affiliates nor any of its legal predecessors has, in violation of Environmental
Laws, treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled, or Released, or exposed any Person to, any Hazardous
Materials, or owned or operated any property or facility (and no such property
or facility including the Real Property is contaminated by any such Hazardous
Materials) so as to give rise to any current or future liability under
Environmental Laws, including without limitation, any liability to investigate,
remediate, cleanup, monitor or take any similar actions with respect to the
environmental condition of any property (whether owned or non-owned), facility
or treatment, storage or disposal facility. None of the following exists or to
Isis’ or Ibis’ Knowledge, has ever existed at the Real Property: underground
storage tanks, septic tanks, asbestos containing materials, polychlorinated
biphenyls, lead-based paint, urea-formaldehyde, dumps, landfills, or waste
disposal areas, sumps, pits, lagoons, surface impoundments or wetlands, or any
contamination of any kind of the surface, subsurface, groundwater or surface
water. Ibis has not assumed or become subject to, whether expressly or by
operation of Law, any liabilities of any other Person arising under
Environmental Laws or pursuant to any type of agreement. The consummation of
the transactions contemplated by this Agreement do not impose any obligation on
the Business under any Environmental Law or require notification to or consent
of any Governmental Authority or third party pursuant to any Environmental Law.
Ibis has provided to AMI copies
of all material environmental Licenses, reports, audits, assessments, and
investigations, and any other material environmental documents, relating to
Ibis or the Business to the extent the foregoing are in the possession,
custody, or control of Isis or any of its Affiliates or Ibis.


 


(s)   Offering Valid. Assuming
the accuracy of the representations and warranties of AMI contained in Section 5.2 hereof, the offer and
sale of the Remaining Shares will be exempt from the registration requirements
of the Securities Act, and will have been registered or qualified (or are
exempt from registration and qualification) under the registration, permit or
qualification requirements of all applicable state securities Laws. Neither
Isis nor any agent on its behalf has solicited or will solicit any offers to
sell or has offered to sell or will offer to sell all or any part of the
Remaining Shares to any Person or Persons so as to bring the sale of such
Remaining Shares by Isis within the registration provisions of the Securities
Act or any state securities Laws.


 


(t)    Financial Statements.


 


(i)            Schedule 5.1(t)(i) attached
hereto contains the following financial statements (collectively the “Financial
Statements”): (i) the profit and loss statement for the Division for
the fiscal year ended December 31, 2007 and (ii) the profit


 


31

















 


and loss statement for Ibis and the related balance sheet (the “Most
Recent Balance Sheet”) for the nine-month period ended September 30,
2008. The Financial Statements have been prepared in accordance with GAAP
throughout the periods covered thereby, present fairly in all material respects
the financial condition of Ibis or the Division (as the case may be) as of such
dates and the results of operations of Ibis or the Division (as the case may
be) for such periods, and are materially correct and complete and consistent
with the books and records of Ibis (which books and records are materially
correct and complete).


 


(ii)           As of December 31,
2008, the [***], as determined in accordance with GAAP, on the Ibis balance
sheet for the twelve-month period ending December 31, 2008 will be no less
than $[***]. As of December 31, 2008, the [***], as determined in
accordance with GAAP, on the Ibis balance sheet for the twelve-month period
ending December 31, 2008 will be no more than $[***].


 


(u)   Subsequent Events. Since
the date of the Most Recent Balance Sheet, there has not been any material adverse
change in the business, assets, liabilities, condition (financial or
otherwise), operations, operating results, prospects, customer relations or
supplier relations of Ibis and Ibis has and Isis has caused Ibis to conduct the
Business in the ordinary course. Since the date of the Most Recent Balance
Sheet:


 


(i)            Ibis has not sold,
leased, transferred, or assigned any of its assets to a third party, tangible
or intangible, other than inventory in the ordinary course of business;


 


(ii)           No party (including
Ibis or Isis) has accelerated, terminated, modified, or canceled any material
Contract (or series of related Contracts) to which Ibis is or was a party or by
which the Business is or was bound;


 


(iii)          Ibis has made capital expenditures consistent
with its normal course of operations;


 


(iv)          Ibis has not experienced
any damage, destruction, or loss (whether or not covered by insurance) to its
property over $50,000 in the aggregate;


 


(v)           Ibis has not granted
any increase in the base compensation of any employee, except in the ordinary
course of business (including as to amount) or any bonus to, any employee,
other than in the ordinary course of business;


 


(vi)          Ibis
has not amended, modified, or terminated any Plan (except as specified in Section 8.11(d));


 


(vii)         Ibis has not entered into any transaction with
any of its directors, officers, employees or Affiliates, except for
transactions with its employees in the ordinary course of business;


 


(viii)        Neither Ibis nor Isis has licensed,
sublicensed, allowed any Encumbrance to exist on, abandoned, or permitted to
lapse any Business IP or, except in


 


32

















 


the ordinary course of business, disclosed any Confidential Information
of Ibis or the Business to any Person (other than AMI and AMI’s
Representatives);


 


(ix)           Ibis
has not made a change in its accounting methods; and


 


(x)            Ibis
has not committed in any binding manner to any of the foregoing.


 


(v)   Brokers’ Fees. There are
no brokerage commissions, finders’ fees or similar compensation due in
connection with the transactions contemplated by the Transaction Documents
based on any arrangement or agreement made by or on behalf of Isis or Ibis. To
the extent there are any brokerage commissions, finders’ fees or similar compensation
due in connection with the transactions contemplated by the Transaction
Documents to [***] Isis shall be solely liable for any and all such amounts.


 


(w)  Leased Real Property.


 


(i)            Ibis
does not own any real property and the ownership of any real property is not
necessary for the operation of the Business. Ibis does not lease, sublease,
license or otherwise grant any Person the right to use any real property. Neither
Isis nor any of its Affiliates leases, subleases, licenses or occupies any real
property used or occupied by, or necessary for the operation or conduct of, the
Business.


 


(ii)           Schedule
5.1(w)(ii) sets forth the names of the lessor and lessee, the address
of each parcel of real property used by Ibis (collectively, the “Leased Real
Property”), and a list of all leases, subleases, licenses and other
agreements (whether written or oral) (collectively, “Leases”) for each
such Leased Real Property. None of the Leases is a ground lease. Ibis and Isis
have delivered to AMI a true and
complete copy of each such Lease document, and in the case of any oral Lease, a
written summary of the material terms of such Lease. Ibis does not own any
structures, improvements or fixtures located on any Leased Real Property
(collectively, “Leasehold Improvements”) and no Leasehold Improvements
other than those provided to Ibis under the Corporate Services Agreement are
material to the operation of the Business.


 


(iii)          Each such Lease is legal, valid, binding,
enforceable and in full force and effect.


 


(iv)          Neither
Ibis nor, to Isis’ or Ibis’ Knowledge, any other party to a Lease is in breach
or default under such Lease, no event has occurred or circumstance exists
which, with the delivery of notice, the passage of time or both, could
reasonably be expected to constitute such a breach or default, or permit the
termination, modification or acceleration of rent under such Lease and neither
Ibis nor Isis has received notice that the Leased Real Property is in violation
of any Applicable Law.


 


(v)           No
security deposit or portion thereof deposited with respect to such Lease has
been applied in respect of a breach or default under such Lease which has not
been redeposited in full. Neither Ibis nor any other Person owes any brokerage
commissions, finder’s fees, free rent or allowances with respect to such Lease.


 


33
















 


(x)                   Contracts.


 


(i)                                     Schedule
5.1(x)(i) lists the following Contracts relating to the Business or to
which Ibis is a party:  (A) Contract
for the employment of any officer, individual employee, or other Person on a
full-time, part-time, consulting, or other basis or Contract relating to loans
to officers, directors, employees or Affiliates; (B) agreement or
indenture relating to borrowed money or other Indebtedness or the mortgaging,
pledging, or otherwise placing an Encumbrance on the assets or Capital Stock of
Ibis; (C) lease or agreement under which Ibis is the lessee of or holds or
operates any property, real or personal, owned by any other party, except for
any lease or agreement for real or personal property under which the aggregate
annual consideration is less than or equal to $25,000; (D) lease or
agreement under which Ibis is the lessor of or permits any Person to hold or
operate any property, real or personal, owned or controlled by Ibis; (E) distribution
or franchise agreement; (F) agreement with a term of more than six months
and (1) which is not terminable by Ibis upon less than 90 days’ notice
without penalty or (2) which involves aggregate annual consideration in
excess of $25,000; (G) agreements relating to ownership of or investments
in any business or enterprise, including joint ventures and minority equity
investments; (H) Contract prohibiting it from freely engaging in any
business or competing anywhere in the world; (I)  except as otherwise
disclosed on Schedule 5.1(x)(i) any other Contract or group of
related Contracts with the same party or group of affiliated parties that
involves aggregate annual consideration from or to Ibis in excess of $100,000;
or (J) any Contract that is otherwise material to Ibis and/or the
Business, including, without limitation, any IP Contract or Government
Contract, whether or not entered into in the ordinary course of business and
whether or not performance thereunder has been completed. All of the Contracts
and other similar arrangements set forth on or required to be set forth on Schedule
5.1(x)(i) (the “Ibis Contracts”).


 


(ii)                                  All
of the Ibis Contracts are valid, binding, enforceable and in full force and
effect, and the transactions contemplated by the Transaction Documents will not
cause such Contracts to cease to be valid, binding, enforceable and in full
force and effect on identical terms following the Closing. Each of Isis or
Ibis, as applicable, and, to Isis’ or Ibis’ Knowledge, each counterparty
thereto has performed all material obligations required to be performed by it
and is not in default under or in breach of or in receipt of any claim of
default or breach under any Ibis Contract. No event has occurred which with the
passage of time or the giving of notice or both would result in a default,
breach or event of noncompliance by either Ibis or Isis or, to Isis’ or Ibis’
Knowledge, any other party under any such Ibis Contract. Neither Isis nor Ibis
has received notice of the intention of any party to cancel or terminate any
Ibis Contract and, to Isis’ or Ibis’ Knowledge, there has not been any breach
or anticipated breach by the other parties to any such Ibis Contract.


 


(iii)                               Isis
has provided AMI with a true and
correct copy of all Ibis Contracts in each case together with all amendments,
waivers, or other changes thereto (all of which are disclosed on Schedule
5.1(x)(i)). Schedule 5.1(x)(i) contains an accurate and
complete description of all material terms of all oral Contracts referred to
therein.


 


34

















 


(y)                 Insurance.  Schedule 5.1(y) attached hereto lists
and briefly describes each insurance policy maintained by Ibis or Isis with
respect to the Business (the “Insurance Policies”), together with a claims
history for the past five (5) years for Ibis and, with respect to the Business,
Isis. All of the Insurance Policies are in full force and effect, and
neither Ibis nor Isis with respect to the Business is in default with respect
to its obligations under any such insurance policy and neither Ibis nor Isis,
with respect to the Business has been denied insurance coverage. Neither Ibis
nor Isis, with respect to the Business has any self-insurance or co-insurance
programs.


 


(z)                   Customers
and Suppliers.  Schedule 5.1(z) accurately
sets forth a list of the Business’ top ten customers by revenue for the fiscal
year ended December 31, 2007 and the nine-month period ended September 30,
2008. Except as set forth on Schedule 5.1(z), neither Isis nor
Ibis has received any indication from any material customer of the Business or
any Governmental Authority to the effect that, and neither Isis nor Ibis has
any reason to believe that, such customer or Governmental Authority will in the
future stop, or materially decrease the rate of buying products or services
from the Business. Schedule 5.1(z) also accurately sets forth a
list of the Business’ top ten suppliers by dollar amount for the nine-month period ended September 30, 2008. Except as set
forth on Schedule 5.1(z), neither Isis nor Ibis has received any
indication from any material supplier of the Business to the effect that, and
neither Isis nor Ibis has any reason to believe that, such supplier will stop
or materially decrease the rate of providing products or services to the
Business and its customers. Neither Isis nor Ibis is involved in any material
dispute with any customer or supplier of or to the Business.


 


(aa)                            No
Material Adverse Effect. Since September 30, 2007, there has been no
Material Adverse Effect.


 


(bb)                          Names
and Locations.  During the five-year
period prior to the date hereof, neither Ibis nor the Business has used any
name or names under which it has invoiced account debtors or maintained records
concerning the assets used in the operation of the Business, other than Ibis
Biosciences, Inc. and all of the assets used in the operation of the
Business are located at the Leased Real Property.


 


(cc)                            Directors,
Officers and Bank Accounts.  Schedule
5.1(cc) (i) sets forth a true and correct list of the directors and
officers of Ibis and the title of each such officer. Schedule 5.1(cc) (ii) lists
all of Ibis’ bank accounts, safety deposit boxes and lock boxes (designating
each authorized signatory with respect thereto).


 


(dd)                          Regulatory
Filings.  Ibis and Isis have made
available for inspection by AMI
all material registrations, filings or submissions made with any Regulatory
Authority or the SEC, and reports of audits ever issued by any Governmental
Authority made by or with respect to Ibis or the Business. Ibis or Isis has
timely filed, or caused to be timely filed, all material reports, statements,
documents, registrations, filings or submissions required to be filed by Ibis
or the Business with any Governmental Authority in connection with the
operation of Ibis or the Business. All such registrations, filings and
submissions are in material compliance in all respects with all Laws when filed
or as amended or supplemented, and no deficiencies have been asserted by any
such Governmental Authority with respect to such registrations, filings or
submissions.


 


35

















 


(ee)                            Disclosure.
 Neither the Transaction Documents, nor
any of the Schedules delivered in connection herewith or therewith, contains
any untrue statement of a material fact or omits a material fact necessary to
make the statements contained herein or therein, in light of the circumstances
in which they were made, not misleading. To Isis’ or Ibis’ Knowledge, there is
no event, circumstance or other fact which Isis or Ibis has not disclosed to AMI in writing which has had or would
reasonably be expected to have a Material Adverse Effect.


 


5.2                                 Representations
and Warranties of AMI.  As a material
inducement to Isis to enter into this Agreement, AMI hereby represents and
warrants to Isis that, except as set forth in the corresponding Section of
the Disclosure Schedules, the following representations and warranties are as
of the date hereof, and will be as of the Closing Date, true and correct:


 


(a)                  Power and
Authority.  AMI has the power,
authority and the legal right to enter into the Transaction Documents and to
perform its obligations hereunder and thereunder, and it has taken all
necessary action required to authorize the execution and delivery of each such
agreement and the performance of its obligations hereunder and thereunder.


 


(b)                 Enforceability.
 Each of the Transaction Documents has
been duly executed and delivered on behalf of AMI and constitutes its legal, valid
and binding obligation 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.


 


(c)                  Governmental
Authority; Consents.  All necessary
consents, approvals and authorizations of all Governmental Authorities and
other parties required to be obtained by AMI in connection with the execution
and delivery of the Transaction Documents and the performance of its
obligations hereunder and thereunder have been obtained.


 


(d)                 No Conflicts.
 The execution and delivery of the Transaction
Documents by AMI and the performance of its obligations hereunder and
thereunder (i) do not conflict with or violate any requirement of
Applicable Law or any provision of its certificate of incorporation or bylaws
and (ii) do not require any notice, conflict with, violate, or breach or
constitute a default or require any consent not already obtained or give rise
to any termination or acceleration right under, any contractual obligation by
which such Party is bound.


 


(e)                  Due
Organization; Qualification.  AMI is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, with full corporate power and authority to enter
into the Transaction Documents and to perform its obligations hereunder and
thereunder.


 


(f)                    Investment
Representations.  AMI understands
that the Remaining Shares have not been registered under the Securities Act. AMI
also understands that the Remaining Shares are being offered and sold pursuant
to an exemption from registration contained in the Securities Act based in part
upon AMI’s representations contained in this Agreement. AMI hereby represents
and warrants as follows:


 


(i)                                     AMI Bears Economic Risk. AMI may be required to bear the
economic risk of its investment in the Remaining Shares indefinitely unless the
Remaining 


 


36

















 


Shares
are registered pursuant to the Securities Act, or an exemption from
registration is available.


 


(ii)                                  Acquisition for Own Account. AMI is acquiring the Remaining
Shares for AMI’s own account for investment only, and not with a view towards
their distribution.


 


(iii)                               Accredited Investor. AMI represents that it is an accredited
investor within the meaning of Regulation D under the Securities Act.


 


(iv)                              Ibis Information. Ibis and Isis have given AMI an
opportunity to discuss Ibis’ business, management and financial affairs with
directors, officers and management of Ibis and AMI has had an opportunity to
review Ibis’ operations and facilities.


 


(v)                                 Rule 144. AMI acknowledges and agrees that the
Remaining Shares are “restricted securities” as defined in Rule 144
promulgated under the Securities Act as in effect from time to time and must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. AMI has been advised
or is aware of the provisions of Rule 144, which permits limited resale of
shares purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things: the availability of certain current
public information about Ibis, the resale occurring following the required
holding period under Rule 144 and the number of shares being sold during
any three-month period not exceeding specified limitations.


 


(g)                 Legends.  AMI
understands and agrees that the certificates evidencing the Remaining Shares
will bear legends relating to restrictions on Transfer under federal and state
securities Laws and legends required under applicable state securities Laws.


 


Section 6.                          RESERVED.


 


Section 7.                          PRE-CLOSING
COVENANTS.  The Parties agree as
follows with respect to the period between the execution of this Agreement and
the Closing:


 


7.1                                 General.
 Each of the Parties shall use its
commercially reasonable efforts to take all action and to do all things
necessary in order to consummate and make effective the transactions
contemplated by this Agreement.


 


7.2                                 Affirmative
Covenants of Isis and Ibis.  Except
as otherwise contemplated by this Agreement, between the date hereof and the
Closing, each of Isis, with respect to the Business, and Ibis shall:


 


(a)                                  conduct
the Business only in the ordinary course; use commercially reasonable efforts
to carry on the Business in the same manner as currently conducted and to keep
Ibis’ business organization and properties intact, including its business
operations, physical facilities, working conditions, executives and key
employees and Ibis’ and the Business’ relationships with lessors, licensors,
suppliers, customers, carriers, consultants, independent contractors and others
having business relations with Ibis or the Business;


 


37

















 


(b)                                 keep
in full force and effect Ibis’ organizational existence and all of its and the
Business’ assets, Contracts, rights, franchises, and Business IP and use
commercially reasonable efforts to cause Ibis’ and the Business’ current
insurance (or reinsurance) policies not to be canceled or terminated or any of
the coverage thereunder to lapse;


 


(c)                                  maintain
the Real Property and other assets of Ibis (including the Business IP) in good
repair, order and condition (normal wear and tear excepted) consistent with
current needs, replace in accordance with prudent practices inoperable, worn
out or obsolete assets with assets of good quality consistent with prudent
practices and current needs and, in the event of a casualty, loss or damage to
any of such assets or properties before the Closing Date, either repair or
replace such damaged property or use the proceeds of such insurance in such
other manner as mutually agreed upon by Isis and AMI; and


 


(d)                                 maintain
the books, accounts, and records of Ibis consistent with past practice and make
capital expenditures at levels consistent with the past practices of Ibis and
the Business.


 


7.3                                 Negative
Covenants of Isis.  Except as
expressly contemplated by this Agreement or as set forth on Schedule 7.3,
between the date hereof and the Closing, Ibis shall not and, with respect to
Ibis and the Business, Isis shall not and shall cause Ibis not to:


 


(a)                                  amend
or waive any provision of Ibis’ Certificate of Incorporation;


 


(b)                                 take
any action that would reasonably be expected to adversely affect the rights,
preferences or privileges of the Shares, the Additional Shares or the Remaining
Shares;


 


(c)                                  take
any action by written stockholder consent of Ibis without at least 2 Business
Days prior written notice to AMI;


 


(d)                                 redeem,
repurchase, pay or declare dividends or other distributions with respect to any
Capital Stock of Ibis;


 


(e)                                  issue
any Capital Stock of Ibis or any rights to acquire Capital Stock of Ibis;


 


(f)                                    authorize
or designate, whether by reclassification or otherwise, any new class or series
of Capital Stock of Ibis or any increase in the authorized or designated number
of any such class or series of Capital Stock of Ibis;


 


(g)                                 enter
into any transaction of merger, consolidation or sale of control, or liquidate,
reorganize, recapitalize, wind up or dissolve Ibis, or Transfer any portion of
Ibis’ Capital Stock, properties, assets or business other than transfers of
inventory in the ordinary course of business;


 


(h)                                 sell,
transfer, assign, license or sublicense, or allow any Encumbrance on any
Business IP other than (i) rights of the U.S. federal government in
Intellectual Property pursuant to the Government Contracts set forth on Schedule 5.1(l)(iii) or


 


38

















 


new Government Contracts entered into in the ordinary course of
business and (ii) end user license agreements related to the Software
embodied in the T5000 Biosensor Systems that are issued in the ordinary course
of business solely to purchasers of T5000 Biosensor Systems;


 


(i)                                     abandon
or permit to lapse any Business IP other than patents expiring at the end of
their statutory terms (and not as a result of any act or omission by either
Ibis or Isis, including, without limitation, a failure to pay any required
maintenance fees) and limitations to the scope of claims of any pending patent
application made during the ordinary course of prosecuting such pending patent
applications;


 


(j)                                     disclose
any Confidential Information of the Business to any Person (other than AMI and
its Representatives) other than in the ordinary course of business;


 


(k)                                  create,
incur, guarantee, assume, or be liable for any Indebtedness, other than
Permitted Indebtedness in the ordinary course of business;


 


(l)                                     subject
any tangible asset of the Business to any Encumbrance, other than Permitted
Encumbrances in the ordinary course of business and rights of the U.S. federal
government in certain equipment purchased using government funds pursuant to (i) the
Government Contracts set forth on Schedule
5.1(l)(iii) or (ii) new
Government Contracts entered into in the ordinary course of business;


 


(m)                               (i) make
any loan to or enter into any transaction with any officer, employee, partner
or Affiliate, (ii) increase any officer’s, employee’s or partner’s
compensation outside the ordinary course of business, (iii) increase or
accelerate any benefit, vesting schedule, obligation, subsidy or similar
feature under any Plan outside the ordinary course of business, (iv) establish
any Plan or (v) amend any Plan outside the ordinary course of business or
commence making contributions to any multiemployer plan;


 


(n)                                 make
any acquisition, by means of merger, consolidation or otherwise, or any
disposition, of assets or Capital Stock of any other Person;


 


(o)                                 make
any loans or capital contributions to, or investments in, any other Person,
except advances to employees for reasonable expenses incurred in the ordinary
course of business;


 


(p)                                 enter
into any Contract or amend any Contract required to be disclosed or to have
been disclosed on Schedule 5.1(l) or Schedule 5.1(x), except
in the ordinary course of business;


 


(q)                                 enter
into any strategic alliance, joint venture or joint marketing arrangement or
agreement;


 


(r)                                    delay
or defer maintenance or repairs on any of Ibis’ assets;


 


(s)                                  waive
or release any material Claim of Ibis;


 


39

















 


(t)                                    except
as may be required by GAAP, make any material changes in policies or practices
relating to selling practices, returns, discounts or other terms of the
Business or accounting therefor, or in respect of the payment of trade payables
or other similar liabilities incurred in connection with the operation of Ibis;


 


(u)                                 increase
or decrease marketing or promotional spending in any material respect from the
rates established as of the date hereof, other than in the ordinary course of
business;


 


(v)                                 incur
or guarantee any liability other than in connection with the performance or
consummation of this Agreement;


 


(w)                               incur
or commit to incur any capital expenditures in excess of $100,000 which would
be payable after the Closing;


 


(x)                                   take
or omit to take any action that has or could reasonably be expected to have the
effect of accelerating to pre-Closing periods sales that would otherwise be
expected to occur after the Closing or otherwise in anticipation of the
transactions contemplated hereby;


 


(y)                                 take
or omit to take any action that has or could reasonably be expected to have the
effect of decelerating to post-Closing periods any payments or liabilities that
would otherwise be expected to occur prior to the Closing or otherwise in
anticipation of the transactions contemplated hereby;


 


(z)                                   except
as otherwise contemplated by this Agreement, pay, discharge, settle or satisfy
any claim, liability or obligation or litigation (whether or not commenced
prior to the date of this Agreement) outside the ordinary course of business;


 


(aa)                            take
any other action which would reasonably be expected to interfere with, impede
or materially delay the transactions contemplated hereby or dilute the benefits
hereof to AMI and its Affiliates; or


 


(bb)                          commit,
or enter into any agreement to do, any of the foregoing.


 


7.4                                 Notices
and Consents.  Each of the Parties
will give any notices to, make any filings with and use its commercially
reasonable efforts to obtain any authorizations, consents and approvals of
third parties and Governmental Authorities in connection with the matters
referred to in Sections 5.1(c) (Governmental Authority; Consents)
and 5.1(d) (No Conflicts) above, including without limitation the
transfers of Licenses.


 


7.5                                 Full
Access.  Ibis will cooperate with AMI
in AMI’s investigation of Ibis and the Business, and Ibis will permit AMI and
its employees, agents, accountants, attorneys, environmental consultants, and
other authorized representatives to (a) have full access to the premises,
books and records of Ibis and, to the extent related to the Business, Isis,
upon reasonable prior notice during normal business hours, (b) visit and
inspect any of the properties of Ibis and, to the extent related to the
Business, Isis, upon reasonable prior notice during normal


 


40

















 


business hours and (c) discuss the affairs, finances and accounts
of Ibis with the officers, directors, employees, key customers, suppliers and
independent accountants of Ibis.


 


7.6                                 Transition
Assistance.  From and after the date
hereof, neither Isis nor Ibis will in any manner take or cause to be taken any
action which is designed, intended or might reasonably be anticipated to have
the effect of discouraging current or potential customers, suppliers,
licensors, lessors, independent contractors, consultants, employees and other
associates of Ibis or the Business from establishing or maintaining the same
business relationships with AMI after the date of this Agreement as were
maintained with Ibis or the Business prior to the date of this Agreement.


 


7.7                                 Notice
of Developments.


 


(a)                  Isis shall
promptly (once Isis or Ibis obtains Knowledge thereof, but in any event within
[***] of such Knowledge) inform AMI in writing of any inaccuracy in or breach
of the representations and warranties contained in Section 5.1 or
any breach of any covenant hereunder by Ibis or Isis. No such disclosure by
Isis pursuant to this Section 7.7, however, shall be deemed to cure
any breach of any representation or warranty or covenant contained herein for
purposes of determining the fulfillment of the conditions set forth in Sections
4.1(a) and 4.1(b) as of the Closing or for purposes of
determining the liability of Isis with respect thereto under Section 8.2(a).


 


(b)                 AMI shall
promptly (once AMI obtains Knowledge thereof, but in any event within three (3) Business
Days of such Knowledge) inform Isis in writing of any inaccuracy in or breach
of the representations and warranties contained in Section 5.2 or
any breach of any covenant hereunder by AMI. No such disclosure by AMI pursuant
to this Section 7.7, however, shall be deemed to cure any breach of
any representation or warranty or covenant contained herein for purposes of
determining the fulfillment of the conditions set forth in Sections 4.2(a) and
4.2(b) as of the Closing or for purposes of determining the
accuracy of the representations and warranties contained in Section 5.2
and the liability of AMI with respect thereto under Section 8.2(c).


 


7.8                                 Exclusivity.


 


(a)                  Until the
Closing, neither Isis, nor Ibis nor any of their respective Affiliates shall
(and each shall (i) cause its Representatives and (ii) instruct its
investment bankers, attorneys and accountants, not to), directly or indirectly,
encourage, solicit, approve or recommend or participate in or initiate
discussions or negotiations with, or provide any information to, any Person or
group (other than AMI and its Representatives) concerning any Purchase Offer.


 


(b)                 Isis shall
promptly, but in any event within [***], notify AMI of the existence of any
attempted [***] by a non-intermediary principal received by Ibis or Isis or
their respective Representatives, regarding any [***] and Ibis and Isis shall
promptly, but in any event within [***], communicate to [***] which they may
receive (and will immediately provide to AMI [***] and the [***]. Isis and Ibis
shall promptly provide to AMI any [***] provided to any other Person by or on
behalf of Ibis or Isis in connection with [***]


 


41

















 


7.9                                 Indebtedness
and Intercompany Accounts.


 


(a)                  Prior to the
Closing, Isis (i) shall assume, extinguish, repay or contribute as equity,
or shall cause to be assumed, extinguished, repaid or contributed as equity,
all Indebtedness and ancillary obligations thereto owed by Ibis to any Person
(including Isis and its Affiliates) (not including the amount of any
Indebtedness that is Permitted Indebtedness under clauses (i) or (ii) of
the Permitted Indebtedness definition that is owed to any Person other than
Isis or any of its Affiliates), such that Ibis shall have no Indebtedness or
ancillary obligations to any Person (not including the amount of any
Indebtedness that is Permitted Indebtedness under clauses (i) or (ii) of
the Permitted Indebtedness definition that is owed to any Person other than
Isis or any of its Affiliates) and (ii) shall, and shall cause its
Affiliates to, repay in full all Indebtedness and ancillary obligations thereto
it or they owe to Ibis.


 


(b)                                 Prior
to the Closing, Isis shall, and shall cause its Affiliates to, settle or
extinguish all intercompany receivables and payables that were incurred on or
prior to the Closing and that arose from transactions between Isis or its
Affiliates (other than Ibis), on the one hand, and Ibis, on the other hand.


 


(c)                  At the Closing,
Isis shall cause to be delivered to AMI (i) the Remaining Shares free and
clear of all Encumbrances, (ii) the assets of Ibis free and clear of all
Encumbrances, other than Permitted Encumbrances and (iii) payoff letters
with respect to any Indebtedness of Ibis to be paid by AMI at the Closing (in
each case in form and substance reasonably satisfactory to AMI).


 


(d)                 At or prior to
the Closing, Isis and Ibis shall (i) amend the Contribution Agreement as
reasonably requested by AMI and (ii) terminate the Corporate Services
Agreement and any other intercompany agreements and arrangements, except the
Contribution Agreement (as amended under clause (i) above), the
Transaction Documents and the arrangements expressly contemplated by the
Transaction Documents.


 


7.10                           Distribution
of Cash.


 


Immediately prior to the
Closing, Ibis may distribute to Isis all of its cash and cash equivalents in
excess of the amount, not to exceed $[***], required to pay for [***] for which
payment has not been made by Ibis prior to the Closing Date. Notwithstanding
the foregoing, [***] will be distributed after the Closing in accordance with Section 8.14
[***].


 


7.11                           [***]
and [***].


 


Prior to the Closing
Date, Ibis shall order, pay for and ensure the delivery to Ibis of, no fewer
than [***] working [***] meeting the requirements set forth on Exhibit F
attached hereto. In addition, Ibis shall order $[***] worth of the [***]
set forth on Exhibit F that are necessary to manufacture [***] (the
“[***]”).


 


7.12                           Permitted
Indebtedness.


 


On or prior to the
Closing Date, AMI shall, at AMI’s option, either (a) execute and deliver
to [***] a written [***] pursuant to which AMI [***], effective as of the
Closing, Ibis’


 


42

















 


[***], not to
exceed $[***], under (i) that certain [***], by and between [***] and
Ibis, and (ii) that certain related [***] issued by Ibis to [***] (the “[***]”),
(b) consent to the transfer to Isis of the [***] attached to such [***] or
(c) [***] the [***], including any [***].


 


7.13                           Bonus
Arrangement Payments.


 


On or prior to the
Closing Date, Isis and Ibis shall satisfy all obligations under the Bonus
Arrangement, including paying all amounts due thereunder to Ibis Employees.


 


Section 8.                          ADDITIONAL
AGREEMENTS.


 


8.1                                 Survival.
The covenants in this Agreement shall survive the Closing indefinitely, except
as otherwise provided herein. The representations and warranties in this
Agreement shall survive the Closing as follows:


 


(a)                                  the
Fundamental Isis Representations, other than the representations contained in Section 5.1(t)(ii),
which shall terminate on the [***] anniversary of the Closing Date, and the
Fundamental AMI Representations shall terminate on [***];


 


(b)                                 the
representations and warranties in Section 5.1(o) (Tax
Matters), Section 5.1(p) (Employees) and Section 5.1(r) (Environment,
Health and Safety) shall terminate [***] and the representations and warranties
in Section 5.1(l) (Intellectual Property) shall terminate on
the [***] anniversary of the Closing Date; and


 


(c)                                  all
other representations and warranties in this Agreement shall terminate on the
[***] anniversary of the Closing Date.


 


Notwithstanding the
foregoing, claims for indemnification pursuant to Section 8.2 as to
which the Indemnified Party has given the Indemnifying Party proper notice
pursuant to Section 10.6 prior to the expiration of the applicable
survival period shall survive such expiration until such claims are resolved by
written agreement of the Parties or by order of a court of competent jurisdiction.


 


8.2                                 Indemnification.


 


(a)                  Isis shall
indemnify, defend and hold harmless AMI, Ibis, their respective officers,
directors, shareholders, employees, representatives, agents and Affiliates
(collectively, the “AMI Group”) against any Losses which any of them may
suffer, sustain, or become subject to, as a result of:


 


(i)                                     the
breach of any representation or warranty made by either Isis or Ibis in the
Transaction Documents or in any certificate delivered by Isis or Ibis pursuant
hereto or thereto;


 


(ii)                                  the
breach of any covenant or agreement made by either Isis or Ibis in the
Transaction Documents or in any certificate delivered by Isis or Ibis pursuant
hereto or thereto;


 


43
















 


(iii)                               (A) any Plan of any
entity that together with Ibis constitutes a controlled group of entities with
Isis under Section 414(b), (c), (m) or (o) of the Code, (B) any
former employee of Ibis or Isis who is not an Ibis Employee (regardless of when
such Loss arises) and (C) any Ibis Employees, in each case, incurred on or
prior to the Closing Date;


 


(iv)                              the
conduct or operation of the Business or ownership or occupancy of the assets
used in the Business on or prior to the Closing Date;


 


(v)                                 the
Bonus Arrangement;


 


(vi)                              any
services provided to Ibis prior to the Closing Date [***], whether as an
employee, independent consultant or otherwise, including the matters described
in [***];


 


(vii)                           the
matters described in [***] of the [***]; and


 


(viii)                        [***]
claims from [***] related to goods and services provided to [***] by Ibis prior
to the Closing pursuant to any Contract listed on Exhibit C to the
extent such [***] claims are in excess of the [***].


 


(b)         With respect to claims
for indemnification pursuant to Sections 8.2(a)(i), 8.2(a)(iii) or
8.2(a)(iv) above, Isis will be liable to the AMI Group for any such
Losses only if the aggregate amount of all such Losses relating to all such
breaches exceeds [***], in which case Isis will be [***].  Notwithstanding the foregoing, the recovery
limitations set forth in this Section 8.2(b) shall not apply
to any Losses suffered as a result of the breach by Isis or Ibis of any [***].


 


(c)          AMI shall indemnify,
defend and hold harmless Isis, its respective officers, directors,
shareholders, employees and Affiliates (the “Seller Group”) against any
Losses which any of them may suffer, sustain or become subject to, as the
result of:


 


(i)                                     the
breach of any representation or warranty made by AMI in the Transaction
Documents or in any certificate delivered by AMI pursuant hereto or thereto;


 


(ii)                                  the
breach of any covenant or agreement made by AMI in the Transaction Documents or
in any certificate delivered by AMI pursuant hereto or thereto; and


 


(iii)                               the
conduct or operation of the Business or ownership or occupancy of the assets
used in the Business after the Closing Date.


 


(d)         With respect to claims
for indemnification pursuant to Sections 8.2(c)(i) and 8.2(c)(iii) above,
AMI will be liable to the Seller Group for any such Losses only if the
aggregate amount of all such Losses relating to all such breaches exceeds
[***], in which case AMI will be [***]. 
Notwithstanding the foregoing, the recovery limitations set forth in
this 


 


44





















 


Section 8.2(d) shall not
apply to any Losses suffered as a result of the breach by AMI of any [***].


 


(e)          If any third party shall
notify any Party to this Agreement (the “Indemnified Party”) of any
matter which may give rise to a claim (a “Third Party Claim”) for
indemnification against any other Party to this Agreement (the “Indemnifying
Party”) under this Section 8.2, then the following procedures
shall apply:


 


(i)                                     The
Indemnified Party shall notify the Indemnifying Party thereof; provided, that the failure to so notify
the Indemnifying Party shall not relieve the Indemnifying Party of its
obligations hereunder except to the extent such failure shall have actually
materially prejudiced the Indemnifying Party.


 


(ii)                                  If
the Third Party Claim pertains to any matter other than those identified in
Sections 8.2(a)(vi) or 8.2(a)(vii), once the Indemnified
Party has given notice of the matter to the Indemnifying Party, the Indemnified
Party shall defend against the matter in any manner it reasonably may deem appropriate.  The Indemnifying Party may, at its sole cost
and expense, participate in the defense of such Claim with co-counsel of its
choice.  Notwithstanding the foregoing or
any other provision in this Agreement to the contrary, the Indemnifying Party shall
not have the right to participate in such defense if the claim in which the
Indemnifying Party seeks to participate (A) seeks non-monetary relief that
does not seek to obtain a license or other access to, restrict the scope of, or
adversely affect the enforceability of, any Intellectual Property controlled by
the Indemnifying Party, (B) seeks injunctive relief, (C) involves
criminal allegations against an Indemnified Party or (D) is one in which
the Indemnifying Party is also a party and joint representation would be
inappropriate or there may be legal defenses available to the Indemnified Party
which are different from or additional to those available to the Indemnifying
Party.  The Indemnified Party shall not
consent to the entry of any judgment with respect to the matter or enter into
any settlement with respect to the matter without the Indemnifying Party’s
prior written consent (not to be unreasonably withheld, conditioned or
delayed).


 


(iii)                               If
the Third Party Claim pertains to any matter identified in Sections 8.2(a)(vi) or
8.2(a)(vii), in connection with the prosecution, defense and resolution
of such matter, as among Isis and the members of the AMI Group, once a member
of the AMI Group has given notice of the matter to Isis, Isis shall control the
prosecution, defense and resolution of such matter as it may reasonably deem
appropriate.  Notwithstanding the
foregoing or any other provision in this Agreement to the contrary (A) the
AMI Group will have the right to participate, at its own expense, in the
prosecution, defense or resolution of such Third Party Claim to the extent such
Third Party Claim (1) seeks injunctive relief against a member of the AMI
Group, (2) involves criminal allegations against a member of the AMI Group
or (3) is one in which Isis is also a party and joint representation would
be inappropriate or there may be legal defenses available to a member of the
AMI Group which are different from or additional to those available to Isis
(such Third Party Claims, to the extent meeting the criteria set forth in
subsections (e)(iii)(A)(1), (e)(iii)(A)(2) or (e)(iii)(A)(3) above
are referred to as “Special AMI Claims”), (B) Isis shall not
consent to the entry of any judgment with


 


45

















 


respect to any matter identified in Sections 8.2(a)(vi) or
8.2(a)(vii) or enter into any settlement with respect to such
matter without AMI’s prior written consent (not to be unreasonably withheld,
conditioned or delayed), (C) the AMI Group shall not consent to the entry
of any judgment with respect to any Special AMI Claims or enter into any
settlement with respect to such Special AMI Claims without Isis’ prior written
consent (not to be unreasonably withheld, conditioned or delayed) and (D) for
any matter that Isis is entitled to control pursuant to this Section 8.2(e)(iii),
Isis shall promptly advise in-house counsel designated by AMI of all court
filings as well as developments with respect to such matter.


 


(f)            None of the AMI Group
or the Seller Group shall be entitled to recover any Losses relating to any
matter arising under one provision of this Agreement to the extent that any
such Person has already recovered Losses with respect to such matter pursuant
to other provisions of this Agreement (including but not limited to the earnout
payment reductions provided under Sections 2.3(a) and 2.3(b))
or the Master Agreement, it being understood and agreed that application of the
foregoing provision shall not preclude the AMI Group from recovering any Losses
incurred by the AMI Group in connection with the operation of the Business or
the exploitation of the Business IP that are not [***].


 


(g)         In determining (i) whether
any representation, warranty, covenant or agreement contained herein has been
breached or (ii) the amount of any Loss with respect thereto, any
materiality, Material Adverse Effect, or similar qualification contained
therein shall be disregarded.


 


(h)         Indemnification for each
Loss for which an Indemnifying Party, but for this Section 8.2(h),
would be liable under Section 8.2(a) or Section 8.2(c) shall
be reduced by the amount of any insurance proceeds actually paid to any member
of the AMI Group or the Seller Group, as the case may be, by any unaffiliated
third party with respect to such Loss, in each case net of any Losses incurred
by any member of the AMI Group or the Seller Group as the case may be in
collecting such proceeds or payments; provided
that this Section 8.2(h) shall not limit in any respect the
right of any member of the AMI Group or the Seller Group, as the case may be,
to pursue indemnification from an Indemnifying Party hereunder or from
recovering for any Loss not reduced to zero pursuant to this Section 8.2(h).  Nothing contained herein shall be deemed to
cause any amounts for which a member of the AMI Group or the Seller Group, as
the case may be, would ultimately be responsible, as a result of deductibles,
self-insurance, indemnification of insurers, caps or similar items or
arrangements, to not be subject to indemnification as “Losses” hereunder.


 


(i)             For Tax purposes, the
Parties agree to treat all payments made under this Section 8.2 as
adjustments to the Purchase Price, except to the extent any applicable Tax Law
does not permit such treatment. If any Governmental Authority disputes treatment
as an adjustment to the Purchase Price, the Party receiving notice of such
dispute will promptly notify and consult the other Party concerning resolution
of such dispute.


 


8.3                                 Press
Release and Announcements.  On the
date hereof, the Parties may issue a press release announcing the execution of
this Agreement, substantially in the form attached hereto as Exhibit G.  Each Party agrees not to issue any other
press release or other


 


46

















 


public statement relating to or make any public filing with respect to
the Transaction Documents or the transactions contemplated hereby without the
prior written consent of the other Party, which consent will not be
unreasonably withheld or delayed.  Each
Party agrees to provide to the other Party a copy of any public announcement or
public filing regarding the Transaction Documents or the subject matter thereof
as far in advance as 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.  The contents of any announcement or filing or
similar publicity which has been reviewed, approved and released by the
reviewing Party may be re-released by either Party without a requirement for
advance notice or re-approval.


 


8.4                                 Expenses.  Except as otherwise provided herein, each of
AMI and Isis will bear its own costs and expenses (including, without limitation,
all legal, accounting, consulting, investment banking, brokerage and other fees
and expenses) incurred in connection with this Agreement and the transactions
contemplated hereby; provided that all costs and expenses associated with
obtaining third party consents with respect to Ibis Contracts or any Restricted
Asset less than or equal to [***] in the aggregate shall be borne by AMI and
that, in accordance with Section 2.5, all such costs and expenses in
excess of [***] in the aggregate shall be borne by Isis; provided further, that
the initial premerger notification and filing fee for HSR shall be borne by
AMI, but any fees arising from any subsequent filings with respect thereto
shall be borne equally by AMI and Isis.


 


8.5                                 Setoff.  AMI and Ibis shall have the right to set off
any claim AMI or Ibis may have against Isis under this Agreement or the
Transition Services Agreement against any amounts owing to Isis under this
Agreement; provided that (i) AMI provides written notice to Isis of such setoff
claim and (ii) initiates the ADR process described in Exhibit H
hereto.  AMI shall setoff any amounts
pursuant to the foregoing by [***]


 


8.6                                 Certain
Tax Matters.


 


(a)          Transfer
Taxes.  All transfer, sales, use,
stamp, registration and such Taxes and fees (including any penalties, interest
and filing expenses) incurred in connection with this Agreement shall be paid
by Isis, and Isis will prepare and file all necessary Tax Returns and other
documentation with respect to all such transfer, documentary, sales, use,
stamp, registration and other taxes and fees, and, if required by applicable
law, the Parties will, and will cause their Affiliates to, cooperate in the
execution of such Tax Returns.  If AMI or
one of its Affiliates is required to execute any Tax Return prepared by Isis
under this section, Isis will provide a copy of such Tax Return to AMI at least
10 days prior to the anticipated filing of such Tax Return and AMI or its
Affiliate shall execute the Tax Return, subject to Abbott’s reasonable
approval.


 


(b)         Ad Valorem Taxes.  All real property Taxes, personal property
Taxes, ad valorem obligations and similar Taxes imposed on a periodic basis, in
each case levied on Ibis, other than transfer Taxes provided for in Section 8.6(a) above,
for a taxable period which includes (but does not end on) the Closing Date
shall be apportioned between Isis and AMI as of the Closing Date based on the
number of days of such taxable period included in the Pre-Closing Tax period
and the number of days of such taxable period included in the Post-Closing
period.  Isis shall be liable for the
proportionate amount of such Taxes that is attributable to the 


 


47





















 


Pre-Closing Tax period.  Within 90 days after the Closing, Isis and
AMI shall present a reimbursement to which each is entitled under this Section 8.6(b) together
with such supporting evidence as is reasonably necessary to calculate the
proration amount; provided, that
if the final Tax amount due for a taxable period that includes the Closing Date
is not determined within such period, a reimbursement shall be based on the
amount of the relevant Tax for the preceding taxable year, subject to an
adjustment within 30 days after the final amount of such Tax is determined.  The proration amount shall be paid by the
Party owing it to the other within 10 days after delivery of such
statement.  Thereafter, Isis shall notify
AMI upon receipt of any bill for real or personal property Taxes relating to
Ibis, part or all of which are attributable to the Post-Closing Tax period, and
shall promptly deliver such bill to AMI who shall pay the same to the
appropriate taxing authority, provided,
that if such bill covers any portion of the Pre-Closing Tax period, Isis shall
also remit prior to the due date of assessment to AMI payment for the
proportionate amount of such bill that is attributable to the Pre-Closing Tax
period.  In the event that either Isis or
AMI shall thereafter make a payment for which it is entitled to reimbursement
under this Section 8.6(b), the other Party shall make such
reimbursement promptly but in no event later than 30 days after the
presentation of a statement setting forth the amount of reimbursement to which
the presenting Party is entitled along with such supporting evidence as is
reasonably necessary to calculate the amount of reimbursement.  Any payment required under this Section 8.6(b) and
not made within 10 days of delivery of the statement shall bear interest at the
Applicable Rate for each day until paid.


 


(c)          Tax Liability.


 


(i)                                     Isis
shall, in accordance with Section 8.2(a) (except as explicitly
provided in this Section 8.6), indemnify and hold harmless the AMI
Group from any and all Losses arising from: (1) all Taxes (or the
non-payment thereof) of Ibis for the Pre-Closing Tax Period, (2) all Taxes
of any member of an affiliated, consolidated, combined or unitary group of
which Ibis (or any predecessor thereof) is or was a member on or prior to the
Closing Date, including pursuant to U.S. Treasury Regulation §1.1502-6 or any
analogous or similar state, local, or foreign Law, and (3) any and all
Taxes of any Person (other than Ibis) imposed on Ibis as a transferee or
successor, by contract or pursuant to any Law, which Taxes relate to an event
or transaction occurring before the Closing.


 


(ii)                                  To
the extent there is any taxable period that includes (but does not end on) the
Closing Date (a “Straddle Period”), the amount of any Taxes based on or
measured by income or receipts of Ibis for the Pre-Closing Tax Period shall be
determined based on an interim closing of the books as of the close of business
on the Closing Date (and for such purpose, the taxable period of any
partnership or other pass-through entity in which Ibis holds a beneficial
interest shall be deemed to terminate at such time) and the amount of other
Taxes of Ibis for a Straddle Period that relates to the Pre-Closing Tax Period
shall be deemed to be the amount of such Tax for the entire taxable period
multiplied by a fraction the numerator of which is the number of days in the
taxable period ending on the Closing Date and the denominator of which is the
number of days in such Straddle Period.


 


48

















 


(iii)                               AMI
shall, in accordance with Section 8.2(c) (except as explicitly
provided in this Section 8.6), indemnify and hold harmless the
Seller Group from any and all Losses arising from: (1) all Taxes (or the
non-payment thereof) of Ibis for the Post-Closing Tax Period, (2) all
Taxes of any member of an affiliated, consolidated, combined or unitary group
of which Ibis (or any successor thereto) is a member after the Closing Date,
including pursuant to U.S. Treasury Regulation §1.1502-6 or any analogous or
similar state, local, or foreign Law, and (3) any and all Taxes of any
Person (other than Ibis) imposed on Ibis as a transferee or successor, by
contract or pursuant to any Law, which Taxes relate to an event or transaction
occurring after the Closing.


 


(iv)                              Isis’
and AMI’s obligations to indemnify for any Taxes under this Section 8.6
shall survive the Closing hereunder and continue until 30 days following the
expiration of the statute of limitations on assessment of the relevant
Tax.  Notwithstanding the foregoing, any
claim for indemnification shall survive such termination date if the
Indemnified Party, prior to such termination date, shall have advised the
Indemnifying Party in writing of facts that constitute or may give rise to an
alleged claim for indemnification under this Section 8.6.


 


(d)         Tax Returns.


 


(i)                                     Isis
shall file or cause to be filed when due (taking into account any extensions
received from the relevant Tax authorities) (1) all Tax Returns that are
required to be filed with respect to Ibis on or before the Closing Date, and (2) all
Tax Returns that are required to be filed after the Closing Date with respect
to income Taxes of Ibis with respect to all Pre-Closing Tax Periods, and shall
pay when due (X) any income Taxes due in respect of such Tax Returns, and (Y) any
other Taxes due in respect of such Tax Returns that are due on or before the
Closing Date.


 


(e)          Contest Provisions.


 


(i)                                     Isis
shall have the sole right to control the conduct and resolution of any audit,
litigation, contest, dispute, negotiation, or other proceeding with any Tax
authority that relates to income Taxes of Ibis relating to a Pre-Closing Tax
Period, including, without limitation, by selecting counsel of its choice to
represent Ibis, unless Isis fails to assert such control within 30 days of
receiving notice of such proceeding (each such proceeding for which Isis
asserts such control, an “Isis Proceeding”); provided, that (A) Isis shall consult with AMI and keep
AMI informed regarding the progress and any potential compromise or settlement
of each Isis Proceeding; and (B) AMI shall be entitled to participate at
its own expense in each Isis Proceeding and (C) Isis shall not settle or
otherwise compromise any Isis Proceeding without the consent of AMI to the
extent such settlement or compromise would have an adverse effect on AMI or Ibis
with respect to a Post-Closing Tax Period, which consent shall not be
unreasonably withheld, conditioned or delayed.


 


(ii)                                  AMI
shall have the sole right to control the conduct and resolution of any audit,
litigation, contest, dispute, negotiation, or other proceeding with 


 


49

















 


any Tax authority relating to Taxes of Ibis that is
not an Isis Proceeding, including, without limitation, by selecting counsel of
its choice to represent Ibis (each such proceeding, an “AMI Proceeding”);
provided, that (A) AMI shall
consult with Isis regarding the progress and any potential compromise or
settlement of any Isis Proceeding that relates to Taxes for which Isis may be
liable pursuant to Section 8.6(c)(i) of this Agreement (an “Applicable
AMI Proceeding”); (B) Isis shall be entitled to participate at its own
expense in any Applicable AMI Proceeding; and (C) AMI shall not settle or
otherwise compromise any Applicable AMI Proceeding without the consent of Isis
to the extent such settlement or compromise would have an adverse effect on
Isis or Ibis with respect to a Pre-Closing Tax Period, which consent shall not
be unreasonably withheld, conditioned or delayed.


 


(iii)                               Provided AMI fails to assert
control over an Applicable AMI Proceeding within 30 days of receiving notice of
such proceeding, Isis shall have the sole right to control the conduct and
resolution of an Applicable AMI Proceeding with any Tax authority, including,
without limitation, by selecting counsel of its choice to represent Ibis; provided, that (A) Isis shall
promptly consult with AMI regarding the progress and any potential compromise
or settlement of any Applicable AMI Proceeding; (B) AMI shall be entitled
to participate at its own expense in any Applicable Isis Proceeding; and (C) neither
Isis nor Ibis shall
settle or compromise any Applicable AMI Proceeding without the prior written
consent of AMI, which shall not be unreasonably withheld, conditioned or
delayed.


 


(f)            Assistance and
Cooperation.  From and after the
Closing Date, each of Isis and AMI shall:


 


(i)                                     assist
(and cause their respective Affiliates to assist) the other party in preparing
any Tax Returns which such other party is responsible for preparing and filing
in accordance with this Section 8.6;


 


(ii)                                  cooperate
fully in preparing for any audit, litigation, contest, dispute, negotiation, or
other proceeding with any Tax authority regarding Taxes of Ibis;


 


(iii)                               make
available to the other party and to any Tax authority, as reasonably requested,
all information, records, and documents relating to Taxes or Tax Returns of
Ibis (including, without limitation, information necessary to file extensions
and make estimated Tax payments); and


 


(iv)                              furnish
the other party with copies of all correspondence received from any Tax
authority in connection with any applicable Isis Proceeding or AMI Proceeding.


 


(g)         Code § 338(h)(10) Election.
At AMI’s option, Isis and AMI shall join in making an election under Code
§ 338(h)(10) (and any corresponding elections under state, local, or
foreign tax law) (collectively a “§ 338(h)(10) Election”) with
respect to the purchase and sale of the Shares, the Additional Shares and the
Remaining Shares, unless and to the extent


 


50





















 


the Code is amended to prevent or limit the filing of
a § 338(h)(10) Election. Isis will pay any Tax attributable to the
making of the § 338(h)(10) Election and will indemnify the AMI Group
against any Losses arising out of any failure to pay such Tax.


 


(h)         Allocation of Purchase
Price. The Parties agree that the Purchase Price and the liabilities of
Ibis (and other relevant items) will be allocated for tax purposes to the
assets of Ibis in a manner consistent with Code §§  338 and 1060 and the
regulations thereunder. AMI, Ibis and Isis shall file all Tax Returns
(including amended returns and claims for refund) and information reports in a
manner consistent with such allocation.


 


8.7                                 Further
Assurances.  Isis will execute and
deliver such further instruments of conveyance and transfer and take such
additional action as AMI may reasonably request to effect, consummate, confirm
or evidence the transfer to AMI of the Remaining Shares and the assets of the
Business (including the Business IP and the Ibis Contracts), and Isis will
execute such documents as may be necessary to assist AMI in preserving or
perfecting its rights in the Shares, the Remaining Shares and the
Business.  Except for the services,
funding and facilities provided under the Corporate Services Agreement, to the
extent any assets used in the Business on or prior to the Closing Date
(including the Business IP and the Ibis Contracts) or necessary to conduct the
Business as conducted on and prior to the Closing Date (including the Business
IP and the Ibis Contracts) or as contemplated to be conducted after the Closing
Date have not been duly and fully transferred to Ibis as of such date, Isis
hereby covenants, at its sole cost and expense and without further
consideration by AMI, to take all such actions as may be requested by AMI to
promptly transfer such assets to Ibis or AMI’s designee.


 


8.8                                 Confidentiality.


 


(a)          Each Party agrees that
for a period of three (3) years after the Closing Date, a Party (the “Receiving
Party”) receiving or that has received Confidential Information of the
other Party (the “Disclosing Party”) will (i) maintain and cause
its Representatives to maintain in confidence such Confidential Information
using not less than the efforts such Receiving Party uses to maintain in confidence
other proprietary information of similar kind and value (it being understood
and agreed that AMI shall have no obligation to maintain the confidentiality of
any Ibis Confidential Information and that Isis shall have an obligation to
maintain the confidentiality of all Ibis Confidential Information pursuant to
this Section 8.8), (ii) not disclose such Confidential
Information except to the Receiving Party’s employees or Affiliates having a
need-to-know such Confidential Information solely for purposes of performing
the Receiving Party’s obligations under the Transaction Documents, (iii) not
disclose such Confidential Information to any Person without the prior written
consent of the Disclosing Party, except for disclosures expressly permitted by
the Transaction Documents, and (iv) not use such Confidential Information
for any purpose except those expressly permitted by the Transaction
Documents.  The provisions of this Section 8.8
shall supersede the provisions of Section 5.1, Section 5.2 and Section 5.3
of the Master Agreement which shall terminate and be of no further force or
effect from and after the Closing Date.  Upon AMI’s request Isis will return or
destroy (and certify to AMI any such destruction) all Confidential Information
of AMI or its Affiliates and upon Isis’ request, AMI will return or destroy
(and certify to Isis any such destruction) all Confidential Information of Isis
that is not Confidential Information of Ibis;


 


51





















 


provided, that AMI may retain one (1) copy of
Isis’ Confidential Information in Abbott’s confidential files.


 


(b)         To the extent (and only
to the extent) that it is reasonably necessary, a Party may disclose
Confidential Information belonging to the other Party in the following
instances:


 


(i)                                     when
defending litigation related to the Confidential Information to be disclosed;


 


(ii)                                  when
complying with Applicable Laws (including, without limitation, the rules and
regulations of the SEC or any national securities exchange, and compliance with
Tax Laws) and with judicial process; and


 


(iii)                               disclosure,
in connection with the performance of the Transaction Documents and solely on a
need-to-know basis, to employees or independent contractors (including without
limitation consultants and clinical investigators), 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 Section 8.8;
provided, that the Receiving
Party will remain responsible for any failure by any Person who receives
Confidential Information pursuant to this Section 8.8 to treat such
Confidential Information as required under this Section 8.8.


 


(c)          If and whenever any
Confidential Information is disclosed in accordance with this Section 8.8,
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).  Except as prohibited by Law, the Receiving
Party will notify the Disclosing Party of the Receiving Party’s intent to make
such disclosure pursuant to clauses (i) or (ii) of Section 8.8(b) sufficiently
prior to making such disclosure so as to allow the Disclosing Party adequate
time to take whatever action the Disclosing Party may deem appropriate to
protect the confidentiality of the information. 
In addition, in the event any Party proposes to file with any Governmental
Authority a Transaction Document, including, without limitation, as an exhibit
to a registration statement, periodic report, or current report, the Party
proposing to make such filing will notify the other Parties of such intention
and will work in good faith with the other Parties to obtain confidential
treatment of any material terms of the Transaction Documents that such other
Parties request be kept confidential (except to the extent advised by counsel
or such Governmental Authority that confidential treatment is not available for
such information).


 


(d)         At the Closing, Isis
shall deliver to AMI all Confidential Information of the Business in Isis’ or
its Affiliates’ possession and control and all copies thereof, in whatever form
or medium, including, without limitation, written records, optical and magnetic
media, and all other materials containing any such Confidential
Information.  If AMI requests, Isis shall
promptly provide written confirmation that all such materials have been
delivered to AMI.


 


52





















 


(e)          The existence and the
terms and conditions of the Transaction Documents that the Parties have not
specifically agreed to disclose pursuant to Section 8.8(b) or Section 8.3
will be considered Confidential Information of both Parties.  AMI and, subject to the terms of Section 7.8,
Isis may disclose such terms to a bona fide potential investor, investment
banker, acquirer, merger partner or other potential business partner of AMI or
Isis, respectively, 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.


 


8.9                                 Noncompetition
and Nonsolicitation.  The Parties
hereby agree as follows:


 


(a)          Noncompetition.  During the period from the date hereof to and
including the [***] anniversary of the Closing Date (the “Noncompete Period”),
Isis and its Affiliates shall not engage in and shall not have any affiliation
with any Person that engages in a line of business that competes with the
Business as conducted on and prior to the Closing Date and as contemplated by
Ibis and Isis to be conducted after the Closing Date, as reflected in the
Offering Memorandum and the Management Presentations.  For purposes of this Section 8.9,
the term “affiliation” shall mean any direct or indirect interest in such
Person or enterprise, whether as an investor, partner, stockholder, operator,
lender, trustee, joint venture contributor, licensor or consultant (other than
passive investments by Isis of less than [***] of the outstanding equity
securities of any entity listed for trading on a national stock exchange or
investments in less than [***] of the outstanding equity securities by Isis in
a Person engaged in drug discovery, development or commercialization).


 


(b)         Pre-Existing Business.  Notwithstanding the foregoing, if a Person
becomes an Affiliate of Isis after the Closing Date, and such Person was
engaged in a line of business that on or before the time such Person became an
Affiliate of Isis, competed with the Business as conducted on and prior to the
Closing Date and as contemplated by Ibis and Isis to be conducted after the
Closing Date, as reflected in the Offering Memorandum and Management
Presentations (a “Pre-Existing Business”), then the provisions of Section 8.9(a) will
not apply to such Pre-Existing Business if (i) such third party does not
[***] and (ii) appropriate protective measures and procedures are
established by Isis and its Affiliates and such Person and its Affiliates to
protect and safeguard the confidentiality of Abbott and Ibis Confidential
Information.


 


(c)          No Solicitation of
AMI Employees.  During the period
from the date hereof to and including the [***] anniversary of the Closing Date
(the “Nonsolicitation Period”), Isis (and until the Closing, Ibis) shall
not and shall not permit any of their respective Representatives to directly or
indirectly, (i) without the prior written consent of AMI, induce or
attempt to induce any employee of AMI or any member of the Abbott Transaction
Team to leave the employ of AMI or the applicable Abbott Affiliate, or in any
way interfere with the relationship between AMI or the applicable Abbott
Affiliates and any employee of AMI or any member of the Abbott Transaction
Team, or Known consultant or independent contractor thereof or (ii) without
the prior written consent of AMI, hire directly or through another entity any
employee of AMI or any member of the Abbott Transaction Team or any Person who
was an employee of AMI or a member of the Abbott Transaction Team who was
employed by Abbott or


 


53





















 


any of its Affiliates during the [***] months prior to
the date of such hiring, in each case to work for Isis or Ibis.


 


(d)         No Solicitation of
Ibis or Isis Employees.  During the
Nonsolicitation Period with respect to employees of Isis and until the Closing
with respect to employees of Ibis, AMI and its Affiliates will cause AMI and
the members of the Abbott Transaction Team not to, directly or indirectly, (i) without
the prior written consent of Isis or Ibis (as the case may be), induce or
attempt to induce any employee of Isis or Ibis to leave the employ of Isis or
Ibis, or in any way interfere with the relationship between Isis or Ibis and
any of their respective employees, or Known consultant or independent
contractor thereof or (ii) without the prior written consent of Isis or
Ibis (as the case may be), hire directly or through another entity any employee
of Isis or Ibis or any Person who was an employee of Isis or Ibis who was
employed by Isis or Ibis during the [***] months prior to the date of such
hiring, in each case to work for AMI.


 


(e)          No Solicitation of
Ibis Employees.  During the
Nonsolicitation Period, Isis shall not and shall not permit any of its
Representatives to directly or indirectly (i) without the prior written
consent of AMI, induce or attempt to induce any employee of Ibis to leave the
employ of Ibis, or in any way interfere with the relationship between Ibis and
any employee, consultant or independent contractor thereof, (ii) without
the prior written consent of AMI, hire directly or through another entity any
employee of Ibis or any Person who was an employee of Ibis during the [***]
months prior to the date of such hiring or (iii) induce or attempt to
induce any customer, supplier, licensee, licensor or other business relation of
Ibis, AMI or any of their respective Affiliates or the Business, to cease doing
business with Ibis, AMI or any of their respective Affiliates or the Business.


 


For purposes of Sections 8.9(c), 8.9(d) and
8.9(e), “recruit,” “solicit” or “induce” shall not be deemed to mean (i) circumstances
where an employee, consultant or independent contractor or former employee,
consultant or independent contractor initiates contact with a Party with regard
to possible employment, or (ii) general solicitations of employment not
specifically targeted at specific employees of a Party, including responses to
general advertisements.


 


Notwithstanding anything in this Section 8.9
to the contrary, if at any time a court holds that the restrictions stated in Section 8.9(a),
Section 8.9(c), Section 8.9(d) or Section 8.9(e) or
any part of any of the foregoing are unreasonable or otherwise unenforceable
under circumstances then existing, the Parties hereto agree that the maximum
period, scope or geographical area determined to be reasonable under such
circumstances by such court will be substituted for the stated period, scope or
area.  The Parties acknowledge and agree
that money damages may not be an adequate remedy for any breach or threatened
breach of the provisions of Section 8.9(a), Section 8.9(c),
Section 8.9(d) or Section 8.9(e) and that, in
such event, any Party or its successors or assigns may, in addition to any
other rights and remedies existing in its or their favor, apply to any court of
competent jurisdiction for specific performance, injunctive and/or other relief
in order to enforce or prevent any violations of the provisions of this Section 8.9
(including, if the court so determines, the extension of the Noncompete Period
or the Nonsolicitation Period, as applicable, by a period equal to the length
of court proceedings necessary to stop such violation).  Any injunction shall be available without the
posting of any bond or other security. 
In the event of an alleged breach or violation by any Party or any of
their respective Representatives of any of


 


54

















 


the provisions of this Section 8.9, the
Noncompete Period or the Nonsolicitation Period, as applicable will be tolled
until such alleged breach or violation is resolved.  The Parties agree that the restrictions
contained in this Section 8.9 are reasonable in all respects.


 


8.10                           Access
to Books and Records.  After the
Closing, Isis will permit AMI and its representatives, and AMI will permit Isis
and its representatives, to have reasonable access upon prior notice and at
reasonable times, and in a manner so as not to interfere with the normal
business operations of the other Party, to all books, records (including Tax
records), contracts and documents of or pertaining to Ibis.


 


8.11                           Employee
and Related Matters.


 


(a)          Ibis Employees.
All employees of Ibis employed as of the Closing Date (the “Ibis Employees”)
shall, as of the Closing, receive compensation and benefits from Abbott that
are substantially comparable, in the aggregate, to the compensation and
benefits received by other similarly-situated employees of Abbott based on
Abbott’s evaluation of the nature and scope of such employee’s duties,
principal location where those duties are performed, grade level and
performance.  To facilitate Abbott’s
obligations to provide such compensation and benefits under this Section 8.11,
Isis shall provide AMI promptly, upon AMI’s request, but in any event, no less
than [***] prior to the Closing Date (and again on the Closing Date) a true,
complete and accurate list of each Ibis Employee, including the date of
employment and title or job position of each Ibis Employee, information
regarding pay and benefits, including, but not limited to, the total annual
salary, wages, bonus or other compensation of each Ibis Employee, and, with
respect to any Ibis Employees who are inactive Ibis Employees (as defined in Section 8.11(f)),
the date such inactive employee changed from active to inactive status, the
reason for such inactive status and, if applicable, the anticipated date of
return to active employment.  Ibis
Employees shall be employees at will, subject to Abbott’s employment policies
and nothing herein shall be construed to limit Abbott’s ability to (a) terminate
or alter the employment terms of any Ibis Employee for any reason, including
without cause, or (b) modify, amend or terminate any employee benefit
plan, policy or arrangement.


 


(b)         WARN.  Isis covenants and agrees to cause Ibis to
comply, if applicable, with all requirements specified under the Worker
Adjustment and Retraining Notification Act of 1988 (the “WARN Act”) or
any similar or successor federal, state or local law, including the provision
of appropriate notice to affected employees with respect to any “employment
loss” (as defined in the WARN Act) that occurs on or prior to the Closing
Date.  Except as set forth on Schedule
8.11(b), no Ibis Employee has suffered an “employment loss” during the
ninety (90)-day period prior to the date hereof.  Isis shall update Schedule 8.11(b) as
necessary to reflect all “employment losses” between the date hereof and prior
to the Closing Date.


 


(c)          COBRA.  Isis shall retain responsibility for all
liability for any health care continuation coverage or notice requirement under
Section 4980B of the Code and Part G of Subtitle B of Title 1 of
ERISA with respect to any Plan, including with respect to all former employees
of Ibis or the Business, who are former employees thereof as of the Closing.


 


55
















 


(d)         Retirement Plans.  Prior to or on the Closing Date, Isis and/or
Ibis shall make all matching contributions and a pro-rated portion of any
profit sharing contributions that would otherwise be made for the plan year
(without regard to any year-end employment requirements) with respect to the
Ibis Employees’ contributions to any Plan that is intended to be qualified
under Section 401(a) of the Code (the “Isis Retirement Plans”).  Isis shall prior to the Closing: (A) amend
each Isis Retirement Plan to cause the account balances or accrued benefits of
Ibis Employees to be fully vested as of the Closing Date and (B) amend
each Isis Retirement Plan that includes a cash or deferred arrangement under Section 401(k) of
the Code to permit Ibis Employees with an outstanding plan loan to roll over
such loan to Abbott’s 401(k) plan. 
Abbott will cause its 401(k) plan to accept a direct rollover of
the Ibis Employees’ 401(k) account balance, including a direct rollover of
any outstanding plan loan.


 


(e)          Payroll Tax Reporting.  Ibis, Isis and AMI agree that payroll
reporting of the Ibis Employees will be treated in accordance with the
Alternate Procedure set forth in Section 5 of Revenue Procedure 2004-53.


 


(f)            Retention of
Liability.  Isis shall be solely
responsible for, and retain all liabilities with respect to and Isis shall
retain, bear and discharge all liabilities and obligations with respect to (i) all
inactive Ibis Employees until such time as the inactive Ibis Employee returns
to active employment with Ibis and (ii) all
inactive Ibis Employees who fail to return to active employment with Ibis.  Isis shall be solely responsible for, and
retain all liabilities with respect to, all wages, salaries, commissions,
bonuses, vacation pay and other compensation payable to any Ibis Employee for
all periods through and including the Closing Date.  AMI shall not assume liability for any
retention, severance, change-of-control or similar agreements between Isis and
any of the Ibis Employees, and Isis shall retain or assume liability for all
obligations under any such retention, severance, change-of-control or similar
agreements.  For purposes of this Section 8.11,
an “inactive Ibis Employee” shall mean any employee of Ibis who, as of the
Closing Date, is on any type of leave of absence or who has been otherwise
continuously absent from work with Ibis for any reason for longer than five (5) working
days, other than for approved paid vacation.


 


(g)         Full-Time Equivalents.  From and after the date hereof, Isis and Ibis
shall cause the number of full-time equivalent employees (not including
temporary employees and consultants) of Ibis to be not greater than 70 in the
aggregate and to be not less than 56 in the aggregate.


 


(h)         No Third Party Rights.  Nothing in this Agreement, express or
implied, shall create a contract of employment with any Ibis Employee or a
third party beneficiary relationship or otherwise amend or create any employee
benefit plan of AMI or Ibis or confer any benefit, entitlement, or right upon
any person or entity other than the parties hereto or result in AMI or Ibis
having any liability under any Plan.


 


8.12                           Consolidated
Return.  From and after the date
hereof, Isis will file a consolidated Tax Return with respect to itself and
Ibis in lieu of separate Tax Returns with respect to income Tax imposed by
Chapter 1 of the Code for each Tax year beginning on or after January 1, 2008
through and including the Closing unless the provisions of the Code shall have
been amended after the date hereof to disallow the filing of such consolidated
Tax Returns.  In


 


56





















 


the event of an Internal
Revenue Service audit of Isis arising out or related to the consolidation of
Ibis and Isis in such consolidated Tax Return, Isis will promptly (but in any
event within [***] notify AMI of such audit and allow AMI to participate and
advise Ibis and Isis in connection with such audit.


 


8.13                           Isis
Intellectual Property License.


 


(a)          To the extent Isis has
not as of the Closing Date granted rights preventing Isis from making any
further license grants, Isis hereby grants to Ibis a worldwide, fully-paid,
royalty free, non-exclusive license (without the right to grant sublicenses,
except to purchasers, distributors or resellers of Products to use, sell or
resell, the amounts of Products purchased) under the Isis Licensed Intellectual
Property to make, have made, import, use (in any field of use, including
research performed internally and with collaborators, and in the sale of
services), offer for sale, and sell Products. 
This license is transferable by Ibis to its Affiliates or to a successor
in interest to Ibis without the prior written consent of Isis.


 


(b)         Additionally, upon Ibis’
request, Isis shall grant to Ibis worldwide, fully-paid, royalty free,
non-exclusive licenses (without the right to grant sublicenses, except to
purchasers, distributors or resellers of Products to use, sell or resell, the
amounts of Products purchased) to any [***] make, have made, import,  use (in any field of use, including
research performed internally and with collaborators, and in the sale of
services), offer for sale and sell Products, to the extent Isis has not
previously granted rights preventing Isis from granting such licenses to Ibis.  This right to license Isis’ Intellectual
Property is transferable by Ibis to its Affiliates or to a successor in
interest to Ibis without the prior written consent of Isis.


 


(c)          Until [***], Isis and
its Affiliates shall not license any [***] for use with a [***]


 


8.14                           [***]
[***].


 


Following the Closing, Ibis shall pay to Isis all
amounts in excess of $[***] that Ibis receives for the payment of [***], it
being understood that the first $[***] of such amounts shall belong to Ibis; provided, that if the Closing does not
occur on or before [***], then the first $[***] of such amounts shall not
belong to Ibis, and Ibis will pay to Isis all amounts that Ibis receives for
the payment of [***].  Following the
Closing, Ibis shall collect such [***] using commercially reasonably efforts, taking
into account the manner in which Ibis collected similar receivables prior to
the Closing Date.  For Tax purposes, the
Parties agree to treat all payments made under this Section 8.14 as
adjustments to the Purchase Price, except to the extent any applicable Tax Law
does not permit such treatment. If any Governmental Authority disputes
treatment as an adjustment to the Purchase Price, the Party receiving notice of
such dispute will promptly notify and consult the other Party concerning
resolution of such dispute.


 


8.15                           [***].


 


Following the Closing, Ibis shall be responsible for
satisfying [***] claims from [***] related to the goods and services provided
by Ibis prior to the Closing pursuant to the Contracts listed on Exhibit C,
up to an amount not to exceed, with respect to each such Contract, the [***]
listed on Exhibit C for such Contract (each a [***]).


 


57

















 


8.16                           Fees
for Transition Services.


 


If the Closing occurs after [***], then AMI shall pay
Isis, as additional consideration for the services provided pursuant to the
Transition Services Agreement, an aggregate amount not to exceed (a) the
absolute value of the difference between Ibis’ [***], for the period beginning
[***] and ending on the Closing Date, not to exceed $[***] per month, as
calculated in accordance with GAAP, minus (b) $[***].


 


8.17                           Updated
Exhibits.


 


Within 10 Business Days following the Closing Date,
Isis shall deliver to AMI Exhibit B prepared in the manner
described in Section 1(w). In addition, by January 31, 2009,
Isis shall deliver to AMI Exhibit C updated as of the Closing Date
and prepared in the manner described in Section 1(gg).  Both such Exhibits shall be attached
thereafter to this Agreement.


 


Section 9.                  TERMINATION.


 


9.1                                 Termination.  AMI or Isis may terminate this Agreement as
follows:


 


(a)          by mutual written
consent at any time prior to the Closing;


 


(b)         by giving written notice
to the other at any time prior to Closing if there has been a material
misrepresentation or breach on the part of the other Party of the
representations, warranties or covenants set forth in this Agreement, which
breach cannot be or has not been cured, in all material respects, within [***]
after the giving of written notice of such breach to AMI or Isis, as
applicable;


 


(c)          if events have occurred
which have made it impossible to satisfy a condition precedent to the
terminating Party’s obligations to consummate the transactions contemplated
hereby unless such terminating Party’s willful breach of this Agreement has
caused the condition to be unsatisfied;


 


(d)         by giving written notice
to the other Party at any time prior to the Closing if the Closing shall not
have occurred on or before the date that is [***] from the date hereof or, in
the event that the applicable waiting periods (and any extensions thereof)
under the HSR Act have not expired or otherwise been terminated (whether as a
result of a “second request” or otherwise), the date that is [***] from the
date hereof; provided, that
neither AMI nor Isis shall be entitled to terminate this Agreement pursuant to
this Section 9.1(d) if such Party’s willful breach of this
Agreement has prevented the consummation of the transactions contemplated
hereby at or before such time.


 


9.2                                 Effect
of Termination.  In the event of
termination of this Agreement by either AMI or Isis as provided in Section
9.1, this Agreement shall forthwith become null and void and there shall be
no liability on the part of any Party to any other Party under this Agreement,
except that the provisions of Section 1, this Section 9.2, Section
8.3, Section 8.4, Section 8.8, and Section 10 shall
continue in full force and effect, except that nothing herein shall relieve any
Party from liability for any breach of this Agreement prior to such
termination.


 


58

















 


Section 10.           MISCELLANEOUS.


 


10.1                           No
Third Party Beneficiaries.  Except as
expressly provided in Section 8.2 with respect to members of the AMI Group
and the Seller Group, this Agreement shall not confer any rights or remedies
upon any Person other than the Parties and their respective successors and
permitted assigns.


 


10.2                           Entire
Agreement.  This Agreement, the
Exhibits and Schedules hereto, the Transaction Documents and the other documents
delivered pursuant hereto or referred to herein constitute the full and entire
understanding and agreement between the Parties with regard to the subject
hereof and no party will be liable for or bound to any other in any manner by
any oral or written representations, warranties, covenants and agreements
except as specifically set forth herein or therein.  From and after the Closing, the Investment
Documents shall terminate and be of no further force or effect except that such
termination shall not relieve any Party from liability for any breach of such
agreements prior to such termination.


 


10.3                           Successors
and Assigns.  This Agreement shall be
binding upon and inure to the benefit of the Parties and their respective
successors and permitted assigns.  No
Party may assign either this Agreement or any of its rights, interests or
obligations hereunder without the prior written approval of the other Party; provided that AMI may (a) assign any
or all of its rights and interests hereunder to one or more of its Affiliates, (b) designate
one or more of its Affiliates to perform its obligations hereunder (in any or
all of which cases AMI nonetheless shall remain responsible for the performance
of all of its obligations hereunder), and (c) assign any or all of its rights
and interests hereunder in connection with a Change of Control of AMI.


 


10.4                           Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.  This Agreement and any signed agreement or
instrument entered into in connection with this Agreement, and any amendments
hereto or thereto, to the extent signed and delivered by means of a facsimile machine
or other electronic means, shall be treated in all manner and respects as an
original agreement or instrument and shall be considered to have the same
binding legal effect as if it were the original signed version thereof
delivered in person.  At the request of
any party hereto or to any such agreement or instrument, each other party
hereto or thereto shall re-execute original forms thereof and deliver them to
all other parties.  No party hereto or to
any such agreement or instrument shall raise the use of a facsimile machine or
other electronic means to deliver a signature or the fact that any signature or
agreement or instrument was transmitted or communicated through the use of a
facsimile machine or other electronic means as a defense to the formation of a
contract and each such party forever waives any such defense.


 


10.5                           Headings.  The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.


 


10.6                           Notices.  All notices, requests, demands, claims, and
other communications hereunder will be in writing.  Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given (a) when delivered on a
Business Day, if


 


59

















 


personally delivered or sent
by facsimile or other electronic means (subject to confirmation of such
delivery), on such Business Day, (b) when delivered other than on a
Business Day, if personally delivered or sent by facsimile or other electronic
means (subject to confirmation of such delivery), on the first Business Day
after dispatch, (c) on the Business Day after dispatch, if sent by
nationally-recognized overnight courier, and (d) on the third Business Day
following the date of mailing, if sent by mail, in each case, addressed to the
intended recipient as set forth below:


 


If to Ibis, to:


 


Ibis Biosciences Inc.


1896 Rutherford Road


Carlsbad, CA  92008


Attention:  President 


Facsimile: (760) 603-4653


 


If to Isis, to:


 


Isis
Pharmaceuticals, Inc.


1896 Rutherford
Road


Carlsbad,
CA 92008


Attention:
Chief Financial Officer


Facsimile:
(760) 603-4650


 


with a copy to:


 


1896
Rutherford Road


Carlsbad,
CA 92008


Attention:  General Counsel


Facsimile:
(760) 268-4922


 


If to AMI:


 


Abbott
Molecular Inc.


c/o
Abbott Laboratories


Corporate
Transactions and Medical Products Legal Operations


Dept.
322, Bldg. AP6A 


100
Abbott Park Road


Abbott
Park, IL 60064-6010


Attention:  Vice President and Associate General Counsel


Facsimile:
(847) 938-1206


 


with a copy to:


 


Kirkland & Ellis
LLP


200 East Randolph Drive


Chicago, IL 60601


Attn:                  R. Scott Falk,
P.C.


R. Henry Kleeman


Facsimile:  (312) 861-2200


 


60

















 


Any Party may send any notice, request, demand, claim
or other communication hereunder to the intended recipient at the address set
forth above using any other means, but no such notice, request, demand, claim
or other communication shall be deemed to have been duly given unless and until
it actually is received by the intended recipient.  Any Party may change the address to which
notices, requests, demands, claims and other communications hereunder are to be
delivered by giving the other Party notice in the manner herein set forth.


 


10.7                           Governing
Law.  This Agreement shall be
governed by and construed in accordance with the domestic laws of the State of
Delaware without giving effect to any choice or conflict of law provision or rule (whether
of the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.


 


10.8                           Alternative
Dispute Resolution Procedure.  The
Parties recognize that from time to time a dispute may arise relating to a
Party’s rights or obligations under this Agreement or the other Transaction
Documents. The Parties agree that any such dispute shall be resolved by the
Alternative Dispute Resolution (“ADR”) provisions set forth in Exhibit H
the result of which shall be binding upon the Parties.


 


10.9                           Amendments
and Waivers.  No amendment of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by AMI and Isis.  No waiver by
any Party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior
or subsequent default, misrepresentation or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.


 


10.10                     Delays or Omissions.  It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any Party, upon any breach,
default or noncompliance by another party under a Transaction Document or
otherwise, will impair any such right, power or remedy, nor will it be
construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter occurring.  It is further
agreed that any waiver, permit, consent or approval of any kind or character on
any Party’s part of any breach, default or noncompliance under a Transaction
Document or otherwise or any waiver on such Party’s part of any provisions or
conditions of a Transaction Document, or otherwise must be in writing and will
be effective only to the extent specifically set forth in such writing.  All remedies, either under a Transaction
Document, Ibis’ Certificate of Incorporation, bylaw, or otherwise afforded to
any party, will be cumulative and not alternative.


 


10.11                     Incorporation of Exhibits and
Schedules.  The exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.  The Parties
acknowledge and agree that (a) the Disclosure Schedules are arranged in
sections corresponding to the sections and paragraphs of this Agreement and the
disclosures therein qualify the specifically referenced corresponding
representations and warranties of the Parties


 


61

















 


contained in this Agreement, (b) to the extent this Agreement
requires disclosure of any matter, such matter disclosed pursuant to one
provision, subprovision, section or subsection of the Disclosure Schedules
shall be deemed disclosed only to the extent actually disclosed with respect to
the specific provision, subprovision, section or subsection of the Disclosure
Schedule that it is actually disclosed pursuant to and (c) section numbers
and titles inserted in the Disclosure Schedules are for convenience of
reference only and shall to no extent have the effect of amending or changing
the express description of such sections of the Disclosure Schedules as set
forth in this Agreement.  Information set
forth in each section of the Disclosure Schedules specifically refers to the
section of this Agreement to which such information is responsive, and such
information shall not be deemed to have been disclosed with respect to any
statement made in any other section of this Agreement.  Any capitalized terms used in any Schedule
but not otherwise defined therein shall have the meanings ascribed to such
terms in this Agreement.


 


10.12                     Construction.  The Parties acknowledge and agree that they
have been represented by counsel during the negotiation, preparation and
execution of this Agreement and, therefore, waive the application of any Law or
rule of construction providing that ambiguities in an agreement or other
document shall be construed against the Party drafting such agreement or
document. Where specific language is used to clarify by example a general statement
contained herein, such specific language shall not be deemed to modify, limit
or restrict in any manner the construction of the general statement to which it
relates.  When the context so requires
the word “or” when used herein shall mean “and/or.” All pronouns contained
herein, and any variations thereof, will be deemed to refer to the masculine,
feminine or neutral, singular or plural, as the identity of the Parties hereto
may require.  Other than with respect to Section 3.2,
Section 4.1 and the preamble to Section 5.1, the words,
“provided to,” “delivered” or “made available” or words of similar import when
used in this Agreement to refer to obligations of Isis and/or Ibis to “provide,”
“deliver” or “make available” materials to AMI mean “made available in the
online dataroom maintained by Isis at [***] at least three (3) Business
Days prior to the date hereof”.  Unless
otherwise provided therein, when used in any Transaction Document or Schedule, “Dollars”
or “$” means the lawful currency of the United States of America.


 


10.13                     Remedies.  Each of the Parties acknowledges and agrees
that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. 
Accordingly, each of the Parties agrees that, subject to Section 10.8
the other Party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter (subject to Section 10.8 above), in addition
to any other remedy to which they may be entitled, at law or in equity.


 


10.14                     Severability.  In the event that any provision of this
Agreement, or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement shall continue in full force and effect and the application of
such provision to other Persons or circumstances shall be interpreted so as
reasonably to effect the intent of the Parties hereto.  The Parties further agree to replace such
void or unenforceable provision of this Agreement with a valid and enforceable
provision that


 


62

















 


will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.


 


10.15                     No Other Compensation.


 


The Parties hereby agree
that the terms of the Transaction Documents fully define all consideration,
compensation and benefits, monetary or otherwise, to be paid, granted or
delivered by Isis or Ibis to AMI or Abbott and by AMI or Abbott to Isis or Ibis
in connection with the transactions contemplated herein and therein.  No Party previously has paid or entered into
any other commitment to pay, whether orally or in writing, any employee of any other
Party, directly or indirectly, any consideration, compensation or benefits,
monetary or otherwise, in connection with the transactions contemplated in the
Transaction Documents.


 


*   *  
*   *   *


 


[Remainder of page intentionally left blank;
Signatures on following page]


 


63

















 


IN WITNESS WHEREOF, the Parties hereto have executed
this Stock Purchase Agreement as of the date first above written.


 


	
   

  	
  ISIS
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ B.
  Lynne Parshall

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  B. Lynne Parshall

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chief Operating Officer
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  IBIS
  BIOSCIENCES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ B. Lynne Parshall

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  B. Lynne Parshall

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  
	
   

  	
  ABBOTT
  MOLECULAR INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Stafford O’Kelly

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Stafford O’Kelly

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  President

  



 


 


SIGNATURE
PAGE TO STOCK PURCHASE AGREEMENT


 


64

















 


LIST OF EXHIBITS


 


	
  Exhibit A-

  	
   

  	
  [***]

  
	
  Exhibit B-

  	
   

  	
  Commercial Revenue
  Detail

  
	
  Exhibit C-

  	
   

  	
  [***]

  
	
  Exhibit D-

  	
   

  	
  Isis Licensed
  Intellectual Property

  
	
  Exhibit E-

  	
   

  	
  Transition Services
  Agreement

  
	
  Exhibit E-1-

  	
   

  	
  List of Transition
  Services

  
	
  Exhibit F-

  	
   

  	
  Requirements for [***]
  and [***]

  
	
  Exhibit G-

  	
   

  	
  Press Release

  
	
  Exhibit H-

  	
   

  	
  Alternative Dispute
  Resolution Procedures

  



 


65
















 


EXHIBIT A


 


[***]


 


[Attached]


 


[***]


 


66

















 


EXHIBIT
B


 


COMMERCIAL
REVENUE DETAIL


 


[Attached]


 


[***]


 


67

















 


EXHIBIT C


 


[***]


 


[Attached]


 


[***]


 


68

















 


EXHIBIT D


 


ISIS LICENSED INTELLECTUAL PROPERTY


 


[Attached]


 


[***]


 


69

















 


EXHIBIT E


 


TRANSITION SERVICES AGREEMENT


 


[Attached]


 


70

















 


EXHIBIT
E


 


TRANSITION SERVICES AGREEMENT


 


THIS TRANSITION SERVICES AGREEMENT is made and entered into as of this
[    ] day of [                          ], 2009, by and between Ibis Biosciences, Inc.,
a Delaware corporation (“Ibis”), and Isis Pharmaceuticals, Inc., a
Delaware corporation (“Isis”). 
Ibis and Isis are sometimes referred to herein individually as a “Party”
and collectively as the “Parties.”


 


WHEREAS, Ibis, Isis and Abbott Molecular Inc., a Delaware corporation (“AMI”),
have entered into a Stock Purchase Agreement, dated as of December 17,
2008  (the “Acquisition
Agreement”);


 


WHEREAS, pursuant to the Acquisition Agreement, among other things, AMI
has acquired the Remaining Shares of Capital Stock of Ibis such that, as of the
date hereof, Ibis is a wholly-owned subsidiary of AMI;


 


WHEREAS, to facilitate an orderly transition of the Business, Isis has
agreed to provide certain transition services to Ibis, as set forth herein; and


 


WHEREAS, Ibis has agreed to cooperate with and offer support to Isis in
connection with closing the books of Ibis as they relate to the operation of
the Business prior to the Closing, as set forth herein.


 


NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, and covenants hereinafter set forth and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereby agree as follows:


 


Section 1.  Definitions.


 


Capitalized terms used and not defined herein shall have the meanings
ascribed to such terms in the Acquisition Agreement.  In addition to the terms defined elsewhere
herein and in the Acquisition Agreement, the following terms when used in this
Agreement shall have the following meanings:


 


“Acquisition Agreement” has the meaning set forth in the
Recitals.


 


“AMI” has the meaning set forth in the Recitals.


 


“Additional Services” has the meaning set forth in Section 2(b).


 


“Agreement” means this Transition Services Agreement, including
all Schedules and Exhibits attached hereto, as it may be amended from time to
time pursuant to the provisions hereof.


 


“Fees” has the meaning set forth in Section 2(f).


 


“Ibis” has the meaning set forth in
the Preamble.


 


71

















 


“Initial Services” has the meaning set forth in Section 2(a).


 


“Isis” has the meaning set forth in
the Preamble.


 


“Schedule of Services” has the meaning set forth in Section 2(a).


 


“Services” has the meaning set forth
in Section 2(b).


 


“Term” has the meaning set forth in Section 4(a).


 


“Third Party” means any Person other than Isis, Ibis and any of
their respective Affiliates.


 


Section 2.  Services.


 


(a)           Initial
Services.  Commencing on the Closing
Date, Isis shall provide to Ibis the applicable services (the “Initial
Services”) set forth on the Schedule of Services attached hereto as Exhibit A
(the “Schedule of Services”).


 


(b)           Additional
Services.  At any time during the
Term, Ibis may request in writing that Isis provide other services to Ibis
hereunder.  If Isis consents in writing
to such request, which consent shall not be unreasonably withheld if such
requested service has been provided by Isis to the Business during the 12-month
period ending on the Closing Date, then the Schedule of Services shall be
amended to add such services (the “Additional Services” and, together
with the Initial Services, the “Services”).  Each Schedule describing an Additional
Service shall set forth a description of such Additional Service, the time
period during which such Additional Service will be provided, the charges for
such Additional Service and any other terms applicable thereto.


 


(c)           Audit
Assistance.  Each of the Parties and
their respective Affiliates are or may be subject to regulation and audit by
Governmental Authorities, standards organizations, customers or other Parties
to contracts with such Parties under Applicable Law and contract
provisions.  If a Governmental Authority,
standards organization, or customer or other party to a contract with a Party
or an Affiliate of a Party exercises its right to examine or audit such Party’s
or its Affiliate’s books, records, documents or accounting practices and
procedures pursuant to such Applicable Law, standards or contract provisions
and such audit or examination relates to the Services or the conduct of the
Business prior to the Closing, the other Party shall provide (at its own
expense), all reasonable assistance requested by the Party that is subject to
the audit in responding to such audits or requests for information, to the
extent that such assistance or information is within the reasonable control of
the cooperating Party and is related to the Services or the conduct of the
Business prior to the Closing. 
Specifically, Ibis’ accounting group and contract administration group
will assist Isis in all activities related to Ibis’ work performed under its
government contracts prior to the Closing. 
These activities include (i) preparing and sending invoices related
to 2008 activity, (ii) preparing and filing on or prior to June 30,
2009 the 2008 incurred cost submission, (iii) planning, preparing for and
executing the 2008 project-specific audit (A-133 audit) so that the audit
report is filed on or prior to September 30, 2009, (iv) contract
closeout audits, (v) incurred cost submission audits and (vi) any
other contract audits pertaining to work Ibis performed prior to the Closing.
Additionally, Ibis’ accounting 


 


72

















 


group and contract administration group will make
available to Isis any documentation related to government contracts, government
billings, indirect rate calculations or any other documents related to
government contracts under which Ibis performed work prior to the Closing that
Isis reasonably requests in writing. 
Ibis shall perform such services using due care and in a commercially
reasonable manner that is substantially similar in nature, quality and
timeliness to the same tasks performed by Ibis prior to the Closing Date.  All information provided pursuant to this Section 2(c) shall
be subject to Section 8.8 of the Acquisition Agreement (Confidentiality).


 


(d)           Accounting
and IT Services.  For [***] to Isis,
Ibis will provide Isis with the accounting and information technology services
set forth in Exhibit B until the termination date set forth in Exhibit B
for each such service.


 


(e)           Access.  Subject to Section 8.8 of the
Acquisition Agreement (Confidentiality), Ibis shall make available on a timely
basis to Isis all information and materials reasonably requested by Isis that
are necessary to enable Isis to provide the relevant Services.


 


(f)            Performance
of Services.  Except as specifically
set forth in the applicable Schedule of Services, Isis shall perform all
Services using due care and in a commercially reasonable manner that is substantially
similar in nature, quality and timeliness to analogous services provided to
Ibis prior to the Closing Date.


 


(g)           Charges
for Services.  Subject to adjustment
in accordance with Section 8.16 of the Acquisition Agreement (Fees for
Transition Services), the aggregate charges for all Initial Services shall be
[***] (the “Fees”), which shall be payable in equal monthly
installments.  The charges for an
Additional Service, if any, shall be described in detail on the Schedule of
Services with respect to such Additional Service.  Ibis will pay the applicable charges for the
Services in accordance with Section 3 (Billing; Taxes).


 


(h)           Transitional
Nature of Services.  The Parties
acknowledge the transitional nature of the Services and agree to cooperate in
good faith and to use reasonable best efforts to effectuate a smooth transition
of the Services from Isis to Ibis (or its Affiliates).


 


(i)            Cooperation.  In the event that (i) there is
nonperformance of any Service as a result of an event described in Section 7(c) (Force
Majeure), or (ii) the provision of a Service would violate Applicable Law,
the Parties agree to work together in good faith to arrange for an alternative
means by which Ibis may obtain, at Ibis’ sole cost, the Services so affected.


 


(j)            Use
of Third Parties to Provide Services. 
Isis may perform its obligations through its Affiliates or, if prior to
the Closing, Isis obtains analogous services for itself from agents,
subcontractors or independent contractors, Isis may perform its obligations
hereunder through the use of agents, subcontractors or independent
contractors.  If, prior to the Closing,
Isis is not obtaining analogous services for itself from agents, subcontractors
or independent contractors, Isis may perform its obligations hereunder through
the use of agents, subcontractors or independent contractors only upon
obtaining the prior written consent of Ibis, which consent shall not be
unreasonably withheld or delayed. 
Notwithstanding the foregoing, Isis shall not be relieved of its
obligations under this Agreement by use of such Affiliates, agents,
subcontractors or contractors.


 


73

















 


Section 3.  Billing; Taxes.


 


(a)           Procedure.  For the Initial Services, Isis shall invoice
Ibis monthly for the prior month’s pro rata share of the Fees.  Unless otherwise mutually agreed by the
Parties in writing, for Additional Services, if any, Isis shall invoice Ibis on
a quarterly basis for the Additional Services. 
Ibis shall pay invoiced amounts within 45 days of receipt of the
invoice.


 


(b)           Taxes.  Ibis shall pay any and
all Taxes incurred in connection with Isis’ provision of the Services,
including all withholding Taxes required by Applicable Law and all sales, use,
value-added, and similar Taxes, but excluding Taxes based on Isis’ net income.


 


Section 4.  Term and Termination.


 


(a)           Term.  The term of this Agreement (the “Term”)
shall commence on the Closing Date and, unless terminated earlier pursuant to Section 4(b),
shall terminate at the close of business on [***]


 


(b)           Early
Termination.  This Agreement shall
automatically terminate upon the earlier of (i) termination of the
performance of the last Service or (ii) the date Ibis is no longer
occupying Isis’ premises.  If Ibis
intends to vacate Isis’ premises before [***], then Ibis will provide Isis at
least 30 days advance written notice.


 


Section 5.  Software License.  Isis hereby grants to Ibis a worldwide, fully
paid, royalty free, perpetual, nonexclusive license (without the right to grant
sublicenses, except to Affiliates of Ibis) to all of Isis’ rights in (a) the
software programs entitled [***], and [***] (and any dependent programs
specifically referenced therein) used in support of the Ibis manufacturing
process to facilitate [***], and (b) the software application Ibis uses to
enter employee time.  Such software is
hereby licensed to Ibis as-is.  Each
party acknowledges and agrees that Isis has provided the source code for the
software described above to Ibis.


 


Section 6.  Indemnification.


 


(a)           Isis
shall indemnify, defend and hold harmless AMI, Ibis and their respective
officers, directors, shareholders, employees, representatives, agents and
Affiliates (the “Ibis Indemnified Parties”) from and against all Losses
actually suffered or incurred by them to the extent arising out of or resulting
from (i) a breach of this Agreement by Isis or any of its Affiliates or (ii) the
handling, storage, disposal or transport of any Hazardous Materials by Isis or
any of its Representatives, except, in each case, to the extent such Losses
arise out of the negligence, willful misconduct or bad faith of any Ibis
Indemnified Party.


 


(b)           Ibis
shall indemnify, defend and hold harmless Isis and its officers, directors,
shareholders, employees, representatives, agents and Affiliates (the “Isis
Indemnified Parties”) from and against all Losses actually suffered or
incurred by them to the extent arising out of or resulting from (i) a
breach of this Agreement by Ibis or any of its Affiliates, (ii) the
handling, storage, disposal or transport of any Hazardous Materials by Ibis or
any of its Representatives, or (iii) the occupancy of Isis’ premises by
Ibis or any of its Representatives (including any Third Party invited onto Isis’
premises by Ibis), except, in each case, to the extent 


 


74

















 


such Losses arise out of the negligence, willful
misconduct or bad faith of any Isis Indemnified Party.


 


(c)           If
any Third Party shall notify any Party to this Agreement (the “Indemnified Party”)
with respect to any matter which may give rise to a claim (a “Third Party
Claim”) for indemnification against any other Party to this Agreement (the “Indemnifying
Party”) under this Section 6, then the Indemnified Party shall
notify the Indemnifying Party thereof; provided that the failure to so notify
the Indemnifying Party shall not relieve the Indemnifying Party of its
obligations hereunder except to the extent such failure shall have actually
materially prejudiced the Indemnifying Party. 
Once the Indemnified Party has given notice of the matter to the
Indemnifying Party, the Indemnified Party shall defend against the matter in
any manner it reasonably may deem appropriate. 
The Indemnifying Party may, at its sole cost and expense, participate in
the defense of such Claim with co-counsel of its choice.  The Indemnified Party will not consent to the
entry of any judgment with respect to the matter or enter into any settlement
with respect to the matter without the Indemnifying Party’s prior written
consent (not to be unreasonably withheld, conditioned or delayed).  Notwithstanding anything herein to the
contrary, the Indemnifying Party shall not have the right to participate in
such defense if the claim in which the Indemnifying Party seeks to participate (i) seeks
non-monetary, including injunctive, relief, (ii) involves criminal
allegations against an Indemnified Party or (iii) is one in which the
Indemnifying Party is also a party and joint representation would be
inappropriate or there may be legal defenses available to the Indemnified Party
which are different from or additional to those available to the Indemnifying
Party.


 


(d)           No
Ibis Indemnified Party or Isis Indemnified Party shall be entitled to recover
any Losses relating to any matter arising under any provision of this Agreement
to the extent that any such Person has already recovered Losses with respect to
such matter pursuant to the Acquisition Agreement.


 


Section 7.  Miscellaneous.


 


(a)           Limitations
On Liability.  EXCEPT TO THE EXTENT
THAT ANY PUNITIVE, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES ARE
AWARDED IN CONNECTION WITH A THIRD PARTY CLAIM AGAINST AN INDEMNIFIED PARTY AND
SUCH INDEMNIFIED PARTY IS ENTITLED TO BE INDEMNIFIED HEREUNDER AS A RESULT OF
THE FACTS OR CIRCUMSTANCES GIVING RISE TO SUCH THIRD PARTY CLAIM, IN NO EVENT
SHALL ANY PARTY, ITS OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES,
REPRESENTATIVES, AGENTS OR AFFILIATES BE LIABLE TO ANOTHER PARTY FOR ANY
PUNITIVE, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES IN CONNECTION
WITH THE PERFORMANCE OF THIS AGREEMENT, EVEN IF THE PARTY HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES, AND EACH PARTY HEREBY WAIVES ON BEHALF OF
ITSELF AND THE IBIS INDEMNIFIED PARTIES OR THE ISIS INDEMNIFIED PARTIES, AS THE
CASE MAY BE, ANY CLAIM FOR SUCH DAMAGES, INCLUDING ANY CLAIM FOR PROPERTY
DAMAGE OR LOST PROFITS, WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE.


 


(b)           Title
To Intellectual Property.  Except as
explicitly provided in Section 5 (Software License) Ibis acknowledges
that it shall acquire no right, title or interest (including any 


 


75

















 


license rights or rights of use) in any intellectual
property that is owned or licensed by Isis, by reason of the provision of the
Services provided hereunder.  Ibis shall
not remove or alter any copyright, trademark, confidentiality or other
proprietary notices that appear on any intellectual property owned or licensed
by Isis, and Ibis shall reproduce any such notices on any and all copies
thereof.  Ibis shall not attempt to
decompile, translate, reverse engineer or make excessive copies of any
intellectual property owned or licensed by Isis, and Ibis shall promptly notify
Isis of any such attempt, regardless of whether by Ibis or any Third Party, of
which Ibis becomes aware.  Nothing in
this Agreement shall affect any rights granted to a Party under the Acquisition
Agreement.


 


(c)           Force
Majeure.  No Party shall be liable to
another Party if, and to the extent that, the performance or delay in
performance of any of its obligations under this Agreement is prevented,
restricted, delayed or interfered with due to circumstances beyond the
reasonable control of such Party, including, but not limited to, government
legislation, fires, floods, explosions, epidemics, accidents, acts of God,
wars, acts of terrorism, riots, strikes, lockouts or other concerted acts of
workers and/or acts of government.  The
Party claiming an event of force majeure shall promptly notify the other Party
in writing, and provide full particulars of the cause or event and the date of
first occurrence thereof, as soon as possible after the event and also keep the
other Party informed of any further developments.  The Party so affected shall use its
reasonable best efforts to remove the cause of non-performance, and both the
Parties shall resume performance hereunder with the utmost dispatch when such
cause is removed unless this Agreement has previously been terminated under Section 4
(Term and Termination).


 


(d)           Independent
Contractors.  The Parties each
acknowledge that they are separate entities, each of which has entered into
this Agreement for independent business reasons. The relationships of the
Parties hereunder are those of independent contractors and nothing contained
herein shall be deemed to create a joint venture, partnership or any other
relationship.


 


(e)           Survival.  Section 1 (Definitions), Section 2(c) (Audit
Assistance), Section 3 (Billing; Taxes), Section 5
(Software License), Section 6 (Indemnification) and Section 7
(Miscellaneous), shall survive any expiration or termination of this Agreement.


 


(f)            No
Third Party Beneficiaries.  Except as
expressly contemplated in Section 6 with respect to Ibis Indemnified
Parties and Ibis Indemnified Parties, this Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.


 


(g)           Entire
Agreement.  This Agreement
constitutes the full and entire understanding and agreement between the Parties
with regard to the subject hereof and no party will be liable for or bound to
any other in any manner by any oral or written representations, warranties,
covenants and agreements except as specifically set forth herein or therein.


 


(h)           Successors
and Assigns.  This Agreement shall be
binding upon and inure to the benefit of the Parties and their respective
successors and permitted assigns.  No
Party may assign either this Agreement or any of its rights, interests or
obligations hereunder without the prior written approval of the other Party; provided that Ibis may (i) assign any
or all of its rights 


 


76

















 


and interests hereunder to one or more of its
Affiliates, (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases Ibis nonetheless shall
remain responsible for the performance of all of its obligations hereunder),
and (c) assign any or all of its rights and interests hereunder in
connection with a Change of Control of Ibis or AMI.


 


(i)            Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.  This Agreement and any signed agreement or
instrument entered into in connection with this Agreement, and any amendments
hereto or thereto, to the extent signed and delivered by means of a facsimile
machine or other electronic means, shall be treated in all manner and respects
as an original agreement or instrument and shall be considered to have the same
binding legal effect as if it were the original signed version thereof
delivered in person.  At the request of
any party hereto or to any such agreement or instrument, each other party hereto
or thereto shall re-execute original forms thereof and deliver them to all
other parties.  No party hereto or to any
such agreement or instrument shall raise the use of a facsimile machine or
other electronic means to deliver a signature or the fact that any signature or
agreement or instrument was transmitted or communicated through the use of a
facsimile machine or other electronic means as a defense to the formation of a
contract and each such party forever waives any such defense.


 


(j)            Headings.  The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.


 


(k)           Notices.  All notices, requests, demands, claims, and
other communications hereunder will be in writing.  Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given (i) when delivered on a
Business Day, if personally delivered or sent by facsimile or other electronic
means (subject to confirmation of such delivery), on such Business Day, (ii) when
delivered other than on a Business Day, if personally delivered or sent by
facsimile or other electronic means (subject to confirmation of such delivery),
on the first Business Day after dispatch, (iii) on the Business Day after
dispatch, if sent by nationally-recognized overnight courier, and (iv) on
the third Business Day following the date of mailing, if sent by mail, in each
case, addressed to the intended recipient as set forth below:


 


If to
Isis, to:


 


Isis Pharmaceuticals, Inc.

1896 Rutherford Road

Carlsbad, CA  92008

Attention: Chief Financial Officer

Facsimile: (760) 603-4650


 


with a
copy to:


 


Isis Pharmaceuticals, Inc.

1896 Rutherford Road

Carlsbad, CA  92008

Attention:  General Counsel

Facsimile: (760) 268-4922


 


77

















 


If to
Ibis, to:


 


Ibis Biosciences Inc.

1896 Rutherford Road

Carlsbad, CA  92008

Attention:   General Manager

Facsimile: (760) 603-4653


 


with
copies to:


 


Abbott Molecular Inc.

c/o Abbott Laboratories

Corporate Transactions and Medical Products Legal Operations

Dept. 322, Bldg. AP6A 

100 Abbott Park Road

Abbott Park, Illinois  60064-6010

Attention:  Vice President and Associate
General Counsel

Facsimile: (847) 938-1206


 


and:


 


Kirkland & Ellis
LLP

200 East Randolph Drive

Chicago, Illinois  60601

Attn:  R. Scott Falk, P.C.


R. Henry Kleeman


Facsimile:  (312) 861-2200


 


Any Party may send any
notice, request, demand, claim or other communication hereunder to the intended
recipient at the address set forth above using any other means, but no such
notice, request, demand, claim or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient.  Any Party may change the
address to which notices, requests, demands, claims and other communications
hereunder are to be delivered by giving the other Party notice in the manner
herein set forth.


 


(l)            Governing
Law.  This Agreement shall be
governed by and construed in accordance with the domestic laws of the State of
Delaware without giving effect to any choice or conflict of law provision or rule (whether
of the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.


 


(m)          Alternative
Dispute Resolution Procedure.  The
Parties recognize that from time to time a dispute may arise relating to either
Party’s rights or obligations under this Agreement.  The Parties agree that any such dispute shall
be resolved by the Alternative Dispute 


 


78

















 


Resolution (“ADR”) provisions set forth in Exhibit E
of the Acquisition Agreement, the result of which shall be binding upon the
Parties.


 


(n)           Amendments
and Waivers.  No amendment of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by Ibis and Isis.  No waiver
by any Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to
any prior or subsequent default, misrepresentation or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.


 


(o)           Construction.  The Parties acknowledge and agree that they
have been represented by counsel during the negotiation, preparation and
execution of this Agreement and, therefore, waive the application of any Law or
rule of construction providing that ambiguities in an agreement or other
document shall be construed against the Party drafting such agreement or
document.  Where specific language is
used to clarify by example a general statement contained herein, such specific
language shall not be deemed to modify, limit or restrict in any manner the
construction of the general statement to which it relates.  When the context so requires the word “or”
when used herein shall mean “and/or.” All pronouns contained herein, and any
variations thereof, will be deemed to refer to the masculine, feminine or
neutral, singular or plural, as the identity of the Parties hereto may
require.  Unless otherwise provided
therein, when used in any Transaction Document or Schedule, “Dollars” or “$”
means the lawful currency of the United States of America.


 


(p)           Remedies.  Each of the Parties acknowledges and agrees
that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. 
Accordingly, each of the Parties agrees that, subject to Section 7(m),
the other Party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter (subject to Section 7(m), above), in
addition to any other remedy to which they may be entitled, at law or in
equity.


 


(q)           Severability.  In the event that any provision of this
Agreement, or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement shall continue in full force and effect and the application of
such provision to other Persons or circumstances shall be interpreted so as
reasonably to effect the intent of the Parties hereto.  The Parties further agree to replace such
void or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and
other purposes of such void or unenforceable provision.


 


[Remainder of page intentionally left blank;
Signatures on following page]


 


79
















 


IN WITNESS WHEREOF, the Parties have executed this
Transition Services Agreement as of the date first written above.


 


 


	
   

  	
  ISIS PHARMACEUTICALS,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  IBIS BIOSCIENCES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


 


SIGNATURE
PAGE TO TRANSITION SERVICES AGREEMENT


 


80

















 


EXHIBIT A


 


SCHEDULE OF
SERVICES


 


81

















 


EXHIBIT B


 


ACCOUNTING
AND IT SERVICES


 


82

















 


EXHIBIT E-1


 


LIST OF TRANSITION SERVICES


 


Health, Safety and
Environment


· services to be defined in the areas of:
hazardous waste, biological waste, training, regulatory and permitting and
general safety


 


Shipping and Receiving


· packaging, receiving, shipping and receipt
distribution processing (exclusive of packaging material cost, fedex charges
and postage costs, which shall be AMI’s responsibility)


 


Office and Facilities


· janitorial, break room services, copiers, fax,
telephone system (exclusive of long distance charges, which shall be AMI’s
responsibility) and laboratory services


· facility support as provided immediately prior
to the Closing Date (exclusive of materials and labor related to new
construction projects, if any)


 


Occupancy


· office and laboratory furniture


· utilities


· reception


· security


 


IT


·
limited consulting services required to ensure the Business is functional
immediately after the Closing.


 


83

















 


EXHIBIT F


 


[***]


 


84

















 


EXHIBIT G


 


PRESS RELEASE


 


[Attached]


 


85

















 


Abbott
Exercises Its Option to Acquire Ibis Biosciences, a Subsidiary of Isis


 


CARLSBAD, Calif. and ABBOTT PARK, Ill., Dec 17, 2008
/PRNewswire-FirstCall via COMTEX News Network/—


 


Total acquisition price will be $215 million


 


Acquisition will expand Abbott’s position in molecular diagnostics for
infectious disease


 


Isis Pharmaceuticals, Inc. (Nasdaq: ISIS) and Abbott (NYSE: ABT)
announced today that Abbott has exercised its option to purchase the remaining
equity ownership in Ibis Biosciences, Inc., an Isis subsidiary, for a
closing purchase price of $175 million. In addition to the closing purchase
price, Isis will receive earn out payments from Abbott tied to post-closing
sales of Ibis systems, including instruments and assay kits.


 


Earlier this year, Abbott invested $40 million in Ibis in exchange for
approximately 18.6% of Ibis’ outstanding equity. This investment, along with
the $175 million that would be due at closing, would result in a total
acquisition price of $215 million plus earn out payments.


 


The closing of the acquisition of the remaining equity ownership in
Ibis is subject to the satisfaction of the terms and conditions of a stock
purchase agreement that has been executed by the parties, including obtaining
clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and
is expected to occur in January, 2009.


 


“Abbott’s confidence in Ibis is reflected in its decision to invest in
Ibis’ technology and to exercise its option to purchase Ibis. We have already
presented development plans for the next-generation instrument that will
facilitate our rapid growth into clinical diagnostics,” said Michael Treble,
President of Ibis. “This year we have made substantial progress by advancing
our broad pathogen detection and characterization capabilities and establishing
a foundation for our commercial clinical diagnostic products. We look forward
to continuing this progress.”


 


“The broad applicability of Ibis’ technology has been demonstrated in
biodefense applications, microbial forensics and infectious disease detection
and surveillance, and we believe that it has the potential to be a powerful
tool in the detection and surveillance of infectious diseases in the hospital
and clinical settings,” added Stafford O’Kelly, Vice President, Molecular
Diagnostics, Abbott.


 


“Ibis is an example of Isis’ broad innovation, and will provide
substantial benefit to our shareholders, both now as well as in the future, as
Isis receives earn out payments associated with sales of Ibis products,” said
Stanley Crooke, M.D., Ph.D., Chairman and CEO of Isis. “Ibis has refined its
approach toward larger commercial markets, and we believe its relationship with
Abbott will allow Ibis to continue to move quickly forward along this path.”


 


About Ibis T5000 Biosensor System and Ibis Biosciences, Inc.


 


Ibis Biosciences, Inc., a majority-owned subsidiary of Isis
Pharmaceuticals, has developed and is commercializing the Ibis T5000(TM)
Biosensor System for rapid identification and characterization of infectious
agents. The Ibis T5000 is currently intended for research use only and not for
use in diagnostic procedures. It is capable of identifying virtually all
bacteria, viruses 


 


86

















 


and fungi, and can provide information about drug resistance, virulence
and strain type of these pathogens. Commercial applications for the Ibis T5000
Biosensor System include epidemiologic surveillance, monitoring of pandemic
diseases, identification of emerging or previously unknown pathogens, forensic
characterization of human samples, identification of sources of
hospital-associated infections, and, in the future, human infectious disease
diagnostics. Ibis develops, manufactures and markets Ibis T5000 instruments and
assay kits. Additional information about Ibis can be found by selecting the
Ibis link from Isis’ homepage at www.isispharm.com.


 


About Abbott Molecular


 


Abbott’s molecular diagnostics business, headquartered in Des Plaines,
Ill., provides physicians with critical information based on the early
detection of pathogens and key changes in patients’ genes and chromosomes,
allowing for earlier diagnosis, selection of appropriate therapies and
monitoring of disease progression. The business includes instruments and
reagents used to conduct sophisticated analysis of patient DNA and RNA.


 


About Abbott


 


Abbott is a global, broad-based health care company devoted to the discovery,
development, manufacture and marketing of pharmaceuticals and medical products,
including nutritionals, devices and diagnostics. The company employs more than
68,000 people and markets its products in more than 130 countries.


 


Abbott’s news releases and other information are available on the
company’s Web site at www.abbott.com.


 


About Isis Pharmaceuticals, Inc.


 


Isis is exploiting its expertise in RNA to discover and develop novel
drugs for its product pipeline and for its partners. The Company has successfully
commercialized the world’s first antisense drug and has 19 drugs in
development. Isis’ drug development programs are focused on treating
cardiovascular and metabolic diseases. Isis’ partners are developing antisense
drugs invented by Isis to treat a wide variety of diseases. Isis is a joint
owner of Regulus Therapeutics LLC, a joint venture focused on the discovery,
development and commercialization of microRNA therapeutics. As an innovator in
RNA-based drug discovery and development, Isis is the owner or exclusive
licensee of over 1,500 issued patents worldwide. Additional information about
Isis is available at www.isispharm.com.


 


This press release includes forward-looking statements regarding Isis
Pharmaceuticals’ business, the financial position and outlook for Isis as well
as its Ibis Biosciences subsidiary and the commercial potential of Ibis’
technologies and products in development. Any statement describing Isis’ goals,
expectations, financial or other projections, intentions or beliefs is a
forward-looking statement and should be considered an at-risk statement,
including those statements that are described as Isis’ goals or projections.
Such statements are subject to certain risks and uncertainties, particularly
those inherent in the process of discovering, developing and commercializing
drugs that are safe and effective for use as human therapeutics, in developing
and commercializing systems to identify infectious organisms that are effective
and commercially attractive, and in the endeavor of building a business around
such products. Isis’ forward-looking statements also involve assumptions that,
if they never materialize or prove 


 


87

















 


correct, could cause its results to differ materially from those
expressed or implied by such forward-looking statements. Although Isis’
forward-looking statements reflect the good faith judgment of its management,
these statements are based only on facts and factors currently known by Isis.
As a result, you are cautioned not to rely on these forward-looking statements.
These and other risks concerning Isis’ programs are described in additional
detail in Isis’ annual report on Form 10-K for the year ended December 31,
2007, and its most recent quarterly report on Form 10-Q, which are on file
with the SEC. Copies of these and other documents are available from the
Company.


 


Private Securities Litigation Reform Act of 1995 —A Caution Concerning
Forward-Looking Statements


 


Some statements in this news release may be forward-looking statements
for the purposes of the Private Securities Litigation Reform Act of 1995.
Abbott cautions that these forward-looking statements are subject to risks and
uncertainties that may cause actual results to differ materially from those
indicated. Economic, competitive, governmental, technological and other factors
that may affect Abbott’s operations are discussed in Item 1A, “Risk Factors,”
to Abbott’s Annual Report on Securities and Exchange Commission Form 10-K
for the year ended December 31, 2007, and in Item 1A, “Risk Factors,” to
Abbott’s Quarterly Reports on Securities and Exchange Commission Form 10-Q
for the quarters ended June 30, 2008, and September 30, 2008, and are
incorporated by reference. Abbott undertakes no obligation to release publicly
any revisions to forward-looking statements as a result of subsequent events or
developments.


 


In this press release, unless the context requires otherwise, “Isis”
and “Company” refers to Isis Pharmaceuticals and its subsidiaries and joint
venture.


 


Isis Pharmaceuticals is a registered trademark of Isis Pharmaceuticals, Inc.
Ibis Biosciences and Ibis T5000 are trademarks of Ibis Biosciences, Inc.
Regulus Therapeutics is a trademark of Regulus Therapeutics LLC.


 


88

















 


EXHIBIT H


 


ADR
PROCEDURE


 


To begin the ADR process, a Party first must send
written notice of the dispute to the other Party for attempted resolution by
good faith negotiations between their respective presidents (or their designees)
of the affected subsidiaries, divisions, or business units within twenty-eight
(28) days after such notice is received (all references to “days” in this ADR
provision are to calendar days). If the matter has not been resolved within
twenty-eight (28) days after the notice of dispute, or if the parties fail to
meet within such twenty-eight (28) days, either Party may initiate an ADR
proceeding as provided herein. The parties shall have the right to be
represented by counsel in such a proceeding.


 


1.             To
begin an ADR proceeding, a Party shall provide written notice to the other
Party of the issues to be resolved by ADR. Within fourteen (14) days after its
receipt of such notice, the other Party may, by written notice to the Party
initiating the ADR, add additional issues to be resolved within the same ADR.


 


2.             Within
twenty-one (21) days following the initiation of the ADR proceeding, the
Parties shall select a mutually acceptable independent, impartial and
conflicts-free neutral to preside in the resolution of any disputes in this ADR
proceeding. If the Parties are unable to agree on a mutually acceptable neutral
within such period, each Party will select one independent, impartial and
conflicts-free neutral and those two neutrals will select a third independent,
impartial and conflicts-free neutral within ten (10) days thereafter.  None of the neutrals selected may be current
or former employees, officers or directors of either Party, its Subsidiaries or
Affiliates or a current consultant or independent contractor of either Party or
its Affiliates.


 


3.             No
earlier than twenty-eight (28) days or later than fifty-six (56) days after
selection, the neutral(s) shall hold a hearing to resolve each of the
issues identified by the Parties. The ADR proceeding shall take place at a
location agreed upon by the Parties. If the Parties cannot agree, the neutral(s) shall
designate a location other than the principal place of business of either Party
or any of their Subsidiaries or Affiliates.


 


4.             At
least seven (7) days prior to the hearing, each Party shall submit the
following to the other Party and the neutral(s):


 


(a)           a
copy of all exhibits on which such Party intends to rely in any oral or written
presentation to the neutral;


 


(b)           a
list of any witnesses such Party intends to call at the hearing, and a short
summary of the anticipated testimony of each witness;


 


(c)           a
proposed ruling on each issue to be resolved, together with a request for a
specific damage award or other remedy for each issue. The proposed rulings and remedies
shall not contain any recitation of the facts or any legal arguments and shall
not exceed one (1) page per issue. The Parties agree that neither
side shall seek as part of its remedy any punitive damages.


 


89

















 


(d)           a
brief in support of such Party’s proposed rulings and remedies, provided, that the brief shall not exceed
twenty (20) pages. This page limitation shall apply regardless of the
number of issues raised in the ADR proceeding.


 


Except as expressly set forth in subparagraphs 4(a) -
4(d), no discovery shall be required or permitted by any means, including
depositions, interrogatories, requests for admissions, or production of
documents.


 


5.             The
hearing shall be conducted on two (2) consecutive days and shall be
governed by the following rules:


 


(a)           Each
Party shall be entitled to five (5) hours of hearing time to present its
case. The neutral shall determine whether each Party has had the five (5) hours
to which it is entitled.


 


(b)           Each
Party shall be entitled, but not required, to make an opening statement, to
present regular and rebuttal testimony, documents or other evidence, to
cross-examine witnesses, and to make a closing argument. Cross-examination of
witnesses shall occur immediately after their direct testimony, and
cross-examination time shall be charged against the Party conducting the
cross-examination.


 


(c)           The
Party initiating the ADR shall begin the hearing and, if it chooses to make an
opening statement, shall address not only issues it raised but also any issues
raised by the responding Party. The responding Party, if it chooses to make an
opening statement, also shall address all issues raised in the ADR. Thereafter,
the presentation of regular and rebuttal testimony and documents, other
evidence, and closing arguments shall proceed in the same sequence.


 


(d)           Except
when testifying, witnesses shall be excluded from the hearing until closing
arguments.


 


(e)           Settlement
negotiations, including any statements made therein, shall not be admissible
under any circumstances. Affidavits prepared for purposes of the ADR hearing
also shall not be admissible. As to all other matters, the neutral(s) shall
have sole discretion regarding the admissibility of any evidence.


 


6.             Within
seven (7) days following completion of the hearing, each Party may submit
to the other Party and the neutral(s) a post-hearing brief in support of
its proposed rulings and remedies, provided,
that such brief shall not contain or discuss any new evidence and shall not exceed
ten (10) pages. This page limitation shall apply regardless of the
number of issues raised in the ADR proceeding.


 


7.             The
neutral(s) shall rule on each disputed issue within fourteen (14)
days following completion of the hearing. Such ruling shall adopt in its
entirety the proposed ruling and remedy of one of the Parties on each disputed
issue but may adopt one Party’s proposed rulings and remedies on some issues
and the other Party’s proposed rulings and remedies on other issues. The
neutral(s) shall not issue any written opinion or otherwise explain the
basis of the ruling.


 


90

















 


8.             The
neutral(s) shall be paid a reasonable fee plus expenses. These fees and
expenses, along with the reasonable legal fees and expenses of the prevailing
Party (including all expert witness fees and expenses), the fees and expenses
of a court reporter, and any expenses for a hearing room, shall be paid as
follows:


 


(a)           If
the neutral(s) rule(s) in favor of one Party on all disputed issues
in the ADR, the losing Party shall pay 100% of such fees and expenses.


 


(b)           If
the neutral(s) rule(s) in favor of one Party on some issues and the
other Party on other issues, the neutral(s) shall issue with the rulings a
written determination as to how such fees and expenses shall be allocated among
the Parties. The neutral(s) shall allocate fees and expenses in a way that
bears a reasonable relationship to the outcome of the ADR, with the Party
prevailing on more issues, or on issues of greater value or gravity, recovering
a relatively larger share of its legal fees and expenses.


 


9.             The
rulings of the neutral(s) and the allocation of fees and expenses shall be
binding, non-reviewable, and non-appealable, and may be entered as a final
judgment in any court having jurisdiction.


 


10.           Except
as provided in paragraph 9 or as required by law, the existence of the dispute,
any settlement negotiations, the ADR hearing, any submissions (including
exhibits, testimony, proposed rulings, and briefs), and the rulings shall be
deemed Confidential Information. The neutral(s) shall have the authority
to impose sanctions for unauthorized disclosure of Confidential Information.


 


91