Document:

Exhibit
10.2

Execution
Copy

SEPARATION AGREEMENT

THIS AGREEMENT (this “Agreement”), made and entered
into as of this 7th day of February, 2007 (the “Termination Date”), by and
between the Seneca Gaming Corporation (“Parent”), a wholly-owned governmental
instrumentality of the Seneca Nation of Indians (the “Nation”) with its
principal place of business in the Allegany and Niagara Territories of the
Nation and Joseph D’Amato (“Executive”),

W I T N E S S E T
H:

WHEREAS, Executive
and Parent entered into that certain Amended and Restated Employment Agreement,
dated July 13, 2004, as amended by Amendment No. 1 to Employment
Agreement, entered into on September 14, 2006 and effective as of June 22, 2006
(collectively, the “Employment Agreement”), pursuant to which Executive served
as the Chief Operating Officer of Parent; and

WHEREAS, Executive
also serves as the Chief Operating Officer of each of Parent’s wholly-owned
subsidiaries:  Seneca Niagara Falls
Gaming Corporation, Seneca Territory Gaming Corporation, and the Seneca Erie
Gaming Corporation (collectively, the “Subsidiaries” and together with Parent, “Employer”);
and

WHEREAS, Executive has elected to resign as an
employee and officer of Parent and each of the Subsidiaries effective as of the
Termination Date.

NOW, THEREFORE, for and in consideration of the mutual
covenants and obligations contained herein, Parent and Executive hereby agree
as follows:

ARTICLE I:                           RESIGNATION
AND POST-TERMINATION COOPERATION

Section
1.1             Resignation.   Executive
hereby resigns as an employee and officer of Parent and the Subsidiaries
effective as of the close of business on the Termination Date.  Except as specifically provided in Article
III of this Agreement, notwithstanding any other written or oral agreements
between Employer and Executive relating to Executive’s employment or
termination thereof, and all subsequent amendments thereto, including, without
limitation, the Employment Agreement, such resignation shall not be deemed to
be a breach by Executive or Employer of any such agreements, and in
consideration of the payments and benefits herein described, any and all terms
set forth in such agreements, including, without limitation, the Employment
Agreement, shall terminate and cease to have any effect as of the Termination
Date notwithstanding any survival clauses therein contained.  Executive agrees to execute all other
necessary documents that Employer requests that he execute to evidence his
termination of employment and his status as an employee and officer of
Employer.  Executive represents,
understands and agrees that following the Termination Date, he will not, at any
time, apply for, seek, or accept any employment with, and waives any right to
employment with, Employer.

Section
1.2             Post-Termination
Cooperation.   Following the Termination Date, Executive agrees to
reasonably cooperate with Employer, as and when reasonably requested, for
purposes of facilitating Employer’s transitioning of matters in which Executive
was engaged or for which Executive was responsible as an employee of Employer,
including reasonable participation in ongoing litigation in which Parent or any
Subsidiary is a party (e.g., as a witness). 
Executive shall have no power to bind Employer in contractual or other
matters, and shall not hold himself out as having such authority. Executive
shall personally provide all of the consulting services required hereunder.

ARTICLE II:                          SEVERANCE PAYMENTS,
BENEFITS AND FEES

Section
2.1             Severance Payments.   Upon
execution and delivery of this Agreement by the parties, and consistent with
customary policies of Parent, to the extent not previously paid, the Company
shall pay Executive:  (a) all
compensation payable under Section 5(e) of Executive’s Employment Agreement
(i.e., including payment of 120 days base compensation) and (b) any unpaid
reasonable business expenses incurred through the Termination Date.  Parent further agrees to reimburse Executive
for reasonable costs and expenses incurred by Executive at Parent’s direction
in connection with Executive’s efforts pursuant to Section 1.2 above, including
participation in litigation proceedings, subject to Parent’s receipt of
adequate documentation thereof and compliance with Parent’s applicable policies
and procedures.

Section
2.2             Benefits.   Subsequent
to the close of business on the Termination Date, Executive shall cease to be
eligible to participate in all Employer employee benefit plans, provided that,
for the period commencing on the Termination Date and ending on the earlier of
(a) the date 120 days following the Termination Date, or (b) the date on which
Executive is eligible to receive employer health insurance coverage through a
new employer, Employer will pay the cost of (1) Executive’s premiums for continuation
healthcare coverage under Section 4980B of the Internal Revenue Code of 1986,
as amended (COBRA) and (2) reimbursement under Exec-u-Care® consistent with
Executive’s participation in Exec-u-Care® prior to the Termination Date.   Employer further acknowledges that it shall
reasonably cooperate with Executive, upon request, to ensure that Executive is
allowed to maximize his Employer 401(k) plan deductions for 2007 consistent
with applicable law.

Section
2.3             Withholding of Taxes.   Parent
may withhold from any benefits or compensation payable under this Agreement all
federal, state, city or other taxes as may be required pursuant to any law or
governmental regulation or ruling.

Section
2.4             No Other Payments.   Except
as specifically provided in this Agreement or as otherwise may be required by
law, Executive acknowledges and agrees that he shall not be entitled to receive
any other payments, salary, bonus, pension, medical, life, disability insurance
or any other benefits, incentive compensation, or severance or separation pay
or any other claim or compensation or benefits of any kind or nature whatsoever
that Executive may now have or ever claimed to have been entitled to from
Employer or any affiliate.  Executive’s
participation in any other employee benefit plan maintained by Employer or any
affiliate shall terminate effective as of the Termination Date in accordance
with the terms of such employee benefit plans and applicable law.  Except as specifically set forth herein,
Executive acknowledges and agrees that as of the Termination Date, his rights
under the Employment Agreement shall be void and cease to have any effect and
this Agreement shall provide the sole right Executive may have upon termination
of his employment.

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ARTICLE III:                         RESTRICTIVE COVENANTS

Section
3.1             Acknowledgements.   Executive
acknowledges that:  (i) as a result of
Executive’s employment  with Employer, he
obtained secret, proprietary and confidential information concerning the
business of Employer, including, without limitation, business and marketing
plans, strategies, employee lists, patron lists, operating procedures, business
relationships (including persons, corporations or other entities performing
services on behalf of or otherwise engaged in business transactions with the Employer),
accounts, financial data, know-how, computer software and related
documentation, trade secrets, processes, policies and/or personnel, and other
information relating to the Employer (“Confidential Information”); (ii) the
Confidential Information has been developed and created by Employer at
substantial expense and the Confidential Information constitutes a valuable
proprietary asset and that Employer will suffer substantial damage and
irreparable harm which will be difficult to compute if, during the Restricted
Period, Executive should enter a Competitive Business (as defined herein) in
violation of the provisions of this Agreement; (iii) Employer will suffer
substantial damage which will be difficult to compute if, during the Restricted
Period, Executive should solicit or interfere with Employer’s employees, or
patrons or should divulge Confidential Information relating to the business of
Employer; (iv) the provisions of this Article III are reasonable and necessary
for the protection of the business of Employer; (v) Employer would not have
entered into this Agreement unless Executive made the acknowledgements set
forth in this Section; and (vi) the provisions of this Agreement will not
preclude Executive from other gainful employment.  For purposes of this Agreement, “Competitive
Business” means any gaming establishment which provides to its patrons games of
chance such as slot machines, card games, roulette, and similar games in the
State of New York or within a 100 mile radius of Nation Territory.  For purposes of this Agreement, “Nation
Territory” means, collectively, the Seneca Nation of Indians’ Allegany,
Cattaraugus, Oil Springs, Niagara Falls, and Buffalo Creek Territories.

Section
3.2             Confidentiality.   Executive
acknowledges and agrees that the unauthorized disclosure or misuse of
Confidential Information will cause substantial damage to the Employer.  Therefore, Executive agrees not to, at any
time, either during the Term of the Agreement or thereafter, divulge, use,
publish or in any other manner reveal, directly or indirectly, to any person,
firm or corporation any Confidential Information obtained or learned by
Executive during the course of his employment with Employer, with regard to the
operational, financial, business or other affairs and activities of Employer,
their officers, directors or employees and the entities with which they have
business relationships, except (i) as may be necessary to the performance of
Executive’s duties with Employer, (ii) with Employer’s express prior written
consent, (iii) to the extent that any such information is in the public domain
other than as a result of Executive’s breach of any of his obligations
hereunder, or (iv) where required to be disclosed by court order, subpoena or
other government process and, in such event, Executive shall cooperate with the
Employer in attempting to keep such information confidential.

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Section
3.3             Non-Compete.   For
the period commencing on the Termination Date and ending eighteen (18) months
thereafter (the “Restricted Period”), Executive, without the prior written
permission of Parent, shall not, directly or indirectly, (i) enter into the
employ of or render any services to any person or entity engaged in or
preparing to engage in a Competitive Business; or (ii) become affiliated with
or interested in any Competitive Business as an individual, partner,
shareholder, member, creditor, director, officer, principal, agent, employee,
trustee, consultant, or advisor, or in any other relationship or capacity.  This section 3.3 shall not prevent Executive
from owning common stock in a publicly traded corporation which owns or manages
a casino, provided that Executive does not take an active role in the ownership
or management of such corporation and his ownership interest represents less
than 3% of the voting securities and/or economic value of such corporation.

Section
3.4             Non-Solicitation —
Employees.   By executing this Agreement, Executive acknowledges that
he understands that Employer’s ability to operate its business depends upon its
ability to attract and retain skilled people and that Employer has and will
continue to invest substantial resources in training such individuals.  Therefore, during the Restricted Period,
Executive shall not, without the prior written permission of Parent, directly
solicit, employ or retain, or have or cause any other person or entity to
solicit, employ or retain, any person who is employed by Employer.

Section
3.5             Non-Solicitation —
Vendors.   By executing this Agreement, Executive acknowledges that he
understands that Employer’s ability to operate its business depends upon its
ability to attract and retain vendors and patrons.  Therefore, during the Restricted Period,
Executive shall not, directly or indirectly, take any action with respect to
any current or potential vendors of Employer, or any such persons or entities
that were vendors of the Employer within the one year period immediately prior
to Executive’s termination of employment, that would be adverse to the
interests of Employer.

Section
3.6             Non-Disparagement.   The
parties hereto acknowledge and agree that during the Term and for all time
thereafter that they will not defame or publicly criticize the services,
business, integrity, veracity or personal or professional reputation of the
other party, or such party’s officers, directors, employees, agents or
affiliates, in either a professional or personal manner.

Section
3.7             Blue-Pencil.   If,
at any time, the provisions of this Agreement shall be determined to be invalid
or unenforceable under any applicable law, by reason of being vague or
unreasonable as to area, duration or scope of activity, this Agreement shall be
considered divisible and shall become and be immediately amended to only such
area, duration and scope of activity as shall be determined to be reasonable
and enforceable by the court or other body having jurisdiction over the matter
and Executive and Employer agree that this Agreement as so amended shall be
valid and binding as though any invalid or unenforceable provision had not been
included herein.

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ARTICLE
IV:                         RELEASE

Section
4.1             Release of Known Claims.

(a)           It
is understood and agreed by the parties to this Agreement that in consideration
of the mutual  covenants and obligations
contained in this Agreement, and after consultation with counsel, Executive for
himself and each of his respective heirs, representatives, agents, successors
and assigns, irrevocably and unconditionally releases and forever discharges
the Nation, Parent, and each Subsidiary, and its and their respective current
and former officers, directors, shareholders, employees, representatives,
heirs, attorneys and agents, as well as its and their respective predecessors,
parent companies, subsidiaries, affiliates, divisions, successors and assigns
and its respective current and former officers, directors, shareholders,
employees, representatives, attorneys and agents (the “Released Parties”), from
any and all causes of action, claims, actions, rights, judgments, obligations,
damages, demands, accountings or liabilities of whatever kind or character,
which Executive may have against them, or any of them, by reason of or arising
out of, touching upon or concerning Executive’s employment with Employer and
the termination of his employment, or any statutory claims, or any and all
other matters of whatever kind, nature or description, whether known or
unknown, occurring prior to the Termination Date.  Executive acknowledges that this release of
claims specifically includes, but is not limited to, any and all claims for
fraud; breach of contract; breach of the implied covenant of good faith and
fair dealing; inducement of breach; interference with contractual rights;
wrongful or unlawful discharge or demotion; violation of public policy;
invasion of privacy; intentional or negligent infliction of emotional distress;
intentional or negligent misrepresentation; conspiracy; failure to pay wages,
benefits, vacation pay, severance pay, attorneys’ fees, or other compensation
of any sort; defamation; unlawful effort to prevent employment; discrimination
on the basis of race, color, sex, national origin, ancestry, religion, age,
disability, handicap, medical condition or marital status; any claim under
Title VII of the Civil Rights Act of 1964 (Title VII, as amended), 42 U.S.C.
§2000, et seq., the Age Discrimination in
Employment Act (“ADEA”), 29 U.S.C. §621, et seq., the
Older Workers Benefit Protection Act (“OWBPA”), 29 U.S.C. §626(f), the
Equal Pay Act, the Family and Medical Leave Act, the New York Human Rights Law;
the New York Labor Law; the New York Whistleblower Protection Law; the New York
Wage and Hour Laws; violation of the Consolidated Omnibus Budget Reconciliation
Act of 1985 (“COBRA”); the Americans with Disabilities Act (“ADA”); violation
of the Occupational Safety and Health Act (“OSHA”) or any other health and/or
safety laws, statutes or regulations; violation of the Employee Retirement
Income Security Act of 1974 (“ERISA”); violation of the Internal Revenue Code
of 1986, as amended; any other foreign, federal, state, or local laws, common law
or case law relating to employment discrimination or the regulation of
employment; or any other wrongful conduct based upon events occurring prior to
the Termination Date.

(b)           Executive
represents and warrants that he has not assigned or subrogated any of his
rights, claims and causes of action, including any claims referenced in this
Agreement, or authorized any other person or entity to assert such claim or
claims on his behalf, and he agrees to indemnify and hold harmless the Released
Parties against any assignment of said rights, claims and/or causes of action.

(c)           Executive
acknowledges and agrees that the making of this Agreement, and anything
contained herein, is not intended, and shall not be construed, as an admission
that the Released Parties have: violated or abridged any foreign, federal,
state or local law (statutory or common law), ordinance or regulation; breached
any contract, or violated any right or obligation that it may owe or may have
owed to Executive or committed any wrong whatsoever against Executive.

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Section 4.2             Waiver
of Rights Under the Age Discrimination Act.

(a)           Executive
understands that this Agreement, and the release contained herein, waives
claims and rights Executive might have under the ADEA. The waiver of Executive’s
rights under the ADEA does not extend to claims or rights that might arise
after the Effective Date.  Executive may
revoke the terms of this Agreement relating to ADEA claims by a written
document received by the Parent’s General Counsel at Seneca Niagara Falls
Casino and Hotel, 310 Fourth Street, Niagara Falls, New York (Seneca Nation
Territory) 14303 within seven (7) calendar days after Executive’s execution of
this Agreement.  Executive agrees that
any such revocation will not be effective unless it is made in writing and
delivered to Parent, to the attention of its General Counsel at the address set
forth above, by the end of the seventh (7th) calendar day.  This Agreement and the provisions of this
Section 4.2 will become effective on the eighth (8th) calendar day after the
Agreement is executed by both parties (the “Effective Date”).  In the event of a valid revocation of this
Agreement by Executive, Executive shall not be entitled to be paid any of the
amounts described in this Agreement and this Agreement shall become null and
void.

(b)           Executive
acknowledges that he has been given up to 21 days to decide whether to sign
this Agreement.  At Executive’s option
and sole discretion, Executive may waive the twenty-one (21) day review period
and execute this Agreement before the expiration of twenty-one (21) days.  If Executive elects to waive the twenty-one
(21) day review period, Executive acknowledges and admits that Executive was
given a reasonable period of time within which to consider this Agreement and
Executive’s waiver is made freely and voluntarily, without duress or any
coercion by any other person

Section 4.3             Workers
Compensation.   Executive expressly acknowledges that he has not, to
his knowledge, suffered from any illness or injury arising out of and in the
course of his employment with Employer that would be compensable under the
Workers’ Compensation Act (the “WC Act”), that he has not filed any claim
against Employer under the WC Act, and that he represents that he will not file
or otherwise assert any workers’ compensation claim against Employer seeking to
remedy an injury or illness caused by Executive’s employment and termination
thereof.

Section 4.4             Breach.   If
Executive should breach any of his obligations under this Article IV, Employer
shall have no further obligation to make the payments and benefits described
herein attached hereto and Executive shall be required to return all amounts
paid to Executive hereunder.

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Section 4.5             Release
of Claims by Parent.   Subject to the provisions of this Agreement and
subject to Executive not exercising his revocation rights hereunder, Parent and
Employer hereby irrevocably and unconditionally release, waive and fully and
forever discharge Executive, from and against any and all claims, liabilities,
obligations, covenants, rights, demands and damages of any nature whatsoever,
whether known or unknown, anticipated or unanticipated, arising from, by reason
of or in any way related to any transaction, event or circumstance which
occurred or existed prior to and including the date of this Agreement arising
out of or in any way related to Executive’s employment with Employer or the
termination thereof.  Notwithstanding the
provisions of this paragraph, nothing in this waiver or release shall be
construed to constitute any release or waiver by either party of its rights or
claims against the other party arising out of or referred to in this Agreement
or for any fraudulent acts engaged in by the other party during the course of
Executive’s employment.

ARTICLE V:                          MISCELLANEOUS

Section
5.1             Remedy.   Should
Executive engage in or perform, either directly or indirectly, any of the acts
prohibited by Articles III and IV or, in any other way, violate such Articles,
it is agreed that Employer shall be entitled to full injunctive relief, to be
issued by any competent court of equity, enjoining and restraining Executive
and each and every other person, firm, organization, association, or
corporation concerned therein, from the continuance of such violative
acts.  The foregoing remedy shall not be
deemed to limit or prevent the exercise by Employer of any or all further
rights and remedies which may be available to Employer hereunder or at law or
in equity.

Section
5.2             Notices.   For
purposes of this Agreement, notices and all other communica­tions provided for
herein shall be in writing and shall be deemed to have been duly given when
personally delivered, sent by facsimile or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed to such address as provided in the signature pages hereto or sent to
such other address or facsimile number as each party may furnish to the other
in writing from time to time in accordance with this Section 5.3.

Section
5.3             Applicable Law.   This
Agreement is entered into under, and shall be governed for all purposes by, the
laws of the State of New York without giving effect to any choice of law
principles.

Section
5.4             No Waiver.   No
failure by either party hereto at any time to give notice of any breach by the
other party of, or to require compliance with, any condition or provision of
this Agreement shall (i) be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time or (ii) preclude insistence
upon strict compliance in the future.

Section
5.5             Severability.   If
a court of competent jurisdiction determines that any provision of this
Agreement is invalid or unenforceable, then the invalidity or unenforceability
of that provision shall not affect the validity or enforceability of any other
provision of this Agreement, and all other provisions shall remain in full
force and effect and such invalid or unenforceable provision shall be
reformulated by such court to preserve the intent of the parties hereto.

Section
5.6             Counterparts.   This
Agreement may be executed in one or more counter­parts, each of which shall be
deemed to be an original, but both of which together will constitute one and
the same Agreement.

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Section
5.7             Headings.   The
paragraph headings have been inserted for purposes of convenience and shall not
be used for interpretive purposes.

Section
5.8             Gender and Plurals.   Wherever
the context so requires, the masculine gender includes the feminine or neuter,
and the singular number includes the plural and conversely.

Section
5.9             Affiliate.   As
used in this Agreement, unless otherwise indicated, “affiliate” shall mean any
person or entity which directly or indirectly through any one or more
intermediaries owns or controls, is owned or controlled by, or is under common
ownership or control with the Parent.

Section
5.10           Assignment.   This
Agreement is binding on Executive and Employer and their successors and
assigns; provided, however, that the rights and obligations of
Employer under this Agreement may be assigned to a successor entity.  No rights or obligations of Executive
hereunder may be assigned by Executive to any other person or entity, except by
will or the laws of descent and distribution. 
In the event of Executive’s death prior to receipt by Executive of all
amounts payable by Employer hereunder, such amounts shall be payable to
Executive’s designated beneficiaries on the same schedule as provided for in
this Agreement.

Section
5.11           Entire Agreement.   Except
as otherwise specifically provided herein, this Agreement constitutes the
entire agreement of the parties with regard to the subject matter hereof,
contains all the covenants, promises, representations, warranties and
agreements between the parties with respect to Executive’s resignation from
Employer and supersedes all prior employment or severance or other agreements
between Executive and Employer whether written or oral or any of predecessor or
affiliate of Employer, including, but not limited to the Employment Agreement.  Executive acknowledges and agrees that the
consideration provided for herein is adequate consideration for Executive
waiving his rights under any other agreement whether written or oral between
Executive and Employer, including, without limitation, the Employment Agreement.  Except as otherwise provided herein,
Executive acknowledges that no representation, inducement, promise or
agreement, oral or written, has been made by either party, or by anyone acting
on behalf of either party, which is not embodied herein, and that no agreement,
statement, or promise relating to Executive’s resignation from Employer, that
is not contained in this Agreement, shall be valid or binding.  Any modification of this Agreement will be
effective only if it is in writing and signed by the party to be charged.

ARTICLE
VI:                         JOINT
DRAFTING

Executive and Parent acknowledge and agree that this
Agreement was jointly drafted by Parent on the one side and by Executive on the
other side.  Neither party, nor any party’s
counsel, shall be deemed the drafter of this Agreement in any proceeding that
may hereafter arise between them.

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ARTICLE
VII:                       EXECUTIVE ACKNOWLEDGEMENTS

Executive
acknowledges that:

(a)           He has read and understands the terms
of this Agreement and has voluntarily agreed to these terms without coercion or
undue persuasion by Parent or any officer, director or other agent thereof;

(b)           He has been encouraged by Parent to
seek, and has had the opportunity to seek competent legal counsel in his review
and consideration of this Agreement and its terms; and

(c)           This Agreement does not purport to
waive, and does not waive, any rights Executive may have which arise after the
Termination Date.

*              *              *

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

 

	
  

  	
   

  	
  SENECA GAMING CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
  Barry E. Snyder, Sr.

  
	
   

  	
   

  	
  Title:

  	
   

  	
  Chairman of the Board of Directors

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Joseph D’Amato

  

 

 10Exhibit
10.1

February 1, 2007

VIA HAND DELIVERY

Jeffrey M. Jonas, M.D.

Executive Vice President

Isis Pharmaceuticals, Inc.

1896 Rutherford Road

Carlsbad, CA 92008

Dear Jeff:

Isis
Pharmaceuticals, Inc. (“Isis”) is pleased to offer you certain severance benefits
in light of your future contribution to Isis. As Isis has no policy or
procedure requiring such benefits, we request that you keep the terms and
conditions of this letter agreement confidential.

In the event that
your employment is terminated without “cause” (as defined herein) by Isis on or
before February 1, 2008 (the “Severance Period”), you will be eligible to
receive salary continuation equal to your then current base salary, less
payroll deductions and withholdings until the sooner to occur of (a) the date you
secure new employment (including part-time employment and consulting) or (b)
the twelve-month anniversary of the date of your termination.  For purposes of this letter agreement, “cause”
will be defined as follows: (i) engaging or in any manner participating in any
activity which is competitive with or intentionally injurious to Isis or which
violates any provision of the Proprietary Information and Inventions Agreement;
(ii) commission of any fraud against Isis or use or appropriation for personal
use or benefit of any funds or properties of Isis not authorized by the Company
to be so used or appropriated; (iii) conviction of a crime involving dishonesty
or moral turpitude; (iv) conduct by you which in the good faith and reasonable
determination of the Company demonstrates gross unfitness to serve in your then
current capacity at Isis. In order to be eligible to receive the severance
payments described herein, you will be required to execute an Employee
Separation Agreement substantially in the form attached hereto as Exhibit A.

If within the
first twelve months of a Change in Control (as defined herein), your employment
is terminated without “cause” (as defined above) by Isis or the acquirer, or
you elect to terminate your employment because in your sole judgment your job
responsibilities are significantly reduced, you will receive a severance
payment equal to a total of 24 months of your then current base salary, less
payroll deductions and withholdings. For purposes of this letter agreement, Change
in Control will be defined as follows: (i) a sale of all or substantially all
of the assets of Isis; (ii) a merger or consolidation in which Isis is not the
surviving corporation and in which beneficial

ownership of securities
of Isis representing at least fifty percent (50%) of the combined voting power
entitled to vote in the election of Directors has changed; (iii) a reverse
merger in which Isis is the surviving corporation but the shares of Common
Stock outstanding immediately preceding the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise, and in which beneficial ownership of securities of Isis representing
at least fifty percent (50%) of the combined voting power entitled to vote in
the election of Directors has changed; or (iv) an acquisition by any person,
entity or group within the meaning of Section 13(d) or 14(d) of the Exchange
Act, or any comparable successor provisions (excluding any employee benefit
plan, or related trust, sponsored or maintained by Isis or subsidiary of Isis
or other entity controlled by Isis) of the beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable
successor rule) of securities of Isis representing at least fifty percent (50%)
of the combined voting power entitled to vote in the election of Directors.

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

	
  Very truly yours,

  
	
   

  
	
  /s/ Stanley T.
  Crooke

  	
   

  

Isis
Pharmaceuticals, Inc.

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

Chairman and CEO

EXHIBIT A

FORM OF SEPARATION AGREEMENT

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

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

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

1.     SEVERANCE PAYMENTS.
On                        (“Separation
Date”), Employee shall cease to be an employee or officer of the Company for
all purposes. In return for executing this Agreement, Employee will receive the
payments described in the severance benefits letter attached hereto as Schedule
1.

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

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

4.     STOCK OPTIONS. Pursuant to the Company’s
equity incentive plans), vesting of Employee’s stock options will cease on the
Separation Date. Employee’s rights to exercise Employee’s option as to any
vested shares will be as set forth in the Plan and Employee’s Stock Option
Agreement.

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

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

7.     PROPRIETARY INFORMATION OBLIGATIONS.
Employee acknowledges that nothing herein shall impair the covenants and
obligations set forth in Employee’s Proprietary Information and Inventions
Agreement.

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

9.     ADEA WAIVER. Employee acknowledges that
Employee knowingly and voluntarily waives and releases any rights Employee may
have under the ADEA, as amended. Employee also acknowledges that the
consideration given for the waiver and release in the preceding paragraph
hereof is in addition to anything of value to which Employee was already
entitled. Employee further acknowledges that Employee has been advised by this
writing, as required by the ADEA, that: (a) Employee’s waiver and release
do not apply to any rights or claims that may arise after the execution date of
this Agreement; (b) Employee has the right to consult with an attorney
prior to executing this Agreement; (c) Employee has forty-five
(45) days to consider this Agreement (although Employee may choose to voluntarily
execute this Agreement earlier); (d) Employee has seven (7) days
following the execution of this Agreement by the parties to revoke the
Agreement; and (e) this Agreement shall not be effective until the date
upon which the revocation period has expired, which shall be the eighth day
after this Agreement is executed by Employee, provided that the Company has
also executed this Agreement by that date (“Effective Date”).

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

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

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

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

13.   ENTIRE AGREEMENT. This Agreement, including
all exhibits, constitutes the complete, final and exclusive embodiment of the
entire agreement between Employee and the Company with regard to the subject
matter hereof. It supersedes any and all agreements entered into by and between
Employee and the 

Company where such other agreement may conflict with
this agreement. It is entered into without reliance on any promise or
representation, written or oral, other than those expressly contained herein.
It may not be modified except in a writing signed by Employee and a duly
authorized officer of the Company. The parties have carefully read this
Agreement, have been afforded the opportunity to be advised of its meaning and
consequences by their respective attorneys, and signed the same of their own
free will.

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

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

	
  EMPLOYEE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
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